CAPACITY AS STOCKHOLDERS’
REPRESENTATIVE
Dated as of June 20, 2009
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ARTICLE I THE MERGERS | 2 | |||||
Section 1.1. | The Mergers | 2 | ||||
Section 1.2. | Closing | 3 | ||||
Section 1.3. | Effective Time | 3 | ||||
Section 1.4. | Effects of the Mergers | 3 | ||||
Section 1.5. | Certificate of Incorporation and By-laws of the Surviving Corporations | 3 | ||||
Section 1.6. | Directors | 4 | ||||
Section 1.7. | Officers | 4 | ||||
ARTICLE II CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES | 4 | |||||
Section 2.1. | Effect on Vowel Capital Stock | 4 | ||||
Section 2.2. | Effect on Consonant Capital Stock | 8 | ||||
Section 2.3. | Exchange of Certificates | 10 | ||||
Section 2.4. | Treatment of Consonant Management Incentive Plan | 14 | ||||
Section 2.5. | Treatment of Vowel Stock Options and Other Stock-Based Awards | 14 | ||||
Section 2.6. | Withholding Rights | 16 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF VOWEL | 16 | |||||
Section 3.1. | Corporate Organization | 16 | ||||
Section 3.2. | Subsidiaries | 16 | ||||
Section 3.3. | Capitalization | 17 | ||||
Section 3.4. | Authority | 18 | ||||
Section 3.5. | No Conflicts | 19 | ||||
Section 3.6. | SEC Reports; Financial Statements | 19 | ||||
Section 3.7. | Conduct of Business | 21 | ||||
Section 3.8. | Undisclosed Liabilities; No Material Events | 21 | ||||
Section 3.9. | Taxes | 21 | ||||
Section 3.10. | Intellectual Property | 22 | ||||
Section 3.11. | Title to Properties; Leases; Assets | 25 | ||||
Section 3.12. | Environmental Matters | 26 | ||||
Section 3.13. | Material Contracts | 26 | ||||
Section 3.14. | Employee Benefit Plans | 29 | ||||
Section 3.15. | Labor Matters | 32 | ||||
Section 3.16. | Employment Matters | 33 | ||||
Section 3.17. | Litigation; Compliance with Laws; Licenses; Permits and Approvals | 33 | ||||
Section 3.18. | Brokers | 34 | ||||
Section 3.19. | Insurance | 35 | ||||
Section 3.20. | Related Party Transactions | 35 |
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Section 3.21. | Customers and Vendors | 35 | ||||
Section 3.22. | Accounts Receivable | 36 | ||||
Section 3.23. | No Prebillings or Prepayments | 36 | ||||
Section 3.24. | Inventory | 36 | ||||
Section 3.25. | Foreign Corrupt Practices Act | 37 | ||||
Section 3.26. | Export Controls | 37 | ||||
Section 3.27. | Software | 38 | ||||
Section 3.28. | Tax Qualification | 38 | ||||
Section 3.29. | Opinion of Financial Advisor | 38 | ||||
Section 3.30. | Required Vote of the Vowel Stockholders | 38 | ||||
Section 3.31. | Disclosure Documents | 38 | ||||
Section 3.32. | State Takeover Statutes and Rights Plans | 39 | ||||
Section 3.33. | Bank Accounts | 39 | ||||
Section 3.34. | Transaction Expenses | 39 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CONSONANT | 39 | |||||
Section 4.1. | Corporate Organization | 40 | ||||
Section 4.2. | Subsidiaries | 40 | ||||
Section 4.3. | Capitalization | 41 | ||||
Section 4.4. | Authority | 41 | ||||
Section 4.5. | No Conflicts | 42 | ||||
Section 4.6. | Financial Statements | 42 | ||||
Section 4.7. | Conduct of Business | 43 | ||||
Section 4.8. | Undisclosed Liabilities; No Material Events | 43 | ||||
Section 4.9. | Taxes | 44 | ||||
Section 4.10. | Intellectual Property | 44 | ||||
Section 4.11. | Title to Properties; Leases; Assets | 47 | ||||
Section 4.12. | Environmental Matters | 48 | ||||
Section 4.13. | Material Contracts | 48 | ||||
Section 4.14. | Employee Benefit Plans | 52 | ||||
Section 4.15. | Labor Matters | 55 | ||||
Section 4.16. | Employment Matters | 55 | ||||
Section 4.17. | Litigation; Compliance with Laws; Licenses; Permits and Approvals | 56 | ||||
Section 4.18. | Brokers | 57 | ||||
Section 4.19. | Insurance | 57 | ||||
Section 4.20. | Related Party Transactions | 58 | ||||
Section 4.21. | Customers and Vendors | 58 | ||||
Section 4.22. | Accounts Receivable | 59 | ||||
Section 4.23. | No Prebillings or Prepayments | 59 | ||||
