<PAGE>
As filed with the Securities and Exchange Commission on October 16, 1997.
Registration No. 333-35559
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
CORPORATE EXPRESS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Colorado 5112 84-0978360
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification
Number)
1 Environmental Way
Broomfield, Colorado 80021-3416
(303) 664-2000
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
JIRKA RYSAVY
Chief Executive Officer
Corporate Express, Inc.
1 Environmental Way
Broomfield, Colorado 80021-3416
(303) 664-2000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
-----------------
Copies to:
GERALD J. GUARCINI, ESQ. KENNETH M. DORAN, ESQ.
Ballard Spahr Andrews & Ingersoll Gibson Dunn & Crutcher LLP
1735 Market Street, 51st Floor 333 South Grand Avenue
Philadelphia, Pennsylvania 19103-7599 Los Angeles, California 90071-3197
(215) 665-8500 (213) 229-7000
-----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effectiveness of this Registration Statement and the
effective time of the merger (the "Merger") of IDD Acquisition Corp., a wholly
owned subsidiary of Corporate Express, Inc., into Data Documents Incorporated as
described in the Agreement and Plan of Merger, dated as of September 10, 1997
(the "Merger Agreement"), attached as Appendix I to the Proxy Statement and
Prospectus forming a part of this Registration Statement.
------------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and are in compliance with
General Instruction G, check the following box. [_]
------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
Data Documents Incorporated
4205 South 96th Street
Omaha, Nebraska 68127
October __, 1997
Dear Stockholder:
It is a pleasure to invite you to the Special Meeting of Stockholders of
Data Documents Incorporated ("Data Documents") in Omaha, Nebraska on
November __, 1997 at 10:00 a.m. local time, at Data Documents' principal
offices (the "Special Meeting"). The sole purpose of the Special Meeting
will be to consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of September 10, 1997 (the "Merger
Agreement"), by and among Corporate Express, Inc. ("Corporate Express"),
IDD Acquisition Corp., a wholly owned subsidiary of Corporate Express
("Acquisition Sub"), and Data Documents.
The Merger Agreement provides, among other things, for the merger of
Acquisition Sub with and into Data Documents (the "Merger") pursuant to
which Data Documents will become a wholly owned subsidiary of Corporate
Express and each outstanding share of Data Documents Common Stock would be
converted into 1.1 shares of Corporate Express Common Stock subject to
adjustment under certain circumstances. The adjustments to the exchange
ratio are described more fully in the accompanying Proxy Statement and
Prospectus. Accordingly, all of the shares of Data Documents
Common Stock issued and outstanding immediately prior to the consummation
of the Merger would be automatically converted at the effective time into a
right to receive shares of Corporate Express Common Stock.
SINCE ANY ADJUSTMENT TO THE EXCHANGE RATIO WILL OCCUR AFTER THE DATE OF
THE PROXY STATEMENT AND PROSPECTUS, STOCKHOLDERS OF DATA DOCUMENTS WILL BE
ABLE TO OBTAIN THE EXCHANGE RATIO BEGINNING FIVE TRADING DAYS PRIOR TO THE
SPECIAL MEETING BY CALLING (800) ___ - ____.
The Merger Agreement contains a number of conditions and other terms, all
of which are summarized, along with certain financial and other
information, in the accompanying Proxy Statement and Prospectus. Please
read and consider the Proxy Statement and Prospectus carefully.
The vote of every stockholder is important. Mailing or faxing your
completed proxy will not prevent you from voting in person at the meeting
if you wish to do so.
Please sign, date and promptly mail or fax your proxy. Your cooperation
will be greatly appreciated.
Your Board of Directors and management look forward to greeting those
stockholders who are able to attend.
Sincerely,
A. Robert Thomas
Secretary
<PAGE>
DATA DOCUMENTS INCORPORATED
4205 South 96th Street
Omaha, Nebraska 68127
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON November __, 1997
To the Stockholders of Data Documents:
A Special Meeting of Stockholders of Data Documents Incorporated, a
Delaware corporation ("Data Documents"), will be held at Data Documents'
principal offices in Omaha, Nebraska, on November __, 1997 at 10:00 a.m.,
local time, to consider and act upon the following matter:
To consider and act upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of September 10, 1997 among
Corporate Express, Inc., IDD Acquisition Corp. and Data Documents, and
the conversion of each outstanding share of Data Documents Common Stock,
par value $.001 per share, into 1.1 shares of Corporate Express Common
Stock, par value $.0002 per share, subject to adjustment under certain
circumstances all as more fully described in the accompanying Proxy
Statement and Prospectus. STOCKHOLDERS OF DATA DOCUMENTS WILL BE ABLE TO
OBTAIN THE EXCHANGE RATIO BEGINNING FIVE TRADING DAYS PRIOR TO THE
SPECIAL MEETING BY CALLING (800) ___-____.
Stockholders of record at the close of business on October 14, 1997 are
entitled to notice of, and to vote at, the Special Meeting and any
adjournments thereof. The Data Documents stock transfer books will remain
open for the purchase and sale of Data Documents' Common Stock. For a
period of ten days prior to the Special Meeting, a complete list of the
stockholders entitled to vote at the Special Meeting will be available at
the offices of Data Documents for inspection by any stockholder of record
for any purpose germane to the Special Meeting.
All stockholders are cordially invited to attend the meeting.
By order of the Board of Directors,
Walter J. Kearns, Chairman of the Board
Omaha, Nebraska
October __, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL THE PROXY
CARD IN THE ENCLOSED ENVELOPE OR FAX AS PROVIDED HEREIN IN ORDER TO ASSURE
REPRESENTATION OF YOUR SHARES AT THE SPECIAL MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED WITHIN THE UNITED STATES.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+ REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+ SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+ OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOME+
+ EFFECTIVE. THIS PROXY STATEMENT AND PROSPECTUS SHALL NOT CONSTITUTE AN OFFER +
+ TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE +
+ OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION +
+ OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE +
+ SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion; Dated October 16, 1997
CORPORATE EXPRESS INC.
DATA DOCUMENTS INCORPORATED
PROXY STATEMENT AND PROSPECTUS
This Proxy Statement and Prospectus ("Proxy Statement and Prospectus")
relates to the proposed merger (the "Merger") of IDD Acquisition Corp.
("Acquisition Sub"), a wholly owned subsidiary of Corporate Express, Inc.
("Corporate Express") with and into Data Documents Incorporated ("Data
Documents") pursuant to an Agreement and Plan of Merger dated September 10,
1997 among Corporate Express, Acquisition Sub and Data Documents (the "Merger
Agreement"). As a result of the Merger, Data Documents will become a wholly
owned subsidiary of Corporate Express and the stockholders of Data Documents
will receive Corporate Express common stock, par value $.0002 per share
("Corporate Express Common Stock"), in exchange for all of the issued and
outstanding shares of Data Documents common stock, par value $.001 per share
("Data Documents Common Stock"). Pursuant to the Merger, each outstanding
share of Data Documents Common Stock will be converted into 1.1 shares of
Corporate Express Common Stock (the "Exchange Ratio"). The Exchange Ratio is
subject to adjustment as described herein if the average of the closing
prices of Corporate Express Common Stock, as reported on The Nasdaq National
Market ("Nasdaq") for ten trading days selected randomly from the twenty
consecutive trading days ending five trading days prior to the special
meeting of Data Documents' stockholders to approve the Merger (the "Corporate
Express Stock Value"), is less than $15.00 or greater than $18.20. If the
Corporate Express Stock Value is less than $15.00, then Corporate Express has
the right to increase the Exchange Ratio to the number (expressed as a
decimal fraction) which, when multiplied by the Corporate Express Stock
Value, will equal $16.50 and the Merger shall be consummated on the basis of
such increased Exchange Ratio. In the event Corporate Express does not elect
to increase the Exchange Ratio, then Data Documents may at its option either
(i) terminate the Merger Agreement or (ii) consummate the Merger.
Notwithstanding the forgoing, even if Corporate Express does elect to
increase the Exchange Ratio, Data Documents may at its option terminate the
Agreement if the Corporate Express Stock Value is less than $10.00. See "The
Merger -- Adjustments to Merger Consideration." The Data Documents Board of
Directors does not currently intend to resolicit proxies in the event that
the right to terminate, as described above, arises. See "The Special
Meeting -- Solicitation of Proxies."
Approval of the Merger Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Data Documents Common
Stock present, either in person or by proxy, at the special meeting. Certain
executive officers and employee directors of Data Documents, representing
approximately __% of Data Documents Common Stock, have executed and delivered
irrevocable proxies to Corporate Express to vote their shares in favor of the
Merger. Data Documents' stockholders will not be entitled to any appraisal or
dissenters' rights under the Delaware General Corporation Law in connection
with the Merger. Since any adjustment to the Exchange Ratio will occur after
the date of this Proxy Statement and Prospectus, stockholders will not know
the Exchange Ratio at the time of their vote, but may obtain the Exchange
Ratio beginning five trading days prior to the special meeting by calling
(800) ___-_____, and may revoke their vote by facsimile as provided below. On
October 13, 1997, the closing price of the Corporate Express Common Stock was
$20.625 per share. If the trading price of Corporate Express Common Stock
were to stay at $20.625 per share to the closing date of the Merger, the
Exchange Ratio would be 1.0 shares of Corporate Express Common Stock for each
share of Data Documents Common Stock. See "The Merger -- Adjustments to
Merger Consideration."
This Proxy Statement and Prospectus serves as the proxy statement for
Data Documents for its special meeting of stockholders to be held November
__, 1997. See "The Special Meeting."
TO FACILITATE THE VOTING PROCESS FOR THE SPECIAL MEETING, STOCKHOLDERS OF
DATA DOCUMENTS WILL BE ABLE TO VOTE THEIR SHARES AND REVOKE THEIR VOTES BY
FACSIMILE, BY THE STATED TIME OF THE SPECIAL MEETING, AT THE FOLLOWING
TELEPHONE NUMBER - (402) 339-9270. SEE "THE SPECIAL MEETING -- VOTING OF
PROXIES" AND "-- REVOCATION OF PROXIES".
This Proxy Statement and Prospectus also constitutes a prospectus of
Corporate Express with respect to up to _________ shares of Corporate Express
Common Stock to be issued to stockholders of Data Documents pursuant to the
Merger Agreement. This Proxy Statement and Prospectus and the accompanying
forms of proxy are first being mailed to stockholders of Data Documents on or
about October __, 1997.
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN
CONSIDERATIONS IN EVALUATING THE MERGER.
No persons have been authorized to give any information or to make any
representation other than those contained in this Proxy Statement and
Prospectus in connection with the solicitation of proxies or the offering of
securities made hereby and, if given or made, such information or
representation should not be relied upon as having been authorized by
Corporate Express or Data Documents. This Proxy Statement and Prospectus
does not constitute an offer to sell, or a solicitation of an offer to
purchase, any securities, or the solicitation of a proxy, in any jurisdiction
in which, or to any person to whom, it is unlawful to make such offer or
solicitation of an offer or proxy solicitation. Neither the delivery of this
Proxy Statement and Prospectus nor any distribution of the securities offered
hereby shall, under any circumstances, create any implication that there has
been no change in the affairs of Corporate Express or Data Documents since
the date hereof or that the information set forth or incorporated by
reference herein is correct as of any time subsequent to its date. All
information herein with respect to Corporate Express and Acquisition Sub has
been furnished by Corporate Express, and all information herein with respect
to Data Documents has been furnished by Data Documents.
THE SECURITIES TO WHICH THIS PROXY STATEMENT AND PROSPECTUS RELATES HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement and Prospectus is October __, 1997.
<PAGE>
FORWARD-LOOKING STATEMENTS
This Proxy Statement and Prospectus includes and incorporates by
reference forward-looking statements based on current plans and expectations
of Corporate Express, Data Documents and Acquisition Sub relating to, among
other matters, analyses, including opinions from independent financial
advisors to Data Documents' Board of Directors and Corporate Express' Board
of Directors as to the fairness from a financial point of view of the
Exchange Ratio to be offered to Data Documents' stockholders in the Merger,
based upon forecasts of future results, and estimates of amounts that are not
yet determinable. Such forward-looking statements are contained in the
sections entitled "Summary," "Risk Factors," "The Merger," "The Companies"
and other sections of this Proxy Statement and Prospectus. Such statements
involve risks and uncertainties which may cause actual future activities and
results of operations to be materially different from that suggested in this
Proxy Statement and Prospectus, including among others, risks associated with
the integration of acquisitions by Corporate Express, fluctuations in
Corporate Express' operating results because of the acquisitions and seasonal
influences and variations in stock prices, as well as other factors described
elsewhere in this Proxy Statement and Prospectus.
AVAILABLE INFORMATION
Each of Corporate Express and Data Documents are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, files reports, proxy
statements, and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information may
be inspected and copied at the public reference facilities maintained by the
Commission at its principal office at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and the Regional Offices of the Commission: 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials may be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates or through the
Commission's Web site (http://www.sec.gov). Corporate Express Common Stock
and Data Documents Common Stock are quoted on Nasdaq and reports, proxy
statements and other information concerning Corporate Express and Data
Documents are available for inspection and copying at the Public Reference
Section of The Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006-1500.
Corporate Express has filed with the Commission a registration statement
on Form S-4 (the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the Corporate Express
Common Stock to be issued in the Merger. This Proxy Statement and Prospectus
also constitutes the Prospectus of Corporate Express filed as part of the
Registration Statement and does not contain all of the information set forth
in the Registration Statement and the exhibits thereto, certain parts of
which are omitted in accordance with the rules of the Commission. Statements
made in this Proxy Statement and Prospectus as to the contents of any
contract, agreement, or other document referred to are not necessarily
complete; with respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be qualified in its entirety by such reference. The
Registration Statement and any amendments thereto, including exhibits filed
as part thereof, are available for inspection and copying at the Commission's
offices as described above.
------------------------
Corporate Express(R) is a registered service mark of Corporate Express,
Inc.
2
<PAGE>
------------------------
As used in this Proxy Statement and Prospectus, "fiscal 1994," "fiscal
1995" and "fiscal 1996" refer to Corporate Express' fiscal years ended or
ending February 25, 1995, March 2, 1996 and March 1, 1997, respectively or to
Data Documents' fiscal years ended December 31, 1994, 1995 and 1996,
respectively.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Corporate Express with the Commission
pursuant to the Exchange Act (File No. 0-24642) are hereby incorporated by
reference in this Proxy Statement and Prospectus:
1. Corporate Express' Annual Report on Form 10-K for the fiscal
year ended March 1, 1997;
2. Corporate Express' Quarterly Report on Form 10-Q for the quarter
ended May 31, 1997;
3. Corporate Express' Quarterly Report on Form 10-Q for the quarter
ended August 30, 1997;
4. Corporate Express' Current Report on Form 8-K filed with the
Commission on September 17, 1997; and
5. The description of Corporate Express Common Stock contained in
Corporate Express' Registration Statement on Form 8-A filed with the
Commission on August 4, 1994, including any amendment or report filed for the
purpose of updating such description.
The following documents filed by Data Documents with the Commission
pursuant to the Exchange Act (File No. 0-26674) are hereby incorporated by
reference in this Proxy Statement and Prospectus:
1. Data Documents' Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
2. Data Documents' Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997;
3. Data Documents' Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997; and
4. Data Documents' Current Reports on Form 8-K filed with the
Commission on August 14, 1997 and September 17, 1997.
All reports and other documents filed with the Commission by Corporate
Express or Data Documents pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Proxy Statement and Prospectus and
prior to the Special Meeting shall be deemed to be incorporated by reference
herein and to be a part hereof from the respective dates of filing of such
reports and other documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for all purposes to the extent that a statement
contained herein or in any other subsequently filed document that is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statements so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Proxy Statement and Prospectus.
This Proxy Statement and Prospectus incorporates by reference documents
with respect to Corporate Express which are not presented herein or delivered
herewith. Copies of these documents (not including exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents or herein) are available without charge to any person to whom
this Proxy Statement and Prospectus is delivered upon written or oral request
to Corporate Express, Inc., 1 Environmental Way, Broomfield, Colorado 80021,
Attn: Secretary (Telephone Number (303) 664-2000).
In order to ensure timely delivery of the documents prior to the Special
Meeting, any request should be made by November __, 1997.
3
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TABLE OF CONTENTS
<TABLE>
<S> <C>
FORWARD-LOOKING STATEMENTS............................................... 2
AVAILABLE INFORMATION.................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................... 3
SUMMARY.................................................................. 6
Corporate Express, Inc............................................... 6
Data Documents Incorporated.......................................... 7
Strategic Reasons for the Merger..................................... 9
The Special Meeting.................................................. 9
The Merger........................................................... 10
Comparative Historical and Pro Forma Per Share Data.................. 14
Comparative Market Data.............................................. 16
Dividend Policy...................................................... 17
RISK FACTORS............................................................. 18
Risks Relating to Corporate Express.................................. 18
Risks Relating to Data Documents..................................... 21
Risks Relating to the Merger......................................... 22
THE SPECIAL MEETING...................................................... 24
Special Meeting of Data Documents Stockholders....................... 24
Quorum............................................................... 24
Vote Required........................................................ 24
Record Date; Stock Entitled to Vote.................................. 24
Voting of Proxies.................................................... 24
Revocation of Proxies................................................ 25
Solicitation of Proxies.............................................. 25
THE MERGER............................................................... 26
Merger Consideration................................................. 26
Adjustments to Merger Consideration.................................. 26
Option Plans......................................................... 26
Conversion of Shares; Procedures for Exchange of Certificates;
Fractional Shares................................................... 27
Nasdaq Listing....................................................... 27
Background of the Merger............................................. 27
Recommendation of the Data Documents Board of Directors.............. 29
Reasons for the Merger............................................... 29
Opinion of Data Documents' Financial Advisor......................... 30
Effective Time of the Merger......................................... 30
Interests of Certain Persons in the Merger........................... 31
Certain Federal Income Tax Consequences.............................. 31
Anticipated Accounting Treatment..................................... 32
</TABLE>
4
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<TABLE>
<S> <C>
Resale of Corporate Express Common Stock by Affiliates............... 32
Certain Regulatory Matters........................................... 33
Rights of Dissenting Stockholders.................................... 33
Comparison of Stockholder Rights..................................... 33
THE MERGER AGREEMENT..................................................... 41
Conditions to the Merger............................................. 41
Representations and Warranties....................................... 44
Certain Covenants.................................................... 44
No Solicitation...................................................... 45
Additional Agreements................................................ 46
Termination, Amendment and Waiver.................................... 49
SELECTED CONSOLIDATED FINANCIAL DATA..................................... 51
Corporate Express.................................................... 51
SELECTED CONSOLIDATED FINANCIAL DATA..................................... 53
Data Documents....................................................... 53
PRO FORMA COMBINED BALANCE SHEET......................................... 56
PRO FORMA COMBINED STATEMENTS OF OPERATIONS.............................. 57
HISTORICAL COMBINED STATEMENTS OF OPERATIONS............................. 59
LEGAL MATTERS............................................................ 60
EXPERTS.................................................................. 60
</TABLE>
APPENDIX I - AGREEMENT AND PLAN OF MERGER DATED AS OF SEPTEMBER 10, 1997
AMONG CORPORATE EXPRESS, DATA DOCUMENTS AND ACQUISITION SUB
APPENDIX II - OPINION OF JEFFERIES & COMPANY, INC.
5
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement and Prospectus. The information contained in this
summary is qualified in its entirety by, and should be read in conjunction
with, the detailed information and financial statements, including the
notes thereto, appearing elsewhere in this Proxy Statement and Prospectus
and the documents incorporated herein by reference.
Corporate Express, Inc.
Corporate Express is a provider of non-production goods and services to
large corporations. Since 1991, Corporate Express has expanded through
acquisitions from a regional operation in Colorado to operations throughout
the United States, Canada, the United Kingdom, Australia, Germany, France,
Italy and New Zealand. Corporate Express believes it has developed a
substantially different model of non-store retailing, defining itself as a
"Corporate Supplier" which provides a broad array of non-production goods
and services to its customers while reducing overall procurement costs and
providing a high level of customer service. The Company's current product
and service offering includes office supplies, paper, computer and imaging
supplies, computer desktop software, office furniture, janitorial and
cleaning supplies, advertising specialties, forms management, printing,
same-day local delivery service and distribution logistics management.
Corporate Express markets to its existing and prospective customers through
a direct sales force and fulfills its products and services through over
700 locations including 80 distribution centers and a fleet of more than
10,000 owned or contracted vehicles.
Corporate Express' target customers are large corporations with over 100
employees. Corporate Express believes that these large corporations
increasingly seek to reduce the cost of procuring non-production goods and
services while decreasing the time and effort spent managing functions that
are not considered core competencies. To that end, corporations seek to
reduce the number of their suppliers in order to eliminate the internal
costs associated with multiple invoices, deliveries, complex ordering
procedures, uneven service levels and inconsistent product availability.
Many large corporations operate from multiple locations and can benefit
from selecting suppliers who can service them nationally or
internationally.
In many non-production goods and services sectors, including office
products and same-day local delivery, competition is often highly
fragmented and consists primarily of smaller local or regional providers.
Corporate Express believes that the desire of large corporations to reduce
costs by decreasing their number of suppliers to a small group of reliable
and cost-effective national and international partners will continue to
lead to the consolidation of many currently fragmented product and service
sectors, as well as consolidation in sectors where the key differentiation
will be the ability to fulfill a broad spectrum of customer requirements
rather than providing an individual product or service.
Corporate Express' Corporate Supplier strategy is designed to reduce its
customers' total costs and the internal effort necessary to manage the
procurement of non-production goods and services. Corporate Express
believes that its target customers value a high level of service including
account relationship managers, delivery services, customized pricing,
electronic interfaces, customized reporting and product catalogs.
Corporate Express seeks to supply a broad range of non-production goods and
services to large corporations. This broad product and service offering
permits Corporate Express to reduce its customers' procurement costs
associated with dealing with multiple vendors, including multiple invoices,
deliveries, ordering procedures, uneven service levels and inconsistent
product availability, while servicing customers' broad geographical service
and delivery requirements.
6
<PAGE>
Corporate Express also seeks to continually reduce its merchandise and
operating costs which should permit it to offer its customers competitive
prices. By purchasing most of its products directly from manufacturers in
large volumes and limiting the number of manufacturers represented in its
In-Stock Catalog and other specialty catalogs, Corporate Express is
increasingly able to earn volume discounts and advertising allowances from
its vendors. Corporate Express believes its computer systems represent a
key strategic advantage which differentiates the Company from its
competitors and permits it to achieve cost savings, provide superior
customer service and centrally manage its operations. Corporate Express
expects to continue making substantial investments to upgrade and enhance
the capabilities of its computer systems.
Corporate Express historically has grown and intends to continue to grow
in the future through a combination of acquisitions and internal growth.
Corporate Express plans to increase sales to existing customers by cross-
selling its expanded product and service offering and developing existing
customers into international, national or multi-regional accounts.
Corporate Express believes that its expanded product line and expanding
geographic coverage enable it to offer its customers a broad array of non-
production goods and services to address their desire to reduce the number
of suppliers with which they interact. Corporate Express seeks to attract
new customers, including national and international accounts, through the
marketing efforts of its direct sales force. Further, Corporate Express
has expanded its delivery capabilities and geographic coverage in the
United States, and Corporate Express intends to increase development of
sales efforts in these new geographic areas. In addition, Corporate Express
may open additional satellite sales offices and distribution breakpoints to
serve new accounts.
In order to better service its multi-national customers and to take
advantage of the fragmented nature of many international markets, Corporate
Express has devoted substantial resources to expanding outside of the
United States, principally through acquisitions. Corporate Express
acquired or made investments in companies in Canada and Australia in
calendar 1995 and the United Kingdom, Germany and New Zealand in calendar
1996. Corporate Express entered the French market with the acquisition of
a computer software reseller in October 1996, and the Italian market in
calendar 1997. The Company plans to enter additional international markets
in the future. Over time, the Company has and will continue to implement
appropriate aspects of the Corporate Supplier business model in its
international operations, including creating in-stock catalogs,
consolidating warehouses, upgrading information systems, acquiring
companies offering complementary products and services and focusing on
larger customers and national and international accounts. Portions of the
Corporate Supplier business model have been implemented in Canada,
Australia and the United Kingdom.
Corporate Express was incorporated under the laws of Colorado in 1985.
Corporate Express operates its business through various subsidiaries.
Corporate Express' executive offices are located at 1 Environmental Way,
Broomfield, Colorado 80021, and its telephone number is (303) 664-2000.
Data Documents Incorporated
Data Documents is a designer and provider of custom business forms,
pressure-sensitive label products and forms management systems that enable
its large corporate customers to enhance productivity and reduce costs
associated with managing information. A substantial portion of Data
Documents' forms sales are made in connection with its proprietary forms
management systems. In addition, Data Documents supplies specialized direct
mail products and sells other computer services and products, including
laser printer supplies and software packages.
7
<PAGE>
Within the pressure-sensitive label market, Data Documents has focused
on, among others, the thermal, laser and combination label/forms segments.
Data Documents has developed many label products, such as the Dual-Web(R)
label/form combination product and airline baggage tracking labels. Many
of Data Documents' products have been developed to satisfy customers'
increasing needs for variable information content, such as inventory
control bar coding.
Over the last five years, the business forms industry has been affected
by numerous factors, including changes in end-user requirements and
available technology. These changes have resulted in a shift towards
certain custom value-added products and systems in both the business forms
and pressure-sensitive label markets from the stock forms segment. In
addition, end-users are increasingly seeking to outsource and single source
their forms management and pressure-sensitive label needs. Data Documents
has positioned itself as a provider of solutions-based approaches to
information collection and distribution and to focus its business on custom
value-added products that are tied to Data Documents' services.
Data Documents establishes strategic, long-term forms management
relationships with its core customers. Data Documents' forms management
services have been designed to respond to increased outsourcing by large
corporations of non-core operations, such as forms design and workflow
analysis, inventory management, warehousing and shipping. Data Documents'
Odyssey Integrated Services(R) program provides a selection of fully
integrated service modules, supported by proprietary software, offering
comprehensive forms management services and efficiency-enhancing tools.
Data Documents conducts all of its consolidated operations through its
one wholly owned subsidiary, Data Documents, Inc., a Nebraska corporation
("DDI"), and DDI's wholly owned subsidiaries, PBF Washington, Inc., a
Washington corporation ("PBF"), Cal Emblem Labels, Inc., a California
corporation ("Cal Emblem"), and Moore Labels, Inc., a Kansas corporation
("Moore Labels"). Data Documents was organized by management and an
investor group in Delaware in February 1988 to acquire DDI from Pitney
Bowes, Inc.
DDI, PBF, Cal Emblem and Moore Labels account for 100% of the
consolidated revenues and net earnings of Data Documents. Data Documents'
sole assets are the investment in the stock of, and advances to, DDI. Data
Documents has no subsidiaries other than DDI and, indirectly, PBF, Cal
Emblem and Moore Labels, and has no liabilities other than guarantees of
indebtedness of DDI, PBF, Cal Emblem and Moore Labels. Data Document's
financial statements are prepared on a consolidated basis and include the
financial results of DDI, PBF, Cal Emblem and Moore Labels. Unless the
context otherwise requires, the term "Data Documents" includes Data
Documents Incorporated and its direct and indirect subsidiaries.
Data Documents was incorporated under the laws of Delaware in 1988. Data
Documents' executive offices are located at 4205 South 96th Street, Omaha,
Nebraska 68127, and its telephone number is (402) 339-0900.
8
<PAGE>
Strategic Reasons for the Merger
The Corporate Express Board of Directors and management continually
review strategic alternatives available to Corporate Express, including
acquisitions, product extensions and geographic expansion. The Corporate
Express Board of Directors believes that the combination with Data
Documents will (i) allow Corporate Express to offer various additional
services which are complementary to its business; (ii) create economies of
scale including allowing the combined entity to reduce duplicative
administrative functions and combine regional and national marketing
programs; (iii) create a combined entity positioned to compete more
effectively on both a strategic and financial basis and (iv) create cross-
selling opportunities.
The Data Documents Board of Directors believes that the Merger with
Corporate Express will (i) enhance Data Documents' product offering,
distribution capabilities and services to its customers, (ii) result in
strategic and operating synergies and (iii) provide the opportunity for
stockholders of Data Documents to have an ownership interest in a larger
company with greater opportunities for growth in the same industry in which
Data Documents occupies a smaller niche.
The Special Meeting
Meeting of Stockholders........ The Special Meeting of stockholders
of Data Documents (the "Special
Meeting") will be held on November __,
1997 at 10:00 a.m. (local time) at
Data Documents' principal offices at
4205 South 96th Street, Omaha,
Nebraska.
Matters to be Considered
at the Special Meeting....... At the Special Meeting, stockholders
will be asked to approve and adopt the
Merger Agreement. Pursuant to the terms
of the Merger Agreement, each share of
Data Documents Common Stock will be
converted into 1.1 shares of Corporate
Express Common Stock. The Exchange Ratio
is subject to adjustment in certain
circumstances. See "The Merger - Merger
Consideration" and "- Adjustments to
Merger Consideration."
For additional information relating
to the Special Meeting, see "The
Special Meeting."
Quorum; Vote Required.......... The presence, in person or by proxy,
of the holders of a majority of the
outstanding shares of Data Documents
Common Stock at the Special Meeting
is necessary to constitute a quorum
at the meeting. Approval of the
Merger Agreement requires the
affirmative vote of the holders of a
majority of the outstanding shares of
Data Documents Common Stock. See
"The Special Meeting - Vote Required"
and "The Merger Agreement -
Conditions to the Merger."
Record Date.................... Only stockholders of record of Data
Documents Common
9
<PAGE>
Stock at the close of business on
October 14, 1997 are entitled to
notice of and to vote at the Special
Meeting. On that date, there were
9,957,387 shares (which includes 269,607
treasury shares) of Data Documents
Common Stock outstanding, with each
share of Data Documents Common Stock
entitled to cast one vote with
respect to the Merger Agreement at
the Special Meeting.
Security Ownership
of Management.................. As of the record date, the directors
and executive officers of Data
Documents as a group had the power to
vote approximately _______% of the
outstanding shares of Data Documents
Common Stock entitled to vote at the
Special Meeting and have indicated
that they intend to vote their shares
in favor of the Merger Agreement.
See "The Merger - Interests of
Certain Persons in the Merger."
The Merger
Effect of the Merger.............. Pursuant to the Merger Agreement,
Acquisition Sub would merge with and
into Data Documents, Data Documents
would continue as the surviving
corporation (sometimes referred to as
the "Surviving Corporation") and Data
Documents would become a wholly owned
subsidiary of Corporate Express. All
of the shares of Data Documents
Common Stock issued and outstanding
immediately prior to the consummation
of the Merger would be automatically
converted at the Effective Time (as
defined below) into the right to receive
shares of Corporate Express Common
Stock. Pursuant to the Merger, each
share of Data Documents Common Stock
would be converted into 1.1 shares of
Corporate Express Common Stock (the
"Exchange Ratio"). The Exchange Ratio is
subject to adjustment. See "The Merger -
Merger Consideration" and "- Adjustments
to Merger Consideration."
Assumption of Options; Warrants... Each unexpired option and warrant to
acquire shares of Data Documents
Common Stock will automatically be
converted at the Effective Time (as
defined below) into an option or
warrant, as the case may be, to
purchase shares of Corporate Express
Common Stock. The number of shares
which each option or warrant holder
shall have the right to purchase, and
the exercise price of such options or
warrants, will be adjusted to reflect
the Exchange Ratio. Upon
consummation of the Merger, Corporate
Express will enter into a
supplemental agreement with holders
of Data Documents warrants. See "The
Merger Agreement - Additional
Agreements."
10
<PAGE>
Recommendation of the Board of
Directors and Reasons for the
Merger............................. The Data Documents Board of Directors
believes that the terms of the Merger
are fair to and in the best interests
of the Data Documents stockholders
and has unanimously approved the
Merger Agreement and the related
transactions. The Data Documents
Board of Directors unanimously
recommends that Data Documents
stockholders approve the Merger
Agreement. See "The Merger -
Recommendations of the Board of
Directors," "- Background of the
Merger" and " - Reasons for the
Merger."
Opinion of Data Documents' Financial
Advisor............................ Jefferies & Company, Inc. has
delivered to the Board of Directors
of Data Documents a written opinion
dated September 5, 1997 to the effect
that, as of the date of such opinion and
based upon and subject to certain
matters stated therein, the
consideration was fair, from a financial
point of view, to the holders of Data
Documents Common Stock. The full text of
the written opinion of Jefferies &
Company, Inc. dated September 5, 1997,
and confirmed by Jefferies & Company,
Inc. on the date of this Proxy Statement
and Prospectus, which sets forth the
assumptions made, matters considered and
limitations on the review undertaken, is
attached as Appendix II to this Proxy
Statement and Prospectus and should be
read carefully in its entirety. See "The
Merger - Opinion of Data Documents'
Financial Advisor."
Effective Time of
the Merger......................... The Merger will become effective at
the time provided in a certificate of
merger (the "Certificate of Merger")
to be filed with the Secretary of
State of Delaware (the "Effective
Time"). The filing will be made
simultaneously with or as soon as
practicable after the closing of the
Merger. The closing of the Merger
(the "Closing") will occur on the
third business day after all of the
conditions to the Merger contained in
the Merger Agreement have been
satisfied or waived, or at such other
time as Corporate Express and Data
Documents shall reasonably agree.
See "The Merger Agreement -Conditions
to the Merger."
Conditions to the Merger............. The obligations of Corporate Express
and Data Documents to consummate the
Merger are subject to certain
conditions including: (i) obtaining
the approval of the stockholders of
Data Documents; (ii) obtaining
authorization for listing on Nasdaq,
subject to official notice of
issuance, of the Corporate Express
Common Stock to be issued in
connection with the Merger; (iii) the
expiration or termination of the
relevant waiting period under the
Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended
(the "HSR Act") and
11
<PAGE>
all other governmental waivers,
consents, orders and approvals
legally required for the consummation
of the Merger are obtained; (iv) the
effectiveness of the Registration
Statement of which this Proxy
Statement and Prospectus is a part;
(v) no order being entered in any
action or proceeding or other legal
restraint or prohibition preventing
the consummation of the Merger; (vi)
the receipt by each party of various
legal, financial and accounting
opinions, comfort letters and other
certificates, consents, reports and
approvals from the other parties to
the Merger and from third parties;
(vii) the accuracy in all material
respects of the representations and
warranties of each party and
performance in all material respects
by each party of its obligations
under the Merger Agreement; and
(viii) the absence of any material
adverse change in the business or
financial condition of Corporate
Express or Data Documents. See "The
Merger - Certain Regulatory Matters"
and "The Merger Agreement -
Conditions to the Merger."
No Solicitation...................... Data Documents has agreed that, prior
to the Effective Time, it will not
initiate or solicit any proposal or
offer to acquire the capital stock of
Data Documents and its subsidiaries
or similar actions, whether by
merger, purchase of assets, tender
offer or otherwise. See "The Merger
- No Solicitation."
Termination, Amendment and Waiver.... The Merger Agreement may be
terminated at any time prior to the
Effective Time by mutual consent of
Corporate Express and Data Documents
or, generally, by either party if (i)
the Merger shall not have been
completed by December 31, 1997, (ii)
the Merger is enjoined by court
order, (iii) either party fails to
perform in any material respect any
of its covenants under the Merger
Agreement or (iv) Data Documents'
stockholders fail to approve the
Merger. In addition, either
Corporate Express or Data Documents
may extend the time for performance
of any of the obligations of the
other party or may waive conditions
with respect to those obligations.
Data Documents may terminate the
Merger Agreement in connection with
consummating an alternative
Acquisition Transaction (as
hereinafter defined) or upon certain
changes in the value of Corporate
Express Common Stock. See "The
Merger Agreement - Termination,
Amendment and Waiver."
Expenses............................. In general, each party will bear its own
expenses in connection with the Merger,
however Corporate Express will pay for
fees and expenses relating to the
printing, filing and mailing of the
Proxy Statement and Prospectus if the
Merger is consummated. See "Merger
Agreement -- Additional Agreements --
Expenses and Fees."
Appraisal Rights .................... Data Documents stockholders will not
be entitled to any appraisal or
dissenters' rights under the Delaware
General Corporation Law in connection
with the Merger. See "The Merger -
Rights of Dissenting Stockholders."
Certain Regulatory Matters........... Consummation of the Merger is subject
to the expiration or termination of
the relevant waiting period under the
HSR Act.
12
<PAGE>
Corporate Express and Data Documents
believe that the Merger can be
effected in compliance with any other
applicable federal and state
regulations, although no assurance
can be given to that effect. See
"The Merger - Certain Regulatory
Matters."
Certain Federal Income
Tax Consequences.................... The Merger is intended to qualify as
a tax-free reorganization for federal
income tax purposes so that no gain
or loss would be recognized by
Corporate Express or Data Documents,
and no gain or loss would be
recognized by Data Documents
stockholders, except in respect of
cash received for fractional shares.
Consummation of the Merger is
conditioned upon there being
delivered to Data Documents an
opinion of counsel prior to the
Closing to the effect that the Data
Documents stockholders will recognize
no gain or loss for federal income
tax purposes as a result of the
consummation of the Merger, except to
the extent cash is received in lieu
of fractional shares. See "The
Merger - Certain Federal Income Tax
Consequences."
Anticipated Accounting
Treatment........................... The Merger is intended to qualify as
a "pooling of interests" for
accounting and financial reporting
purposes. Consummation of the Merger
is conditioned upon there being
delivered prior to the Closing a letter
from Coopers & Lybrand L.L.P., certified
public accountants to Corporate Express
stating that the Merger will qualify as
a pooling-of-interests transactions and
a letter from Deloitte & Touche L.L.P.,
independent public accountants to Data
Documents stating that Data Documents
has not taken any action that would
affect the ability to account for the
Merger as a pooling-of-interests
transaction for financial accounting
purposes. See "The Merger - Anticipated
Accounting Treatment."
Interests of Certain
Persons in the Merger............... In considering the recommendation of
the Data Documents Board of Directors
with respect to the Merger, Data
Documents stockholders should be
aware that certain members of the
Data Documents Board of Directors who
are also employees of Data Documents,
have interests in the Merger and may
be entitled to receive non-qualified
options of Corporate Express Common
Stock upon consummation of the
Merger. See "The Merger - Interests
of Certain Persons in the Merger" for
a description of such arrangements.
13
<PAGE>
Comparative Historical and Pro Forma Per Share Data
The following summary presents selected comparative per share information
for (i) Corporate Express on an historical basis in comparison with pro forma
information giving effect to the Merger on a pooling-of-interests basis, and
(ii) Data Documents on an historical basis in comparison with its pro forma
equivalent information after giving effect to the Merger, including the receipt
of the Corporate Express Common Stock for the Data Documents Common Stock in
accordance with the Merger. The pro forma financial information should be read
in conjunction with the historical financial statements of Corporate Express and
Data Documents and the related notes thereto contained elsewhere herein or
incorporated herein by reference, and in conjunction with the unaudited pro
forma financial information appearing elsewhere in this Proxy Statement and
Prospectus.
The following information is not necessarily indicative of the combined
results of operations or combined financial position that would have resulted
had the Merger been consummated at the beginning of the periods indicated, nor
is it necessarily indicative of the combined results of operations in future
periods or future combined financial position. Corporate Express and Data
Documents have never paid cash dividends on their respective common stock. See
"--Dividend Policy."
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Six Months
March 1, March 2, February 25, Ended
1997 1996 1995 August 30, 1997
---------- ---------- ------------- ---------------
<S> <C> <C> <C> <C>
Pro Forma income from continuing
operations per common and common
equivalent share:
Corporate Express historical... $0.31 $0.06 $0.19 $0.18
Corporate Express and Data
Documents combined............ 0.35 0.10 0.18 0.21
<CAPTION>
Years Ended December 31, Six Months Ended
1996 1995 1994 June 30, 1997
---- ---- ---- -------------
<S> <C> <C> <C> <C>
Data Documents historical...... $1.05 $0.61 $0.13(2) $0.56
Data Documents pro forma
equivalent(1)................. 0.35 0.10 0.18 0.21
<CAPTION>
March 1, 1997 August 30, 1997
------------- ---------------
<S> <C> <C>
Stockholders' equity per common equivalent share:
Corporate Express historical......................... $5.33 $5.48
Corporate Express and Data Documents combined........ 5.20 5.37
<CAPTION>
December 31, 1996 June 30, 1997
----------------- -------------
<S> <C> <C>
Data Documents historical............................ $3.79 $4.35
Data Documents pro forma equivalent(3)............... 5.17 5.37
</TABLE>
14
<PAGE>
(1) Represents the Corporate Express and Data Documents combined pro forma
income from continuing operations per common and common equivalent
share multiplied by the Exchange Ratio.
(2) Represents the Data Documents historical primary income from
continuing operations per common and common equivalent share for the
year ended December 31, 1994. The Data Documents historical fully
diluted income from continuing operations per common and common
equivalent share for the year ended December 31, 1994 is $0.11.
(3) Represents the Corporate Express and Data Documents combined
stockholders' equity per common and common equivalent share multiplied
by an assumed Exchange Ratio of 1.0. The Exchange Ratio is subject to
adjustment. See "The Merger -- Adjustments to Merger
Consideration."
15
<PAGE>
Comparative Market Data
Corporate Express Common Stock has been traded on Nasdaq under the symbol
"CEXP" since September 23, 1994. The following table sets forth, for the fiscal
quarters indicated, the high and low closing sale prices for Corporate Express
Common Stock, as reported by Nasdaq, and reflects the 50% share dividends
distributed by the Company in June 1995 and January 1997:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal 1995
First Quarter............................................ $13.33 $10.22
Second Quarter........................................... 17.17 12.67
Third Quarter............................................ 19.92 13.33
Fourth Quarter........................................... 21.09 15.42
Fiscal 1996
First Quarter............................................ 28.17 19.25
Second Quarter........................................... 30.54 21.83
Third Quarter............................................ 26.08 18.67
Fourth Quarter........................................... 23.75 16.63
Fiscal 1997
First Quarter............................................ 18.38 8.38
Second Quarter........................................... 17.88 12.63
Third Quarter (through October 8, 1997).................. 22.06 16.94
</TABLE>
As of October 8, 1997, Corporate Express Common Stock was held by
approximately 810 holders of record.
Data Documents Common Stock is traded on Nasdaq under the symbol "DDII." Data
Documents Common Stock was not listed on Nasdaq for a full quarterly period
during its fiscal year ended December 31, 1995. The following table sets forth,
for the fiscal quarters indicated, the high and low closing sales prices for
Data Documents Common Stock, as reported by Nasdaq:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal 1996
First Quarter............................................ $10.75 $7.88
Second Quarter........................................... 14.00 8.88
Third Quarter............................................ 14.00 10.13
Fourth Quarter........................................... 12.75 9.50
Fiscal 1997
First Quarter............................................ 13.00 9.13
Second Quarter........................................... 13.00 9.00
Third Quarter............................................ 21.75 11.25
Fourth Quarter (through October 8, 1997)................. 21.00 19.63
</TABLE>
As of October 8, 1997, Data Documents Common Stock was held by
approximately 66 holders of record.
16
<PAGE>
The following table sets forth the closing price per share of Corporate
Express Common Stock and Data Documents Common Stock on Nasdaq and the
equivalent per share price (as explained below) of Data Documents Common Stock
on September 9, 1997, the business day preceding public announcement of the
Merger:
<TABLE>
<CAPTION>
Market Price Corporate Express Data Documents Equivalent
Per Share At: Common Stock Common Stock Per Share Price(1)
------------ ------------ ------------ ------------------
<S> <C> <C> <C>
September 9, 1997 $19.00 $14.88 $20.00(2)
</TABLE>
- ---------------------
(1) The equivalent per share price of a share of Data Documents Common Stock
represents the closing price of a share of Corporate Express Common Stock
on such date multiplied by the Exchange Ratio of 1.1 shares of Corporate
Express Common Stock for each share of Data Documents Common Stock. The
Exchange Ratio is subject to adjustment under certain circumstances. See
"The Merger - Merger Consideration" and " - Adjustments to Merger
Consideration."
(2) In the event that the Corporate Express Stock Value is greater than $18.20,
the Exchange Ratio will be decreased to the number (expressed as a decimal
fraction) which, when multiplied by the Corporate Express Stock Value, will
equal $20.00. See "The Merger-Merger Consideration" and "-Adjustments to
Merger Consideration."
Data Documents stockholders are advised to obtain current market quotations
for Corporate Express Common Stock and Data Documents Common Stock. No assurance
can be given as to the market price of Corporate Express Common Stock or Data
Documents Common Stock at, or in the case of Corporate Express Common Stock,
after the Effective Time.
Dividend Policy
Corporate Express has not paid cash dividends since inception. It is
anticipated that Corporate Express will retain all earnings for use in the
expansion of the business and therefore does not anticipate paying any cash
dividends in the foreseeable future. Corporate Express intends to retain its
earnings to finance the expansion of its business and for general corporate
purposes. Any future payment of dividends will be at the discretion of the
Corporate Express Board of Directors and will depend upon, among other things,
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions with respect to the payment of dividends and other
relevant factors. Corporate Express' senior credit facility prohibits the
distribution of dividends without the prior written consent of the lenders.
Additionally, the indenture governing Corporate Express' 9 1/8% Senior
Subordinated Notes (the "CEI Senior Notes") prohibits any dividend which would
cause a default under such indenture or which would cause the failure to comply
with certain financial covenants.
Data Documents has not paid cash dividends on its Common Stock to date.
Because Data Documents currently intends to retain any earnings to provide funds
for the operation and expansion of its business and to repay any indebtedness,
Data Documents does not intend to pay cash dividends on Data Documents Common
Stock in the foreseeable future. Furthermore, as a holding company with no
independent operations, the ability of Data Documents to pay cash dividends will
be dependent upon the receipt of dividends or other payments from its wholly
owned subsidiary, DDI. Under the terms of the Indenture governing DDI's 13 1/2%
Senior Secured Notes (the "DDI Senior Notes"), DDI is not permitted to pay any
dividends on DDI's common stock unless certain financial ratio tests are
satisfied. In addition, DDI's current revolving credit facility contains
similar restrictions on the payment of dividends by DDI. Any determination to
pay cash dividends on Data Documents Common Stock in the future will be at the
sole discretion of Data Documents' Board of Directors.
17
<PAGE>
RISK FACTORS
In addition to other information in this Proxy Statement and Prospectus,
the following factors should be considered carefully in evaluating the proposals
to be voted on at the Special Meeting and in evaluating an investment in
Corporate Express Common Stock.
