-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RlQzg7xZ3pKx+a2YrBaVaGvvLaqvEvUEbKA3vZ7Vr1abv6R642S9w7RtyhIYaWOL AD1felD2GXzbSP/d5i+Htw== 0000898822-06-000962.txt : 20060810 0000898822-06-000962.hdr.sgml : 20060810 20060810163442 ACCESSION NUMBER: 0000898822-06-000962 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20060807 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Material Modifications to Rights of Security Holders ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060810 DATE AS OF CHANGE: 20060810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REYNOLDS & REYNOLDS CO CENTRAL INDEX KEY: 0000083588 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 310421120 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10147 FILM NUMBER: 061021769 BUSINESS ADDRESS: STREET 1: ONE REYNOLDS WAY CITY: DAYTON STATE: OH ZIP: 45430 BUSINESS PHONE: 9374852000 MAIL ADDRESS: STREET 1: P.O. BOX 2608 CITY: DAYTON STATE: OH ZIP: 45401 8-K 1 form8k.txt FORM 8K, DATED AS OF AUGUST 7, 2006 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 - -------------------------------------------------------------------------------- FORM 8-K - -------------------------------------------------------------------------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 7, 2006 THE REYNOLDS AND REYNOLDS COMPANY - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) OHIO 1-10147 31-04211 - ---------------------------- ------------------------ -------------- (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER OF INCORPORATION) NUMBER) IDENTIFICATION ONE REYNOLDS WAY DAYTON, OHIO 45430 - ------------------------------------------------------------ -------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (937) 485-2000 NOT APPLICABLE ----------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [X] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. On August 7, 2006, The Reynolds and Reynolds Company (the "Company") entered into an Agreement and Plan of Merger (the "Merger Agreement"), among Universal Computer Systems Holding, Inc. ("Parent") and Racecar Acquisition Co., a wholly owned indirect subsidiary of Parent ("Merger Sub"). MERGER AGREEMENT The Merger Agreement provides for a business combination whereby Merger Sub will merge with and into the Company (the "Merger"). As a result of the Merger, the separate corporate existence of Merger Sub will cease and the Company will continue as the surviving corporation in the Merger. At the effective time of the Merger, each share of common stock of the Company (other than shares owned by the Company, Parent and Merger Sub) will be converted into the right to receive $40 in cash, without interest. Each outstanding Company stock option at the time of the closing will be cancelled in the Merger and the holder thereof shall be entitled to an amount of cash, without interest, equal to the difference between $40 and the exercise price of such stock option. The Merger is subject to the approval of the Company's shareholders representing two-thirds or more of the votes associated with the outstanding voting equity securities of the Company entitled to vote thereon. In addition, the Merger is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and other regulatory laws applicable to the Merger, as well as other customary closing conditions. The Merger Agreement contains certain termination rights for both the Company and Parent and further provides that, upon termination of the Merger Agreement under certain circumstances, (i) the Company may be obligated to pay Parent a termination fee of $81 million and (ii) Parent may be obligated to pay to the Company a reverse termination fee of $81 million. A copy of the Merger Agreement is attached hereto as Exhibit 10.01 and is incorporated herein by reference. The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement. VOTING AGREEMENTS In connection with the transactions contemplated by the Merger Agreement, Mr. Richard H. Grant III and Mr. Finbarr O'Neill have entered into voting agreements (each, a "Voting Agreement") with Parent and Merger Sub, pursuant to which they have undertaken to vote the shares they own in favor of the Merger, unless the Merger Agreement has been terminated. Copies of the Voting Agreement with Mr. Richard H. Grant III and of the Voting Agreement with Mr. Finbarr O'Neill are attached hereto as Exhibit 10.02 and Exhibit 10.03, respectively, and are incorporated herein by reference. The foregoing description of the Voting Agreements is qualified in its entirety by reference to the full text of the Voting Agreements. RIGHTS AMENDMENT Immediately prior to the execution of the Merger Agreement, on August 7, 2006, the Company entered into an Amendment (the "Amendment") to its Rights Agreement, dated as of April 18, 2001, between the Company and Computershare Investor Services LLC (the "Rights Agreement"), as amended, for the purpose of amending the Rights Agreement to render it inapplicable to the Merger Agreement, the Voting Agreements, the Merger and the other transactions contemplated thereby. A copy of the Amendment is attached hereto as Exhibit 4.01 and is incorporated herein by reference. The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment. EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS On August 7, 2006, the Company entered into an Amended and Restated Employment Agreement with its Chief Executive Officer, Finbarr J. O'Neill. The changes included in Mr. O'Neill's Amended and Restated Employment Agreement relate primarily to provisions governing Mr. O'Neill's severance following, or prior to and in connection with, a change in control of the Company. A summary of material terms of Mr. O'Neill's Amended and Restated Employment Agreement (including pre-existing terms that have not been revised) is included as Exhibit 10.04 hereto and the Agreement itself is included as Exhibit 10.05 hereto. On August 7, 2006, the Company entered into Amended and Restated Change in Control Agreements with 8 of its executive officers, including the following individuals: Gregory T. Geswein Senior Vice President and Chief Financial Officer Douglas M. Ventura Executive Vice President, Reynolds International and Corporate Services Scot K. Eisenfelder Senior Vice President, Solutions Management, Marketing and Strategic Planning Terri L. Mulcahey Senior Vice President of Sales and Services Robert S. Guttman Vice President and General Counsel A summary of material terms of the form of Change in Control Agreement is included as Exhibit 10.06 hereto and the form of agreement is included as Exhibit 10.07 hereto. ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed transaction, a proxy statement of The Reynolds and Reynolds Company and other materials will be filed with SEC. WE URGE INVESTORS TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE REYNOLDS AND REYNOLDS COMPANY AND THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the proxy statement (when available) as well as other filed documents containing information about The Reynolds and Reynolds Company at http://www.sec.gov, SEC's Web site. Free copies of The Reynolds and Reynolds Company's SEC filings are also available by directing a request to The Reynolds and Reynolds Company, One Reynolds Way, Dayton, Ohio 45430, Attention: Investor Relations. PARTICIPANTS IN THE SOLICITATION The Reynolds and Reynolds Company and its executive officers and directors and Universal Computer Systems may be deemed, under SEC rules, to be participants in the solicitation of proxies from The Reynolds and Reynolds Company shareholders with respect to the proposed transaction. Information regarding the executive officers and directors of The Reynolds and Reynolds Company is included in its definitive proxy statement for its 2006 annual meeting filed with the SEC on May 5, 2006. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by securities holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with the proposed transaction. ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITY HOLDERS. Please see the disclosure set forth under "Item 1.01 Entry into a Material Definitive Agreement" which is incorporated by reference into this Item 3.03. ITEM 8.01 OTHER EVENTS. On August 8, 2006, the Company issued a press release announcing the signing of the Merger Agreement and various communications relating to the merger, copies of which are filed as Exhibit 99.1 and 99.2 hereto. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (a) Not applicable. (b) Not applicable. (d) Exhibits. EXHIBIT NO. DESCRIPTION 4.01 Amendment to Rights Agreement, dated as of August 7, 2006, between the Company and the Rights Agent. 10.01 Agreement and Plan of Merger, dated as of August 7, 2006, among Universal Computer Systems, Inc., Racecar Acquisition Co. and The Reynolds and Reynolds Company. 10.02 Voting Agreement, dated as of August 7, 2006, among Finbarr O'Neill, Universal Computer Systems, Inc. and Racecar Acquisition Co. 10.03 Voting Agreement, dated as of August 7, 2006, among Richard H. Grant III, Universal Computer Systems, Inc. and Racecar Acquisition Co. 10.04 Summary of Material Terms of Finbarr O'Neill's Amended and Restated Employment Agreement including pre-existing terms that have not been revised) 10.05 Amended and Restated Employment Agreement, dated as of August 7, 2006 with Finbarr O'Neill 10.06 Summary of Material Terms of the Form of Change in Control Agreement 10.07 Form of Change in Control Agreement 99.1 Press Release 99.2 Internal and External Communication Materials SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: August 10, 2006 The Reynolds and Reynolds Company By: /s/ Finbarr J. O'Neill --------------------------------- Name: Finbarr J. O'Neill Title: Chief Executive Officer EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION 4.01 Amendment to Rights Agreement, dated as of August 7, 2006, between the Company and the Rights Agent. 10.01 Agreement and Plan of Merger, dated as of August 7, 2006, among Universal Computer Systems, Inc., Racecar Acquisition Co. and The Reynolds and Reynolds Company. 10.02 Voting Agreement, dated as of August 7, 2006, among Finbarr O'Neill, Universal Computer Systems, Inc. and Racecar Acquisition Co. 10.03 Voting Agreement, dated as of August 7, 2006, among Richard H. Grant III, Universal Computer Systems, Inc. and Racecar Acquisition Co. 10.04 Summary of Material Terms of Finbarr O'Neill's Amended and Restated Employment Agreement including pre-existing terms that have not been revised) 10.05 Amended and Restated Employment Agreement, dated as of August 7, 2006 with Finbarr O'Neill 10.06 Summary of Material Terms of the Form of Change in Control Agreement 10.07 Form of Change in Control Agreement 99.1 Press Release 99.2 Internal and External Communication Materials EX-4 2 rightsagmt.txt 4.01 AMENDMENT TO RIGHTS AGREEMENT EXHIBIT 4.01 AMENDMENT NO. 2 TO RIGHTS AGREEMENT AMENDMENT NO. 2 TO RIGHTS AGREEMENT (this "AMENDMENT"), dated as of August 7, 2006, to the Rights Agreement dated as of April 18, 2001, between The Reynolds and Reynolds Company and Wells Fargo Bank, N.A., as successor to Mellon Investor Services LLC, as Rights Agent (the "RIGHTS AGENT"), as amended on October 26, 2004 (the "RIGHTS AGREEMENT"). WITNESSETH WHEREAS, the Company and the Rights Agent have heretofore executed and entered into the Rights Agreement; WHEREAS, Universal Computer Systems Holding, Inc. a Delaware corporation ("Parent"), Racecar Acquisition, Inc. a Ohio corporation and a wholly owned indirect subsidiary of Parent ("MergerCo") and The Reynolds and Reynolds Company, a Ohio corporation (the "Company"), propose to enter into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which MergerCo will merge with and into the Company, with the Company as the surviving corporation and whereby all the Company's issued shares of common stock will be converted into the right to receive cash; WHEREAS, the Board of Directors of the Company has approved the Merger Agreement and the voting agreements among Parent, MergerCo, on the one hand, and Mr. Richard H. Grant III. and Mr. Finbarr O'Neill (the "Voting Agreements"); WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company may from time to time supplement or amend the Rights Agreement; and WHEREAS, the Board of Directors of the Company has determined that an amendment to the Rights Agreement as set forth herein is necessary and desirable in connection with the foregoing and has approved this Amendment, and the Company and the Rights Agent desire to evidence such amendment in writing. NOW, THEREFORE, the Company and the Rights Agent hereby amend the Rights Agreement as follows: 1. AMENDMENT OF SECTION 1. Section 1 of the Rights Agreement is hereby amended and supplemented to add the following definitions in the appropriate alphabetical locations: "MERGERCO" shall mean Racecar Acquisition, Inc. a [Ohio] corporation and a wholly owned indirect subsidiary of UCI. "MERGER" shall mean the "Merger" as such term is defined in the Merger Agreement. "MERGER AGREEMENT" shall mean the Agreement and Plan of Merger, dated as of August 7, 2006, by and among UCI, MergerCo and the Company, as it may be amended from time to time. "UCI" shall mean Universal Computer Systems Holdings, Inc. 2. AMENDMENT OF DEFINITION OF "ACQUIRING PERSON". The definition of "Acquiring Person" in Section 1 of the Rights Agreement is hereby amended and supplemented by adding the following sentence at the end thereof: "Notwithstanding anything in this Rights Agreement to the contrary, neither UCI, MergerCo, nor any of their Affiliates or Associates shall be deemed to be an Acquiring Person as a result, directly or indirectly, of (i) the approval, execution, delivery or performance of the Merger Agreement, (ii) the consummation of the Merger or any other transaction contemplated by the Merger Agreement or (iii) the public announcement of any of the foregoing." 3. AMENDMENT OF DEFINITION OF "DISTRIBUTION DATE". The definition of "Distribution Date" in Section 3(a) of the Rights Agreement is hereby amended and supplemented by adding the following proviso immediately after the words "evidenced solely by the Right Certificate": "Notwithstanding anything in this Rights Agreement to the contrary, a Distribution Date shall not be deemed to have occurred solely as the result, directly or indirectly, of (i) the approval, execution, delivery or performance of the Merger Agreement, (ii) the approval, execution, delivery or performance of the Voting Agreements, (iii) the consummation of the Merger or any other transaction contemplated by the Merger Agreement or the Voting Agreements or (iv) the public announcement of any of the foregoing." 4. AMENDMENT OF DEFINITION OF "STOCK ACQUISITION DATE". The definition of "Stock Acquisition Date" in Section 1 of the Rights Agreement is hereby amended and supplemented by adding the following sentence at the end thereof: "Notwithstanding anything in this Rights Agreement to the contrary, a "Stock Acquisition Date" shall not be deemed to have occurred solely as the result, directly or indirectly, of (i) the approval, execution, delivery or performance of the Merger Agreement, (ii) the approval, execution, delivery or performance of the Voting Agreements, (iii) the consummation of the Merger or any other transaction contemplated by the Merger Agreement or the Voting Agreements or (iv) the public announcement of any of the foregoing." 5. AMENDMENT OF SECTION 3. Section 3 of the Rights Agreement is hereby amended and supplemented by adding the following sentence at the end thereof as a new Section 3(d): 2 "Nothing in this Rights Agreement shall be construed to give any holder of Rights or any other Person any legal or equitable rights, remedies or claims under this Rights Agreement by virtue of (i) the approval, execution, delivery or performance of the Merger Agreement, (ii) the approval, execution, delivery or performance of the Voting Agreements, (iii) the consummation of the Merger or any other transaction contemplated by the Merger Agreement or the Voting Agreements or (iv) the public announcement of any of the foregoing." 6. AMENDMENT OF SECTION 7(A). Section 7(a) of the Rights Agreement is hereby amended and supplemented by deleting "(i) the Close of Business on May 11, 2009 (the "Final Expiration Date")" and replacing it with the following: "(i) the earlier of (x) the Close of Business on May 11, 2009 and (y) immediately prior to the Effective Time (as defined in the Merger Agreement) (such earlier date, the "Final Expiration Date"). 7. AMENDMENT OF SECTION 11(A)(II). Section 11(a)(ii) of the Rights Agreement is amended by adding the following sentence to the end of that section: "Notwithstanding anything else set forth in this Agreement, no event requiring an adjustment under this Section 11(a)(ii) shall be deemed to have occurred by reason of (i) the approval, execution, delivery or performance of the Merger Agreement, (ii) the approval, execution, delivery or performance of the Voting Agreements, (iii) the consummation of the Merger or any other transaction contemplated by the Merger Agreement or the Voting Agreements or (iv) the public announcement of any of the foregoing." 8. AMENDMENT TO SECTION 13. Section 13 of the Rights Agreement is amended to read as follows: Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER. (a) In the event that, directly or indirectly, at any time after a Person has become an Acquiring Person, (x) the Company shall consolidate with, or merge with and into, any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o)), and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o)) shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding shares of Common Stock shall be changed into or exchanged for stock or other securities of any other Person or the Company or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as 3 a whole) to any Person or Persons, other than the Company or one or more of its wholly-owned Subsidiaries in one or more transactions each of which complies with Section 11(o), (other than, in the case of any transaction described in (x), (y) or (z) above, the Merger), then, and in each such case, proper provision shall be made so that: (i) each holder of a Right, except as provided in Section 7(e), shall thereafter have the right to receive upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, and in lieu of shares of Common Stock of the Company, such number of validly authorized and issued, fully paid, nonassessable and freely tradable shares of Common Stock of the Principal Party (as such term is hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or other adverse claims, as shall be equal to the result obtained by (1) multiplying the then current Purchase Price by the number of shares of Common Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event, and dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by (2) 50% of the current market price (determined pursuant to Section 11(d)) per share of Common Stock of such Principal Party on the date of consummation of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of its shares of Common Stock) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall be of no effect following the first occurrence of any Section 13 Event. (b) "PRINCIPAL PARTY" shall mean: (i) in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or consolidation; and (ii) in the case of any transaction described in clause (z) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such Person is not at such time and has not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Stock of which is and has been so registered, 4 "Principal Party" shall refer to such other Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stock of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Stock having the greatest aggregate market value. (c) The Company shall not consummate any such consolidation, merger, sale or transfer, (other than the Merger), unless the Principal Party shall have a sufficient number of its authorized shares of Common Stock which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger, sale or transfer of assets mentioned in paragraph (a) of this Section 13, the Principal Party will: (i) prepare and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date; and (ii) will deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act. The provisions of this Section 13 shall similarly apply to any successive mergers or consolidations or sales or other transfers (other than the Merger). In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a). 8. EFFECTIVENESS. This Amendment shall be effective as of the date first written above, as if executed on such date. Except as specifically amended by this Amendment, all other terms and conditions of the Rights Agreement shall remain in full force and effect and are hereby ratified and confirmed. 9. MISCELLANEOUS. This Amendment shall be deemed to be a contract made under the laws of the State of Minnesota and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State. This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all of such counterparts shall together constitute one and the same instrument. If any term, provision, covenant or restriction of this Amendment is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Except as otherwise expressly provided herein, or unless the context otherwise requires, all terms used herein have the meanings assigned to them in the Rights Agreement. The Rights Agent and the Company hereby waive any notice requirement under the Rights Agreement in connection with the entering into and delivery of this Amendment. 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and attested, all as of the day and year first above written. Attest: THE REYNOLDS AND REYNOLDS COMPANY By: /s/ Robert S. Guttman By: /s/ Finbar O'Neill -------------------------------- -------------------------------- Name: Robert S. Guttman Name: Finbar O'Neill Title: Executive Vice President Title: Chief Executive Officer General Counsel and Secretary Attest: WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ Barbara M. Novak By: /s/ Suzanne M. Swits -------------------------------- -------------------------------- Name: Barbara M. Novak Name: Suzanne M. Swits Title: Vice President Title: Vice President 6 EX-10 3 mergeragmt.txt 10.01 AGREEMENT AND PLAN OF MERGER EXHIBIT 10.01 EXECUTION COPY AGREEMENT AND PLAN OF MERGER Among THE REYNOLDS AND REYNOLDS COMPANY, UNIVERSAL COMPUTER SYSTEMS HOLDING, INC. and RACECAR ACQUISITION CO. Dated as of August 7, 2006 TABLE OF CONTENTS PAGE ARTICLE I DEFINITIONS SECTION 1.01 Definitions......................................................1 SECTION 1.02 Interpretation and Rules of Construction........................10 ARTICLE II THE MERGER SECTION 2.01 Merger..........................................................11 SECTION 2.02 Charter and Bylaws..............................................11 SECTION 2.03 Effective Time of the Merger....................................11 SECTION 2.04 Closing.........................................................11 SECTION 2.05 Directors and Officers of the Surviving Corporation.............12 ARTICLE III EFFECTS OF THE MERGER SECTION 3.01 Effects of the Merger on Company Securities.....................12 SECTION 3.02 Effects of the Merger on MergerCo Securities....................13 SECTION 3.03 Payment of Company Consideration; Stock Transfer Books..........13 SECTION 3.04 Employee Stock Purchase Plan of the Company.....................15 SECTION 3.05 Termination of the Company's DRIP...............................15 SECTION 3.06 Company Dissenting Shares.......................................16 SECTION 3.07 Withholding Rights..............................................16 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY SECTION 4.01 Organization and Qualification; Subsidiaries; Authority.........17 SECTION 4.02 Organizational Documents........................................18 SECTION 4.03 Capitalization..................................................18 SECTION 4.04 Authority Relative to this Agreement, Validity and Effect of Agreements...................................................19 SECTION 4.05 No Conflict; Required Filings and Consents......................20 SECTION 4.06 Permits; Compliance with Laws...................................21 SECTION 4.07 SEC Filings; Financial Statements...............................22 SECTION 4.08 Absence of Certain Changes or Events............................23 SECTION 4.09 Absence of Litigation...........................................23 SECTION 4.10 Employee Benefit Plans..........................................24 SECTION 4.11 Information Supplied............................................26 SECTION 4.12 Intellectual Property...........................................27 SECTION 4.13 Taxes...........................................................29 SECTION 4.14 Environmental Matters...........................................30 SECTION 4.15 Material Contracts..............................................31 SECTION 4.16 Interested Party Transactions...................................33 SECTION 4.17 Brokers.........................................................33 SECTION 4.18 Opinion of Financial Advisor....................................33 -i- SECTION 4.19 Insurance.......................................................33 SECTION 4.20 Takeover Statutes; Rights Agreement.............................34 SECTION 4.21 Labor