Section 4.24. | Inventory | 59 | ||||
Section 4.25. | Foreign Corrupt Practices Act | 59 | ||||
Section 4.26. | Export Controls | 60 | ||||
Section 4.27. | Software | 60 | ||||
Section 4.28. | Tax Qualification | 60 | ||||
Section 4.29. | Disclosure Documents | 61 |
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Section 4.30. | State Takeover Statutes and Rights Plans | 61 | ||||
Section 4.31. | Bank Accounts | 61 | ||||
Section 4.32. | Transaction Expenses | 61 | ||||
ARTICLE V COVENANTS | 64 | |||||
Section 5.1. | Conduct of Business by Consonant and Vowel | 64 | ||||
Section 5.2. | Access | 69 | ||||
Section 5.3. | Vowel No Solicitation | 69 | ||||
Section 5.4. | Filings; Other Actions | 72 | ||||
Section 5.5. | Efforts | 74 | ||||
Section 5.6. | Takeover Statute | 76 | ||||
Section 5.7. | Public Announcements | 76 | ||||
Section 5.8. | Indemnification and Insurance | 77 | ||||
Section 5.9. | Employee Relations and Benefits | 78 | ||||
Section 5.10. | Holdco Stock Options | 79 | ||||
Section 5.11. | Control of Operations | 79 | ||||
Section 5.12. | Notification of Certain Matters | 79 | ||||
Section 5.13. | Rule 16b-3 | 80 | ||||
Section 5.14. | Agreement to Defend; Stockholder Litigation | 80 | ||||
Section 5.15. | Nasdaq Listing | 80 | ||||
Section 5.16. | Directors and Officers of Holdco | 81 | ||||
Section 5.17. | Tax-Free Qualification | 81 | ||||
Section 5.18. | Tax Representation Letters | 81 | ||||
Section 5.19. | Transfer Restrictions | 82 | ||||
Section 5.20. | Closing Deliveries | 82 | ||||
Section 5.21. | Credit Agreements Provisions | 82 | ||||
Section 5.22. | Vowel Tax Holdback Amounts; Tax Refund Escrow | 84 | ||||
Section 5.23. | Shared Tax Liabilities | 85 | ||||
Section 5.24. | Vowel Closing Liabilities | 85 | ||||
Section 5.25. | LAZEL Spinoff | 86 | ||||
Section 5.26. | VEL Drop-Down Transaction and Related Agreements | 87 | ||||
Section 5.27. | Working Capital | 87 | ||||
ARTICLE VI CLOSING CONDITIONS | 89 | |||||
Section 6.1. | Conditions to Each Party’s Obligation to Effect the Mergers | 89 | ||||
Section 6.2. | Conditions to Obligation of Vowel to Effect the Vowel Merger | 90 | ||||
Section 6.3. | Conditions to Obligations of Consonant to Effect the Consonant Merger | 91 | ||||
Section 6.4. | Frustration of Closing Conditions | 92 | ||||
ARTICLE VII TERMINATION | 92 | |||||
Section 7.1. | Termination or Abandonment | 92 |
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Section 7.2. | Effect of Termination; Sole and Exclusive Remedy | 94 | ||||
Section 7.3. | Expenses and Other Payments | 95 | ||||
ARTICLE VIII STOCKHOLDERS’ REPRESENTATIVE | 97 | |||||
Section 8.1. | Appointment of Stockholders' Representative | 97 | ||||
Section 8.2. | Authority | 97 | ||||
Section 8.3. | Reliance | 98 | ||||
Section 8.4. | Indemnification of Stockholders' Representative | 98 | ||||
ARTICLE IX GENERAL PROVISIONS | 99 | |||||
Section 9.1. | No Survival of Representations and Warranties; Limitations of Representations and Warranties | 99 | ||||
Section 9.2. | Counterparts; Effectiveness | 99 | ||||
Section 9.3. | Notices | 99 | ||||
Section 9.4. | Headings | 100 | ||||
Section 9.5. | Severability | 101 | ||||
Section 9.6. | Assignment; Binding Effect | 101 | ||||
Section 9.7. | Entire Agreement; No Third-Party Beneficiaries | 101 | ||||
Section 9.8. | Amendments; Waivers | 101 | ||||
Section 9.9. | Governing Law | 102 | ||||
Section 9.10. | Jurisdiction, Etc | 102 | ||||
Section 9.11. | WAIVER OF JURY TRIAL | 103 | ||||
Section 9.12. | Interpretive Provisions | 103 | ||||
Section 9.13. | Certain Definitions | 104 |
Exhibits | ||
Exhibit A-1 | Holdings III Merger Agreement | |
Exhibit A-2 | Holdings III Contribution Agreement | |
Exhibit A-3 | Holdings IV Contribution Agreement | |
Exhibit B-1 | Form of Vowel Voting Agreement | |
Exhibit B-2 | Form of Consonant Voting Agreement | |
Exhibit C-1 | Vowel Preliminary Closing Certificate | |
Exhibit C-2 | Vowel Closing Certificate | |