Risks Relating to Corporate Express
Rapid Expansion; Integration of Acquisitions; Dependence on Acquisitions
for Future Growth. Through numerous acquisitions completed since 1991, Corporate
Express significantly increased the scope of its operations from a regional
operation in Colorado to operations throughout the United States, Canada, the
United Kingdom, Australia, Germany, France, Italy and New Zealand. The majority
of these acquisitions have occurred since 1994. For fiscal year 1996 and fiscal
year 1997 to date, Corporate Express has completed 113 acquisitions. In fiscal
1995, Corporate Express completed 51 acquisitions. In fiscal 1994, Corporate
Express completed 26 acquisitions. There can be no assurance that Corporate
Express' management and financial controls, personnel, computer systems and
other corporate support systems will be adequate to manage the increase in the
size and scope of Corporate Express' operations and acquisition activity.
An important part of Corporate Express' strategy is to integrate its
acquisitions in North America into its operations and implement the Corporate
Express business model. Corporate Express has not fully implemented the
Corporate Express business model in many of its North American regions, which
regions generally are not performing as favorably as the regions in which the
Corporate Express business model has been implemented. There can be no assurance
that Corporate Express will be able to implement key aspects of the Corporate
Express business model in a timely manner without substantial costs, delays or
other problems. Recent acquisitions may not achieve sales, profitability or
asset productivity commensurate with Corporate Express' more mature regions. In
addition, acquisitions involve a number of special risks, including adverse
short-term effects on Corporate Express' reported operating results, the
diversion of management's attention, the dependence on retention, hiring and
training of key personnel, the amortization of acquired intangible assets and
risks associated with unanticipated problems or legal liabilities, some or all
of which could have a material adverse effect on Corporate Express' operations
and financial performance.
A major element of Corporate Express' business strategy is to continue to
pursue acquisitions that either expand or complement its business in new or
existing regions. Acquisitions have constituted, and Corporate Express expects
that acquisitions will continue to constitute in the future, a principal
component of growth in revenue and operating income. There can be no assurance
that Corporate Express will be able to identify and acquire acceptable
acquisition candidates on terms favorable to it and in a timely manner to the
extent necessary to fulfill its expansion plans. A substantial portion of
Corporate Express' capital resources could be used for these acquisitions.
Consequently, Corporate Express may require additional debt or equity financing
for future acquisitions, which additional financing may not be available on
favorable terms, if at all. The failure to complete acquisitions and continue
its expansion could have a material adverse effect on Corporate Express'
financial performance. As Corporate Express proceeds with its acquisition
strategy, it will continue to encounter the risks associated with the
integration of acquisitions described above.
International Expansion. Corporate Express acquired or made investments in
companies in Canada and Australia in calendar 1995, the United Kingdom, Germany,
France and New Zealand in calendar 1996 and Italy in calendar 1997. Over time,
Corporate Express plans to implement appropriate aspects of the Corporate
Express business model in its international operations, including creating in-
stock catalogs, consolidating warehouses,
18
<PAGE>
upgrading information systems, acquiring companies offering complementary
products and services and focusing on larger customers and national and
international accounts. Expansion into international markets may involve
additional risks relating to implementing key aspects of the Corporate Express
business model, as well as risks relating to currency exchange rates, new and
different legal, tax, accounting and regulatory requirements, difficulties in
staffing and managing foreign operations, operating difficulties and other
factors. Due to a review of competition in the Australian office products market
by the Australian Competition and Consumer Commission, future acquisitions of
office products suppliers by Corporate Express' majority-owned subsidiary,
Corporate Express Australia, may be subject to heightened regulatory scrutiny.
Expanded Product and Service Offering. Corporate Express has significantly
expanded its product and service offering through the acquisition of Richard
Young Journal, Inc. ("Young"), a computer products distributor, Delivery and UT,
same-day local delivery companies, ASAP Software Express, Inc. ("ASAP"), a
direct reseller of computer software and provider of related services, Hermann
Marketing, Inc. ("Hermann"), an advertising specialties distributor and Sofco-
Mead, Inc. ("Sofco"), a janitorial and cleaning supplies distributor. Certain
complementary products now offered by Corporate Express, such as computer
software, have lower gross profit margins than the products traditionally sold
by Corporate Express. Corporate Express intends to continue to make additions to
its product and service offering in the future. Moreover, the addition by
Corporate Express to its product and service offering presents certain risks and
uncertainties involving Corporate Express' relative unfamiliarity with these new
products and services and the market for such new products and services. There
can be no assurance that Corporate Express will be successful in developing or
integrating these or other additions, or that its existing customers will accept
such additions, to the products and services currently offered by Corporate
Express.
Dependence on Systems. During 1996, Corporate Express continued the
development of its "ISIS" computer software and, on a limited basis, implemented
it for its national accounts. ISIS is being developed to incorporate three-tier
client/server architecture that is expected to permit customers and suppliers to
better communicate with Corporate Express. ISIS is intended to give Corporate
Express the ability to more readily customize its product offering, operating
procedures and customer services. This is expected to give Corporate Express the
ability to integrate various product and service offerings, enabling it to
reduce procurement costs for its customers and add value as a service provider.
There can be no assurance that Corporate Express' goals with respect to the
systems will be attained. Pending full introduction of the ISIS upgrades, which
could take longer than expected, various of Corporate Express' operations will
be dependent upon different hardware or software operating systems which may be
costly to maintain or integrate. Further, Corporate Express anticipates that
ongoing modifications to its computer systems such as the introduction of the
new release of ISIS will continue to be made in the future and such
modifications may cause disruptions in operations, delay the integration of
acquisitions, or cost more to design, implement or operate than currently
budgeted. Any such disruptions, delays or costs could have a material adverse
effect on Corporate Express' operations and financial performance.
Although Corporate Express uses computers which have been reliable to date,
it does not currently have redundant computer systems or redundant dedicated
communication lines linking one of its computers to each regional warehouse.
Corporate Express has taken precautions to protect itself from events that could
interrupt its operations, including back-up power supplies that allow its
computer system to function in the event of a power outage, off-site storage of
back-up data, fire protection, physical security systems and an early warning
detection and fire extinguishing system. Notwithstanding these precautions,
there can be no assurance that a fire, flood or other natural disaster affecting
Corporate Express' system or its dedicated communication line would not disable
the system or prevent the system from communicating with the regional
warehouses. The occurrence of any of these events could have a material adverse
effect on Corporate Express' operations and financial performance.
19
<PAGE>
Substantial Competition. Corporate Express, in many of its product lines
and services, operates in a highly competitive environment. Corporate Express'
principal competitors in North America for office supplies and computer products
are regional and national contract stationers, including the contract stationer
operations of office products superstores, large direct resellers, privately-
held companies that generally operate in only one location, and distributors of
business software for personal computers. In the delivery services sector
Corporate Express has numerous competitors, certain of which have service
offerings which are similiar to Corporate Express' and others which provide
different types or levels of service.
Each of Corporate Express' major product and service categories are within
fragmented industries which are currently experiencing a trend toward
consolidation. Certain of Corporate Express' competitors have greater financial
resources than Corporate Express. In addition, there may be increasing
competition for acquisition candidates and there can be no assurance that
acquisitions will continue to be available on favorable terms, if at all.
Fluctuations in Quarterly Operating Results. Corporate Express' product
distribution business is subject to seasonal influences. In particular, net
sales and profits in the United States and Canada are typically lower in the
three months ending in late August due to lower levels of business activity
during the summer months. Because cost of sales includes delivery and occupancy
expenses, gross profit as a percentage of net sales may be impacted by seasonal
fluctuations in net sales and the acquisition of less efficient operations.
Quarterly results may be materially affected by the timing of acquisitions and
the timing and magnitude of acquisition assimilation costs. Therefore, the
operating results for any three month period are not necessarily indicative of
the results that may be achieved for any subsequent fiscal quarter or for a full
fiscal year.
Dependence on Key Management. Corporate Express' success will continue to
depend to a significant extent on its executive officers and other key
management. Corporate Express has entered into employment agreements with
certain executive officers. There can be no assurance that Corporate Express
will be able to retain its executive officers and key personnel or attract
additional qualified members of management in the future. In addition, the
success of certain of Corporate Express' acquisitions may depend, in part, on
Corporate Express' ability to retain management personnel of the acquired
companies. The loss of the services of any key managers could have a material
adverse effect upon Corporate Express' business.
Possible Volatility of Stock Price. The market price of Corporate Express
Common Stock has been, and can be expected to continue to be, subject to
significant fluctuations caused by variations in quarterly operating results,
litigation involving Corporate Express, announcements by Corporate Express or
its competitors, general conditions in the office products and services industry
and other factors. Since the beginning of fiscal 1996 through September 10,
1997, Corporate Express Common Stock has traded in the range of $8.38 to $30.54.
The stock market in recent years has experienced extreme price and volume
fluctuations that often have been unrelated or disproportionate to the operating
performance of publicly traded companies. These broad fluctuations may adversely
affect the market price of Corporate Express Common Stock.
20
<PAGE>
Risks Relating to Data Documents
Effect of Changes in the Business Forms Industry; Acceptance of New
Products. Historically, the business forms industry has been affected by the
price of paper, general economic conditions and changes in end-user
requirements. Paper prices represent a substantial portion of the cost of
producing business forms. During the period from May 1989 to January 1992, paper
prices decreased 33% and Data Documents passed on these reductions to its
customers, which resulted in a period of declining revenues. During the last
half of 1994, paper prices increased rapidly and, in December 1994, reached May
1989 levels. Through 1995, prices paid by Data Documents for paper rose
steadily. As in the past, these paper price increases were passed on to
customers. There can be no assurance that Data Documents will be able to pass on
all or a portion of any future increases to its customers. In addition, any
cyclical downturns in the economy could have an adverse impact on both Data
Documents and the industry. During 1996 and in the first two quarters of 1997,
Data Documents has experienced declines in paper prices. Such declines, if
passed on to Data Documents' customers, could negatively affect the Data
Documents' revenues.
Furthermore, over the last several years, the forms industry has undergone
a transition as a result of end-users' conversion from impact to laser printing
technology, which has led to decreased or shifting demand for many products,
such as stock and certain custom continuous forms and multi-part forms, while
other forms and forms-related products, such as pressure-sensitive labels and
forms for laser printers, have experienced growth. During this period, there has
also been a trend among large corporate users of Data Documents' products
towards outsourcing non-core operations such as forms management. Data Documents
has developed its Odyssey Integrated Services(R) programs partially in response
to these trends. While Data Documents has signed agreements with 50 customers
and is in various stages of installation, there can be no assurances that the
introduction of the program will prove successful or that it will be adopted by
existing or new customers.
The foregoing factors have caused and may continue to cause Data Documents
to experience period-to-period changes in net sales and operating income.
Specifically, the convergence of falling paper prices and the reduction in paper
content of business forms along with the recession of 1990-1992 adversely
affected the business forms industry in a number of ways, including by
increasing price competition. In 1992, this led to reduced operating income for
Data Documents and a net loss. No assurance can be given as to the effect of a
continuation of, or change in, these trends and business cycles on Data
Documents' business or results of operations. In addition, any delay or
inability by Data Documents to respond to changing market trends could adversely
affect Data Documents' results of operations or financial condition.
Competitive Industry. The business forms, pressure-sensitive label and
direct mail industries are highly competitive. Data Documents competes with both
national and regional manufacturers based on several factors, including price,
quality of service, turnaround time and other factors. Many of Data Documents'
competitors are larger than Data Documents and have greater financial and other
resources.
21
<PAGE>
Acquisition of Moore Labels. In July 1997, Data Documents completed its
acquisition of the capital stock of Moore Labels, a privately held pressure-
sensitive label company. While Data Documents has moved quickly to accomplish a
combination of the businesses, the consolidation of the Moore Labels operations
into the operations of Data Documents will require management time and could
result in diversion of management resources from other important matters. No
assurances can be given regarding the ultimate success of the integration of the
two companies.
Significant Leverage and Debt Service. As a result of the acquisition in
1988 of the Company by management and an investor group, and the DDI Senior
Notes, Data Documents is highly leveraged. At June 30, 1997, Data Documents had
total consolidated debt of approximately $64.9 million. This leverage may
significantly limit Data Documents' ability to withstand competitive pressure or
adverse economic conditions, make acquisitions or take advantage of business
opportunities.
Data Documents' ability to meet its debt service obligations and to comply
with the financial terms of its outstanding DDI Senior Notes and its working
capital revolving credit facility will be dependent upon its future performance,
which, in turn, will be subject to general economic conditions and to financial,
business, competitive and other factors affecting the operations of Data
Documents, many of which are beyond its control. If Data Documents is unable to
generate sufficient cash flow from operations in the future to service its debt,
it may be required to refinance all or a portion of such debt or to obtain
additional financing. However, there can be no assurance that any refinancing
would be possible or that any additional financing could be obtained.
Fluctuations in Quarterly Results. Data Documents' results of operations
may fluctuate between quarterly periods due to the effect of possible future
acquisitions, the number of shipping days in the quarter, the timing of
significant contracts, changes in raw material prices and other factors, many of
which may be beyond the control of Data Documents. Such variability in Data
Documents' results of operations could cause Data Documents' stock price to
fluctuate following the release of interim results of operations or other
information and may have a material adverse effect on Data Documents and its
stock price.
Dependence on Key Personnel. Data Documents' continued success will depend
upon its ability to retain a core group of key officers and employees. The loss
of certain key employees or Data Documents' inability to attract and retain
other qualified employees could have an adverse impact on Data Documents'
business. Data Documents does not maintain key man life insurance on any of its
key employees.
Possible Volatility of Stock Price. The stock market has from time to time
experienced extreme price and volume fluctuations which often have been
unrelated to the operating performance of particular companies. Announcements of
new products or accounts by Data Documents or its competitors, changes in
earnings estimates by analysts and economic and other external factors, as well
as period-to-period fluctuations in financial results of Data Documents, may
have a significant impact on the market price and marketability of the Common
Stock. Fluctuations or decreases in the trading price of the Common Stock may
adversely affect the liquidity of the trading market for the Common Stock and
Data Documents' ability to raise capital through future equity financing.
Risks Relating to the Merger
No Assurance of Successful Integration of Certain Operations. Corporate
Express and Data Documents have entered into the Merger Agreement with the
expectation that the Merger will result in certain benefits for the combined
company. See "The Merger - Reasons for the Merger." Achieving the anticipated
benefits of the Merger will depend in part upon whether the integration of the
two companies' business is achieved in an efficient and
22
<PAGE>
effective manner, and there can be no assurance that this will occur. The
combination of the two companies will require, among other things, coordination
of the companies' sales and marketing and research and development efforts.
There can be no assurance that integration will be accomplished on a timely
basis, or at all. The difficulties of such integration may be increased by the
necessity of coordinating geographically separated organizations. The
integration of certain operations following the Merger will require the
dedication of management resources which may distract attention from the day-to-
day business of the combined company. Failure to effectively accomplish the
integration of the two companies' operations could have a material adverse
effect on Corporate Express' results of operations and financial condition.
Exchange Ratio May Not Fully Reflect Changes in Stock Prices. The relative
stock prices of Corporate Express Common Stock and Data Documents Common Stock
at the Effective Time may vary significantly from the prices as of the date of
execution of the Merger Agreement, the date hereof or the date on which
stockholders vote on the Merger due to, among other factors, market perception
of the synergies expected to be achieved by the Merger, changes in the business,
operations or prospects of Corporate Express or Data Documents, market
assessments of the likelihood that the Merger will be consummated and the timing
thereof, and general market and economic conditions. The Exchange Ratio is fixed
within certain ranges and may not reflect a change in the value of Corporate
Express Common Stock. Additionally, the Exchange Ratio will not be adjusted to
reflect changes in the value of Data Documents Common Stock. See "The Merger-
Merger Consideration."
23
<PAGE>
THE SPECIAL MEETING
Special Meeting of Data Documents Stockholders
The Special Meeting will be held at the principal offices of Data
Documents, 4205 South 96th Street, Omaha, Nebraska on November __, 1997, at
10:00 a.m., local time, and at any adjournment or postponement thereof.
At the Special Meeting, the stockholders of Data Documents will be asked to
consider and vote upon the adoption and approval of the Merger Agreement under
which, among other things, Acquisition Sub would be merged with and into Data
Documents with Data Documents surviving the Merger. Data Documents would become
a wholly owned subsidiary of Corporate Express, and all of the issued and
outstanding shares of Data Documents Common Stock would be converted into the
right to receive, subject to and in accordance with the terms and conditions of
the Merger Agreement, an aggregate of approximately _________ shares of
Corporate Express Common Stock, and each unexpired and outstanding option or
warrant to acquire Data Documents Common Stock would be converted into an
equivalent option or warrant to acquire Corporate Express Common Stock, with
quantity and exercise price adjusted to reflect the Exchange Ratio. The Exchange
Ratio is subject to adjustment in certain circumstances described herein. A copy
of the Merger Agreement is attached hereto as Appendix I. See "The Merger -
Adjustments to the Merger Consideration."
The Data Documents Board of Directors has unanimously approved the Merger
Agreement and recommends a vote FOR approval of the Merger Agreement.
Quorum
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Data Documents Common Stock at the Special Meeting is
necessary to constitute a quorum.
Vote Required
The affirmative vote of the holders of a majority of the outstanding shares
of Data Documents Common Stock is required to approve the Merger Agreement.
Record Date; Stock Entitled to Vote
The Data Documents Board of Directors has established October 14, 1997 as
the date to determine those record holders of Data Documents Common Stock
entitled to notice of and to vote at the Special Meeting. On that date, there
were 9,957,387 shares (which includes 269,607 treasury shares) of Data Documents
Common Stock outstanding, with each share entitled to one vote with respect to
the Merger Agreement.
Voting of Proxies
Shares represented by all properly executed proxies received in time for
the Special Meeting will be voted at such meetings in the manner specified by
the holders thereof. Properly executed proxies that do not contain voting
instructions will be voted FOR approval of the Merger Agreement at the Special
Meeting. It is not expected that any matter other than that referred to herein
will be brought before the Special Meeting.
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<PAGE>
If a holder of Data Documents Common Stock does not return a signed proxy
card, his or her shares will not be voted and thus will have the effect of a
vote against the Merger Agreement at the Special Meeting. Abstentions and broker
non-votes will have the effect of a vote against the Merger Agreement at the
Special Meeting.
TO FACILITATE THE VOTING PROCESS FOR THE SPECIAL MEETING, STOCKHOLDERS OF
DATA DOCUMENTS MAY VOTE THEIR SHARES BY FACSIMILE AT THE FOLLOWING TELEPHONE
NUMBER -- (402) 339-9270.
Data Documents has agreed to use its best efforts to cause its executive
officers and employee directors to execute and deliver to Corporate Express
irrevocable proxies authorizing Corporate Express to vote all shares of Data
Documents Common Stock held by such officer or employee director, in favor of
the Merger. It is expected that such irrevocable proxies will contain provisions
for termination upon the occurrence of certain events, including (i) the
termination of the Merger Agreement in accordance with its terms and (ii) the
withdrawal by Data Documents of its approval of the Merger Agreement.
Revocation of Proxies
Any holder of Data Documents Common Stock has the unconditional right to
revoke his or her proxy at any time prior to the voting thereof at the Special
Meeting by (i) filing a written revocation with the Secretary of Data Documents
prior to the voting of such proxy, (ii) giving a duly executed proxy bearing a
later date, or (iii) attending the Special Meeting and voting in person.
Attendance by a stockholder at the Special Meeting will not itself revoke his or
her proxy.
TO FACILITATE THE VOTING PROCESS FOR THE SPECIAL MEETING, STOCKHOLDERS OF
DATA DOCUMENTS MAY REVOKE THEIR SHARES BY FACSIMILE AT THE FOLLOWING TELEPHONE
NUMBER -- (402) 339-9270.
Solicitation of Proxies
Solicitation of proxies for use at the Special Meeting may be made in
person or by mail, telephone, telecopy or telegram. Data Documents will bear the
cost of the solicitation of proxies from its stockholders, and Corporate Express
will pay the cost of printing and mailing this Proxy Statement and Prospectus in
the event that the Merger is consummated. In addition to solicitation by mail,
the directors, officers and employees of Data Documents and its subsidiaries may
solicit proxies from stockholders of Data Documents by telephone, telecopy,
telegram or in person. Data Documents has requested banking institutions,
brokerage firms, custodians, trustees, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of Data Documents Common Stock
held of record by such entities, and Data Documents will, upon the request of
such record holders, reimburse reasonable forwarding expenses. Data Documents
has retained Shareholder Communications Corporation to assist in the
solicitation process.
The Data Documents Board of Directors does not currently intend to
resolicit proxies if the Corporate Express Stock Value is less than $15.00 and
Corporate Express does not elect to increase the Exchange Ratio (or if the
Corporate Express Stock Value is less than $10.00) thereby giving Data Documents
the right to terminate the Merger. In such event the Data Documents Board will
meet to consider all relevant factors including general market conditions and
the relative performance of Corporate Express and any other material event
occurring at the time and use its business judgment to determine whether to
proceed with the Merger or terminate.
DATA DOCUMENTS STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES
WITH THEIR PROXY CARDS.
25
<PAGE>
THE MERGER
Merger Consideration
Pursuant to the Merger Agreement, at the Effective Time, Acquisition Sub
will merge with and into Data Documents. Upon consummation of the Merger, each
share of Data Documents Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares of Data Documents Common Stock owned by
Data Documents as treasury stock and shares of Data Documents Common Stock owned
by Corporate Express, Acquisition Sub or any wholly owned subsidiary of
Corporate Express or Data Documents to be canceled in accordance with the Merger
Agreement) shall be converted into 1.1 shares of Corporate Express Common Stock,
subject to adjustment in certain circumstances and each unexpired Data Documents
option and warrant to purchase Data Documents Common Stock which is outstanding
at the Effective Time shall automatically be converted into an option or warrant
to purchase a number of shares of Corporate Express Common Stock equal to the
number of shares of Data Documents Common Stock entitled to be purchased under
such option or warrant multiplied by the Exchange Ratio, at an exercise price
which is adjusted to reflect the Exchange Ratio.
Immediately after the Effective Time, the stockholders of Data Documents
will hold approximately ____% of the outstanding Corporate Express Common Stock.
The consideration to be issued to each Data Documents stockholder in the
Merger will be that number of shares of Corporate Express Common Stock which is
determined by multiplying the Exchange Ratio by the number of shares of Data
Documents Common Stock held by such Data Documents stockholder on the Closing
Date. The Exchange Ratio equals 1.1 shares of Corporate Express Common Stock for
each share of Data Documents Common Stock immediately prior to the Effective
Time, subject to adjustment under certain circumstances.
Adjustments to Merger Consideration
If the average of the closing prices of Corporate Express Common Stock as
reported on Nasdaq for the ten (10) trading days selected randomly from the
twenty (20) consecutive trading days ending five (5) trading days prior to the
Special Meeting (the "Corporate Express Stock Value") is less than $15.00, then
Corporate Express has the right to increase the Exchange Ratio to the number
(expressed as a decimal fraction) which, when multiplied by the Corporate
Express Stock Value, will equal $16.50 and the Merger shall be consummated on
the basis of such increased Exchange Ratio. In the event Corporate Express does
not elect to increase the Exchange Ratio, then Data Documents may at its option
either (i) terminate the Merger Agreement or (ii) consummate the Merger.
Notwithstanding the forgoing, even if Corporate Express does elect to increase
the Exchange Ratio, Data Documents may at its option terminate the Agreement if
the Corporate Express Stock Value is less than $10.00. The Data Documents Board
of Directors does not currently intend to resolicit proxies in the event that
the right to terminate the Agreement arises. See "The Special Meeting--
Solicitation of Proxies." In the event that the Merger is not consummated
because Corporate Express does not exercise its right to increase the Exchange
Ratio, unless the Corporate Express Stock Value is less than $13.20 per share,
then Corporate Express has agreed to pay Data Documents the sum of $3,000,000.
If the Corporate Express Stock Value is greater than $18.20, then the Exchange
Ratio will be decreased to the number (expressed as a decimal fraction) which,
when multiplied by the Corporate Express Stock Value, will equal $20.00. In no
event will the Exchange Ratio be less than one share of Corporate Express Stock
for each share of Data Documents Common Stock.
Stockholders of Data Documents may obtain the Exchange Ratio beginning five
(5) trading days prior to the Special Meeting by calling (800) ___-____.
The following tables set forth the Exchange Ratio to be applied in the
Merger assuming various Corporate Express Stock Values as set out in the first
column, with the equivalent value (in dollars per Data Documents share, rounded)
to be received for each share of Data Documents Common Stock:
<TABLE>
<CAPTION>
Corporate Express Exchange Equivalent
Stock Value ($) Ratio Value ($)
----------------- -------- ----------
<S> <C> <C>
20.50....................... 1.00 20.50
20.00....................... 1.00 20.00
19.50....................... 1.03 20.00
19.00....................... 1.05 20.00
18.50....................... 1.08 20.00
18.20....................... 1.10 20.00
17.00....................... 1.10 18.70
16.00....................... 1.10 17.60
15.00....................... 1.10 16.50
14.00....................... 1.18(*) 16.50(*)
</TABLE>
---------
(*) Corporate Express has no obligation to increase the
Exchange Ratio in the event the Corporate Express Stock Value is
less than $15.00 per share. In the event Corporate Express does
not elect to increase the Exchange Ratio, Data Documents may at
its option either (i) terminate the Merger Agreement or (ii)
consummate the Merger.
Since the actual number of shares of Corporate Express Common Stock
issuable to Data Documents stockholders in the Merger depends on the Corporate
Express Stock Value, there is no guarantee as to the number of shares or value
of the Corporate Express Common Stock that Data Documents stockholders will
received. If the Corporate Express Stock Value is greater than $18.20, the
Exchange Ratio will be adjusted such that the equivalent value to be received
for each share of Data Documents Common Stock will equal $20.00, provided,
however, that the Exchange Ratio will not be less than 1 to 1. Accordingly, if
the Corporate Express Stock Value is greater than $18.20, the Exchange Ratio
would be reduced with the result that stockholders of Data Documents would be
entitled to receive fewer shares of Corporate Express Common Stock in the
Merger. In addition, the Corporate Express Stock Value may differ from the
actual market price of the Corporate Express Common Stock reported on Nasdaq on
the date of the Special Meeting, the date of the consummation of the Merger or
the date that Data Documents stockholders actually receive their shares of
Corporate Express Common Stock after the Merger is completed.
Option Plans; Warrants
At the Effective Time and subject to registration, each option and warrant
granted by Data Documents to purchase shares of Data Documents' Stock (each, a
"Data Documents Option" or a "Data Documents Warrant") which is outstanding and
exercisable immediately prior thereto shall cease to represent a right to
acquire shares of Data Documents Common Stock and shall be converted
automatically into an option or warrant (the "Exchanged Option" or "Exchanged
Warrant") to purchase shares of Corporate Express Common Stock exercisable
until the current termination of the Data Documents Option or Data Documents
Warrant, as the case may be, without accelerated termination by virtue of the
Merger and in an amount and at an exercise price determined as provided
26
<PAGE>
below (and subject to the terms of the Data Documents' 1995 Stock Inventive Plan
or the terms of the option issued to John Bailey in connection with Data
Documents' acquisition of Cal Emblem, and the agreements evidencing such grants,
including but not limited to the accelerated vesting of any such options or
warrants which shall occur by virtue of the consummation of the Merger to the
extent required by such plans and agreements):
(a) The number of shares of Corporate Express Common Stock to be subject to
the converted options and warrants shall be equal to the product of the number
of shares of Data Documents Common Stock subject to the original options or
warrants and the Exchange Ratio, provided that any fractional shares of
Corporate Express Common Stock resulting from such multiplication shall be
rounded down to the nearest share;
(b) The exercise price per share of Corporate Express Common Stock under
the converted option or warrant shall be equal to the exercise price per share
of Data Documents Common Stock under the original option or warrant divided by
the Exchange Ratio, provided that such exercise price shall be rounded to the
nearest cent; and
(c) Corporate Express shall (i) reserve for issuance the number of shares
of Corporate Express Common Stock that will become issuable upon the exercise of
the Exchanged Options and the Exchanged Warrants and (ii) promptly after the
Effective Time, issue to each holder of an Exchanged Option and Exchanged
Warrant a document evidencing Corporate Express' assumption of Data Documents'
obligations under the Data Documents Options and Data Documents Warrants. The
Exchanged Options and the Exchanged Warrants shall have the same terms and
conditions as the Data Documents Options and the Data Documents Warrants,
respectively.
In the case of any converted options which are intended to qualify as
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")), the exercise price, the number of shares
purchasable pursuant to such options and the terms and conditions of exercise of
such options shall be determined in order to comply with Section 424(a) of the
Code. The duration and other terms of the converted option shall be the same as
the original option except that all references to Data Documents shall be deemed
to be references to Corporate Express.
Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares
The conversion of Data Documents Common Stock into Corporate Express Common
Stock will occur automatically at the Effective Time.
Promptly after the special meeting of Data Documents' stockholders at which
the Merger will be considered, ChaseMellon Shareholder Services, or another bank
or trust company designated by Corporate Express and reasonably acceptable to
Data Documents, in its capacity as Exchange Agent (the "Exchange Agent"), will
mail a transmittal form to each Data Documents stockholder. The transmittal form
will contain instructions with respect to the surrender of certificates
representing Data Documents Common Stock to be exchanged for Corporate Express
Common Stock.
DATA DOCUMENTS' STOCKHOLDERS SHOULD NOT FORWARD DATA DOCUMENTS STOCK
CERTIFICATES TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS.
DATA DOCUMENTS STOCKHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE
ENCLOSED PROXY.
No fractional shares of Corporate Express Common Stock will be issued to
any Data Documents stockholder upon consummation of the Merger. For each
fractional share that would otherwise be issued, the Exchange Agent
27
<PAGE>
will pay a cash payment equal to such fraction multiplied by the closing price
of Corporate Express Common Stock as reported on Nasdaq on the last trading day
immediately preceding the Effective Time.
Nasdaq Listing
It is a condition to the Merger that the shares of Corporate Express Common
Stock to be issued in the Merger be authorized for listing on Nasdaq, subject to
official notice of issuance.
Background of the Merger
In the ordinary course of Corporate Express' business, Corporate Express
routinely analyzes potential combinations and acquisitions of companies which
offer products or services complementary to those offered by Corporate Express
and consistent with its Corporate Supplier business model. In this regard,
Corporate Express has significantly expanded its product and service offering
through the acquisition of Young, a computer products distributor; Delivery and
UT, same-day local delivery companies; ASAP, a direct reseller of computer
software and provider of related services; Hermann, an advertising specialties
distributor; and Sofco, a janitorial and cleaning supplies distributor.
Corporate Express has indicated to the investment community on several
occasions its desire to expand its forms management business. Corporate Express'
management believes that the Merger will strengthen its current forms management
business nationwide.
On February 24, 1997, as part of its business development efforts, certain
senior officers of Jefferies & Company, Inc. ("Jefferies"), which also acts as
financial advisor to Data Documents, met with senior management of Corporate
Express in order to introduce Corporate Express to the Jefferies firm and its
service offerings. Present at the meeting were Mr. Frank Baxter, Chief Executive
Officer of Jefferies, Mr. David Eisner, Executive Vice President of Jefferies,
Mr. John Chiles, Managing Director of Corporate Finance at Jefferies, Mr. Jirka
Rysavy, Chairman and Chief Executive Officer of Corporate Express, Mr. Bob King,
Chief Operating Officer of Corporate Express and Mr. Gary Jacobs, Executive Vice
President of Corporate Development for Corporate Express. Mr. Eisner had
previously performed investment banking services for Corporate Express. Mr. King
is a director of Investment Technology Group, Inc. which is an affiliate of
Jefferies Group, Inc., the parent corporation of Jefferies. Mr. Eisner arranged
such meeting with Mr. King in order to introduce Mr. Baxter, Jefferies' Chief
Executive Officer, and Mr. Chiles, Jefferies' senior business services banker,
to Corporate Express' senior management. The purpose of the meeting was to
present Jefferies' financial advisory and underwriting capabilities. In the
normal course of discussing Jefferies' investment banking services and Corporate
Express' business operations, several companies that Jefferies had knowledge of
or relationships with, including Data Documents, were mentioned as potential
joint venture business partners or as possible candidates for a business
combination with Corporate Express.
During the February 24, 1997 meeting, Data Documents was discussed as a
possible candidate for a business combination to expand its forms management
business. Messrs. Rysavy, King and Jacobs wanted to discuss the matter further
with Corporate Express management before pursuing a meeting with Data Documents'
senior management.
On February 26, 1997, Mr. Chiles called Mr. Walter Kearns, Chief Executive
Officer of Data Documents, to inform him of the meeting with Corporate Express.
Mr. Kearns indicated he would meet with Corporate Express to discuss a potential
business relationship as a business partner in forms management with Data
Documents.
During the week of March 3, 1997, Mr. Chiles contacted Mr. King by
telephone to determine if Corporate Express management was interested in meeting
with Data Documents management. Mr. King indicated that Corporate Express
remained interested but could not arrange a meeting at that time.
On April 15, 1997, Mr. Chiles left a telephone message for Mr. King
regarding arranging a meeting between Corporate Express and Data Documents and
mentioned that another party had approached him regarding a business combination
with Data Documents. On April 25, 1997, Mr. Chiles and Mr. King spoke by
telephone during which Mr. King asked Mr. Chiles to arrange for a meeting with
Mr. Kearns in Omaha. Mr. Chiles asked Mr. Kearns if he should proceed any
further with the other party who approached him regarding a business combination
with Data Documents. Mr. Kearns said that he wished to assess the level of
interest at Corporate Express before pursuing any discussion with the other
party. As such, Mr. Chiles did not proceed any further with the other party.
On May 9, 1997, Mr. Kearns, Mr. King and Mr. Chiles met in Omaha, Nebraska
at Data Documents' principal offices. Mr. Kearns presented information and an
overview of Data Documents, and Mr. King presented information and an overview
of Corporate Express. The parties discussed the business and cultural fit
between the two companies. The parties agreed that Mr. King would review a
possible business combination with the Corporate Express senior management and
contact Mr. Kearns for a future meeting.
On June 2, 1997, Mr. Chiles, Mr. Kearns and Mr. Ray Killam, Vice President
of Data Documents, met with Messrs. Rysavy, King, Jacobs, and Mr. Sam Leno,
Executive Vice President and Chief Financial Officer of Corporate Express, at
Corporate Express' principal offices in Broomfield, Colorado. The parties each
provided an in-depth presentation on their respective company's business and
strategy.
On June 13, 1997 Data Documents signed an Engagement Letter with Jefferies
related to a business combination between Data Documents and Corporate Express.
The Engagement Letter confirmed the engagement of Jefferies as exclusive
financial advisor to Data Documents in connection with its discussions with
Corporate Express regarding a possible business combination and to render a
written opinion to the Board of Directors of Data Documents regarding the
fairness from a financial point of view of any such transaction to the
shareholders of Data Documents' Common Stock of the consideration proposed to be
paid in any such transaction.
On June 20, 1997, a due diligence meeting was held at the Omaha Airport,
Omaha, Nebraska with Messrs. King and Jacobs, and certain other members of
Corporate Express' management and Mr. Kearns, Mr. Killam and Mr. Robert Thomas,
Executive Vice President of Data Documents. A presentation of the Odyssey
Integrated Services(R) program was given by Mr. Killam and a discussion of Data
Document's financial results and accounting was held.
On June 30, 1997, Mr. Kearns received from Mr. Jacobs an initial outline of
proposed terms for a merger including due diligence requirements, conditions to
the closing of the Merger and covenants to be performed prior to closing. Under
the initial outline, the proposed exchange ratio was 1.15 shares of Corporate
Express Common Stock for each share of Data Documents Common Stock.
From June 30, 1997 to July 14, 1997, numerous telephone conversations were
held between senior management of Data Documents, including Mr. Kearns and Mr.
Thomas of Data Documents, and their legal counsel, Jefferies, and Mr. Jacobs of
Corporate Express regarding the proposed terms. On July 14, 1997, Jefferies
personnel and legal counsel to Data Documents held a due diligence meeting at
the principal offices of Corporate Express with senior management of Corporate
Express. At such due diligence meeting, Jefferies was provided with actual
results for Corporate Express' first quarter and its fiscal 1997 operating plan.
Jefferies subsequently forwarded such projections to the management of Data
Documents on July 15, 1997. Projections regarding Data Documents for 1997, 1998
and 1999 were delivered to Corporate Express on July 17, 1997. Additional
information was exchanged between the two companies during the following weeks
in the normal course of due diligence.
At a regularly scheduled meeting of the Corporate Express Board of
Directors held on July 17, 1997 (which was also attended by Mr. Jacobs), Mr.
Rysavy advised the Directors of the discussions with Mr. Kearns and Jefferies
about the possibility of a combination between the two companies. In addition,
Mr. Jacobs distributed to the Directors certain publicly available information
about Data Documents, including annual, quarterly and current reports filed with
the Commission, reports prepared by securities analysts, and a draft proposal
letter regarding the Merger. Following a brief discussion, the Corporate Express
Board of Directors authorized management to proceed with discussions with
management of Data Documents and to retain counsel and an investment banker to
assist with the evaluation of a possible transaction.
On July 23, 1997, Corporate Express and Data Documents entered into a
letter of understanding regarding the proposed business combination which was
based upon the Corporate Express Common Stock value at that time. The letter of
understanding included a proposed exchange ratio of 1.25 shares of Corporate
Express Common Stock for each share of Data Documents Common Stock with a
proposed collar of $12.50 to $16.50 per share for the Corporate Express Common
Stock, outside of which the exchange ratio would be adjusted upward or downward.
The letter of understanding also contained provisions regarding due diligence
requirements, conditions to the closing of the Merger, covenants to be performed
prior to closing and certain employment matters.
On July 30, 1997, Jefferies presented a business and valuation analysis of
Corporate Express to the Board of Directors of Data Documents. Also on July 30,
1997, a telephone conference call was held between the Board of Directors of
Data Documents and Mr. King, Mr. Jacobs, Ms. Farver and Ronald H. Hoffman,
Director of Planning and Analysis of Corporate Express. The Data Documents Board
granted management and Jefferies the authority to continue negotiations with
Corporate Express.
On August 5, 1997, the Board of Directors of Data Documents met in New
York, New York to consider the proposed transaction and to receive Jefferies
preliminary analysis concerning the fairness of the transaction. The Board of
Directors of Data Documents authorized Jefferies and management to complete the
negotiation of a definitive Merger Agreement on the basis considered at the
meeting. In a telephone call on August 5, 1997, Mr. Jacobs informed Mr. Chiles
that Corporate Express had substantially completed its due diligence and pending
a few items was prepared to present the Merger to its Board.
On September 3, 1997, the Corporate Express Board of Directors discussed
the potential Merger at a regularly scheduled meeting (which was also attended
by Mr. Jacobs). Prior to the meeting, the Directors had been provided with a
detailed description of the proposed transaction, detailed financial and due
diligence analyses, and drafts of the Merger Agreement and S-4 registration
statement. Mr. Rysavy made a presentation to the Directors which reviewed Data
Documents history, strategic vision, revenues, major accounts, and other issues.
He also advised the Directors of the conclusions of the financial advisors
engaged by Corporate Express that the consideration to be paid by Corporate
Express pursuant to the proposed Merger Agreement was as of such date fair to
the shareholders of Corporate Express from a financial point of view. Following
a review of the transaction and the presentation of Mr. Rysavy, the Corporate
Express Board of Directors unanimously voted to approve the Merger, and to
authorize the execution and delivery of the Merger Agreement subject to Messrs.
Rysavy and Jacobs successfully negotiating a reduction in the Exchange Ratio to
levels acceptable to the Board of Directors. Mr. Rysavy was to report back to
the Directors to confirm his success in such negotiations. The Corporate Express
Board of Directors has unanimously: (i) determined that it is in the best
interest of Corporate Express and its shareholders to proceed with the Merger;
(ii) determined that the terms of the Merger are fair to the Corporate Express
shareholders; and (iii) approved the Merger.
On September 4, 1997, a conference call with Messrs. Rysavy, Jacobs,
Kearns, Thomas and Chiles was held in which Mr. Rysavy communicated the
Corporate Express Board's determination that the maximum exchange ratio
Corporate Express would pay, as a result of the increase in its stock price, was
1.1 and that the collar should be reset to a range which reflects Corporate
Express' then current stock price. The Data Documents Board members were
conferred with informally during the day of September 4. Modifications to the
transaction's structure were negotiated including a modification to the break-up
fee and a reciprocal payment by Corporate Express in certain circumstances.
On September 5, 1997, the Data Documents Board held a special meeting to
consider the proposed Merger Agreement. At this meeting, Jefferies discussed the
financial aspects of the proposed business combination and the procedures it had
undertaken to evaluate the proposal from a financial point of view and addressed
questions from members of the Board. Gibson, Dunn & Crutcher made a presentation
regarding the structure of the proposed transaction, the negotiations
surrounding the Merger Agreement and then discussed the Merger Agreement and the
exhibits and disclosure schedules thereto with the Board. Jefferies delivered
its opinion that the consideration to be received by the Data Documents
shareholders was fair to such shareholders from a financial point of view as of
such date. Following discussion of the terms of the proposed transaction
including the revised structure, the Board of Directors of Data Documents
unanimously approved the Merger Agreement, subject to certain changes and the
resolution of certain remaining issues.
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Recommendation of the Data Documents Board of Directors
For the reasons described below under "-- Reasons for the Merger," the Data
Documents Board of Directors has unanimously approved the Merger and recommends
that Data Documents stockholders vote FOR approval of the Merger Agreement.
Reasons for the Merger
Corporate Express. The Corporate Express Board of Directors believes that
the Merger with Data Documents will: (i) allow Corporate Express to offer
various additional services which are complementary to its business; (ii) create
economies of scale by allowing the combined entity to reduce duplicative
administrative functions and combine regional and national marketing programs;
(iii) create a combined entity positioned to compete more effectively on
both a strategic and financial basis; and (iv) create cross-selling
opportunities.
In reaching the conclusions discussed above, the Corporate Express Board of
Directors considered the following material factors with no particular weight of
importance for any single factor: (i) the judgment, advice and analyses of its
management; (ii) the financial condition, results of operations and cash flows
of Corporate Express and Data Documents, both on a historical and a prospective
basis; (iii) the opportunity to achieve synergies, cost reductions and operating
efficiencies that may become available to the combined enterprise as a result of
the Merger; (iv) the strategic benefits of the Merger; (v) the terms and
conditions of the Merger Agreement, which were viewed as providing an equitable
basis for the Merger from the standpoint of Corporate Express; (vi) the
historical market prices and trading information with respect to Corporate
Express Common Stock and Data Documents Common Stock; (vii) the tax effects of
the Merger on Corporate Express; and (viii) the ability to consummate the Merger
as a pooling-of-interests under generally accepted accounting principles. While
Corporate Express is unable at the present time to quantify the costs of
integrating the operations of Data Documents into its operations, Corporate
Express is in the process of estimating such costs and such estimate may be
completed on or before the consummation of the Merger.
Data Documents. The Board of Directors of Data Documents has concluded that
the Merger is fair to and in the best interests of the Data Documents
stockholders after considering financial, business, securities market and other
information available to the Board concerning Corporate Express and Data
Documents, including the investigations of Corporate Express by Data Documents'
management and consultation with Data Documents' legal, financial and business
advisors.
In reaching its conclusion to approve the Merger and to unanimously
recommend that the stockholders of Data Documents vote in favor of the Merger,
the Board of Directors considered the following material factors (in connection
with such consideration, no special weight of importance was given to any single
factor):
1. The belief of management of Data Documents that the Merger will
enhance Data Documents product offering, distribution capabilities and services
to its customers.
2. The principal terms of the Merger Agreement, which the Data Documents'
Board of Directors viewed as being reasonable to Data Documents and its
stockholders under the circumstances. In particular, the Data Documents' Board
noted that: (i) although Data Documents agreed to not solicit additional offers,
it had the ability to respond to unsolicited alternative proposals to acquire
Data Documents; (ii) the size of the breakup-fee payable under the Merger
Agreement and the circumstance that it is not payable unless Data Documents
enters into an Acquisiton Transaction with another party within twelve months
from the date of the Merger Agreement; (iii) the reciprocal nature of the
breakup-fee under certain circumstances if Corporate Express does not increase
the Merger consideration; and (iv) the generally reciprocal nature of the
representations and warranties of Data Documents and Corporate Express.
3. The Corporate Express Common Stock to be exchanged for Data Documents
Common Stock represents an ownership interest in a larger company with greater
opportunities for growth in the same industry in which Data Documents occupies a
smaller niche.
4. The opportunity to achieve economics of scale by allowing the combined
entity to consolidate operating facilities, reduce duplicative administrative
functions and to create a combined entity able to compete more effectively on
both a strategic and operating basis than Data Documents would be able to if it
were to remain independent.
5. The information presented by Jefferies at the August 5 and
September 5 meetings of the Board of Directors and the written opinion of
Jefferies dated September 5, 1997, to the effect that the Merger
consideration is fair to the Data Documents stockholders.
6. The likelihood of continued consolidation in the industry in which
Data Documents and Corporate Express operate.
7. The fact that the merger consideration represents a significant
premium above the pre-announcement market price of Data Documents Common Stock
(Based upon a pre-announcement closing market price of $14.88 and $19.00 for
Data Documents Common Stock and Corporate Express Common Stock, respectively,
the premium would be 27.7% and 40.5% based upon an Exchange Ratio of 1 to 1 and
1.1 to 1, respectively).
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Opinion of Data Documents' Financial Advisor
Data Documents engaged Jefferies to render an opinion to the Data
Documents' Board as to the fairness, from a financial point of view, to the
stockholders of Data Documents of the consideration to be received by such
stockholders pursuant to the transaction as originally contemplated by the
Merger Agreement. The Data Documents' Board selected Jefferies to render such
opinion because of Jefferies' reputation as an internationally recognized
investment banking firm. As part of its investment banking business, Jefferies
is regularly engaged in the evaluation of capital structures, the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements, financial restructurings and
other financial services.
On September 5, 1997, Jefferies delivered its oral presentation to the Data
Documents' Board and followed this presentation with a written opinion to the
Data Documents' Board, dated September 5, 1997, (the "Opinion"), to the effect
that, as of such date and based upon procedures and subject to the assumptions
set forth in the Opinion, the consideration to be received by the stockholders
of Data Documents pursuant to the Merger is fair to such stockholders from a
financial point of view. Except as set forth below, no limitations were imposed
by the Data Documents' Board on the scope of Jefferies' investigations or
procedures to be followed by it in rendering its Opinion. Jefferies was not
requested to opine as to, and the Opinion did not address, the underlying
business decision of the Data Documents' Board to proceed with or to effect the
Merger.