Matters...................................................34 SECTION 4.22 Real Property...................................................35 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES SECTION 5.01 Organization....................................................35 SECTION 5.02 Ownership of MergerCo; No Prior Activities......................35 SECTION 5.03 Power and Authority.............................................35 SECTION 5.04 No Conflict; Required Filings and Consents......................36 SECTION 5.05 Information Supplied............................................37 SECTION 5.06 Financial Statements............................................37 SECTION 5.07 Absence of Litigation...........................................37 SECTION 5.08 Available Funds.................................................37 SECTION 5.09 No Ownership of Company Capital Stock...........................38 SECTION 5.10 Other Agreements or Understandings..............................38 SECTION 5.11 Brokers.........................................................39 SECTION 5.12 No Additional Representations...................................39 ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER SECTION 6.01 Conduct of Business by the Company Pending the Merger...........39 SECTION 6.02 Conduct of Business by Buyer Parties Pending the Merger.........43 SECTION 6.03 Tax Matters.....................................................43 SECTION 6.04 MergerCo........................................................43 ARTICLE VII ADDITIONAL AGREEMENTS SECTION 7.01 Company Proxy Statement; Other Filings; Stockholders' Meeting.........................................................43 SECTION 7.02 Access to Information; Confidentiality..........................45 SECTION 7.03 No Solicitation of Transactions by the Company..................46 SECTION 7.04 Employee Benefits Matters.......................................47 SECTION 7.05 Directors' and Officers' Indemnification and Insurance of the Surviving Corporation.......................................50 SECTION 7.06 Financing.......................................................52 SECTION 7.07 Further Action; Reasonable Best Efforts.........................54 SECTION 7.08 Public Announcements............................................56 SECTION 7.09 Third Party Consents............................................56 SECTION 7.10 Notification....................................................56 SECTION 7.11 Stockholder Litigation..........................................56 ARTICLE VIII CONDITIONS TO THE MERGER SECTION 8.01 Conditions to the Obligations of Each Party.....................57 SECTION 8.02 Conditions to the Obligations of Parent and MergerCo............57 SECTION 8.03 Conditions to the Obligations of the Company....................58 -ii- ARTICLE IX TERMINATION, AMENDMENT AND WAIVER SECTION 9.01 Termination.....................................................58 SECTION 9.02 Effect of Termination...........................................61 SECTION 9.03 Fees and Expenses...............................................61 SECTION 9.04 Waiver..........................................................63 ARTICLE X GENERAL PROVISIONS SECTION 10.01 Non-Survival of Representations and Warranties..................64 SECTION 10.02 Notices.........................................................64 SECTION 10.03 Severability....................................................65 SECTION 10.04 Amendment.......................................................65 SECTION 10.05 Entire Agreement; Assignment....................................65 SECTION 10.06 Performance Guaranty............................................65 SECTION 10.07 Specific Performance............................................65 SECTION 10.08 Parties in Interest.............................................66 SECTION 10.09 Governing Law; Forum............................................66 SECTION 10.10 Waiver of Jury Trial............................................66 SECTION 10.11 Headings........................................................67 SECTION 10.12 Counterparts....................................................67 SECTION 10.13 Waiver..........................................................67 -iii- EXHIBITS Exhibit A Form of the Surviving Corporation Charter -iv- AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER, dated as of August 7, 2006 (this "AGREEMENT"), is by and among The Reynolds and Reynolds Company, an Ohio corporation (the "COMPANY"), Universal Computer Systems Holding, Inc., a Delaware corporation ("PARENT"), and Racecar Acquisition Co., an Ohio corporation and an indirect wholly owned subsidiary of Parent ("MERGERCO", and together with Parent, the "BUYER PARTIES"). WHEREAS, the parties wish to effect a business combination through a merger of MergerCo with and into the Company (the "MERGER") on the terms and subject to the conditions set forth in this Agreement and in accordance with Chapter 1701 of the Ohio Revised Code (the "OGCL"); WHEREAS, the board of directors of the Company (the "COMPANY BOARD"), and the boards of directors of each of Parent and MergerCo deem it advisable and in the best interests of their respective shareholders to consummate the Merger on the terms and subject to the conditions set forth in this Agreement, and each of the Company Board and the boards of directors of Parent and MergerCo have approved this Agreement and declared its advisability and, in the case of the Company Board, recommended that this Agreement be adopted by the Company's shareholders; WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Parent's willingness to enter into this Agreement, Richard H. Grant and Finbarr J. O'Neill are entering into voting agreements with Parent and MergerCo (the "VOTING AGREEMENTS"); and WHEREAS, the Company has amended is Amended and Restated Rights Agreement, dated as of April 18, 2001 (the "RIGHTS AGREEMENT"), in accordance with its terms to render the Rights Agreement inapplicable to this Agreement and the transactions contemplated by this Agreement (including the Merger and the execution, delivery and performance of the Voting Agreements); NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS (a) For purposes of this Agreement: "ACTION" means any claim, action, complaint, charge, suit, proceeding, arbitration, mediation or other investigation as to which notice has been provided to the applicable party. "AFFILIATE" or "AFFILIATE" of a specified person means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person. "BALANCE SHEET" means the audited balance sheet of the Company dated as of March 31, 2006 contained in the Company SEC Reports. "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP", with respect to any Company Common Shares, has the meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act. "BUSINESS DAY" or "BUSINESS DAY" means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings and on which banks are not required or authorized to close in New York, New York. "CLASS A COMMON SHARES" means Class A Common Shares, no par value, of the Company. "CLASS B COMMON SHARES" means Class B Common Shares, no par value, of the Company. "CODE" means the Internal Revenue Code of 1986, as amended. "COMPANY ACQUISITION PROPOSAL" means any proposal or offer for, whether in one transaction or a series of related transactions or any public announcement providing for, contemplating or which constitutes any (a) merger, consolidation, business combination, acquisition, spin off, recapitalization involving the distribution of assets, cash, debt securities or preferred stock of the Company having a market value equal to at least 20% of the Company's equity market capitalization prior to the announcement thereof (whether by dividend, share repurchase or otherwise), liquidation, dissolution or other similar transaction involving the Company or any Company Subsidiary that would constitute a "significant subsidiary" (as defined in Rule 1-02 of Regulation S-X, but substituting 20% for references to 10% therein), (b) sale or other disposition, directly or indirectly, including by merger, consolidation, share exchange, recapitalization or any similar transaction, of any assets of the Company or the Company Subsidiaries representing 20% or more of the consolidated assets of the Company and the Company Subsidiaries taken as a whole, (c) issue, sale or other disposition by the Company of (including by way of merger, consolidation, share exchange, recapitalization or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 20% or more of the votes associated with the outstanding voting equity securities of the Company, (d) tender offer or exchange offer in which any Person or "group" (as such term is defined under the Exchange Act) offers to acquire beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the economic benefits associated with ownership, or the right to acquire beneficial ownership or such economic benefit, or any person or group acquires or agrees to acquire beneficial ownership or the right thereto or the economic benefits associated with ownership of, in any case, of 20% or more of the outstanding Company Common Shares, or (e) transaction which is similar in form, substance or purpose to any of the foregoing transactions; PROVIDED, HOWEVER, that the term "Company -2- Acquisition Proposal" shall not include (i) the Merger or any of the other transactions contemplated by this Agreement, or (ii) any merger, consolidation, business combination, recapitalization or similar transaction solely among the Company and one or more Company Subsidiaries or among Company Subsidiaries. "COMPANY CHARTER" means the Amended and Restated Articles of Incorporation of the Company dated as of February 9, 1995, as amended. "COMPANY COMMON SHARES" means all the Class A Common Shares and Class B Common Shares, PROVIDED, that all references to Company Common Shares shall be deemed to include Class B Common Shares on an as converted basis. For the avoidance of doubt, each Class B Common Share is convertible into Class A Common Shares at a rate of one (1) Class A Common Share for each twenty (20) Class B Common Shares. "COMPANY CONSIDERATION" means the aggregate consideration to be paid pursuant to Section 3.01 of this Agreement. "COMPANY DISCLOSURE SCHEDULE" means the disclosure schedule delivered by the Company to Parent concurrently with the execution of this Agreement for which the disclosure of any fact or item in any Section of such disclosure schedule shall, should the existence of such fact or item be relevant to any other section, be deemed to be disclosed with respect to that other Section so long as the relevance of such disclosure to such other Section is reasonably apparent from the nature of such disclosure. Nothing in the Company Disclosure Schedule is intended to broaden the scope of any representation or warranty of the Company made herein. "COMPANY OWNED INTELLECTUAL PROPERTY" means any Intellectual Property which is owned by the Company or any Company Subsidiary. "COMPANY OWNED SOFTWARE" means the Software owned by the Company or any Company Subsidiary that is included in the Software products currently marketed, licensed or used to provide services to Customers in the ordinary course of the business of the Company or any Company Subsidiary. "COMPANY SUPERIOR PROPOSAL" means a bona fide Company Acquisition Proposal (on its most recently amended and modified terms, if amended and modified) made by a Third Party (i) that relates to securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing two-thirds or more of the votes associated with the outstanding voting equity securities of the Company on a fully diluted basis or all or substantially all of the assets of the Company and the Company Subsidiaries, taken as a whole, (ii) which the Company Board determines in its good faith judgment (after consultation with its outside financial and legal advisors and taking into account all legal, financial, regulatory and other aspects of the proposal and the likelihood of consummation) to be more favorable from a financial point of view to the shareholders of the Company than the Merger, and (iii) which is accompanied by fully committed financing required to pay the cash portion of the total consideration required for (including payment of all fees and debt which is required to be paid (including to avoid default or breach thereunder) in connection with or in contemplation of such Company Acquisition Proposal). -3- "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise. "CREDIT AGREEMENT" means the Company's Credit Agreement dated as of April 8, 2004, among the Company, Reyna Capital Corporation, the lenders party thereto, Credit Lyonnais, New York Branch, as Syndication Agent, and JPMorgan Chase Bank, as Administration Agent. "DISCLOSURE SCHEDULES" means, collectively, the Company Disclosure Schedule and the Parent Disclosure Schedule. "ENVIRONMENTAL LAWS" means any applicable Law in existence on or before the date of this Agreement relating to (i) releases or threatened releases of Hazardous Substances; (ii) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances; or (iii) pollution or protection of the environment, health, safety or natural resources. "GAAP" means generally accepted accounting principles as applied in the United States. "GOVERNMENTAL AUTHORITY" means any national, state, provincial, municipal, local or foreign government, governmental, regulatory (including stock exchange) or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body. "HAZARDOUS SUBSTANCES" means any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive, or dangerous, or otherwise regulated, under any Environmental Law. Hazardous Substance includes any substance to which exposure is regulated by any Governmental Authority or any Environmental Law including any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or byproduct thereof, radon, radioactive material, asbestos, or asbestos containing material, urea formaldehyde, foam insulation or polychlorinated biphenyls or toxic mold. "INDEBTEDNESS" means, with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iii) all obligations of such Person upon which interest charges are customarily paid, (iv) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding obligations of such Person to creditors for raw materials, inventory, Software, services and supplies incurred in the ordinary course of such Person's business), (v) all obligations of such Person under a lease required to be capitalized for financial reporting purposes according to GAAP, (vi) all obligations of others secured by any Lien on property or assets owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (vii) all obligations of such Person under interest rate or currency swap transactions (other than refinancing of existing interest rate swaps as of the date hereof), (viii) all letters of credit issued for the account of such Person (excluding letters of -4- credit issued for the benefit of suppliers to support accounts payable to suppliers incurred in the ordinary course of business and letters of credit issued to renew existing letters of credit as of the date hereof), (ix) all obligations of such Person to purchase securities (or other property) that arise out of or in connection with the sale of the same or substantially similar securities or property, and (x) all guarantees and arrangements having the economic effect of a guarantee of such Person of any indebtedness of any other Person. "INTELLECTUAL PROPERTY" means all intellectual property rights of any kind or nature, including all U.S. or foreign (i) patents, patent applications, patent disclosures, invention registrations of any type, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof ("PATENTS"), (ii) trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, domain names and other source identifiers, and registrations and applications for registration thereof, together with the goodwill symbolized by any of the foregoing ("TRADEMARKS"), (iii) copyrightable works, copyrights, and registrations and applications for registration thereof ("COPYRIGHTS"), (iv) confidential and proprietary information, including trade secrets, know how, technical information, processes, formulae, models, and methodologies ("TRADE SECRETS"), and (v) computer programs and software (whether in source code, object code, or other form), algorithms, databases, data collections, technology supporting the foregoing, and all documentation, including user manuals and training materials, related to any of the foregoing ("SOFTWARE"). "KNOWLEDGE OF THE COMPANY" means the actual knowledge after reasonable investigation of any of those individuals listed on Section 1.01 of the Company Disclosure Schedule. "KNOWLEDGE OF PARENT AND MERGERCO" means the actual knowledge after reasonable investigation of any of those individuals listed on Section 1.01 of the Parent Disclosure Schedule. "LAW" means any United States or foreign, national, state, provincial, municipal or local statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree, order or legal requirement. "LIENS" means with respect to any asset (including any security), any mortgage, claim, lien, pledge, charge, security interest or ownership or other similar encumbrance of any kind or the filing of a financing statement in respect of such asset (including any restriction on (i) the voting of any security or the transfer of any security or other asset, (ii) the receipt of any income derived from any asset, and (iii) the use of any asset) other than any encumbrance arising (A) under applicable Laws with respect to Taxes not yet due and payable and (B) in the case of securities, under applicable state or federal Securities Laws. "MATERIAL ADVERSE EFFECT" means any effect, event, fact, circumstance, condition, development, occurrence or change that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on (1) the ability of the Company to materially perform its obligations under this Agreement or to consummate the Transactions, or (2) the business, financial condition or results of operation of the Company and its Subsidiaries, -5- taken as a whole, other than any effect, event, development or change arising out of or resulting from: (a) a decrease in the market price of Company Common Shares (but not any effect, event, development or change underlying such decrease to the extent that such effect, event, development or change is not otherwise excluded from the definition of Material Adverse Effect), (b) changes in conditions in the U.S. or global economy or capital or financial markets generally, including changes in interest or exchange rates, (c) changes in general legal, tax, regulatory, political or business conditions that, in each case, generally affect the geographic regions or industry or industries in which the Company and the Company Subsidiaries conduct their business (except to the extent such effect, event, development or change affects the Company or the Company Subsidiaries in a materially disproportionate manner as compared to other persons or participants in the industries in which the Company or the Company Subsidiaries conduct their business and that operate in the geographic regions affected by such effect, event, development or change), (d) changes in GAAP, (e) any effects, events or changes that the Company can demonstrate resulted directly or indirectly from the negotiation, execution, announcement or performance of this Agreement or the transactions contemplated hereby or the consummation of the transactions contemplated by this Agreement, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, vendors, lenders, investors, venture partners or employees, (f) acts of war, armed hostilities, sabotage or terrorism, or any escalation or worsening of any such acts of war, armed hostilities, sabotage or terrorism threatened or underway as of the date of this Agreement (in each case, that do not disproportionately affect the Company relative to other companies that participate in the industries in which the Company participates and that operate in the geographic regions affected by such war, armed hostility, sabotage, or terrorism), (g) earthquakes, hurricanes, floods, or other natural disasters, or (h) any action taken by the Company at the request of any of the Buyer Parties; PROVIDED, FURTHER, that clause (e) shall not apply with respect to the matters described in Section 4.05 hereof (including for purposes of Section 8.02(a) hereof insofar as Section 4.05 is concerned). "PARENT DISCLOSURE SCHEDULE" means the disclosure schedule delivered by Parent and MergerCo to the Company concurrently with the execution of this Agreement for which the disclosure of any fact or item in any section of such disclosure schedule shall, should the existence of such fact or item be relevant to any other section, be deemed to be disclosed with respect to that other section so long as the relevance of such disclosure to such other section is readily apparent from the nature of such disclosure. "PARENT MATERIAL ADVERSE EFFECT" means any event, circumstance, change or effect that would reasonably be expected to prevent Parent or MergerCo from consummating the Merger or any of the other transactions contemplated by this Agreement. "PERMITTED LIENS" means (i) Liens for Taxes not yet delinquent and Liens for Taxes being contested in good faith and for which there are adequate reserves on the financial statements of the Company (if such reserves are required pursuant to GAAP), (ii) inchoate mechanics' and materialmen's Liens for construction in progress, (iii) inchoate workmen's, repairmen's, warehousemen's and carriers' Liens arising in the ordinary course of business of the Company or any Company Subsidiary, (iv) zoning restrictions, survey exceptions, utility easements, rights of way and similar Liens that are imposed by any Governmental Authority having jurisdiction thereon or otherwise are typical for the applicable property type and locality, -6- (v) Liens and obligations arising pursuant to any Company Material Contract which do not materially impair the benefits to be received thereunder, (vi) matters that would be disclosed on current title reports or surveys that arise or have arisen in the ordinary course of business, which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and/or (vii) other Liens being contested in good faith in the ordinary course of business and which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. "PERSON" or "PERSON" means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including a "person" as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or Governmental Authority, but shall exclude Company Subsidiaries and Significant Company Subsidiaries. "SUBSIDIARY" or "SUBSIDIARIES" of the Company, Parent or any other person means a corporation, limited liability company, partnership, joint venture or other organization of which: (a) such party or any other subsidiary of such party is a general partner; (b) voting power to elect at least 50% of the board of directors or others performing similar functions with respect to such organization is held by such party or by any one or more of such party's subsidiaries; or (c) at least 50% of the equity interests is controlled by such party. "TAX" or "TAXES" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. "TAX RETURN" means any return, declaration, report, claim for refund, or information re-turn or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "THIRD PARTY" means any party other than the Company or any Company Subsidiary. "VOTING DEBT" shall mean bonds, debentures, notes or other indebtedness having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of equity interests in the Company or any Company Subsidiary may vote. (b) The following terms have the meaning set forth in the Sections set forth below: DEFINED TERM LOCATION OF DEFINITION 2006 Annual Bonuses ss. 7.04(d) 2006 Forecast ss. 6.01(c) 2007 Annual Bonus Plan ss. 7.04(e) Agreement Preamble -7- DEFINED TERM LOCATION OF DEFINITION Antitakeover Laws ss. 4.20(a) Benefits Continuation Period ss. 7.04(a) Buyer Parties Preamble Capital Expenditures ss. 6.01(i) CERCLA ss. 4.14(c) Claim ss. 7.05(a)(A) Closing ss. 2.04 Closing Cash ss. 5.08(a) Closing Date ss. 2.04 Company Preamble Company Board Recitals Company Bylaws ss. 2.02(b) Company Certificate of Merger ss. 2.03 Company Change in Recommendation ss. 7.01(b)(ii)(i) Company Common Share Certificates ss. 3.03(b)(i) Company Common Share Merger Consideration ss. 3.01(b) Company Consideration ss. 3.01(a) Company Dissenting Shares ss. 3.06(a) Company Employees ss. 7.04(a) Company Financial Advisors ss. 4.17 Company Intellectual Property ss. 4.12 Company Material Contract ss. 4.15 Company Option Consideration ss. 3.01(c) Company Paying Agent ss. 3.03(a) Company Preferred Shares ss. 4.03(a) Company Recommendation ss. 7.01(b)(i) Company Restricted Shares ss. 3.01(d) Company Retiree Welfare Programs ss. 7.04(c) Company SEC Reports ss. 4.07(a) Company Shareholder Approval ss. 4.04(a)(i) Company Shareholders' Meeting ss. 7.01 Company Stock Awards ss. 4.03(c) Company Stock-Based Awards ss. 3.01(e) Company Stock Options ss. 3.01(c) Company Subsidiaries ss. 4.01(b) Confidentiality Agreement ss. 7.02(b) Contract ss. 4.15(a) Customers ss. 4.12(b) Damages Cap ss. 9.03(e)(ii) Debt Commitment Letter ss. 5.08(b)(ii) Debt Financing ss. 5.08(b)(ii) DRIP ss. 3.05 Environmental Permits ss. 4.14(a) Equity