EXHIBIT 2.1
Execution Copy
--------------
AGREEMENT AND PLAN OF MERGER
by and among
JOHN H. HARLAND COMPANY,
M & F WORLDWIDE CORP.
and
H ACQUISITION CORP.
Dated as of December 19, 2006
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1
Certain Defined Terms........................................1
ARTICLE II
THE MERGER
Section 2.1 The
Merger...................................................9
Section 2.2
Closing; Effective Time......................................9
Section 2.3
Effects of the Merger........................................9
Section 2.4
Articles of Incorporation; Bylaws...........................10
Section 2.5
Directors and Officers of Surviving Corporation.............10
ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK AND EXCHANGE OF
CERTIFICATES
Section 3.1
Effect on Capital Stock.....................................10
Section 3.2
Treatment of Options and Other Equity Awards................11
Section 3.3
Adjustment of Merger Consideration..........................12
Section 3.4
Dissenting Shares...........................................12
Section 3.5
Payment and Exchange of Certificates........................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1
Organization................................................15
Section 4.2
Authority; Enforceability...................................16
Section 4.3
Non-Contravention...........................................16
Section 4.4
Governmental Consents.......................................17
Section 4.5
Capitalization of the Company...............................17
Section 4.6
Company Subsidiaries........................................19
Section 4.7 SEC
Reports; Financial Information..........................19
Section 4.8 No
Undisclosed Liabilities..................................19
Section 4.9
Absence of Certain Changes or Events........................20
Section 4.10
Contracts...................................................21
Section 4.11 Title to
Properties; Assets.................................23
Section 4.12 Compliance
with Law and Reporting Requirements..............24
Section 4.13
Litigation..................................................25
Section 4.14 Employee
Compensation and Benefit Plans; ERISA..............25
Section 4.15 Labor
Matters...............................................28
Section 4.16
Intellectual Property.......................................29
Section 4.17 Privacy
Policies............................................32
Section 4.18
Environmental Laws..........................................32
Section 4.19
Taxes.......................................................34
Section 4.20 Disclosure
Documents........................................35
Section 4.21
Insurance...................................................36
Section 4.22 Customers
and Suppliers.....................................36
Section 4.23 Rights
Agreement............................................37
Section 4.24 Fairness
Opinion............................................38
Section 4.25
Brokers.....................................................38
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 5.1
Organization................................................38
Section 5.2
Authority; Enforceability...................................38
Section 5.3
Non-Contravention...........................................39
Section 5.4
Governmental Consents.......................................39
Section 5.5
Financing...................................................39
Section 5.6
Disclosure Documents........................................40
Section 5.7
Brokers.....................................................40
Section 5.8
Operations of Merger Sub....................................40
Section 5.9
Ownership of Company Capital Stock; Affiliates and
Associates..................................................40
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1
Conduct of Business Prior to the Closing....................41
Section 6.2
Shareholders Meeting; Board Recommendation..................44
Section 6.3
Proxy Statement...............................................
Section 6.4
Access to Information; Certain Notices......................45
Section 6.5
Solicitation................................................46
Section 6.6
Further Action; Reasonable Best Efforts.....................49
Section 6.7
Directors' and Officers' Indemnification and Insurance......51
Section 6.8
Public Announcements........................................52
Section 6.9
Financing...................................................52
Section 6.10
Notification..................................................
Section 6.11 Employment
and Benefits Matters.............................55
Section 6.12 Section
16(b)...............................................57
Section 6.13 Takeover
Statutes...........................................57
Section 6.14 Retention
Bonuses...........................................57
ARTICLE VII
CONDITIONS PRECEDENT TO MERGER
Section 7.1
Mutual Conditions to Closing................................58
Section 7.2
Conditions to Obligations of Parent and Merger Sub..........58
Section 7.3
Conditions to Obligations of the Company....................59
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1
Termination.................................................59
Section 8.2 Effect of
Termination.......................................60
Section 8.3 Fees
and Expenses...........................................61
Section 8.4
Procedure for Termination...................................62
ARTICLE IX
GENERAL PROVISIONS
Section 9.1
Non-Survival of Representations, Warranties and Agreements..63
Section 9.2
Notices.....................................................63
Section 9.3
Severability................................................64
Section 9.4
Entire Agreement............................................64
Section 9.5
Assignment..................................................64
Section 9.6
Amendment...................................................65
Section 9.7
Waiver......................................................65
Section 9.8 No
Third Party Beneficiaries................................65
Section 9.9
Governing Law...............................................65
Section 9.10
Jurisdiction................................................65
Section 9.11 Waiver of
Jury Trial........................................66
Section 9.12 Consents
and Approvals......................................66
Section 9.13
Counterparts................................................66
Section 9.14
Interpretation..............................................66
<PAGE>
INDEX OF DEFINED TERMS
Acceptable Confidentiality
Agreement.................................Section 1.1
Action...............................................................Section
1.1
Affiliate............................................................Section
1.1
Agreement...............................................................Preamble
Alternative
Financing.............................................Section
6.9(b)
Antitrust
Law........................................................Section
1.1
Benefit
Plans....................................................Section
4.14(a)
Board...................................................................Recitals
Board
Recommendation..............................................Section
4.2(b)
Business
Day.........................................................Section
1.1
Capitalization
Date...............................................Section
4.5(a)
Certificate.......................................................Section
3.5(b)
Certificate of
Merger................................................Section
2.2
Closing..............................................................Section
2.2
Closing
Date.........................................................Section
2.2
Code.................................................................Section
1.1
Company.................................................................Preamble
Company Common
Stock..............................................Section
3.1(b)
Company Disclosure
Letter.............................................Article IV
Company
Employees................................................Section
6.11(a)
Company Intellectual
Property........................................Section 1.1
Company Preferred
Stock...........................................Section 4.5(a)
Company Takeover
Proposal.........................................Section 6.5(g)
Company Termination
Fee..............................................Section 1.1
Completion
Period....................................................Section
1.1
Confidentiality
Agreement............................................Section
1.1
Continuation
Period..............................................Section
6.11(a)
Contract.............................................................Section
1.1
control..............................................................Section
1.1
Copyrights...........................................................Section
1.1
Customer
Information................................................Section
4.17
Damages...........................................................Section
6.7(a)
Debt Commitment
Letters...........................................Section
5.5(a)
Debt
Financing....................................................Section
5.5(a)
Director Compensation
Plans..........................................Section 1.1
Dissenters
Provisions.............................................Section
3.4(a)
Dissenting
Shares.................................................Section
3.4(a)
Effective
Time.......................................................Section
2.2
Encumbrance..........................................................Section
1.1
Environmental
Claim...........................................Section
4.18(a)(i)
Environmental
Laws...........................................Section
4.18(a)(ii)
Equity
Interest......................................................Section
1.1
ERISA................................................................Section
1.1
ERISA
Affiliate..................................................Section
4.14(c)
ESPP..............................................................Section
3.2(d)
Exchange
Act.........................................................Section
1.1
Final Purchase
Date...............................................Section
3.2(d)
Foreign
Plans....................................................Section
4.14(a)
Funded
Indebtedness...............................................Section
4.5(d)
GAAP.................................................................Section
1.1
GBCC....................................................................Recitals
Governmental
Authority...............................................Section
1.1
Governmental
Order...................................................Section
1.1
Hazardous Materials.........................................Section
4.18(a)(iii)
HSR
Act..............................................................Section
1.1
Incentive
Plans..................................................Section
6.11(d)
Indebtedness.........................................................Section
1.1
Intellectual
Property................................................Section
1.1
Key
Customers.......................................................Section
4.22
Key
Suppliers.......................................................Section
4.22
Knowledge............................................................Section
1.1
Law..................................................................Section
1.1
Leased Real
Property.............................................Section
4.11(b)
License..............................................................Section
1.1
Made
Available.......................................................Section
1.1
Material Adverse
Effect..............................................Section 1.1
Material