Exhibit D-1 | Certificate of Incorporation of Consonant Surviving Corporation | |
Exhibit D-2 | Bylaws of Consonant Surviving Corporation | |
Exhibit E-1 | Certificate of Incorporation of Vowel Surviving Corporation | |
Exhibit E-2 | Bylaws of Vowel Surviving Corporation | |
Exhibit F | Form of Holdco Warrant | |
Exhibit G | Holdco Stockholders Agreement | |
Exhibit H | Amended and Restated Certificate of Incorporation of Holdco | |
Exhibit I | By-laws of Holdco | |
Exhibit J | Security Agreement | |
Exhibit K | LAZEL Guaranty | |
Exhibit L | Contingent Value Right Agreement | |
Exhibit M | Escrow Agreement |
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Exhibits | ||
Exhibit N | Holdco 2009 Equity Incentive Plan | |
Exhibit O-1 | Services Agreement | |
Exhibit O-2 | Subscription Agreement | |
Exhibit O-3 | Subscription Agreement | |
Exhibit P-1 | Stock Purchase Agreement | |
Exhibit P-2 | Subscription Agreement | |
Exhibit Q | Holdco Note | |
Exhibit R | Holdco Vowel Liability Guaranty |
Schedules | ||
Schedule A | List of Vowel stockholders executing the Vowel Voting Agreement | |
Schedule B | List of VSS Funds executing Consonant Voting Agreement | |
Schedule 1.6 | Directors of Consonant Surviving Corporation and Vowel Surviving Corporation | |
Schedule 1.7 | Officers of Consonant Surviving Corporation and Vowel Surviving Corporation | |
Schedule 5.24 | Vowel Closing Funding Amounts |
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(a) | If to Holdco: | ||
Cambium Holdings, Inc. c/o Veronis Suhler Stevenson LLC 350 Park Avenue |
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New York, New York 10022 Facsimile: (212) 381-8168 Attention: Scott J. Troeller |
With a copy to (which shall not constitute notice): | |||
Lowenstein Sandler PC 1251 Avenue of the Americas New York, NY 10020 Facsimile: (973) 597-2507 Attention: Steven E. Siesser, Esq. | |||
(b) | If to Consonant: | ||
VSS-Cambium Holdings II Corp. c/o Veronis Suhler Stevenson LLC 350 Park Avenue New York, New York 10022 Facsimile: (212) 381-8168 Attention: Scott J. Troeller | |||
With a copy to (which shall not constitute notice): | |||
Lowenstein Sandler PC 1251 Avenue of the Americas New York, NY 10020 Facsimile: (973) 597-2507 Attention: Steven E. Siesser, Esq. | |||
(c) | If to Vowel: | ||
Voyager Learning Company 789 Eisenhower Parkway Ann Arbor, MI 48108 Facsimile: (734) 663-5692 Attention: Todd Buchardt | |||
With a copy to (which shall not constitute notice): | |||
Perkins Coie LLP 131 South Dearborn Street Suite 1700 Chicago, Illinois 60603 Facsimile: (312) 324-9400 Attention: Phil Gordon, Esq. |
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(d) | If to the Stockholders’ Representative: | ||
Vowel Representative, LLC c/o Perkins Coie LLP 131 South Dearborn Street, Suite 1700 Chicago, Illinois 60603 Facsimile: 312.324.9400 Attention: Phil Gordon, Esq. | |||
with a copy (which will not constitute notice) to: | |||
Perkins Coie LLP 131 South Dearborn Street, Suite 1700 Chicago, Illinois 60603 Facsimile: 312.324.9400 Attention: Phil Gordon, Esq. |
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CAMBIUM HOLDINGS, INC. | ||||
By: | /s/ Scott J. Troeller | |||
Name: | Scott J. Troeller | |||
Title: | President | |||
VOYAGER LEARNING COMPANY | ||||
By: | /s/ Richard Surratt | |||
Name: | Richard Surratt | |||
Title: | President and Chief Executive Officer | |||
VSS-CAMBIUM HOLDINGS II CORP. | ||||
By: | /s/ Scott J. Troeller | |||
Name: | Scott J. Troeller | |||
Title: | President | |||
CONSONANT ACQUISITION CORP. | ||||
By: | /s/ Scott J. Troeller | |||
Name: | Scott J. Troeller | |||
Title: | President | |||
VOWEL ACQUISITION CORP. | ||||
By: | /s/ Scott J. Troeller | |||
Name: | Scott J. Troeller | |||
Title: | President |
STOCKHOLDERS’ REPRESENTATIVE: VOWEL REPRESENTATIVE, LLC | ||||
BY: | SPO ADVISORY CORP., its manager | |||
By: | /s/ William E. Oberndorf | |||
Name: | William E. Oberndorf | |||
Title: | Vice President | |||