THE FULL TEXT OF THE OPINION, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX II TO THIS PROXY STATEMENT AND PROSPECTUS. STOCKHOLDERS OF DATA
DOCUMENTS ARE URGED TO READ THE OPINION CAREFULLY AND IN ITS ENTIRETY FOR
INFORMATION WITH RESPECT TO PROCEDURES FOLLOWED, ASSUMPTIONS MADE AND MATTERS
CONSIDERED BY JEFFERIES IN ARRIVING AT THE CONCLUSIONS EXPRESSED THEREIN. THE
SUMMARY OF THE OPINION SET FORTH IN THIS PROXY STATEMENT AND PROSPECTUS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION. THE
OPINION IS DIRECTED ONLY TO THE CONSIDERATION TO BE RECEIVED BY THE STOCKHOLDERS
OF DATA DOCUMENTS IN THE MERGER AND DOES NOT ADDRESS THE UNDERLYING BUSINESS
DECISION TO PROCEED WITH THE MERGER OR CONSTITUTE A RECOMMENDATION TO ANY
STOCKHOLDER OF DATA DOCUMENTS (OR ANY OTHER PERSON) AS TO HOW SUCH STOCKHOLDER
SHOULD VOTE AT THE SPECIAL MEETING.
The Opinion notes that: (i) the consummation of the Merger is conditioned
upon the approval of the stockholders of Data Documents, and Jefferies is not
recommending that Data Documents, the Data Documents' Board, any of its security
holders or any other person should take any specific action in connection with
the Merger; (ii) Jefferies was not requested to solicit, nor did Jefferies
solicit, any third party indications of interest in acquiring all or any part of
Data Documents, (iii) such opinion does not constitute a recommendation of the
Merger over any alternative transactions which may be available to Data
Documents, and does not address Data Documents' underlying business decision to
effect the Merger; (iv) Jefferies did not opine as to the market value of the
consideration to be received by the stockholders of Data Documents or the prices
at which any of the securities of Corporate Express may trade upon following the
consummation of the Merger; (v) Jefferies has no obligation to advise any person
of any change in any fact or matter affecting the Opinion of which Jefferies
becomes aware after the date of such Opinion; and (vi) such Opinion is for the
use of the Data Documents' Board, as one element in the Data Documents' Board's
consideration of the Merger, and may not be used for any other purpose, or
otherwise referred to, relied upon or circulated, without Jefferies' prior
written consent.
In connection with the provision of the Opinion, Jefferies, among other
things, (i) reviewed a draft of the Merger Agreement (including the schedules
and exhibits thereto) and certain financial and other information that
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was publicly available or furnished to Jefferies by Data Documents and Corporate
Express, including certain internal financial analyses, budgets, reports and
other information prepared by the respective managements of the companies; (ii)
held discussions with various members of senior management of Data Documents and
Corporate Express concerning each company's historical and current operations,
financial conditions and prospects, as well as the strategic and operating
benefits anticipated from the business combination; and (iii) conducted such
other reviews, analyses and inquiries relating to Data Documents and Corporate
Express as it considered appropriate.
In Jefferies' review and analysis in rendering the Opinion, Jefferies
relied upon, without independent investigation or verification, the accuracy,
completeness and fair presentation of all financial and other information that
was provided to Jefferies by Data Documents and Corporate Express, or that was
publicly available (including, without limitation, the information described
above and the financial projections prepared by Data Documents and Corporate
Express regarding the estimated future performance of the respective companies
before and after giving effect to the Merger). The Opinion is expressly
conditioned upon all such information (whether written or oral) being complete,
accurate and fair in all respects.
With respect to the financial projections provided by Data Documents and
Corporate Express to, and examined by, Jefferies, Jefferies noted that
projecting future results of any company is inherently subject to vast
uncertainty. However, the Data Documents' Board informed Jefferies, and
Jefferies assumed, that such projections were reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the respective managements of the companies as to the future performance of each
company. In addition, although Jefferies performed sensitivity analyses thereon
in rendering the Opinion, Jefferies assumed, with the permission of the Data
Documents' Board, that each company will perform in accordance with such
projections for all periods specified therein. Although such projections did not
form the principal basis for the Opinion, but rather constituted one of many
items that Jefferies employed, changes to such projections could affect the
Opinion. In addition, Jefferies assumed, with the permission of the Data
Documents' Board, that the Merger will be a tax-free reorganization and will be
accounted for under the "pooling of interests" method of merger accounting.
Jefferies has disclaimed any undertaking or obligation to advise any person of
any change in any fact or matter affecting the Opinion of which it becomes aware
after the date of the Opinion.
Jefferies was not requested to, and did not make any independent evaluation
or appraisal of the assets or liabilities of, nor conducted a comprehensive
physical inspection of any of the assets of, Data Documents or Corporate
Express, nor was Jefferies furnished with any such appraisals.
The Opinion is based on economic, monetary, political, market and other
conditions existing and which could be evaluated as of the date of the Opinion
(including, without limitation, then current market prices of shares of Data
Documents Common Stock and shares of Corporate Express Common Stock and the
terms of the Merger Agreement as of such date). The Opinion expressly noted that
such conditions, however, are subject to rapid and unpredictable change and such
changes could affect the conclusions expressed in the Opinion. Jefferies did not
make an independent investigation of any legal matters affecting Data Documents
or Corporate Express, and assumed the correctness of all legal and accounting
advice given to such parties and their respective boards of directors, including
(without limitation) advice as to the accounting and tax consequences of the
Merger to Data Documents, Corporate Express and the stockholders of Data
Documents.
In rendering the Opinion, Jefferies also assumed that: (i) the terms and
provisions contained in the definitive Merger Agreement (including the schedules
and exhibits thereto) will not differ from those contained in the draft of those
documents Jefferies reviewed; (ii) the conditions to the consummation of the
Merger set forth in the Merger Agreement will be satisfied without material
expense; and (iii) there is not now, and there will not as a result of the
consummation of the transactions contemplated by the Merger Agreement be, any
default, or event of default,
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under any indenture, credit agreement or other material agreement or instrument
to which Data Documents, Corporate Express or any of their respective
subsidiaries or affiliates is a party.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant methods of financial analyses and the
application of those methods to particular circumstances and, therefore, such an
opinion is not readily susceptible to summary description. Furthermore, in
arriving at the Opinion, Jefferies did not attribute any particular weight to
any analysis or factor considered by it, but rather made qualitative judgments
as to the significance of each analysis and factor. Accordingly, Jefferies'
analyses must be considered as a whole. Considering any portion of such analyses
and of the factors considered, without considering all analyses and factors,
could create a misleading or incomplete view of the process underlying the
Opinion. In its analyses, Jefferies made many assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of the merging companies. Any
estimates contained in these analyses are not necessarily indicative of actual
values or predictive of future results or values, which may be significantly
more or less favorable than as set forth therein and herein. In addition,
analyses relating to the value of businesses do not purport to be appraisals or
to reflect the prices at which businesses actually may be sold.
The following summarizes the material financial and comparative analyses
Jefferies performed in arriving at the conclusions expressed in the Opinion. The
information presented below is based on the financial condition of Data
Documents and Corporate Express as of June 30, 1997 and May 31, 1997,
respectively and share price information of Data Documents Common Stock and
Corporate Express Common Stock through the close of the market on September 4,
1997. The following does not purport to be a complete description of the
analyses performed or the matters considered by Jefferies in arriving at the
Opinion.
Jefferies noted that the aggregate implied purchase price for Data
Documents was approximately $265.7 million, which is comprised of (i) the
assumption of approximately $76.3 million (market value assuming Senior Secured
Notes price of 115.2%) in Data Documents debt and (ii) the issuance of shares of
Corporate Express Common Stock valued at approximately $189.4 million.
Analysis of Data Documents
Current Market Valuation. Jefferies examined the range of implied total
enterprise value ("Total Enterprise Value" or "TEV") of Data Documents using
its trading range over the last 52 weeks. Based on a September 4, 1997 closing
bid price of $13.625, a 52-week high price of $14.750 and a 52-week low price of
$9.000, the implied Total Enterprise Values ranged from $165.7 million to $222.8
million. Jefferies also noted that Data Documents' average trading price per
share over the last 30 days was $13.101, over the last 90 days was $12.518 and
the average over the last 180 days was $11.513.
Comparable Publicly-Traded Company Analysis. Using public information, as
part of its analysis, Jefferies calculated the implied TEV of Data Documents
based on (i) Data Documents' latest twelve months ("LTM") historical information
(the "Base Case") and (ii) "Data Documents with $5 Million in Synergies", which
assumes that as a result of the Merger, cost redundancies between Data Documents
and Corporate Express will be eliminated and that the pro forma combined company
realizes the benefits of its respective operational strengths. Jefferies
calculated these values using the multiples of TEV/LTM revenue, TEV/LTM earnings
before interest, taxes, depreciation and amortization ("EBITDA"), price/LTM
earnings per share ("EPS"), price/1997 EPS and price/1998 EPS at which five
publicly traded business forms and services companies were trading on September
4, 1997. The five comparable companies examined were: Moore Corporation, Ltd.,
The Reynolds and Reynolds Company, Standard Register Corporation, Wallace
Computer Services, Inc. and American Business Products, Inc. The resulting
multiples from these comparables were as follows: TEV/LTM Revenue (mean: 1.1x,
median: 0.9x, and range: 0.6x-1.8x); TEV/LTM EBITDA (mean: 7.4x, median; 7.1x,
and range: 5.9x-9.3x); price/LTM EPS (mean: 16.9x, median: 15.9x, and range:
13.9x-21.3x); price/1997 EPS (mean: 15.9x, median: 16.5x, and range: 13.3x-
18.1x); and price/1998 EPS (mean: 13.7x, median: 14.2x, and range: 11.4x-15.6x).
Jefferies applied the mean multiples of these five comparable
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companies to the analogous LTM June 30, 1997 statistics for Data Documents. This
analysis indicated an implied Total Enterprise Value of Data Documents of
between approximately $239.0 million and $273.0 million based on the Base Case
and of between approximately $242.7 million and $314.8 million based on Data
Documents with $5 Million in Synergies. In comparison, the Total Enterprise
Value consideration to be received by Data Documents in the Merger, based on a
Exchange Ratio of 1.1 shares of Corporate Express Common Stock for each share of
Data Documents Common Stock and a Corporate Express Common Stock closing bid
share price of $17.00 on September 4, 1997, equals approximately $265.7 million.
None of the companies used in the above analysis is identical to Data
Documents. Because of the inherent differences between the operations of Data
Documents and the comparable companies, a purely quantitative comparable company
analysis is not particularly meaningful. An appropriate use of a comparable
company analysis in this instance necessarily involves qualitative judgments
concerning, among other things, differences between the financial and operating
characteristics of Data Documents and the selected comparable companies that
could affect the public trading values of Data Documents and such companies.
Discounted Cash Flow Analysis. Jefferies applied a discounted cash flow
analysis to Data Documents' financial forecasts for fiscal years 1997 through
1999. In conducting its discounted cash flow analysis, Jefferies first
calculated the estimated future streams of cash flows that Data Documents would
produce through the year 1999. These future streams of cash flows were
calculated by taking the projected net income of Data Documents and making the
following adjustments: (i) adding back depreciation and amortization, (ii)
subtracting capital expenditures, changes in working capital, and changes in
other non-cash items, and (iii) adding back after-tax interest expense. In
addition, Jefferies applied various terminal EBITDA multiples to Data Documents'
1999 projected EBITDA for terminal valuation purposes. The terminal EBITDA
multiples used were a range from 5x to 7x EBITDA. Finally, Jefferies discounted
such cash flow streams to present values using discount rates ranging from 8.3%
to 12.3%, calculated using a weighted average cost of capital methodology for
Data Documents. Based on this discounted cash flow analysis and the projections
provided, the range of equity values for Data Documents were $125.1 million to
$216.4 million, or $12.35 to $21.36 per share. These values imply a range of
Total Enterprise Values of Data Documents of between $201.4 million to $292.7
million.
Comparable Merger and Acquisition Transaction Analysis. Jefferies reviewed
the consideration paid in the following four transactions that Jefferies
believed were the only reasonable comparable transactions completed on or after
August 1, 1995 for which sufficient public data was available as screened by
Securities Data Company (target/acquirer): DIMAC Corporation/Heritage Media
Corporation (October 1995), Duplex Products, Inc./Reynolds & Reynolds Company
(April 1996), SFI Net, Inc./U.S. Office Products Company (January 1997) and
Shade-Allied, Inc./American Pad & Paper Company (January 1997). Jefferies
analyzed the consideration paid in such transactions as a multiple of the target
companies' sales, EBITDA and earnings for the LTM period prior to the
acquisition of the target. Such analysis yielded mean multiplies of 0.9x LTM
sales, 10.5x LTM EBITDA and 13.7x LTM earnings. Jefferies compared these
multiples with the respective multiples calculated using the Total Enterprise
Value of Data Documents based on an offer price of $18.700 per share of Data
Documents Common Stock (the Exchange Ratio multiplied by the closing share price
of Corporate Express Common Stock on September 4, 1997 of $17.000 (the "Offer
Price")). These multiplies were 1.1x LTM sales, 8.2x LTM EBITDA and 9.6x LTM
earnings. Jefferies noted that each of the above targets differed from Data
Documents in certain operational respects as follows: DIMAC Corporation was
solely a direct mail company; Duplex Products, Inc. was a company with severely
poor operating performance for a number of years; SFI Net, Inc. was primarily a
distributor of business forms, as opposed to a manufacturer; and Shade-Allied,
Inc. was a manufacturer of only machine paper and certain types of printed
forms.
Because the reasons for and circumstances surrounding each of the
transactions analyzed were diverse and because of the inherent differences
between the operations of Data Documents and the companies engaged in the
selected transactions, Jefferies believes that a purely quantitative comparable
transaction analysis is not particularly meaningful. An appropriate use of a
comparable transaction analysis in this instance necessarily involves complex
considerations and qualitative judgments concerning, among other things,
differences between the characteristics
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of these transactions and the Merger that could affect the public trading value
of the companies to which Data Documents is being compared.
Leveraged Buyout/Change of Control Analysis. Jefferies examined an implied
range of Total Enterprise Values for Data Documents based on a potential
leveraged buyout of Data Documents. The analysis performed assumes that a
purchaser could leverage Data Documents by 5.0x its LTM EBITDA and then
determines the amount of cash equity that such a purchaser would be required to
infuse in order to earn a range of equity rates of return upon a sale of Data
Documents in three years. Based on a range of terminal EBITDA multiples for Data
Documents' projected 1999 EBITDA from 5.0x to 7.0x and a purchaser's required
return on equity range of 25% to 35%, the resulting implied Total Enterprise
Values of Data Documents ranged from $206.0 million to $260.2 million. Jefferies
noted that this range was less than the implied purchase price of Data Documents
of $265.7 million in the Merger.
Premiums Paid Analysis. Jefferies examined the premiums paid in all
completed acquisition transactions announced on or after July 14, 1995 with
transaction values between $100 and $500 million as screened by Securities Data
Company. The mean premiums paid in these completed transactions based on the
target's stock price one day, one week and one month prior to the announcement
were 40.6%, 43.5% and 53.3%, respectively. In the proposed Merger, the assumed
Offer Price of $18.700 per original share of Data Documents Common Stock
represents, based on the closing bid prices of $13.625 per share of Data
Documents Common Stock on September 4, 1997, $13.750 per share on August 28,
1997, and $12.500 per share on August 7, 1997, an approximate premium of 37.2%,
36.0% and 49.6%, respectively.
Summary of Analyses. Jefferies noted that the average implied Total
Enterprise Values based on the valuation methodologies performed resulted in a
range of approximately $203.0 million to $272.6 million for Data Documents. In
addition, Jefferies noted that the implied purchase price of Data Documents of
$265.7 million was at the upper end of the average valuation range.
Analysis of Corporate Express
Current Market Valuation. Jefferies examined the range of implied Total
Enterprise Values of Corporate Express using its trading range over the last 52
weeks. Based on a September 4, 1997 closing bid price of $17.000, a 52-week high
price of $26.172 and a 52-week low price of $8.250, the implied Total Enterprise
Values ranged from $1,727.3 million to $4,116.9 million.
Comparable Publicly-Traded Company Analysis. Using public information, as
part of its analysis, Jefferies calculated the implied Total Enterprise Value of
Corporate Express based on (i) Corporate Express' LTM historical information
(the "Base Case") and (ii) "Corporate Express with $5 Million in Synergies",
which assumes that as a result of the Merger, cost redundancies between Data
Documents and Corporate Express will be eliminated and that the pro forma
combined company realizes the benefits of its respective operational strengths.
Jefferies calculated these values using the multiples of TEV/LTM revenue,
TEV/LTM EBITDA, price/LTM EPS and price/1997 EPS at which four publicly traded
office products and contract stationer companies were trading on September 4,
1997. The four comparable companies examined were: Boise Cascade Office
Products, Inc., BT Office Products International, Inc., Viking Office Products,
Inc. and U.S. Office Products Company. The resulting multiples from these
comparables were as follows: TEV/LTM Revenue (mean: 0.9x, median: 0.8x, and
range: 0.3x-1.4x); TEV/LTM EBITDA (mean: 13.3x, median: 13.7x, and range:
8.2x-16.6x); price/LTM EPS (mean: 27.5x, median: 26.1x, and range: 17.1x-42.0x);
and price/1997 EPS (mean: 22.5x, median: 23.5x, and range: 13.8x-29.9x).
Jefferies applied the mean multiples of these four comparable companies to the
analogous LTM May 31, 1997 statistics for Corporate Express. This analysis
indicated an implied Total Enterprise Value of Corporate Express of between
approximately $2,051.8 million and $3,112.7 million based on the Base Case and
of between approximately $2,134.3 million and $3,112.7 million based on
Corporate Express with $5 Million in Synergies. The average of these parameters
based
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on the Base Case and Corporate Express with $5 Million in Synergies implies a
net equity value of Corporate Express of between approximately $1,859.3 million
and $1,898.5 million, or between $13.94 and $14.24 per share.
None of the companies used in the above analysis is identical to Corporate
Express. Because of the inherent differences between the operations of Corporate
Express and the comparable companies, a purely quantitative comparable company
analysis is not particularly meaningful. An appropriate use of a comparable
company analysis in this instance necessarily involves qualitative judgments
concerning, among other things, differences between the financial and operating
characteristics of Corporate Express and the selected comparable companies that
could affect the public trading values of Corporate Express and such companies.
Discounted Cash Flow Analysis. Jefferies applied a discounted cash flow
analysis to Corporate Express' financial forecasts for 1997 through 1999.
Jefferies noted that it only received one year of projections from Corporate
Express (fiscal 1997) and extrapolated out its projections for EBITDA and free
cash flow for two additional years using Corporate Express' projected five-year
average annual growth rate of 45%. In conducting its discounted cash flow
analysis, Jefferies first calculated the estimated future streams of cash flows
that Corporate Express would produce through the year 1999. These future streams
of cash flows were calculated by taking the projected net income of Corporate
Express and making the following adjustments: (i) adding back depreciation and
amortization, (ii) subtracting capital expenditures, changes in working capital,
and changes in other non-cash items, and (iii) adding back after-tax interest
expense. In addition, Jefferies applied various terminal EBITDA multiples to
Corporate Express' 1999 projected EBITDA for terminal valuation purposes. The
terminal EBITDA multiples used were a range from 8x to 10x EBITDA. Finally,
Jefferies discounted such cash flow streams to present values using discount
rates ranging from 8.8% to 12.8%, calculated using a weighted average cost of
capital methodology for Corporate Express. Based on this discounted cash flow
analysis and the projections provided, the range of equity values for Corporate
Express were $2,676.2 million to $3,917.1 million, or $20.07 to $29.38 per
share. These values imply a range of Total Enterprise Values of Corporate
Express of between $3,303.5 million to $4,544.3 million.
Summary of Analyses. Jefferies noted that the average implied Total
Enterprise Values based on the valuation methodologies performed resulted in a
range of approximately $2,360.9 million to $3,924.6 million for Corporate
Express. In addition, Jefferies noted that the implied net equity value range
for Corporate Express was between $1,733.6 million and $3,297.3 million, or
between $13.00 and $24.73 per share.
Analysis of Combined Company
Earnings Per Share Analysis. Jefferies analyzed the effects of the Merger
on the earnings per share of the combined company by comparing Corporate
Express' LTM May 31, 1997 and fiscal year 1997 projected earnings per share on a
stand-alone basis to (i) the LTM May 31, 1997 and fiscal year 1997 projected
earnings per share pro forma for the Merger with "$5 Million in Synergies"
assumed to be realized, and (ii) the LTM May 31, 1997 and fiscal year 1997
projected earnings per share pro forma for the Merger with no synergies ("No
Synergies"). For the purpose of calculating earnings per share, Jefferies
assumed that on a pro forma basis, there were approximately 134.5 million shares
of Corporate Express outstanding in fiscal year 1997. Based on these analyses,
Jefferies observed that in the Merger, the LTM May 31, 1997 and fiscal year 1997
projected earnings per share of Corporate Express Common Stock with $5 Million
in Synergies were accretive to Corporate Express' stockholders by 16.7% and
9.8%, respectively. In addition, Jefferies observed that even with No Synergies,
the Merger resulted in LTM May 31, 1997 and fiscal year 1997 projected earnings
per share of Corporate Express Common Stock that were accretive to Corporate
Express' stockholders by 11.9% and 4.9%, respectively.
Contribution Analysis. Jefferies analyzed the relative contribution of each
of Data Documents and Corporate Express to the pro forma combined company based
on the projections provided to Jefferies by Data Documents and Corporate
Express. Based on pro forma fiscal year 1997 data, Data Documents would
contribute approximately 5.9% of revenues, 6.5% of gross margin and 12.2% of
EBITDA of the combined company before taking into account any synergies that may
be achieved if the Merger were consummated. Based on data as of September 4,
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1997, Data Documents would contribute 5.6% of the market capitalization of the
combined companies. Based on the Exchange Ratio, Data Documents would receive
approximately 7.7% of the equity of Corporate Express following consummation of
the Merger. Jefferies compared the above projected contribution percentages with
the approximately 7.7% ownership that current Data Documents stockholders would
have in the combined company. Jefferies considered this analysis relevant to the
fairness to Data Documents' public stockholders from a financial point of view
of the consideration to be paid by Corporate Express in the Merger because, to
the extent that the percentage ownership of the Corporate Express shareholders
in the combined company exceeds the projected contribution by Corporate Express
to the combined operating results, the proportionate return to the Data
Documents stockholders would adversely affect the fairness of the consideration
to be paid. Conversely, to the extent that the proportionate ownership of the
Corporate Express shareholders following the Merger is lower than the
anticipated contribution of Corporate Express to the combined operating results,
the Merger could be expected to improve per share results of operations from the
perspective of current Data Documents stockholders. This would generally support
a conclusion that the transaction is fair. In addition, Jefferies noted that
although Data Documents' contribution to combined EBITDA in fiscal 1997 was
greater than its initial ownership position in the combined entity, its relative
contribution would decrease in each successive year of the projection period,
and that the growth prospects that Corporate Express brings to the combined
company mitigate any initial excess contribution by Data Documents on an EBITDA
basis. As a result, Jefferies considered the relative contribution analysis to
support its Opinion.
Based on the foregoing analyses and factors Jefferies arrived at the
Opinion; however, the summary set forth above does not propose to be a complete
description of the analysis performed and factors considered by Jefferies in
arriving at the Opinion.
Pursuant to an engagement letter dated June 13, 1997 between Data Documents
and Jefferies, as compensation for Jefferies' services in connection with its
delivery of an opinion to Data Documents with respect to the Merger, Data
Documents has paid Jefferies a fee of $250,000 (without regard to whether
Jefferies' Opinion ultimately would be favorable or unfavorable), of which such
fee is to be credited against the Advisory Fee described below, if earned. In
addition, in connection with Jefferies' role as exclusive financial advisor to
Data Documents, Data Documents will pay to Jefferies an advisory fee of 1.5% of
the Total Enterprise Value of Data Documents on the closing date, or
approximately $4.0 million, (the "Advisory Fee") upon closing of the Merger.
Data Documents has also agreed to indemnify Jefferies against certain
liabilities, including liabilities arising under the federal securities laws,
and to reimburse Jefferies promptly for all out-of-pocket expenses (including
the reasonable fees and expenses of counsel). In the ordinary course of its
business, Jefferies may actively trade the securities of Data Documents and
Corporate Express for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in those securities.
Effective Time of the Merger
Upon the terms and conditions of the Merger Agreement and in accordance
with the Delaware General Corporation Law (the "DGCL"), Acquisition Sub will be
merged with and into Data Documents at the Effective Time. The Merger will
become effective immediately when the Certificate of Merger, prepared and
executed in accordance with the relevant provisions of the DGCL, is filed with
the Secretary of State of the State of Delaware or at such time thereafter as is
provided in the Certificate of Merger. The filing of the Certificate of Merger
will be made as soon as practicable on or after the Closing.
The Closing shall take place at a location mutually agreeable to Corporate
Express and Data Documents on the third business day after satisfaction of (or
waiver in accordance with the Merger Agreement) the latest to occur of the
conditions set forth in Article VIII of the Merger Agreement, or at such other
time and place as Corporate
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Express and Data Documents shall reasonably agree (the "Closing Date"). See "The
Merger Agreement -- Conditions to the Merger."
Interests of Certain Persons in the Merger
In considering the recommendation of the Data Documents Board of Directors
with respect to the Merger, Data Documents's stockholders should be aware that
certain members of the Data Documents Board of Directors and management have
certain interests separate from their interests as holders of Data Documents
Common Stock, including those referred to below.
Upon consummation of the Merger, Corporate Express shall grant options to
purchase 400,000 shares of Corporate Express Common Stock at an exercise price
equal to the fair market value at the date of grant to certain employees
of Data Documents, as recommended to Corporate Express in writing by senior
management of Data Documents and as agreed to by the compensation committee of
the Corporate Express Board of Directors. The amounts and terms of such options
shall be consistent with the Corporate Express policies relating to stock option
grants to new employees, providing for a four-year ratable vesting schedule
beginning one year from the date of grant (2.083% per month, for months thirteen
(13) through sixty (60), inclusive, following the Effective Time). See "The
Merger Agreement -- Additional Agreements." While the exact amounts are not yet
determined or agreed upon, it is anticipated that certain members of the Data
Documents Board of Directors and other senior management will receive a
substantial percentage of such options.
The Merger Agreement provides for indemnification for a period of six years
of the officers and directors of Data Documents for any claims against such
directors and officers, in such capacities, occurring prior to the Effective
Time or arising out of transactions contemplated by the Merger Agreement. See
"The Merger Agreement -- Additional Agreements."
Certain Federal Income Tax Consequences
The Merger Agreement requires that Data Documents receive an opinion
effective as of the Closing Date, based on factual representations by Data
Documents and Corporate Express, from Gibson Dunn & Crutcher LLP, tax counsel to
Data Documents, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), that Corporate Express,
Acquisition Sub and Data Documents will each be a party to that reorganization
within the meaning of Section 368(b) of the Code and that no gain or loss will
be recognized by a stockholder of Data Documents as a result of the Merger with
respect to the shares of Data Documents Common Stock converted into Corporate
Express Common Stock, except to the extent such stockholders receive cash in
lieu of fractional shares.
An opinion of counsel is not binding on the Internal Revenue Service or on
the courts. Therefore, there can be no assurance that the Merger will constitute
a tax-free reorganization or that any of the favorable tax treatments pursuant
to a tax-free reorganization will be available to Data Documents stockholders.
Because of the complexity of the tax laws and because the tax consequences to
any particular stockholder may be affected by matters not discussed herein, each
Data Documents stockholder is advised to consult its own tax advisor concerning
the applicable federal, state and local income tax consequences of the Merger.
Assuming qualification as a tax-free reorganization under the Code, (i) no
gain or loss will be recognized by Corporate Express or its shareholders as a
result of the Merger, (ii) no gain or loss will be recognized by Data Documents
or its stockholders who receive Corporate Express Common Stock in the Merger in
exchange for their shares of Data Documents Common Stock (except to the extent
such stockholders receive cash in lieu of fractional shares), (iii) the basis of
the shares of Corporate Express Common Stock to be received by the Data
Documents stockholders in the Merger will be the same as the basis of the shares
of Data Documents Common Stock surrendered in exchange therefor and (iv) the
holding period of the shares of Corporate Express Common Stock to be received by
the Data Documents stockholders in the Merger will include the holding period of
the respective
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shares of Data Documents Common Stock exchanged therefor, provided that all
shares are held as capital assets of Data Documents stockholders at the
Effective Time.
THE DISCUSSION SET FORTH ABOVE DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN
TAX ASPECTS OF THE MERGER. THE DISCUSSION IS BASED ON CURRENTLY EXISTING
PROVISIONS OF THE CODE, EXISTING AND PROPOSED TREASURY REGULATIONS THEREUNDER
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. ALL OF THE FOREGOING ARE
SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF
THIS DISCUSSION. EACH CORPORATE EXPRESS AND DATA DOCUMENTS STOCKHOLDER SHOULD
CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES
OF THE MERGER TO HIM OR HER, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL AND FOREIGN TAX LAWS.
Anticipated Accounting Treatment
The Merger will be accounted for using the "pooling-of-interests" method of
accounting pursuant to APB 16 and published interpretations thereof. The
"pooling-of-interests" method of accounting assumes that the combining companies
have been merged from inception, and the historical financial statements for
periods prior to consummation of the Merger are restated as though the companies
had been combined from inception. The restated financial statements are adjusted
to conform the accounting policies of the separate companies. See "The Merger
Agreement -- Conditions to the Merger" and "Pro Forma Financial Information."
Corporate Express, Acquisition Sub and Data Documents each represent that
to its knowledge and based upon consultation with its independent accountants,
neither it nor any of its affiliates has taken or agreed to take any action that
would affect the ability of Corporate Express to account for the business
combination to be affected by the Merger as a pooling of interests.
Additionally, pooling-of-interests treatment is a condition to Closing. See "The
Merger Agreement - Conditions to the Merger."
Resale of Corporate Express Common Stock by Affiliates
Corporate Express Common Stock to be issued to stockholders of Data
Documents in connection with the Merger will be registered under the Securities
Act and, as such, will be freely transferable under the Securities Act, except
for shares issued to any person who may be deemed an "Affiliate" (as defined
below) of Data Documents or Corporate Express within the meaning of Rule 145
under the Securities Act ("Rule 145"). "Affiliates" are generally defined as
persons who control, are controlled by, or are under common control with Data
Documents or Corporate Express at the time of the Special Meeting (generally,
directors, executive officers and major stockholders). Affiliates of Data
Documents or Corporate Express may not sell their shares of Corporate Express
Common Stock acquired in connection with the Merger, except pursuant to an
effective registration statement under the Securities Act covering such shares
or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act. In general, under Rule 145, for
one year following the Effective Time, an Affiliate (together with certain
related persons) would be entitled to sell shares of Corporate Express Common
Stock acquired in connection with the Merger only through unsolicited "broker
transactions" or in transactions directly with a "market maker," as such terms
are defined in Rule 144 under the Securities Act. Additionally, the number of
shares to be sold by an Affiliate (together with certain related persons and
certain persons acting in concert) during such one-year period within any three-
month period for purposes of Rule 145 may not exceed the greater of 1% of the
outstanding shares of Corporate Express Common Stock or the average weekly
trading volume of such Corporate Express Common Stock during the four calendar
weeks preceding such sale. Rule 145 would remain available to Affiliates only if
Corporate Express remained current with its information filings with
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the Commission under the Exchange Act. One year after the Effective Time, an
Affiliate would be able to sell such Corporate Express Common Stock without such
manner of sale or volume limitations, provided that Corporate Express was
current with its Exchange Act information filings and such Affiliate was not
then an Affiliate of Corporate Express. Two years after the Effective Time, an
Affiliate would be able to sell such shares of Corporate Express Common Stock
without any restrictions provided such Affiliate has not been an Affiliate of
Corporate Express for at least three months prior thereto.
With certain non-material exceptions, shares of Corporate Express Common
Stock received by Affiliates of Data Documents or held by Affiliates of
Corporate Express may not be sold until Corporate Express publishes at least
thirty (30) days of the combined results of operations of Corporate Express and
Data Documents.
Certain Regulatory Matters
The HSR Act and the rules and regulations thereunder provide that certain
transactions may not be consummated until required information and materials
have been furnished to the U.S. Department of Justice ("DOJ") and the Federal
Trade Commission ("FTC") and certain waiting periods have expired or been
terminated. Corporate Express and Data Documents have made the requisite filings
in order to cause the waiting periods to commence. There can be no assurance
that the DOJ or FTC will permit the waiting periods to expire without taking
further action to examine the implications of the Merger under applicable
federal antitrust laws.
Based on information available to it, Data Documents believes that the
Merger can be effected in compliance with federal and state antitrust laws.
However, there can be no assurance that a challenge to the consummation of the
Merger on antitrust grounds will not be made or that, if such a challenge were
made, Corporate Express and Data Documents would prevail or would not be
required to accept certain conditions, possibly including certain divestitures
in order to consummate the Merger.
Rights of Dissenting Stockholders
Data Documents stockholders will not be entitled to any appraisal or
dissenters' rights under applicable state law in connection with the Merger.
Comparison of Stockholder Rights
Prior to the Effective Time, the rights of Data Documents stockholders are
governed by the DGCL, the Data Documents Certificate of Incorporation (the "Data
Documents Certificate") and the Data Documents By-Laws (the "Data Documents By-
Laws"). At the Effective Time, the stockholders of Data Documents will become
shareholders of Corporate Express, a corporation governed by Colorado law, the
Corporate Express Articles of Amendment and Restatement (the "Corporate Express
Articles") and the Corporate Express By-Laws (the "Corporate Express By-Laws").
The following discussion summarizes the material differences between the rights
of holders of the Data Documents Common Stock and holders of the Corporate
Express Common Stock. The following summarizes certain provisions of the DGCL,
the Colorado Business Corporation Act (the "CBCA"), the Corporate Express
Articles and the Corporate Express By-Laws, the Data Documents Certificate and
the Data Documents By-Laws.
General. The DGCL and the interpretations of those laws by Delaware courts
is generally more comprehensive and more developed than the CBCA and the
interpretation of those laws by Colorado courts. The DGCL is more frequently
updated and revised to meet changes in the business environment. The CBCA
replaced the Colorado
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Corporation Code effective July 1, 1994 and is a modern, updated corporation
statute. Corporate Express does not believe that it has been impeded in
operating its business under the CBCA.
Voting Groups. Under the CBCA, Corporate Express shareholders are entitled
to vote in voting groups in certain circumstances. A voting group consists of
all the shares of one or more classes or series that, under the Corporate
Express Articles or under the CBCA, are entitled to vote and be counted together
collectively on a matter at a meeting of shareholders. If multiple voting groups
are entitled to vote on a matter, favorable action on the matter is taken only
when it is duly approved by each such voting group. Although the Corporate
Express Common Stock is the only issued and outstanding voting stock of
Corporate Express and the Corporate Express Articles do not provide for voting
by voting groups, any other class or series of capital stock that may be issued
by Corporate Express in the future is entitled to vote separately as a voting
group under the CBCA in connection with certain amendments to the Corporate
Express Articles and certain plans of merger and share exchange. See "-
Amendments to Corporate Express Articles and Data Documents Certificate."
The DGCL has no equivalent provisions for voting groups.
Amendments to Corporate Express Articles and Data Documents Certificate.
Under the CBCA, an amendment to the Corporate Express Articles (with certain
exceptions for routine amendments) must be proposed by the Corporate Express
Board of Directors or the holders of shares representing at least ten percent
(10%) of all of the votes entitled to be cast on the amendment, and must then be
approved by the holders of a majority of the votes cast within the voting groups
entitled to vote on the amendment.
Under the CBCA, all of the holders of Corporate Express Common Stock, and
each holder of shares of an affected class or series of stock, if any, voting in
separate voting groups, are entitled to vote on any amendment of the Corporate
Express Articles that would (i) increase or decrease the aggregate number of
authorized shares of the class or series; (ii) effect an exchange or
reclassification of all or part of the shares of the class or series into shares
of another class or series; (iii) effect an exchange or reclassification, or
create the right of exchange, of all or part of the shares of another class or
series into shares of the class or series; (iv) change the designation,
preferences, limitations, or relative rights of all or part of the shares of the
class or series; (v) change the shares of all or part of the class or series
into a different number of shares of the same class or series; (vi) create a new
class of shares having rights or preferences with respect to distributions or
dissolution that are prior, superior or substantially equal to the shares of the
class or series; (vii) increase the rights, preferences, or number of authorized
shares of any class or series that, after giving effect to the amendment, have
rights or preferences with respect to distributions or to dissolution that are
prior, superior, or substantially equal to the shares of the class or series;
(viii) limit or deny an existing preemptive right of all or part of the shares
of the class or series; or (ix) cancel or otherwise affect rights to
distributions or dividends that have accumulated but have not yet been declared
on all or part of the shares of the class or series.
Under the DGCL and the Data Documents Certificate, amendments to the Data
Documents Certificate must be adopted by the Data Documents Board of Directors
and must then be approved by the holders of a majority of the voting power of
the outstanding shares of stock entitled to vote thereon. The DGCL requires the
approval of a majority of the outstanding shares of a class of stock, voting as
a separate class, for any amendment that changes the number of authorized shares
of that class, changes the par value of that class or adversely affects the
powers, preferences or special rights of that class.
Amendments to By-Laws. As permitted under the CBCA, the Corporate Express
By-Laws provide that the
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Corporate Express By-Laws may be amended, supplemented or repealed by the
Corporate Express Board of Directors.
As permitted under the DGCL, the Data Documents Certificate provides that
the Data Documents By-Laws may be adopted, amended, or repealed by the Data
Documents Board of Directors.
Vote Required for Merger and Certain Other Transactions. Under the CBCA,
except for certain specific situations, whole shareholder approval is not
required, a plan of merger or share exchange or a transaction involving the
sale, lease, exchange or other disposition of all or substantially all of
Corporate Express' property, other than in the usual and regular course of
business, must be adopted by the Corporate Express Board of Directors and then
approved by each voting group entitled to vote separately on such plan, share
exchange or transaction by the holders of a majority of all the votes entitled
to be cast on such plan, share exchange or transaction by that voting group;
provided, however, that unless the articles of incorporation of a corporation
that was in existence on June 30, 1994 provide otherwise, a plan of merger or
share exchange which requires shareholder approval must be approved by two-
thirds of all votes entitled to be cast on the plan by that voting group. The
CBCA requires separate voting by voting groups (i) on a plan of merger if the
plan contains a provision that, if contained in an amendment to the Corporate
Express Articles, would require action by separate voting groups, and (ii) on a
plan of share exchange by each class or series of shares included in the share
exchange, with each class or series constituting a separate voting group.
Under the DGCL, an agreement of merger or a sale, lease or exchange of all
or substantially all of Data Documents' assets must be approved by the Data
Documents Board of Directors and then adopted by the holders of a majority of
the voting power of the outstanding shares of stock entitled to vote thereon.
Directors. The Corporate Express Articles provide that the number of
directors shall be fixed by the Corporate Express By-Laws. The Corporate Express
By-Laws provide that the Corporate Express Board of Directors shall consist of
five members.
The Data Documents Certificate provides that the number of directors shall
be fixed from time to time solely by resolution of the Data Documents Board of
Directors. The Data Documents By-Laws provide that the Data Documents Board of
Directors shall consist of not less than two nor more than seven members.
Removal of Directors. Under the Corporate Express By-Laws, a member of the
Corporate Express Board of Directors may be removed, with or without cause, by
the holders of a majority of the shares of stock entitled to vote on the
election of directors. In addition, a director may be removed by the district
court of the county in Colorado in which Corporate Express' principal or
registered office is located, in a proceeding commenced either by Corporate
Express or by shareholders holding at least ten percent of the outstanding
shares of any class, if the court finds that the director engaged in fraudulent
or dishonest conduct or gross abuse of authority or discretion with respect to
Corporate Express and that removal is in Corporate Express' best interests.
Under the DGCL and the Data Documents By-Laws, directors of Data Documents
may be removed, with or without cause, by the holders of a majority of the
voting power of the outstanding shares of stock entitled to vote thereon.
Newly Created Directorships and Vacancies. Under the CBCA and the Corporate
Express By-Laws, vacancies in the Corporate Express Board of Directors may be
filled by the affirmative vote of a majority of the directors then in office,
even if less than a quorum, and newly created directorships resulting from an
increase in the number of directors, including an increase effected by the
Corporate Express Board of Directors, may be filled by the
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affirmative vote of a majority of the directors then in office or by an election
at an annual meeting or special meeting of shareholders called for that purpose.
Under the DGCL and the Data Documents By-Laws, newly created directorships
resulting from any increase in the number of directors, including an increase
effected by the Data Documents Board of Directors, may be filled by a majority
of the directors then in office, provided that a quorum is present. Any other
vacancy on the Board may be filled by a majority of the directors then in
office, even if less than a quorum, or by a sole remaining director. Whenever
the holders of any one or more classes or series of Preferred Stock issued by
Data Documents shall have the right, voting separately by class or series, to
elect directors at an annual or special meeting of the stockholders, the
election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of the Preferred Stock Designation
applicable thereto. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Delaware Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent (10%) of the total number of the
shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in office.
Cumulative Voting. As permitted under the CBCA, the Corporate Express
Articles expressly provide that there shall be no cumulative voting in the
election of directors.
The Data Documents Certificate does not provide for cumulative voting in
the election of directors.
Limitation of Director's Liability. As permitted by both the CBCA and the
DGCL, both the Corporate Express Articles and the Data Documents Certificate
eliminate or limit the personal liability of a director to Corporate Express or
its shareholders and Data Documents or its stockholders, respectively, for
monetary damages based on such director's breach of fiduciary duty, provided
that a director's liability is not eliminated or limited for any breach of the
director's duty of loyalty to the corporation or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, for certain excess or prohibited distributions, or for any
transaction from which the director derived an improper personal benefit.
Indemnification of Directors and Officers. The CBCA and the DGCL contain
generally similar provisions for the indemnification of directors, officers,
employees and agents. The CBCA permits indemnification of a director only if the
director conducted himself or herself in good faith and reasonably believed, in
connection with conduct in an official capacity, that his or her conduct was in
the best interests of the corporation and, in all other cases, that his or her
conduct was at least not opposed to the corporation's best interests. The DGCL
permits such indemnification if the director acted in good faith and reasonably
believed that such conduct was in or not opposed to the best interests of the
corporation. The CBCA generally precludes indemnification if there is an
adjudication of liability that the director obtained an improper personal
benefit. The DGCL does not specifically deal with cases of improper personal
benefit. Neither the CBCA nor the DGCL permits a corporation to indemnify
directors against judgments in actions brought by or in the right of the
corporation in which such director was adjudged liable to the corporation, and
the DGCL extends such limitation to indemnification of officers. However, both
the CBCA and the DGCL permit indemnification for reasonable expenses in such
situations if the indemnification is ordered by a court. Both the CBCA and the
DGCL permit the corporation to advance expenses upon a written undertaking for
their repayment if the person receiving the advance is not ultimately entitled
to indemnification. In addition, the CBCA requires (i) written affirmation of a
good faith belief of having met his or her standard of conduct and (ii)
determination that facts known would not preclude indemnification. The CBCA
prohibits provisions in articles of incorporation, bylaws, or contracts that are
inconsistent with the statutory provisions, while the DGCL specifies
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that the statutory provisions are not exclusive of other rights to
indemnification or advancement of expenses that may be provided by bylaws,
agreements, votes of stockholders or disinterested directors, or otherwise.
Special Meeting of Shareholders; Action by Consent. Under the CBCA and the
Corporate Express By-Laws, a special meeting of the shareholders of Corporate
Express may be called for any purpose by the Chairman of the Corporate Express
Board of Directors, by the Corporate Express Board of Directors, by the Chief
Executive Officer or by the President of Corporate Express and must be called by
the Chairman of the Corporate Express Board of Directors at the request of the
holders of not less than ten percent (10%) of all votes entitled to be cast on
any issue proposed to be considered at such meeting. Under the CBCA, unless the
Corporate Express Articles require that action be taken at a shareholders'
meeting, any action required or permitted to be taken at a shareholders' meeting
may be taken without a meeting if all of the shareholders entitled to vote
thereon consent to such action in writing.
As permitted under the DGCL, the Data Documents By-Laws provide that
special meetings of stockholders of Data Documents may be called by the Data
Documents Board of Directors, the Chairman of the Board, the Chief Executive
Officer, the President or the holders of ten percent or more of the combined
voting power of all classes of Data Documents' capital stock. Under the DGCL,
any action required or permitted to be taken at a shareholders' meeting may be
taken without a meeting if all the shareholders entitled to vote thereon consent
to such action in writing.
Business Combinations Involving a Change of Control. Neither the CBCA, the
Corporate Express Articles nor the Corporate Express By-Laws contain any special
provisions regarding business combinations involving a change of control.
The DGCL prohibits certain transactions between a Delaware corporation, the
shares of which are listed on a national securities exchange, and an "interested
stockholder," unless the certificate of incorporation of the corporation
contains a provision expressly electing not to be governed by this prohibition.
The Data Documents Certificate does not contain such an election. An "interested
stockholder" includes a person that is directly or indirectly a beneficial owner
of fifteen percent (15%) or more of the voting power of the outstanding voting
stock of the corporation and such person's affiliates and associates. The
provision prohibits certain business combinations between an interested
stockholder and a corporation for a period of three years after the date the
interested stockholder became an interested stockholder, unless (i) the business
combination is approved by the corporation's board of directors prior to the
date such stockholder became an interested stockholder, (ii) the interested
stockholder acquired at least eighty-five percent (85%) of the voting stock of
the corporation in the transaction in which such stockholder became an
interested stockholder or (iii) the business combination is approved by a
majority of the board of directors and the affirmative vote of two-thirds of the
outstanding stock that is not owned by the interested stockholder.
Dissenters' Rights. Under the CBCA, a shareholder who complies with
prescribed statutory procedures, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of (i) consummation of a plan of merger to which Corporate Express is a
party, if approval by Corporate Express shareholders is required for the merger
or if Corporate Express were a subsidiary that was merged with its parent
corporation, (ii) consummation of a plan of share exchange to which Corporate
Express is a party as the corporation whose shares will be acquired, (iii)
consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of Corporate Express' property, if a shareholder vote is
required for such disposition under the CBCA, (iv) consummation of a sale,
lease, exchange, or other disposition of all, or substantially all, of the
property of an entity controlled by Corporate Express if Corporate Express
shareholders are entitled to vote on whether Corporate Express will consent to
the disposition; unless the shareholder's shares are listed on a national
securities exchange or on the National Market System of the National Association
of Securities
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Dealers Automated Quotation System or are held of record by more than 2,000
shareholders, provided, however, that this limitation shall not apply if the
shareholder will receive for the shareholder's shares, pursuant to the
corporation action, anything except (a) shares of the corporation surviving the
consummation of the plan of merger or share exchange, (b) shares of any other
corporation which at the effective date of the plan of merger or share exchange
either will be listed on a national securities exchange or on the National
Market System of the National Association of Securities Dealers Automated
Quotation System or will be held of record by more than 2,000 shareholders, (c)
cash in lieu of fractional shares, or (d) any combination of the shares
described in (a) and (b) or cash in lieu of fractional shares.