Contract................................................Section
4.10(a)
Merger..................................................................Recitals
Merger
Consideration..............................................Section
3.1(b)
Merger
Sub..............................................................Preamble
New Debt Commitment
Letters.......................................Section 5.5(b)
New
Plans........................................................Section
6.11(a)
Notice
Period.....................................................Section
6.5(c)
NYSE.................................................................Section
1.1
Old
Plans........................................................Section
6.11(a)
Option...............................................................Section
1.1
Outside
Date......................................................Section
8.1(c)
Owned Real
Property..............................................Section
4.11(a)
Parent..................................................................Preamble
Parent Termination
Fee...............................................Section 1.1
Patents..............................................................Section
1.1
Payee.............................................................Section
3.5(c)
Paying
Agent......................................................Section
3.5(a)
Payment
Date........................................................Section
6.14
Permitted
Encumbrances...............................................Section
1.1
Person...............................................................Section
1.1
Pre-Closing
Service..............................................Section
6.11(b)
Printed Products Key
Customers......................................Section 4.22
Printed Products Key
Suppliers......................................Section 4.22
Privacy
Policy......................................................Section
4.17
Property.........................................................Section
4.11(b)
Proxy
Statement.....................................................Section
4.20
Real Property
Leases.............................................Section
4.11(b)
Recommendation
Withdrawal............................................Section
6.2
Registered Intellectual
Property.................................Section 4.16(a)
Release......................................................Section
4.18(a)(iv)
Representatives......................................................Section
1.1
Required Financial
Information....................................Section 6.9(a)
Requisite Shareholder
Vote........................................Section 4.2(a)
Restricted
Share.....................................................Section
1.1
Retention
Bonus.....................................................Section
6.14
Rights
Agreement....................................................Section
4.23
S&S Key
Customers...................................................Section
4.22
S&S Key
Suppliers...................................................Section
4.22
Sarbanes-Oxley
Act............................................Section
4.12(b)(i)
Scantron Key
Customers..............................................Section
4.22
Scantron Key
Suppliers..............................................Section
4.22
SEC...................................................................Article
IV
SEC
Reports.......................................................Section
4.7(a)
Securities
Act.......................................................Section
1.1
Shareholders
Meeting.................................................Section
6.2
Shares............................................................Section
3.1(b)
Software.............................................................Section
1.1
Software
Documentation...............................................Section
1.1
Stock Appreciation
Right.............................................Section 1.1
Stock
Equivalent.....................................................Section
1.1
Subsidiaries.........................................................Section
1.1
Superior
Proposal.................................................Section
6.5(g)
Surviving
Corporation................................................Section
2.1
Takeover
Laws.....................................................Section
4.2(b)
Tax..................................................................Section
1.1
Tax
Return...........................................................Section
1.1
Trade
Secrets........................................................Section
1.1
Trademarks...........................................................Section
1.1
Unauthorized
Code....................................................Section
1.1
WARN
Act.........................................................Section
4.15(e)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 19, 2006
(this "Agreement") by and among John H. Harland Company, a Georgia
corporation
(the "Company"), M & F Worldwide Corp., a Delaware corporation
("Parent"), and H
Acquisition Corp., a Georgia corporation and a wholly owned
Subsidiary of Parent
("Merger Sub").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the board of directors of the Company (the "Board")
has unanimously (i) determined that it is in the best interests of
the Company
and the shareholders of the Company, and declared it advisable, to
enter into
this Agreement with Merger Sub providing for the merger (the
"Merger") of Merger
Sub with and into the Company in accordance with the Georgia
Business
Corporation Code (the "GBCC"), upon the terms and subject to the
conditions set
forth herein, (ii) approved the execution, delivery and performance
of this
Agreement and the consummation of the transactions contemplated
hereby,
including the Merger, and (iii) resolved to recommend adoption of
this Agreement
by the shareholders of the Company; and
WHEREAS, the boards of directors of Parent and Merger Sub have
each approved this Agreement and declared it advisable for Parent
and Merger Sub
to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth
herein, and
intending to be legally bound hereby, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. As used in this Agreement,
the
following terms have the following meanings:
"Acceptable Confidentiality Agreement" means a confidentiality
and standstill agreement containing confidentiality, standstill
and
no-solicitation covenants no less restrictive to the counterparty
thereto
(including as to duration of such covenants) than those contained
in the
Confidentiality Agreement.
"Action" means any claim, action, suit, arbitration,
mediation, inquiry, proceeding or investigation by or before any
Governmental
Authority, arbitrator or mediator.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more
intermediaries,
controls, is controlled by, or is under common control with, such
specified
Person.
"Antitrust Law" means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and
all other federal, state and foreign, if any, statutes, rules,
regulations,
orders, decrees, administrative and judicial doctrines and other
Laws that are
designed or intended to prohibit, restrict or regulate actions
having the
purpose or effect of monopolization or restraint of trade or
lessening of
competition or the creation or strengthening of a dominant position
through
merger or acquisition, in any case that are applicable to the
transactions
contemplated by this Agreement.
"Business Day" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by Law to be
closed in
The City of New York.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Intellectual Property" means all Intellectual
Property used or held for use in connection with the businesses of
the Company
and/or its Subsidiaries as such businesses are currently
conducted.
"Company Termination Fee" means $52,500,000 in cash.
"Completion Period" means a period of 45 consecutive days
after the date hereof throughout which (i) Parent shall have the
Required
Financial Information that the Company is required to provide to
Parent pursuant
to Section 6.9(a) and (ii) the conditions set forth in Section 7.1
shall be
satisfied and no event shall have occurred and no condition shall
exist that
would cause any of the conditions set forth in Sections 7.2(a) or
7.2(b) to fail
to be satisfied assuming the Closing were to be scheduled for any
time during
such 45 consecutive day period; provided, however, that the
"Completion Period"
shall not be deemed to have commenced if, prior to the completion
of the
Completion Period, Deloitte & Touche LLP shall have withdrawn
or qualified its
audit opinion with respect to any financial statements contained in
the SEC
Reports; provided, further, however, that if the financial
statements included
in the Required Financial Information that is available to Parent
on the first
day of any such 45-day period would be "stale," within the meaning
of Rule 3-12
of Regulation S-X under the Securities Act, on any day during such
45-day period
if a registration statement using such financial statements were to
be filed
with the SEC on such date and there are less than 30 days remaining
in such
45-day period, then such 45-day period shall be extended to a date
that is 30
days from the date such Required Financial Information first would
become
"stale" (within the meaning of Rule 3-12 of Regulation S-X under
the Securities
Act).
"Confidentiality Agreement" means the confidentiality
agreement dated March 20, 2006, between Clarke American Corp. and
the Company.
"Contract" means any contract, agreement, commitment,
arrangement, lease (including with respect to personal property) or
other
instrument or deed, whether written or oral.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or
among two or
more Persons, means the possession, directly or indirectly, of the
power to
direct or cause the direction of the affairs or management of a
Person, whether
through the ownership of voting securities, by Contract or
otherwise, including,
the ownership, directly or indirectly, of securities having the
power to elect a
majority of the board of directors or similar body governing the
affairs of such
Person.
"Director Compensation Plans" means the Company 2005
Compensation Plan for Non-Employee Directors, as amended through
December 15,
2005, and the Company Compensation Plan for Non-Employee Directors,
as amended
through January 17, 2002.
"Encumbrance" means any security interest, pledge, mortgage,
lien, charge, hypothecation, option to purchase or lease or
otherwise acquire
any interest, conditional sales Contract, claim, restriction,
covenant,
easement, right of way, title defect, adverse claim of ownership or
use,
transfer restriction, voting Contract, proxy or other limitation on
voting
rights or other encumbrance of any kind, other than any obligation
to accept
returns of inventory in the ordinary course of business and other
than those
arising by reason of restrictions on transfers under federal, state
or foreign
securities Laws.
"Equity Interest" means (i) with respect to a corporation, any
and all classes or series of shares of capital stock, (ii) with
respect to a
partnership, limited liability company, trust or similar Person,
any and all
classes or series of units, interests or other partnership/limited
liability
company interests and (iii) with respect to any other Person, any
other security
representing any ownership interest or participation in such
Person.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated
thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time
consistently applied.
"Governmental Authority" means any federal, state, provincial,
local or foreign government, governmental, regulatory or
administrative
authority, self-regulatory organization, agency or commission,
workers',
employees' or labor or any similar council or organization, or any
court,
tribunal, or judicial or arbitral body (including any political or
other
subdivision, department or branch of any of the foregoing).