Financing ss. 5.05(a) Equity Financing Sources ss. 5.05(b) -8- DEFINED TERM LOCATION OF DEFINITION Equity Funding Letter ss. 5.08(b)(i) Equity Replacement Plan ss. 7.04(e) ERISA ss. 4.10(a) ERISA Affiliate ss. 4.10(h) ERISA Affiliate Plan ss. 4.10(g) ESPP ss. 3.04 ESPP Date ss. 3.04 Exchange Act ss. 4.05(b)(i)(A) Expenses ss. 7.05(a)(B) Financing ss. 5.08(b)(ii) Financing Breach ss. 9.03(e)(i) Financing Commitments ss. 5.08(b)(ii) Governmental Order ss. 9.01(c) HSR Act ss. 4.05(b)(i)(B) Incentive Plans ss. 3.01(c) Indemnified Parties ss. 7.05(a)(i) IRS ss. 4.10(a)(i) Lease Real Property ss. 4.22(b) Lenders ss. 5.08(b)(ii) Merger Recitals Merger Effective Time ss. 2.03 Merger Shares ss. 3.01(b) MergerCo Preamble New Plans ss. 7.04(b) Non-U.S. Plans ss. 4.10(a) NYSE ss. 4.05(b)(i)(D) OGCL Recitals Ohio Courts ss. 10.09(b) Old Plans ss. 7.04(b) OSOS ss. 2.03 Other Filings ss. 4.11 Outside Date ss. 9.01(b) Owned Real Property ss. 4.22(a) Parent Preamble PBGC ss. 4.10(g)(iii) Permits ss. 4.06(a) Proceedings ss. 4.13(c) Proxy Statement ss. 4.05(b)(i)(C) Regulatory Law ss. 7.07(d) SEC ss. 4.05(b)(i)(C) Section 16 ss. 7.04(e) Section 1701.85 ss. 3.03(c) Securities Act ss. 4.03(e) Seller Expense Fee ss. 9.03(e)(i) Significant Company Subsidiary ss. 4.01(b) -9- DEFINED TERM LOCATION OF DEFINITION Surviving Corporation ss. 2.01 Surviving Corporation Bylaws ss. 2.02(b) Surviving Corporation Charter ss. 2.02(a) Surviving Corporation Fund ss. 3.03(a) Termination Date ss. 9.01 Termination Fee ss. 9.03(d) Title IV Plan ss. 4.10(g) U.S. Plans ss. 4.10(a) SECTION 1.02. INTERPRETATION AND RULES OF CONSTRUCTION. In this Agreement, except to the extent otherwise provided or that the context otherwise requires: (a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated; (b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement; (c) whenever the words "include," "includes" or "including" are used in this Agreement, they are deemed to be followed by the words "without limitation"; (d) the words "hereof," "herein" and "hereunder" and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) references to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under said statutes) and to any section of any statute, rule or regulation include any successor to said section; (f) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein; (g) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (h) references to a person are also to its successors and permitted assigns; (i) the use of "or" is not intended to be exclusive unless expressly indicated otherwise; -10- (j) references to monetary amounts are to the lawful currency of the United States; (k) words importing the singular include the plural and vice versa and words importing gender include all genders; and (l) time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day. ARTICLE II THE MERGER SECTION 2.01. MERGER. Subject to the terms and conditions of this Agreement, and in accordance with Sections 1701.78 and 1701.81 of the OGCL, at the Merger Effective Time, MergerCo and the Company shall consummate the Merger pursuant to which (a) MergerCo shall be merged with and into the Company and the separate existence of MergerCo shall thereupon cease and (b) the Company shall be the surviving corporation in the Merger (the "SURVIVING CORPORATION"). The Merger shall have the effects specified in the OGCL, including Section 1701.82 thereof. SECTION 2.02. CHARTER AND BYLAWS. (a) At the Merger Effective Time, the Company Charter shall be amended to read in its entirety in the form attached hereto as EXHIBIT A, and, subject to Section 7.05, as so amended, such certificate of incorporation shall be the certificate of incorporation of the Surviving Corporation until thereafter further amended as provided therein or by Law (the "SURVIVING CORPORATION CHARTER"). (b) The Amended and Restated Consolidated Code of Regulations of the Company, as in effect immediately prior to the Merger Effective Time (the "COMPANY BYLAWS"), shall be the regulations of the Surviving Corporation until thereafter amended as provided by law, by the Company Charter or by such regulations, subject to Section 7.05 (the "SURVIVING CORPORATION BYLAWS"). SECTION 2.03. EFFECTIVE TIME OF THE MERGER. At the Closing, the Company shall duly execute and file a certificate of merger with respect to the Merger, in such form as is required by, and executed in accordance with, the relevant provisions of the OGCL (the "COMPANY CERTIFICATE OF MERGER"), with the Secretary of State of the State of Ohio (the "OSOS") in accordance with the OGCL. The Merger shall become effective upon such time as the Company Certificate of Merger has been filed with the OSOS, or such later time which the parties hereto shall have agreed upon and designated in such filing in accordance with the OGCL as the effective time of the Merger (the "MERGER EFFECTIVE TIME"). SECTION 2.04. CLOSING. Unless this Agreement shall have been terminated in accordance with Section 9.01, the closing of the Merger (the "CLOSING") shall occur as promptly as practicable (but in no event later than the third (3rd) Business Day) after all of the conditions -11- set forth in Article VIII (other than conditions which by their terms are required to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived by the party entitled to the benefit of the same, or at such other time and on a date as agreed to by the parties (the "CLOSING DATE"). The Closing shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP in New York, New York, or at such other place as agreed to by the parties hereto. SECTION 2.05. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors of MergerCo immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation and the officers of MergerCo immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case, until their respective successors are duly elected or appointed and qualified, or until the earlier of their death, resignation or removal. ARTICLE III EFFECTS OF THE MERGER SECTION 3.01. EFFECTS OF THE MERGER ON COMPANY SECURITIES. At the Merger Effective Time, by virtue of the Merger and without any action on the part of the Company or the holders of any capital stock of the Company (other than the requisite approval of the Merger by the shareholders of the Company in accordance with the OGCL): (a) Each Company Common Share held in treasury and not outstanding and each Company Common Share that is owned by Parent or MergerCo immediately prior to the Merger Effective Time shall be cancelled and retired and shall cease to exist, without any conversion thereof and no payment or distribution shall be made with respect thereto. (b) Each Company Common Share issued and outstanding immediately prior to the Merger Effective Time (other than Company Dissenting Shares and Company Common Shares to be cancelled in accordance with Section 3.01(a)), shall be converted and exchanged automatically into the right to receive an amount in cash equal to $40 per Company Common Share (the "COMPANY COMMON SHARE MERGER CONSIDERATION"), payable to the holder thereof in accordance with Section 3.03. The Company Common Shares that are to be so converted into the right to receive the Company Common Share Merger Consideration are referred to herein as the "MERGER SHARES". (c) Immediately prior to the Merger Effective Time, each outstanding qualified or nonqualified option to purchase Company Common Shares ("COMPANY STOCK OPTIONS") under any employee or director share option or compensation plan or arrangement of the Company (collectively, "INCENTIVE PLANS"), shall become fully vested and exercisable or payable, as the case may be (whether or not then vested or subject to any performance condition that has not been satisfied, and regardless of the exercise price thereof). At the Merger Effective Time, each Company Stock Option not theretofore exercised shall be cancelled in exchange for the right to receive an amount in cash equal to the excess, if any, of (i) the Company Common Share Merger Consideration over (ii) the exercise price per share of such Company Stock Option, multipled by the total number of Company Common Shares subject to such Company Stock Option (the "COMPANY OPTION CONSIDERATION"), without interest and less any applicable Taxes required to be withheld in accordance with Section 3.07 with respect to such payment. -12- Payment of the Company Option Consideration shall be made as soon as practicable after the Merger Effective Date but in any event within five (5) Business Days following the Merger Effective Time. (d) All restricted share awards, whether time-based or performance- based ("COMPANY RESTRICTED SHARES"), granted pursuant to the Incentive Plans or otherwise that remain unvested, automatically shall become fully vested and free of any forfeiture or holding restrictions or performance or other conditions immediately prior to the Merger Effective Time, (based on a deemed achievement of performance awards at "target" level), and each Company Restricted Share shall be considered an outstanding Company Common Share for all purposes of this Agreement, including the right to receive the Company Common Share Merger Consideration. (e) At the Merger Effective Time, each right of any kind, contingent or accrued, to receive Company Common Shares or benefits measured in whole or in part by the value of a number of Company Common Shares granted under the Incentive Plans or otherwise (including performance shares, restricted stock, restricted stock units, phantom units, deferred stock units and dividend equivalents) other than Company Stock Options and Company Restricted Shares (each, other than Company Restricted Shares and Company Stock Options, "COMPANY STOCK-BASED AWARDS"), whether vested or unvested, which is outstanding immediately prior to the Merger Effective Time shall cease to represent a right or award with respect to Company Common Shares, shall become fully vested and free of any forfeiture or holding restrictions or performance or other conditions (based on a deemed achievement of performance awards at "target" level) and shall entitle the holder thereof to receive, at the Merger Effective Time, an amount in cash, calculated in accordance with such right or award, based on the Company Common Share Merger Consideration in respect of each Company Common Share underlying a particular Company Stock-Based Award less any applicable Taxes required to be withheld in accordance with Section 3.07 with respect to such payment. SECTION 3.02. EFFECTS OF THE MERGER ON MERGERCO SECURITIES. At the Merger Effective Time, by virtue of the Merger and without any action on the part of the MergerCo or Parent, as the holder of all outstanding capital stock of MergerCo (other than the requisite approval by Parent as a shareholder of MergerCo in accordance with the OGCL, which approval has been obtained), each outstanding common share, no par value, of MergerCo issued and outstanding immediately prior to the Merger Effective Time shall be converted into and become one fully paid and nonassessable common share, no par value, of the Surviving Corporation. SECTION 3.03. PAYMENT OF COMPANY CONSIDERATION; STOCK TRANSFER BOOKS. (a) Prior to the Merger Effective Time, Parent shall appoint as paying agent a bank or trust company reasonably satisfactory to the Company (the "COMPANY PAYING AGENT") (and the Company agrees that Wells Fargo Shareowner Services is satisfactory to it). Immediately following completion of the Merger and the cancellation of the Company Stock Options, Parent shall cause the Surviving Corporation to deposit, or cause to be deposited, with the Company Paying Agent, for the benefit of the holders of Merger Shares, Company Stock Options, Company Restricted Shares, and Company Stock-Based Awards, cash in an amount sufficient to pay the aggregate Company Consideration required to be paid (such cash being -13- hereinafter referred to as the "SURVIVING CORPORATION FUND"), and to cause the Company Paying Agent to make, and the Company Paying Agent shall make, payments of the Company Consideration out of the Surviving Corporation Fund to the holders of Merger Shares, Company Stock Options, Company Restricted Shares, and Company Stock-Based Awards in accordance with this Agreement. The Surviving Corporation Fund shall be invested by the Paying Agent in (i) direct obligations of the United States of America, (ii) obligations for which the full faith and credit of the United States of America is pledged to provide for payment of all principal and interest or (iii) commercial paper obligations receiving the highest rating from either Moody's Investor Services, Inc. or Standard & Poor's, a division of The McGraw Hill Companies, or a combination thereof, as directed by and for the benefit of the Surviving Corporation; PROVIDED, HOWEVER, that no gain or loss thereon shall affect the amounts payable to the holders of Merger Shares, Company Stock Options, Company Restricted Shares, and Company Stock-Based Awards following completion of the Merger pursuant to this Article III. Any and all interest and other income earned on the Surviving Corporation Fund shall promptly be paid to the Surviving Corporation. (b) As promptly as practicable after the Merger Effective Time, Parent and the Surviving Corporation shall cause the Company Paying Agent to mail to each person who was, as of immediately prior to the Merger Effective Time, a holder of record of the Merger Shares: (i) a letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the certificates representing the Merger Shares (the "COMPANY COMMON SHARE CERTIFICATES") shall pass, only upon proper delivery of the Company Common Share Certificates to the Company Paying Agent) and (ii) instructions for effecting the surrender of the Company Common Share Certificates in exchange for the Company Consideration. Upon surrender to the Company Paying Agent of Company Common Share Certificates for cancellation, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Company Common Share Certificate shall be entitled to receive in exchange therefor, in cash, the Company Common Share Merger Consideration in respect thereof, and the Company Common Share Certificate so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of Merger Shares that is not registered in the transfer records of the Company, payment of the Company Common Share Merger Consideration in respect of the applicable Merger Shares may be made to a person other than the person in whose name the Company Common Share Certificate so surrendered is registered if such Company Common Share Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment of the Company Common Share Merger Consideration in respect thereof or establish to the reasonable satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 3.03, each Company Common Share Certificate shall be deemed at all times after the Merger Effective Time to represent only the right to receive upon such surrender the Company Common Share Merger Consideration. No interest shall be paid or will accrue on any cash payable to holders of Company Common Share Certificates pursuant to the provisions of this Article III. (c) Any portion of the Surviving Corporation Fund deposited with the Paying Agent pursuant to Section 3.03(a) to pay for Merger Shares that become Company Dissenting -14- Shares shall be delivered to the Surviving Corporation upon demand; PROVIDED, HOWEVER, that the Surviving Corporation shall remain liable for payment of the Company Common Share Merger Consideration in respect of Company Common Shares held by any shareholder who shall have failed to perfect or who otherwise shall have withdrawn or lost such shareholder's rights to appraisal of such shares under Section 1701.85 of the OGCL ("SECTION 1701.85"). (d) Any portion of the Surviving Corporation Fund that remains undistributed to the holders of Merger Shares for one year after the Merger Effective Time shall be delivered to the Surviving Corporation, upon demand, and any holders of Merger Shares who have not theretofore complied with this Article III shall thereafter look only to the Surviving Corporation for, and the Surviving Corporation shall remain liable for, payment of their claim for the Company Common Share Merger Consideration. Any portion of the Surviving Corporation Fund remaining unclaimed by holders of Merger Shares as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Authority 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 Parent, the Company Paying Agent or the Surviving Corporation shall be liable to any holder of Merger Shares for any such shares (or dividends or distributions with respect thereto), or cash delivered to a public official pursuant to any abandoned property, escheat or similar Law. (e) If any Company Common Share Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company Common Share Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond, in such reasonable amount as the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Company Common Share Certificate, the Company Paying Agent shall pay in respect of Merger Shares to which such lost, stolen or destroyed Company Common Share Certificate relate the Company Common Share Merger Consideration to which the holder thereof is entitled. (f) At the Merger Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of Merger Shares thereafter on the records of the Company. From and after the Merger Effective Time, the holders of Company Common Share Certificates representing Merger Shares shall cease to have any rights with respect to such Shares, except as otherwise provided in this Agreement, the certificate of incorporation of the Surviving Corporation, or by Law. SECTION 3.04. EMPLOYEE STOCK PURCHASE PLAN OF THE COMPANY. The Company's Employee Stock Purchase Plan (the "ESPP") shall remain in full force and effect until a date determined by the Company, which shall be no later than one month prior to the Merger Effective Time (the "ESPP DATE"). As of the ESPP Date (i) all amounts held under the ESPP shall be used to purchase Company Common Shares as if the ESPP Date were a purchase date under the ESPP and (ii) all offering and purchase periods pending under the ESPP shall be terminated and no new offering or purchasing periods shall be commenced. SECTION 3.05. TERMINATION OF THE COMPANY'S DRIP. The Company shall take all actions necessary to provide that as of no later than five business days prior to the Closing Date -15- no further Company Common Shares will be purchased under its Dividend Reinvestment and Share Purchase Plan (the "DRIP"); PROVIDED, that such cessation of further purchases following the Closing Date shall be conditioned upon the consummation of the Merger. Immediately prior to and effective as of the Merger Effective Time and subject to the consummation of the Merger, the Company shall terminate the DRIP. SECTION 3.06. COMPANY DISSENTING SHARES. (a) Notwithstanding any provision of this Agreement to the contrary and to the extent available under the OGCL, Company Common Shares that are outstanding immediately prior to the Merger Effective Time and that are held by any shareholder who is entitled to demand and properly demands the appraisal for such shares (the "COMPANY DISSENTING SHARES") pursuant to, and who complies in all respects with, the provisions of Section 1701.85 shall not be converted into, or represent the right to receive, the Company Common Share Merger Consideration. Any such shareholder shall instead be entitled to receive payment of the fair cash value of such shareholder's Company Dissenting Shares in accordance with the provisions of Section 1701.85; PROVIDED, HOWEVER, that all Company Dissenting Shares held by any shareholder who shall have failed to perfect or who otherwise shall have withdrawn, in accordance with Section 1701.85, or lost such shareholder's rights to appraisal of such shares under Section 1701.85 shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Merger Effective Time, the right to receive the Company Common Share Merger Consideration, without any interest thereon, upon surrender of the Certificate or Certificates that formerly evidenced such shares in the manner provided in Section 3.03(a) or, if a portion of the Surviving Corporation Fund deposited with the Company Paying Agent to pay for shares that become Company Dissenting Shares has been delivered to the Surviving Corporation in accordance with Section 3.03(c), upon demand to the Surviving Corporation. (b) The Company shall give Parent (i) prompt notice of any demands received by the Company for appraisal of any Company Common Shares, withdrawals of such demands and any other instruments served pursuant to the OGCL and received by the Company and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to demands for appraisal under the OGCL. The Company shall not, except with the prior written consent of Parent, make any payment or agree to make any payment with respect to any demands for appraisal or offer to settle or settle any such demands. SECTION 3.07. WITHHOLDING RIGHTS. The Company, the Surviving Corporation or the Company Paying Agent, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Company Common Shares, Company Stock Options, Company Stock-Based Awards, and Company Dissenting Shares such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, and the rules and regulations promulgated thereunder, or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld by the Company, the Surviving Corporation, or the Company Paying Agent, as applicable, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Company Common Shares, Company Stock Options, Company Stock-Based Awards, or -16- Company Dissenting Shares in respect of which such deduction and withholding was made by the Company, the Surviving Corporation or the Company Paying Agent, as applicable. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth in (A) the Company Disclosure Schedule or (B) the Company's Annual Report on Form 10-K for the year ended September 30, 2005 (other than the risk factors, forward-looking statements, documents incorporated by reference therein and financial statements and the notes thereto) (the "COMPANY 10-K") (provided that (B) shall not apply to Sections 4.03, 4.04, 4.05, 4.15(a)-(l), 4.17, 4.18 and 4.20 of this Agreement), the Company hereby represents and warrants to the Buyer Parties as follows: SECTION 4.