A shareholder is also entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of (i) a reverse split that
reduces the number of shares owned by the shareholder to a fraction of a share
or to scrip if such fractional share or scrip is to be acquired for cash or the
scrip is to be voided under the CBCA, or (ii) any corporate action, to the
extent provided by the Corporate Express By-Laws or a resolution of the
Corporate Express Board of Directors.
Generally, stockholders of a Delaware corporation who object to certain
mergers or consolidations of the corporation are entitled to appraisal rights,
requiring the surviving corporation to pay the fair value of the dissenting
shares. There are, however, no statutory rights of appraisal with respect to
stockholders of a Delaware corporation whose shares of stock are either (i)
listed on a national securities exchange or (ii) held of record by more than
2,000 stockholders. In addition, no appraisal rights shall be available for any
shares of stock of a surviving corporation in a merger if the merger did not
require the approval of the stockholders of such corporation. Further, the DGCL
does not provide appraisal rights to stockholders who dissent from the sale of
all or substantially all of the corporation's assets unless the certificate of
incorporation provides otherwise. The Data Documents Certificate does not
provide for appraisal rights upon the sale of all or substantially all of the
assets of Data Documents.
Dividends. Under the CBCA, a dividend may be paid on the Corporate Express
Common Stock unless, after payment of the dividend, (i) Corporate Express would
not be able to pay its debts as they become due in the usual course of business
or (ii) Corporate Express' total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if Corporate Express were
dissolved at the time of the distribution, to satisfy the preferential rights of
shareholders whose preferential rights are superior to those holders receiving
the dividend.
Under the DGCL, a dividend may be paid on the Data Documents Common Stock
out of either surplus (defined as the excess of net assets over capital) or if
no surplus exists, out of net profits for the fiscal year in which the dividend
is declared and/or the preceding fiscal year. Dividends may not be paid on such
stock out of surplus if the capital of Data Documents is less than the aggregate
amount of the capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets.
Stock Repurchases. Under the CBCA, Corporate Express may purchase, redeem
or otherwise acquire its own shares, unless after giving effect thereto, (i)
Corporate Express would not be able to pay its debts as they become due in the
usual course of business or (ii) Corporate Express' total assets would be less
than the sum of its total liabilities plus the amount that would be needed, if
Corporate Express were dissolved at the time of the redemption, to satisfy the
preferential rights of shareholders whose preferential rights are superior to
those holders whose shares are to be acquired.
Under the DGCL, Data Documents may purchase, redeem or otherwise acquire
its own shares. However, Data Documents may not, (i) purchase or redeem its own
shares of capital stock for cash or other property when the capital of the
corporation is impaired or when such purchase or redemption would cause any
impairment of the capital of the corporation, except that a corporation may
purchase or redeem out of capital any of its own shares
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which are entitled upon any distribution of its assets, whether by dividend or
in liquidation, to a preference over another class or series of its stock, if
such shares will be retired upon their acquisition and the capital of the
corporation reduced; or (ii) purchase, for more than the price at which they may
then be redeemed, any of its shares which are redeemable at the option of the
corporation.
Related Party Transactions. Under the CBCA, no contract or transaction
between Corporate Express and one or more of its directors or between Corporate
Express and any other corporation, partnership, association, or other
organization in which one or more of Corporate Express' directors are directors
or officers, or have a financial interest, unless the contract or transaction is
between Corporate Express and an entity that owns, directly or indirectly, all
of the outstanding shares of Corporate Express or all of the outstanding shares
or other equity interests of which are owned, directly or indirectly, by
Corporate Express, is void or voidable solely for that reason, or solely because
the director is present at or participates in the meeting of the Corporate
Express Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because such director's votes are counted for that
purpose, if: (i) the material facts as to such director's relationship or
interest and as to the contract or transaction are disclosed or are known to the
Corporate Express Board of Directors or the committee, and the Corporate Express
Board of Directors or committee in good faith authorizes, approves or ratifies
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors constitute less
than a quorum; (ii) the material facts as to such director's relationship or
interest and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction is
specifically authorized, approved or ratified in good faith by a vote of the
shareholders; or (iii) the contract or transaction is fair to Corporate Express.
In addition, under the CBCA, the Corporate Express Board of Directors or a
committee thereof may not authorize a loan by Corporate Express to a Corporate
Express director or to an entity in which a Corporate Express director is a
director or officer or has a financial interest or a guaranty by Corporate
Express of an obligation of a Corporate Express director or of an obligation of
an entity in which a Corporate Express director is a director or officer or has
a financial interest, unless such entity (where an entity is involved) is one
that owns, directly or indirectly, all of the outstanding shares of Corporate
Express or all of the outstanding shares or other equity interests of which are
owned, directly or indirectly, by Corporate Express, until at least ten days
after written notice of the proposed authorization of the loan or guaranty has
been given to the holders of the Corporate Express Common Stock who would be
entitled to vote on such a transaction.
The DGCL contains provisions regarding transactions with directors and
officers that are substantially similar to those of the CBCA. In addition, the
DGCL provides that Data Documents may loan money to, or guaranty any obligation
incurred by, its officers (including those who are also directors) if, in the
judgment of the Data Documents Board of Directors, such loan or guarantee may
reasonably be expected to benefit Data Documents.
Corporate Records; Shareholder Inspection. Under the CBCA, a shareholder or
a shareholder's agent or attorney is entitled to inspect and copy, upon at least
five business days' written notice and during regular business hours at
Corporate Express' principal office, the Corporate Express Articles, the
Corporate Express By-Laws, minutes of all shareholders meetings and records of
all action taken by shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders as a group or
to the holders of any class or series of shares as a group, a list of the names
and business addresses of current directors and officers, the most recent
corporate report delivered to the Colorado Secretary of State, and certain
financial statements of Corporate Express prepared for periods ending during the
last three years. In addition, a shareholder who (i) has been a Corporate
Express shareholder for at least three months or who is a holder of at least
five percent of all of the outstanding shares of any class of Corporate Express
capital stock, (ii) makes a demand in good faith and for a purpose reasonably
related to the shareholder's interest as a shareholder, (iii) describes with
reasonable
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particularity the purpose and the records the shareholder desires to inspect,
and (iv) requests records that are directly connected with the described
purpose, or such shareholder's agent or attorney, is entitled to inspect and
copy, upon at least five business days' written notice and during regular
business hours at a reasonable location specified by Corporate Express: excerpts
from minutes or records of any Corporate Express Board of Directors meeting or
action, minutes or records of any shareholders' meeting or action, excerpts of
records of any action of a Corporate Express Board of Directors committee,
waivers of notices of any shareholder, Corporate Express Board of Directors or
Corporate Express Board of Directors committee meeting, accounting records of
Corporate Express, and records of the names and addresses of shareholders.
Under the DGCL, any stockholder of Data Documents, in person or by attorney
or other agent, may, upon written demand under oath stating the purpose thereof,
during the usual hours for business, inspect for any proper purpose, the
corporation's stock ledger, a list of its stockholders, and its other books and
records, and to make copies or extracts therefrom.
Preemptive Rights. As permitted by the CBCA, the Corporate Express Articles
provide that, unless otherwise approved by Corporate Express' Board of
Directors, Corporate Express shareholders shall have no preemptive right to
acquire additional unissued shares or securities convertible into shares or
carrying a right to acquire or subscribe to shares.
Under the DGCL, the stockholders of Data Documents do not have preemptive
rights unless specifically granted in the certificate of incorporation. The Data
Documents Certificate does not grant Data Documents stockholders preemptive
rights.
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THE MERGER AGREEMENT
The following description is qualified in its entirety by reference to the
Merger Agreement, a copy of which is attached as Appendix I to this Proxy
Statement and Prospectus and is incorporated by this reference herein.
Conditions to the Merger
The respective obligations of each party to effect the Merger are subject
to the following conditions:
Stockholder Approval. The Merger Agreement and the transactions
contemplated therein shall have been approved and adopted by the requisite vote
of the stockholders of Data Documents under applicable law and applicable
listing requirements.
Nasdaq Listing. The shares of Corporate Express Common Stock issuable in
the Merger shall have been authorized for listing on Nasdaq upon official notice
of issuance.
Other Approvals. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and all other
governmental waivers, consents, orders and approvals legally required for the
consummation of the Merger and the transactions contemplated thereby shall have
been obtained and be in effect at the Effective Time.
The Registration Statement. The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act, and no stop
order suspending such effectiveness shall have been issued and remain in effect
and no proceeding for that purpose shall have been instituted by the Commission
or any state regulatory authorities.
No Injunctions or Restraints. No preliminary or permanent injunction or
other order or decree by any federal or state court which would prevent the
consummation of the Merger shall have been issued and remain in effect.
No Actions. No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the Merger or make the consummation of the Merger illegal.
Other Consents. All required governmental consents, orders and approvals
shall have been obtained and be in effect at the Effective Time. All required
consents and approvals of lenders who have advanced $5,000,000 or more to
Corporate Express or Data Documents and lessors of material leases shall have
been obtained and be in effect at the Effective Time.
Pooling of Interests. Coopers & Lybrand L.L.P., certified public
accountants for Corporate Express and Acquisition Sub, shall have delivered a
letter addressed to Corporate Express, dated as of the Closing Date, in form and
substance reasonably satisfactory to Corporate Express, stating that the Merger
will qualify as a pooling-of-interests transaction under APB 16 and published
interpretations thereof. Deloitte & Touche LLP, certified public accountants for
Data Documents, shall have delivered a letter, dated as of the Closing Date,
addressed to Data Documents, in form and substance reasonably satisfactory to
Data Documents, stating that Data Documents has not taken any action that would
affect the ability to account for the Merger as a pooling-of-interests
transaction under APB 16 and published interpretations thereof.
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The obligation of Corporate Express and Acquisition Sub to effect the
Merger is subject to the fulfillment or waiver at or prior to the Closing of the
following additional conditions:
Performance of Obligations and Representations and Warranties of Data
Documents. Data Documents shall have performed in all material respects its
agreements contained in the Merger Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of Data
Documents contained in the Merger Agreement shall be true and correct in all
respects on and as of the date made and on and as of the Closing Date as if made
at and as of such date, and Corporate Express shall have received a Certificate
of the President and Chief Executive Officer or of a Vice President of Data
Documents, in form and substance reasonably satisfactory to Corporate Express,
to that effect.
Legal Opinion. Corporate Express shall have received an opinion from Gibson
Dunn & Crutcher LLP, special counsel to Data Documents, effective as of the
Closing Date, addressing various legal matters related to the Merger.
Comfort Letters. Corporate Express shall have received "comfort" letters in
customary form and substance reasonably satisfactory to Corporate Express from
Deloitte & Touche LLP, certified public accountants for Data Documents, dated
the date of the Proxy Statement and Prospectus, the effective date of the
Registration Statement and the Closing Date (or such other date reasonably
acceptable to Corporate Express) with respect to certain financial statements
and other financial information included in the Registration Statement and any
subsequent changes in specified balance sheet and income statement items,
including total assets, working capital, total stockholders' equity, total
revenues and the total and per share amounts of net income related to Data
Documents.
No Material Changes. Since the date of the Merger Agreement, there shall
have been no changes that have, and no event or events shall have occurred which
have resulted in or have, a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Data Documents and its subsidiaries, taken as a whole.
Governmental Waivers and Consents. All governmental waivers, consents,
orders and approvals legally required for the consummation of the Merger and the
transactions contemplated by the Merger Agreement shall have been obtained and
be in effect at the Closing Date, and no governmental authority shall have
promulgated any statute, rule or regulation which, when taken together with all
such promulgations, would materially impair the value to Corporate Express of
the Merger.
Other Agreements and Assurances. Corporate Express has received the
Affiliate Agreements and waivers and/or amendments to certain employment
agreements.
Audited Financial Statements. Corporate Express has received Data
Documents' audited consolidated financial statements for the year ended
December 31, 1996, together with an unqualified opinion from Deloitte & Touche
LLP regarding such financial statements, which financial statements shall
reflect earnings which are not materially less than the average of the published
projections of the securities analysts' which regularly follow Data Documents
and which financial statements shall reflect all normal, recurring adjustments
necessary to present fairly Data Documents' results from operations or financial
conditions.
Fairness Opinion. Corporate Express shall have received from Merrill Lynch,
Pierce, Fenner & Smith, Inc. (or other nationally recognized investment banking
firm reasonably acceptable to Corporate Express) an opinion reasonably
acceptable to Corporate Express, dated as of the date on which the Proxy
Statement and Prospectus is first distributed, to the effect that the Exchange
Ratio is fair, from a financial point of view, to Corporate Express'
shareholders, and such opinion shall not have been withdrawn. This condition
is expected to be waived by Corporate Express.
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The obligation of Data Documents to effect the Merger is subject to the
following additional conditions:
Performance of Obligations and Representations and Warranties of Corporate
Express and Acquisition Sub. Corporate Express and Acquisition Sub shall have
performed in all material respects their agreements contained in the Merger
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of Corporate Express and Acquisition Sub
contained in the Merger Agreement shall be true and correct in all respects on
and as of the date made and on and as of the Closing Date as if made at and as
of such date, and Data Documents shall have received a certificate of the
Chairman of the Board and Chief Executive Officer, the President or a Vice
President of Corporate Express and of the President and Chief Executive Officer
or a Vice President of Acquisition Sub to that effect.
Legal Opinions. Data Documents shall have received an opinion of Gibson
Dunn & Crutcher LLP, special counsel to Data Documents, in form and substance
reasonably satisfactory to Data Documents, effective as of the Closing Date and
based on representations of Corporate Express and Acquisition Sub, to the effect
that (i) the Merger of Acquisition Sub with and into Data Documents pursuant to
the Merger Agreement and applicable State law will be treated for United States
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code; (ii) Corporate Express, Acquisition Sub and Data
Documents will each be a party to the reorganization within the meaning of
Section 368(b) of the Code; and (iii) stockholders of Data Documents will not
recognize gain or loss as a result of the Merger, except to the extent such
stockholders receive cash in lieu of fractional shares and such opinion shall
not have been withdrawn or modified in any material respect. In addition, Data
Documents shall have received an opinion or opinions from Ballard Spahr Andrews
& Ingersoll, special counsel to Corporate Express and Acquisition Sub, dated the
Closing Date, reasonably satisfactory to Data Documents and addressing various
legal matters related to the Merger.
Comfort Letters. Data Documents shall have received "comfort" letters in
customary form from Coopers & Lybrand L.L.P., certified public accountants for
Corporate Express and Acquisition Sub, dated the date of this Proxy Statement
and Prospectus, the effective date of the Registration Statement and the Closing
Date (or such other date reasonably acceptable to Data Documents) with respect
to certain financial statements and other financial information included in the
Registration Statement and any subsequent changes in specified balance sheet and
income statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts of net
income related to Corporate Express.
No Material Changes. Since the date of the Merger Agreement, there shall
have been no changes that have, and no event or events shall have occurred which
have resulted in or have, a material adverse change in the business, operations,
properties, assets, condition (financial or other) or results of operations of
Corporate Express and its subsidiaries, taken as a whole.
Governmental Waivers and Consents. All governmental waivers, consents,
orders, and approvals legally required for the consummation of the Merger and
the transactions contemplated thereby shall have been obtained and be in effect
at the Closing Date, and no governmental authority shall have promulgated any
statute, rule or regulation which, when taken together with all such
promulgations, would materially impair the value to Corporate Express of the
Merger.
Fairness Opinion. Data Documents shall have received from Jefferies &
Company, Inc. (or other nationally recognized investment banking firm reasonably
acceptable to Corporate Express) an opinion, dated as of the date on which this
Proxy Statement and Prospectus is first distributed to the stockholders of Data
Documents, to the effect that the consideration to be received by the
stockholders of Data Documents is fair, from a financial point of view, to the
holders of Data Documents Common Stock, and such opinion shall not have been
withdrawn.
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Other Agreements. Corporate Express shall have entered into an employment
agreement with Walter J. Kearns.
Representations and Warranties
The Merger Agreement contains various representations and warranties by
each of Corporate Express, Acquisition Sub and Data Documents relating to, among
other things, (i) organization and qualification to do business,
(ii) capitalization, (iii) subsidiaries, (iv) authority to enter into the
Merger; non-contravention of laws or governing documents and regulatory
approvals, (v) reports and financial statements, (vi) absence of undisclosed
liabilities, (vii) absence of certain changes or events, (viii) litigation,
(ix) the Registration Statement and this Proxy Statement and Prospectus, (x) no
violations of law, (xi) compliance with agreements, (xii) taxes, (xiii) employee
benefit plans and ERISA matters, (xiv) labor controversies, (xv) environmental
matters, (xvi) title to assets, (xvii) material agreements, (xviii) pooling-of-
interests matters and (xix) brokers, finders or investment bankers in connection
with the Merger. Data Documents makes additional representations and warranties
with respect to (i) stockholder approval, (ii) excess parachute payments,
(iii) trademarks and intellectual property, (iv) transactions with related
parties, (v) insurance and (vi) year 2000 compliance. Corporate Express and
Acquisition Sub further represent and warrant that Acquisition Sub has had no
prior activities, obligations or liabilities.
Certain Covenants
During the period from the date of the Merger Agreement and continuing
until the Closing Date, Data Documents shall, and shall cause its subsidiaries
to:
Ordinary Course. Conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice.
Changes in Stock. Not (i) amend or propose to amend their respective
charters or by-laws, (ii) split, combine or reclassify their outstanding capital
stock or (iii) declare, set aside or pay any dividend or distribution payable in
cash, stock, property or otherwise, except for the payment of dividends or
distributions by a wholly owned subsidiary of Data Documents.
Issuance of Securities. Not issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, or otherwise cause to become outstanding, any
additional shares of, or any options, warrants or rights of any kind to acquire
any shares of their capital stock of any class or any debt or equity securities
convertible into or exchangeable for such capital stock, except that Data
Documents may issue shares (i) upon conversion of convertible securities and
exercise of options outstanding on the date of the Merger Agreement; and (ii) in
connection with the certain acquisitions described in the Merger Agreement.
Other Conduct. Not (i) incur or become contingently liable with respect to
any indebtedness for borrowed money other than (X) borrowings in the ordinary
course of business or (Y) borrowings to refinance existing indebtedness, the
terms of which shall be satisfactory to Corporate Express, (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares of its capital
stock or any options, warrants or rights to acquire any of its capital stock or
any security convertible into or exchangeable for its capital stock, (iii) take
any action which would jeopardize the treatment of the Merger as a pooling of
interests under APB 16 and published interpretations thereof, (iv) take or fail
to take any action which action or failure would cause Data Documents or its
stockholders (except to the extent that any stockholders receive cash in lieu of
fractional shares) to recognize gain or loss for federal income tax purposes as
a result of the consummation of the Merger, (v) make any acquisition of any
assets or businesses other than acquisitions of assets in the ordinary course of
business, (vi) sell, pledge, dispose of or encumber any assets or businesses
other than sales
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in the ordinary course of business, or (vii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing.
Preservation of Goodwill. Use all commercially reasonable efforts to
preserve intact their respective business organizations and goodwill, keep
available the services of their respective present officers and key employees,
and preserve the goodwill and business relationships with customers and others
having business relationships with them and not engage in any action, directly
or indirectly, with the intent to adversely impact the transactions contemplated
by the Merger Agreement.
Communication with Corporate Express. Confer on a regular and frequent
basis with one or more representatives of Corporate Express to report
operational matters of materiality and the general status of ongoing operations.
No Changes in Employment Agreements. Not enter into or amend any
employment, severance, special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with any directors,
officers or key employees, except in the ordinary course and consistent with
past practice.
No Changes in Compensation Arrangements. Not adopt, enter into or amend any
bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any employee or
retiree, except as required to comply with changes in applicable law.
Maintain Insurance. Maintain with financially responsible and adequately
capitalized insurance companies insurance coverage on its assets and its
businesses in such amounts and against such risks and losses as are consistent
with past practice.
During the period from the date of the Merger Agreement and continuing
until the Closing Date, Corporate Express shall, and shall cause Acquisition Sub
to:
Ordinary Course. Conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice.
Changes in Stock. Not (i) except as necessary to consummate the
transactions contemplated by the Merger Agreement, amend or propose to amend
their respective charters or by-laws, (ii) split, combine or reclassify (whether
by stock dividend or otherwise) their outstanding capital stock, or
(iii) declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise, except for the payment of dividends or
distributions by a wholly owned subsidiary of Corporate Express.
Communication with Data Documents. Confer on a regular and frequent basis
with one or more representatives of Data Documents to report operational matters
of materiality and the general status of ongoing operations.
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No Solicitation
After the date of the Merger Agreement and prior to the Effective Time or
earlier termination of the Merger Agreement, Data Documents shall not, and shall
not permit any of its subsidiaries (including officers, directors,
representatives and agents of Data Documents and its subsidiaries) to, directly
or indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with or provide information to any corporation, partnership, person
or other entity or group except Corporate Express, concerning any merger, sale
of assets, sale of or tender offer for its common stock or similar actions (any
such transactions, an "Acquisition Transaction"). However, the Board of
Directors of Data Documents is not prevented from taking and disclosing to Data
Documents' stockholders a position contemplated by Rules 14d-9 and 14e-2 under
the Exchange Act with regard to any tender offer.
Notwithstanding the provisions in the Merger Agreement, in response to an
unsolicited written proposal with respect to an Acquisition Transaction, Data
Documents may furnish information to a financially capable corporation,
partnership, person or other entity or group (a "Potential Acquirer") pursuant
to appropriate confidentiality agreements and may participate in discussions and
negotiate with such Potential Acquirer concerning any inquiry or proposal to
acquire Data Documents in an Acquisition Transaction or negotiate with such
Potential Acquirer if (i) Data Documents shall have given not less than two (2)
business days' advance written notice to Corporate Express of Data Documents'
intention to do so, (ii) the board of directors of Data Documents is advised by
one or more of its independent financial advisors that providing information to
the Potential Acquirer is likely to lead to an Acquisition Transaction on terms
that would yield a higher value to Data Documents' stockholders than the Merger
and is in furtherance of the best interests of Data Documents' stockholders and
(iii) based upon advice of its legal counsel, its board of directors determines
in good faith, that such action is in furtherance of the best interests of Data
Documents' stockholders and that the failure to provide such information to such
Potential Acquirer would constitute a breach of its fiduciary duty to its
stockholders.
In the event Data Documents shall determine to provide any information or
negotiate as described above, or shall receive any offer of the type referred to
above, it shall (i) immediately provide Corporate Express a copy of all
information provided to the third party, (ii) promptly inform Corporate Express
that information is to be provided, that negotiations are to take place or that
an offer has been received and (iii) if a request, inquiry, proposal or offer
has been received, furnish to Corporate Express a description of the material
terms thereof and, unless the board of directors of Data Documents concluded
that such disclosure is inconsistent with its fiduciary duties under applicable
law, furnish to Corporate Express the identity of the person receiving such
information or the proponent of such offer, if applicable.
Data Documents may terminate the Merger Agreement and enter into a
definitive agreement for an Acquisition Transaction which meets the requirements
set forth above with a Potential Acquirer with which it is permitted to
negotiate, but only if (i) the independent financial advisors of the Company
shall have determined in good faith that such Acquisition Transaction would be
more favorable to Data Documents' stockholders from a financial point of view
than the Merger and is in furtherance of the best interests of Data Documents'
stockholders, (ii) Data Documents shall have furnished Corporate Express with a
copy of the definitive agreement at least five (5) business days prior to its
execution and (iii) Corporate Express shall have failed within such five (5)
business day period to offer to amend the terms of the Merger Agreement so that
the Merger would be, in the good faith determination of the Board of Directors
of Data Documents, at least as favorable to Data Documents' stockholders from a
financial point of view as the Acquisition Transaction.
52
<PAGE>
Additional Agreements
Pursuant to the Merger Agreement, Corporate Express and Data Documents have
made the following additional agreements:
Access. Corporate Express and Data Documents and their respective
subsidiaries shall each afford to the other and their respective accountants,
counsel, financial advisors and other representatives, full access to all of
their respective properties, books, contracts, commitments, records and
documents filed or received pursuant to federal or state securities laws or
filed with the Commission or which may have a material effect on their
respective businesses, properties or personnel and such other information as the
other party may reasonably request. Corporate Express and its subsidiaries, and
Data Documents and its subsidiaries, shall hold and shall use their reasonable
best efforts to cause their representatives to hold, in strict confidence all
non-public documents and information furnished to Corporate Express and
Acquisition Sub or to Data Documents, as the case may be, in connection with the
transactions contemplated by the Merger Agreement, except that such information
as may be necessary may be disclosed in connection with statutory approvals,
Data Documents stockholders' approval and as required by law or judicial or
administrative order.
Registration Statement and Proxy Statement. Corporate Express and Data
Documents will file with the Commission as soon as is reasonably practicable,
this Proxy Statement and Prospectus and shall use all reasonable efforts to have
the Registration Statement declared effective by the Commission as promptly as
practicable. Corporate Express shall also take any reasonable action required
under applicable state blue sky or securities law in connection with the
issuance of Corporate Express Common Stock pursuant to the Merger.
Stockholder Meeting. Data Documents will submit the Merger Agreement for
the approval of its stockholders at a meeting of stockholders and, subject to
the fiduciary duties of the Boards of Directors under applicable law, shall use
its reasonable best efforts to obtain stockholder approval and adoption of the
Merger Agreement and the transactions contemplated thereby.
Affiliates of the Company. Within 30 days after the Merger Agreement is
entered into, Data Documents shall identify in a letter to Corporate Express all
persons who may be deemed affiliates of Data Documents under Rule 145 of the
Securities Act ("Rule 145") and shall advise the persons identified in such
letter of the resale restrictions imposed by applicable securities laws. Data
Documents shall use its reasonable best efforts to obtain as soon as practicable
from any person who may be deemed to have become an affiliate of Data Documents
after Data Documents' delivery of the letter referred to above a written
agreement regarding Affiliate status.
Nasdaq Listing. Corporate Express shall use its reasonable best efforts to
effect, at or before the Effective Time, authorization for listing on Nasdaq,
upon official notice of issuance, of the shares of Corporate Express Common
Stock to be issued pursuant to the Merger and the shares of Corporate Express
Common Stock to be reserved for issuance upon exercise of Exchanged Options and
Exchanged Warrants.
Expenses and Fees. Data Documents and Corporate Express shall bear their
own expenses, including reasonable and customary fees and expenses payable to
attorneys, accountants and investment bankers, incurred in connection with the
Merger. In addition, Corporate Express will pay the fees and expenses incurred
in connection with the printing, filing and mailing of this Proxy Statement and
Prospectus and the HSR Act filing, provided, however, that in the event the
Merger is not consummated, the parties will share equally in such fees and
expenses. If the Merger is not consummated because either party breaches a
material representation or warranty or fails to perform a material covenant
contained in the Merger Agreement, and such breach has not been cured within
twenty (20) business days after notice by the other party thereof, and the other
party has not breached and such non-
53
<PAGE>
breaching party chooses to terminate the Merger Agreement as a direct result of
such breach or failure, the breaching party shall pay the non-breaching party
the sum of $1,000,000. Additionally, if the Merger is not consummated because
Data Documents enters into an Acquisition Transaction at any time within twelve
months of the date of the Merger Agreement, Data Documents shall pay to
Corporate Express the sum of $3,000,000, which sum shall be in lieu of the
$1,000,000 listed above. In the event that the Merger is not consummated because
Corporate Express does not exercise its right to increase the Exchange Ratio
(because of a drop in its stock price), unless Corporate Express Stock Value is
less than $13.20 per share, then Corporate Express shall pay to Data Documents
the sum of $3,000,000, which sum shall be in lieu of the $1,000,000 listed
above.
Agreement to Cooperate. Corporate Express and Data Documents will use all
reasonable efforts to take, or cause to be taken, all actions necessary to
consummate and make effective the transactions contemplated by the Merger
Agreement. Each of Corporate Express and Data Documents undertakes and agrees to
make all filings and comply with all requests related to the HSR Act.
Public Statements. Unless required by law or by obligations pursuant to any
listing agreement with the Nasdaq National Market, Corporate Express and Data
Documents (i) shall consult with each other prior to issuing any press release
or any written public statement with respect to the Merger Agreement or the
transaction contemplated thereby, and (ii) shall not issue any such press
release or written public statement prior to such consultation.
Option Plans and Warrants. Corporate Express will cause a Form S-8 to be
filed with the Commission as soon as practicable following the Effective Time,
but not later than thirty days after the Effective Time, to register the shares
of Corporate Express Common Stock underlying the Corporate Express Options
granted in replacement of Data Documents Options, or will cause such shares to
be subject to an existing Form S-8.
Pursuant to Data Documents' existing Warrant Agreement dated as of
November 28, 1994 between Data Documents and The Bank of New York (as successor-
in-interest to NationsBank of Texas, N.A.), concurrently with the consummation
of the Merger, Corporate Express shall enter into a Supplemental Warrant
Agreement and shall mail a notice describing such Supplemental Warrant Agreement
to the holders of Data Documents' warrants.
Notification. Each of Data Documents, Corporate Express and Acquisition Sub
agrees to give prompt notice to each other of, and to use its reasonable best
efforts to prevent or promptly remedy, (i) the occurrence or failure to occur or
the impending or threatened occurrence or failure to occur, of any event which
occurrence or failure to occur would be likely to cause any of its
representations or warranties in the Merger Agreement to be untrue or inaccurate
in any material respect at any time from the date hereof to the Effective Time
and (ii) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
the Merger Agreement.
Indemnification. For a period of six years after the Effective Time,
Corporate Express shall, and Corporate Express shall cause the Surviving
Corporation, to the extent permitted under Section 145 of the DGCL and to the
extent of Data Documents' indemnification prior to the Effective Time, indemnify
and hold harmless (and advance expenses to) each present and former officer,
director, previously indemnified employee and previously indemnified agent of
Data Documents and any of its subsidiaries (collectively, the "Indemnified
Parties") against any costs, expenses, judgments, fines, losses, claims,
damages, liabilities or amounts that are paid in settlement in connection with
any claim, action, suit, proceeding or investigation (a "Claim"), based in whole
or in part on the fact that such person is or was a director or officer of Data
Documents and arising out of acts or omissions occurring at or prior to the
Effective Time, or arising out of the transactions contemplated by the Merger
Agreement.
54
<PAGE>
For a period of six years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by Data Documents (or
may substitute therefore policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect to
claims arising from facts or events that occurred before the Effective Time.
In the event the Surviving Corporation or Corporate Express or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving Corporation or
Corporate Express shall assume the obligations set forth above.
Corrections. Prior to the date of approval of the Merger by Data Documents'
stockholders, each of Data Documents and Corporate Express shall promptly
correct any information provided by it to be used specifically in this Proxy
Statement and Prospectus and the Registration Statement that shall have become
false or misleading in any material respect and shall take all steps necessary
to file with the Commission and have declared effective or cleared by the
Commission any amendment or supplement to this Proxy Statement and Prospectus or
the Registration Statement so as to correct the same and to cause this Proxy
Statement and Prospectus as so corrected to be disseminated to the stockholders
of Data Documents, to the extent required by applicable law.
Employment Agreements. Following the execution of the Merger Agreement,
Data Documents will use its best efforts to cause any and all employees of Data
Documents who are parties to agreements that may provide to them cash
compensation upon a change of control (as defined therein) of Data Documents and
certain other events to execute amendments and/or waivers of the cash
compensation provisions applicable upon such a change of control in exchange for
which Corporate Express will enter into employment agreements with each such
employee of Data Documents in form and substance reasonably satisfactory to the
parties thereto.
Irrevocable Proxies. Data Documents will use its best efforts to cause its
executives officers and directors to execute and deliver to Corporate Express
irrevocable proxies authorizing Corporate Express to vote all shares of Data
Documents Common Stock which such executive officers and directors are entitled
to vote in favor of the Merger.
Grant of Options to Data Documents Employees. Upon consummation of the
Merger, Corporate Express shall grant options to purchase 400,000 shares of
Corporate Express Common Stock to certain employees of Data Documents as
recommended to Corporate Express in writing by senior management of Data
Documents and as agreed to by the compensation committee of the Corporate
Express Board of Directors. Options granted to an employee for the aggregate
purchase of 5,000 shares or less of Corporate Express Common Stock shall be
qualified as incentive stock options. Options granted to an employee for the
aggregate purchase of more than 5,000 shares of Corporate Express Common Stock
shall be non-qualified options. Corporate Express will register the shares
issuable pursuant to such options on a Form S-8 and shall use reasonable efforts
to effect authorization for listing of such shares on Nasdaq.
Tax-Free Treatment of Merger. Corporate Express, Acquisition Sub and Data
Documents shall each use its best efforts to cause the Merger to be treated as a
tax-free reorganization for federal income tax purposes.
Corporate Express' Periodic Reports Following the Merger. As soon as
practicable following the Effective Time, Corporate Express shall file with the
Commission a periodic report under the Exchange Act which contains at least
thirty (30) days of combined results of operations of Data Documents and
Corporate Express as required by ASR 135 within the time prescribed for the
filing of such report.
55
<PAGE>
Employee Benefits. Corporate Express will provide employee benefits to the
employees of Data Documents and its subsidiaries in an amount and nature
materially consistent with benefits provided to existing employees of Corporate
Express and its subsidiaries, which benefits will, to the extent practicable and
feasible, be generally comparable to existing benefits provided to Data
Documents' employees. Notwithstanding the foregoing, nothing contained in the
Merger Agreement shall be construed as requiring Corporate Express or the
Surviving Corporation to continue any specific employee benefit plans or to
continue the employment of any specific person. Corporate Express will also use
its reasonable best efforts cause each employee medical benefit plan in which
the employees of Data Documents and its subsidiaries participate from and after
the Effective Time to waive (i) any preexisting condition restriction that was
waived under the terms of any analogous plan immediately prior to the Effective
Time or (ii) any waiting period limitation that would otherwise be applicable to
an employee of Data Documents or its subsidiaries on or after the Effective Time
to the extent such employee had satisfied any similar waiting period limitation
under any analogous plan prior to the Effective Time.
Termination, Amendment and Waiver
The Merger Agreement may be terminated at any time prior to the Closing
Date, whether before or after approval by the stockholders of Data Documents,
(i) by either Data Documents or Corporate Express, (A) if the Merger is not
consummated by December 31, 1997, other than on account of delay or default on
the part of the terminating party; (B) if the Merger is enjoined by a final
unappealable court order not entered at the request or with the support of the
terminating party or any of its respective five percent (5%) stockholders,
affiliates or associates; (C) if the nonterminating party fails to perform in
any material respect any of its covenants in the Merger Agreement and does not
cure such default in all material respects within 30 days after written notice
of such default is given to the nonterminating party by the terminating party;
or (D) if the Data Documents stockholders' vote is not sufficient to approve the
Merger; and (ii) by Data Documents if (X) it determines to enter into a
qualifying Acquisition Transaction; (Y) Corporate Express does not elect to
increase the Exchange Ratio because the Corporate Express Stock Value is less
than $15.00; or (Z) the Corporate Express Stock Value is less than $10.00, even
if Corporate Express does elect to increase the Exchange Ratio.
The Merger Agreement may not be amended except by action taken by the
parties' respective Boards of Directors or duly authorized committees thereof
and then only by an instrument in writing signed on behalf of each of the
parties to the Merger Agreement and in compliance with applicable law.
At any time prior to the Effective Time, the parties to the Merger
Agreement may (a) extend the time for the performance of any of the obligations
or other acts of the other parties to the Merger Agreement, (b) waive any
inaccuracies in the representations and warranties contained therein or in any
document delivered pursuant thereto and (c) waive compliance with any of the
agreements or conditions contained therein. Any agreement on the part of a party
to the Merger Agreement to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of such party.
56
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
Corporate Express
The following selected consolidated financial data for fiscal 1996 (ending
March 1, 1997), 1995 (ending March 2, 1996), 1994 (ending February 25, 1995),
and 1993 (ending February 28, 1994) have been derived from Corporate Express'
consolidated financial statements which have been audited by independent
accountants. The selected consolidated financial data for the six months ended
August 30, 1997 and August 31, 1996 and fiscal 1992 is derived from unaudited
consolidated financial statements. The unaudited consolidated financial
statements have been prepared on the same basis as the audited consolidated
financial statements and in the opinion of management, contain all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of the financial position and results of operations for these
periods. The information set forth below should be read in conjunction with the
consolidated financial statements of Corporate Express incorporated herein by
reference.
<TABLE>
<CAPTION>
Fiscal Year
-------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:(1)
Net sales.................................... $3,196,056 $1,890,639 $1,145,151 $520,956 $420,030
Cost of sales(2)............................. 2,417,746 1,417,366 855,361 402,142 323,922
Merger related inventory provisions(3)....... -- 5,952 -- 1,146 --
---------- ---------- ---------- -------- --------
Gross profit............................... 778,310 467,321 289,790 117,668 96,108
Warehouse operating and selling expenses........ 562,879 342,581 219,213 97,054 76,056
Corporate general and administrative expenses... 95,101 49,742 29,624 13,063 12,408
Merger and other nonrecurring charges(4)........ 19,840 36,838 -- 1,928 2,592
---------- ---------- ---------- -------- --------
Operating profit............................. 100,490 38,160 40,953 5,623 5,052
Interest expense, net........................... 26,949 17,968 16,915 5,014 4,972
Other income (expense).......................... 244 1,786 562 (104) (993)
---------- ---------- ---------- -------- --------
Income (loss) before income taxes............... 73,785 21,978 24,600 505 (913)
Income tax expense.............................. 33,649 13,766 8,294 2,316 1,567
---------- ---------- ---------- -------- --------
Income (loss) before minority interest.......... 40,136 8,212 16,306 (1,811) (2,480)
Minority interest (income)/expense.............. (1,860) 1,436 69 152 --
---------- ---------- ---------- -------- --------
Income (loss) from continuing operations........ 41,996 6,776 16,237 (1,963) (2,480)
Loss from discontinued operations(5)............ -- 1,225 327 712 4,571
---------- ---------- ---------- -------- --------
Income (loss) before extraordinary item......... 41,996 5,551 15,910 (2,675) (7,051)
Extraordinary item(6)........................... -- -- 586 (1,169) --
---------- ---------- ---------- -------- --------
Net income (loss)............................ $ 41,996 $ 5,551 $ 16,496 $ (3,844) $ (7,051)
========== ========== ========== ======== ========
Pro forma net income (loss)(7).................. $ 40,281 $ 5,140 $ 15,769 $ (5,124) $ (7,390)
========== ========== ========== ======== ========
Weighted average common shares outstanding...... 130,029 110,408 80,993 55,598
Pro forma net income (loss) per common share:(8)
Continuing operations........................ $ 0.31 $ 0.06 $ 0.19 $ (0.09)
Discontinued operations...................... -- (0.01) (0.01) (0.01)
Extraordinary item........................... -- -- 0.01 (0.02)
---------- ---------- ---------- --------
Net income (loss)............................ $ 0.31 $ 0.05 $ 0.19 $ (0.12)
Balance Sheet Data:(1)
Working capital.............................. $ 393,653 $ 253,693 $ 166,421 $ 96,880 $ 50,771
Total assets................................. 1,843,977 1,023,365 645,309 446,189 160,510
Long-term debt and capital lease obligations. 633,250 163,399 188,340 177,523 52,375
Shareholders' equity and redeemable
preferred(9)............................... 693,607 521,776 259,325 116,363 39,584
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------
August 30, 1997 August 31, 1996
---------------- ---------------
<S> <C> <C>
Statement of Operations Data:(1)
Net sales.................................... $1,854,976 $1,405,870
Cost of sales(2)............................. 1,418,524 1,058,727
Merger related inventory provisions(3)....... -- --
---------- ----------
Gross profit............................... 436,452 347,143
Warehouse operating and selling expenses........ 320,900 249,281
Corporate general and administrative expenses... 55,480 44,124
Merger and other nonrecurring charges(4)........ -- --
---------- ----------
Operating profit............................. 60,072 53,738
Interest expense, net........................... 19,374 10,555
Other income (expense).......................... 180 (114)
---------- ----------
Income (loss) before income taxes............... 40,878 43,069
Income tax expense.............................. 17,331 17,670
---------- ----------
Income (loss) before minority interest.......... 23,547 25,399
Minority interest (income)/expense.............. (1,042) (100)
---------- ----------
Income (loss) from continuing operations........ 24,589 25,499
Loss from discontinued operations(5)............ -- --
---------- ----------
Income (loss) before extraordinary item......... 24,589 25,499
Extraordinary item(6)........................... -- --
---------- ----------
Net income (loss)............................ $ 24,589 $ 25,499
========== ==========
Pro forma net income (loss)(7).................. $ 24,589 $ 24,842
========== ==========
Weighted average common shares outstanding...... 133,786 128,267
Pro forma net income (loss) per common share:(8)
Continuing operations........................ $ 0.18 $ 0.19
Discontinued operations...................... -- --
Extraordinary item........................... -- --
---------- ----------
Net income (loss)............................ $ 0.18 $ 0.19
Balance Sheet Data:(1)
Working capital.............................. $ 411,780 $ 326,764
Total assets................................. 1,906,965 1,373,313
Long-term debt and capital lease obligations. 637,614 539,385
Shareholders' equity and redeemable
preferred(9)............................... 732,603 536,269
</TABLE>
57
<PAGE>
- --------------------
(1) The Hermann Marketing, Inc. ("HMI") acquisition (effective January 30,
1997), the Sofco-Mead, Inc. ("Sofco") acquisition (effective January 24,
1997), the United TransNet ("UT") acquisition (effective November 8,
1996), the Nimsa S.A. ("Nimsa") acquisition (effective October 31, 1996),
the U.S. Delivery Systems, Inc. ("Delivery") acquisition (effective
March 1, 1996), the Richard Young Journal, Inc. ("Young") acquisition
(effective February 27, 1996) and the acquisition of Lucas Bros., Inc.
("Lucas") (effective November 30, 1993) were accounted for as poolings of
interests and, accordingly, the HMI, Sofco, UT, Nimsa, Delivery, Young
and Lucas accounts and results are included for all applicable periods.
(2) Cost of sales includes occupancy and delivery expenses.
(3) Reflects the write-down to fair market value of certain inventory which
Corporate Express decided to eliminate from its product line.
(4) Merger and other nonrecurring charges relate primarily to the mergers
with Sofco, HMI, Nimsa and UT in fiscal 1996, Delivery and Young in
fiscal 1995 and Lucas in fiscal 1993 and include, among other things,
costs to complete the acquisitions, merging and closing redundant
facilities, personnel reductions and centralizing certain administrative
functions.
(5) In fiscal 1995, Sofco adopted a plan to discontinue Sofco-Eastern, Inc.,
and in February 1993, Lucas adopted a plan to discontinue its retail
operations.
(6) Reflects extraordinary loss related to a write-off of an unamortized
discount on debt in fiscal 1993 and extraordinary gain related to the
repurchase by Corporate Express of $10 million principal amount of
Corporate Express' 9 1/8% Senior Subordinated Notes (the "CEI Senior
Notes") in fiscal 1994.
(7) Pro forma net income reflects the additional taxes that would be incurred
to treat a subchapter S acquisition as if the acquired company was a
C corporation.
(8) Pro forma net income (loss) per common share is calculated by dividing
pro forma net income (loss), after preferred stock dividend requirements
of Young of $432,000 and $1,500,000 for fiscal 1994 and fiscal 1993,
respectively.
(9) Redeemable preferred was converted to common stock in fiscal 1994.
58
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
Data Documents
The following table sets forth selected consolidated financial data of
Data Documents as of and for each of the years in the five-year period
ended December 31, 1996. The consolidated financial data as of and for each
of the five years in the period ended December 31, 1996, have been derived
from Data Documents' audited Consolidated Financial Statements. Data
Documents' Consolidated Financial Statements as of December 31, 1996 and
1995, and for the years ended December 31, 1996, 1995 and 1994 and Deloitte
& Touche LLP's audit report with respect thereto have been incorporated
herein by reference. The consolidated financial data as of and for the six
month periods ended June 30, 1997 and 1996 are derived from unaudited
consolidated financial statements of Data Documents and, in the opinion of
Data Documents' management, reflect all adjustments, consisting only of
adjustments of a normal recurring nature, necessary for a fair presentation
of such data. The statement of operations data for interim periods is not
necessarily indicative of results for the full years.