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by
or with any
Governmental Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Indebtedness" means, with respect to any Person, (i)
indebtedness of such Person, whether or not contingent, for
borrowed money, (ii)
other indebtedness of such Person evidenced by notes, bonds or
debentures, (iii)
capitalized leases classified as indebtedness of such Person under
GAAP, (iv)
all indebtedness created or arising under any conditional sale or
other title
retention Contract with respect to property acquired by such Person
(even though
the rights and remedies of the seller or lender under such Contract
in the event
of default are limited to repossession or sale of such property),
(v) any
obligation of such Person, whether or not contingent, for the
deferred purchase
price of assets, property or services (other than trade payables
incurred in the
ordinary course of business and other current liabilities), (vi)
all obligations
of such Person pursuant to or evidenced by hedging, swap or
factoring Contracts
or other similar instruments, (vii) obligations, contingent or
otherwise, of
such Person to purchase, redeem, retire, defease or otherwise
acquire for value
any capital stock of such Person or any warrants, rights or options
to acquire
such capital stock, valued, in the case of redeemable preferred
stock, at the
greater of its voluntary or involuntary liquidation preference plus
accrued and
unpaid dividends, (viii) all Indebtedness of another Person
referred to in
clauses (i) through (vii) above guaranteed directly or indirectly,
jointly or
severally, in any manner by such Person, or in effect guaranteed
directly or
indirectly, jointly or severally, by such Person through a Contract
(a) to pay
or purchase such Indebtedness or to advance or supply funds for the
payment or
purchase of such Indebtedness, (b) to purchase, sell or lease (as
lessee or
lessor) property, or to purchase or sell services, primarily for
the purpose of
enabling the debtor to make payment of such Indebtedness or to
assure the holder
of such Indebtedness against loss, (c) to supply funds to or in any
manner
invest in the debtor (including any Contract to pay for property or
services
irrespective of whether such property is received or such services
are rendered)
or (d) otherwise to assure a creditor against loss, (ix)
Indebtedness referred
to in clauses (i) through (viii) above secured by (or for which the
holder of
such Indebtedness has an existing right, contingent or otherwise,
to be secured
by) any Encumbrance on property (including accounts and Contract
rights) owned
by such Person, even though such Person has not assumed or become
liable for the
payment of such Indebtedness, (x) reimbursement obligations of such
Person with
respect to letters of credit, bankers' acceptance or similar
facilities issued
for the account of such Person, (xi) obligations under any
acquisition Contracts
pursuant to which such Person is responsible for any earn-out or
other
contingent payments and (xii) obligations in respect of
performance, bid,
litigation or similar bonds; in each of the foregoing cases,
together with all
accrued interest and accrued fees thereon.
"Intellectual Property" means all intellectual property and
industrial property rights of any kind or nature existing anywhere
in the world,
including (i) all patents, patent applications and patent
disclosures, together
with all reissuances, continuations, continuations-in-part,
divisions,
revisions, substitutions, extensions and reexaminations thereof
("Patents"),
(ii) all trademarks, service marks, logos, slogans, design marks,
trade names,
corporate names, domain names, trade dress, and other similar
designations of
origin together with all goodwill symbolized thereby
("Trademarks"), (iii) all
copyrights and copyrightable works ("Copyrights"), (iv) all mask
works, (v) all
trade secrets and confidential or proprietary information
(including ideas,
research and development, inventions, know-how, formulas,
manufacturing and
production processes and techniques, methods, schematics,
technology, technical
data, designs, drawings, specifications, customer and supplier
lists, customer
information, financial information, pricing and cost information
and business
and marketing plans and proposals) ("Trade Secrets"), (vi) all
computer software
(including in both object code and source code formats),
algorithms, data,
databases, and other proprietary technology ("Software"), (vii) all
rights of
privacy, rights of publicity, and rights to personal information,
(viii) moral
rights and rights of attribution and integrity, (ix) all
applications for
registration and registrations for any of the foregoing, (x) all
rights in, to
or under any of the foregoing and in, to or under other similar
intangible
assets, and (xi) all rights and remedies against past, present, and
future
infringement, misappropriation, or other violation thereof.
"Knowledge" means, with respect to the Company, the actual
knowledge of the Persons set forth in Section 1.1(a) of the Company
Disclosure
Letter and, with respect to Parent, the actual knowledge of the
Persons set
forth in Section 1.1(a) of the Parent Disclosure Letter.
"Law" means any statute, law, ordinance, regulation, rule,
code, principle of common law or equity or other requirement of law
of a
Governmental Authority or any Governmental Order.
"License" means any permit, order, decree, consent, approval,
license, registration, qualification, finding of suitability or
other
authorization from a Governmental Authority.
"Made Available" means that the information referred to (i)
has been actually delivered to Parent at least two (2) Business
Days prior to
the date of this Agreement or (ii) was posted at least two (2)
Business Days
prior to the date of this Agreement on the Company's electronic
data site
located at https://datasite.merrillcorp.com (and which has been
identified as a
new addition to such site for at least two (2) Business Days
following the date
on which it is first made available and has not been modified
subsequently);
provided, however, that any document specifically referred to in
Section 1.1(b)
of the Company Disclosure Schedule shall be deemed to be "Made
Available" if
such document was posted prior to the execution of this Agreement
on the
Company's electronic data site located at
https://datasite.merrillcorp.com
(provided such document has been identified as a new addition to
such site and
has not been modified subsequently).
"Material Adverse Effect" means any change, effect, event,
circumstance or development, individually or in the aggregate,
together with all
other changes, effects, events, circumstances or developments, that
is or would
reasonably be expected to (i) have a materially adverse effect on
the business,
assets, financial condition or results of operations of the Company
and its
Subsidiaries, taken as a whole, other than any change, effect,
event,
circumstance or development resulting from (A) general economic or
financial
market conditions, (B) compliance with the express terms of, or the
taking of
any action expressly required by, this Agreement, (C) any actions
taken, or
failure to take action, or such other changes or events, in each
case, to which
Parent has expressly consented or requested in writing, (D)
conditions affecting
the Company's industries, (E) any failure, in and of itself, by the
Company to
meet projections, forecasts or revenue or earnings predictions for
any period
ending on or after the date of this Agreement (it being understood
that the
facts or occurrences giving rise to or contributing to such failure
may be
deemed to constitute, or be taken into account in determining
whether there has
been or will be, a Material Adverse Effect), (F) the announcement
or pendency of
this Agreement, the transactions contemplated hereby or performance
of or
compliance with the terms of this Agreement, and (G) changes in
GAAP; provided,
however, that with respect to clause (A), such change, effect,
event,
circumstance or development does not disproportionately impact the
Company and
its Subsidiaries, taken as a whole, and that with respect to clause
(D), such
change, effect, event, circumstance or development does not
disproportionately
impact any of the Printed Products, Software & Services or
Scantron business
segments of the Company and its Subsidiaries, as applicable, or
(ii) prevent,
materially delay or materially impede the ability of the Company to
consummate
the transactions contemplated by the Agreement.
"NYSE" means the New York Stock Exchange.
"Option" means each option granted by the Company to purchase
shares of Company Common Stock pursuant to any Benefit Plan.
"Parent Termination Fee" means $52,500,000 in cash.
"Permitted Encumbrances" means (i) liens for taxes,
assessments and governmental charges or levies imposed upon the
Company or its
Subsidiaries not yet due and payable for which appropriate reserves
have been
established or which are being contested in good faith by
appropriate
proceedings, (ii) Encumbrances imposed by Law which are not yet due
and payable
and have arisen in the ordinary course of business (including
zoning,
entitlement and other land use regulations), (iii) pledges or
deposits to secure
obligations under workers' compensation Laws or similar Laws or to
secure public
or statutory obligations, (iv) mechanics', carriers', workers',
repairers' and
similar Encumbrances imposed upon the Company or its Subsidiaries
arising or
incurred in the ordinary course of business and (v) such other
imperfections or
irregularities in title, charges, easements, survey exceptions,
leases,
subleases, license agreements and other occupancy agreements,
reciprocal
easement agreements, restrictions and other customary encumbrances
on title to
real property; provided, that none of the foregoing, individually
or in the
aggregate, adversely affect in any material respect (A) the
continued use of the
property to which they relate in the conduct of the business
currently conducted
thereon or (B) the value or resale value of the property to which
they relate.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization, Governmental
Authority, joint
venture, limited liability company or other entity.
"Representatives" means, collectively, any Person's officers,
partners, directors, employees, affiliates, attorneys, consultants,
financing
sources, agents or other advisors or representatives.
"Restricted Share" means each share of Company Common Stock
granted by the Company pursuant to any Benefit Plan that is
outstanding as of
the relevant time but is subject to vesting or other forfeiture
restrictions or
a right of repurchase by the Company as of such time.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Software Documentation" means all user manuals, training
materials, and other similar materials relating to the Software
included in the
Company Intellectual Property.
"Stock Appreciation Right" means each stock appreciation right
award with respect to a share of Company Common Stock granted by
the Company
pursuant to any Benefit Plan.
"Stock Equivalent" means each stock equivalent with respect to
a share of Company Common Stock granted by the Company under a
Director
Compensation Plan.
"Subsidiaries" of a Person means any and all corporations,
partnerships, limited liability companies and other entities,
whether
incorporated or unincorporated, with respect to which such Person,
directly or
indirectly, owns (i) a right to a majority of the profits of such
entity, (ii)
securities having the power to elect a majority of the board of
directors or
similar body governing the affairs of such entity or (iii) a
general partnership
interest, managing member or similar interest entitling such Person
to govern
the affairs of such entity.