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES; AUTHORITY. (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. The Company is duly qualified or licensed to do business as a foreign corporation and is in good standing under the Laws of each jurisdiction in which the character of the properties owned, leased or operated by it therein or the conduct or nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has all requisite corporate power and authority to own, operate, lease and encumber its properties and carry on its business as now conducted. (b) Each of the Company's subsidiaries (the "COMPANY SUBSIDIARIES", and each of the Company Subsidiaries that is a "significant subsidiary," as such term is defined in Rule 1-02 of Regulation S-X under the Exchange Act, a "SIGNIFICANT COMPANY SUBSIDIARY"), together with the jurisdiction of organization of each such subsidiary, the percentage of the outstanding equity of each such subsidiary owned by the Company and each other subsidiary of the Company, is set forth on Section 4.01(b) of the Company Disclosure Schedule. Each Company Subsidiary is a corporation, partnership, limited liability company or trust duly incorporated or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, except where the failure to be so incorporated, organized, validly existing or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Significant Company Subsidiaries has the requisite corporate, limited partnership, limited liability company or similar power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to have such power and authority would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. Each of the Company Subsidiaries is duly qualified or licensed to do business, and is in good standing (to the extent applicable), in each jurisdiction where the character of the properties owned, leased or operated by it or the conduct or nature of its business makes such qualification or licensing necessary, except for jurisdictions in which the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. -17- SECTION 4.02. ORGANIZATIONAL DOCUMENTS. The Company has previously provided or made available complete and correct copies of the Company Charter and Company Bylaws, (and in each case, all amendments thereto) as well as the organizational and governing documents for each Significant Company Subsidiary. All such documents are in full force and effect, no dissolution, revocation or forfeiture proceedings regarding the Company have been commenced and the Company is not in violation of any provision of the Company Charter or Company Bylaws and no Significant Company Subsidiary is in violation of its organizational or governing documents, unless, in the case of a Significant Company Subsidiary, such violation has not had a Material Adverse Effect. SECTION 4.03. CAPITALIZATION. (a) The authorized capital stock of the Company consists of 240,000,000 Class A Common Shares, 40,000,000 Class B Common Shares, and 60,000,000 shares of preferred stock, no par value, of the Company ("COMPANY PREFERRED SHARES"). As of June 30, 2006, (i) 64,285,553 Class A Common Shares and 13,500,000 Class B Common Shares were issued and outstanding, all of which are validly issued, fully paid and nonassessable and were not issued in violation of any shareholders' preemptive rights and (ii) 27,768,792 Class A Common Shares and no Class B Common Shares were held in the treasury of the Company. As of the date of this Agreement, no Company Preferred Shares are issued and outstanding and no "Rights" (as defined in the Rights Agreement) are issued and outstanding. (b) Each outstanding share of capital stock of, or other equity interest in, a Company Subsidiary owned by the Company or by another Company Subsidiary is owned free and clear of all Liens except as set forth on Section 4.03(b) of the Company Disclosure Schedule. Each of the outstanding shares of capital stock of, or other equity interest in, each of the Company Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and was issued free of preemptive rights. Except as set forth on Section 4.03(b) of the Company Disclosure Schedule, there are no (i) outstanding options or other rights of any kind which obligate the Company or any Company Subsidiary to issue or deliver any shares of capital stock, voting securities or other equity interests of any Company Subsidiary or any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other equity interests of any Company Subsidiary, (ii) outstanding obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other equity interests of any Company Subsidiary; or (iii) other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock or other equity interests of any Company Subsidiary to which the Company or any Company Subsidiary is a party. (c) As of June 30, 2006, 4,733,092 Class A Common Shares were subject to outstanding Company Stock Options and 77,040 Class A Common Shares were subject to Company Stock-Based Awards. During the period from June 30, 2006 to the date of this Agreement, (x) other than issuances of Class A Common Shares pursuant to the exercise of Company Stock Options, Company Restricted Shares, Company Stock-Based Awards, and other purchase rights and stock awards granted pursuant to Incentive Plans (collectively, the "COMPANY STOCK AWARDS") (other than Company Restricted Shares) outstanding on such date, -18- there have been no issuances by the Company of Class A Common Shares or Class B Common Shares and (y) other than Company Stock-Based Awards for 8,625 Class A Common Shares, there have been no issuances of any Company Stock Awards. As of June 30, 2006, 2,345,611 Class A Common Shares were reserved for future issuance pursuant to Incentive Plans. Except as set forth above, and as set forth in Section 4.03(c) of the Company Disclosure Schedule and the Company Charter, there are no options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any Company Subsidiary or obligating the Company or any Company Subsidiary to issue or sell any shares of capital stock of, or other equity interests in, the Company or any Company Subsidiary. (d) Except as set forth in clauses (a) and (c) of this Section 4.03 and in Section 4.03(d) of the Company Disclosure Schedule and except for the issuance of capital stock of the Company pursuant to employee stock options outstanding on the date hereof, (i) there are no outstanding (A) shares of capital stock or other voting securities of the Company, (B) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (C) options or other rights to acquire from the Company, or any obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (collectively, "COMPANY SECURITIES"); and (ii) there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock of the Company. No Company Subsidiary owns any capital stock of the Company. (e) Except as set forth in Section 4.03(e) of the Company Disclosure Schedule, the Company is under no obligation, contingent or otherwise, by reason of any agreement to register the offer and sale or resale of any of its securities under the Securities Act of 1933, as amended (the "SECURITIES ACT"). (f) Except as set forth in the Company Charter and except for the Voting Agreements, there are no agreements or understandings to which the Company or any Company Subsidiary is a party with respect to the voting of any shares of capital stock of the Company or which restrict the transfer of any such shares, nor does the Company have knowledge of any third party agreements or understandings with respect to the voting of any such shares or which restrict the transfer of any such shares. (g) There is no Voting Debt of the Company or any Company Subsidiary outstanding. SECTION 4.04. AUTHORITY RELATIVE TO THIS AGREEMENT, VALIDITY AND EFFECT OF AGREEMENTS. (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. Except for the approvals described in the following sentence, the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action on behalf of the Company. No other -19- corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement other than (i) the approval and adoption of this Agreement by the holders of securities representing two-thirds or more of the votes associated with the outstanding voting equity securities of the Company entitled to vote thereon, voting as one class, at a meeting of the shareholders of the Company duly called and held for such purpose (the "COMPANY SHAREHOLDER APPROVAL") and (ii) the filing and recordation of the Company Certificate of Merger and other appropriate merger documents as required by the OGCL. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by each of Parent and MergerCo, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting creditors' rights or by general equity principles. (b) The Company Board, by resolutions duly adopted at meetings duly called and held, has duly and unanimously (i) determined that this Agreement and the Merger are fair to and in the best interests of the Company and its shareholders, (ii) approved this Agreement and declared its advisability in accordance with the OGCL, (iii) recommended that the shareholders of the Company adopt this Agreement, and (iv) directed that this Agreement be submitted for consideration by the shareholders of the Company at the Company Shareholders' Meeting. SECTION 4.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) Except as set forth in Section 4.05(a) of the Company Disclosure Schedule, subject to the receipt of the consents, approvals and other authorizations described in Section 4.05(b), the execution and delivery by the Company of this Agreement do not, and the performance of its obligations hereunder and thereunder will not, (i) conflict with or violate the Company Charter or Company Bylaws or the analogous governance or organizational documents of any Company Subsidiary, (ii) assuming that all consents, approvals, authorizations and other actions described in subsection (b) of this Section 4.05 have been obtained and all filings and obligations described in subsection (b) of this Section 4.05 have been made, conflict with or violate any Law applicable to the Company or any Company Subsidiary or by which any property or asset of the Company or any Company Subsidiary, is bound, or (iii) require any consent or result in any violation or breach or termination of or constitute (with or without notice or lapse of time or both) a default (or give to others any right of termination, amendment, acceleration or cancellation) under, or result in the triggering of any payments or result in the creation of a Lien or other encumbrance on any property or asset of the Company or any Company Subsidiary, pursuant to, any of the terms, conditions or provisions of any Permit or Contract to which the Company or any Company Subsidiary is a party or by which it or any of its respective properties or assets may be bound, except, with respect to clauses (ii) and (iii), such triggering of payments, Liens, encumbrances, filings, notices, permits, authorizations, consents, approvals, violations, conflicts, breaches or defaults which would not, individually or in the aggregate, (A) prevent or materially delay consummation of the Merger and the other transactions contemplated by this Agreement or (B) reasonably be expected to have a Material Adverse Effect. -20- (b) The execution and delivery by the Company of this Agreement does not, and the performance of its obligations hereunder will not, require any consent, approval, authorization or permit of, action by, or filing with or notification to, any Governmental Authority, except (i) for (A) applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (B) if applicable, the pre-merger notification and waiting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT") and any other applicable Regulatory Laws, (C) the filing with the Securities and Exchange Commission (the "SEC") of a proxy statement relating to the Merger to be sent to the Company's shareholders (as amended or supplemented from time to time, the "PROXY STATEMENT") and other written communications that may be deemed "soliciting materials" under Rule 14a-12, (D) any filings required under the rules and regulations of the New York Stock Exchange (the "NYSE"), and (E) the filing of the appropriate merger documents as required by the OGCL, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications would not, individually or in the aggregate, (A) prevent or materially delay consummation of the Merger and the other transactions contemplated by this Agreement or (B) reasonably be expected to have a Material Adverse Effect. SECTION 4.06. PERMITS; COMPLIANCE WITH LAWS. (a) The Company and Company Subsidiaries are in possession of all registrations, franchises, grants, authorizations, licenses, permits, consents, certificates, approvals, other regulatory authorizations and orders of any Governmental Authority necessary for them to own, lease and operate their properties or to carry on their business as it is now being conducted (collectively, the "PERMITS"), and all such Permits are valid and in full force and effect, except where the failure to obtain and maintain the Permits, or the suspension or cancellation of, any of the Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (b) Except as set forth in Section 4.06 of the Company Disclosure Schedule, none of the Company or any Company Subsidiary is in violation of any Laws or Permits applicable to the Company or any Company Subsidiary, or by which any property or asset of the Company or any Company Subsidiary is bound, and, to the knowledge of the Company, no event has occurred which would constitute (i) a breach or default under, or would cause revocation, or termination of any Permits applicable to the Company or any Company Subsidiary or (ii) a violation of any Laws applicable to the Company or any Company Subsidiary, except, in each case, for any such violation, breach, default, revocation or termination which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No investigation or inquiry by any Governmental Authority with respect to the Company or any Company Subsidiary is pending or, to the knowledge of the Company, threatened, in each case with respect to any alleged or claimed violation of Law applicable to the Company or any Company Subsidiary, or by which any property or asset of the Company or any Company Subsidiary is bound or affected, except, in each case, for any such investigation or inquiry which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. -21- SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) Except as set forth on Section 4.07(a) of the Company Disclosure Schedule, the Company has timely filed all forms, reports and documents (including all exhibits) required to be filed by it with the SEC (the "COMPANY SEC REPORTS") since July 1, 2004. The Company SEC Reports, including any financial statements or schedules included in the Company SEC Reports, each as amended prior to the date of this Agreement, (i) complied in all material respects in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder, and (ii) did not, when filed as amended prior to the date of this Agreement, contain any untrue statement of a material fact or omit to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Company SEC Reports, each as amended, was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and each fairly present, in all material respects, the consolidated financial position, results of operations and cash flows (and changes in shareholders equity, if any) of the Company and its consolidated Company Subsidiaries as of the respective dates thereof and for the respective periods indicated therein except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year end adjustments). None of the Company Subsidiaries is subject to the periodic reporting requirements of the Exchange Act or required to file any form, report or other document with the SEC or the NYSE. (c) The Company has devised and maintains a system of internal accounting controls (within the meaning of Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company (1) has designed disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that information material to the Company and its subsidiaries taken as a whole relating to it and any of its subsidiaries is made known to the management of the Company by others within the Company or any of its subsidiaries as appropriate to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act with respect to the Company SEC Reports and (2) has disclosed based upon the most recent evaluation completed on June 8, 2006 to its auditors and the audit committee of its Board of Directors (A) any significant deficiencies in the design or operation of internal controls which could adversely affect in any material respect its ability to record, process, summarize and report financial data and have disclosed to its auditors any material weaknesses in internal controls and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in its internal controls and the Company has provided to Parent copies of any such disclosure in (A) or (B), except to the extent provided by privilege. (d) Since June 8, 2006 through the date of this Agreement, to the knowledge of the Company, (x) neither the Company nor any of its subsidiaries nor any director, officer, employee, auditor, accountant or representative of the Company or any of its subsidiaries has -22- received or otherwise had or obtained knowledge since then of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of its subsidiaries has engaged in questionable accounting or auditing practices or has a "significant deficiency" or "material weakness" (as such terms are defined in the Public Accounting Oversight Board's Auditing Standard No. 2, as in effect on the date of this Agreement) in the Company's internal controls over financial reporting, and (y) no attorney representing the Company or any of its subsidiaries, whether or not employed by the Company or any of its subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company Board or any committee thereof or to the General Counsel or Chief Executive Officer of the Company. (e) The Company is in compliance in all material respects with the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the NYSE that are applicable to the Company. The Company's auditors and chief executive officer and chief financial officer have given all certifications, attestations and reports required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. (f) Neither the Company nor any Company Subsidiary has any liabilities of any nature (whether known or unknown, accrued, absolute, contingent or otherwise and whether due or to become due), except liabilities that (i) are accrued or reserved against in the Balance Sheet or are reflected in the notes thereto, (ii) were incurred in the ordinary course of business consistent with past practice since the date of such financial statements, or (iii) would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect. SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Section 4.08 of the Company Disclosure Schedule, since March 31, 2006, (a) the Company has conducted its business in the ordinary course consistent with past practice and (b) there has not been any change, event, fact, development, occurrence, effect or circumstance that has resulted or would reasonably be expected to result in a Material Adverse Effect. SECTION 4.09. ABSENCE OF LITIGATION. Except (i) as listed in Section 4.09 of the Company Disclosure Schedule or (ii) with respect to litigation that may be commenced after the date of this Agreement in connection with the Merger, there is no Action pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary or any of its or their respective properties or assets except as would not, individually or in the aggregate, (x) prevent or materially delay consummation of the Merger and the other transactions contemplated by this Agreement or (y) have or reasonably be expected to have a Material Adverse Effect. None of the Company or any of Company Subsidiaries or any of their respective properties is or are subject to any order, judgment, writ, injunction or decree, except as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect. -23- SECTION 4.10. EMPLOYEE BENEFIT PLANS. (a) Section 4.10(a) of the Company Disclosure Schedule lists all material employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and all material bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all material employment, termination, severance or other contracts or agreements to which the Company or any Company Subsidiary is a party, with respect to which the Company or any Company Subsidiary has any obligation or which are maintained, contributed to or sponsored by the Company or any Company Subsidiary for the benefit of any current or former employee, officer, director or consultant of the Company or any Company Subsidiary other than any such benefit plans, programs, arrangements, contracts or agreements maintained outside of the United States primarily for the benefit of current or former employees, officers, directors or consultants of the Company or any Company Subsidiary working outside of the United States or who worked outside of the United States (such plans hereinafter being referred to as "NON-U.S. PLANS") (collectively, the "U.S. PLANS"). The Company has made available to Parent copies, which are correct and complete in all material respects, of the following: (i) the U.S. Plans and any amendments thereto, (ii) the annual report (Form 5500) filed with the Internal Revenue Service ("IRS") for the last two plan years, (iii) the most recently received IRS determination letter, if any, relating to a U.S. Plan, (iv) the most recently prepared actuarial report or financial statement, if any, relating to a U.S. Plan, (v) the most recent summary plan description for such U.S. Plan (or other descriptions of such U.S. Plan provided to employees) and all material modifications thereto, and (vi) any related trust or other funding vehicle. With respect to the U.S. Plans and Non-U.S. Plans, no event has occurred, and, to the Company's knowledge, there exists no condition or set of circumstances, which would reasonably be expected to have a Material Adverse Effect on the Company and Company Subsidiaries, taken as a whole, under ERISA, the Code or any other Applicable Laws. Except as would not, individually or in the aggregate, result in an increase in liabilities or obligations that would be material to the Company and the Company Subsidiaries taken as a whole, neither the Company, nor any Company Subsidiary, nor, to the knowledge of the Company, any other Person, has any express commitment, whether legally enforceable or not, to modify, change or terminate any Plan, other than with respect to a modification, change or termination required by ERISA or the Code, or any other Applicable Law or administrative changes that do not increase the liabilities or obligations under any such plan. (b) Except as would not, individually or in the aggregate, result in any material liability to the Company and the Company Subsidiaries taken as a whole, each U.S. Plan has been operated in all respects in accordance with its terms and the requirements of all applicable Laws, including ERISA and the Code. Except as would not, individually or in the aggregate, result in any material liability to the Company and the Company Subsidiaries taken as a whole, there are no unresolved claims or disputes under the terms of, or in connection with, any U.S. Plan, and no Action is pending or anticipated or, to the knowledge of the Company, threatened with respect to any Plan (other than claims for benefits in the ordinary course) with respect to any such claim or dispute. -24- (c) Each U.S. Plan that is intended to be qualified under Section 401(a) of the Code or Section 401(k) of the Code has received a favorable determination letter from the IRS, or is entitled to rely on a favorable opinion issued by the IRS, and to the knowledge of the Company no fact or event has occurred since the date of such determination letter or letters from the IRS to adversely affect the qualified status of any such U.S. Plan or the exempt status of any such trust that would, individually or in the aggregate, result in any material liability for the Company and the Company Subsidiaries taken as a whole. (d) Except as set forth in Section 4.10(d)(i) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary sponsors or has sponsored any U.S. Plan that provides for any post-employment or post-retirement health or medical or life insurance benefits for retired, former or current employees of the Company or any Company Subsidiary, except as required by Section 4980B of the Code. Except as set forth in Section 4.10(d)(ii) of the Company Disclosure Schedule, to the best knowledge of the Company, no written communication has been made that would prevent the Company or any Company Subsidiary from amending or terminating any U.S. Plan providing health or medical benefits in respect of any retired, former or current employee of the Company or any Company Subsidiary. (e) Full payment has been made, or otherwise properly accrued on the books and records of the Company and any Company Subsidiary, of all amounts that the Company and any Company Subsidiary are required under the terms of the U.S. Plans to have paid as contributions to such Plans on or prior to the date of this Agreement (excluding any amounts not yet due). (f) Except as set forth in Section 4.10(f) of the Company Disclosure Schedule, no U.S. Plan, either individually or collectively, provides for any payment by the Company or any Company Subsidiary that would constitute a "parachute payment" within the meaning of Section 280G of the Code after giving effect to the transactions contemplated by this Agreement. (g) Section 4.10(g) of the Company Disclosure Schedule lists each U.S. Plan (or United-States based pension plan in the case of an ERISA Affiliate) sponsored by the Company or an ERISA Affiliate that is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code (each, a "TITLE IV PLAN"), and with respect to each Title IV Plan, except as would not individually or in the aggregate result in any material liability for the Company and the Company Subsidiaries taken as a whole, as of the date of this Agreement: (i) there does not exist any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, (ii) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred, (iii) all premiums to the Pension Benefit Guaranty Corporation (the "PBGC") have been timely paid in full, (iv) no liability (other than for premiums to the PBGC) under Title IV of ERISA has been or is expected to be incurred by the Company or any of its subsidiaries, and the PBGC has not instituted proceedings to terminate any Title IV Plan, and (v) the PBGC has not instituted proceedings to terminate any Title IV Plan. (h) For purposes of this Section 4.10, an entity is an "ERISA AFFILIATE" of the Company if it would have ever been considered a single employer with the Company under -25- 4001(b) of ERISA or part of the same controlled group as the Company for purposes of Section 302(d)(8)(C) of ERISA. (i) SCHEDULE 4.10(I) of the Company Disclosure Schedule contains a list of each material Non-U.S. Plan. Except as set forth on SCHEDULE 4.10(I) of the Company Disclosure Schedule, or as would not, individually or in the aggregate, result in a material liability to the Company and the Company Subsidiaries taken as a whole, each Non-U.S. Plan complies in all respects with applicable Laws. With respect to each Non-U.S. Plan, except as would not, individually or in the aggregate, result in any material liability to the Company and the Company Subsidiaries taken as a whole, (i) all employer and employee contributions to each Non-U.S. Plan required by applicable Laws or by the terms of such Non-U.S. Plan have been made, or, if applicable, accrued, in accordance with GAAP; (ii) the fair market value of the assets of each funded Non-U.S. Plan, the liability of each insurer for any Non-U.S. Plan funded through insurance or the book reserve established for any Non-U.S. Plan, together with any accrued contributions, is sufficient to procure or provide for the accrued benefit obligations, as of the date of this Agreement with respect to all current and former participants in such plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Non-U.S. Plan and no transaction contemplated by this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations; (iii) each Non-U.S. Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities. As of the date of this Agreement, there is no pending or, to the knowledge of the Company, anticipated or threatened material litigation relating to any Non-U.S. Plan; and (iv) any and all amounts required to be accrued with respect to any Non-U.S. Plan or pursuant to any statutory requirements pertaining to employee benefits, mandatory contributions, retirement plans or similar benefits, have been accrued in accordance with GAAP, including accruals relating to any severance, termination pay or profit sharing benefits. (j) No Title IV Plan is a "multiemployer pension plan," as defined in section 3(37) of ERISA, nor is any Title IV Plan a plan described in section 4063(a) of ERISA. (k) Except as set forth in Schedule 4.10(k) of the Company Disclosure Schedule and except as provided in this Agreement, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee or officer of the Company or any ERISA Affiliate to severance pay, unemployment compensation or any other payment or funding of any payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee or officer, or (iii) limit the ability to amend or terminate any Plan. (l) All Company Stock Options have been granted with an exercise price per share no lower than the "fair market value" (as defined in the applicable plan) of one Class A Common Share on the date of the corporate action effectuating the grant. SECTION 4.11. INFORMATION SUPPLIED. The information supplied by the Company relating to the Company and Company Subsidiaries to be contained in the Proxy Statement or any other document to be filed with the SEC in connection herewith (the "OTHER FILINGS") will not, in the case of the Proxy Statement, at the date it is first mailed to the Company's shareholders or at the time of the Company Shareholders' Meeting or at the time of any -26- amendment or supplement thereto, or, in the case of any Other Filing, at the date it is first mailed to the Company's shareholders or at the date it is first filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation is made (or omitted to be made) by the Company or any Company Subsidiary with respect to statements made or incorporated by reference therein based on information supplied by Parent or MergerCo in connection with the preparation of the Proxy Statement or the Other Filings for inclusion or incorporation by reference therein. All documents that the Company is responsible for filing with the SEC in connection with the Merger, or the other transactions contemplated by this Agreement, will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the rules and regulations thereunder and the Exchange Act and the rules and regulations thereunder. SECTION 4.12. INTELLECTUAL PROPERTY. (a) Schedule 4.12(a) sets forth a true, correct and complete list of all U.S. and foreign (i) issued Patents and Patent applications, (ii) Trademark registrations and applications, and (C) Copyright registrations and applications, in each case which is owned by the Company or any Company Subsidiary. The Company and the Company Subsidiaries are the sole and exclusive beneficial and, with respect to registrations and applications therefor, record owners of all the items set forth in Schedule 4.12(a), and, to the knowledge of the Company, all such registrations therefor are valid and applications and registrations therefor are subsisting. (b) Either the Company or a Company Subsidiary owns, or is licensed or otherwise entitled to use, (i) all material Intellectual Property contained and used in the Software marketed, licensed or used to provide services to customers of the Company or any Company Subsidiary ("Customers"), and (ii) all material Intellectual Property used or held for use in their respective businesses as currently conducted (collectively, the "COMPANY INTELLECTUAL PROPERTY"). (c) There are no currently, nor have there been in the past two (2) years any, pending or, to the knowledge of the Company, threatened claims by any Person alleging infringement, misappropriation or other violation of any Intellectual Property rights of any Person by the Company or any Company Subsidiaries which, either individually or in the aggregate, are material. The conduct of the business (including the products and services) of the Company and the Company Subsidiaries does not materially infringe, misappropriate or otherwise violate any material Intellectual Property rights of any Person, nor, to the knowledge of the Company, does there exist a substantial basis for any claim therefor. (d) Neither the Company nor any Company Subsidiary has made any claim in the past two (2) years of a material infringement, misappropriation or other violation by any other Person of the Company's or any Company Subsidiary's rights to Company Intellectual Property, and, to the knowledge of the Company, no Person is materially infringing, misappropriating or otherwise violating any Company Owned Intellectual Property. (e) With respect to material Company Owned Software, to the knowledge of the Company, no such Software is subject to the terms of any "open source" or other similar -27- public license that would require, or condition any use or distribution of such Software on, the disclosure, licensing or distribution of any source code to the public. (f) To the knowledge of the Company, there have been no material security breaches in the Company's or any of the Company Subsidiaries' internal information technology systems or external information technology systems hosted or operated by the Company or any of the Company Subsidiaries. (g) No claims have been asserted against the Company or any Company Subsidiary or, to the knowledge of the Company, threatened in writing against the Company or any Company Subsidiary in the past two (2) years alleging a violation of an applicable Law in connection with a violation of any Person's privacy or personal information rights, nor, to the knowledge of the Company, does there exist a substantial basis for any material claim therefore. To the knowledge of the Company, the consummation of the transactions contemplated hereby will not materially breach or otherwise cause any material violation of any applicable Law in connection with privacy, data protection, or the collection and use of personal information collected, used, or held for use by the Company and the Company Subsidiaries in the conduct of their respective businesses. The Company and the Company Subsidiaries take commercially reasonable measures consistent with industry standard practices of the computer software and information technology industry to ensure that such personal information is protected against unauthorized access, use, modification, or other misuse. (h) Each consultant or contractor of the Company or any Company Subsidiary that has developed, modified, improved, or contributed to any material Intellectual Property owned by the Company or any Company Subsidiary has assigned all of its Intellectual Property rights in such development, modification, improvement, or contribution to such Company or Company Subsidiary. (i) No current or former director, officer or employee of the Company or any Company Subsidiary has, nor will have, after giving effect to the transactions contemplated hereby, any valid and enforceable claim, right or interest of ownership under applicable Law to or in any material Intellectual Property of the Company or a Company Subsidiary. (j) The Company and the Company Subsidiaries take commercially reasonable measures according to industry standards in the computer software and information technology industry to protect the confidentiality of Trade Secrets included in the material Company Intellectual Property, including requiring all Persons having access thereto to execute written non-disclosure agreements. (k) Neither the Company nor any Company Subsidiary is a member of, or contributor of Intellectual Property to, any industry standards body or similar organization such that the Company or any Company Subsidiary is obligated to offer or grant for (i) free or nominal value or (ii) except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, less than fair market value, to any other Person any license or right to any Intellectual Property owned by the Company or any Company Subsidiary. -28- (l) Except as set forth in Section 4.12(k) of the Company Disclosure Schedule, (A) neither the Company nor any Company Subsidiary has any duty or obligation (whether present, contingent or otherwise) to deliver, license or make available any source code included in Company Owned Software to any escrow agent or any other Person, and (B) no event has occurred, and no circumstance or condition exists, that has resulted in, or to the knowledge of the Company will, or could reasonably be expected to, result in the delivery, license or disclosure of any source code included in the Company Owned Software to any other Person, except, with respect to each of the foregoing (A) and (B), to employees and consultants who have a reasonable need to access such source code in the ordinary course of the business of the Company or any Company Subsidiary and who are subject to, and to the knowledge of the Company, are in compliance with, appropriate written non-disclosure agreements. (m) Neither the execution, delivery or performance of this Agreement (or any other agreements contemplated by this Agreement) nor the consummation of the transactions contemplated by this Agreement will (A) result in the material loss or impairment of or payment of any additional material amounts with respect to the Company's right to own, use, or hold for use any of the material Intellectual Property as owned, used or held for use in the conduct of the Business as currently conducted, or (B) give any Person the right or option to cause or declare the release, disclosure or delivery of any Intellectual Property owned by the Company or any Company Subsidiary by or to any escrow agent or other Person. SECTION 4.13. TAXES. Except as set forth in Section 4.13 of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (a) all Tax Returns required to be filed by or with respect to the Company or any of its subsidiaries have been duly and timely filed (except those under valid extension) and such Tax Returns are true, complete, and correct. (b) All Taxes due and payable by the Company or any of its subsidiaries have been duly and timely paid, withheld, or are being contested in good faith and are adequately provided for in accordance with GAAP on the Company's most recent consolidated financial statements. (c) Neither the Company nor any of its subsidiaries has received written notice of any proposed or threatened proceeding, examination, investigation, audit or administrative or judicial proceeding ("PROCEEDINGS") against, or with respect to any Taxes of, the Company or any of its subsidiaries, and no such proceedings are currently pending. (d) No deficiencies for any Taxes have been proposed, asserted or assessed in writing against the Company or any of its subsidiaries that have not been finally resolved and paid in full. (e) Neither the Company nor any of its subsidiaries has granted any extension or waiver of the limitation period applicable to any Tax that remain in effect. (f) There are no liens for Taxes (other than statutory liens for Taxes not yet due and payable) upon any of the assets of the Company or any of its subsidiaries. -29- (g) Neither the Company nor any of its subsidiaries is a party to or is bound by any Tax sharing, allocation, or indemnification agreement or arrangement (other than such an agreement or arrangement exclusively between or among the Company and its subsidiaries). (h) Neither the Company nor any of its subsidiaries (A) has been a member of a group filing a consolidated, combined or unitary Tax Return (other than a group the common parent of which was the Company) or (B) has any liability for the Taxes of any Person (other than the Company or any of its subsidiaries) under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign law). (i) The Company and each of its subsidiaries has withheld and paid over to the relevant taxing authority all Taxes required to have been withheld and paid in connection with payments to employees, independent contractors, creditors, stockholders or other third parties. (j) No claim has been made in writing by any Governmental Authority in a jurisdiction in which the Company or any of its subsidiaries does not file a Tax Return that the Company or any of its subsidiaries is or may be subject to taxation by such jurisdiction. (k) Neither the Company nor any of its subsidiaries has entered into, or otherwise participated (directly or indirectly) in, any "listed transaction" within the meaning of Treasury Regulations Section 1.6011-4(b). (l) Neither the Company nor any of its subsidiaries has, within the past two years, or otherwise as part of a plan (or series of related transactions) (within the meaning of Section 355(e) of the Code) of which the Merger is a part, distributed stock of another entity or had its stock distributed by another entity in a transaction that was purported or intended to be governed in whole or in part by Code Sections 355 or 361. SECTION 4.14. ENVIRONMENTAL MATTERS. Except as set forth in Section 4.14 of the Company Disclosure Schedule and to the knowledge of the Company, the Company has provided to Parent all material environmental reports of the Company or any of its subsidiaries received during the last three years or which relate to material environmental liabilities or obligations of the Company or its subsidiaries taken as a whole. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (a) to the knowledge of the Company, the Company and the Company Subsidiaries (i) are in compliance with all Environmental Laws, (ii) hold all permits, approvals, identification numbers, licenses and other authorizations required under any Environmental Law to own or operate their assets as currently owned and operated ("ENVIRONMENTAL PERMITS") and (iii) are in compliance with their respective Environmental Permits; (b) neither the Company nor any Company Subsidiary has released, and to the knowledge of the Company, no other person has released, Hazardous Substances on any real property currently or formerly owned, leased or operated at any time since July 1, 2001 by the Company or the Company Subsidiaries in the United States; -30- (c) neither the Company nor any Company Subsidiary has received any written claim or notice alleging that the Company or any Company Subsidiary may be in violation of, or liable under, or a potentially responsible party pursuant to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA") or any other Environmental Law; (d) neither the Company nor any Company Subsidiary (i) has entered into or agreed to any consent decree or order or is a party to any judgment, decree or judicial or administrative order relating to compliance with Environmental Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous Substances and, to the knowledge of the Company, no investigation, litigation or other proceeding is pending or threatened in writing with respect thereto or (ii) is an indemnitor in connection with any threatened or asserted claim by any third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous Substances; and (e) notwithstanding any other provision of this Agreement, this Section 4.14 sets forth the Company's sole and exclusive representations and warranties with respect to Hazardous Substances, Environmental Laws or other environmental matters. SECTION 4.15. MATERIAL CONTRACTS. Other than any "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K under the Securities Act) filed as an exhibit to the Company SEC Reports filed prior to the date of this Agreement, Section 4.15 of the Company Disclosure Schedule lists each of the following written contracts and agreements (and all amendments, modifications and supplements thereto and all side letters to which the Company or any Company Subsidiary is a party affecting the obligations of any party thereunder) to which the Company or any Company Subsidiary is a party or by which any of their respective properties or assets are bound (each such agreement and contract, including any contract filed as an exhibit to the Company SEC Reports filed prior to the date of this Agreement being a "COMPANY MATERIAL CONTRACT"), any: (a) Loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, contract (written or oral), agreement, lease, license, permit, franchise, right, arrangement or other binding commitment, instrument or obligation (each, a "Contract") (other than among consolidated Company Subsidiaries) relating to (i) Indebtedness of a type described in clauses (i), (v), (vi), (viii) and (x) of the definition thereof or any other type of indebtedness in an amount in excess of $2.5 million in any single instance or (ii) conditional sale arrangements, obligations secured by a Lien, or interest rate or currency hedging activities, in each case in connection with which the aggregate actual or contingent obligations of the Company and the Company Subsidiaries under such Contract are greater than $2.5 million; (b) Contract that purports to limit the right of the Company or the Company Subsidiaries (i) to engage or compete in any line of business or (ii) to compete with any person or operate in any location, in the case of each of (i) and (ii), in any respect material to the business of the Company and the Company Subsidiaries, taken as a whole; -31- (c) Contract for the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets or capital stock or other equity interests of another person for aggregate consideration under such Contract in excess of $10 million; (d) Contract with any current or former director or officer of the Company or any Company Subsidiary that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act, except as is included in the list of exhibits to the Company 10-K; (e) Contract between (x) the Company or any of the Company Subsidiaries, on the one hand, and (y) any Affiliate of the Company (other than the Company Subsidiaries), on the other hand, of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Exchange Act, except as is included in the list of exhibits to the Company 10-K; (f) Contract that creates a partnership or joint venture or similar agreement with respect to any material business of the Company; (g) Contract with the top five (by dollar volume during the fiscal year ended September 30, 2005) suppliers or service providers of the Company and the Company Subsidiaries taken as a whole; (h) collective bargaining agreement material to the Company and the Company Subsidiaries taken as a whole; (i) written Contract that contains a put, call, right of first refusal or similar right pursuant to which the Company or any Company Subsidiary would be required to purchase or sell any securities of the Company or any of its subsidiaries; (j) settlement or conciliation agreement or similar agreement with any Governmental Authority or order or consent of a Governmental Authority to which the Company or any Company Subsidiary is subject involving future performance by the Company or any of the Company Subsidiaries which is material to the Company and the Company Subsidiaries taken as a whole; (k) other than sublicenses contained in any customer or reseller agreements or other agreement with respect to the network services business in the ordinary course of business, any Contract to which the Company or a Company Subsidiary is a party or otherwise bound (i) granting or obtaining any right to use any material Intellectual Property (other than Contracts granting rights to use readily available commercial software), or (ii) restricting the Company's or any Company Subsidiary's rights, or permitting other Persons, to use or register any material Intellectual Property; (l) acquisition agreement (other than with respect to inventory in the ordinary course) pursuant to which the Company or any Company Subsidiary has continuing indemnification, "earn-out" or other contingent obligations, in each case, that would be reasonably expected to result in payments in excess of $5 million. Notwithstanding anything in this Section 4.15, "COMPANY MATERIAL CONTRACT" shall not include any Contract that (i) is terminable upon 90 days' or less notice without a -32- penalty premium, (ii) will be fully performed or satisfied as of or prior to Closing, or (iii) is solely between the Company and one or more Company Subsidiaries or is solely between Company Subsidiaries. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) neither the Company nor any Company Subsidiary is and, to the knowledge of the Company, no other party is in breach or violation of, or default under, any Company Material Contract, (ii) none of the Company or any Company Subsidiary has received any notice or claim of default under any such agreement or any notice of an intention to, and to the knowledge of the Company, no other party to any Company Material Contract intends to terminate, not renew or challenge the validity or enforceability of any Company Material Contract (including as a result of the execution and performance of this Agreement), and (iii) no event has occurred which would result in a breach or violation of, or a default under, any Company Material Contract (in each case, with or without notice or lapse of time or both). Each Company Material Contract is valid, binding and enforceable in accordance with its terms and is in full force and effect with respect to the Company or Company Subsidiaries, as applicable, and, to the knowledge of the Company, with respect to the other parties hereto. SECTION 4.16. INTERESTED PARTY TRANSACTIONS. There are no Company Material Contracts, agreements, loans or other material transactions between the Company or any Company Subsidiary, on the one hand, and (a) any officer or director of the Company, (b) any record or beneficial owner of five percent (5%) or more of the voting securities of the Company, or (c) any Affiliate of any such officer, director or record or beneficial owner, on the other hand. SECTION 4.17. BROKERS. No broker, finder or investment banker or other Person (other than J.P. Morgan Securities Inc. (the "COMPANY FINANCIAL ADVISORS")) is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any Company Subsidiary. SECTION 4.18. OPINION OF FINANCIAL ADVISOR. The Company has received an opinion of the Company Financial Advisor to the effect that, as of the date of this Agreement, the Company Common Share Merger Consideration is fair to the holders of Company Common Shares from a financial point of view to such holders, and will promptly deliver to Parent a true, correct and complete copy of such opinion following the Company's receipt thereof in written form. SECTION 4.19. INSURANCE. Section 4.19 of the Company Disclosure Schedule contains a complete and accurate list of all material insurance policies maintained by the Company as of the date of this Agreement, and the Company has heretofore made available to Parent a complete and accurate copy of all such material policies, including all occurrence-based policies applicable to the Company (or its assets or business) for all periods since January 1, 2004. Neither the Company nor any Company Subsidiary has taken any action or failed to take any action which, with or without notice or the lapse of time or both, would constitute a material breach or default, or permit termination or modification of, any such material insurance policies. Except as set forth in Section 4.19 of the Company Disclosure Schedule or for exceptions that would not, individually or in the aggregate, have or reasonably be expected to have a Material -33- Adverse Effect, all material insurance policies maintained by the Company are in full force and effect, all premiums due and payable thereon have been paid, and no written notice of cancellation or termination has been received with respect thereto. SECTION 4.20. TAKEOVER STATUTES; RIGHTS AGREEMENT. (a) The Company has taken all necessary actions so that the restrictions on business combinations contained in each "fair price", "moratorium", "control share acquisition", "business combination" or other similar anti-takeover statute or regulation enacted under U.S. state or federal laws applicable to the transactions contemplated by this Agreement ("ANTITAKEOVER LAWS"), including without limitation Chapters 1701 and 1704 of the Ohio Revised Code, will not apply with respect to or as a result of this Agreement, Voting Agreement, and the transactions contemplated hereby and thereby, including the Merger, without any further action on the part of the shareholders or the Company Board. True, correct and complete copies of all resolutions of the Company Board reflecting such actions have been previously provided to Parent. (b) Prior to the date of this Agreement, the Company has amended the Rights Agreement in accordance with its terms to render the Rights Agreement inapplicable to this Agreement and the transactions contemplated by this Agreement (including the Merger and the execution, delivery and performance of the Voting Agreement). SECTION 4.21. LABOR MATTERS. Except as set forth in Section 4.21 of the Company Disclosure Schedule, and except, in the case of Section 4.21(b) of this Agreement, as would not reasonably be expected to have a Material Adverse Effect: (a) except as would not, individually or in the aggregate, result in any material liability to the Company and the Company Subsidiaries taken as a whole, the Company and the Company Subsidiaries are neither party to nor bound by any labor agreement, collective bargaining agreement or material work rules or practices with any labor union or works council, and to the knowledge of the Company, no labor union or works council is currently engaged in any activities to organize employees of the Company or the Company Subsidiaries; (b) since January 1, 2004, there has been no actual or, to the knowledge of the Company, threatened strike, slowdown, work stoppage, lockout or material labor dispute affecting the Company or the Company Subsidiaries; (c) except as would not, individually or in the aggregate, result in any material liability to the Company and the Company Subsidiaries taken as a whole, to the knowledge of the Company, no officer or key employee of the Company or any Company Subsidiary is in any material respect in violation of any material term of any nondisclosure agreement, common law nondisclosure obligation, noncompetition agreement or restrictive covenant to a former employer of any such person relating (i) to the right of any person to be employed or engaged by the Company or Company Subsidiary or (ii) to the knowledge or use of trade secrets or proprietary information; and (d) except as would not, individually or in the aggregate, result in any material liability to the Company and the Company Subsidiaries taken as a whole, the Company and the -34- Company Subsidiaries have at all times properly classified each of their respective employees as employees and each of their respective independent contractors as independent contractors. SECTION 4.22. REAL PROPERTY. (a) Section 4.22(a) of the Company Disclosure Schedule sets forth the address of each parcel of real property owned by the Company or its subsidiaries (collectively, the "OWNED REAL PROPERTY"). The Company or one of its subsidiaries has good and marketable title to the Owned Real Property and to all of the buildings, structures and other improvements thereon, except for Permitted Liens. Except as set forth in Section 4.22(a) of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries has leased, licensed or otherwise granted any Person the right to use or occupy the Owned Real Property. (b) Section 4.22(b) of the Company Disclosure Schedule sets forth the address of each parcel of all material leasehold or material sub-leasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixture or other interest in real property held by or for the Company or its subsidiaries (the "LEASED REAL PROPERTY"). The Company or one of its subsidiaries has a good and valid leasehold interest in the Leased Real Property, free and clear of all liens except Permitted Liens, and, except as set forth in Section 4.22(b) of the Company Disclosure Schedule neither the Company nor any of its subsidiaries has subleased, licensed or granted any occupancy rights in any portion of the Leased Real Property. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES Parent and MergerCo hereby jointly and severally represent and warrant to the Company as follows: SECTION 5.01. ORGANIZATION. Each of the Buyer Parties has been duly organized and is validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority and governmental approvals would not have a Parent Material Adverse Effect. SECTION 5.02. OWNERSHIP OF MERGERCO; NO PRIOR ACTIVITIES. MergerCo was formed solely for the purpose of engaging in the transactions contemplated by this Agreement and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated by this Agreement. All the issued and outstanding shares of capital stock of MergerCo are, and as of the Closing Date will be, owned of record and beneficially by Dealer Computer Services, Inc., a Delaware corporation and a wholly owned subsidiary of Parent. SECTION 5.03. POWER AND AUTHORITY. Each of the Buyer Parties 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 and delivery of this Agreement by each of the Buyer Parties and the consummation by the Buyer Parties of the transactions contemplated by this Agreement have been duly and validly -35- authorized by all necessary corporate action, and no other corporate proceedings on the part of the Buyer Parties are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement; provided, that the foregoing does not apply to the definitive agreements for financing of the Merger to the extent such definitive agreements are inconsistent with the terms of the Financing Commitments, and such definitive agreements, in such event, shall be authorized by the Board of Directors of Parent on a timely basis. This Agreement has been duly and validly executed and delivered by the Buyer Parties and, assuming due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of the Buyer Parties enforceable against each of the Buyer Parties in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws or by general equity principles. SECTION 5.04. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by each of the Buyer Parties do not, and the performance of each of the Buyer Parties' obligations hereunder will not, (i) conflict with or violate the articles of incorporation or bylaws of Parent or the articles of incorporation or bylaws of MergerCo, (ii) assuming that all consents, approvals, authorizations and other actions described in subsection (b) of this Section 5.04 have been obtained and all filings and obligations described in subsection (b) of this Section 5.04 have been made, conflict with or violate any Law applicable to any of the Buyer Parties, or by which any of its properties or assets is bound, or (iii) result in any breach of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or (except in connection with the financing of the Merger) result in the creation of a Lien or other encumbrance on any of its properties or assets pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which it is a party or by which it or any of its properties or assets is bound, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not prevent or materially delay consummation of the Merger or otherwise prevent it from performing its obligations under this Agreement. (b) The execution and delivery of this Agreement by each of the Buyer Parties does not, and the performance of each of the Buyer Parties' obligations hereunder and thereunder will not, require any consent, approval, authorization or permit of, or filing with, or notification to, any Governmental Authority, except (i) for (A) applicable requirements, if any, of the Exchange Act and state take-over Laws, (B) if applicable, filings under the rules and regulations of the NYSE, (C) if applicable, the pre-merger notification and waiting requirements of the HSR Act and any other applicable Regulatory Laws, (D) the filing with the SEC of the Proxy Statement, (E) the filing and recordation of appropriate merger documents as required by the OGCL and (F) filings and recordings in connection with the financing of the Merger and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or materially delay consummation of the Merger, or otherwise prevent Parent from performing its obligations under this Agreement. -36- SECTION 5.05. INFORMATION SUPPLIED. None of the information supplied by the Buyer Parties or any affiliate of Parent for inclusion or incorporation by reference in the Proxy Statement or the Other Filings will, in the case of the Proxy Statement, at the date it is first mailed to the Company's shareholders or at the time of the Company Shareholders' Meeting or at the time of any amendment or supplement thereto, in the case of any Other Filing, at the date it is first mailed to the Company's shareholders or, at the date it is first filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. No representation is made by the Buyer Parties with respect to statements made or incorporated by reference therein based on information supplied by the Company in connection with the preparation of the Proxy Statement or the Other Filings for inclusion or incorporation by reference therein. All Other Filings that are filed by the Buyer Parties will comply as to form in all material respects with the requirements of applicable Law. SECTION 5.06. FINANCIAL STATEMENTS. Parent has previously delivered to the Company the consolidated balance sheet of Parent and its subsidiaries as of December 31, 2005 and the related consolidated statements of operations and retained earnings and cash flows for the year ended December 31, 2005, together with the audit report thereon of Ernst & Young, and the unaudited consolidated balance sheet of Parent and its subsidiaries as of June 30, 2006 and the related unaudited consolidated statements of income, retained earnings and cash flows for the six month period ended June 30, 2006. The consolidated financial statements of Parent and its subsidiaries have been prepared in accordance with GAAP applied on a consistent basis throughout the period indicated (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position and the consolidated results of operations, as of the dates and for the periods then ended, except as otherwise noted therein, of Parent and its subsidiaries, except that the interim financial statements are subject to normal year-end adjustments and accruals and do not include notes to the financial statements. SECTION 5.07. ABSENCE OF LITIGATION. Except with respect to any litigation that may be commenced after the date of this Agreement in connection with the Merger, there is no Action pending or, to the knowledge of Parent, threatened in writing against Parent or any of its subsidiaries or any of its or their respective properties or assets, except (i) as would not, individually or in the aggregate, (a) prevent or materially delay consummation of the Merger and the other transactions contemplated by this Agreement or (b) have or reasonably be expected to have a Parent Material Adverse Effect or (ii) for any Action arising after the date of this Agreement in connection with this Agreement or the transactions contemplated hereby. None of Parent or its subsidiaries is subject to any order, judgment, writ, injunction or decree, except as would not, individually or in the aggregate, have or reasonably be expected to have a Parent Material Adverse Effect. SECTION 5.08. AVAILABLE FUNDS. (a) Parent anticipates that it will have sufficient funds, consisting of (x) $367,000,000 of cash of the Company or Parent at Closing generated from sources other than the Financing Commitments (the "CLOSING CASH"), (y) proceeds from equity issuances (the "EQUITY FINANCING") and (z) proceeds from debt issuances (the "DEBT FINANCING" and, together with the Equity Financing, the "FINANCING"; for the avoidance of doubt, the "FINANCING" shall not include -37- the Closing Cash) at the Closing to satisfy all of its obligations under this Agreement, including to (i) pay the aggregate Company Consideration payable hereunder, (ii) refinance all Company Indebtedness and (iii) pay any and all fees and expenses in connection with the Merger and the financing thereof. (b) Parent has provided to the Company true, complete and correct copies of (i) executed commitment letters from GS Capital Partners V Fund, L.P., Spanish Steps Holdings LTD and Vista Equity Fund II, L.P. (the "EQUITY FINANCING SOURCES") pursuant to which, and subject to the terms and conditions thereof, the Equity Financing Sources have agreed to provide Parent with equity financing in an aggregate amount of up to $420,000,000 (the "EQUITY FUNDING LETTERS"), and (ii) an executed commitment letter (the "DEBT COMMITMENT LETTER", and together with the Equity Funding Letters, as may be modified pursuant to Section 7.06, the "FINANCING COMMITMENTS") from Deutsche Bank AG New York Branch and affiliates thereof and Credit Suisse and affiliates thereof (the "LENDERS") pursuant to which, and subject to the terms and conditions thereof, the Lenders have committed to provide Parent with debt financing (excluding any revolver) in an aggregate amount of $2,535,000,000. As of the date of this Agreement, the Financing Commitments, in the form so delivered, are in full force and effect and are legal, valid and binding obligations of Parent and MergerCo and each of the other parties thereto. None of the Financing Commitments has been amended, supplemented or otherwise modified prior to the date of this Agreement, and the respective commitments contained in the Financing Commitments have not, prior to the date of this Agreement, been withdrawn or rescinded in any respect. As of the date of this Agreement, the Financing Commitments are in full force and effect and, except for the payment of customary fees, there are no conditions precedent or other contingencies related to the funding of the full amount of the Financing, other than as set forth in or contemplated by the Financing Commitments. Parent and MergerCo have fully paid any and all commitment fees or other fees required by the Financing Commitments to be paid by them on or prior to the date of this Agreement and shall in the future pay any such fees as they become due. As of the date of this Agreement, no event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent or MergerCo, and to the knowledge of Parent, any other parties thereto, under the Financing Commitments. As of the date of this Agreement, neither Parent nor MergerCo has any reason to believe that any of the conditions to the Financing contemplated by the Financing Commitments will not be satisfied or that any portion of the Financing to be made thereunder will not otherwise be made available to Parent or MergerCo on the Closing Date. Parent will provide to the Company any amendments to the Equity Funding Letter and the Debt Commitment Letter, or any written notices given in connection therewith, as promptly as possible (but in any event within forty eight (48) hours). SECTION 5.09. NO OWNERSHIP OF COMPANY CAPITAL STOCK. Except as set forth in Section 5.08 of the Parent Disclosure Schedule, neither Parent nor any of its subsidiaries (including MergerCo) owns any Company Common Shares or other securities of the Company or any of the Company Subsidiaries. SECTION 5.10. OTHER AGREEMENTS OR UNDERSTANDINGS. Parent has disclosed to the Company all contracts, arrangements or understandings (and, with respect to those that are written, Parent has furnished to the Company correct and complete copies thereof) between or among Parent, MergerCo, or any affiliate of Parent, on the one hand, and any member of the -38- management of the Company or any person that owns 5% or more of the shares or of the outstanding capital stock of the Company, on the other hand. SECTION 5.11. BROKERS. Except for fees payable in connection with the Financing, no broker, finder or investment banker (other than Credit Suisse Securities (USA)) is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent, MergerCo or any of their subsidiaries. SECTION 5.12. NO ADDITIONAL REPRESENTATIONS. (a) Parent acknowledges that it and its representatives have received access to such books and records, facilities, equipment, contracts and other assets of the Company which it and its representatives have desired or requested to review, and that it and its representatives have had full opportunity to meet with the management of the Company and to discuss the business and assets of the Company. (b) Parent acknowledges that neither the Company nor any person has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Company furnished or made available to Parent and its representatives except as expressly set forth in Article IV (which includes the Company Disclosure Schedule and the Company SEC Documents to the extent specified in Article IV of this Agreement), and, except as set forth in this Agreement (in the case of the Company) and in the Voting Agreements (in the case of the shareholders party thereto), neither the Company nor the shareholders party to the Voting Agreements shall be subject to any liability to Parent or any other person resulting from the Company's making available to Parent or Parent's use of such information, or any information, documents or material made available to Parent in the due diligence materials provided to Parent, including in the "data room," management presentations (formal or informal) or in any other form in connection with the transactions contemplated by this Agreement. Without limiting the foregoing, the Company makes no representation or warranty to Parent with respect to any financial projection or forecast relating to the Company or any of its Subsidiaries. ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER SECTION 6.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The Company agrees that, between the date of this Agreement and the Merger Effective Time, except as expressly required or permitted by this Agreement or as set forth in Section 6.01 of the Company Disclosure Schedule and except with the prior written consent of Parent, such consent not to be unreasonably withheld or delayed, the businesses of the Company and the Company Subsidiaries shall be conducted in, and the Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice; and the Company shall use its reasonable efforts to preserve substantially intact the business organization of the Company and the Company Subsidiaries and to preserve the current relationships of the Company and the Company Subsidiaries with customers, suppliers and any Persons with which the Company or any Company Subsidiary has significant business relations. Without limiting the generality of the foregoing, except as expressly required or permitted by this Agreement, -39- neither the Company nor any Company Subsidiary shall, between the date of this Agreement and the Merger Effective Time, do any of the following without the prior written consent of Parent, such consent not to be unreasonably withheld or delayed: (a) (i) amend or otherwise change any provision of the Company Charter or Company Bylaws, or similar organizational or governance documents of the Significant Company Subsidiaries or (ii) take any action to exempt any Person (other than Parent or MergerCo) from any applicable antitakeover law; (b) (i) authorize for issuance, issue, deliver, pledge, dispose of, encumber or sell (or agree or commit to do any of the foregoing) any shares of any class of capital stock, voting securities or other ownership interest of the Company or any Company Subsidiary or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, voting securities or any other ownership interest, of the Company or any Company Subsidiary, other than (A) the issuance of Company Common Shares issuable pursuant to Company Stock Awards outstanding on the date of this Agreement, (B) except as provided otherwise in Article III hereof, the issuance of Company Common Shares in connection with the current provisions of the ESPP and DRIP and (C) the award of up to 26,000 Company Restricted Shares to newly hired employees, in the Company's discretion, provided that such Company Restricted Shares provide by their terms that they do not vest, but are terminated and forfeited in full with no payment being made therefor, upon the Closing; (ii) repurchase, redeem or otherwise acquire any securities or equity equivalents except in connection with the exercise of Company Stock Options, the vesting of Company Stock-Based Awards or Company Restricted Shares, or the lapse of restrictions on Company Stock-Based Awards or Company Restricted Shares; (iii) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions (whether in cash, shares, property or otherwise) in respect of, any shares of the Company's capital stock or the shares of stock or other equity interests in any Company Subsidiary that is not directly or indirectly wholly owned by the Company, except for (A) dividends by any direct or indirect wholly owned Company Subsidiary to the Company or any other wholly owned Company Subsidiary, (B) the regular quarterly dividend not in excess of $0.11 per Company Class A Common Share (and 1/20 of such amount per Company Class B Common Share) on Company Common Shares (including, without limitation, pursuant to the DRIP) to be declared in August 2006 and paid in cash at a time consistent with past practice, and (C) dividend equivalents paid with respect to Company Stock-Based Awards; or (iv) split, combine, adjust, recapitalize, subdivide, redeem, purchase or reclassify or otherwise acquire any shares, stock or other equity interests of the Company or any Company Subsidiary or issue or authorize the issuance of any securities in respect of, in lieu of or in substitution for shares of such shares, stock or other equity interests. (c) directly or indirectly, acquire (by merger, consolidation, acquisition of equity interests or assets, or any other business combination) any corporation, partnership, limited liability company, joint venture or other business organization (or division thereof) or any assets or property, (other than Software or any other assets or property acquired in the ordinary course of business) exceeding (i) $3.5 million in any given case or $10 million in the aggregate or (ii) that could reasonably be expected to materially delay consummation of the Merger, including the obtaining of any approvals required pursuant to this Agreement under the HSR Act and any other Regulatory Laws; -40- (d) except as set forth in Section 6.01(d) of the Company Disclosure Schedule, incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than a Company Subsidiary) for borrowed money, except for: (i) Indebtedness for borrowed money incurred in the ordinary course of business not in excess of $10,000,000 outstanding in the aggregate for the Company and the Company Subsidiaries taken as a whole and which may be prepaid at any time without penalty; or (ii) Indebtedness for under the Credit Agreement with a maturity of not more than one year in a principal amount not in excess of $10,000,000 in the aggregate for the Company and the Company Subsidiaries taken as a whole and which may be prepaid at any time without penalty; (e) materially modify, amend or terminate or waive, release or assign any material rights or claims with respect to, any Company Material Contract or enter into any new contract or agreement that, if entered into prior to the date of this Agreement, would have been required to be listed in Section 4.15 of the Company Disclosure Schedule as a Company Material Contract or would be reasonably likely to: (y) impair in any material respect the ability of the Company to perform its obligations under this Agreement or (z) prevent or materially delay the consummation of the transactions contemplated by this Agreement; (f) except as set forth in Section 6.01(f) of the Company Disclosure Schedule or except as required by the terms of U.S. Plans or Non-U.S. Plans, by any collective bargaining agreement, work rules or other labor-related agreement with any labor union or works council, or by applicable Law, or is otherwise in the ordinary course of business, (i) increase the compensation or benefits payable to its directors, officers, employees, consultants or independent contractors or (ii) grant to any director, officer or employee, consultant or independent contractor of the Company or of any Company Subsidiary any new severance, change of control or termination pay, grant any increase in, or otherwise alter or amend, any right to receive any severance, change of control or termination pay or benefits or establish, adopt, enter into or amend to materially increase benefits under any collective bargaining, work rules, bonus, profit-sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, loan, retention, consulting, indemnification, termination, severance or other similar plan, agreement, trust, fund, policy or arrangement with any director, officer or employee, consultant or independent contractor; (g) pre-pay any long-term debt, except in the ordinary course of business (which shall be deemed to include, without limitation, pre-payments or repayments of the receivables facility, lines of credit facilities or other similar lines of credit or payments made in respect of any termination or settlement of any interest rate swap or other similar hedging instrument relating thereto) in an amount not to exceed $10,000,000 in the aggregate for the Company and the Subsidiaries taken as a whole, or pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, contingent or otherwise), except (i) in the ordinary course of business consistent with past practice and in accordance with their terms and (ii) the payment of $100 million aggregate principal amount (and accrued interest thereon) of the Company's 7% notes due December 15, 2006 (which amount has been deposited with the Trustee for such notes); -41- (h) except as required by the SEC or changes in GAAP which become effective after the date of this Agreement, or as recommended by the Company's audit committee or independent auditors, in which case the Company shall notify the Parent, materially change any of its accounting policies (whether for financial accounting or Tax purposes); (i) authorize, incur, or enter into any commitment for, any capital expenditure (such authorized or committed capital expenditures being referred to hereinafter as the "CAPITAL EXPENDITURES") other than (i) Capital Expenditures set forth in Section 6.01(i) of the Company Disclosure Schedule and (ii) any other individual Capital Expenditure not exceeding $2,000,000 in the aggregate for all such Capital Expenditures; (j) waive, release, assign, settle or compromise any material litigation other than settlements of, or compromises for, any litigation where the amounts paid or to be paid are (i) covered by insurance coverage maintained by the Company or (ii) otherwise less than $5,000,000; (k) sell, lease, license, mortgage, sell and leaseback or otherwise encumber or subject to any Lien, other than Permitted Liens, or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets, in each case which are material to the Company and its Subsidiaries, taken as a whole, other than sales or dispositions of software, inventory and used equipment in the ordinary course of business consistent with past practice or pursuant to existing Contracts of the Company or a Company Subsidiary, (ii) enter into, modify or amend any material lease of real property, except in the ordinary course of business consistent with past practice, or (iii) modify, amend, terminate or permit the lapse of any material lease of real property or other material Contract relating to any real property; (l) (i) amend or modify or terminate the Rights Agreement other than as contemplated by this Agreement, or (ii) take any action which would allow any Person (as defined in the Rights Agreement) other than Parent or MergerCo or any of their respective Affiliates to become the Beneficial Owner (as defined in the Rights Agreement) of 15% or more of the Company Common Shares or of voting power thereof without causing a Distribution Date or a Stock Acquisition Date (as each such term is defined in the Rights Agreement) to occur or otherwise take any action which would render the Rights Agreement inapplicable to any transaction contemplated by such Person. (m) except in the ordinary course of business consistent with past practices, dispose of, grant exclusive licenses or assign, or permit to lapse any rights to, any material Intellectual Property, or dispose of or disclose to any Person other than representatives of the Buyer Parties, any material Trade Secret; (n) take any action that would result in, or fail to take any action that would prevent, the expiration, lapse, termination or abandonment of any right, registration or application for registration of material Company Intellectual Property other than in the ordinary course of business consistent with past practice; or -42- (o) announce an intention, enter into any agreement or otherwise make a commitment, to do any of the actions described in Section 6.01(a) through (l) hereof. SECTION 6.02. CONDUCT OF BUSINESS BY BUYER PARTIES PENDING THE MERGER. (a) The Buyer Parties agree that, between the date of this Agreement and the Merger Effective Time, except as contemplated by this Agreement, they shall not, directly or indirectly, without the prior written consent of the Company, take or cause to be taken any action that (a) could be expected to materially delay or impair the consummation of the transactions contemplated by this Agreement, or propose, announce an intention, enter into any agreement or otherwise make a commitment to take any such action, or (b) would cause any of the representations or warranties of the Buyer Parties contained herein to become inaccurate in any material respect or any of the covenants of the Buyer Parties to be breached in any material respect or result in the failure to be satisfied of any of the conditions set forth in Section 8.03. (b) Without limitation to the generality of the foregoing, Parent shall not, and shall cause its Affiliates not to, directly or indirectly, acquire (by merger, consolidation, acquisition of equity interests or assets, or any other business combination), any corporation, partnership, limited liability company, joint venture or other business organization (or division thereof) or any assets or property, (other than assets or property acquired in the ordinary course of business or of any Software) that could be reasonably expected to materially delay the consummation of the Merger, including the obtaining of any approvals required pursuant to this Agreement under the HSR Act and other Regulatory Laws. SECTION 6.03. TAX MATTERS. With respect to Taxes, without the prior consent of Parent or MergerCo (which consent shall not be unreasonably withheld or delayed), the Company shall not make, amend or revoke any Tax election, change an annual Tax accounting period, adopt or change any Tax accounting method, file any material amended Tax Return, settle or compromise a material Tax liability, claim or assessment relating to the Company, enter into any closing agreement relating to any material Tax or surrender any right to claim a material Tax refund. SECTION 6.04. MERGERCO. Parent will take all action necessary to cause MergerCo to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement. ARTICLE VII ADDITIONAL AGREEMENTS SECTION 7.01. COMPANY PROXY STATEMENT; OTHER FILINGS; SHAREHOLDERS' MEETING. (a) As promptly as practicable following the date of this Agreement, the Company shall prepare and, after consultation with Parent, file with the SEC the preliminary Proxy Statement and each of the Company and Parent shall, or shall cause their respective affiliates to, prepare and, after consultation with each other, file with the SEC all Other Filings that are required to be filed by such party in connection with the transactions contemplated hereby. Each of the Company and Parent shall furnish all information concerning itself and its affiliates that is required to be included in the Proxy Statement or, to the extent applicable, the -43- Other Filings, or that is customarily included in proxy statements prepared in connection with transactions of the type contemplated by this Agreement. Each of the Company and Parent shall use its reasonable best efforts to respond as promptly as practicable to any comments of the SEC with respect to the Proxy Statement or the Other Filings, and the Company shall use its reasonable best efforts to cause the definitive Proxy Statement to be cleared by the SEC and mailed to the Company's shareholders as promptly as reasonably practicable following clearance from the SEC. The Company shall promptly notify Parent upon the receipt of any comments from the SEC or its staff or any request from the SEC or its staff for amendments or supplements to the Proxy Statement or the Other Filings and shall promptly provide Parent with copies of all correspondence between the Company and its representatives, on the one hand, and the SEC and its staff, on the other hand, relating to the Proxy Statement or the Other Filings. If at any time prior to the Company Shareholders' Meeting, any information relating to the Company or the Buyer Parties or any of their respective affiliates, officers, members or directors, should be discovered by the Company or Parent, which should be set forth in an amendment or supplement to the Proxy Statement or the Other Filings, so that the Proxy Statement or the Other Filings shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party which discovers such information shall promptly notify the other parties, and an appropriate amendment or supplement describing such information shall be filed with the SEC and, to the extent required by applicable Law, disseminated to the shareholders of the Company. Notwithstanding anything to the contrary stated above, prior to filing or mailing the Proxy Statement or filing the Other Filings (or any amendment or supplement thereto) or responding to any comments of the SEC with respect thereto, the Company shall provide Parent a reasonable opportunity to review and comment on such document or response and will in good faith consider such comments, and to the extent practicable, the Company will provide Parent with the opportunity to participate in any substantive calls between the Company, or any of its representatives, and the SEC concerning the Proxy Statement. (b) The Company shall duly call, give notice of, convene and hold a meeting of its shareholders (the "COMPANY SHAREHOLDERS' MEETING"), as promptly as practicable after the date of this Agreement. Subject to the following sentence, (i) the Company Board shall recommend to holders of the Company Common Shares that they adopt this Agreement (the "COMPANY RECOMMENDATION"), and (ii) the Company will use reasonable best efforts to solicit from its shareholders proxies in favor of the adoption of this Agreement and to obtain the Company Shareholder Approval. Notwithstanding anything in this Agreement to the contrary, the Company Board may determine (1) not to make or to withdraw, modify or change such recommendation (a "COMPANY CHANGE IN RECOMMENDATION"), and (2) not to use such efforts to solicit proxies in favor of the adoption of this Agreement if, in the case of both clauses (1) and (2), it has (A) determined in good faith, after consultation with its outside legal counsel and a financial advisor of national recognized reputation, that failure to take such action would likely be inconsistent with its fiduciary duties under applicable Law, (B) complied in all material respects with its obligations under Section 7.03 hereof and there has otherwise not been a material violation of Section 7.03 hereof, (C) the Company uses reasonable best efforts to provide to Parent at least two (2) Business Days' prior written notice that it intends (or may intend) to take any such action and (D) the Company provides immediate written notice to Parent that it has taken such action. The Company may, if it receives an unsolicited Company -44- Acquisition Proposal, delay the mailing of the Proxy Statement or the holding of the Company Shareholders' Meeting, in each case for such reasonable period as would provide a reasonable opportunity for the Company Board to consider such Company Acquisition Proposal and to determine the effect, if any, on the Company but in no event more than ten (10) days (the "FIDUCIARY DELAY"); PROVIDED, HOWEVER, that (x) the Company promptly provide written notice to Parent upon the commencement of any such delay and (y) the Outside Date shall be extended by up to the number of days of the Fiduciary Delay in accordance with Section 9.01(b) hereof. SECTION 7.02. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) Subject to applicable Law and confidentiality agreements, from the date of this Agreement until the Merger Effective Time, the Company shall, and shall cause its subsidiaries and the officers, directors, employees, auditors and agents of the Company and its subsidiaries to afford Parent and the officers, directors, employees, accountants, consultants, legal counsel, financial advisors, financing sources, and other advisors of Parent and its subsidiaries (collectively, "REPRESENTATIVES"), following notice from Parent to the Company in accordance with this Section 7.02, reasonable access during normal business hours to the officers, employees, agents, properties, offices, plants and other facilities, books and records of the Company and its subsidiaries, and all other financial, operating, Tax related and other data and information as Parent may reasonably request. Notwithstanding the foregoing, neither Parent nor any of its Representatives shall (i) contact or have any discussions with any of the Company's or its subsidiaries' employees (other than the Company's or its subsidiaries' officers, and upon two days' notice, directors, as to whom this restriction shall not apply), agents, representatives, unless in each case Parent obtains the prior written consent of the Company, as applicable, which shall not be unreasonably withheld (ii) without the consent of the Company, have any access to any information that is competitively sensitive in any material respect to the Company and its subsidiaries, including information the disclosure of which would violate applicable Law, (iii) contact or have discussions with any licensees or franchisees of the Company or their respective subsidiaries, unless in each case Parent provides written notice to the Company, as applicable or (iv) perform any onsite environmental procedure involving the sampling of any environmental media, without the Company's prior written consent, which consent shall not be unreasonably withheld or delayed. Parent shall schedule and coordinate all inspections with the Company and shall give the Company at least three (3) Business Days' prior written notice thereof, setting forth in general terms the inspection that Parent or its representatives intend to conduct. Notwithstanding the foregoing, (i) neither the Company nor any of their respective subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would jeopardize the attorney-client privilege of the Company or any of their respective subsidiaries or contravene any Law or binding agreement entered into prior to the date of this Agreement; provided that the parties shall cooperate in good faith to create ways in which to maximize the amount of information that can be so disclosed to Parent or its Representatives without such effect, and (ii) the Company and its subsidiaries (and their respective employees) shall use their reasonable best efforts to cooperate with Parent in assisting Parent with its transition and integration planning. (b) Prior to the Merger Effective Time, all information obtained by Parent pursuant to this Section 7.02 shall be kept confidential in accordance with the confidentiality -45- agreement dated June 15, 2006 between Parent and the Company (the "CONFIDENTIALITY AGREEMENT"). SECTION 7.03. NO SOLICITATION OF TRANSACTIONS BY THE COMPANY. (a) During the term of this Agreement, none of the Company or any Company Subsidiary shall, nor shall it authorize or knowingly permit, directly or indirectly, any officer, trustee, director, employee, investment banker, financial advisor, attorney, broker, finder or other agent, representative or Affiliate of the Company or any Company Subsidiary to, (i) initiate, solicit, knowingly encourage or knowingly facilitate (including by way of furnishing nonpublic information or assistance) any inquiries or the making of any proposal or other action that constitutes, or may reasonably be expected to lead to, any Company Acquisition Proposal, (ii) enter into discussions or negotiate with any Person in furtherance of such inquiries or to obtain a Company Acquisition Proposal, (iii) enter into an agreement (other than a confidentiality agreement entered into in accordance with the provisions of this Agreement) with respect to a Company Acquisition Proposal, (iv) except as provided in Section 7.01(b), withhold, withdraw or modify (or publicly propose or announce any intention or desire to withhold, withdraw or modify), in any manner adverse to Parent, the Company Recommendation, or (v) submit to the Company Shareholders for their approval any Company Acquisition Proposal. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, prior to obtaining the Company Shareholders Approval, following the receipt by the Company or any Company Subsidiary of a Company Acquisition Proposal (that was not solicited, encouraged or facilitated in violation of this Section 7.03(a)), the Company Board may (directly or through advisors or representatives) if (A) the Company Board determines in good faith after consultation with its legal and financial advisors that such Company Acquisition Proposal is, or is reasonably likely to lead to, a Company Superior Proposal and (B) the Company Board determines in good faith, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, that failure to take such action would likely be inconsistent with its fiduciary duties under applicable Law, the Company Board may (1) furnish non-public information with respect to the Company and the Company Subsidiaries to the Person who made such proposal (PROVIDED that the Company has previously or concurrently furnished such information to Parent) and prior to furnishing such information, the Company received from the Person to whom such information is being furnished an executed confidentiality agreement on terms at least as restrictive as the terms of the Confidentiality Agreement, (2) participate in negotiations regarding such proposal and (3) following receipt of a Company Acquisition Proposal that constitutes a Company Superior Proposal, terminate this Agreement pursuant to, and subject to compliance with, Section 9.01(h); provided, the Company gives Parent notice prior to taking any of the actions set forth in clauses (1) or (2) above. (b) Subject to Section 7.03(a), the Company shall take, and shall cause the Company Subsidiaries to take, all actions reasonably necessary to cause their respective officers, trustees, directors, employees, investment bankers, financial advisors, attorneys, brokers, finders and any other agents, representatives or affiliates to immediately cease any discussions, negotiations or communications with any party or parties with respect to any Company Acquisition Proposal. -46- (c) The Company shall promptly notify Parent (but in no event more than 48 hours following the Company's initial receipt of any Company Acquisition Proposal) of the relevant details relating to a Company Acquisition Proposal (including the identity of the parties and all material terms thereof) which the Company or any Company Subsidiary or any such officer, trustee, director, employee, investment banker, financial advisor, attorney, broker, finder or other agent, representative or affiliate may receive after the date of this Agreement, and shall keep Parent informed on a prompt basis as to the status of and any material developments regarding any such proposal, including any changes in material terms or conditions based thereto. In the event of any Company Change in Recommendation, the Company shall provide Parent with the Company's stockholder list and, following a Company Change in Recommendation, Parent may contact the Company's shareholders and prospective investors without regard to the limitations set forth in Section 7.08. In the event that this Agreement is terminated pursuant to its terms, Parent shall promptly return to the Company such stockholder list. (d) Nothing in this Section 7.03 or elsewhere in this Agreement shall prevent the Company Board from disclosing any information required to be disclosed under applicable Law or from complying with Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act with respect to a Company Acquisition Proposal. In addition, nothing in this Section 7.03 or this Agreement shall prohibit the Company from taking any action that any court of competent jurisdiction orders the Company to take. SECTION 7.04. EMPLOYEE BENEFITS MATTERS. (a) From and after the Merger Effective Time, Parent shall honor and shall cause the Surviving Corporation to honor all Plans and compensation arrangements and agreements and employment agreements, in each case which have been disclosed and provided to Parent prior to the date of this Agreement, and which are set forth on Section 7.04 of the Company Disclosure Schedule, in accordance with their terms as so disclosed; PROVIDED that nothing herein shall preclude Parent from amending or terminating any such agreement or arrangement in accordance with the terms thereof. For a period of one year following the Merger Effective Time (the "BENEFITS CONTINUATION PERIOD"), Parent shall provide, or shall cause to be provided, to each current and former employee of the Company and the Company Subsidiaries other than such employees covered by collective bargaining agreements ("COMPANY EMPLOYEES") (i) compensation (including base salary and cash bonuses (comparable in terms of achievability) under the Company's annual cash bonus plan, but excluding any equity based incentive compensation) no less favorable than the compensation provided to Company Employees immediately before the Merger Effective Time (including base salary and cash bonuses (comparable in terms of achievability) under the Company's annual cash bonus plan, but excluding any equity based incentive compensation) and (ii) benefits (excluding, however, defined benefit pension plan benefits but including the enhancements to the Company's 401(k) plan and other benefits enhancements set forth in Section 7.04(a)(i) of the Company Disclosure Schedule) that are no less favorable, in the aggregate, than the benefits (excluding, however, defined benefit pension plan benefits but including the enhancements to the Company's 401(k) plan and other benefits enhancements set forth in Section 7.04(a)(i) of the Company Disclosure Schedule) provided to Company Employees immediately before the Merger Effective Time. During the Benefits Continuation Period, Parent shall honor, fulfill and discharge the Company's -47- and the Company Subsidiaries' obligations under, the severance plans listed on Section 7.04(a)(ii) of the Company Disclosure Schedule without any amendment or change that is adverse to the Company Employees. During the Benefits Continuation Period, severance benefits offered to Company Employees shall be determined without taking into account any reduction after the Merger Effective Time in compensation paid to Company Employees and used to determine severance benefits. (b) For all purposes (including purposes of vesting, eligibility to participate and level of benefits) under the employee benefit plans of Parent and its subsidiaries providing benefits to any Company Employees after the Merger Effective Time (the "NEW PLANS"), each Company Employee shall subject to applicable Law and applicable tax qualification requirements be credited with his or her years of service with the Company and the Company Subsidiaries and their respective predecessors before the Merger Effective Time, to the same extent as such Company Employee was entitled, before the Merger Effective Time, to credit for such service under any similar Company employee benefit plan in which such Company Employee participated or was eligible to participate immediately prior to the Merger Effective Time; PROVIDED, that the foregoing shall not apply with respect to benefit accrual under any defined benefit pension plan or to the extent that its application would result in a duplication of benefits. In addition, and without limiting the generality of the foregoing, (i) each Company Employee shall be immediately eligible to participate, without any waiting time, in any and all New Plans to the extent coverage under such New Plan is comparable to a Company Benefit Plan in which such Company Employee participated immediately before the consummation of the Merger (such plans, collectively, the "OLD PLANS"), and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, Parent shall cause all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such Company Employee and his or her covered dependents, unless such conditions would not have been waived under the comparable plans of the Company or the Company Subsidiaries in which such Company Employee participated immediately prior to the Merger Effective Time and Parent shall cause any eligible expenses incurred by such employee and his or her covered dependents during the portion of the plan year of the Old Plan ending on the date such employee's participation in the corresponding New Plan begins to be taken into account under such New Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan. (c) Parent shall continue or cause the Surviving Corporation to continue retiree life insurance benefits for former employees (as of the Closing Date) of the Company and Company Subsidiaries who participate in retiree life insurance plans of the Company or the Company Subsidiaries as of immediately prior to the Merger Effective Time to remain in effect from and after the Closing Date for a period of one year without adverse change to such former employees. Parent shall continue or shall cause the Surviving Corporation to continue retiree health benefits (including medical prescription drugs) for former employees (as of the Closing Date) of the Company or Company Subsidiaries who participate in retiree health benefit programs of the Company or its subsidiaries as of immediately prior to the Merger Effective Time, to remain in effect without adverse change to such former employees for a period of at least one year following the Merger Effective Time; PROVIDED, that Parent may allocate -48- additional costs to participants in the event the actual costs of such retiree health benefits exceed the actuarial costs projected under FAS 106. For Company Employees, for a period of one year following the Effective Time, Parent agrees to continue or cause the Surviving Corporation to continue the Company's retiree welfare programs, including medical prescription drugs and retiree life insurance program (the "COMPANY RETIREE WELFARE PROGRAMS") on terms and conditions substantially equivalent in duration, scope, value, participant cost, vesting and otherwise to those in effect as of the Merger Effective Time with respect to all Company Employees who as of immediately prior to the Merger Effective Time would be eligible to receive benefits under the Company Retiree Welfare Programs. (d) All annual bonus plans for Company Employees for fiscal 2006 will be continued in accordance with their terms, PROVIDED, that the bonus plans for fiscal 2006 shall be calculated without taking into account any expenses or costs associated with or arising as a result of transactions contemplated by this Agreement (including any expenses or costs related