<TABLE>
<CAPTION>
Years Ended December 31, Six Months Ended
---------------------------------------------------------------------- ----------------
(Amounts in Thousands, Except
Share and Per Share Data) 1996 1995 1994 1993 1992 June 30, 1997 June 30, 1996
----------- ------------ ----------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net Sales.................. $ 246,496 $ 242,238 $ 193,626 $ 193,588 $ 184,400 $ 126,394 $ 124,678
Cost of Goods Sold......... 181,058 186,011 148,797 152,036 144,630 93,338 92,242
---------- ---------- ----------- ----------- ----------- ---------- ----------
Gross Profit............... 65,438 56,227 44,829 41,552 39,770 33,056 32,436
Selling, General and
Administrative Expenses... 38,177 35,334 32,729 32,306 32,398 19,009 18,802
Stock Compensation
Charge (1)................ -- 156 -- -- -- -- --
Nonrecurring Charge(2)..... -- -- -- -- 4,208 -- --
---------- ---------- ----------- ----------- ----------- ---------- ----------
Operating Income........... 27,261 20,737 12,100 9,246 3,164 14,047 13,634
Debt Expense............... 9,751 13,335 8,735 8,063 8,160 4,607 4,960
---------- ---------- ----------- ----------- ----------- ---------- ----------
Income (Loss) Before
Income Taxes.............. 17,510 7,402 3,365 1,183 (4,996) 9,440 8,674
Income Tax Expense (Benefit) 7,086 3,127 1,533 212 (1,785) 3,818 3,520
---------- ---------- ----------- ----------- ----------- ---------- ----------
Income (Loss) Before
Extraordinary Item........ $ 10,424 $ 4,275 $ 1,832 $ 971 $ (3,211) $ 5,622 $ 5,154
========== ========== =========== =========== =========== ========== ==========
Net Income (Loss)
(3),(4),(5)............... $ 10,370 $ 1,354 $ (963) $ 971 $ (3,211) $ 5,622 $ 5,100
========== ========== =========== =========== =========== ========== ==========
Net Income (Loss) Available
for Common Stock.......... $ 10,370 $ 1,354 $ (1,583) $ 288 $ (3,898) $ 5,622 $ 5,100
========== ========== =========== =========== =========== ========== ==========
Earnings (Loss) Per Common
Share:
Primary:
Income (Loss) Before
Extraordinary Item..... $ 1.05 $ 0.61 $0.13 $ 0.03 $ (0.71) $ 0.56 $ 0.52
Extraordinary Item...... (0.01) (0.40) (0.30) -- -- -- (0.01)
---------- ---------- ----------- ----------- ----------- ---------- ----------
Net Income (Loss)....... $ 1.04 $ 0.21 $ (0.17) $ 0.03 $ (0.71) $ 0.56 $ 0.51
========== ========== =========== =========== =========== ========== ==========
Fully Diluted:
Income (Loss) Before
Extraordinary Item...... $ 1.05 $ 0.61 $ 0.11 $ 0.05 $ (0.24) $ 0.56 $ 0.52
Extraordinary Item....... (0.01) (0.40) (0.17) -- -- -- (0.01)
---------- ---------- ----------- ----------- ----------- ---------- ----------
Net Income (Loss)....... $ 1.04 $ 0.21 $ (0.06) $ 0.05 $ (0.24) $ 0.56 $ 0.51
========== ========== =========== =========== =========== ========== ==========
Weighted Average Common and
Common Share
Equivalents Outstanding:
Primary.................. 9,939,454 7,333,864 9,453,494 10,025,704 5,505,652 9,954,979 9,932,331
Fully Diluted............ 9,943,754 7,333,864 16,911,580 18,161,798 13,641,746 9,954,979 9,932,331
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
At December 31, At
--------------------------------------------------- -------------
1996 1995 1994 1993 1992 June 30, 1997 June 30, 1996
-------- -------- --------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working Capital.............. $ 53,445 $ 43,016 $ 37,231 $ 29,179 $ 28,691 $ 59,111 $ 49,352
Total Assets................. 133,977 125,725 116,221 104,534 105,289 140,153 127,123
Long-Term Obligations, Less
Current Maturities......... 63,965 65,212 86,719 68,569 71,298 63,952 64,689
Redeemable Preferred Stock... -- -- -- 6,829 6,829 -- --
Exchangeable Warrants(6)..... -- -- 2,771 -- -- -- --
Common Stockholders' Equity
(Deficit).................. 37,676 27,424 (5,143) (2,979) (3,267) 43,329 32,397
</TABLE>
------------------
(1) Reflects the difference between the fair value and the price paid for
Data Documents Common Stock issued to an employee and a director in
the second quarter of 1995.
(2) Relates to $1,863,000 of plant consolidation costs in connection with
the cessation of operations at two of Data Documents' manufacturing
facilities and the $2,345,000 writedown of the carrying values of
certain real estate property in connection with the sale and leaseback
of five other manufacturing facilities.
(3) In November 1994, Data Documents incurred an extraordinary charge of
$2,795,000 net of income tax benefit of $1,787,000 for the write-off
of unamortized deferred financing costs and unamortized original issue
discount and certain termination fees and costs associated with the
early termination of debt in connection with the issuance of the DDI
13 1/2% Senior Secured Notes (the "DDI Senior Notes").
(4) In November 1995, Data Documents incurred an extraordinary charge of
$2,921,000 net of income tax benefit of $1,790,000 for the write-off
of unamortized deferred financing costs, unamortized original issue
discount and prepayment fees associated with the prepayment of
$24,000,000 of DDI Senior Notes.
(5) In June 1996, Data Documents incurred an extraordinary charge of
$54,000 net of income tax benefit of $34,000 for the write-off of
unamortized deferred financing costs, unamortized original issue
discount, and certain premium on reacquisition associated with the
repurchase of $500,000 of DDI Senior Notes.
(6) Exchangeable warrants include the present value of Data Documents
outstanding warrants, which were exchangeable, under certain
circumstances, for an aggregate of $4 million principal amounts of DDI
Senior Notes or $4 million cash. This exchangeability feature was
terminated upon completion of the Data Documents' initial public
offering.
60
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS
UNAUDITED COMBINED AND PRO FORMA FINANCIAL STATEMENTS
The unaudited Historical Combined Statements of Operations are based
upon the historical financial statements of Corporate Express and Data
Documents which are included or incorporated by reference in this Proxy
Statement and Prospectus and should be read in conjunction with those
consolidated financial statements and related notes. The unaudited
Historical Combined Statements of Operations give effect to the proposed
Merger by combining the results of operations of Corporate Express for the
six months ended August 30, 1997 and August 31, 1996 and for the years
ended March 1, 1997, March 2, 1996 and February 25, 1995 with the results
of operations of Data Documents for the six months ended June 30, 1997 and
June 30, 1996 and for the years ended December 31, 1996, December 31, 1995
and December 31, 1994. For purposes of the combined presentation, certain
conforming accounting adjustments and reclassifications have been made to
the Data Documents financial information to be consistent with the
Corporate Express presentation.
The unaudited Pro Forma Combined Balance Sheet presents the combined
financial position of Corporate Express as of August 30, 1997 with the
financial position of Data Documents as of June 30, 1997 assuming the
Merger was consummated on August 30, 1997.
The unaudited Pro Forma Combined Statements of Operations gives effect
to the proposed Merger by combining the results of operations of Corporate
Express for the years ended March 1, 1997, March 2, 1996, and February 25,
1995 and the six months ended August 30, 1997 and August 31, 1996 with the
results of operations of Data Documents for the years ended December 31,
1996, 1995 and 1994 and the six months ended June 30, 1997 and June 30,
1996 assuming the Merger was consummated as of the beginning of the
earliest period presented.
The unaudited Pro Forma Combined Balance Sheet and the unaudited Pro
Forma Combined Statements of Operations exclude transaction costs and
certain estimated consolidation costs and do not reflect the planned
retirement of Data Documents' senior subordinated notes and related write-
off of capitalized debt costs and original issue discount.
61
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS, INC.
PRO FORMA COMBINED BALANCE SHEET
AUGUST 30, 1997
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Corporate
Corporate Express
Express and
and Data Documents
Corporate Data Data Documents Pro Forma Pro Forma
Express Documents Combined Adjustments Combined
----------- ---------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,290 $ 13,300 $ 52,590 52,590
Receivables, net 569,376 34,152 603,528 603,528
Inventories 201,354 38,183 239,537 (5,508) (1) 234,029
Other current assets 64,695 1,962 66,657 2,148 (2) 68,805
---------- -------- ---------- ----------- ----------
Total current assets 874,715 87,597 962,312 (3,360) 958,952
Property and equipment, net 280,580 37,623 318,203 318,203
Goodwill, net 680,396 9,531 689,927 689,927
Other assets, net 71,274 5,402 76,676 76,676
---------- -------- ---------- ----------- ----------
Total assets $1,906,965 $140,153 $2,047,118 $ (3,360) $2,043,758
========== ======== ========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 307,722 $ 16,383 $ 324,105 $ 324,105
Accrued liabilities 105,638 11,156 116,794 116,794
Accrued purchase costs 11,307 11,307 11,307
Accrued merger and related costs 12,292 12,292 12,292
Current portion of long-term
debt and capital leases 25,976 947 26,923 26,923
---------- -------- ---------- ----------- ----------
Total current liabilities 462,935 28,486 491,421 -- 491,421
Capital lease obligations 11,398 11,398 11,398
Long-term debt 626,216 63,952 690,168 690,168
Deferred income taxes 38,350 2,489 40,839 40,839
Minority interest in subsidiaries 22,285 22,285 22,285
Other non-current liabilities 13,178 1,897 15,075 15,075
---------- -------- ---------- ----------- ----------
Total liabilities 1,174,362 96,824 1,271,186 -- 1,271,186
Shareholders' equity:
Common stock 26 10 36 (8) (3) 28
Additional paid-in capital 666,461 32,022 698,483 8 (3) 698,491
Retained earnings 72,811 11,503 84,314 (3,360) (4) 80,954
Stockholder notes receivable (206) (206) (206)
Foreign currency translation adjustments (6,695) (6,695) (6,695)
---------- -------- ---------- ----------- ----------
Total shareholders' equity 732,603 43,329 775,932 (3,360) 772,572
---------- -------- ---------- ----------- ----------
Total liabilities and shareholders' equity $1,906,965 $140,153 $2,047,118 $ (3,360) $2,043,758
========== ======== ========== =========== ==========
</TABLE>
------------------
(1) Conform DDI from LIFO basis inventory valuation to a FIFO basis
inventory valuation consistent with CEI accounting policies.
(2) Income tax effect of the above pro forma adjustment at the statutory
tax rate.
(3) To adjust for the difference between the DDI common stock and CEI
common stock par values.
(4) Retained earnings impact of the above pro forma adjustments and related
income tax effects.
62
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 1, 1997
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Corporate
Corporate Express
Express and
and Data Documents
Corporate Data Data Documents Pro Forma Pro Forma
Express Documents Combined Adjustments Combined
----------- ------------ --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $3,196,056 $246,496 $3,442,552 $3,442,552
Cost of sales 2,417,746 181,058 2,598,804 $ 2,719 (2) 2,601,523
---------- -------- ---------- ------- ----------
Gross profit 778,310 65,438 843,748 (2,719) 841,029
Warehouse operating and selling expenses 562,879 31,138 594,017 594,017
Corporate general and administrative expenses 95,101 7,039 102,140 102,140
Merger and other nonrecurring charges 19,840 -- 19,840 19,840
---------- -------- ---------- ------- ----------
Operating profit 100,490 27,261 127,751 (2,719) 125,032
Interest expense, net 26,949 9,751 36,700 36,700
Other income (244) -- (244) (244)
---------- -------- ---------- ------- ----------
Income before income taxes 73,785 17,510 91,295 (2,719) 88,576
Income tax expense 33,649 7,086 40,735 (1,060) (3) 39,675
---------- -------- ---------- ------- ----------
Income before minority interest 40,136 10,424 50,560 (1,659) 48,901
Minority interest (1,860) -- (1,860) (1,860)
---------- -------- ---------- ------- ----------
Income from continuing operations $ 41,996 $ 10,424 $ 52,420 $(1,659) $ 50,761
========== ======== ========== ======= ==========
Pro forma income from continuing
operations (4) $ 49,046
==========
Weighted average common and common
equivalent shares outstanding: (1) 139,968
Pro forma income from continuing operations
per common share(4) $ 0.35 (5)
</TABLE>
_______________
(1) Weighted average common shares outstanding reflects the conversion of
Data Documents common stock into 1.0 shares of Corporate Express common
stock.
(2) Conform Data Documents from LIFO basis inventory valuation to a FIFO
basis inventory valuation consistent with Corporate Express accounting
policies.
(3) Tax effects of the pro forma adjustment.
(4) Pro forma income from continuing operations reflects the additional
taxes that would be incurred to treat a subchapter S acquisition as if
this acquired company was a C corporation.
(5) Excludes transaction costs and consolidation costs of the merger.
63
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 2, 1996
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Corporate
Corporate Express
Express and
and Data Documents
Corporate Data Data Documents Pro Forma Pro Forma
Express Documents Combined Adjustments Combined
---------- ------------ --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $1,890,639 $ 242,238 $ 2,132,877 $ 2,132,877
Cost of sales 1,417,366 186,011 1,603,377 $ (1,872) (2) 1,601,505
Merger related inventory provisions 5,952 5,952 5,952
---------- ------------ --------------- ----------- --------------
Gross profit 467,321 56,227 523,548 1,872 525,420
Warehouse operating and selling expenses 342,581 28,265 370,846 370,846
Corporate general and administrative expenses 49,742 7,225 56,967 56,967
Merger and other nonrecurrring charges 36,838 - 36,838 36,838
---------- ------------ --------------- ----------- --------------
Operating profit 38,160 20,737 58,897 1,872 60,769
Interest expense, net 17,968 13,335 31,303 31,303
Other income (1,786) - (1,786) (1,786)
---------- ------------ --------------- ----------- --------------
Income before income taxes 21,978 7,402 29,380 1,872 31,252
Income tax expense 13,766 3,127 16,893 730 (3) 17,623
---------- ------------ --------------- ----------- --------------
Income before minority interest 8,212 4,275 12,487 1,142 13,629
Minority interest 1,436 - 1,436 1,436
---------- ------------ --------------- ----------- --------------
Income from continuing operations $ 6,776 $ 4,275 $ 11,051 $ 1,142 $ 12,193
========== ============ =============== =========== ==============
Pro forma income from continuing operations $ 11,782
==============
Weighted average common and common
equivalent shares outstanding:(1) 117,742
Pro forma income from continuing operations
per common share(4) $ 0.10
</TABLE>
_______________
(1) Weighted average common shares outstanding reflects the conversion of
DDI common stock into 1.0 shares of CEI common stock.
(2) Conform DDI from LIFO basis inventory valuation to a FIFO basis
inventory valuation consistent with CEI accounting policies.
(3) Tax effects of the pro forma adjustment.
(4) Pro forma net reflects the additional taxes that would be incurred to
treat a subchapter S acquisition as if this acquired company was a
C corporation.
64
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 25, 1995
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Corporate
Corporate Express
Express and
and Data Documents
Corporate Data Data Documents Pro Forma Pro Forma
Express Documents Combined Adjustments Combined
---------- ------------ --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $1,145,151 $ 193,626 $ 1,338,777 $ 1,338,777
Cost of sales 855,361 148,797 1,004,158 $ (388) (2) 1,003,770
---------- ------------ --------------- ----------- --------------
Gross profit 289,790 44,829 334,619 388 335,007
Warehouse operating and selling expenses 219,213 25,767 244,980 244,980
Corporate general and administrative expenses 29,624 6,962 36,586 36,586
Merger and other nonrecurrring charges - - - -
---------- ------------ --------------- ----------- --------------
Operating profit 40,953 12,100 53,053 388 53,441
Interest expense, net 16,915 8,735 25,650 25,650
Other income (562) - (562) (562)
---------- ------------ --------------- ----------- --------------
Income before income taxes 24,600 3,365 27,965 388 28,353
Income tax expense 8,294 1,533 9,827 151 (3) 9,978
---------- ------------ --------------- ----------- --------------
Income before minority interest 16,306 1,832 18,138 237 18,375
Minority interest 69 - 69 69
---------- ------------ --------------- ----------- --------------
Income from continuing operations $ 16,237 $ 1,832 $ 18,069 $ 237 $ 18,306
========== ============ =============== =========== ==============
Pro forma income from continuing operations(4) $ 17,579
==============
Weighted average common and common
equivalent shares outstanding:(1)
Primary 90,447
Fully diluted 97,905
Pro forma income from continuing operations
per common share:(4)
Primary $ 0.18
Fully diluted $ 0.17
</TABLE>
_______________
(1) Weighted average common shares outstanding reflects the conversion of
DDI common stock into 1.0 shares of CEI common stock.
(2) Conform DDI from LIFO basis inventory valuation to a FIFO basis
inventory valuation consistent with CEI accounting policies.
(3) Tax effects of the pro forma adjustment.
(4) Pro forma income from continuing operations reflects the additional
taxes that would be incurred to treat a subchapter S acquisition as if
this acquired company was a C corporation.
65
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 30, 1997
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Corporate
Corporate Express
Express and
and Data Documents
Corporate Data Data Documents Pro Forma Pro Forma
Express Documents Combined Adjustments Combined
---------- ------------ --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $1,854,976 $ 126,394 $ 1,981,370 $ 1,981,370
Cost of sales 1,418,524 93,338 1,511,862 $ 327 (2) 1,512,189
---------- ------------ --------------- ----------- --------------
Gross profit 436,452 33,056 469,508 (327) 469,181
Warehouse operating and selling expenses 320,900 15,767 336,667 336,667
Corporate general and administrative expenses 55,480 3,242 58,722 58,722
---------- ------------ --------------- ----------- --------------
Operating profit 60,072 14,047 74,119 (327) 73,792
Interest expense, net 19,194 4,607 23,801 23,801
---------- ------------ --------------- ----------- --------------
Income before income taxes 40,878 9,440 50,318 (327) 49,991
Income tax expense 17,331 3,818 21,149 (128) (3) 21,021
---------- ------------ --------------- ----------- --------------
Income before minority interest 23,547 5,622 29,169 (199) 28,970
Minority interest (1,042) - (1,042) (1,042)
---------- ------------ --------------- ----------- --------------
Income from continuing operations $ 24,589 $ 5,622 $ 30,211 $ (199) $ 30,012
========== ============ =============== =========== ==============
Weighted average common and common
equivalent shares outstanding:(1) 143,741
Income from continuing operations
per common share: $ 0.21
</TABLE>
_______________
(1) Weighted average common shares outstanding reflects the conversion of
DDI common stock into 1.0 shares of CEI common stock.
(2) Conform DDI from LIFO basis inventory valuation to a FIFO basis
inventory valuation consistent with CEI accounting policies.
(3) Tax effects of the pro forma adjustment.
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Corporate
Corporate Express
Express and
and Data Documents
Corporate Data Data Documents Pro Forma Pro Forma
Express Documents Combined Adjustments Combined
---------- ------------ --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $1,405,870 $ 124,678 $ 1,530,548 $ 1,530,548
Cost of sales 1,058,727 92,242 1,150,969 $ 1,171 (2) 1,152,140
---------- ------------ --------------- ----------- --------------
Gross profit 347,143 32,436 379,579 (1,171) 378,408
Warehouse operating and selling expenses 249,281 15,406 264,687 264,687
Corporate general and administrative expenses 44,124 3,396 47,520 47,520
---------- ------------ --------------- ----------- --------------
Operating profit 53,738 13,634 67,372 (1,171) 66,201
Interest expense, net 10,669 4,960 15,629 15,629
---------- ------------ --------------- ----------- --------------
Income before income taxes 43,069 8,674 51,743 (1,171) 50,572
Income tax expense 17,670 3,520 21,190 (457) (3) 20,733
---------- ------------ --------------- ----------- --------------
Income before minority interest 25,399 5,154 30,553 (714) 29,839
Minority interest (100) - (100) (100)
---------- ------------ --------------- ----------- --------------
Income from continuing operations $ 25,499 $ 5,154 $ 30,653 $ (714) $ 29,939
========== ============ =============== =========== ==============
Pro Forma income from continuing operations(4) $ 29,282
==============
Weighted average common and common
equivalent shares outstanding:(1) 138,199
Pro forma income from continuing operations
per common share(4) $ 0.21
</TABLE>
_______________
(1) Weighted average common shares outstanding reflects the conversion of
DDI common stock into 1.0 shares of CEI common stock.
(2) DDI from LIFO basis inventory valuation to a FIFO basis inventory
valuation consistent with CEI accounting policies.
(3) Tax effects of the pro forma adjustment.
(4) Pro forma income from continuing operations reflects the additional
taxes that would be incurred to treat a subchapter S acquisition as if
this acquired company was a C corporation.
67
<PAGE>
CORPORATE EXPRESS AND DATA DOCUMENTS
HISTORICAL COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended Six Months Ended
--------------------------------------- -----------------------
March 1, March 2, February 25, August 30, August 31,
1997 1996 1995 1997 1996
----------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $3,442,552 $2,132,877 $1,338,777 $1,981,370 $1,530,548
Cost of sales 2,601,523 1,601,505 1,003,770 1,512,189 1,152,140
Merger related inventory provisions -- 5,952 -- -- --
---------- ---------- ---------- ---------- ----------
Gross profit 841,029 525,420 335,007 469,181 378,408
Warehouse operating and selling expenses 594,017 370,846 244,980 336,667 264,687
Corporate general and admin. expense 102,140 56,967 36,586 58,722 47,520
Merger and other nonrecurring charges 19,840 36,838 -- -- --
---------- ---------- ---------- ---------- ----------
Operating profit 125,032 60,769 53,441 73,792 66,201
Interest expense, net 36,700 31,303 25,650 23,801 15,629
Other income (244) (1,786) (562) -- --
---------- ---------- ---------- ---------- ----------
Income before income taxes 88,576 31,252 28,353 49,991 50,572
Income tax expense 39,675 17,623 9,978 21,021 20,733
---------- ---------- ---------- ---------- ----------
Income before minority interest 48,901 13,629 18,375 28,970 29,839
Minority interest (1,860) 1,436 69 (1,042) (100)
---------- ---------- ---------- ---------- ----------
Income from continuing operations 50,761 12,193 18,306 30,012 29,939
Discontinued operations
Loss from discontinued operations -- (1,225) (327) -- --
---------- ---------- ---------- ---------- ----------
Income before extraordinary item 50,761 10,968 17,979 30,012 29,939
Extraordinary item:
Extraordinary item (54) (2,921) (2,209) -- (54)
---------- ---------- ---------- ---------- ----------
Net income (1) (3) $ 50,707 $ 8,047 $ 15,770 $ 30,012 $ 29,885
========== ========== ========== ========== ==========
Pro forma net income (2) $ 48,992 $ 7,636 $ 15,043 $ 30,012 $ 29,228
========== ========== ========== ========== ==========
Weighted average common and common
equivalent shares outstanding:
Primary 139,968 117,742 90,447 143,741 138,199
Fully diluted 139,973 117,742 97,905 143,741 138,199
Pro forma per common share:
Primary:
Pro forma continuing operations $ 0.35 $0.10 $ 0.18 $ 0.21 $ 0.21
Discontinued operations -- (0.01) (0.01) -- --
Extraordinary item -- (0.02) (0.02) -- --
---------- ---------- ---------- ---------- ----------
Pro forma net income (2) (3) $ 0.35 $0.07 $ 0.15 $ 0.21 $ 0.21
========== ========== ========== ========== ==========
Fully diluted:
Pro forma continuing operations $ 0.35 $0.10 $ 0.17 $ 0.21 $ 0.21
Discontinued operations -- (0.01) (0.01) -- --
Extraordinary item -- (0.02) (0.02) -- --
---------- ---------- ---------- ---------- ----------
Pro forma net income (2) (3) $ 0.35 $0.07 $ 0.14 $ 0.21 $ 0.21
========== ========== ========== ========== ==========
Balance Sheet data:
Working capital $ 441,837 $ 295,053 $ 199,870 $ 467,531 $ 373,943
Total assets 1,972,693 1,147,434 757,748 2,043,758 1,498,263
Long-term debt and capital
lease obligations 697,215 228,611 275,059 701,566 604,074
Shareholders' equity and redeemable preferred 728,074 548,190 251,875 772,572 566,899
</TABLE>
- -------------
(1) Reflects impact of adjustments to conform Data Documents from LIFO basis
inventory to a FIFO basis inventory valuation, net of tax, to increase
(decrease) net income by ($1,659,000), $1,142,000, $237,000, ($199,000),
and ($714,000) for the years ended March 1, 1997, March 2, 1996, February
25, 1995 and the six months ended August 30, 1997 and August 31, 1996,
respectively.
(2) Pro forma net income reflects the additional taxes that would be incurred
to treat a subchapter S acquisition as if the acquired company was a C
corporation.
(3) Excludes transaction costs and consolidation costs of the Merger.
68
<PAGE>
LEGAL MATTERS
The validity of the Corporate Express Common Stock offered hereby will
be passed upon for Corporate Express by Ballard Spahr Andrews & Ingersoll,
Philadelphia, Pennsylvania. Certain other matters will be passed upon for
Data Documents by Gibson Dunn & Crutcher LLP, Los Angeles, California.
EXPERTS
The consolidated financial statements and financial statement
schedule of Corporate Express as of March 1, 1997 and March 2, 1996 and for
the years ended March 1, 1997, March 2, 1996 and February 25, 1995,
incorporated by reference from Corporate Express' annual report on Form 10-
K into this Proxy Statement and Prospectus, have been audited by Coopers &
Lybrand L.L.P., independent accountants, and have been incorporated by
reference in reliance upon the report of such firm given on their authority
as experts in accounting and auditing.
The consolidated financial statements and the related financial
statement schedules incorporated in this Proxy Statement and Prospectus by
reference from Data Documents' Annual Report on Form 10-K for the year
ended December 31, 1996 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated
therein by reference, and have been so incorporated by reference in
reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
69
<PAGE>
APPENDIX I
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Dated as of September 10, 1997
by and among
Corporate Express, Inc.,
IDD Acquisition Corp.
and
Data Documents Incorporated
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
SECTION 1.1 The Merger.................................................... 1
SECTION 1.2 Effective Time of the Merger.................................. 1
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1 Certificate of Incorporation.................................. 2
SECTION 2.2 By-laws....................................................... 2
SECTION 2.3 Officers...................................................... 2
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Company Shares in the Merger.................... 2
SECTION 3.2 Conversion of Subsidiary Shares............................... 3
SECTION 3.3 Exchange of Certificates...................................... 3
SECTION 3.4 No Fractional Securities...................................... 5
SECTION 3.5 Options and Warrants.......................................... 5
SECTION 3.6 Closing....................................................... 6
SECTION 3.7 Closing of the Company's Transfer Books....................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
SECTION 4.1 Organization and Qualification................................ 6
SECTION 4.2 Capitalization................................................ 7
SECTION 4.3 Subsidiaries.................................................. 7
SECTION 4.4 Authority; Non-Contravention; Approvals....................... 8
SECTION 4.5 Reports and Financial Statements.............................. 9
SECTION 4.6 Absence of Undisclosed Liabilities............................ 9
SECTION 4.7 Absence of Certain Changes or Events.......................... 10
SECTION 4.8 Litigation.................................................... 10
SECTION 4.9 Registration Statement and Proxy Statement.................... 10
SECTION 4.10 No Violation of Law.......................................... 10
i
<PAGE>
SECTION 4.11 Compliance with Agreements................................. 11
SECTION 4.12 Taxes...................................................... 11
SECTION 4.13 Employee Benefit Plans; ERISA.............................. 12
SECTION 4.14 Labor Controversies........................................ 13
SECTION 4.15 Environmental Matters...................................... 13
SECTION 4.16 Title to Assets............................................ 15
SECTION 4.17 Material Agreements........................................ 15
SECTION 4.18 Pooling Matters............................................ 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.1 Organization and Qualification............................. 16
SECTION 5.2 Capitalization............................................. 16
SECTION 5.3 Subsidiaries............................................... 17
SECTION 5.4 Authority; Non-Contravention; Approvals.................... 17
SECTION 5.5 Reports and Financial Statements........................... 18
SECTION 5.6 Absence of Undisclosed Liabilities......................... 19
SECTION 5.7 Absence of Certain Changes or Events....................... 19
SECTION 5.8 Litigation................................................. 19
SECTION 5.9 Registration Statement and Proxy Statement................. 19
SECTION 5.10 No Violation of Law........................................ 20
SECTION 5.11 Compliance with Agreements................................. 20
SECTION 5.12 Taxes...................................................... 20
SECTION 5.13 Employee Benefit Plans; ERISA.............................. 21
SECTION 5.14 Labor Controversies........................................ 22
SECTION 5.15 Environmental Matters...................................... 22
SECTION 5.16 Title to Assets............................................ 23
SECTION 5.17 Company Stockholders' Approval............................. 24
SECTION 5.18 No Excess Parachute Payments............................... 24
SECTION 5.19 Trademarks and Intellectual Property Compliance............ 24
SECTION 5.20 Material Agreements........................................ 24
SECTION 5.21 Pooling Matters............................................ 24
SECTION 5.22 Transactions with Related Parties.......................... 24
SECTION 5.23 Insurance.................................................. 25
SECTION 5.24 Year 2000 Compliance....................................... 25
SECTION 5.25 Brokers.................................................... 25
ii
<PAGE>
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Conduct of Business by the Company Pending the Merger...... 25
SECTION 6.2 Conduct of Business by Parent and Subsidiary Pending
the Merger............................................... 27
SECTION 6.3 Control of the Company's Operations........................ 27
SECTION 6.4 Control of Parent's or Subsidiary's Operations............. 27
SECTION 6.5 Acquisition Transactions................................... 28
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information...................................... 29
SECTION 7.2 Registration Statement and Proxy Statement................. 30
SECTION 7.3 Company Stockholders' Approval............................. 30
SECTION 7.4 Affiliates of the Company.................................. 30
SECTION 7.5 Nasdaq Listing............................................. 31
SECTION 7.6 Expenses and Fees.......................................... 31
SECTION 7.7 Agreement to Cooperate..................................... 32
SECTION 7.8 Public Statements.......................................... 32
SECTION 7.9 Option Plans and Warrants.................................. 32
SECTION 7.10 Notification of Certain Matters............................ 33
SECTION 7.11 Directors' and Officers' Indemnification................... 33
SECTION 7.12 Corrections to the Proxy Statement and Prospectus
and Registration Statement............................... 34
SECTION 7.13 Employment Agreements...................................... 35
SECTION 7.14 Irrevocable Proxies........................................ 35
SECTION 7.15 Grant of Options to Company Employees...................... 35
SECTION 7.16 Tax-Free Treatment of Merger............................... 35
SECTION 7.17 Parent's Periodic Reports Following the Merger............. 35
SECTION 7.18 Employee Benefits.......................................... 36
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger. 36
SECTION 8.2 Conditions to Obligation of the Company to Effect the
Merger................................................... 37
SECTION 8.3 Conditions to Obligations of Parent and Subsidiary to
Effect the Merger......................................... 38
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination.................................................. 39
SECTION 9.2 Effect of Termination........................................ 40
SECTION 9.3 Amendment.................................................... 40
SECTION 9.4 Waiver....................................................... 40
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations and Warranties............... 41
SECTION 10.2 Validity..................................................... 41
SECTION 10.3 Notices...................................................... 41
SECTION 10.4 Interpretation............................................... 42
SECTION 10.5 Miscellaneous................................................ 42
SECTION 10.6 Counterparts................................................. 42
SECTION 10.7 Parties In Interest.......................................... 42
SECTION 10.8 Exhibits and Schedules....................................... 42
SECTION 10.9 Personal Liability........................................... 43
SECTION 10.10 Definition of "Knowledge" and "Belief"....................... 43
EXHIBITS
Exhibit 7.4 Form of Letter Agreement with Company Affiliates
Exhibit 7.16(a) Form of Representation relating to tax matters of the Company
Exhibit 7.16(b) Form of Representation relating to tax matters of Parent and
Subsidiary
Exhibit 8.2(b) Matters to be covered by Opinion of Tax Counsel to the Company
Exhibit 8.2(c) Matters to be covered by Opinion of Legal Counsel to the
Company
Exhibit 8.2(i) Form of Kearns Employment Agreement
Exhibit 8.3(b) Matters to be covered by Legal Counsel to the Parent and
Subsidiary
SCHEDULES
Schedule 2.3 List of Officers of the Surviving Corporation
Schedule 4.2 Parent Capitalization
Schedule 4.3 Subsidiaries
Schedule 4.6 Absence of Undisclosed Liabilities
Schedule 4.8 Litigation of Parent
Schedule 4.11 Compliance with Agreements
Schedule 4.13 Employee Benefit Plans of Parent
Schedule 4.15 Environmental Matters
Schedule 5.2 Company Capitalization
Schedule 5.3 Subsidiaries
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Schedule 5.4 Non-contravention of Agreements
Schedule 5.5 Company SEC Compliance Exceptions
Schedule 5.8 Litigation of the Company
Schedule 5.10 Violations of Laws by Company
Schedule 5.13 Employee Benefit Plans of the Company
Schedule 5.15 Environmental Matters
Schedule 5.16 Title to Assets
Schedule 5.18 Parachute Payments
Schedule 6.1 Securities to be Issued in Acquisitions by the Company
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 10, 1997 (the
"Agreement"), by and among Corporate Express, Inc., a Colorado corporation
("Parent"), IDD Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Subsidiary"), and Data Documents Incorporated, a Delaware
corporation (the "Company");
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent and the Company have determined
that the merger of Subsidiary with and into the Company (the "Merger") is
consistent with and in furtherance of the long-term business strategy of Parent
and the Company, and is fair to and in the best interests of Parent and the
Company and their respective stockholders; and
WHEREAS, Parent, Subsidiary and the Company intend the Merger to qualify as
a tax-free reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and to be treated as a "pooling
of interests" under Accounting Principles Board Opinion No. 16 ("APB 16").
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2) in accordance
with the Delaware General Corporation Law (the "DGCL"), Subsidiary shall be
merged with and into the Company and the separate existence of Subsidiary shall
thereupon cease. The Company shall be the surviving corporation in the Merger
and is hereinafter sometimes referred to as the "Surviving Corporation."
SECTION 1.2 Effective Time of the Merger. The Merger shall become effective
at such time (the "Effective Time") as shall be stated in a Certificate of
Merger, in a form mutually acceptable to Parent and the Company, to be filed
with the Secretary of State of the State of Delaware in accordance with the DGCL
(the "Merger Filing"). The Merger Filing shall be made simultaneously with or as
soon as practicable after the closing of the transactions contemplated by this
Agreement in accordance with Section 3.5.
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ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1 Certificate of Incorporation. The Certificate of Incorporation
of the Surviving Corporation shall be amended and restated at and as of the
Effective Time to read as did the Certificate of Incorporation of the Subsidiary
immediately prior to the Effective Time (except that the name of the Surviving
Corporation shall remain unchanged).
SECTION 2.2 By-laws. The By-laws of the Surviving Corporation shall be
amended and restated at and as of the Effective Time to read as did the By-laws
of the Subsidiary immediately prior to the Effective Time (except that the name
of the Surviving Corporation shall remain unchanged).
SECTION 2.3 Officers. The officers of the Surviving Corporation following
the Merger shall be as designated in Schedule 2.3, and such officers shall serve
------------
in accordance with the By-laws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Company Shares in the Merger. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of the Company:
(a) each share of the Company's Common Stock, par value $.001 per share
(the "Company Common Stock"), issued and outstanding immediately prior to the
Effective Time, except any Non-Converting Shares (as defined in Section 3.1(c)),
shall, subject to Section 3.1(b), be converted into the right to receive
consideration (the "Merger Consideration") equal to that number of shares of
common stock, par value $.0002 per share, of Parent ("Parent Common Stock"),
which is determined by multiplying the Exchange Ratio (as defined below) by the
number of shares of Company Common Stock held by such Company stockholder on the
Closing Date (as defined in Section 3.5). The "Exchange Ratio" shall equal 1.1
shares of Parent Common Stock for each share of Company Common Stock outstanding
at the time of the Merger, subject to adjustment upward or downward pursuant to
this Section 3.1. There shall be no adjustment to the Exchange Ratio, and the
Exchange Ratio shall remain 1.1 shares of Parent Common Stock for each share of
Company Common Stock, if the average of the closing prices of Parent Common
Stock as reported on the Nasdaq National Market ("Nasdaq") for ten (10) trading
days selected randomly from the twenty (20) consecutive trading days ending five
(5) trading days prior to the special meeting of the Company's stockholders to
approve the Merger (the "Parent Stock Value"), is greater than or equal to
$15.00 but less than or equal to $18.20.
(b) (i) If the Parent Stock Value is less than $15.00, then the Parent
shall have the right to increase the Exchange Ratio to the number (expressed as
a decimal fraction) which, when multiplied by the Parent Stock Value, will equal
$16.50 and the Merger shall be consummated on the basis of such increased
Exchange Ratio. In the event that the Parent does not elect to increase the
Exchange Ratio to
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the amount set forth in the immediately preceding sentence, then the Company may
at its option, either (i) terminate the Agreement or (ii) consummate the Merger.
Notwithstanding the foregoing, even if Parent does elect to increase the
Exchange Ratio, the Company may at its option terminate the Agreement if the
Parent Stock Value is less than $10.00.
(ii) If the Parent Stock Value is greater than $18.20, then the
Exchange Ratio shall be decreased to the number (expressed as a decimal
fraction) which, when multiplied by the Parent Stock Value, will equal $20.00.
Notwithstanding the foregoing, the Exchange Ratio will not be less than one
share of Parent Common Stock for each share of Company Stock.
(c) each share of Company Common Stock, if any, owned by Parent or any
subsidiary of Parent or held in treasury by the Company or any subsidiary of the
Company (each a "Non-Converting Share") immediately prior to the Effective Time
shall be cancelled and shall cease to exist from and after the Effective Time.
(d) No share of Company Common Stock shall be deemed to be outstanding or
to have any rights other than those set forth in this Section 3.1 after the
Effective Time.
(e) The holders of shares of Company Common Stock shall not be entitled to
appraisal rights.
SECTION 3.2 Conversion of Subsidiary Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent as the sole
stockholder of Subsidiary, each issued and outstanding share of common stock,
par value $.001 per share, of Subsidiary ("Subsidiary Common Stock") shall be
converted into one share of common stock, par value $.001 per share, of the
Surviving Corporation.
SECTION 3.3 Exchange of Certificates. (a) From and after the Effective
Time, all Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive in exchange
therefor, upon surrender thereof to ChaseMellon Shareholder Services (the
"Exchange Agent"), a certificate or certificates representing the number of
whole shares of Parent Common Stock to which such holder is entitled pursuant to
Section 3.1 and cash payment for any fractional shares referred to in Section
3.4. Notwithstanding any other provision of this Agreement, (i) until holders or
transferees of certificates theretofore representing shares of Company Common
Stock have surrendered them for exchange as provided herein, no dividends shall
be paid with respect to any Parent Common Stock shares represented by such
certificates and no payment for fractional shares shall be made and (ii) without
regard to when such certificates representing shares of Company Common Stock are
surrendered for exchange as provided herein, no interest shall be paid on any
Parent Common Stock dividends or any payment for fractional shares. Upon
surrender of a certificate which immediately prior to the Effective Time
represented shares of Company Common Stock, there shall be paid to the holder of
such certificate the amount of any dividends which theretofore became payable,
but which were not paid by reason of the foregoing, with respect to the number
of whole shares of Parent Common Stock represented by the certificate or
certificates issued upon such surrender.
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(b) If any certificate for shares of Parent Common Stock is to be
issued in a name other than that in which the certificate for shares of Company
Common Stock surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and the person requesting
such exchange shall have paid to Parent or its transfer agent any applicable
transfer or other taxes required by reason of such issuance.
(c) Promptly after the Effective Time, Parent shall make available to
the Exchange Agent the certificates representing shares of Parent Common Stock
required to effect the exchanges referred to in paragraph (a) above and cash for
payment of any fractional shares referred to in Section 3.4.
(d) Promptly after the Effective Time, the Exchange Agent shall mail
to each holder of record of a certificate or certificates that immediately prior
to the Effective Time represented outstanding shares of Company Common Stock
(the "Company Certificates") (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon actual delivery of the Company Certificates
to the Exchange Agent) and (ii) instructions for use in effecting the surrender
of the Company Certificates in exchange for certificates representing shares of
Parent Common Stock. Upon surrender of Company Certificates for cancellation to
the Exchange Agent, together with a duly executed letter of transmittal and such
other documents as the Exchange Agent shall reasonably require, the holder of
such Company Certificates shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock into
which the shares of Company Common Stock theretofore represented by the Company
Certificates so surrendered shall have been converted pursuant to the provisions
of Section 3.1, and the Company Certificates so surrendered shall be cancelled.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of shares of Company Common Stock for any shares of
Parent Common Stock or dividends or distributions thereon delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine (9) months after the
Effective Time, the Exchange Agent shall deliver to Parent all certificates
(including certificates representing shares of any Parent Common Stock),
property and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Company Certificate may surrender such Company
Certificate to Parent and (subject to applicable abandoned property, escheat and
similar laws) receive in exchange therefor the number of shares of Parent Common
Stock to which such person is entitled, without any interest thereon.
Notwithstanding the foregoing, none of the Exchange Agent, Parent, Subsidiary or
the Surviving Corporation shall be liable to a holder of Company Common Stock
for any Parent Common Stock delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws.
(f) In the event any Company Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed, the Surviving
Corporation shall issue in exchange for such lost, stolen or destroyed Company
Certificate the Parent Common Stock deliverable in respect thereof determined in
accordance with this Section 3.3. When authorizing such payment in exchange
therefor, the Board of Directors of Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Company Certificate to give Parent such indemnity as it may
reasonably direct as protection
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against any claim that may be made against Parent or the Surviving Corporation
with respect to the Company Certificate alleged to have been lost, stolen or
destroyed.
SECTION 3.4 No Fractional Securities. Notwithstanding any other
provision of this Agreement, no certificates or scrip for fractional shares of
Parent Common Stock shall be issued in the Merger and no Parent Common Stock
dividend, stock split or interest shall relate to any fractional security, and
such fractional interests shall not entitle the owner thereof to vote or to any
other rights of a security holder. In lieu of any such fractional shares, each
holder of Company Common Stock who would otherwise have been entitled to receive
a fraction of a share of Parent Common Stock upon surrender of Company
Certificates for exchange pursuant to this Article III shall be entitled to
receive from the Exchange Agent a cash payment equal to such fraction multiplied
by the closing price of the Parent Common Stock as reported on Nasdaq on the
last trading day immediately preceding the Effective Time.
SECTION 3.5 Options and Warrants. At the Effective Time and subject
to Section 7.9, each option and warrant granted by the Company to purchase
shares of the Company's Stock (each, a "Company Option" or a "Company Warrant")
which is outstanding and exercisable immediately prior thereto shall cease to
represent a right to acquire shares of Company Common Stock and shall be
converted automatically into an option or warrant (the "Exchanged Option" or
"Exchange Warrant") to purchase shares of Parent Common Stock exercisable until
the current termination of the Company Option or Company Warrant, as the case
may be, without accelerated termination by virtue of the Merger and in an amount
and at an exercise price determined as provided below (and subject to the terms
of the Company's 1995 Stock Inventive Plan or the terms of the option issued to
John Bailey in connection with the Company's acquisition of Cal Emblem, and the
agreements evidencing such grants, including but not limited to the accelerated
vesting of any such options or warrants which shall occur by virtue of the
consummation of the Merger to the extent required by such plans and agreements):
(a) The number of shares of Parent Common Stock to be subject
to the converted options and warrants shall be equal to the product of the
number of shares of Company Common Stock subject to the original options or
warrants and the Exchange Ratio, provided that any fractional shares of Parent
Common Stock resulting from such multiplication shall be rounded down to the
nearest share; and
(b) The exercise price per share of Parent Common Stock under
the converted option or warrant shall be equal to the exercise price per share
of Company Common Stock under the original option or warrant divided by the
Exchange Ratio, provided that such exercise price shall be rounded out to the
nearest cent.
(c) Parent shall (i) reserve for issuance the number of shares
of Parent Common Stock that will become issuable upon the exercise of the
Exchanged Options and the Exchanged Warrants and (ii) promptly after the
Effective Time, issue to each holder of an Exchanged Option and Exchanged
Warrant a document evidencing Parent's assumption of the Company's obligations
under the Company Options and Company Warrants. The Exchanged Options and the
Exchanged Warrants shall have the same terms and conditions as the Company
Options and the Company Warrants, respectively.
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In the case of any converted options which are intended to
qualify as "incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")), the exercise price, the number
of shares purchasable pursuant to such options and the terms and conditions of
exercise of such options shall be determined in order to comply with Section
424(a) of the Code. The duration and other terms of the converted option shall
be the same as the original option except that all references to Company shall
be deemed to be references to Parent.
SECTION 3.6 Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at a location mutually agreeable
to Parent and the Company on the third (3rd) business day immediately following
the date on which the last of the conditions set forth in Article VIII hereof is
fulfilled or waived, or at such other time and place as Parent and the Company
shall reasonably agree (the date on which the Closing occurs is referred to in
this Agreement as the "Closing Date").
SECTION 3.7 Closing of the Company's Transfer Books. At and after
the Effective Time, holders of Company Common Stock shall cease to have any
rights as stockholders of the Company, except for the right to receive shares of
Parent Common Stock pursuant to Section 3.1 and the right to receive cash for
the payment of fractional shares pursuant to Section 3.4. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time shall thereafter be made. If, after the Effective Time, subject
to the terms and conditions of this Agreement, Company Certificates formerly
representing Company Common Stock are presented to Parent or the Surviving
Corporation, they shall be cancelled and exchanged for Parent Common Stock in
accordance with this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the Company as of
the date hereof as follows:
SECTION 4.1 Organization and Qualification. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Each of Parent and
Subsidiary is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a material adverse effect on
the business, operations, properties, assets, condition (financial or other), or
results of operations of Parent and its subsidiaries, taken as a whole (a
"Parent Material Adverse Effect"). True, accurate and complete copies of each of
Parent's Articles of Incorporation and Subsidiary's Certificates of
Incorporation and respective By-laws, in each case as in effect on the date
hereof, including all amendments thereto, have heretofore been or in the case of
Subsidiary, will promptly be delivered to the Company.
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SECTION 4.2 Capitalization.
(a) The authorized capital stock of Parent consists of (i)
300,000,000 shares of Parent Common Stock, of which 129,713,444 shares were
issued and outstanding as of July 31, 1997, (ii) 3,000,000 shares of non-voting
common stock, par value $.0002 per share, no shares of which are outstanding as
of September 9, 1997 and (iii) 25,000,000 shares of preferred stock, par value
$.0001 per share, no shares of which are outstanding as of September 9, 1997.
All of the issued and outstanding shares of Parent Common Stock are validly
issued and are fully paid, nonassessable and free of preemptive rights. The
Parent Common Stock constitutes the only class of equity securities of Parent or
its subsidiaries registered or required to be registered under the Exchange Act
(as defined in Section 4.4(c) hereof).
(b) The authorized capital stock of Subsidiary consists of 1,000
shares of Subsidiary Common Stock, of which 1,000 shares are issued and
outstanding, which shares are owned beneficially and of record by Parent.
(c) Except as disclosed in the Parent SEC Reports (as defined in
Section 4.5) or as set forth on Schedule 4.2 attached hereto, as of the date
------------
hereof, there are (i) no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other anti-
takeover agreement, obligating Parent or any subsidiary of Parent to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of Parent or obligating Parent or any subsidiary of Parent to
grant, extend or enter into any such agreement or commitment and (ii) no voting
trusts, proxies or other agreements or understandings to which Parent or any
subsidiary of Parent is a party or is bound with respect to the voting of any
shares of capital stock of Parent. The shares of Parent Common Stock to be
issued to stockholders of the Company in the Merger will be at the Effective
Time duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights.
SECTION 4.3 Subsidiaries. Each direct and indirect corporate
subsidiary of Parent is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted except where any failure would not
have a Parent Material Adverse Effect. Each subsidiary of Parent is qualified
to do business, and is in good standing, in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing would not have a Parent Material Adverse
Effect. All of the outstanding shares of capital stock of each corporate
subsidiary of Parent that are owned by Parent are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned directly or
indirectly by Parent, free and clear of any liens, claims or encumbrances except
that such shares are pledged to secure Parent's credit facilities, and except as
set forth on Schedule 4.3 with respect to the pledge of certain subsidiaries'
------------
stock to secure promissory notes issued in connection with certain acquisitions.