"Taxes" means all federal, state, provincial, local,
territorial and foreign income, profits, franchise, license,
capital, capital
gains, transfer, ad valorem, wage, severance, occupation, import,
custom, gross
receipts, payroll, sales, employment, use, property, real estate,
excise, value
added, goods and services, estimated, stamp, unclaimed or abandoned
alternative
or add-on minimum, environmental, withholding and any other taxes,
duties,
assessments or governmental tax charges of any kind whatsoever,
together with
all interest, penalties and additions imposed with respect to such
amounts.
"Tax Returns" means all returns, declarations, reports, claims
for refund or information returns or statements relating to Taxes,
including any
schedule or attachment thereto, and including any amendment thereof
filed or to
be filed with any Tax Authority in connection with the
determination, assessment
or collection of Taxes.
"Unauthorized Code" means any "virus," "Trojan horse," "worm,"
"back door," "time bomb," "drop dead device," (as such terms are
commonly
understood in the software industry), or any other code, software
routines or
hardware components designed or intended to have, or capable of,
any of (i)
permitting unauthorized access or disabling, erasing, or otherwise
harming any
computer, systems, software, or other device on which code is
stored or
installed, (ii) disabling a computer program automatically with the
passage of
time or under the positive control of a Person other than an
authorized licensee
or owner of a copy of or rights in the program or (iii) damaging or
destroying
any data, file or information without the user's consent.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the
conditions of
this Agreement and in accordance with the GBCC, at the Effective
Time, Merger
Sub shall be merged with and into the Company. As a result of the
Merger, the
separate corporate existence of Merger Sub will cease and the
Company will
continue under the name "John H. Harland Company" as the surviving
corporation
of the Merger under the GBCC (the "Surviving Corporation").
Section 2.2 Closing; Effective Time. Subject to the provisions
of
Article VII, the closing of the Merger (the "Closing") will take
place at 10:00
a.m., New York time, as soon as practicable, but in no event later
than the
fifth Business Day after the satisfaction or (to the extent
permitted by law)
waiver of the conditions set forth in Article VII (excluding
conditions that, by
their terms, cannot be satisfied until the Closing, but the Closing
shall be
subject to the satisfaction or (to the extent permitted by law)
waiver of those
conditions), at the offices of Skadden, Arps, Slate, Meagher &
Flom LLP, Four
Times Square, New York, New York (or the Closing may take place at
such other
place or at such other date as Parent and the Company may mutually
agree in
writing); provided, however, that notwithstanding the satisfaction
or waiver of
the conditions set forth in Article VII, the parties will not be
required to
effect the Closing until the earlier to occur of (a) a date
specified by Parent
on at least three (3) Business Days' notice to the Company and (b)
the final day
of the Completion Period. The date on which the Closing actually
occurs is
hereinafter referred to as the "Closing Date". Prior to the
Closing, Parent
shall prepare and on the Closing Date the Surviving Corporation
shall cause the
Merger to be consummated by filing an appropriate certificate of
merger (the
"Certificate of Merger") with the Secretary of State of the State
of Georgia, in
such form as required by, and executed in accordance with, the
relevant
provisions of the GBCC (the date and time of the filing of the
Certificate of
Merger with the Secretary of State of the State of Georgia, or such
later time
as is specified in the Certificate of Merger and as is agreed to by
the parties,
being the "Effective Time") and the parties shall make all other
filings or
recordings required under the GBCC in connection with the Merger,
including
publication of the notice of merger contemplated by Section
14-2-1105.1 of the
GBCC.
Section 2.3 Effects of the Merger. The Merger shall have the
effects
set forth in Section 14-2-1106 of the GBCC. Without limiting the
generality of
the foregoing and subject thereto, at the Effective Time, all the
property,
rights, privileges, immunities, powers and franchises of the
Company and Merger
Sub shall vest in the Surviving Corporation and all debts,
liabilities and
duties of the Company and Merger Sub shall become the debts,
liabilities and
duties of the Surviving Corporation.
Section 2.4 Articles of Incorporation; Bylaws. At the Effective
Time,
(a) the Articles of Incorporation of the Surviving Corporation
shall be amended
to read in their entirety as the Articles of Incorporation of
Merger Sub read
immediately prior to the Effective Time, except that the name of
the Surviving
Corporation shall be "John H. Harland Company" and (b) the bylaws
of the
Surviving Corporation shall be amended so as to read in their
entirety as the
bylaws of Merger Sub as in effect immediately prior to the
Effective Time, until
thereafter amended in accordance with applicable Law, except the
references to
Merger Sub's name shall be replaced by references to "John H.
Harland Company".
Section 2.5 Directors and Officers of Surviving Corporation.
The
directors of Merger Sub and the officers of the Company (other than
those who
Merger Sub determines shall not remain as officers of the
Surviving
Corporation), in each case, as of the Effective Time shall, from
and after the
Effective Time, be the directors and officers, respectively, of the
Surviving
Corporation until their successors have been duly elected or
appointed and
qualified or until their earlier death, resignation or removal in
accordance
with the certificate of incorporation or bylaws of the Surviving
Corporation.
ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK AND EXCHANGE OF
CERTIFICATES
Section 3.1 Effect on Capital Stock. At the Effective Time, by
virtue
of the Merger and without any action on the part of Parent, Merger
Sub, the
Company or the holders of any of the following securities:
(a) Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into and
become one fully paid and nonassessable share of common stock, par
value $0.01,
of the Surviving Corporation.
(b) Each share of Common Stock, par value $1.00 per share, of
the Company (the "Company Common Stock") issued and outstanding
immediately
prior to the Effective Time (other than any shares of Company
Common Stock to be
canceled pursuant to Section 3.1(c) and any Dissenting Shares)
("Shares") shall
be converted into the right to receive in cash an amount per Share
(subject to
any applicable withholding Tax specified in Section 3.5(c)) equal
to $52.75 in
cash, without interest (the "Merger Consideration"). At the
Effective Time, each
holder of a certificate theretofore representing any such shares of
Company
Common Stock shall cease to have any rights with respect thereto,
except the
right to receive Merger Consideration upon surrender of such
certificates in
accordance with Section 3.5, without interest.
(c) Each Share held in the treasury of the Company, or
otherwise owned by Parent or Merger Sub, or owned by any direct or
indirect
Subsidiary of such Persons, in each case immediately prior to the
Effective
Time, shall be canceled without any conversion thereof and no
consideration
shall be paid with respect thereto.
Section 3.2 Treatment of Options and Other Equity Awards.
(a) As of the Effective Time, each Option will be canceled and
extinguished, and the holder thereof will be entitled to receive an
amount in
cash equal to the excess (if any) of (i) the product of (A) the
number of Shares
subject to such Option and (B) the Merger Consideration over (ii)
the aggregate
exercise price of such Option, without interest and less any
required
withholding Taxes as specified in Section 3.5(c). All payments with
respect to
canceled Options shall be made by the Paying Agent as promptly as
reasonably
practicable after the Effective Time from funds deposited by or at
the direction
of the Surviving Corporation to pay such amounts in accordance with
Section
3.5(a). Prior to the Effective Time, the Company shall take any and
all actions
necessary to effectuate the cancelation of Options pursuant to this
Section
3.2(a), including adopting any plan amendments.
(b) As of the Effective Time, each Stock Appreciation Right
will be canceled and extinguished, and the holder thereof will be
entitled to
receive, in full satisfaction of the rights of such holder with
respect thereto,
an amount in cash equal to the excess (if any) of (i) the lesser of
(A) the
"target price" applicable thereto (if any) and (B) the Merger
Consideration over
(ii) the "grant price" applicable thereto, without interest and
less any
required withholding Taxes as specified in Section 3.5(c). All
payments with
respect to canceled Stock Appreciation Rights shall be made by the
Paying Agent
as promptly as reasonably practicable after the Effective Time from
funds
deposited by or at the direction of the Surviving Corporation to
pay such
amounts in accordance with Section 3.5(a). Prior to the Effective
Time, the
Company shall take any and all actions necessary to effectuate the
cancelation
of Stock Appreciation Rights pursuant to this Section 3.2(b).
(c) As of the Effective Time, each Restricted Share that is
issued and outstanding as of the Effective Time shall, by virtue of
the Merger
and without any action on the part of any holder of Restricted
Shares, become
fully vested. Each vested Restricted Share issued and outstanding
immediately
prior to the Effective Time (other than any such shares to be
canceled pursuant
to Section 3.1(c) and any Dissenting Shares) shall be converted
into the right
at the Effective Time to receive, as promptly as reasonably
practicable
following the Effective Time, a cash payment with respect thereto
equal to the
Merger Consideration, without interest and less any required
withholding Taxes
as specified in Section 3.5(c). At the Effective Time, each holder
of a
Restricted Share (other than any Dissenting Shares, which shall
have the rights
set forth in Section 3.4) shall cease to have any rights with
respect thereto,
except the right to receive Merger Consideration. Prior to the
Effective Time,
the Company shall take any and all actions necessary to effectuate
this Section
3.2(c), including providing holders of Restricted Shares with
notice of their
rights with respect to any such Restricted Shares as provided
herein.
(d) Prior to the Effective Time, the Company shall take such
action as is necessary to cause the ending date of the then current
offering
period under the Company's Employee Stock Purchase Plan (the
"ESPP") to be at
least thirty (30) days prior to the Effective Time, subject to the
terms of such
plan (the "Final Purchase Date"). On the Final Purchase Date, the
Company shall
apply the funds credited as of such date under such ESPP within
each
participant's payroll withholding account to the purchase of whole
Shares of the
Company in accordance with the terms of such ESPP and shall prevent
the
commencement of any new purchase or offering period.
(e) As of the Effective Time, each Stock Equivalent that is
outstanding immediately prior to the Effective Time shall cease to
represent a
right to receive upon distribution a share of Company Common Stock
and shall
instead be converted automatically into a right to receive an
amount in cash
determined in accordance with the terms of the applicable Director
Compensation
Plan (including applicable interest accruing after the Effective
Time).
Following the Effective Time, Parent shall, and shall cause the
Surviving
Corporation to, comply with the terms of the Director Compensation
Plans,
subject to the adjustments pursuant to this Section 3.2(e).
Section 3.3 Adjustment of Merger Consideration. Notwithstanding
anything in this Agreement to the contrary, if, between the date of
this
Agreement and the Effective Time, the issued and outstanding Shares
shall have
been changed into a different number of shares or a different class
by reason of
any stock split, reverse stock split, stock dividend,
reclassification,
redenomination, recapitalization, split-up, combination, exchange
of shares or
other similar transaction, the Merger Consideration and any other
dependent
items shall be appropriately adjusted to provide to the holders of
Company
Common Stock the same economic effect as contemplated by this
Agreement prior to
such action and as so adjusted shall, from and after the date of
such event, be
the Merger Consideration or other dependent item, subject to
further adjustment
in accordance with this sentence.
Section 3.4 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective
Time and held by
a holder who is entitled to demand and properly demands appraisal
of such Shares
(the "Dissenting Shares") pursuant to, and who complies in all
respects with,
Article 13 of the GBCC (the "Dissenters Provisions"), shall be
entitled to
payment of the fair value of such Dissenting Shares in accordance
with the
Dissenters Provisions; provided, however, that if any such holder
shall fail to
perfect or otherwise shall waive, withdraw or lose the right to
dissent under
the Dissenters Provisions, then the right of such holder to be paid
the fair
value of such holder's Dissenting Shares shall cease and such
Dissenting Shares
shall be deemed to have been converted as of the Effective Time
into, and to
have become exchangeable solely for the right to receive, the
Merger
Consideration.
(b) The Company will give Parent prompt notice of any notice
received by the Company of intent to demand the fair value of any
Shares,
withdrawals of such notices and any other instruments served
pursuant to the
Dissenters Provisions and received by the Company and Parent shall
have the
right to participate in all negotiations and proceedings with
respect to the
exercise of dissenters' rights under the Dissenters Provisions. The
Company will
not, except with the prior written consent of Parent, make any
payment or other
commitment with respect to any such exercise of dissenters' rights
or offer to
settle or settle any such rights.
Section 3.5 Payment and Exchange of Certificates.
(a) Following
the date of this Agreement and in any event not
less than three (3) Business Days prior to the mailing of the Proxy
Statement to
the shareholders of the Company, Parent shall designate a bank or
trust company
reasonably acceptable to the Company to act as Paying Agent in
connection with
the Merger (the "Paying Agent"). Promptly after the Effective Time,
Parent will,
or cause the Surviving Corporation to, deposit in trust with, the
Paying Agent,
the aggregate consideration to which shareholders, holders of
Options, holders
of Stock Appreciation Rights, and holders of Restricted Shares of
the Company
become entitled under this Article III. Until used for that
purpose, the funds
shall be invested by the Paying Agent, as directed by Parent or the
Surviving
Corporation, in obligations of or guaranteed by the United States
of America or
obligations of an agency of the United States of America which are
backed by the
full faith and credit of the United States of America, in
commercial paper
obligations rated A-1 or P-1 or better by Moody's Investors
Services Inc. or
Standard & Poor's Corporation, or in deposit accounts,
certificates of deposit
or banker's acceptances of, repurchase or reverse repurchase
agreements with, or
Eurodollar time deposits purchased from, commercial banks, each of
which has
capital, surplus and undivided profits aggregating more than
$500,000,000 (based
on the most recent financial statements of the banks which are then
publicly
available at the SEC or otherwise).
(b)
Promptly after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each Person who
was a record
holder of Company Common Stock immediately prior to the Effective
Time, whose
shares were converted pursuant to Article III into the right to
receive the
Merger Consideration, (i) a form of letter of transmittal for use
in effecting
the surrender of stock certificates which immediately prior to the
Effective
Time represented Company Common Stock (each, a "Certificate") in
order to
receive payment of the Merger Consideration (which shall specify
that delivery
shall be effected, and risk of loss and title to the Certificate
shall pass,
only upon actual delivery of the Certificates to the Paying Agent
(or effective
affidavits of loss in lieu thereof), and shall otherwise be in
customary form)
and (ii) instructions for use in effecting the surrender of the
Certificates (or
effective affidavits of loss in lieu thereof) in exchange for
payment of the
Merger Consideration. When the Paying Agent receives a Certificate
(or effective
affidavits of loss in lieu thereof), together with a properly
completed and
executed letter of transmittal and any other required documents,
the Paying
Agent shall pay to the holder of the Shares represented by the
Certificate (or
effective affidavits of loss in lieu thereof), or as otherwise
directed in the
letter of transmittal, the Merger Consideration with regard to each
Share
represented by such Certificate, less any required Tax withholdings
in
accordance with Section 3.5(c), and the Certificate shall be
canceled. No
interest shall be paid or accrued on the Merger Consideration
payable upon the
surrender of Certificates. If payment is to be made to a Person
other than the
Person in whose name a surrendered Certificate is registered, it
shall be a
condition of payment that the Certificate so surrendered must be
properly
endorsed or otherwise be in proper form for transfer, and the
Person who
surrenders the Certificate must provide funds for payment of any
transfer or
other Taxes required by reason of the payment to a Person other
than the
registered holder of the surrendered Certificate or establish to
the
satisfaction of the Surviving Corporation that all Taxes have been
paid or are
not applicable. After the Effective Time, a Certificate shall
represent only the
right to receive the Merger Consideration in respect of the Shares
represented
by such Certificate, without any interest thereon.
(c) Parent, the Surviving Corporation and Paying Agent, as
applicable, shall be entitled to deduct and withhold from the
consideration and
any other amount otherwise payable to a holder of Shares, Options,
Stock
Appreciation Rights, or Restricted Shares pursuant to the Merger or
this
Agreement (each, a "Payee ") such amounts as are required to be
withheld under
the Code, the rules and regulations promulgated thereunder or any
applicable
provision of state, local or foreign tax Law. To the extent that
amounts are so
withheld, such withheld amounts shall be treated for all purposes
of this
Agreement as having been paid to the Payee in respect of which such
deduction
and withholding was made.
(d) If a Certificate has been lost, stolen or destroyed, the
Surviving Corporation will cause the Paying Agent to accept an
affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or
destroyed
instead of the Certificate; provided, that the Surviving
Corporation may require
the Person to whom any Merger Consideration is paid, as a condition
precedent to
the payment thereof, to give the Surviving Corporation a bond in
such sum as it
may direct or otherwise indemnify the Surviving Corporation in a
manner
reasonably satisfactory to the Surviving Corporation against any
claim that may
be made against the Surviving Corporation with respect to the
Certificate
claimed to have been lost, stolen or destroyed.