Except as set forth on Schedule 4.3, there are no outstanding subscriptions,
------------
options, warrants, rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, voting, transfer, ownership or other rights with respect to any
shares of capital stock of any corporate subsidiary of Parent, including any
right of conversion or exchange under any outstanding
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security, instrument or agreement. As used in this Agreement, the term
"subsidiary" shall mean, when used with reference to any person or entity, any
corporation, partnership, joint venture or other entity which such person or
entity, directly or indirectly, controls or of which such person or entity
(either acting alone or together with its other subsidiaries) owns, directly or
indirectly, 50% or more of the stock or other voting interests, the holders of
which are entitled to vote for the election of a majority of the board of
directors or any similar governing body of such corporation, partnership, joint
venture or other entity.
SECTION 4.4 Authority; Non-Contravention; Approvals.
(a) Parent and Subsidiary each have all necessary corporate power and
authority to enter into this Agreement and, subject to the Parent Required
Statutory Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. This Agreement has been approved by the Boards
of Directors of Parent and Subsidiary, and no other corporate proceedings on the
part of Parent or Subsidiary are necessary to authorize the execution and
delivery of this Agreement or the consummation by Parent and Subsidiary of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Subsidiary, and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and legally
binding agreement of each of Parent and Subsidiary enforceable against each of
them in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles. Without limitation of the foregoing, each of the
covenants and obligations of Parent set forth in Sections 6.2, 6.5, 7.6, 7.7,
7.8, 7.10, 7.14 and 7.15 is valid, legally binding and enforceable.
(b) The execution and delivery of this Agreement by each of Parent
and Subsidiary do not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Parent or any of its subsidiaries under any of the terms, conditions or
provisions of (i) the respective charters or by-laws of Parent or any of its
subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to Parent or any of its subsidiaries or any of their
respective properties or assets or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or any of its
subsidiaries is now a party or by which Parent or any of its subsidiaries or any
of their respective properties or assets may be bound. The consummation by
Parent and Subsidiary of the transactions contemplated hereby will not result in
any violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Parent Required Statutory Approvals (as defined in
Section 4.4(c)) and (y) in the case of the terms, conditions or provisions
described in clause (iii) above, to obtaining (prior to the Effective Time)
consents required from lenders, lessors or other third parties. Excluded from
the foregoing sentences of this paragraph (b), insofar as they apply to the
terms, conditions or provisions described in clauses (ii) and (iii) of the first
sentence of this paragraph (b), are such violations, conflicts,
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breaches, defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
Parent Material Adverse Effect.
(c) Except for (i) the filings by Parent and the Company required by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing of the Proxy Statement and Prospectus (as defined in
Section 4.9) with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Securities Act of 1933, as amended (the "Securities Act"), and the declaration
of the effectiveness thereof by the SEC and filings with various state blue sky
authorities or (iii) the making of the Merger Filing with the Secretary of State
of the State of Delaware in connection with the Merger (the filings and
approvals referred to in clauses (i) through (iii) above are collectively
referred to as the "Parent Required Statutory Approvals"), no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by Parent or Subsidiary or the
consummation by Parent or Subsidiary of the transactions contemplated hereby,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not, in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.5 Reports and Financial Statements. Since February 28,
1995, Parent has filed with the SEC all forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. Parent has
previously delivered to the Company copies of its (a) Annual Report on Form 10-K
for the fiscal year ended March 1, 1997, as filed with the SEC, (b) proxy and
information statements relating to (i) all meetings of its stockholders (whether
annual or special) and (ii) actions by written consent in lieu of a
stockholders' meeting from March 1, 1997, until the date hereof and (c) all
other reports, including quarterly reports, or registration statements filed by
Parent with the SEC since March 1, 1997 (other than Registration Statements
filed on Form S-8) (collectively, the "Parent SEC Reports"). As of their
respective dates, the Parent SEC Reports did not 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 were made, not misleading. The audited consolidated financial
statements and unaudited interim consolidated financial statements of Parent
included in such reports (collectively, the "Parent Financial Statements") have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of Parent and its
subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal year-end and audit
adjustments and any other adjustments described therein.
SECTION 4.6 Absence of Undisclosed Liabilities. Except as disclosed
in the Parent SEC Reports or with respect to acquisitions or potential
transactions set forth on Schedule 4.6 attached hereto, neither Parent nor any
------------
of its subsidiaries had at May 31, 1997, or has incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature, except: (a) liabilities, obligations or contingencies (i) which
are accrued or reserved against in the Parent Financial Statements or reflected
in the notes thereto or (ii) which were incurred after May 31, 1997 and
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were incurred in the ordinary course of business and consistent with past
practices; (b) liabilities, obligations or contingencies which (i) would not, in
the aggregate, have a Parent Material Adverse Effect or (ii) have been
discharged or paid in full prior to the date hereof; and (c) liabilities and
obligations which are of a nature not required to be reflected in the
consolidated financial statements of Parent and its subsidiaries prepared in
accordance with generally accepted accounting principles consistently applied
and which were incurred in the ordinary course of business.
SECTION 4.7 Absence of Certain Changes or Events. Since May 31,
1997, there has not been any material adverse change in the business,
operations, properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.8 Litigation. Except as disclosed in the Parent SEC
Reports or in Schedule 4.8 attached hereto, there are no claims, suits, actions
------------
or proceedings pending or, to the knowledge of Parent, threatened against,
relating to or affecting Parent or any of its subsidiaries, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that seek to restrain or enjoin the consummation of the Merger or
which could reasonably be expected, either alone or in the aggregate with all
such claims, actions or proceedings, to cause a Parent Material Adverse Effect.
Except as set forth in the Parent SEC Reports or in Schedule 4.8 attached
------------
hereto, neither Parent nor any of its subsidiaries is subject to any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality, authority or arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would
reasonably be expected, either alone or in the aggregate, to have a Parent
Material Adverse Effect.
SECTION 4.9 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by Parent or its subsidiaries for
inclusion in (a) the Registration Statement on Form S-4 to be filed under the
Securities Act with the SEC by Parent and the Company in connection with the
Merger for the purpose of registering the shares of Parent Common Stock to be
issued in connection with the Merger (the "Registration Statement") or (b) the
proxy statement to be distributed in connection with the Company's meeting of
its stockholders to vote upon this Agreement and the transactions contemplated
hereby (the "Proxy Statement" and, together with the prospectus included in the
Registration Statement, the "Proxy Statement and Prospectus") will, in the case
of the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments thereof or
supplements thereto, and at the time of the meeting of stockholders of the
Company to be held in connection with the transactions contemplated by this
Agreement, or, in the case of the Registration Statement, as amended or
supplemented, at the time it becomes effective and at the time of such meeting
of the stockholders of the Company, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement and Prospectus
will, as of its effective date, comply as to form in all material respects with
all applicable laws, including the provisions of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation is made by Parent or Subsidiary with respect to information
supplied by the Company for inclusion therein.
SECTION 4.10 No Violation of Law. Except as disclosed in the Parent
SEC Reports, neither Parent nor any of its subsidiaries is in violation of, or
has been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance, or judgment (including, without
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limitation, any applicable environmental law, ordinance or regulation) of any
governmental or regulatory body or authority, except for violations which, in
the aggregate, could not reasonably be expected to have a Parent Material
Adverse Effect. Except as disclosed in the Parent SEC Reports, as of the date of
this Agreement, to the knowledge of Parent, no investigation or review by any
governmental or regulatory body or authority is pending or threatened, nor has
any governmental or regulatory body or authority indicated to Parent an
intention to conduct the same, other than, in each case, those the outcome of
which, as far as reasonably can be foreseen, will not have a Parent Material
Adverse Effect. Parent and its subsidiaries have all permits, licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct their businesses as presently
conducted (collectively, the "Parent Permits"), except for permits, licenses,
franchises, variances, exemptions, orders, authorizations, consents and
approvals the absence of which, alone or in the aggregate, would not have a
Parent Material Adverse Effect. Parent and its subsidiaries are not in violation
of the terms of any Parent Permit, except for delays in filing reports or
violations which, alone or in the aggregate, would not have a Parent Material
Adverse Effect.
SECTION 4.11 Compliance with Agreements. Except as disclosed in the
Parent SEC Reports or in Schedule 4.11 attached hereto, Parent and each of its
-------------
subsidiaries are not in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
notice or lapse of time or action by a third party, could result in a default
under (a) the respective charters, by-laws or other similar organizational
instruments of Parent or any of its subsidiaries or (b) any contract,
commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which Parent or any of its subsidiaries
is a party or by which any of them is bound or to which any of their property is
subject, which breaches, violations and defaults, in the case of clause (b) of
this Section 4.11, would have, in the aggregate, a Parent Material Adverse
Effect.
SECTION 4.12 Taxes.
(a) Parent and its subsidiaries have (i) duly filed with the
appropriate governmental authorities all Tax Returns (as defined in Section
4.12(c)) required to be filed by them for all periods ending on or prior to the
Effective Time, other than those Tax Returns the failure of which to file would
not have a Parent Material Adverse Effect, and such Tax Returns are true,
correct and complete in all material respects and (ii) duly paid in full or made
adequate provision in the Parent Financial Statements for the payment of all
Taxes (as defined in Section 4.12(b)) for all periods ending at or prior to the
Effective Time, except where the failure to pay such Taxes would not have a
Parent Material Adverse Effect. The liabilities and reserves for Taxes reflected
in the Parent balance sheet included in the latest Parent SEC Report are
expected to be adequate to cover all Taxes for all periods ending at or prior to
the Effective Time and there are no material liens for Taxes upon any property
or assets of Parent or any subsidiary thereof, except for liens for Taxes not
yet due. There are no unresolved issues of law or fact arising out of a notice
of deficiency, proposed deficiency or assessment from the Internal Revenue
Service (the "IRS") or any other governmental taxing authority with respect to
Taxes of the Parent or any of its subsidiaries which, if decided adversely,
singly or in the aggregate, would have a Parent Material Adverse Effect. Neither
Parent nor any of its subsidiaries is a party to any agreement providing for the
allocation or sharing of Taxes with any entity that is not, directly or
indirectly, a wholly owned subsidiary of Parent other than agreements the
consequences of which are fully and adequately reserved for in the Parent
Financial Statements. Neither Parent nor any of its subsidiaries has, with
regard to any assets or
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property held, acquired or to be acquired by any of them, filed a consent to the
application of Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean all
taxes, including, without limitation, income, gross receipts, excise, property,
sales, withholding, social security, occupation, use, service, service use,
license, payroll, franchise, transfer and recording taxes, fees and charges,
windfall profits, severance, customs, import, export, employment or similar
taxes, charges, fees, levies or other assessments imposed by the United States,
or any state, local or foreign government or subdivision or agency thereof,
whether computed on a separate, consolidated, unitary, combined or any other
basis, and such term shall include any interest, fines, penalties or additional
amounts and any interest in respect of any additions, fines or penalties
attributable or imposed or with respect to any such taxes, charges, fees, levies
or other assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean
any return, report or other document or information required to be supplied to a
taxing authority in connection with Taxes.
SECTION 4.13 Employee Benefit Plans; ERISA. (a) Except as set forth
in the Parent SEC Reports, at the date hereof, Parent and its subsidiaries do
not maintain or contribute to any material employee benefit plans, programs,
arrangements or practices (such plans, programs, arrangements or practices of
Parent and its subsidiaries being referred to as the "Parent Plans"), including
employee benefit plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or other
similar material arrangements for the provision of benefits (excluding any
"Multi-employer Plan" within the meaning of Section 3(37) of ERISA or a
"Multiple Employer Plan" within the meaning of Section 413(c) of the Code).
Schedule 4.13 attached hereto lists all Multi-employer Plans and Multiple
- -------------
Employer Plans which any of Parent or its subsidiaries maintains or to which any
of them makes material contributions or which cover a material number of
employees. Neither Parent nor its subsidiaries has any obligation to create any
additional such plan or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of the Parent Plans, under
existing collective bargaining agreements or to comply with applicable law.
(b) Except as disclosed in the Parent SEC Reports, (i) there have
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Parent Plans that
could result in penalties, taxes or liabilities which, singly or in the
aggregate, could have a Parent Material Adverse Effect, (ii) except for premiums
due, there is no outstanding material liability, whether measured alone or in
the aggregate, under Title IV of ERISA with respect to any of the Parent Plans,
(iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Parent Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the Parent Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Parent Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit obligations
under each of the Parent Plans which is subject to Title IV of ERISA did not, as
of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such benefit liabilities by more than the amount, if any,
disclosed in the Parent SEC Reports as of May 31, 1997, based upon reasonable
actuarial assumptions currently utilized for such Parent Plan, (vi) each of the
Parent Plans has been operated and administered in all material respects in
accordance
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with applicable laws during the period of time covered by the applicable statute
of limitations, (vii) each of the Parent Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the IRS to be so qualified and such determination has not been modified,
revoked or limited by failure to satisfy any condition thereof or by a
subsequent amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain the
"qualified" status of such Parent Plans, and the period for making any such
necessary retroactive amendments has not expired, (viii) with respect to Multi-
employer Plans, neither Parent nor any of its subsidiaries has made or suffered
a "complete withdrawal" or a "partial withdrawal," as such terms are defined in
Sections 4203, 4204 and 4205 of ERISA, respectively, and, to the knowledge of
Parent and its subsidiaries, no event has occurred or is expected to occur which
presents a material risk of a complete withdrawal or partial withdrawal under
said Sections 4203, 4204 and 4205, (ix) to the knowledge of Parent and its
subsidiaries, there are no material pending, threatened or anticipated claims
involving any of the Parent Plans other than claims for benefits in the ordinary
course and (x) Parent and its subsidiaries have no current material liability
for plan termination or complete withdrawal or partial withdrawal under Title IV
of ERISA based on any plan to which any entity that would be deemed one employer
with Parent and its subsidiaries under Section 4001 of ERISA or Section 414 of
the Code contributed during the period of time covered by the applicable statute
of limitations (a "Parent Controlled Group Plan"), and Parent and its
subsidiaries do not reasonably anticipate that any such liability will be
asserted against Parent or any of its subsidiaries. None of the Parent
Controlled Group Plans has an "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code).
(c) The Parent SEC Reports contain a true and complete summary or
list of or otherwise describe all material employment contracts and other
employee benefit arrangements with "change of control" or similar provisions and
all severance agreements with executive officers.
SECTION 4.14 Labor Controversies. Except as set forth in the Parent
SEC Reports, (a) there are no material controversies pending or, to the
knowledge of Parent, threatened between Parent or its subsidiaries and any
representatives of any of their employees, (b) to the knowledge of Parent, there
are no material organizational efforts presently being made involving any of the
presently unorganized employees of Parent and its subsidiaries, (c) Parent and
its subsidiaries have, to the knowledge of Parent, complied in all material
respects with all laws relating to the employment of labor, including, without
limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes and (d) no
person has, to the knowledge of Parent, asserted that Parent or any of its
subsidiaries is liable in any material amount for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing, except for
such controversies, organizational efforts, non-compliance and liabilities
which, singly or in the aggregate, could not reasonably be expected to cause a
Parent Material Adverse Effect.
SECTION 4.15 Environmental Matters. (a) To Parent's knowledge and
except as set forth in the Parent SEC Reports, (i) Parent and its subsidiaries
have conducted their respective businesses in compliance with all applicable
Environmental Laws (as defined in Section 4.15(b)), including, without
limitation, having all permits, licenses and other approvals and authorizations
necessary for the operation of their respective businesses as presently
conducted, (ii) none of the properties owned by Parent or any of its
subsidiaries contain any Hazardous Substance (as defined in Section 4.15(c)) as
a result of any activity of Parent or any of its subsidiaries in amounts
exceeding the levels permitted by applicable
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Environmental Laws, (iii) neither Parent nor any of its subsidiaries has
received any notices, demand letters or requests for information from any
Federal, state, local or foreign governmental entity or third party indicating
that Parent or any of its subsidiaries may be in violation of, or liable under,
any Environmental Law in connection with the ownership or operation of their
businesses, (iv) there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or proceedings pending or threatened
against Parent or any of its subsidiaries relating to any violation, or alleged
violation, of any Environmental Law, (v) no reports have been filed, or are
required to be filed, by Parent or any of its subsidiaries concerning the
release of any Hazardous Substance or the threatened or actual violation of any
Environmental Law, (vi) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law from any properties
owned by Parent or any of its subsidiaries as a result of any activity of Parent
or any of its subsidiaries during the time such properties were owned, leased or
operated by Parent or any of its subsidiaries, (vii) there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
regarding compliance or noncompliance with any applicable Environmental Law
conducted by or which are in the possession of Parent or its subsidiaries
relating to the activities of Parent or its subsidiaries, (viii) except as set
forth on Schedule 4.15 attached hereto, there are no underground storage tanks
-------------
on, in or under any properties owned by Parent and any of its subsidiaries and
no underground storage tanks have been closed or removed from any of such
properties during the time such properties were owned, leased or operated by
Parent or any of its subsidiaries, (ix) there is no asbestos or asbestos
containing material present in any of the properties owned by Parent and its
subsidiaries, and no asbestos has been removed from any of such properties
during the time such properties were owned, leased or operated by Parent or any
of its subsidiaries and (x) neither Parent, its subsidiaries nor any of their
respective properties are subject to any material liabilities or expenditures
(fixed or contingent) relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment or claim asserted or
arising under any Environmental Law, except for violations of the foregoing
clauses (i) through (x) that, singly or in the aggregate, would not reasonably
be expected to have a Parent Material Adverse Effect.
(b) As used herein, "Environmental Law" means any Federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, order, judgment, decree, injunction,
requirement or agreement with any governmental entity relating to (x) the
protection, preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource) or to human health or safety or (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Substances, in each case
as amended and as in effect on the Closing Date. The term Environmental Law
includes, without limitation, (i) the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
the Federal Occupational Safety and Health Act of 1970, each as amended and as
in effect on the Closing Date, or any state counterpart thereof, and (ii) any
common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligations for injuries, damages or
penalties due to, or threatened as a result of, the presence of, effects of or
exposure to any Hazardous Substance.
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(c) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure
is regulated by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
SECTION 4.16 Title to Assets. Parent and each of its subsidiaries
has good and marketable title in fee simple to all its real property and good
title to all its leasehold interests and other properties as reflected in the
most recent balance sheet included in the Parent Financial Statements, except
for such properties and assets that have been disposed of in the ordinary course
of business since the date of such balance sheet, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any nature whatsoever,
except (i) the lien for current Taxes, payments of which are not yet delinquent,
(ii) such imperfections in title and easements and encumbrances, if any, as are
not material in character, amount or extent and do not materially and adversely
affect the value or interfere with the present use of the property subject
thereto or affected thereby, or otherwise materially impair the Parent's
business operations (in the manner presently carried on by the Parent), (iii) as
disclosed in the Parent SEC Reports or (iv) mortgages incurred in the ordinary
course of business, and except for such matters which, singly or in the
aggregate, could not reasonably be expected to cause a Parent Material Adverse
Effect. All leases under which Parent leases any real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing default or event which
with notice or lapse of time or both would become a default other than defaults
under such leases which in the aggregate will not cause a Parent Material
Adverse Effect.
SECTION 4.17 Material Agreements. Parent and Subsidiary have no
material agreements other than those filed as exhibits to Parent SEC Reports or
which will be filed with the Form S-4.
SECTION 4.18 Pooling Matters. To the Parent's knowledge and based
upon consultation with its independent advisors, neither the Parent nor any of
its affiliates has taken or agreed to take any action that would prevent the
Merger (a) from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code or (b) from being treated for financial accounting
purposes as a pooling of interests in accordance with generally accepted
accounting principles and the rules, regulations and interpretations of the SEC.
SECTION 4.19 No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Subsidiary has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind whatsoever or entered into any
agreement or arrangement with any person.
SECTION 4.20 Brokers. Parent and Subsidiary represent and warrant
that no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee (except for the fee payable to the investment banking firm
described in Section 8.3(g)) or commission in connection with the Merger or
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the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Subsidiary.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary as of the
date hereof as follows:
SECTION 5.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on its business as
it is now being conducted. The Company is qualified to do business and is in
good standing in each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing will not, when taken together with all other such failures, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of the
Company and its subsidiaries, taken as a whole (a "Company Material Adverse
Effect"). True, accurate and complete copies of the Company's Certificate of
Incorporation and By-laws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to Parent.
SECTION 5.2 Capitalization.
(a) The authorized capital stock of the Company consists of
15,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock. As of July 31, 1997, 9,687,582 shares of Company Common Stock and no
shares of preferred stock were issued and outstanding. All of such issued and
outstanding shares are validly issued and are fully paid, nonassessable and free
of preemptive rights. No subsidiary of the Company holds any shares of the
capital stock of the Company. The Company Common Stock constitutes the only
class of equity securities of the Company or its subsidiaries registered or
required to be registered under the Exchange Act.
(b) Except as set forth on Schedule 5.2 attached hereto, as of the
------------
date hereof (i) there were no outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement and also including any rights plan or
other anti-takeover agreement, obligating the Company or any subsidiary of the
Company to issue, deliver or sell, or cause to be issued, delivered or sold or
otherwise to become outstanding, additional shares of the capital stock of the
Company or obligating the Company or any subsidiary of the Company to grant,
extend or enter into any such agreement or commitment and (ii) except as
contemplated hereby, there are no voting trusts, proxies or other agreements or
understandings to which the Company or any subsidiary of the Company is a party
or is bound with respect to the voting of any shares of capital stock of the
Company and there are no such trusts, proxies, agreements or understandings by,
between or among any of the Company's stockholders with respect to Company
Common Stock. There are no outstanding or
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authorized stock appreciation rights, phantom stock, profit participation or
similar rights with respect to the Company.
SECTION 5.3 Subsidiaries. Except as set forth in Schedule 5.3, each
------------
direct and indirect subsidiary of the Company is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each subsidiary of the Company is
qualified to do business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing will not, when taken together with all such
other failures, have a Company Material Adverse Effect. All of the outstanding
shares of capital stock of each subsidiary of the Company are validly issued,
fully paid, nonassessable and free of preemptive rights and are owned directly
or indirectly by the Company free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any nature whatsoever
except as set forth in Schedule 5.3 attached hereto. There are no
------------
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or other rights with
respect to any shares of capital stock of any subsidiary of the Company,
including any right of conversion or exchange under any outstanding security,
instrument or agreement.
SECTION 5.4 Authority; Non-Contravention; Approvals.
(a) The Company has full corporate power and authority to enter into
this Agreement and, subject to the Company Stockholders' Approval (as defined in
Section 7.3) and the Company Required Statutory Approvals (as defined in Section
5.4(c)), to consummate the transactions contemplated hereby. This Agreement has
been approved by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or, except for the Company Stockholders'
Approval, the consummation by the Company of the transactions contemplated
hereby. The Board of Directors of the Company has recommended that the Merger
be approved by the stockholders of the Company and has authorized the
solicitation of proxies therefor. This Agreement has been duly executed and
delivered by the Company, and, assuming the due authorization, execution and
delivery hereof by Parent and Subsidiary, constitutes a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles. Without limitation of the foregoing, each of the
covenants and obligations of the Company set forth in Sections 6.1, 6.5, 7.1,
7.3, 7.6, 7.7, 7.8, 7.10, 7.13 and 7.14 is valid, legally binding and
enforceable notwithstanding the absence of the Company Stockholders' Approval.
(b) Except as set forth in Schedule 5.4, the execution and delivery
------------
of this Agreement by the Company do not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
requirement to redeem, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of
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the Company or any of its subsidiaries, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to the Company or any of its
subsidiaries or any of their respective properties or assets or (iii) any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which the Company or any of its subsidiaries is now a party or by which
the Company or any of its subsidiaries or any of their respective properties or
assets may be bound or affected. The consummation by the Company of the
transactions contemplated hereby will not result in any violation, conflict,
breach, termination, acceleration or creation of liens under any of the terms,
conditions or provisions described in clauses (i) through (iii) of the preceding
sentence, subject (x) in the case of the terms, conditions or provisions
described in clause (ii) above, to obtaining (prior to the Effective Time) the
Company Required Statutory Approvals and the Company Stockholder's Approval and
(y) in the case of the terms, conditions or provisions described in clause (iii)
above, to obtaining (prior to the Effective Time) consents required from
commercial lenders, lessors or other third parties. Excluded from the foregoing
sentences of this paragraph (b), insofar as they apply to the terms, conditions
or provisions described in clauses (ii) and (iii) of the first sentence of this
paragraph (b), are such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens, security interests, charges or encumbrances
that would not, in the aggregate, have a Company Material Adverse Effect.
(c) Except for (i) the filings by Parent and the Company required by
the HSR Act, (ii) the filing of the Proxy Statement and Prospectus with the SEC
pursuant to the Exchange Act and the Securities Act and the declaration of the
effectiveness thereof by the SEC and filings with various state blue sky
authorities and (iii) the making of the Merger Filing with the Secretary of
State of the State of Delaware in connection with the Merger (the filings and
approvals referred to in clauses (i) through (iii) above are collectively
referred to as the "Company Required Statutory Approvals"), no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a Company Material Adverse Effect.
SECTION 5.5 Reports and Financial Statements. Except as set forth on
Schedule 5.5 attached hereto, since December 31, 1995, the Company has filed
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with the SEC all forms, statements, reports and documents (including all
exhibits, amendments and supplements thereto) required to be filed by it under
each of the Securities Act, the Exchange Act and the respective rules and
regulations thereunder, all of which, as amended if applicable, complied in all
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder. The Company has previously delivered to
Parent copies of its (a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as filed with the SEC, (b) proxy and information statements
relating to (i) all meetings of its stockholders (whether annual or special) and
(ii) actions by written consent in lieu of a stockholders' meeting from December
31, 1995 until the date hereof and (c) all other reports, including quarterly
reports, or registration statements filed by the Company with the SEC since
December 31, 1995 (the documents referred to in clauses (a), (b) and (c) are
collectively referred to as the "Company SEC Reports"). As of their respective
dates, the Company SEC Reports did not 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 were made, not misleading. The audited
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consolidated financial statements and unaudited interim consolidated financial
statements of the Company included in such reports (collectively, the "Company
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
the Company and its subsidiaries as of the dates thereof and the results of
their operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
SECTION 5.6 Absence of Undisclosed Liabilities. Except as disclosed
in the Company SEC Reports or, with respect to acquisitions or potential
transactions, as set forth on Schedule 5.6 attached hereto, neither the Company
------------
nor any of its subsidiaries had at March 31, 1997, or has incurred since that
date, any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature, except: (a) liabilities, obligations or contingencies
(i) which are accrued or reserved against in the Company Financial Statements or
reflected in the notes thereto or (ii) which were incurred after March 31, 1997
and were incurred in the ordinary course of business and consistent with past
practices, (b) liabilities, obligations or contingencies which (i) would not, in
the aggregate, have a Company Material Adverse Effect or (ii) have been
discharged or paid in full prior to the date hereof and (c) liabilities and
obligations which are of a nature not required to be reflected in the
consolidated financial statements of the Company and its subsidiaries prepared
in accordance with generally accepted accounting principles consistently applied
and which were incurred in the normal course of business.
SECTION 5.7 Absence of Certain Changes or Events. Since the date of
the most recent Company SEC Report, there has not been any material adverse
change in the business, operations, properties, assets, liabilities, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, including as a result of any change in capital
structure, employee compensation arrangement (including severance rights and
benefit plans), accounting method or applicable law.
SECTION 5.8 Litigation. Except as referred to in the Company SEC
Reports or in Schedule 5.8 attached hereto, there are no claims, suits, actions
------------
or proceedings pending or, to the knowledge of the Company, threatened against,
relating to or affecting the Company or any of its subsidiaries, before any
court, governmental department, commission, agency, instrumentality, authority
or arbitrator that seek to restrain the consummation of the Merger or which
could reasonably be expected, either alone or in the aggregate with all such
claims, actions or proceedings, to cause a Company Material Adverse Effect.
Except as referred to in the Company SEC Reports or in Schedule 5.8 attached
------------
hereto, neither the Company nor any of its subsidiaries is subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any Company Material Adverse Effect.
SECTION 5.9 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by the Company or its subsidiaries for
inclusion in (a) the Registration Statement or (b) the Proxy Statement will, in
the case of the Proxy Statement or any amendments thereof or supplements
thereto, at the time of the mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of the meeting of stockholders of the
Company to be held in connection with the transactions contemplated by this
Agreement or, in the case of the Registration
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Statement, as amended or supplemented, at the time it becomes effective and at
the time of such meeting of the stockholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement and Prospectus will comply, as of its effective date, as to form in
all material respects with all applicable laws, including the provisions of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the Company with respect to
information supplied by Parent or Subsidiary for inclusion therein. The Company
is qualified to use Form S-3 under the Securities Act.
SECTION 5.10 No Violation of Law. Except as disclosed in the Company
SEC Reports or in Schedule 5.10 attached hereto, neither the Company nor any of
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its subsidiaries is in violation of or has been given notice or been charged
with any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable environmental law,
ordinance or regulation) of any governmental or regulatory body or authority,
except for violations which, in the aggregate, could not reasonably be expected
to have a Company Material Adverse Effect. Except as disclosed in the Company
SEC Reports, to the knowledge of the Company, no investigation or review by any
governmental or regulatory body or authority is pending or threatened, nor has
any governmental or regulatory body or authority indicated to the Company an
intention to conduct the same, other than, in each case, those the outcome of
which, as far as reasonably can be foreseen, will not have a Company Material
Adverse Effect. The Company and its subsidiaries have all permits, licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct their businesses as presently
conducted (collectively, the "Company Permits"), except for permits, licenses,
franchises, variances, exemptions, orders, authorizations, consents and
approvals the absence of which, alone or in the aggregate, would not have a
Company Material Adverse Effect. The Company and its subsidiaries are not in
violation of the terms of any Company Permit, except for delays in filing
reports or violations which, alone or in the aggregate, would not have a Company
Material Adverse Effect.
SECTION 5.11 Compliance with Agreements. Except as disclosed in the
Company SEC Reports, the Company and each of its subsidiaries are not in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with notice or lapse of time or
action by a third party, could result in a default under, (a) the respective
charters, By-laws or similar organizational instruments of the Company or any of
its subsidiaries; or (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which the Company or any of its subsidiaries is a party or by
which any of them is bound or to which any of their property is subject, which
breaches, violations and defaults, in the case of clause (b) of this Section
5.11, would have, in the aggregate, a Company Material Adverse Effect.
SECTION 5.12 Taxes. The Company and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns required to
be filed by them for all periods ending on or prior to the Effective Time, other
than those Tax Returns the failure of which to file would not have a Company
Material Adverse Effect, and such Tax Returns are true, correct and complete in
all material respects and (ii) duly paid in full or made adequate provision in
the Company Financial Statements for the payment of all Taxes for all periods
ending at or prior to the Effective Time (whether or not shown on any Tax
Return), except where the failure to pay such Taxes would not have a Company
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Material Adverse Effect. The liabilities and reserves for Taxes reflected in
the Company balance sheet included in the latest Company SEC Report are adequate
to cover all Taxes for all periods ending at or prior to the Effective Time and
there are no material liens for Taxes upon any property or asset of the Company
or any subsidiary thereof, except for liens for Taxes not yet due. There are no
unresolved issues of law or fact arising out of a notice of deficiency, proposed
deficiency or assessment from the IRS or any other governmental taxing authority
with respect to Taxes of the Company or any of its subsidiaries which, if
decided adversely, singly or in the aggregate, would have a Company Material
Adverse Effect. Neither the Company nor any of its subsidiaries is a party to
any agreement providing for the allocation or sharing of Taxes with any entity
that is not, directly or indirectly, a wholly owned corporate subsidiary of
Company. Neither the Company nor any of its corporate subsidiaries has, with
regard to any assets or property held, acquired or to be acquired by any of
them, filed a consent to the application of Section 341(f) of the Code.
SECTION 5.13 Employee Benefit Plans; ERISA.
(a) Except as set forth in the Company SEC Reports, as supplemented
by Schedule 5.13 attached hereto, at the date hereof, the Company and its
-------------
subsidiaries do not maintain, contribute to or have any obligation or liability
to any employee benefit plans, programs, arrangements and practices (such plans,
programs, arrangements and practices of the Company and its subsidiaries being
referred to as the "Company Plans"), including employee benefit plans within the
meaning set forth in Section 3(3) of ERISA, or other similar material
arrangements for the provision of benefits (excluding any "Multi-employer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple Employer Plan"
within the meaning of Section 413(c) of the Code). Schedule 5.13 attached
-------------
hereto lists all Multi-employer Plans and Multiple Employer Plans which any of
the Company or its subsidiaries maintains or to which any of them makes
contributions or has any liability, contingent or otherwise. Neither the
Company nor its subsidiaries has any obligation to create any additional such
plan or to amend any such plan so as to increase benefits thereunder, except as
required under the terms of the Company Plans, under existing collective
bargaining agreements or to comply with applicable law.
(b) Except as disclosed in the Company SEC Reports or Schedule 5.13,
-------------
(i) there have been no prohibited transactions within the meaning of Section 406
or 407 of ERISA or Section 4975 of the Code with respect to any of the Company
Plans that could result in penalties, taxes or liabilities which, singly or in
the aggregate, could have a Company Material Adverse Effect, (ii) except for
premiums due, there is no outstanding material liability, whether measured alone
or in the aggregate, under Title IV of ERISA with respect to any of the Company
Plans, (iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Company Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the Company Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Company Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit obligations
under each of the Company Plans which is subject to Title IV of ERISA did not,
as of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such benefit liabilities by more than the amount, if any,
disclosed in the Company SEC Reports as of September 30, 1995, based upon
reasonable actuarial assumptions currently utilized for such Company Plan, (vi)
each of the Company Plans has been operated and administered in all material
respects in accordance with applicable laws during the period of time covered by
the
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applicable statute of limitations, (vii) each of the Company Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and such
determination has not been modified, revoked or limited by failure to satisfy
any condition thereof or by a subsequent amendment thereto or a failure to
amend, except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Company Plans, and the
period for making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-employer Plans, neither the Company nor any of its
subsidiaries has, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are defined in Sections 4203, 4204 and 4205 of ERISA,
respectively, and, to the best knowledge of the Company and its subsidiaries, no
event has occurred or is expected to occur which presents a material risk of a
complete or partial withdrawal under said Sections 4203, 4204 and 4205, (ix) to
the knowledge of the Company and its subsidiaries, there are no material
pending, threatened or anticipated claims involving any of the Company Plans
other than claims for benefits in the ordinary course and (x) the Company and
its subsidiaries have no current material liability, whether measured alone or
in the aggregate, for plan termination or complete withdrawal or partial
withdrawal under Title IV of ERISA based on any plan to which any entity that
would be deemed one employer with the Company and its subsidiaries under Section
4001 of ERISA or Section 414 of the Code contributed during the period of time
covered by the applicable statute of limitations (the "Company Controlled Group
Plans"), and the Company and its subsidiaries do not reasonably anticipate that
any such liability will be asserted against the Company or any of its
subsidiaries. None of the Company Controlled Group Plans has an "accumulated
funding deficiency" (as defined in Section 302 of ERISA and 412 of the Code).
(c) The Company SEC Reports, as supplemented by Schedule 5.13
-------------
attached hereto, contain a true and complete summary or list of or otherwise
describe all material employment contracts and other employee benefit
arrangements with "change of control" or similar provisions and all severance
agreements with executive officers.
SECTION 5.14 Labor Controversies. Except as set forth in the Company
SEC Reports, (a) there are no controversies pending or, to the knowledge of the
Company, threatened between the Company or its subsidiaries and any
representatives of any of their employees, (b) to the knowledge of the Company,
there are no material organizational efforts presently being made involving any
of the presently unorganized employees of the Company or its subsidiaries, (c)
the Company and its subsidiaries have, to the knowledge of the Company, complied
in all material respects with all laws relating to the employment of labor,
including, without limitation, any provisions thereof relating to wages, hours,
collective bargaining, and the payment of social security and similar taxes and
(d) no person has, to the knowledge of the Company, asserted that the Company or
any of its subsidiaries is liable in any material amount for any arrears of
wages or any taxes or penalties for failure to comply with any of the foregoing,
except for such controversies, organizational efforts, non-compliance and
liabilities which, singly or in the aggregate, could not reasonably be expected
to cause a Company Material Adverse Effect.
SECTION 5.15 Environmental Matters. Schedule 5.15 attached hereto
-------------
lists all environmental studies, audits and reports prepared by or for the
Company relating to any currently owned or leased properties of the Company and
its subsidiaries conducted or completed since December 31, 1994. To the
Company's knowledge and except as set forth in the Company SEC Reports or the
studies, audits and reports identified in Schedule 5.15 or as otherwise set
-------------
forth on Schedule 5.15, since December 31, 1994, (i) the Company and its
-------------
subsidiaries have conducted their respective businesses in compliance in all
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material respects with all applicable Environmental Laws, including, without
limitation, having all permits, licenses and other approvals and authorizations
necessary for the operation of their respective businesses as presently
conducted, (ii) none of the properties currently owned by the Company or any of
its subsidiaries contain any Hazardous Substance as a result of any activity of
the Company or any of its subsidiaries in concentrations that require removal or
remediation under applicable Environmental Laws, (iii) neither the Company nor
any of its subsidiaries has received any notices, demand letters or requests for
information from any Federal, state, local or foreign governmental entity or
third party indicating that the Company or any of its subsidiaries may be in
material violation of, or liable under, any Environmental Law in connection with
the ownership or operation of their businesses, (iv) there are no civil,
criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or threatened in writing, against the
Company or any of its subsidiaries relating to any violation, or alleged
violation, of any Environmental Law, (v) no reports have been filed, or are
required to be filed, by the Company or any of its subsidiaries concerning the
release of any Hazardous Substance or the threatened or actual violation of any
Environmental Law by the Company or any of its subsidiaries, (vi) no Hazardous
Substance has been disposed of, released or transported in violation of any
applicable Environmental Law from any properties currently owned by the Company
or any of its subsidiaries as a result of any activity of the Company or any of
its subsidiaries during the time such properties were owned, leased or operated
by the Company or any of its subsidiaries, (vii) there have been no
environmental investigations, studies, audits, tests, reviews or other analyses
regarding compliance or noncompliance with any applicable Environmental Law
conducted by or which are in the possession of the Company or its subsidiaries
relating to the activities of the Company or its subsidiaries, (viii) any
underground storage tanks on, in or under any properties currently owned by the
Company or any of its subsidiaries are operated in material compliance with all
applicable Environmental Laws and no underground storage tanks have been closed
or removed from any of such properties currently during the time such properties
were owned, leased or operated by the Company or any of its subsidiaries, (ix)
there is no asbestos or asbestos containing material present in any of the
properties owned by the Company and its subsidiaries that require removal or
remediation under any applicable Environmental Law, and no asbestos has been
removed from any of such properties during the time such properties were owned,
leased or operated by the Company or any of its subsidiaries and (x) neither the
Company, its subsidiaries nor any of their respective properties are subject to
any material liabilities or expenditures (fixed or contingent) relating to any
suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law, except for
violations of the foregoing clauses (i) through (x) that, singly or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 5.16 Title to Assets. The Company and each of its
subsidiaries has good and marketable title in fee simple to all its real
property and good title to all its leasehold interests and other properties, as
reflected in the most recent balance sheet included in the Company Financial
Statements, except for properties and assets that have been disposed of in the
ordinary course of business since the date of such balance sheet, free and clear
of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, except (i) the lien of current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title and easements and encumbrances, if
any, as are not substantial in character, amount or extent and do not materially
detract from the value, or interfere with the present use of the property
subject thereto or affected thereby, or otherwise materially impair the
Company's business operations (in the manner presently carried on by the
Company), (iii) as disclosed in the Company SEC Reports, (iv) mortgages incurred
in the ordinary course of business, or (v) except as set forth on
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Schedule 5.16 attached hereto and except for such matters which, singly or in
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the aggregate, could not reasonably be expected to cause a Company Material
Adverse Effect. All leases under which the Company leases real or personal
property have been delivered to Parent and are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event which with notice or lapse of time
or both would become a default other than defaults under such leases which in
the aggregate will not have a Company Material Adverse Effect.
SECTION 5.17 Company Stockholders' Approval. The affirmative vote of
stockholders of the Company required for approval and adoption of this Agreement
and the Merger is a majority of the outstanding shares of Company Common Stock.
SECTION 5.18 No Excess Parachute Payments. Except as set forth on
Schedule 5.18, the Company has no contracts, arrangements or understandings
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pursuant to which any person may receive any amount or entitlement from the
Company or any of its subsidiaries (including cash or property or the vesting of
property) that may be characterized as an "excess parachute payment" (as such
term is defined in Section 280G(B)(1) of the Code) (any such amount being an
"Excess Parachute Payment") as a result of any of the transactions contemplated
by this Agreement. Except as set forth on Schedule 5.18, no person is entitled
-------------
to receive any additional payment from the Company, its subsidiaries or any
other person (a "Parachute Gross-up Payment") in the event that the twenty
percent (20%) parachute excise tax of Section 4999(a) of the Code is imposed on
such person. Except as set forth on Schedule 5.18, the Board of Directors of
-------------
the Company has not during the six (6) months prior to the date of this
Agreement granted to any officer, director or employee of the Company any right
to receive any Parachute Gross-Up Payment.
SECTION 5.19 Trademarks and Intellectual Property Compliance. The
Company and its subsidiaries own or have the right to use, without any material
payment to any other party, all of their patents, trademarks (registered or
unregistered), trade names, service marks, copyrights and applications
("Intellectual Property Rights"), and the consummation of the transactions
contemplated hereby will not alter or impair such rights in any material
respect. To the knowledge of the Company, no claims are pending by any person
with respect to the ownership, validity, enforceability or use of any such
Intellectual Property Rights challenging or questioning the validity or
effectiveness of any of the foregoing which claims could reasonably be expected
to have a Company Material Adverse Effect.
SECTION 5.20 Material Agreements. The Company has no material
agreements other than those filed as exhibits to the Company SEC Reports or
which will be filed with the Form S-4.
SECTION 5.21 Pooling Matters. To the Company's knowledge and based
upon consultation with its independent accountants, neither the Company nor any
of its affiliates has taken or agreed to take any action that would prevent the
Merger (a) from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code or (b) from being treated for financial accounting
purposes as a pooling of interests in accordance with generally accepted
accounting principles and the rules, regulations and interpretations of the SEC.
SECTION 5.22 Transactions with Related Parties. Except as set forth
in the Company SEC Reports, (a) there have been no transactions by the Company
or its subsidiaries with any officer or director of the Company or beneficial
owner of more than five percent (5%) of the Company Common
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Stock or their affiliates ("Related Parties") since December 31, 1996 which are
required to be disclosed pursuant to the Exchange Act and (b) there are no
material agreements or understandings now in effect between the Company or its
subsidiaries and any Related Party.
SECTION 5.23 Insurance. Except to extent there would be no Company
Material Adverse Effect, all of the Company's and its subsidiaries' liability,
theft, life, health, fire, title, worker's compensation and other forms of
insurance, surety bonds and umbrella policies, insuring the Company and its
subsidiaries and their directors, officers, employees, independent contractors,
properties, assets and business, are valid and in full force and effect and
without any premium past due or pending notice of cancellation, are, in the
reasonable judgment of the Company, adequate for the business of the Company and
its subsidiaries as now conducted, and there are no claims, singly or in the
aggregate, under such policies in excess of $100,000, which, in any event, are
not in excess of the limitations of coverage set forth in such policies. The
Company and its subsidiaries have taken all actions reasonably necessary to
insure that their independent contractors obtain and maintain adequate insurance
coverage. All of the insurance policies referred to in this Section 5.23 are
"occurrence" policies and no such policies are "claims made" policies, except
with respect to directors and executive officers. Neither the Company nor any
of its subsidiaries has knowledge of any fact indicating that such policies will
not continue to be available to the Company and its subsidiaries upon
substantially similar terms subsequent to the Effective Time. The provision
and/or reserves in the Company Financial Statements are adequate for any and all
self insurance programs maintained by the Company or its subsidiaries.
SECTION 5.24 Year 2000 Compliance. The Company believes that its
ongoing management information system upgrading program will result in each
system, comprised of software, hardware, databases or embedded control systems
(microprocessor controlled, robotic or other device) (collectively, a "System"),
that constitutes any material part of, or is used in connection with the use,
operation or enjoyment of, any material tangible or intangible asset or real
property of the Company and its subsidiaries not being materially adversely
affected by the advent of the year 2000, the advent of the twenty-first century
or the transition from the twentieth century through the year 2000 and into the
twenty-first century, and that neither the Company nor any of its subsidiaries
will incur material expenses arising from or relating to the failure of any of
its Systems as a result of the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century.
SECTION 5.25 Brokers. The Company represents and warrants that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee (except for the fee payable to the investment banking firm described
in Section 8.2(g)) or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Conduct of Business by the Company Pending the Merger.
Except as otherwise contemplated by this Agreement, after the date hereof and
prior to the Closing Date or earlier
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termination of this Agreement, unless Parent shall otherwise agree in writing,
the Company shall, and shall cause its subsidiaries to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or
By-laws, (ii) split, combine or reclassify their outstanding capital stock or
(iii) declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise, except for the payment of dividends or
distributions by a wholly owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of or otherwise cause to become outstanding, any additional
shares of, or any options, warrants or rights of any kind to acquire any shares
of their capital stock of any class or any debt or equity securities convertible
into or exchangeable for such capital stock, except that the Company may issue
shares (i) upon conversion of convertible securities and exercise of options
outstanding on the date hereof and (ii) in connection with the potential
acquisitions described in Schedule 6.1;
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(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (x) borrowings in the ordinary course
of business or (y) borrowings to refinance existing indebtedness, the terms of
which shall be reasonably satisfactory to Parent, (ii) redeem, purchase, acquire
or offer to purchase or acquire any shares of its capital stock or any options,
warrants or rights to acquire any of its capital stock or any security
convertible into or exchangeable for its capital stock, (iii) take any action
which would jeopardize the treatment of the Merger as a pooling of interests
under APB 16, (iv) take or fail to take any action which action or failure would
cause the Company or its stockholders (except to the extent that any
stockholders receive cash in lieu of fractional shares) to recognize gain or
loss for federal income tax purposes as a result of the consummation of the
Merger, (v) make any acquisition of any assets or businesses other than
acquisitions of assets in the ordinary course of business, (vi) sell, pledge,
dispose of or encumber any assets or businesses other than sales in the ordinary
course of business or (vii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(e) use all commercially reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the services of
their respective present officers and key employees, and preserve the goodwill
and business relationships with customers and others having business
relationships with them and not engage in any action, directly or indirectly,
with the intent to adversely impact the transactions contemplated by this
Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of Parent to report operational matters of materiality and the
general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees, except
in the ordinary course and consistent with past practice;
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(h) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law; and
(i) maintain with financially responsible and adequately capitalized
insurance companies insurance coverage on its assets and its businesses in such
amounts and against such risks and losses as are consistent with past practice.