(e) At any time which is more than six (6) months after the
Effective Time, the Surviving Corporation shall be entitled to
require the
Paying Agent to deliver to it any funds which had been deposited
with the Paying
Agent and have not been disbursed in accordance with this Article
III (including
interest and other income received by the Paying Agent in respect
of the funds
made available to it), and after the funds have been delivered to
the Surviving
Corporation, Persons entitled to payment in accordance with this
Article III
shall be entitled to look solely to the Surviving Corporation
(subject to
abandoned property, escheat or other similar Laws) for payment of
the Merger
Consideration upon surrender of the Certificates held by them,
without any
interest thereon. Any portion of the funds deposited with the
Paying Agent
remaining unclaimed as of a date which is immediately prior to such
time as such
amounts would otherwise escheat to or become property of any
government entity
shall, to the extent permitted by applicable Law, become the
property of the
Surviving Corporation free and clear of any claims or interest of
any Person
previously entitled thereto. None of the Surviving Corporation,
Parent, Merger
Sub or the Paying Agent will be liable to any Person entitled to
payment under
this Article III for any consideration which is delivered to a
public official
pursuant to any abandoned property, escheat or similar Law.
(f) From and after the Effective Time, the Surviving
Corporation shall not record on the stock transfer books of the
Company or the
Surviving Corporation any transfers of shares of Company Common
Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective
Time, Certificates are presented for transfer, they shall be
canceled and
treated as having been surrendered for the Merger Consideration in
respect of
the Shares represented thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the corresponding section of the
disclosure
letter provided by the Company to Parent prior to the execution of
this
Agreement (the "Company Disclosure Letter") (it being understood
that any
information set forth in one section or subsection of the Company
Disclosure
Letter shall be deemed to apply to each other Section or subsection
of this
Agreement to the extent that its relevance is reasonably apparent
on its face)
and except as expressly disclosed in reasonable detail in any
report, schedule,
form, statement or other document filed with or furnished to the
Securities and
Exchange Commission (the "SEC") by the Company since December 31,
2005, each as
filed prior to the date of this Agreement (other than disclosures
in the "Risk
Factors" section of the Company's Annual Report on Form 10-K and
any other
disclosures included in such filings that are predictive or forward
looking in
nature), the Company hereby represents and warrants to Parent and
Merger Sub
that:
Section 4.1 Organization. Each of the Company and each of its
Subsidiaries is duly organized, validly existing and in good
standing under the
Laws of its respective jurisdiction of organization, and has the
requisite
corporate or similar power and authority to own its properties and
to carry on
its business as presently conducted and is duly qualified or
licensed to do
business and is in good standing (where such concept exists) as a
foreign
corporation or other entity in each jurisdiction in which the
nature of its
business or the ownership or leasing of its properties makes such
qualification
or licensing necessary, except where the failure to be so
qualified, licensed or
in good standing would not have a Material Adverse Effect. Complete
and correct
copies of the articles of incorporation and bylaws or other
organizational
documents of each of the Company and each of its Subsidiaries, in
each case as
currently in full force and effect, have been Made Available to
Parent. The
Company is not in violation of the provisions of its governing
documents. None
of the Subsidiaries of the Company is in violation in any material
respect of
the provisions of its governing documents.
Section 4.2 Authority; Enforceability.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations
hereunder and to consummate the transactions contemplated by this
Agreement. The
execution, delivery and performance by the Company of this
Agreement and the
consummation by the Company of the transactions contemplated by
this Agreement
have been duly and validly authorized by the Board, and no other
corporate
proceedings on the part of the Company are necessary to authorize
this Agreement
or to consummate the transactions contemplated by this Agreement
(except that
consummation of the Merger is subject to adoption of this Agreement
by the
affirmative vote of a majority of the votes entitled to be cast by
the holders
of the outstanding shares of Company Common Stock voting together
as a single
voting group (the "Requisite Shareholder Vote")).
(b) The
Board at a duly held meeting has unanimously (i)
determined that it is in the best interests of the Company and its
shareholders,
and declared it advisable, to enter into this Agreement, (ii)
adopted this
Agreement and the consummation of the transactions contemplated
hereby,
including the Merger and (iii) resolved to recommend that the
shareholders of
the Company approve the adoption of this Agreement and directed
that such matter
be submitted for consideration of the shareholders of the Company
at the
Shareholders Meeting (this clause (iii), the "Board
Recommendation"). Assuming
the accuracy of the representations and warranties contained in
Section 5.9, no
"moratorium", "control share acquisition", "business combination",
"fair price"
or other form of anti-takeover Laws or regulations (collectively,
"Takeover
Laws") are applicable in the State of Georgia or in any other U.S.
or foreign
jurisdiction in which any of the Company's Subsidiaries are
organized or formed,
or to the Company's Knowledge, in any other jurisdiction, to the
execution,
delivery or performance of this Agreement, the consummation of the
Merger, or
the other transactions contemplated by this Agreement.
(c) This Agreement has been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery by
the other
parties, constitutes a legal, valid and binding agreement of the
Company,
enforceable against the Company in accordance with its terms,
subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization,
moratorium and other similar Laws relating to or affecting
creditors' rights
generally and general equitable principles (whether considered in a
proceeding
in equity or at Law).
Section 4.3 Non-Contravention. The execution, delivery and
performance
by the Company of this Agreement and the consummation by the
Company of the
Merger and the other transactions contemplated hereby do and will
not (a)
violate or conflict with or result in any breach of any provision
of the
respective articles of incorporation or bylaws (or other similar
governing
documents) of the Company or any of its Subsidiaries, (b) assuming
that all
consents, approvals and authorizations contemplated by clauses (a)
- (e) of
Section 4.4 have been obtained and all filings described in such
Section have
been made and the receipt of the Requisite Shareholder Vote,
conflict with or
violate any Law applicable to the Company or any of its
Subsidiaries or by which
its or any of their respective properties are bound, or (c) require
the consent,
approval or authorization of, or notice to or filing with any third
party with
respect to, or result in any breach or violation of or constitute a
default (or
an event which with notice or lapse of time or both would become a
default) or
result in the loss of a benefit or a change in the rights and
obligations under,
or give rise to any right of termination, cancellation, amendment
or
acceleration of, any note, bond, mortgage, indenture, Contract,
license, permit
or other obligation to which the Company or any of its Subsidiaries
is a party
or by which the Company or any of its Subsidiaries or its or any of
their
respective properties are bound, except, in the case of clauses (b)
and (c) of
this Section 4.3, for any such conflict, violation, breach,
default, loss, right
or other occurrence which would not have a Material Adverse
Effect.
Section 4.4 Governmental Consents. The execution, delivery and
performance of this Agreement by the Company and the consummation
by it of the
transactions contemplated by this Agreement do not and will not
require any
consent, approval, authorization or permit of, action by, filing
with or
notification to, any Governmental Authority, except as required
under or
pursuant to (a) the HSR Act, (b) the Exchange Act, (c) state
securities,
takeover and "blue sky" Laws, (d) the rules and regulations of the
NYSE, (e) the
GBCC, and (f) any other consent, approval, authorization, permit,
action, filing
or notification the failure of which to make or obtain would not
have a Material
Adverse Effect.
Section 4.5 Capitalization of the Company.
(a) The authorized capital stock of the Company consists of
144,000,000 shares of Company Common Stock and 500,000 shares of
Preferred
Stock, par value $1.00 per share ("Company Preferred Stock"). As of
the close of
business on December 18, 2006 (the "Capitalization Date"), (i)
37,907,497 shares
of Company Common Stock were issued and outstanding (including
491,887
outstanding Restricted Shares), (ii) 12,252,466 shares of Company
Common Stock
were held in the treasury of the Company or by the Company's
Subsidiaries, (iii)
an aggregate of 2,924,650 shares of Company Common Stock were
reserved for
issuance upon or otherwise deliverable in connection with the
exercise of
outstanding Options, (iv) 44,775 shares of Company Common Stock
were reserved
and available for issuance under the ESPP, (v) Stock Equivalents
representing
209,211 shares of Company Common Stock were credited to accounts
under the
Director Compensation Plans, (vi) 343,250 Stock Appreciation Rights
were
outstanding and (vii) 35,000,000 shares of Company Common Stock
were reserved
and available for issuance upon exercise of the Rights (as defined
in the Rights
Agreement) issued pursuant to the Rights Agreement. As of the date
of this
Agreement, the Company has outstanding Options to purchase
2,924,650 shares of
Company Common Stock with a weighted average exercise price of
$29.69 per share.