SECTION 6.2 Conduct of Business by Parent and Subsidiary Pending the
Merger. Except as otherwise contemplated by this Agreement, after the date
hereof and prior to the Closing Date or earlier termination of this Agreement,
unless the Company shall otherwise agree in writing, Parent shall, and shall
cause Subsidiary to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) except as necessary to consummate the transactions
contemplated hereby, amend or propose to amend their respective charters or by-
laws, (ii) split, combine or reclassify (whether by stock dividend or otherwise)
their outstanding capital stock or (iii) declare, set aside or pay any dividend
or distribution payable in cash, stock, property or otherwise, except for the
payment of dividends or distributions by a wholly owned subsidiary of Parent;
(c) use all commercially reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the services of
their respective present officers and key employees, and preserve the goodwill
and business relationships with customers and others having business
relationships with them and not engage in any action, directly or indirectly,
with the intent to adversely impact the transactions contemplated by this
Agreement; and
(d) confer on a regular and frequent basis with one or more
representatives of the Company to report operational matters of materiality and
the general status of ongoing operations.
SECTION 6.3 Control of the Company's Operations. Nothing contained
in this Agreement shall give to Parent, directly or indirectly, rights to
control or direct the Company's operations prior to the Effective Time. Prior
to the Effective Time, the Company shall exercise, consistent with and subject
to the terms and conditions of this Agreement, complete control and supervision
of its operations.
SECTION 6.4 Control of Parent's or Subsidiary's Operations. Nothing
contained in this Agreement shall give to the Company, directly or indirectly,
rights to control or direct Parent's or Subsidiary's operations prior to the
Effective Time. Prior to the Effective Time, Parent shall exercise, consistent
with and subject to the terms and conditions of this Agreement, complete control
and supervision of its operations.
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SECTION 6.5 Acquisition Transactions.
(a) After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, the Company shall not, and shall not permit any
of its subsidiaries (including officers, directors, representatives and agents
of the Company and its subsidiaries) to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with or provide
information to any corporation, partnership, person or other entity or group
except the Parent, concerning any merger, sale of assets, sale of or tender
offer for its common stock or similar actions (any such transactions being
referred to herein as "Acquisition Transactions") provided, however, that
nothing herein shall prevent the Board of Directors of the Company from taking
and disclosing to the Company's stockholders a position contemplated by Rules
14d-9 and 14e-2 promulgated under the Exchange Act with regard to any tender
offer.
(b) Notwithstanding the provisions of paragraph (a) above, the
Company may, in response to an unsolicited written proposal with respect to an
Acquisition Transaction, furnish information to a financially capable
corporation, partnership, person or other entity or group (a "Potential
Acquirer") pursuant to appropriate confidentiality agreements and may
participate in discussions and negotiate with such Potential Acquirer concerning
any inquiry or proposal to acquire the Company in an Acquisition Transaction or
negotiate with such Potential Acquirer if (i) the Company shall have given not
less than two (2) business days' advance written notice to the Parent of the
Company's intention to do so, (ii) the board of directors of the Company is
advised by one or more of its independent financial advisors that providing
information to the Potential Acquirer is likely to lead to an Acquisition
Transaction on terms that would yield a higher value to the Company's
stockholders than the Merger and is in furtherance of the best interests of the
Company's stockholders and (iii) based upon advice of its legal counsel, its
board of directors determines in good faith, that such action is in furtherance
of the best interests of the Company stockholders and that the failure to
provide such information to such Potential Acquirer would constitute a breach of
its fiduciary duty to its stockholders.
(c) In the event the Company shall determine to provide any
information or negotiate as described in paragraph (b) above, or shall receive
any request, inquiry proposals or offer of the type referred to in paragraph (b)
above, it shall (i) immediately provide Parent with a copy of all information
being provided to the third party, (ii) promptly inform the Parent that
information is to be provided, that negotiations are to take place or that an
offer has been received and (iii) if a request, inquiry, proposal or offer has
been received, furnish to the Parent a description of the material terms thereof
and, unless the board of directors of the Company concluded that such disclosure
is inconsistent with its fiduciary duties under applicable law, furnish to the
Parent the identity of the person receiving such information or the proponent of
such offer, if applicable.
(d) Subject to Subsection (e) below, the Company may enter into a
definitive agreement for an Acquisition Transaction which meets the requirements
set forth above with a Potential Acquirer with which it is permitted to
negotiate pursuant to paragraph (b) above, but only if (i) the independent
financial advisors of the Company shall have determined in good faith that such
Acquisition Transaction would be more favorable to the Company's stockholders
from a financial point of view than the Merger and is in furtherance of the best
interests of the Company's stockholders, (ii) at least five (5) business days
prior to the execution of such definitive agreement, the Company shall have
furnished the Parent with a copy of such definitive agreement and (iii) the
Parent shall have failed within such five-day period to offer to
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amend the terms of this Agreement in order that the Merger be, in good faith
determination of the Board of Directors of the Company, at least as favorable to
the Company's stockholders from a financial point of view as the Acquisition
Transaction.
(e) Each party (i) acknowledges that a breach of any of its covenants
contained in this Section 6.5 will result in irreparable harm to the other party
which will not be compensable in money damages and (ii) agrees that such
covenant shall be specifically enforceable and that specific performance and
injunctive relief shall be a remedy properly available to the other party for a
breach of such covenant. In any event, if Company enters into an Acquisition
Transaction, it will immediately pay to Parent the sums described in Section 7.6
hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information. (a) The Company and its
subsidiaries shall afford to Parent and Subsidiary and their respective
accountants, counsel, financial advisors and other representatives (the "Parent
Representatives") and Parent and its subsidiaries shall afford to the Company
and its accountants, counsel, financial advisors and other representatives (the
"Company Representatives") full access during normal business hours throughout
the period prior to the Effective Time to all of their respective properties,
books, contracts, commitments and records (including, but not limited to, Tax
Returns) and, during such period, shall furnish promptly to one another (i) a
copy of each report, schedule and other document filed or received by any of
them pursuant to the requirements of federal or state securities laws or filed
by any of them with the SEC or which may have a material effect on their
respective businesses, properties or personnel and (ii) such other information
concerning their respective businesses, operations, properties, assets,
condition (financial or other), results of operations and personnel as Parent or
Subsidiary or the Company, as the case may be, shall reasonably request;
provided that no investigation pursuant to this Section 7.1 shall amend or
modify any representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the Merger. Parent and its
subsidiaries shall hold and shall use their reasonable best efforts to cause the
Parent Representatives to hold, and the Company and its subsidiaries shall hold
and shall use their reasonable best efforts to cause the Company Representatives
to hold, in strict confidence all non-public documents and information furnished
to Parent and Subsidiary or to the Company, as the case may be, in connection
with the transactions contemplated by this Agreement, except that (i) Parent,
Subsidiary and the Company may disclose such information as may be necessary in
connection with seeking the Parent Required Statutory Approvals, the Company
Required Statutory Approvals and the Company Stockholders' Approval and (ii)
each of Parent, Subsidiary and the Company may disclose any information that it
is required by law or judicial or administrative order to disclose.
(b) In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver to the other all non-public
written material provided pursuant to this Section 7.1 and shall not retain any
copies, extracts or other reproductions in whole or in part of such written
material. In such event, all documents, memoranda, notes and other writings
prepared by Parent or the Company based on the information in such material
shall be destroyed (and Parent and the Company shall use their respective
reasonable best efforts to cause their advisors and representatives to similarly
destroy
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their documents, memoranda and notes), and such destruction (and reasonable best
efforts) shall be certified in writing by an authorized officer supervising such
destruction.
(c) The Company shall promptly advise Parent and Parent shall
promptly advise the Company in writing of any change or the occurrence of any
event after the date of this Agreement having, or which, insofar as can
reasonably be foreseen, in the future may have, any material adverse effect on
the business, operations, properties, assets, condition (financial or other), or
results of operations of the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be, taken as a whole.
SECTION 7.2 Registration Statement and Proxy Statement. Parent and
the Company shall file with the SEC as soon as is reasonably practicable after
the date hereof the Proxy Statement and Prospectus and shall use all reasonable
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable. Parent shall also take any reasonable action required
to be taken under applicable state blue sky or securities laws in connection
with the issuance of Parent Common Stock pursuant hereto. Parent and the
Company shall promptly furnish to each other all information, and take such
other actions, as may reasonably be requested in connection with any action by
any of them in connection with the preceding sentences. The information
provided and to be provided by Parent and the Company, respectively, for use in
the Proxy Statement and Prospectus shall be true and correct in all material
respects without omission of any material fact which is required to make such
information not misleading as of the date thereof and in light of the
circumstances under which given or made.
SECTION 7.3 Company Stockholders' Approval. The Company shall, as
promptly as practicable, submit this Agreement and the transactions contemplated
hereby for the approval of its stockholders at a meeting of stockholders and,
subject to the fiduciary duties of the Board of Directors of the Company under
applicable law, shall use its reasonable best efforts to obtain stockholder
approval and adoption (the "Company Stockholders' Approval") of this Agreement
and the transactions contemplated hereby, provided that the Board of Directors
of the Company may make any disclosure that it is compelled to make with respect
to the receipt of a proposal for an Acquisition Transaction with a Potential
Acquirer in order to comply with its fiduciary duties or Rule 14d-9 or 14e-2
promulgated under the Exchange Act with regard to any tender offer. Such
meeting of stockholders shall be held as soon as practicable following the date
upon which the Registration Statement becomes effective. Subject to the
fiduciary duties of the Board of Directors of the Company under applicable law,
the Company shall, through its Board of Directors, recommend to its stockholders
approval of the transactions contemplated by this Agreement. The Company (i)
acknowledges that a breach of its covenant contained in this Section 7.3 to
convene a meeting of its stockholders and call for a vote thereat with respect
to the approval of this Agreement and the Merger will result in irreparable harm
to Parent which will not be compensable in money damages, and (ii) agrees that
such covenant shall be specifically enforceable and that specific performance
and injunctive relief shall be a remedy properly available to Parent for a
breach of such covenant.
SECTION 7.4 Affiliates of the Company. (a) Within 30 days after the
date of this Agreement, (i) the Company shall deliver to Parent a letter
identifying all persons who may be deemed affiliates of the Company under Rule
145 of the Securities Act ("Rule 145"), including, without limitation, all
directors and executive officers of the Company and (ii) the Company shall
advise the persons identified in such letter of the resale restrictions imposed
by applicable securities laws, including Accounting Series Release No. 135 ("ASR
135"). The Company shall use its reasonable best efforts to obtain as soon as
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practicable from any person who may be deemed to have become an affiliate of the
Company after the Company's delivery of the letter referred to above and prior
to the Effective Time, a written agreement substantially in the form of Exhibit
-------
7.4.
- ---
(b) If any stockholder of the Company reasonably determines on the
basis of a rule or interpretation of the staff of the SEC that such stockholder
will not be eligible to sell all of the shares (the "Stockholder Shares") of
Parent received by such stockholder in the Merger pursuant to Rule 145(d) (1) in
the three (3) month period immediately following the publication of thirty (30)
days of combined financial results of operations of the Company and Parent as
required by ASR 135, Parent agrees, if requested by such stockholder, to either,
at Parent's option, (i) take such actions reasonably necessary to register the
Stockholder Shares for resale pursuant to the Registration Statement or (ii)
promptly after the Effective Time, register the Stockholder Shares pursuant to a
registration statement on Form S-3. Parent shall maintain the effectiveness of
any such registration statement (subject to Parent's right to convert to a Form
S-3 registration from the Registration Statement at any time) until the earlier
of the second anniversary of the Effective Time or such time as Parent
reasonably determines that such stockholder will be eligible to sell all of the
Stockholder Shares then owned by the Stockholder pursuant to Rule 145(d) (1) in
the three month period immediately following the termination of the
effectiveness of the applicable registration statement. Parent's obligations
contained in this paragraph (b) shall terminate on the second anniversary of the
Effective Time.
SECTION 7.5 Nasdaq Listing. Parent shall use its reasonable best
efforts to effect, at or before the Effective Time, authorization for listing on
Nasdaq, upon official notice of issuance, of the shares of Parent Common Stock
to be issued pursuant to the Merger and the shares of Parent Common Stock to be
reserved for issuance upon exercise of Exchanged Options and Exchanged Warrants.
SECTION 7.6 Expenses and Fees. Each party hereto agrees to bear its
own expenses, including reasonable and customary fees and expenses payable to
attorneys, accountants and investment bankers in connection with the
transactions contemplated hereby. In addition, Parent will pay the fees and
expenses incurred in connection with the printing, filing and mailing of the
Proxy Statement and Prospectus and the HSR Act filing, provided, however, that
in the event the Merger is not consummated, the parties will share equally in
such fees and expenses.
(a) If the Merger is not consummated because either party breaches a
material representation or warranty or fails to perform a material covenant
contained in this Agreement, and such breach shall not have been cured or such
representation or warranty shall not have been made true within twenty (20)
business days after notice by the other party thereof, and the other party has
not breached any material representation or warranty or failed to perform a
material covenant and the non-breaching party chooses to terminate this
Agreement as a direct result of such breach or failure, the breaching party
shall pay the non-breaching party the sum of $1,000,000.
(b) If the Merger is not consummated because the Company enters into
an Acquisition Transaction with another party other than the Parent as set forth
in Section 6.5 hereof, at any time within twelve (12) months from the date of
this Agreement, the Company shall pay to Parent the sum of $3,000,000, which sum
shall be in lieu of the amount listed in subsection (a) of this Section 7.6. In
the event that the Merger is not consummated because the Parent does not
exercise its right under Section 3.1(b)(i) hereof, unless the Parent Stock Value
is less than $13.20 per share, then the Parent shall
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pay to the Company the sum of $3,000,000, which sum shall be in lieu of the
amount listed in subsection (a) of this Section 7.6.
SECTION 7.7 Agreement to Cooperate.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable pursuant to all agreements, contracts, indentures or other instruments
to which the parties hereto are a party, or under any applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable efforts (i) to obtain all
necessary or appropriate waivers, consents and approvals from lenders,
landlords, security holders or other parties whose waiver, consent or approval
is required to consummate the Merger, (ii) to effect all necessary
registrations, filings and submissions and (iii) to lift any injunction or other
legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible), subject, however, to the requisite votes of the
stockholders of the Company and boards of directors of the Company and Parent.
(b) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable after the date
hereof a Notification and Report Form under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division"). Each of Parent and the Company shall (i) use its
reasonable efforts to comply as expeditiously as possible with all lawful
requests of the FTC or the Antitrust Division for additional information and
documents and (ii) not extend any waiting period under the HSR Act or enter into
any agreement with the FTC or the Antitrust Division not to consummate the
transactions contemplated by this Agreement, except with the prior written
consent of the other parties hereto.
(c) In the event any litigation is commenced by any person or entity
relating to the transactions contemplated by this Agreement, including any
Acquisition Transaction, Parent shall have the right, at its own expense, to
participate therein, and the Company will not settle any such litigation without
the consent of Parent, which consent will not be unreasonably withheld.
SECTION 7.8 Public Statements. Unless required by law or by
obligations pursuant to any listing agreement with the Nasdaq National Market as
determined by Parent, Subsidiary or the Company, as the case may be, the parties
(i) shall consult with each other prior to issuing any press release or any
written public statement with respect to this Agreement or the transactions
contemplated hereby, and (ii) shall not issue any such press release or written
public statement prior to such consultation.
SECTION 7.9 Option Plans and Warrants. (a) The Parent will cause a
Form S-8 ("Form S-8") to be filed with the SEC as soon as practicable following
the Effective Time, but in no event more than thirty (30) days after the
Effective Time, which registration statement shall register the shares of Parent
Common Stock underlying the Parent Options granted in replacement of Company
Options, or will cause such shares underlying such Parent Options to be subject
to an existing Form S-8, and the Parent shall use its best efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Parent Options remain outstanding. At or before the
Effective Time, the Company shall cause
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to be effected any necessary amendments to the Plan to give effect to the
foregoing provisions of this Section 7.9.
(b) Pursuant to Section 12(h) of the Warrant Agreement dated as of
November 28, 1994 between the Company and The Bank of New York (as the
successor-in-interest to NationsBank of Texas, N.A.), concurrently with the
consummation of the Merger the Parent shall enter into a supplemental Warrant
Agreement and shall mail a notice describing such supplemental Warrant Agreement
to the holders of Company Warrants.
SECTION 7.10 Notification of Certain Matters. Each of the Company,
Parent and Subsidiary agrees to give prompt notice to each other of, and to use
their respective reasonable best efforts to prevent or promptly remedy, (i) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representations or warranties in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time and (ii) any material failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 7.10 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.11 Directors' and Officers' Indemnification.
(a) For a period of six years after the Effective Time, the Surviving
Corporation and the Parent shall, to the extent permitted under Section 145 of
the DGCL and to the extent of the Company's indemnification prior to the
Effective Time, indemnify and hold harmless (and shall also advance expenses as
incurred to the fullest extent permitted under applicable law to) each present
and former director, officer, previously indemnified employee and previously
indemnified agent of the Company or any of its subsidiaries (each, together with
such person's heirs, executors or administrators, an "indemnified Party" and
collectively, the "indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of, relating to or in connection with any action or
omission occurring prior to the Effective Time (including, without limitation,
acts or omissions in connection with such persons serving as an officer,
director or other fiduciary in any entity if such service was at the request or
for the benefit of the Company) or arising out of or pertaining to the
transactions contemplated by this Agreement. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Company or Parent and the Surviving Corporation, as the
case may be, shall pay the reasonable fees and expenses of counsel selected by
the indemnified Parties, which counsel shall be reasonably satisfactory to the
Parent and the Surviving Corporation, promptly after statements therefor are
received, (ii) the Parent and the Surviving Corporation will cooperate in the
defense of any such matter and (iii) any determination required to be made with
respect to whether an indemnified Party's conduct complies with the standards
set forth under Section 145 of the DGCL and the Parent's or the Surviving
Corporation's respective Certificates of Incorporation or By-Laws shall be made
by independent legal counsel acceptable to the Parent or the Surviving
Corporation, as the case may be, and the indemnified Party; provided, however,
that neither Parent nor the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld). The parties hereto intend, to the extent not prohibited
by applicable law,
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that the indemnification provided for in this Section 7.11 shall apply without
limitation to negligent acts or omissions by an indemnified Party. Each
indemnified Party is intended to be a third party beneficiary of this Section
7.11 and may specifically enforce its terms. This Section 7.11 shall not limit
or otherwise adversely affect any rights any indemnified Party may have under
any agreement with the Company or under the Company's Certificate of
Incorporation or bylaws as presently in effect.
(b) Without limiting any of the obligations under paragraph (a) of
this Section 7.11, Parent agrees that all rights to indemnification and all
limitations of liability existing in favor of the indemnified Parties as
provided in the Company's Certificate of Incorporation or Bylaws or in the
similar governing documents of any of the Company's subsidiaries as in effect as
of the date of this Agreement or as provided in the indemnification agreements
of the Company with respect to matters occurring on or prior to the Effective
Time shall survive the Merger and shall continue in full force and effect,
without any amendment thereto, for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in respect of any
claim, action, suit, proceeding or investigation asserted or made within such
period shall continue until the final disposition of such claim, action, suit,
proceeding or investigation; provided, further, however, that nothing contained
in this Section 7.11(b) shall be deemed to preclude the liquidation,
consolidation or merger of the Company or any of the Company's subsidiaries, in
which case all of such rights to indemnification and limitations on liability
shall be deemed to so survive and continue notwithstanding any such liquidation,
consolidation or merger and shall constitute rights which may be asserted
against Parent.
(c) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations set forth in this Section
7.11.
(d) For a period of six years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company (provided
that the Surviving Corporation may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous) with respect to claims arising from facts or events that occurred
before the Effective Time; provided, however, that in no event shall the
Surviving Corporation be required to expend pursuant to this Section 7.11(c)
more than an amount equal to 150% of current annual premiums paid by the Company
for such insurance (which premiums the Company represents and warrants to be
approximately $190,000 in the aggregate).
SECTION 7.12 Corrections to the Proxy Statement and Prospectus and
Registration Statement. Prior to the date of approval of the Merger by the
Company's stockholders, each of the Company, Parent and Subsidiary shall correct
promptly any information provided by it to be used specifically in the Proxy
Statement and Prospectus and Registration Statement that shall have become false
or misleading in any material respect and shall take all steps necessary to file
with the SEC and have declared effective or cleared by the SEC any amendment or
supplement to the Proxy Statement and Prospectus or the Registration Statement
so as to correct the same and to cause the Proxy Statement and Prospectus as so
corrected to be disseminated to the stockholders of the Company, to the extent
required by applicable law.
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SECTION 7.13 Employment Agreements. Following the execution hereof,
the Company will use its best efforts to cause any and all employees of the
Company who are parties to agreements that may provide to them cash compensation
upon a change of control (as defined therein) of the Company and certain other
events (the "Employment Agreements") to execute amendments and/or waivers of the
cash compensation provisions applicable upon such a change of control (as
defined therein), in exchange for which the Parent will enter into employment
agreements with each such employee of the Company in form and substance
reasonably satisfactory to the parties thereto.
SECTION 7.14 Irrevocable Proxies. Upon the execution hereof, the
Company will use its best efforts to cause its executive officers and employee
directors to execute and deliver to the Parent irrevocable proxies in a form
reasonably acceptable to the Parent authorizing the Parent to vote all shares of
Company Common Stock which such executive officers and directors are entitled to
vote in favor of the Merger.
SECTION 7.15 Grant of Options to Company Employees. Upon
consummation of the Merger, Parent shall grant options to purchase 400,000
shares of Parent Common Stock (at an exercise price equal to the fair market
price on the date of grant) to certain employees of the Company as recommended
to Parent in writing by senior management of the Company and as agreed to by the
compensation committee of the Parent's Board of Directors. Options granted to
an employee for the aggregate purchase of 5,000 shares or less of Parent Common
Stock shall be qualified as incentive stock options. Options granted to an
employee for the aggregate purchase of more than 5,000 shares of Parent Company
Stock shall be non-qualified options. The amounts and terms of such options
shall be consistent with the Parent's policies relating to stock option grants
to new employees, providing for a four-year ratable vesting schedule beginning
one year from the date of grant (2.083% per month, for months thirteen (13)
through sixty (60), inclusive, following the Effective Time) and a seven year
expiration (or earlier in the event of termination of employment, except for Mr.
Kearns' options, the expiration of which will be governed by Mr. Kearns'
employment agreement). The Parent will register the shares issuable pursuant to
the options Parent has agreed to grant under this Section 7.15 on a Form S-8,
and shall use reasonable efforts to effect authorization for listing of such
shares on the Nasdaq.
SECTION 7.16 Tax-Free Treatment of Merger. The Parent, the
Subsidiary and Company shall each use its best efforts to cause the Merger to be
treated as a tax-free reorganization for federal income tax purposes. The
Company, on the one hand, and Parent and Subsidiary, on the other hand, shall
execute and deliver to legal counsel to the Company and Parent certificates
substantially in the form attached hereto as Exhibits 7.16(a) and 7.16(b),
---------------- -------
respectively, at such time or times as reasonably requested by such legal
counsel in connection with its delivery of an opinion with respect to
transactions contemplated hereby and the Company and Parent shall each provide a
copy thereof to the other parties hereto. Prior to the Effective Time, none of
the Company, Parent or Subsidiary shall take or cause to be taken any action
which would cause to be untrue (or fail to take or cause not to be taken any
action which would cause to be untrue) any of the representations in Exhibits
--------
7.16(a) and 7.16(b).
- ------- -------
SECTION 7.17 Parent's Periodic Reports Following the Merger. As soon
as practicable following the Effective Time, Parent shall file with the SEC a
periodic report under the Exchange Act which contains at least thirty (30) days
of combined results of operations of the Company and the Parent as required by
ASR 135 within the time prescribed for the filing of such report.
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SECTION 7.18 Employee Benefits. The Parent shall provide employee
benefits to the employees of the Company and its subsidiaries in an amount and
nature materially consistent with benefits provided to existing employees of the
Parent and its subsidiaries, which benefits will, to the extent practicable and
feasible, be generally comparable to existing benefits provided to the Company's
employees. Notwithstanding the foregoing, nothing contained herein shall be
construed as requiring Parent or the Surviving Corporation to continue any
specific employee benefit plans or to continue the employment of any specific
person. The Parent will also use its reasonable best efforts cause each
employee medical benefit plan in which the employees of the Company and its
subsidiaries participate from and after the Effective Time to waive (i) any
preexisting condition restriction that was waived under the terms of any
analogous plan immediately prior to the Effective Time or (ii) any waiting
period limitation that would otherwise be applicable to an employee of the
Company or its subsidiaries on or after the Effective Time to the extent such
employee had satisfied any similar waiting period limitation under any analogous
plan prior to the Effective Time.
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation to Effect the
Merger. Unless waived by the parties, the respective obligations of each party
to effect the Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) this Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the stockholders of the
Company under applicable law and applicable listing requirements;
(b) the shares of Parent Common Stock issuable in the Merger shall
have been authorized for listing on Nasdaq upon official notice of issuance;
(c) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect and no
proceeding for that purpose shall have been instituted by the SEC or any state
regulatory authorities;
(e) no preliminary or permanent injunction or other order or decree
by any federal or state court which prevents the consummation of the Merger
shall have been issued and remain in effect (each party agreeing to use its
reasonable efforts to have any such injunction, order or decree lifted);
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the Merger or make the consummation of the Merger illegal;
36
<PAGE>
(g) all governmental waivers, consents, orders and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby, and all consents from lenders required to consummate the Merger, shall
have been obtained and be in effect at the Effective Time;
(h) Coopers & Lybrand L.L.P., certified public accountants for
Parent, shall have delivered a letter, dated the Closing Date, addressed to
Parent, in form and substance reasonably satisfactory to Parent, stating that
the Merger will qualify as a pooling-of-interests transaction under APB 16; and
(i) all required material consents and approvals of lenders who have
advanced $5,000,000 or more to Parent or the Company and lessors of material
leases shall have been obtained and be in effect at the Effective Time;
provided, however, that the failure to obtain such consents or approvals shall
- -------- -------
not be due to the default or delay of the party responsible for obtaining such
consents and approvals.
SECTION 8.2 Conditions to Obligation of the Company to Effect the
Merger. Unless waived by the Company, the obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:
(a) Parent and Subsidiary shall have performed in all material
respects their agreements contained in this Agreement required to be performed
on or prior to the Closing Date and the representations and warranties of Parent
and Subsidiary contained in this Agreement shall be true and correct in all
material respects on and as of the date made and on and as of the Closing Date
as if made at and as of such date, and the Company shall have received a
certificate of the Chairman of the Board and Chief Executive Officer, the
President or a Vice President of Parent and of the President and Chief Executive
Officer or a Vice President of Subsidiary to that effect;
(b) the Company shall have received an opinion of Gibson Dunn &
Crutcher LLP, special counsel to the Company, in form and substance reasonably
satisfactory to the Company, effective as of the Closing Date and based on
representations of the Company and Parent, to the effect that (i) the Merger of
Subsidiary with and into the Company pursuant to the Merger Agreement and
applicable state law will be treated for United States federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code;
(ii) Parent, Subsidiary and Company will each be a party to the reorganization
within the meaning of Section 368(b) of the Code; and (iii) the stockholders of
the Company will not recognize gain or loss as a result of the Merger, except to
the extent such stockholders receive cash in lieu of fractional shares, and such
opinion shall not have been withdrawn or modified in any material respect,
substantially in the form of Exhibit 8.2(b);
--------------
(c) the Company shall have received an opinion or opinions from
Ballard Spahr Andrews & Ingersoll, special counsel to Parent and Subsidiary,
dated the Closing Date, reasonably satisfactory to the Company substantially in
the form set forth in Exhibit 8.2(c) attached hereto;
--------------
(d) the Company shall have received "comfort" letters in customary
form from Coopers & Lybrand L.L.P., certified public accountants for Parent and
Subsidiary, dated the date of the Proxy Statement, the effective date of the
Registration Statement and the Closing Date (or such other date reasonably
acceptable to the Company) with respect to certain financial statements and
other financial information included in the Registration Statement and any
subsequent changes in specified balance sheet and income statement items,
including total assets, working capital, total stockholders' equity, total
revenues and the total and per share amounts of net income related to Parent;
37
<PAGE>
(e) since the date hereof, there shall have been no changes that
have, and no event or events shall have occurred which have resulted in or have,
a Parent Material Adverse Effect;
(f) all governmental waivers, consents, orders, and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Closing Date, and no
governmental authority shall have promulgated any statute, rule or regulation
which, when taken together with all such promulgations, would materially impair
the value to Parent of the Merger;
(g) the Company shall have received from Jefferies & Company, Inc.
(or other nationally recognized investment banking firm reasonably acceptable to
Parent) an opinion, dated as of the date on which the Proxy Statement and
Prospectus is first distributed to the stockholders of the Company, to the
effect that the consideration to be received by the stockholders of the Company
in the Merger is fair, from a financial point of view, to the holders of Company
Common Stock, and such opinion shall not have been withdrawn;
(h) Deloitte & Touche LLP, independent public accountants for the
Company, shall have delivered a letter, dated the Closing Date, addressed to the
Company, in form and substance reasonably satisfactory to the Company, stating
that the Company has not taken any action that would affect the ability to
account for the Merger as a pooling-of-interests transaction under APB 16; and
(i) The parent shall have entered into an employment agreement with
Walter J. Kearns ("Mr. Kearns"), a form of which is attached hereto as Exhibit
-------
8.2(i).
- ------
SECTION 8.3 Conditions to Obligations of Parent and Subsidiary to
Effect the Merger. Unless waived by Parent and Subsidiary, the obligations of
Parent and Subsidiary to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the additional following conditions:
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of the Company contained
in this Agreement shall be true and correct in all respects on and as of the
date made and on and as of the Closing Date as if made at and as of such date,
and Parent shall have received a Certificate of the President and Chief
Executive Officer or of a Vice President of the Company, in form and substance
reasonably satisfactory to Parent to that effect;
(b) Parent shall have received an opinion from Gibson Dunn & Crutcher
LLP, special counsel to the Company, effective as of the Closing Date,
substantially in the form set forth in Exhibit 8.3(b) attached hereto;
--------------
(c) Parent shall have received "comfort" letters in customary form
and substance reasonably satisfactory to Parent from Deloitte & Touche LLP,
certified public accountants for the Company, dated the date of the Proxy
Statement, the effective date of the Registration Statement and the Closing Date
(or such other date reasonably acceptable to Parent) with respect to certain
financial statements and other financial information included in the
Registration Statement and any subsequent changes in specified balance sheet and
income statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts of net
income related to the Company;
38
<PAGE>
(d) the Affiliate Agreements required to be delivered to Parent
pursuant to Section 7.4 shall have been furnished as required by Section 7.4;
(e) since the date hereof, there shall have been no changes that
have, and no event or events shall have occurred which have resulted in or have,
a Company Material Adverse Effect;
(f) all governmental waivers, consents, orders and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby shall have been obtained and be in effect at the Closing Date, and no
governmental authority shall have promulgated any statute, rule or regulation
which, when taken together with all such promulgations, would materially impair
the value to Parent of the Merger;
(g) Parent shall have received from Merrill Lynch, Pierce, Fenner &
Smith, Inc. (or other nationally recognized investment banking firm reasonably
acceptable to the Parent) an opinion reasonably acceptable to the Parent, dated
as of the date on which the Proxy Statement and Prospectus is first distributed
to the shareholders of Parent, to the effect that the Exchange Ratio is fair,
from a financial point of view, to Parent's stockholders, and such opinion shall
not have been withdrawn;
(h) the Company shall have delivered to Parent its audited
consolidated financial statements for the year ended December 31, 1996, together
with an unqualified opinion from Deloitte & Touche LLP regarding such financial
statements, which financial statements shall reflect earnings which are not
materially less than the average of the published projections of the securities
analysts' which regularly follow the Company and which financial statements
shall reflect all normal, recurring adjustments necessary to fairly present the
Company's results from operations or financial condition; and
(i) Coopers & Lybrand L.L.P., public accountants for Parent and
Subsidiary, shall have delivered a letter, dated the Closing Date, addressed to
Parent, in form and substance reasonably satisfactory to Parent stating that the
Merger will qualify as a pooling-of-interests transaction under APB 16.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated by the
mutual written consent of the parties or at any time prior to the Closing Date,
whether before or after approval by the stockholders of the Company, as follows:
(a) The Company shall have the right to terminate this Agreement:
(i) if the Merger is not completed by December 31, 1997 other
than on account of delay or default on the part of the Company;
39
<PAGE>
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Company or
any of its 5% stockholders or any of their affiliates or associates;
(iii) if the terms and conditions of Section 6.5(d) are
satisfied;
(iv) if Parent (A) fails to perform in any material respect any
of its covenants in this Agreement and (B) does not cure such default
in all material respects within 30 days after written notice of such
default is given to Parent by the Company; or
(v) in the manner set forth in Section 3.1; or
(vi) if the Company's shareholders' vote is not sufficient to
approve the Merger.
(b) Parent shall have the right to terminate this Agreement:
(i) if the Merger is not completed by December 31, 1997 other
than on account of delay or default on the part of Parent;
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of Parent or any
of its 5% stockholders or any of their affiliates or associates;
(iii) if the Company (A) fails to perform in any material
respect any of its covenants in this Agreement and (B) does not cure
such default in all material respects within 30 days after written
notice of such default is given to the Company by Parent; or
(iv) in the manner set forth in Section 3.1; or
(v) if the Company's shareholders' vote is not sufficient to
approve the Merger.
SECTION 9.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of the Company, Parent, Subsidiary or their respective officers or
directors (except as set forth in this Section 9.2 and in Sections 7.1, 7.6 and
7.8, all of which shall survive the termination). Nothing in this Section 9.2
shall relieve any party from liability for any breach of this Agreement.
SECTION 9.3 Amendment. This Agreement may not be amended except by
action taken by the parties' respective Boards of Directors or duly authorized
committees thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law.
SECTION 9.4 Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document
40
<PAGE>
delivered pursuant thereto, and (c) waive compliance with any of the agreements
or conditions contained herein. Any such waiver shall not be deemed to be
continuing or to apply to any future obligation or requirement of any party
hereto provided herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations and Warranties. The
representations and warranties contained in Articles IV and V of this Agreement
shall not survive the Merger, and after effectiveness of the Merger the Company,
Parent, Subsidiary or their respective officers or directors shall have no
further obligation with respect thereto. This Section 10.1 shall not limit any
covenant or agreement of the parties hereto which by its terms requires
performance after the Effective Time.
SECTION 10.2 Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 10.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile 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 Parent or Subsidiary to:
Corporate Express, Inc.
1 Environmental Way
Broomfield, Colorado 80021-3416
Attention: Gary M. Jacobs
Facsimile Number: (303) 664-3823
with a copy to:
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
Attention: Gerald J. Guarcini, Esq.
Facsimile Number: (215) 864-8999
41
<PAGE>
(b) If to the Company, to:
Data Documents Incorporated
4205 South 96th Street
Omaha, Nebraska 68217
Attention: Walter J. Kearns
Facsimile Number: (402) 339-9270
with a copy to:
Gibson Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071-3197
Attention: Kenneth M. Doran, Esq.
Facsimile Number: (213) 229-6537
SECTION 10.4 Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a contrary
intention appears, (i) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
SECTION 10.5 Miscellaneous. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof,
(b) is not intended to confer upon any other person any rights or remedies
hereunder, except for rights of indemnified Parties under Section 7.11 and (c)
shall not be assigned by operation of law or otherwise, except that Subsidiary
may assign this Agreement to any other wholly owned subsidiary of Parent. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION
AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 10.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement. Each of the parties agrees to
accept and be bound by facsimile signatures hereto.
SECTION 10.7 Parties In Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and except as set forth in
the exception to Section 10.5(b), nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 10.8 Exhibits and Schedules. All Exhibits and Schedules referred
to in this Agreement shall be attached hereto and are incorporated by reference
herein.
42
<PAGE>
SECTION 10.9 Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or any officer,
director, employee, agent, representative or investor of any party hereto.
SECTION 10.10 Definition of "Knowledge" and "Belief". As used in this
Agreement, "knowledge" or "belief" or similar language means, with respect to
the Company, all things known to or believed by, after reasonable investigation
and inquiry, Walter Kearns, A. Robert Thomas, Ralph Scheer and Milt Romjue.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
43
<PAGE>
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement to be signed by their respective officers as of the date first written
above.
CORPORATE EXPRESS, INC.
By: /s/ Gary M. Jacobs
----------------------------------------
Gary M. Jacobs
Executive Vice President
IDD ACQUISITION CORP.
By: /s/ Gary M. Jacobs
----------------------------------------
Gary M. Jacobs
Executive Vice President
DATA DOCUMENTS INCORPORATED
By: /s/ Walter J. Kearns
----------------------------------------
Walter J. Kearns
Chief Executive Officer
44
<PAGE>
Appendix II
[Jefferies & Company, Inc. Letterhead Appears Here]
September 5, 1997
Board of Directors
DATA DOCUMENTS INCORPORATED
4205 South 96/th/ Street
Omaha, NE 68127-1290
Re: The proposed merger transaction between Data Documents Incorporated, a
Delaware corporation ("DDII" or the "Company"), and Corporate Express,
Inc., a Colorado corporation ("CEXP"), which merger would be accomplished
through a merger of a wholly-owned subsidiary of CEXP into DDII pursuant to
which all of the outstanding common stock of DDII would be converted into
shares of common stock of CEXP at a rate of 1.1 shares of CEXP common stock
for each share of DDII common stock outstanding as of the effective date
(the "Transaction"); all upon the terms and conditions more fully set forth
in an Agreement and Plan of Reorganization (the "Agreement") to be entered
into by and among DDII and CEXP.
---------------------------------------------------------------------------
To the Members of the Board of Directors:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the holders of the outstanding
shares of common stock, par value $.01 per share (the "Common Stock"), of the
Company (the "Stockholders") of the consideration to be received by such
Stockholders pursuant to the Transaction (the "Consideration"). The terms and
conditions of the Transaction are more fully set forth in the Agreement.
Jefferies & Company, Inc. ("Jefferies"), as part of its investment
banking business, is regularly engaged in the evaluation of capital structures,
the evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements, financial
restructurings and other financial services. In the ordinary course of our
business, we may trade the securities of DDII and CEXP for our own account and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in those securities.
As you are aware, Jefferies will receive a fee for providing this
opinion. In addition to delivering this opinion, Jefferies has acted as
exclusive financial advisor to DDII in connection with the Transaction and has
actively assisted DDII in negotiating the terms thereof. Jefferies will receive
an additional fee in connection with the consummation of the Transaction for
acting in such capacity. In addition, over the last twelve months, Jefferies has
received customary fees from CEXP for certain investment banking services
performed by Jefferies.
In conducting our analysis and arriving at the opinion expressed
herein, we have reviewed a draft of the Agreement, dated August 26, 1997
(including any schedules and exhibits thereto) and certain financial and other
information that was publicly available or furnished to us by DDII and CEXP,
including certain internal financial analyses, budgets, reports and other
information
<PAGE>
Board of Directors
DATA DOCUMENTS INCORPORATED
September 5, 1997
Page 2
prepared by the respective company's management. We have also held discussions
with various members of senior management of the Company and CEXP concerning
each company's historical and current operations, financial conditions and
prospects, as well as the strategic and operating benefits anticipated from the
business combination. In addition, we have conducted such other reviews,
analyses and inquiries relating to DDII and CEXP as we considered appropriate in
rendering this opinion.
In our review and analysis and in rendering this opinion, we have
relied upon, but have not independently investigated or verified, the accuracy,
completeness and fair presentation of all financial and other information that
was provided to us by DDII or CEXP, or that was publicly available to us
(including, without limitation, the information described above and the
financial projections prepared by DDII and CEXP regarding the estimated future
performance of the respective companies before and after giving effect to the
Transaction). This opinion is expressly conditioned upon such information
(whether written or oral) being complete, accurate and fair in all respects.
With respect to the financial projections provided to and examined by
us, we note that projecting future results of any company is inherently subject
to vast uncertainty. You have informed us, however, and we have assumed with
your permission, that such projections were reasonably prepared on bases
reflecting the best currently available estimates and good faith judgments of
the respective managements of the companies as to the future performance of each
company. In addition, although we have performed sensitivity analyses thereon,
in rendering this opinion we have assumed, with your permission, that each
company will perform in accordance with such projections for all periods
specified therein. Although such projections did not form the principal basis
for our opinion, but rather constituted one of many items that we employed,
changes thereto could affect the opinion rendered herein. We have assumed, with
your permission, that the Transaction will be a tax free reorganization and will
be accounted for under the "pooling of interests" accounting method.
We have not been requested to, and did not solicit third party
indications of interest in acquiring all or any part of the Company; or make any
independent evaluation or appraisal of the assets or liabilities of, nor conduct
a comprehensive physical inspection of any of the assets of, DDII or CEXP, nor
have we been furnished with any such appraisals. Our opinion is based on
economic, monetary, political, market and other conditions existing and which
can be evaluated as of the date of this opinion (including, without limitation,
current market prices of the common stock of the Company and CEXP); however,
-------
such conditions are subject to rapid and unpredictable change and such changes
could affect the conclusions expressed herein. We have made no independent
investigation of any legal matters affecting DDII or CEXP, and we have assumed
the correctness of all legal and accounting advice given to such parties and
their respective boards of directors, including (without limitation) advice as
to the accounting and tax consequences of the Transaction to DDII, CEXP and
their respective stockholders.
In rendering this opinion we have also assumed, with your permission,
that: (i) the terms and provisions contained in the definitive Agreement
(including any schedules and exhibits
<PAGE>
Board of Directors
DATA DOCUMENTS INCORPORATED
September 5, 1997
Page 3
thereto) will not differ from those contained in the drafts of those documents
we have heretofore reviewed; (ii) the conditions to the consummation of the
Transaction set forth in the Agreement will be satisfied without material
expense; and (iii) there is not now, and there will not as a result of the
consummation of the transactions contemplated by the Agreement be, any default,
or event of default, under any indenture, credit agreement or other material
agreement or instrument to which DDII, CEXP or any of their respective
subsidiaries or affiliates is a party.
Moreover, in rendering the opinion set forth below we note that the
consummation of the Transaction is conditioned upon the approval of DDII's
stockholders, and we are not recommending that DDII, its Board of Directors, any
of its security holders or any other person should take any specific action in
connection with the Transaction. Our opinion does not constitute a
recommendation of the Transaction over any alternative transactions which may be
available to DDII, and does not address DDII's underlying business decision to
effect the Transaction. Finally, we are not opining as to the market value of
the Consideration to be received by the Stockholders or the prices at which any
of the securities of CEXP may trade upon and following the consummation of the
Transaction.
Based upon and subject to the foregoing, and upon such other matters
as we consider relevant, it is our opinion as investment bankers that, as of the
date hereof, the Consideration to be received by the Stockholders is fair from a
financial point of view.
It is understood and agreed that this opinion is provided for the use
of the Board of Directors of DDII as one element in the Board's consideration of
the Transaction, and may not be used for any other purpose, or otherwise
referred to, relied upon or circulated, without our prior written consent.
Without limiting the foregoing, this opinion does not constitute a
recommendation to any Stockholder (or any other person) as to how such person
should vote with respect to the Transaction. We expressly disclaim any
undertaking or obligation to advise any person of any change in any fact or
matter affecting our opinion of which we become aware after the date hereof.
This opinion may be reproduced in full in any proxy statement mailed to holders
of Common Stock in connection with the Transaction but may not otherwise be
disclosed publicly in any manner without our prior written approval.
Sincerely,
JEFFERIES & COMPANY, INC.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 7-109-101, et seq., of the Colorado Business Corporation Act
generally provides that a corporation may indemnify its directors,
officers, employees, fiduciaries and agent against liabilities and
reasonable expenses incurred in connection with any threatened, pending, or
completed action, suit or proceeding whether civil, criminal,
administrative or investigative and whether formal or informal (a
"Proceeding"), by reason of being or having been a director, officer,
employee, fiduciary or agent of the corporation, if such person acted in
good faith and reasonably believed that his conduct, in his official
capacity, was in the best interests of the corporation (or, with respect to
employee benefit plans, was in the best interests of the participants of
the plan), and in all other cases his conduct was at least not opposed to
the corporation's best interests. In the case of a criminal proceeding, the
director, officer, employee, fiduciary or agent must have had no reasonable
cause to believe his conduct was unlawful. Under Colorado law, the
corporation may not indemnify a director, officer, employee, fiduciary or
agent in connection with a Proceeding by or in the right of the corporation
if the director is adjudged liable to the corporation, or in a proceeding
in which the director, officer, employee or agent is adjudged liable for an
improper personal benefit.
Corporate Express' Articles of Amendment and Restatement to the
Articles of Incorporation and By-Laws provide that Corporate Express shall
indemnify its officers and directors to the full extent permitted by the
law. The indemnification provisions in Corporate Express' By-Laws are
substantially similar to the provisions of Section 7-109-101, et seq.
Corporate Express has entered into agreements to provide indemnification
for its directors and certain officers consistent with its Articles of
Amendment and Restatement to the Articles of Incorporation and By-Laws.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
Except as otherwise noted, the exhibit was previously filed as an
exhibit to Corporate Express' Registration Statement on Form S-1, File No.
33-81924 (the "Initial Registration Statement"), and is incorporated herein
by reference.