No shares of Company Preferred Stock are outstanding. From the
close of business
on the Capitalization Date until the date of this Agreement, no
Shares have been
issued except for Shares issued pursuant to the exercise of Options
in
accordance with their terms. All outstanding shares of capital
stock of the
Company and each of its Subsidiaries (other than Restricted Shares)
are duly
authorized, validly issued, fully paid and nonassessable, and are
not subject to
and were not issued in violation of any preemptive or similar
rights, purchase
option, call, or right of first refusal or similar rights. Except
as set forth
above, there are no outstanding shares, options, warrants, calls,
stock
appreciation rights, or other rights or commitments or any other
Contracts of
any character relating to dividend rights or to the sale, issuance
or voting of,
or the granting of rights to acquire, any shares of capital stock
or voting
securities of the Company or any of its Subsidiaries, or any
securities or
obligations convertible into, exchangeable for or evidencing the
right to
purchase any shares of capital stock or voting securities of the
Company or any
of its Subsidiaries.
(b) Except as set forth in Section 4.5(a), (i) there are no
preemptive rights of any kind which obligate the Company or any of
its
Subsidiaries to issue or deliver any shares of capital stock or
voting
securities of the Company or any of its Subsidiaries, (ii) there
are no
securities or obligations convertible or exchangeable into or
exercisable for,
or giving any Person a right to subscribe for or acquire from the
Company or any
of its Subsidiaries, any shares of capital stock or voting
securities of the
Company or any of its Subsidiaries and (iii) there is no Contract
pursuant to
which the Company or any of its Subsidiaries is or may become
obligated to
repurchase or redeem any shares of capital stock or voting
securities of the
Company or its Subsidiaries or any securities or obligations
convertible or
exchangeable into or exercisable for, any shares of capital stock
or voting
securities of the Company or its Subsidiaries, in the case of
clauses (ii) and
(iii), other than pursuant to Benefit Plans. Other than the Options
and the
Stock Equivalents, the Company and its Subsidiaries do not have
outstanding any
bonds, debentures, notes or other obligations the holders of which
have the
right to vote (or which are convertible, exchangeable or
exercisable for or into
securities having the right to vote) with the shareholders of the
Company or any
Subsidiary on any matter.
(c) As of the Capitalization Date, (i) each outstanding Option
has the exercise price, has an exercise period, and is held by the
holder set
forth with respect thereto in Section 4.5(c)(i) of the Company
Disclosure Letter
and (ii) each outstanding Stock Appreciation Right has the "grant
price", has
the "target price" (if any), has an exercise period, and is held by
the holder
set forth with respect thereto in Section 4.5(c)(ii) of the Company
Disclosure
Letter. All outstanding Options have an exercise price equal to no
less than the
fair market value (as defined in the applicable Benefit Plan) of
the underlying
Shares on the date of grant. From the Capitalization Date to the
date of this
Agreement, there have been no changes to the information set forth
in Sections
4.5(c)(i) or (ii) of the Company Disclosure Letter, except as a
result of the
exercise, expiration or forfeiture of Options or the Stock
Appreciation Rights.
(d) As of December 15, 2006, the only principal amount of
outstanding indebtedness for borrowed money of the Company and its
Subsidiaries
(not including intercompany amounts, undrawn letters of credit,
capital leases
or purchase price obligations with respect to acquisitions) (such
indebtedness,
"Funded Indebtedness") is $218,559,000 in aggregate principal
amount under the
Credit Agreement, dated as of July 3, 2006, by and among the
Company, the
several banks and other financial institutions from time to time
party thereto,
and Wachovia Bank, National Association in its capacity as
administrative agent.
As of the date of this Agreement, the principal amount of
outstanding Funded
Indebtedness of the Company and its Subsidiaries does not exceed
$245,000,000 in
the aggregate.
Section 4.6 Company Subsidiaries. Section 4.6 of the Company
Disclosure
Letter lists, as of the date of this Agreement, each Subsidiary of
the Company
and the jurisdiction of organization thereof. All the outstanding
Equity
Interests of each Subsidiary of the Company are owned, directly or
indirectly,
by the Company free and clear of any Encumbrances, other than
Permitted
Encumbrances. Except for its interests in its Subsidiaries, the
Company does not
own, directly or indirectly, any Equity Interest in any other
Person.
Section 4.7 SEC Reports; Financial Information.
(a) The Company has filed with the SEC all forms, documents,
certifications, registration statements and reports required to be
filed or
furnished by it with the SEC since January 1, 2004 (as amended to
date, the "SEC
Reports"). As of their respective dates, or, if amended, as of the
date of the
last such amendment, the SEC Reports complied as to form in all
material
respects with the requirements of the Securities Act or the
Exchange Act, as the
case may be. None of the SEC Reports at the time filed or, if
amended, as of the
date of such amendment, contained any untrue statement of a
material fact or
omitted to state any 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. As of the date hereof, there are no
outstanding or
unresolved comments from the SEC staff with respect to any of the
SEC Reports.
(b) Each of the
consolidated financial statements (including
all related notes and schedules) of the Company included (or
incorporated by
reference) in the SEC Reports fairly presents in all material
respects the
consolidated financial position of the Company and its consolidated
Subsidiaries
as at the respective dates thereof and their consolidated results
of operations
and consolidated cash flows for the respective periods then ended
(subject, in
the case of the unaudited statements, to normal year-end audit
adjustments and
to any other adjustments described therein including the notes
thereto, which
are not expected to be significant) in conformity with GAAP
(except, in the case
of the unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a
consistent basis during the periods involved (except as may be
expressly
referred to therein or in the notes thereto).
Section 4.8 No Undisclosed Liabilities. Except (a) as reflected
or
reserved against on the face of the most recent consolidated
balance sheet of
the Company included in the Company's Annual Report on Form 10-K
for the year
ended December 31, 2005, or (b) for liabilities or obligations
incurred in the
ordinary course of business consistent with past practice since
December 31,
2005, neither the Company nor any of its Subsidiaries has any
liabilities or
obligations of any nature, whether or not accrued, contingent or
otherwise,
other than those which would not have a Material Adverse
Effect.
Section 4.9 Absence of Certain Changes or Events. Since December
31,
2005, there has not been any Material Adverse Effect. From
September 29, 2006
through the date of this Agreement, the Company and its
Subsidiaries have
conducted their respective businesses in the ordinary course of
business
consistent with past practice and, except as otherwise contemplated
by this
Agreement, neither the Company nor any of its Subsidiaries has:
(a) declared, set aside, made or paid any dividend or other
distribution payable in cash, stock, property or otherwise with
respect to any
Equity Interests or any options, warrants, convertible securities
or other
rights to acquire any Equity Interest (except for regular quarterly
dividends
not exceeding $0.175 per share of Company Common Stock and any
dividends or
distributions by a Subsidiary wholly owned, directly or indirectly,
by the
Company);
(b) reclassified, combined, split, subdivided, redeemed,
purchased or otherwise acquired any Equity Interests of the Company
or any of
its Subsidiaries or any options, warrants, convertible securities
or other
rights to acquire any Equity Interest of the Company or any of its
Subsidiaries
(other than the acquisition by the Company of Shares, Options,
Stock
Appreciation Rights, Restricted Shares and Stock Equivalents
pursuant to the
Benefit Plans);
(c) except as required by applicable Law of jurisdictions
outside the United States, (i) granted to any current or former
directors,
officers, employees or consultants, any increase in compensation or
fringe
benefits, except for increases in the ordinary course of business
with respect
to employees who are not directors or officers of the Company, (ii)
granted to
any current or former directors, officers or employees, any right
to receive
severance or termination pay not provided for under a Benefit Plan
or Foreign
Plan listed on Section 4.14 of the Company Disclosure Letter or
(iii) entered
into, amended or modified any Benefit Plans or employment, change
of control or
severance Contract with any of its current or former directors,
officers,
employees or consultants;
(d) (i) acquired, leased or licensed from any Person (by
merger, consolidation, acquisition of stock or assets or otherwise)
or sold,
disposed of, leased or licensed (by merger, consolidation, sale of
stock or
assets or otherwise) any corporation, partnership or other business
organization
or division thereof, any Equity Interests therein or any assets, in
each case,
which are material to the Company and its Subsidiaries, taken as a
whole, other
than purchases and sales of inventory, non-merchandise supplies,
and other
assets in the ordinary course of business or (ii) incurred or
guaranteed, or
modified in any material respect, any Indebtedness or made any
loans, advances
or capital contributions to, or investments in, any other Person
(other than a
Subsidiary of the Company);
(e) made any changes in accounting policies or procedures,
except as required by GAAP or a Governmental Authority;
(f) made or revoked any material Tax election, or changed any
material Tax accounting principles, except as required by
applicable Law; or
(g) agreed to take any of the actions described in Sections
4.9(a) through 4.9(g).
Section 4.10 Contracts.
(a) As of the date of this Agreement, the Company has Made
Available to Parent correct and complete copies of, each Contract
to which the
Company or any of its Subsidiaries is a party or by which the
Company, any of
its Subsidiaries or any of their respective properties or assets is
bound which:
(i) (A) would be required to be filed by the Company
as a "material contract" pursuant to Item 601(b)(10) of Regulation
S-K under the
Securities Act or disclosed by the Company on a Current Report on
Form 8-K, (B)
is to be performed after the date of this Agreement, and (C) has
not been filed
or incorporated by reference in any SEC Report in unredacted
form;
(ii) contains covenants that materially limit the
ability of the Company or any of its Subsidiaries (or which,
following the
consummation of the Merger, could restrict the ability of the
Surviving
Corporation) to compete in any business or with any Person or in
any geographic
area, or to sell, supply or distribute any service or product,
except for any
such Contract that may be canceled without any penalty or other
liability to the
Company or any of its Subsidiaries upon notice of 60 days or
less;
(iii) relates to the formation, creation, operation,
management or control of any partnership or joint venture;
(iv) involves any exchange-traded or over-the-counter
swap, forward, future, option, cap, floor or collar financial
Contract, or any
other interest-rate or foreign currency protection Contract;
(v) evidences or relates to Indebtedness (other than
the endorsement of negotiable instruments for collection in the
ordinary course
of business);
(vi) involves any Key Customers or Key Suppliers
(other than purchase orders, sales orders or invoices under such
Contracts
entered into in the ordinary course of business consistent with
past practice);
(vii) are Contracts with customers or suppliers of
the Company or its Subsidiaries containing a provision which
provides that any
term or terms of such Contract will be no less favorable to such
customers or
suppliers either individually or in the aggregate than similar
provisions in any
other Contract;
(viii) was (A) entered into after December 31, 2005
or (B) has not yet been consummated, that, in the case of either
(A) or (B),
involves the acquisition or disposition, directly or indirectly (by
merger or
otherwise), of assets or capital stock or other equity interests
for aggregate
consideration under such Contract in excess of $1 million (other
than
acquisitions or dispositions of assets in the ordinary course of
business
consistent with past practice, including acquisitions and
dispositions of
inventory);
(ix) by its terms calls for payments by the Company
and/or its Subsidiaries under such Contract of more than $1 million
in any
12-month period or $10 million over the term of such Contract;
(x) involves any acquisition since January 1, 2004,
pursuant to which the Company or any of its Subsidiaries has
continuing
indemnification, "earn-out" or other contingent payment
obligations, in each
case, that could result in payments in excess of $250,000;
(xi) is between (A) the Company or any of its
Subsidiaries, on the one hand, and (B) any other Affiliate of the
Company (other
than its Subsidiaries), on the other hand, of the type that would
be required to
be disclosed under Item 404 of Regulation S-K under the Securities
Act;
(xii) involves any labor union or other employee
organization, including any works council or foreign trade union or
trade
association;
(xiii) (A) grants to the Company and/or any of its
Subsidiaries any rights in, to or under any Company Intellectual
Property (other
than any Contract (i) which grants rights to use readily available
commercial
Software that is generally available on nondiscriminatory pricing
terms or (ii)
which grants to the Company or a Subsidiary the right to use a
third party's
trademarks on printed products in exchange for a royalty, in the
case of either
(i) or (ii), entered into in the ordinary course of business
consistent with
past practice), or (B) restricts any rights of the Company or any
of its
Subsidiaries in, to or under Company Intellectual Property, or
permit third
Persons to use or register any Company Intellectual Property (other
than any
such Contract entered into in the ordinary course of business
consistent with
past practice);
(xiv) obligates the Company or any of its
Subsidiaries to provide indemnification or a guarantee;
(xv) is a Real Property Lease; or
(xvi) is (A) an employment Contract between the
Company and any officer of the Company or any of its Subsidiaries
(including the
heads of each business segment) or (B) a Contract containing any
covenant in
favor of the Company which limits the ability of any past officer
of the Company
or any of its Subsidiaries, or would limit the ability of any
present officer of
the Company or any of its Subsidiaries upon the termination of such
officer's
employment, to compete against the Company, any of its Subsidiaries
or any of
their respective business units.
Each Contract of the type described in clauses (i) through (xvi)
and any
Contract entered into after the date of this Agreement that would
have
constituted a Material Contract if entered into prior to the date
hereof is
referred to herein as a "Material Contract".
(b) Each Material Contract is valid and binding on, and
enforceable in accordance with its terms against, the Company and
any Subsidiary
of the Company which is a party thereto and, to the Knowledge of
the Company,
each other party thereto and is in full force and effect, and the
Company and
its Subsidiaries have performed and complied with all obligations
required to be
performed or complied with by them under each Material Contract.
There is no
default under any Material Contract by the Company or any of its
Subsidiaries
or, to the Knowledge of the Company, by any other party thereto,
and no event
has occurred that with the lapse of time or the giving of notice or
both would
constitute a default thereunder by the Company or any of its
Subsidiaries, or to
the Knowledge of the Company, by any other party thereto, except
which would not
have a Material Adverse Effect.
Section 4.11 Title to Properties; Assets.
(a) As of the date of this Agreement, a complete and correct
list of all of the real property owned by the Company and its
Subsidiaries is
set forth in Section 4.11(a) of the Company Disclosure Letter
(collectively with
any real property acquired by the Company or any of its
Subsidiaries after the
date of this Agreement, the "Owned Real Property").
(b) As of the date of this Agreement, Section 4.11(b) of the
Company Disclosure Letter contains a complete and correct schedule
of all leases
and subleases (including addendums and amendments) under which the
Company or
any of its Subsidiaries use or occupy or have the right to use or
occupy, any
real property (collectively with any real property leases or
subleases entered
into by the Company or any of its Subsidiaries after the date of
this Agreement,
the "Real Property Leases") (the land, buildings and other
improvements covered
by the Real Property Leases being herein called the "Leased Real
Property" and,
collectively with the Owned Real Property, the "Property"), which
schedule sets
forth the address of the Leased Real Property covered thereby. Each
Real
Property Lease has been Made Available to Parent. The Company and
its
Subsidiaries enjoy peaceful and undisturbed possession under each
Real Property
Lease.
(c) Each of the Company and its Subsidiaries (i) has good and
valid fee simple title to the Owned Real Property, (ii) owns or has
a valid
right to use, as applicable, the assets that are material to the
operation of
the business of the Company and its Subsidiaries (except, in the
case of
personal property, for such assets as are no longer used or useful
in the
conduct of its businesses or as have been disposed of in the
ordinary course of
business consistent with past practice) and (iii) has good and
valid leasehold
interests in all of its Leased Real Property. All property, assets
and Owned
Real Property are free and clear of all Encumbrances other than
Permitted
Encumbrances.
Section 4.12 Compliance with Law and Reporting Requirements.
(a) Except as would not have a Material Adverse Effect, (i)
neither the Company nor any of its Subsidiaries is in violation of,
or has
violated, any Law, or has received any written notice of any
violation of Law,
(ii) the Company and each of its Subsidiaries has and is in
compliance with all
Licenses required to conduct their respective businesses as now
being conducted
and all such Licenses are valid and in full force and effect and
(iii) none of
the Company or its Subsidiaries has received any written
notification from any
Governmental Authority threatening to revoke any such License.
(b) (i) The Company has been since January 1, 2003 and is in
compliance in all material respects with (A) the applicable
provisions of the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and (B) the
applicable
listing and corporate governance rules and regulations of the
NYSE.
(ii) The Company has designed disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to
ensure that
material information relating to the Company, including its
consolidated
Subsidiaries, is made known to the chief executive officer and the
chief
financial officer of the Company by others within those entities.
To the
Knowledge of the Company, such disclosure controls and procedures
are effective
in timely alerting the chief executive officer and the chief
financial officer
of the Company to material information required to be included in
the Company's
periodic reports required under the Exchange Act.
(iii) The Company has disclosed, based on its most
recent evaluation prior to the date hereof, to the Company's
auditors and the
audit committee of the Board (A) any significant deficiencies and
material
weaknesses in the design or operation of internal controls over
financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) which
are
reasonably likely to adversely affect the Company's ability to
record, process,
summarize and report financial information and (B) any fraud or
allegation of
fraud, whether or not material, that involves management or other
employees who
have a significant role in the Company's internal controls over
financial
reporting.
(iv) As of the date hereof, to the Company's
Knowledge, the Company has not identified any material control
deficiencies
other than as disclosed in Section 4.12(b)(iv) of the Company
Disclosure Letter.
To the Company's Knowledge, its auditors and its chief ex