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
2.1* Agreement and Plan of Merger dated as of September 10, 1997
among Corporate Express, Inc., IDD Acquisition Corp. and
Data Documents Incorporated
3.1 Articles of Amendment and Restatement of the Articles of
Incorporation of Corporate Express, Inc., a Colorado
corporation, filed on September 30, 1994
3.2 Articles of Amendment and Restatement of Corporate Express,
Inc., filed on August 22, 1996 (incorporated by reference to
Corporate Express' Form 10-K for the year ended
March 1, 1997)
3.3 Amended and Restated By-Laws of Corporate Express, Inc.
4.1 Specimen Common Stock Certificate of Corporate Express, Inc.
4.2 Form of Warrant Agreement
4.3 Indenture dated as of February 28, 1994 by and among
Corporate Express, Inc., and the Guarantors named therein
and First Trust National Association for the $100,000,000
91/8% Senior Subordinated Notes
4.4 Note Purchase Agreement dated February 22, 1994 by and among
Corporate Express, Inc., McQuiddy Holdings Inc., McQuiddy
Office Designers, Inc., New Jersey Office Supply Inc., Ross-
Martin Company Inc., Scott Rice Company Inc.,
Schwabacher/Frey, Inc., Bayless Stationers, Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Alex. Brown &
Sons Incorporated
4.5 Recapitalization Agreement dated December 3, 1991, by and
between Corporate Express, Inc., J.P. Morgan Investment
Corporation ("J.P. Morgan") and Shareholders
4.6 Recapitalization Agreement dated August 29, 1992 by and
among Corporate Express, Inc., J.P. Morgan and certain
shareholders
4.7 Indenture dated as of June 24, 1996 by and among Corporate
Express, Inc. and Bankers Trust Company, as trustee, for the
4 1/2% Convertible Notes due July 1, 2000 (including Form of
Notes) (incorporated by reference to Corporate Express'
Registration Statement on Form S-3, File No. 333-12451)
4.8 First Supplemental Indenture dated as of October 15, 1996
relating to Corporate Express Inc.'s 4 1/2% Convertible
Notes (incorporated by reference to Corporate Express'
Registration Statement on Form S-3, File No. 333-12451)
4.9 Form of 4 1/2% Convertible Note (incorporated by reference
to Corporate Express' Registration Statement on Form S-3,
File No. 333-12451)
5.1** Opinion of Ballard Spahr Andrews & Ingersoll as to the
validity of the shares of Corporate Express Common Stock
being registered
8.1** Opinion of Gibson Dunn & Crutcher LLP as to certain tax
matters relating to the Merger
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
10.1 Employment Agreement dated as of August 25, 1993, by and
between Corporate Express, Inc. and Robert King, as amended
effective July 15, 1994
10.2 Amended and Restated 1992 Stock Option Plan, Form of Non-
qualified Stock Option Agreement and Form of Incentive Stock
Option Agreement
10.3 1994 Executive Stock Option Plan
10.4 Form of Indemnification Agreement between Corporate Express,
Inc. and its officers and directors
10.5 1994 Stock Option and Incentive Plan
10.6 1994 Employee Stock Purchase Plan
10.7 Employment Agreement dated as of July 31, 1995 by and
between Corporate Express, Inc. and Sam Leno (incorporated
by reference to Corporate Express' Registration Statement on
Form S-1, File No. 33-95902)
10.8 Agreement among Corporate Express, Inc., Synergom, Inc. and
OfficeMax, Inc. dated as of August 25, 1995 (incorporated by
reference to Corporate Express' Registration Statement on
Form S-1, File No. 33-95902)
10.9 Agreement and Plan of Merger dated as of January 6, 1996
among the Company, Delivery Systems, Inc. and DSU
Acquisition Corp., as amended (incorporated by reference to
the Company's Registration Statement on Form S-4, File No.
333-288)
10.10 Agreement and Plan of Merger dated as of February 8, 1996 by
and among Corporate Express, Inc., CEX Acquisition Corp.,
Young, Richard Young, HCC Investments, Inc., Juliet
Challenger, Inc. and Wilmington Securities, Inc.
(incorporated by reference to Corporate Express'
Registration Statement on Form S-4, File No. 333-288)
10.11 Stock Purchase Agreement dated April 22, 1996 by and among
the Company, ASAP Software Express, Inc. and the
shareholders of ASAP Software Express, Inc. (incorporated by
reference to Corporate Express' Form 8-K dated May 15, 1996)
10.12 Corporate Express, Inc. Supplemental Stock Option Plan
(incorporated by reference to Corporate Express' Form 10-K
for the year ended March 1, 1997)
10.13 Amended and Restated Credit Agreement, dated as of November
26, 1996 by and among CEX Holdings, Inc., as borrower,
Corporate Express, as a guarantor, the lenders named therein
and The First National Bank of Chicago, as agent
(incorporated by reference to Corporate Express' Quarterly
Report on Form 10-Q for the period ended November 30, 1996)
10.14 Agreement and Plan of Merger dated as of September 10, 1996
among Corporate Express, United TransNet, Inc. and Bevo
Acquisition Corp., Inc. (incorporated by reference to
Corporate Express' Registration Statement on Form S-4, File
No. 333-13217)
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
21.1** List of Subsidiaries
23.1** Consent of Ballard Spahr Andrews & Ingersoll (included as
part of Exhibit 5.1)
23.2** Consent of Coopers & Lybrand L.L.P.
23.3** Consent of Deloitte & Touche LLP
23.4** Consent of Gibson Dunn & Crutcher LLP (included as part of
Exhibit 8.1)
24.1* Power of Attorney (included on signature page to Form S-4)
99.1** Form of Proxy
</TABLE>
------------------
* Previously filed.
** Filed herewith.
Item 22. Undertakings
The undersigned Registrant undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) ((S) 230.424(b) of
this chapter) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the
"Act"), each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act") (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
The Undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder
through use of a prospectus which is part of this Registration
Statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act and issued in
connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment and that, for purposes of determining
any liability under the Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provision, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-4
<PAGE>
The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of
responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject
of and included in the registration statement when it became
effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this amendment to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of
Broomfield, State of Colorado, on October 14, 1997.
CORPORATE EXPRESS, INC.
By: /s/ Jirka Rysavy
------------------------------------
Jirka Rysavy
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to Registration Statement has been signed on October 14, 1997
by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jirka Rysavy Chairman of the Board and Chief October 14, 1997
- --------------------------- Executive Officer (Principal Executive
Jirka Rysavy Officer)
/s/ Robert L. King* President, Chief Operating Officer and October 14, 1997
- --------------------------- Director
Robert L. King
/s/ Sam R. Leno Executive Vice President and Chief October 14, 1997
- --------------------------- Financial Officer (Principal Financial
Sam R. Leno Officer)
/s/ Joanne C. Farver* Vice President and Controller October 14, 1997
- --------------------------- (Principal Accounting Officer)
Joanne C. Farver
/s/ Janet A. Hickey* Director October 14, 1997
- ---------------------------
Janet A. Hickey
/s/ James P. Argyropoulos* Director October 14, 1997
- ---------------------------
James P. Argyropoulos
/s/ Mo Siegel* Director October 14, 1997
- ---------------------------
Mo Siegel
</TABLE>
* Gary M. Jacobs, by signing his name hereto, signs this document on behalf of
the persons indicated above, pursuant to a power of attorney duly executed by
such person and previously filed with the Securities and Exchange Commission
with this Registration Statement.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
2.1* Agreement and Plan of Merger dated as of September 10, 1997
among Corporate Express, Inc., IDD Acquisition Corp. and
Data Documents Incorporated
3.1 Articles of Amendment and Restatement of the Articles of
Incorporation of Corporate Express, Inc., a Colorado
corporation, filed on September 30, 1994
3.2 Articles of Amendment and Restatement of Corporate Express,
Inc., filed on August 22, 1996 (incorporated by reference to
Corporate Express' Form 10-K for the year ended March 1,
1997)
3.3 Amended and Restated By-Laws of Corporate Express, Inc.
4.1 Specimen Common Stock Certificate of Corporate Express, Inc.
4.2 Form of Warrant Agreement
4.3 Indenture dated as of February 28, 1994 by and among
Corporate Express, Inc., and the Guarantors named therein
and First Trust National Association for the $100,000,000
9 1/8% Senior Subordinated Notes
4.4 Note Purchase Agreement dated February 22, 1994 by and among
Corporate Express, Inc., McQuiddy Holdings Inc., McQuiddy
Office Designers, Inc., New Jersey Office Supply Inc., Ross-
Martin Company Inc., Scott Rice Company Inc.,
Schwabacher/Frey, Inc., Bayless Stationers, Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Alex. Brown &
Sons Incorporated
4.5 Recapitalization Agreement dated December 3, 1991, by and
between Corporate Express, Inc., J.P. Morgan Investment
Corporation ("J.P. Morgan") and Shareholders
4.6 Recapitalization Agreement dated August 29, 1992 by and
among Corporate Express, Inc., J.P. Morgan and certain
shareholders
4.7 Indenture dated as of June 24, 1996 by and among Corporate
Express, Inc. and Bankers Trust Company, as trustee, for the
4 1/2% Convertible Notes due July 1, 2000 (including Form of
Notes) (incorporated by reference to Corporate Express'
Registration Statement on Form S-3, File No. 333-12451)
4.8 First Supplemental Indenture dated as of October 15, 1996
relating to Corporate Express Inc.'s 4 1/2% Convertible
Notes (incorporated by reference to Corporate Express'
Registration Statement on Form S-3, File No. 333-12451)
4.9 Form of 4 1/2% Convertible Note (incorporated by reference
to Corporate Express' Registration Statement on Form S-3,
File No. 333-12451)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.1** Opinion of Ballard Spahr Andrews & Ingersoll as to the
validity of the shares of Corporate Express Common Stock
being registered
8.1** Opinion of Gibson Dunn & Crutcher LLP as to certain tax
matters relating to the Merger.
10.1 Employment Agreement dated as of August 25, 1993, by and
between Corporate Express, Inc. and Robert King, as amended
effective July 15, 1994
10.2 Amended and Restated 1992 Stock Option Plan, Form of Non-
qualified Stock Option Agreement and Form of Incentive Stock
Option Agreement
10.3 1994 Executive Stock Option Plan
10.4 Form of Indemnification Agreement between Corporate Express,
Inc. and its officers and directors
10.5 1994 Stock Option and Incentive Plan
10.6 1994 Employee Stock Purchase Plan
10.7 Employment Agreement dated as of July 31, 1995 by and
between Corporate Express, Inc. and Sam Leno (incorporated
by reference to Corporate Express' Registration Statement on
Form S-1, File No. 33-95902)
10.8 Agreement among Corporate Express, Inc., Synergom, Inc. and
OfficeMax, Inc. dated as of August 25, 1995 (incorporated by
reference to Corporate Express' Registration Statement on
Form S-1, File No. 33-95902)
10.9 Agreement and Plan of Merger dated as of January 6, 1996
among the Company, Delivery Systems, Inc. and DSU
Acquisition Corp., as amended (incorporated by reference to
the Company's Registration Statement on Form S-4, File No.
333-288)
10.10 Agreement and Plan of Merger dated as of February 8, 1996 by
and among Corporate Express, Inc., CEX Acquisition Corp.,
Young, Richard Young, HCC Investments, Inc., Juliet
Challenger, Inc. and Wilmington Securities, Inc.
(incorporated by reference to Corporate Express'
Registration Statement on Form S-4, File No. 333-288)
10.11 Stock Purchase Agreement dated April 22, 1996 by and among
the Company, ASAP Software Express, Inc. and the
shareholders of ASAP Software Express, Inc. (incorporated by
reference to Corporate Express' Form 8-K dated May 15, 1996)
10.12 Corporate Express, Inc. Supplemental Stock Option Plan
(incorporated by reference to Corporate Express' Form 10-K
for the year ended March 1, 1997)
10.13 Amended and Restated Credit Agreement, dated as of November
26, 1996 by and among CEX Holdings, Inc., as borrower,
Corporate Express, as a guarantor, the lenders named therein
and The First National Bank of Chicago, as agent
(incorporated by reference to Corporate Express' Quarterly
Report on Form 10-Q for the period ended November 30, 1996)
10.14 Agreement and Plan of Merger dated as of September 10, 1996
among Corporate Express, United TransNet, Inc. and Bevo
Acquisition Corp., Inc. (incorporated by reference to
Corporate Express' Registration Statement on Form S-4, File
No. 333-13217)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
21.1** List of Subsidiaries
23.1** Consent of Ballard Spahr Andrews & Ingersoll (included as
part of Exhibit 5.1)
23.2** Consent of Coopers & Lybrand L.L.P.
23.3** Consent of Deloitte & Touche LLP
23.4** Consent of Gibson Dunn & Crutcher LLP (included as part of
Exhibit 8.1)
24.1* Power of Attorney (included on signature page to Form S-4).
99.1** Form of Proxy
</TABLE>
------------------
* Previously filed.
** Filed herewith.
<PAGE>
Exhibit 5.1
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL APPEARS HERE]
October 15, 1997
Corporate Express, Inc.
325 Interlocken Parkway
Broomfield, CO 80021
Ladies and Gentlemen:
We have acted as your counsel in connection with the proposed issuance
of shares of common stock in connection with the proposed merger (the "Merger")
pursuant to which IDD Acquisition Corp., a wholly owned subsidiary of Corporate
Express, Inc. (the "Company"), will be merged with and into Data Documents
Incorporated and pursuant to which Data Documents Incorporated will become a
wholly owned subsidiary of the Company, as more fully described in the
Registration Statement on Form S-4, as amended (Registration No. 333-35559), and
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended.
In this connection, we have examined and relied upon such corporate
records and other documents, instruments and certificates and have made such
other investigation as we deemed appropriate as the basis for the opinion set
forth below.
Based upon the foregoing, we are of the opinion that the shares of
common stock to be issued by you have been duly authorized and, when duly
executed, delivered and paid for in accordance with the terms of the Merger, and
upon satisfaction of all applicable conditions, will be duly and validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to
<PAGE>
Corporate Express, Inc.
October 15, 1997
Page 2
this firm under the caption "Legal Matters" in the Proxy Statement and
Prospectus forming a part thereof.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll
<PAGE>
Exhibit 8.1
[LETTERHEAD OF GIBSON, DUNN & CRUTCHER LLP APPEARS HERE]
Data Documents Incorporated
4205 South 96th Street
Omaha, Nebraska 68127-1290
Re: Registration Statement on Form S-4 (Registration No. 333-35559)
Gentlemen:
We are acting as counsel to Data Documents Incorporated, a Delaware
corporation (the "Company") in connection with the merger (the "Merger) of IDD
Acquisition Corp. ("Acquisition Sub"), a Delaware corporation and a wholly owned
subsidiary of Corporate Express, Inc., a Colorado corporation ("Parent"), with
and into the Company. You have requested our opinion as to the material federal
income tax consequences of the Merger to holders of Company common stock, $.001
par value (the "Company Common Stock"). The Merger will be effected pursuant to
the terms and conditions of the Agreement and Plan of Merger (the "Merger
Agreement") dated as of September 10, 1997, among the Company, Parent and
Acquisition Sub. The Merger Agreement is attached as Exhibit 2.1 to Registration
Statement on Form S-4 (the "Registration Statement") filed on September 12, 1997
with the Securities and Exchange Commission in connection with the Merger.
Defined terms used herein have the meanings ascribed to them in the Merger
Agreement.
In rendering our opinion, we have examined the Merger Agreement and
have, with your permission, relied upon, and assumed as correct now and as of
the Effective Time, (i) the factual information contained in the Registration
Statement, (ii) the representations and covenants contained in the Merger
Agreement, (iii) certain factual representations made by the Company, Parent and
Acquisition Sub, which are described under Exhibit 7.16 to the Merger Agreement
and are attached hereto and made a part hereof, and (iv) such other materials as
we have deemed necessary or appropriate as a basis for our opinion.
On the basis of the information, representations and covenants contained
in the foregoing materials, it is our opinion that: (i) the Merger will be
treated for federal
<PAGE>
Data Documents Incorporated
October 13, 1997
Page 2
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); (ii) Parent,
Acquisition Sub and the Company will each be a party to that reorganization with
the meaning of Section 368(b) of the Code, and (iii) no gain or loss will be
recognized by a stockholder of the Company as a result of the Merger with
respect to the shares of Company Common Stock converted into Parent Common
Stock, except to the extent such stockholders receives cash in lieu of
fractional shares. Furthermore, in our opinion the discussion under the caption
"Certain Federal Income Tax Consequences" in the Registration Statement
accurately describes the material federal income tax consequences of the Merger.
This opinion expresses our views only as to federal income tax laws in
effect as of the date hereof, including the Code, applicable Treasury
Regulations, published rulings and administrative practices of the Internal
Revenue Service (the "Service") and court decisions. This opinion represents our
best legal judgment as to the matters addressed herein, but is not binding on
the Service or the courts. Furthermore, the legal authorities upon which we rely
are subject to change either prospectively or retroactively. Any change in such
authorities or any change in the facts or representations, or any past or
future actions by the Company, Parent, or Acquisition Sub contrary to such
representations, might adversely affect the conclusions stated herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name under the
caption "Certain Federal Income Tax Consequences" in the Registration Statement.
Very truly yours,
/s/ Gibson, Dunn & Crutcher, LLP
GIBSON, DUNN & CRUTCHER, LLP
<PAGE>
EXHIBIT 7.16(a)
Form of Representations Relating to Tax Matters of the Company
--------------------------------------------------------------
1. As of the Effective Time, the Company will hold at least ninety
percent (90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held by it
immediately prior to the Merger. For the purpose of determining the percentage
of the Company's net and gross assets held immediately prior to the Merger, the
following assets will be treated as property immediately prior to the Merger:
(i) assets used by the Company to pay stockholders perfecting dissenters' rights
or other expenses or liabilities incurred in connection with the Merger and (ii)
assets used to make distributions, redemptions or other payments in respect of
stock of the Company (except for regular, normal distributions) or in respect of
rights to acquire such stock (including payments treated as such for tax
purposes) that are made in contemplation of the Merger or that are related
thereto;
2. Other than in the ordinary course of business or pursuant to in
obligations under the Agreement, the Company has not disposed of any of its
assets (including any distributions of assets with respect to, or in redemption
of, stock) since ______________, 1997;
3. The Company's principal reasons for participating in the Merger are
bona fide business purposes not related to federal income taxes;
4. In the Merger, shares representing "Control" of the Company will be
exchanged solely for voting stock of Parent. For purposes of this paragraph,
shares exchanged in the Merger for cash and other property (including, without
limitation, cash paid to stockholders of the Company perfecting dissenters'
rights or in lieu of fractional shares of Parent Common Stock) will be treated
as outstanding shares on the date of the Merger but not exchanged for shares of
Parent Common Stock. As used herein, "Control" shall consist of direct ownership
of shares of stock possessing at lease eighty percent (80%) of the total
combined voting power of shares of all classes of stock entitled to vote and at
lease eighty percent (80%) of total number of shares of each other claim of
stock of the corporation. For purposes of determining Control, a person shall
not be considered to own shares of voting stock if rights to vote such shares
(or to restrict or otherwise control the voting of such shares) are held by a
third party (including a voting trust) other than an agent of such person;
5. The Company has no outstanding warrants, options, convertible
securities or any other type of right to acquire capital stock of the Company
(or any other equity interest in the Company) or to vote (or restrict or
otherwise control the vote of) shares of the Company's capital stock which, if
exercised, would affect Parent's retention of Control of the Company;
1
<PAGE>
6. The payment of cash in lieu of fractional shares of Parent
Common Stock is solely for the purpose of avoiding the expense and inconvenience
to Parent of issuing fractional shares and does not represent separately
bargained for consideration. The total cash consideration that will be paid in
the Merger to the Company stockholders in lieu of fractional shares of Parent
Common Stock will not exceed one percent (1%) of the fair market value of the
total consideration that will be issued in the Merger to the Company
stockholders in exchange for their shares;
7. The Company has no plan or intention to issue additional shares
of capital stock after the Merger, or take any other action, that would result
in Parent losing Control of the Company;
8. The Company has not plan or intention to sell or otherwise
dispose of any of its assets or of any of the assets acquired from Subsidiary in
the Merger except for dispositions made in the ordinary course of business or
payment of expenses, including payments to stockholders of the Company
perfecting dissenters' rights, incurred by the Company pursuant to the Merger
and except for transfers of its assets or assets of Subsidiary to a corporation
controlled by the Company;
9. The fair market value of the Company's assets will, at the
Effective Time of the Merger, exceed the aggregate liabilities of the Company
plus the amount of liabilities, if any, to which such assets are subject;
10. The ratio for the exchange of shares for Parent Common Stock
was negotiated through arm's length bargaining and with the assistance of
competent professional advisors. Consequently, the fair market value of the
shares of Parent Common Stock to be received by each stockholder of the Company
in the Merger will be approximately equal to the fair market value of the shares
surrendered in exchange therefor and the aggregate consideration to be received
by stockholders of the Company in exchange for their shares will be
approximately equal to the fair market value of all of the outstanding shares
immediately prior to the Merger;
11. The Company is not an "investment company" within the meaning
of Sections 368(a)(2)(F)(iii) and (iv) of the Code;
12. The Company is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code;
13. There is no plan or intention ("Plan") on the part of the
stockholders of the Company who own five percent (5%) or more of the shares, and
to the best knowledge of the management of the Company, there is no Plan on the
part of the remaining stockholders of the Company to engage in a sale, exchange,
transfer, distribution (including, without limitation,
2
<PAGE>
a distribution by a corporation to its stockholders), pledge, disposition or any
other transaction which will result in a reduction in the risk of ownership or a
direct or indirect disposition (a "Sale") of shares of Parent Common Stock
received in the Merger that would reduce ownership by the Company stockholders
of Parent Common Stock to a number of shares having a value as of the Effective
Time of the Merger of less than fifty percent (50%) of the aggregate fair market
value, immediately prior to the Merger, of all outstanding shares. For purposes
of this paragraph, shares (i) with respect to which a stockholder of the Company
receives consideration in the Merger other than shares of Parent Common Stock
(including, without limitation, cash received pursuant to the exercise of
dissenters' rights or in lieu of fractional shares of Parent Common Stock)
and/or (ii) with respect to which a Sale occurs prior to and in contemplation of
the Merger, shall be considered outstanding shares exchanged for shares of
Parent Common Stock in the Merger and then disposed of pursuant to a Plan;
14. There is no intercorporate indebtedness existing between Parent
and the Company or between Subsidiary and the Company that was issued, acquired,
or will be settled at a discount as a result of the Merger;
15. None of the compensation received by any shareholder-employees of
the Company will be separate consideration for, or allocable to, any of shares
owned by them; none of the shares of Parent Common Stock received by any
shareholder-employees or independent contractors of the Company will be separate
consideration for, or allocable to, any employment agreement or any covenants
not to compete; and the compensation paid to any shareholder-employees or
independent contractors of the Company will be for the services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services;
16. To the best knowledge of the Company, during the past five (5)
years, none of the outstanding shares of its capital stock of, including the
right to acquire or vote any such shares, have directly or indirectly been owned
by Parent;
17. Up to and including the Effective Time, the Company has taken no
action that would cause the merger to fail to qualify as a "reorganization"
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
18. Parent, Subsidiary and Company will each pay their respective
expenses, if any, incurred in connection with the Merger. None of Parent,
Subsidiary or Company will pay any expenses of the stockholders of Company
incurred in connection with the Merger.
19. The liabilities of Company and the liabilities to which its
assets are subject at the Effective Time of the Merger were incurred by it in
the ordinary course of its business. None of the Shares of Company to be
surrendered in the Merger in exchange for Parent Common Stock in the Merger will
be subject to any liabilities.
3
<PAGE>
Form of Representation Relating to Tax Matters of Parent and Subsidiary
-----------------------------------------------------------------------
1. Pursuant to the Merger, Subsidiary will merge with and into the
Company, and the Company will acquire all of the assets and liabilities of
Subsidiary. Specifically, the assets transferred to the Company pursuant to the
Merger will represent at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by Subsidiary immediately prior to the Merger. In
addition, at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by the Company immediately prior to the Merger will continue to be
held by the Company immediately after the Merger. For the purpose of determining
the percentage of the Company's and Subsidiary's net and gross assets held by
the Company immediately following the Merger, the following assets will be
treated as property held by Subsidiary or the Company, as the case may be,
immediately prior but not subsequent to the Merger; (i) assets used by the
Company or Subsidiary (other than assets transferred from Parent to Subsidiary
for each purpose) to pay stockholders perfecting dissenters' rights or other
expenses or liabilities incurred in connection with the Merger and (ii) assets
used to make distributions, redemptions or other payments in respect of stock of
the Company (except for regular, normal distributions) or in respect of rights
to acquire such stock (including payments treated as such for tax purposes) that
are made in contemplation of the Merger or that are related thereto;
2. Subsidiary was formed solely for the purpose of consummating the
transactions contemplated by the Agreement, and at no time has Subsidiary
conducted or will Subsidiary conduct any business activities or other
operations, or dispose of any of its assets, other than pursuant to its
obligations under the Agreement;
3. Parent's principal reasons for participating in the Merger are bona
fide business purposes not related to federal income taxes;
4. No shares of Subsidiary (or, following the Effective Time, the
Company) have been or will be used as consideration or issued to stockholders of
the Company pursuant to Merger;
5. Prior to and at the Effective Time, Parent will be in "Control" of
Subsidiary. As used herein, "Control" shall consist of direct ownership of
shares of stock possessing at least eighty percent (80%) of the total combined
voting power of all classes of stock entitled to vote and at least eighty
percent (80%) of the total number of shares of each other class of stock of the
corporation. For purposes of determining Control, a person shall not be
considered to own shares of voting stock if rights to vote such shares (or to
restrict or
1
<PAGE>
otherwise control the voting of such shares) are held by a third party
(including a voting trust) other than an agent of such person:
6. In the Merger, shares representing Control of the Company will be
exchanged solely for shares of voting stock of Parent. For purposes of this
paragraph, shares exchanged in the Merger for cash and other property
(including, without limitation, cash paid to shareholders of the Company
perfecting dissenters' rights or in lieu of fractional shares of Parent Common
Stock) will be treated as shares outstanding on the date of the Merger but not
exchanged for shares of voting stock of Parent. Parent has no plan or intention
to cause the Company to issue additional shares after the Merger, or take any
other action, that would result in Parent losing Control of the Company;
7. The payment of cash in lieu of fractional shares of Parent Common Stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained for
consideration. The total cash consideration that will be paid in the Merger to
the Company stockholders in lieu of fractional shares of Parent Common Stock
will not exceed one percent (1%) of the total consideration that will be issued
in the Merger to the Company stockholders in exchange for their shares;
8. Parent has no plan or intention to reacquire any of its stock issued
pursuant to the Merger;
9. Parent has no plan or intention to liquidate the Company; to merge the
Company with or into another corporation; to sell, distribute or otherwise
dispose of the stock of the Company, including by means of a spinoff; to spin-
off any other Subsidiary of Parent; or to cause the Company to sell or otherwise
dispose of any of its assets, including by means of a spin-off, or of any assets
acquired from Subsidiary, except for dispositions made in the ordinary course of
business or payment of expenses, including payments to stockholders of the
Company perfecting dissenters' rights, incurred by the Company pursuant to the
Merger and except for transfers of stock of the Company to a corporation
controlled by the Parent, and subsequent to the Merger, the Company will
continue to conduct its historic business using its historic assets;
10. In the merger, Subsidiary will have no liabilities assumed by the
Company and will not transfer to the Company any assets subject to liabilities,
except to the extent incurred in connection with the transactions contemplated
by the Agreement;
11. During the past five (5) years, none of the outstanding shares of
Company capital stock, including the right to acquire or vote any such shares,
have directly or indirectly been owned by Parent;
<PAGE>
12. Neither Parent nor Subsidiary is an "investment company"
within the meaning of Sections 368(a)(2)(F)(iii) and (iv) of the Code:
13. Neither Parent nor Subsidiary is under the jurisdiction of a
court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code:
14. The liabilities of Subsidiary assumed by the Company and the
liabilities to which the transferred assets of Subsidiary are subject were
incurred by Subsidiary in the ordinary course of its business;
15. The ratio for the exchange of shares for Parent Common Stock
has been negotiated through arm's length bargaining and with the assistance of
competent professional advisors. Consequently, the fair market values of the
shares of Parent Common Stock to be received by each stockholder of the Company
in the Merger will be approximately equal to the fair market value of the shares
surrendered in exchange therefor and the aggregate consideration to be received
by stockholders of the Company in exchange for their shares will be
approximately equal to the fair market value of all of the outstanding shares
immediately prior to the Merger;
16. Parent, Subsidiary and Company will each pay their respective
expenses, if any, incurred in connection with the Merger. None of Parent,
Subsidiary or Company will pay any expenses of the stockholders of Company
incurred in connection with the Merger.
17. There is no intercorporate indebtedness existing between
Parent and the Company or between Subsidiary and the Company that was issued,
acquired or will be settled at a discount as a result of the Merger;
18. Any amounts paid with respect, to discounting shares of the
Company will be paid by the Company solely from the Company's pre-Merger assets
and without reimbursement therefor by Parent or Subsidiary;
19. Other than as specifically provided in this Agreement, Parent
will not reimburse any stockholder of the Company for the Company's capital
stock such stockholder may have purchased or for other obligations such
stockholder may have incurred;
20. Parent and Subsidiary shall (and, following the Effective
Time, Parent shall cause the Company to) take no action with respect to the
capital stock, asset or liabilities of the Company that would cause the Merger
to fail to qualify as a "reorganization" within the meaning of Section
368(a)(1)(A) and 368(a)(2)(E) of the Code. Without limitation on the foregoing,
following the Effective Time, Parents shall cause the Company to either continue
the historic business of the Company or use a significant portion the Company's
historic business assets in a business.
3
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF CORPORATE EXPRESS, INC.
---------------------------------------
1. Distribution Resources Co. (Colorado)
5340 S. Quebec
Englewood, CO 80111
2. Hermann Marketing, Inc. (Missouri)
1400 Price Rd.
St. Louis, MO 63132
a. Sales Marketing, Inc. (Minnesota)
1286 Trapp Road
St. Paul, MN 55121
3. Sofco-Mead, Inc. (New York)
3366 Walden Avenue
Depew, NY 14043
a. Sofco, Inc. (New York)
702 Potential Parkway
Scotia, NY 12302
b. DJ Mead Hubbs & Howe, Inc. (Delaware)
3366 Walden Avenue
Depew, NY 14043
c. SQP, Inc. (New York)
602 Potential Parkway
Scotia, NY 12302
d. Sofco of Ohio, Inc. (New York)
210 Hayes Dr., Suite A
Cleveland, OH 44131
e. S&Q Property, Inc. (New York)
702 Potential Parkway
Scotia, NY 12302
f. SMI Management, Inc. (New York)
702 Potential Parkway
Scotia, NY 12302
<PAGE>
g. EPCO Packaging Services, Inc.(Delaware)
702 Potential Parkway
Scotia, NY 12302
4. ProSoft Management Systems, Inc. (Connecticut)
88 Ryders Lane, Suite 216
Stratford, CT 06497
5. Dixie Data Products, Inc. (Mississippi)
520 Highway 80 West
Jackson, MI 39204
6. Distribution Solutions, Inc. (Texas)
11 Greenway, Suite 250
Houston, TX 77046
a. Ashabranner-Eubanks Interests, Inc. (Texas)
11 Greenway, Suite 250
Houston, TX 77046
b. Distributions Solutions-Dallas, Inc. (Texas)
11 Greenway, Suite 250
Houston, TX 77046
c. Distributions Solutions-Houston, Inc. (Texas)
11 Greenway, Suite 250
Houston, TX 77046
d. Distributions Solutions-San Antonio, Inc. (Texas)
11 Greenway, Suite 250
Houston, TX 77046
e. Transportation Innovations, Inc. (d/b/a NOVA) (Texas)
11 Greenway, Suite 250
Houston, TX 77046
7. Elite Courier, Ltd. (Connecticut)
737 Canal Street
Stamford, CT 06902
8. Innovative Transportation Concepts, Inc. (New York)
500 Seneca Street
East Aurora, NY 14052
<PAGE>
9. John C. Brimo and Associates, Inc. (New York)
P.O. Box 28
East Aurora, NY 14052
10. Metro Air, Inc. (Delaware)
4315 Frances, Suite 200
Omaha, Nebraska 68105
11. Midnite Express International Courier, Inc.(California)
915-925 W. Hyde Park Boulevard
Inglewood, California 90302
12. NYC Express, Inc. (New York)
P.O. Box 28
East Aurora, NY 14052
13. OK Express, Inc. (Oklahoma)
P.O. Box 271435
Oklahoma City, OK
14. Pronto Delivery Service, Inc. (Texas)
405 North "T" Street, Suite A
Harlingen, TX 78550
15. St. Paul Book & Stationery, Inc. (Minnesota)
1233 W. County Road AE@
Arden Hills, MN 55112
16. CEX Holdings, Inc. (Colorado)
325 Interlocken Parkway
Broomfield, CO 80021 17.
a. Resource Data Systems (New York)
225 Varick Street
New York, New York 10014
b. Towne Office Supply (New York)
111 Eighth Avenue
New York, New York 10011
c. Jay & Bee Office Solutions, Inc. (Illinois)
230 Lexington Drive
Buffalo Grove, IL 60089
<PAGE>
d. Corporate Express of the South, Inc. (Delaware)
561 Village Trace Bldg.
Mairetta, GA 30067
(1) Schooley, Inc. (Delaware)
3401 Truman Road
Kansas City, MO 64127
(2) Lake Charles Office Plus, Inc. (Louisiana)
320 Seventh Street
Lake Charles, LA 70601
(3) CE Miami Real Estate, Inc. (Delaware)
325 Interlocken Parkway
Broomfield, Colorado 80021
(4) Columbia Office Supply Co. (South Carolina)
1021 Indian Mound Road
Lexington, SC 29072
(5) Jim Ammons Office Supply, Inc. dba Ammons Office Plus (North Carolina)
P.O. Box 1377
Arden, NC 28704
(6) Forms & Supplies, Inc. (Tennessee)
4670 Shelby Drive, Suite 106
Memphis, TN 38118
(7) Precision Business Suppliers, Inc. (Georgia)
1430 Laurel Haven Ct.
Lawrenceville, GA 30243
(8) Ideal, Inc. (Illinois)
13 N. Church Street
Belleville, IL 62221
(9) Bishop Office Furniture Company, Inc. (Florida)
1800 East Colonial
Orlando, FL 32803
(10) Carr Printing & Office Supplies, Inc. (Louisiana)
1000 S. Cypress St.
Hammond, LA 70403
<PAGE>
(11) Inform, Inc. (Tennessee)
2712 Westwood Drive
Nashville, TN 37204
(12) Meldrum Business Systems, Inc. (Louisiana)
555 Southfield Road
Shreveport, LA 71106
(13) Computer Software, Inc. (Georgia)
303 Research Drive, Suite 150
Norcross, GA 30092
e. Corporate Express of the West, Inc. (Colorado)
300 SW 41st Street
Renton, WA 98055
(1) International Office Equipment and Paper Supply, Inc. (Colorado)
1500 W. Hampden Avenue, Unit 4C
Englewood, CO 80111
f. Corporate Express of Texas, Inc. (Delaware)
5225 Katy Freeway
Houston, TX 77007
g. Corporate Express of the East, Inc. (Delaware)
35 Melanie Lane
Whippany, NJ 07981
(1) Federal Sales Service, Inc. (Virginia)
6598 Fleet Drive
Alexandria, VA 22310
(2) Contemporary Office Products, Inc. (Ohio)
3904 St. Clair Avenue
Cleveland, OH 44114
(3) Laser Perfect Products, Inc. (Massachusetts)
5 First Avenue
Peabody, MA 01960-4908
(4) OP2000, Inc. (Delaware)
44 Garden Street
Danvers, MA 01923
<PAGE>
(5) Office Products Network of North America, Inc. (Maryland)
325 Interlocken Parkway
Broomfield, CO 80021
(6) Virginia Impressions Products Co., Inc. (Virginia)
11250 Hopson Road
Richmond, VA 23227
(7) MicroMagnetic Systems, Inc. (Virginia)
3941 Deep Rock Road
Richmond, VA 23233
(8) Everything for the Office, Inc. (Minnesota)
8201 54th Avenue North
New Hope, MN 55428
h. Corporate Express Imaging and Computer Graphics Supplies, Inc. (Delaware)
508 S. Military Trail
Deerfield Beach, FL 33442
(1) International Business Supplies Corporation (Maryland)
508 S. Military Trail
Deerfield Beach, FL 33442
i. Ross-Martin Company, Inc. (Delaware)
6500 E. 44th Street
Tulsa, OK 74145
j. Corporate Express Real Estate, Inc. (Delaware)
325 Interlocken Parkway
Broomfield, CO 80021
k. CEX Land Company (Delaware)
1 Environmental Way
Broomfield, CO 80021
l. ASAP Software Express, Inc. (Illinois)
850 Asbury Drive
Buffalo Grove, IL 60089
m. Corporate Express Delivery Systems, Inc. (Delaware)
11 Greenway Plaza, Suite 250
Houston, Texas 77046
<PAGE>
(1) American Delivery System, Inc. (Michigan)
3080 Orchard Lake Road
Keego Harbor, Michigan 48320
(2) Corporate Express Distribution Services, Inc. (Michigan)
3080 Orchard Lake Road
Keego Harbor, Michigan 48320
(3) CallCenter Services, Inc. (Delaware)
31550 Winter Place Parkway
Salisbury, Maryland 21801
(4) New Delaware Delivery, Inc. (Delaware)
11 Greenway Plaza, Suite 250
Houston, Texas 77046
(5) Red Arrow Corporation (Missouri)
130 Byassee
St. Louis, MO 63042
(6) SRG Enterprises, Inc. (New York)
160 or 168 Milbar Boulevard
Farmingdale, NY 11735
(7) Corporate Express Delivery Systems - Intermountain, Inc. (Delaware)
2465 S. 19th Avenue, Suite D-3
Phoenix, Arizona 85009
(a) Corporate Express Delivery Leasing - Intermountain, Inc. (Delaware)
2465 S. 19th Avenue, Suite D-3
Phoenix, Arizona 85009
(8) Corporate Express Delivery Systems - Mid-Atlantic, Inc. (Delaware)
7768 Woodmont Avenue, Suite 201
Bethesda, Maryland 20814
(a) Corporate Express Delivery Leasing - Mid-Atlantic, Inc. (Delaware)
7768 Woodmont Avenue, Suite 201
Bethesda, Maryland 20814
(9) Corporate Express Delivery Systems - Mid-West, Inc. (Delaware)
2040 N. Ashland Avenue
Chicago, Illinois 60614
<PAGE>
(a) Corporate Express Delivery Leasing - Mid-West, Inc. (Delaware)
2040 N. Ashland Avenue
Chicago, Illinois 60614
(b) B. Kay, Inc. (Nebraska)
2040 N. Ashland Avenue
Chicago, Illinois 60614
(c) BJAM Enterprises, Inc. (Nebraska)
2040 N. Ashland Avenue
Chicago, Illinois 60614
(10) Corporate Express Delivery Systems - New England, Inc. (Delaware)
53 Hurlbut Street
West Hartford, Connecticut 061101
(a) Corporate Express Delivery Leasing - New England, Inc. (Delaware)
53 Hurlbut Street
West Hartford, Connecticut 06110
(11) Corporate Express Delivery Systems - Northeast, Inc. (Delaware)
58-18 37th Avenue
Woodside, New York 11377
(a) Corporate Express Delivery Leasing - Northeast, Inc. (Delaware)
58-18 37th Avenue
Woodside, New York 11377
(12) Corporate Express Delivery Systems - Southeast, Inc. (Delaware)
6131 Anno Avenue, Suite 101
Orlando, Florida 32809
<PAGE>
(a) Air Courier Dispatch of New Jersey, Inc. (Minnesota)
1080 Holcomb Bridge Road
Building 200, Suite 140
Roswell, GA 30076
(b) Dependable Courier Services, Inc. (Georgia)
(c) Film Transit, Inc. (Arkansas)
3931 Homewood Road
Memphis, TN 38118
(d) Sunbelt Courier, Inc. (Arkansas)
1000 North Vine Street
North Little Rock, AR 72116
(e) Tricor America, Inc. (California)
717 Airport Boulevard
South San Francisco, CA 94080
(13) Corporate Express Delivery Systems - Southwest, Inc. (Delaware)
1140 West Loop North
Houston, Texas 77055
(a) Corporate Express Delivery Leasing - Southwest, Inc. (Delaware)
1140 West Loop North
Houston, Texas 77055
(14) Corporate Express Delivery Systems - West Coast, Inc. (Delaware)
1848 Echo Park Avenue
Los Angeles, California 90026
(a) Corporate Express Delivery Leasing - West Coast, Inc. (Delaware)
1848 Echo Park Avenue
Los Angeles, California 90026
(b) Midnite Express International Couriers Limited
Unite 3 & 4, The Metro Center
St. Johns Road
Isleworth
(c) Midnite Express International (Australia) Pty. Limited
27 Botany Rd.
Rosebury, Australia
<PAGE>
(15) U.S. Delivery Administration, Inc. (Nevada)
11 Greenway Plaza, Suite 250
Houston, Texas 77046
(16) U.S. Delivery Management Business Trust (Delaware Business Trust)
11 Greenway Plaza, Suite 250
Houston, Texas 77046
(17) USDS Canada, Ltd.
(a) Visex Courier Services, Inc.
7845 Bath Road
Mississauga, Ontario L4T 4C1
(b) Swift Messenger Service Canada, Ltd.
159 Cleopatra Drive North, Unit 900
Nepean, Ontario
CANADA K2G 5X4
(c) Axiom Contract Management, Inc.
n. Corporate Express (Holdings) Limited
Enterprise Pavillon
London Square
Crosslanes
Guildford, Surrey UK GU11UG
(1) Network (Office Supplies) Ltd
Enterprise Pavillon
London Square
Crosslanes
Guildford, Surrey UK GU11UG
(2) Corporate Express (UK) Ltd
Enterprise Pavillon
London Square
Crosslanes
Guildford, Surrey UK GU11UG
(3) Unistat (Office Supplies Systems) Limited
Enterprise Pavillon
London Square
Crosslanes
Guildford, Surrey UK GU11UG
<PAGE>
(4) The Harrison Terry Group Limited
Enterprise Pavillon
London Square
Crosslanes
Guildford, Surrey UK GU11UG
o. Corporate Express Canada, Inc.
120 Traders Blvd. E,
Mississauga, Ontario Canada L4Z 2H7
(1) Centura Office Products, Inc.
559 Alness Street
Downsview, Ontario M3J 2T8
(2) O'Neil Stationery & Office Equipment, Ltd.
P. O. Box 636
121 Front Street
Belleville, Ontario K8N 5B3
p. Corporate Express South Pacific Pty Ltd.
Level 26
AMP Centre
50 Bridge Street
Sydney, NSW 2000, Australia
(1) Corporate Express Holdings Australia Pty Limited
Level 26
AMP Centre
50 Bridge Street
Sydney, NSW 2000, Australia
(2) Corporate Express Finance Australia Pty Limited
Level 26
AMP Centre
50 Bridge Street
Sydney, NSW 2000, Australia
(a) Corporate Express Australia Limited
(37% and 15% by 25.a. and 25.b.)
67-77 Epsom Road
Rosebery, NSW 2018, Australia
<PAGE>
i) Ballment Manufacturing Co. Pty Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
a) Corporate Express Australia (NSW) Pty Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
1. Corporate Express Australia (QLD) Pty Limited
(25% and 75% by 25b.(1)(a) and 25b.(1)(a)i))
67-77 Epsom Road
Rosebery, NSW 2018, Australia
ii) Corporate Express Australia (Vic) Pty Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
a) Corporate Express Australia (SA) Pty Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
iii) Revson Australia Pty Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
iv) Boulton Robinson Office Supplies Pty Ltd
67-77 Epsom Road
Rosebery, NSW 2018, Australia
v) Corporate Express Australia (ACT) Pty Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
vi) Corporate Express New Zealand Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
vii) Corporate Express Australia (NT) Pty Limited
67-77 Epsom Road
Rosebery, NSW 2018, Australia
17. Corporate Express (Deutschland) GmbH
Rendsburger Lanstr. 196-198
24113 Kiel Germany
<PAGE>
a. Reese GmbH & Co.
Rendsburger Lanstr. 196-198
24113 Kiel Germany
b. BIT Messerknecht GmbH
Rendsburger Lanstr. 196-198
24113 Kiel Germany
c. Messerknecht BuroKommunication GmbH
Rendsburger Lanstr. 196-198
24113 Kiel Germany
d. Buro-Partner
Rendsburger Lanstr. 196-198
24113 Kiel Germany
e. Eugen Haas
Rendsburger Lanstr. 196-198
24113 Kiel Germany
18. Nimsa, SA
a. Trivial Information, SA
19. Cession 26e Avenue
20. SCI Siman
21. CE of Southern Europe, LLC
a. Corporate Express of Italy
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of Corporate Express, Inc. on Form S-4 (the "Registration
Statement") of our report dated April 18, 1997 on our audits of the
consolidated financial statements and financial statement schedule of
Corporate Express, Inc. as of March 1, 1997 and March 2, 1996, and for the
years ended March 1, 1997, March 2, 1996 and February 25, 1995. We also
consent to the reference to our Firm under the caption "Experts".
/s/ COOPERS & LYBRAND L.L.P.
Denver, Colorado
October 14, 1997
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1
to Registration Statement No. 333-35559 of Corporate Express, Inc. on Form
S-4 of our reports dated February 6, 1997, appearing in the Annual Report
on Form 10-K of Data Documents Incorporated for the year ended December 31,
1996, and to the references to us under the headings "Selected Financial
Data" and "Experts" in this Prospectus, which is part of this Registration
Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
October 14, 1997
<PAGE>
EXHIBIT 99.1
DATA DOCUMENTS INCORPORATED
4205 SOUTH 95th STREET, OMAHA, NEBRASKA 68127
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Walter J. Kearns and A. Robert Thomas as
Proxies, each with the power to appoint his substitute, and hereby authorized
them to represent and vote, as designated on the reverse, all shares of Common
Stock of Data Documents Incorporated (the "Company") held of record by the
undersigned on October 14, 1997 at the Special Meeting of Stockholders to be
held on November __, 1997 or any adjournment thereof.
(To Be Signed on Reverse Side.)
================================================================================
Please mark your vote as this [X] Please mark your
vote as in this example.
1. Proposal to approve and adopt the Agreement and Plan [ ] [ ] [ ]
of Merger dated as of September 10, 1997 among FOR AGAINST ABSTAIN
Corporate Express, Inc., IDD Acquisition Corp., and
the Company, and the conversion of each outstanding
share of the Company's Common Stock, par value $.001
per share, into 1.1 shares of Corporate Express
Common Stock, par value $.0002 per share, subject to
adjustment under certain circumstances all as more
fully described in the Proxy Statement and Prospectus
dated October __, 1997. Stockholders will be able to
obtain the adjusted exchange ratio beginning five
trading days prior to the Special Meeting by calling
(800) ___-_____. To facilitate the voting process for
the Special Meeting, Stockholders will be able to
vote by facsimile at the following telephone number:
(402) 339-9270.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ADOPTION OF THE MERGER
2. In their discretion upon such other business as may
properly come before the Special Meeting or any
postponement or adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THE PROXY PROMPTLY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
SIGNATURES_____________________________________ Dated_______________, 1997
Signature if Held Jointly
NOTE: Please sign exactly as your name or names appear on stock certificate (as
indicated hereon)