to restructurings undertaken in anticipation of the transactions contemplated by this Agreement) or any non-recurring charges that would not reasonably be expected to have been incurred had the transactions contemplated by this Agreement not occurred, and bonus amounts for the 2006 fiscal year shall be determined based on the Company's actual performance and in accordance with past practice, PROVIDED, that such bonus amounts in the aggregate shall, not be less than $14.0 million, but in no event shall exceed $16.5 million and, PROVIDED, FURTHER, that such amounts shall be determined by the compensation committee of the Company Board prior to Closing. The Company shall pay the bonus amounts for the 2006 fiscal year following the determination contemplated by the immediately preceding sentence and prior to the Closing. (e) Following the Closing, Parent shall cause the Company to establish a special equity replacement bonus plan for fiscal 2007 (the "EQUITY REPLACEMENT PLAN") which shall be (i) in addition to the cash bonuses contemplated by Section 7.04(a), (ii) in lieu of equity compensation historically granted to Company Employees, and (iii) based upon targets and goals that are comparable in terms of achievability to those targets and goals pertaining to equity compensation granted to Company Employees in fiscal 2006 and scheduled to vest during such fiscal year. The amounts payable in respect of the Equity Replacement Plan, assuming performance at target levels shall not be less than $5.5 million in the aggregate. (f) Prior to the Merger Effective Time, the Company Board, or an appropriate committee of non-employee directors thereof, shall adopt a resolution consistent with the interpretive guidance of the SEC so that the disposition by any officer or director of the Company who is a covered person of the Company for purposes of Section 16 of the Exchange Act and the rules and regulations thereunder ("SECTION 16") of Company Common Shares or Company Stock Options to acquire Company Common Shares (or Company Common Shares acquired upon the vesting of any Company Stock-Based Awards or Company Restricted Shares) pursuant to this Agreement and the Merger shall be an exempt transaction for purposes of Section 16. (g) Notwithstanding anything in this Agreement to the contrary, no provision of this Agreement shall be deemed to (i) guarantee employment for any period of time for, or preclude the ability of either Parent or the Surviving Corporation to terminate, any Company Employee for any reason or (ii) subject to the limitations and requirements specifically set forth -49- in this Section 7.04, require either Parent or the Surviving Corporation to continue any Plan or prevent the amendment, modification or termination thereof after the Merger Effective Time. (h) Prior to the Merger Effective Date, the Company shall amend each of the Company Retirement Plan and the Company Supplemental Retirement Plan to provide that no additional benefits in respect of any Company Employee shall accrue under each such plan after the date of the applicable amendment. SECTION 7.05. DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE OF THE SURVIVING CORPORATION. (a) Without limiting any additional rights that any director, officer, trustee, employee, agent, or fiduciary may have under any employment or indemnification agreement or under the Company Charter, Company Bylaws or this Agreement or, if applicable, similar organizational documents or agreements of any of the Company Subsidiaries, from and after the Merger Effective Time, Parent and the Surviving Corporation shall: (i) indemnify and hold harmless each person who is at the date of this Agreement or during the period from the date of this Agreement through the Closing Date serving as a director, officer, trustee, employee, agent, or fiduciary of the Company or Company Subsidiaries or as a fiduciary under or with respect to any employee benefit plan (within the meaning of Section 3(3) of ERISA) (collectively, the "INDEMNIFIED PARTIES") to the fullest extent authorized or permitted by applicable law, as now or hereafter in effect, in connection with any Claim and any judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or, with the consent of Parent which shall not be unreasonably withheld, amounts paid in settlement) resulting therefrom; and (ii) promptly pay on behalf of or, within thirty (30) days after any request for advancement, advance to each of the Indemnified Parties, to the fullest extent authorized or permitted by applicable law, as now or hereafter in effect, any Expenses incurred in defending, serving as a witness with respect to or otherwise participating in any Claim in advance of the final disposition of such Claim, including payment on behalf of or advancement to the Indemnified Party of any Expenses incurred by such Indemnified Party in connection with enforcing any rights with respect to such indemnification or advancement, in each case without the requirement of any bond or other security; PROVIDED that all advancement of expenses pursuant to the foregoing shall be subject to an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification from the Surviving Corporation. The indemnification and advancement obligations of the Surviving Corporation pursuant to this Section 7.05(a) shall extend to acts or omissions occurring at or before the Merger Effective Time and any Claim relating thereto (including with respect to any acts or omissions occurring in connection with the approval of this Agreement and the consummation of the transactions contemplated hereby, including the consideration and approval thereof and the process undertaken in connection therewith and any Claim relating thereto), and all rights to indemnification and advancement conferred hereunder shall continue as to a person who continues to be or who has ceased to be a director, officer, trustee, employee, agent, or fiduciary of the Company or the Company Subsidiaries after the date of this Agreement and shall inure to the benefit of such person's heirs, executors and personal and legal representatives. As used in this Section 7.05(a): (A) the term "CLAIM" means any threatened, asserted, pending or completed Action, suit or proceeding, or any inquiry or investigation, whether instituted by any party hereto, any Governmental Authority or -50- any other party, that any Indemnified Party in good faith believes might lead to the institution of any such Action, suit or proceeding, whether civil, criminal, administrative, investigative or other, including any arbitration or other alternative dispute resolution mechanism, arising out of or pertaining to matters that relate to such Indemnified Party's duties or service as a director, officer, trustee, employee, agent, or fiduciary of the Company, any of the Company Subsidiaries, or any employee benefit plan (within the meaning of Section 3(3) of ERISA) maintained by any of the foregoing or any other person at or prior to the Merger Effective Time at the request of the Company or any of Company Subsidiaries; and (B) the term "EXPENSES" means reasonable attorneys' fees and all other reasonable costs, expenses and obligations (including, without limitation, experts' fees, travel expenses, court costs, retainers, transcript fees, duplicating, printing and binding costs, as well as telecommunications, postage and courier charges) paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in, any Claim for which indemnification is authorized pursuant to this Section 7.05(a), including any Action relating to a claim for indemnification or advancement brought by an Indemnified Party. Parent and the Surviving Corporation shall have the right to assume control of and the defense of any Action, suit, proceeding, inquiry or investigation in respect of which this Section 7.05 applied. Neither Parent nor the Surviving Corporation shall settle, compromise, or consent to the entry of any judgment in any actual or threatened claim, demand, Action, suit, proceeding, inquiry or investigation in respect of which indemnification has been sought by such Indemnified Party hereunder unless such settlement, compromise or judgment includes an unconditional release of such Indemnified Party from all liability arising out of such claim, demand, Action, suit, proceeding, inquiry or investigation or such Indemnified Party otherwise consents thereto, which consent shall not be unreasonably withheld. (b) Without limiting the foregoing, Parent and MergerCo agree that all rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the Merger Effective Time now existing in favor of the current or former directors, officers, trustees, employees, agents, or fiduciaries of the Company or any of the Company Subsidiaries as provided in the Company Charter and Company Bylaws (or, as applicable, the charter, bylaws, partnership agreement, limited liability company agreement, or other organizational documents of any of the Subsidiaries) and indemnification agreements of the Company or any of the Company Subsidiaries identified on Section 7.05(b) of the Company Disclosure Schedule shall be assumed by the Surviving Corporation in the Merger, without further action, at the Merger Effective Time and shall survive the Merger and shall continue in full force and effect in accordance with their terms. (c) For a period of six (6) years from the Merger Effective Time, the organizational documents of the Surviving Corporation shall contain provisions no less favorable with respect to indemnification than are set forth in the Company Charter and Company Bylaws, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Merger Effective Time in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Merger Effective Time, were directors, officers, trustees, employees, agents, or fiduciaries of the Company or any of Company Subsidiaries, unless such modification shall be required by Law and then only to the minimum extent required by Law. -51- (d) The Surviving Corporation shall maintain for a period of at least six (6) years the current policies of directors' and officers' liability insurance maintained by the Company and the Company Subsidiaries with respect to claims arising from facts or events that occurred on or before the Merger Effective Time, including, without limitation, in respect of the transactions contemplated by this Agreement; PROVIDED, that (i) that the Surviving Corporation may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured, PROVIDED, that such substitution shall not result in gaps or lapses of coverage with respect to matters occurring before the Merger Effective Time; (ii) in no event shall the Surviving Corporation be required to expend pursuant to this Section 7.05(d) more than an amount per year of coverage equal to two hundred fifty percent (250%) of the current annual premiums paid by the Company for such insurance. In the event that, but for the proviso to the immediately preceding sentence, the Surviving Corporation would be required to expend more than two hundred fifty percent (250%) of the current annual premiums paid by the Company, the Surviving Corporation shall obtain the maximum amount of such insurance obtainable by payment of annual premiums equal to two hundred fifty percent (250%) of the current annual premiums paid by the Company. Parent shall, and shall cause the Surviving Corporation or its successors or assigns to, maintain such policies in full force and effect, and continue to honor all obligations thereunder. (e) If the Surviving Corporation or any of its respective successors or assigns (i) consolidates with or merges with or into any other person and shall not be the continuing or surviving limited liability company, partnership or other entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Surviving Corporation assume the obligations set forth in this Section 7.05. (f) Parent shall cause the Surviving Corporation to perform all of the obligations of the Surviving Corporation under this Section 7.05 and the parties acknowledge and agree that Parent guarantees the payment and performance of the Surviving Corporation's obligations pursuant to this Section 7.05. (g) This Section 7.05 is intended for the irrevocable benefit of, and to grant third party rights to, the Indemnified Parties and shall be binding on all successors and assigns of the Company, Parent and the Surviving Corporation. Each of the Indemnified Parties shall be entitled to enforce the covenants contained in this Section 7.05. SECTION 7.06. FINANCING. (a) Each of Parent and MergerCo shall use, and shall cause their Affiliates to use, their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange and obtain the proceeds of the Financing, including using reasonable best efforts to (i) negotiate and enter into the definitive agreements with respect thereto on the terms and conditions contained therein and (ii) to satisfy (or cause its Affiliates to satisfy) on a timely basis all conditions, and otherwise comply with all terms, applicable to the Buyer Parties (or their Affiliates) in such definitive agreements. In the event any portion of the Financing becomes unavailable on the terms and conditions contemplated in the Financing Commitments, Parent and MergerCo shall promptly notify the -52- Company and shall use their reasonable best efforts to arrange to obtain any such portion from alternative sources as promptly as practicable following the occurrence of such event. Parent shall deliver to the Company true and complete copies of all agreements pursuant to which any such alternative source shall have committed to provide Parent and MergerCo with any portion of the Financing. Parent shall give the Company prompt notice of any material breach by any party to the Financing Commitments or any termination of the Financing Commitments. Each of Parent and MergerCo shall refrain (and shall use its reasonable best efforts to cause its Affiliates to refrain) from taking, directly or indirectly, any action that would reasonably be expected to result in a failure of any of the conditions contained in the Financing Commitments or in any definitive agreement related to the Financing. Parent shall keep the Company informed on a reasonably current basis in reasonable detail of the status of its efforts to arrange the Financing. Parent and MergerCo may agree to or permit any amendment, supplement or other modification to be made to, or any waiver of any material provision or remedy under, the Financing Commitments or the definitive agreements relating to the Financing and may obtain financing in substitution of all or a portion of the Financing, so long as they consult with the Company and promptly provide the Company with such information it may reasonably request regarding any alternative financing arrangements or plans. For the avoidance of doubt, if the Financing (or any alternative) has not been obtained by the Outside Date, the Buyer Parties shall continue to be obligated to consummate the Merger on the terms contemplated by this Agreement and subject only to the satisfaction or waiver of the conditions set forth in Sections 8.01 and 8.02 of this Agreement and to Parent's right under Section 9.01, regardless of whether the Buyer Parties have complied with all of their obligations under this Agreement (including their obligations under this Section 7.06). (b) The Company shall, and shall cause its subsidiaries and shall use its reasonable best efforts to cause its and their Representatives to, reasonably cooperate in connection with the arrangement of the Financing as may be reasonably requested by Parent; PROVIDED, HOWEVER, that none of the Company or any of its subsidiaries shall be required to pay any commitment or other fee or incur any other liability in connection with the Financing prior to the Effective Time; and PROVIDED, FURTHER, that such requested cooperation shall not unreasonably interfere with the ongoing operations of the Company and its subsidiaries. Such cooperation by the Company shall include, at the reasonable request of Parent and if necessary to obtain the Financing or obtain any portion thereof from alternative sources pursuant to subsection (a) above, (i) agreeing to use reasonable best efforts to enter into such agreements, and to use reasonable best efforts to deliver such officer's certificates and opinions, as are customary in financings of such type and as are, in the good faith determination of the persons executing such officer's certificates or opinions, accurate, and reasonably facilitating the pledging of collateral and the granting of corporate guarantees to the extent required and customary for financings of this type, PROVIDED, that no obligation of the Company under any such agreement, pledge or grant shall be effective until the Merger Effective Time, (ii) using its reasonable best efforts to cause its officers to be reasonably available to (A) participate in meetings, drafting sessions, due diligence sessions, management presentation sessions, "road shows" and sessions with rating agencies, (B) prepare or participate in the preparation of business projections and financial statements for inclusion in offering memoranda, private placement memoranda, prospectuses and similar documents customarily included in documents of this type, (iii) using its reasonable best efforts to cause its independent accountants to provide reasonable assistance to Parent consistent with their customary practice (including to provide consent to Parent to prepare and use their -53- audit reports relating to the Company and any necessary "comfort letters" in each case on customary terms and consistent with their customary practice in connection with the Financing) and (iv) providing to the contemplated sources of the Debt and Equity Financing financial and other information in the Company's possession with respect to the Merger reasonably requested and customary in connection with financings of such type. Parent shall, promptly upon request by the Company or any of its subsidiaries, reimburse the Company for any reasonable out-of-pocket costs incurred by the Company or any of its subsidiaries in connection with such cooperation. The Buyer Parties shall indemnify and hold harmless the Company and its subsidiaries from and against all losses or damages suffered or incurred by them in connection with the arrangement of the Debt Financing and any information utilized in connection therewith; provided however, that the foregoing (1) shall not apply to the Company's or its subsidiaries' or other Representatives' willful misconduct or gross negligence and (2) shall be void and of no further force and effect from and after the Merger Effective Time. SECTION 7.07. FURTHER ACTION; REASONABLE BEST EFFORTS. (a) Subject to the terms and conditions set forth in this Agreement, each of the parties hereto shall use its reasonable best efforts (subject to, and in accordance with, applicable Law) to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement, including (i) the obtaining of all necessary actions or nonactions, waivers, consents and approvals from Governmental Authorities and the making of all necessary registrations and filings and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Authority, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated by this Agreement and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by this Agreement. (b) Subject to the terms and conditions herein provided and without limiting the foregoing, the Company and Parent shall (i) promptly, but in no event later than fifteen (15) days after the date of this Agreement (unless extended by mutual agreement of the parties) make their respective filings and thereafter make any other required submissions under the HSR Act, (ii) use reasonable best efforts to cooperate with each other in (A) determining whether any filings are required to be made with, or consents, permits, authorizations, waivers or approvals are required to be obtained from, any third parties or other Governmental Authorities in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and (B) timely making all such filings and timely seeking all such consents, permits, authorizations or approvals, (iii) use reasonable best efforts to offer to take, or cause to be taken, all other actions and do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the transactions contemplated hereby, including taking all such further action as reasonably may be necessary to resolve such objections, if any, as the United States Federal Trade Commission, the Antitrust Division of the United States Department of Justice, state antitrust enforcement authorities or competition authorities of any other nation or other jurisdiction or any other person may assert under -54- Regulatory Law (as hereinafter defined) with respect to the transactions contemplated hereby, and to avoid or eliminate each and every impediment under any Law that may be asserted by any Governmental Authority with respect to the Merger so as to enable the Closing to occur as soon as expeditiously possible (and in any event shall use reasonable best efforts to cause the Closing to occur by February 15, 2007), including, without limitation (A) proposing, negotiating, committing to and effecting, by consent decree, hold separate order or otherwise, the sale, divestiture or disposition of such assets or businesses of Parent or its subsidiaries or affiliates or of the Company or its subsidiaries and (B) otherwise taking or committing to take actions that after the Closing Date would limit the freedom of Parent or its subsidiaries' (including the Surviving Corporation's) or affiliates' freedom of action with respect to, or its ability to retain, one or more of its or its subsidiaries' (including the Surviving Corporation's) businesses, product lines or assets, in each case as may be required in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any suit or proceeding which would otherwise have the effect of preventing or materially delaying the Closing, PROVIDED, HOWEVER, that nothing in this Section 7.07(b)(iii) shall require or be construed to require any of Parent or the Company to take any action, propose or make any divestiture or other undertaking, or propose or enter into any consent decree, except for those that would not reasonably be expected to have a material adverse effect on the benefits that are expected to be derived from the Merger and the other transactions that are contemplated by this Agreement, and (iv) subject to applicable legal limitations and the instructions of any Governmental Authority, keep each other apprised of the status of matters relating to the completion of the transactions contemplated thereby, including promptly furnishing the other with copies of notices or other communications between the Company or Parent, as the case may be, or any of their respective subsidiaries, and any Third Party and/or any Governmental Authority with respect to such transactions. The Company and Parent shall permit counsel for the other party reasonable opportunity to review in advance, and consider in good faith the views of the other party in connection with, any proposed written communication to any Governmental Authority. Each of the Company and Parent agrees not to participate in any substantive meeting or discussion, either in person or by telephone, with any Governmental Authority in connection with the proposed transactions unless it consults with the other party in advance and, to the extent not prohibited by such Governmental Authority, gives the other party the opportunity to attend and participate. (c) In furtherance and not in limitation of the covenants of the parties contained in this Section 7.07, if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement as violative of any Regulatory Law (as hereinafter defined), each of the Company and Parent shall cooperate in all respects with each other and shall use their respective reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing or any other provision of this Agreement, nothing in this Section 7.07 shall limit a party's right to terminate this Agreement pursuant to Section 9.01(b) or 9.01(c) so long as such party has, prior to such termination, complied with its obligations under this Section 7.07. -55- (d) For purposes of this Agreement, "REGULATORY LAW" means the Sherman Act of 1890, the Clayton Antitrust Act of 1914, the HSR Act, the Federal Trade Commission Act of 1914 and all other federal, state or foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other Laws, including without limitation any antitrust, competition or trade regulation Laws, that are designed or intended to (i) prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition, (ii) preserve or promote diversity of media ownership or (iii) protect the national security or the national economy of any nation. SECTION 7.08. PUBLIC ANNOUNCEMENTS. The parties hereto agree that no public release or announcement concerning the transactions contemplated by this Agreement or the Merger shall be issued by a party without consulting with the other parties and providing such parties reasonable time to comment on such release or announcement in advance of such issuance, except as such release or announcement may be required by Law or the rules or regulations of any securities exchange, in which case the party required to make the release or announcement shall use its reasonable best efforts to allow the other parties reasonable time to comment on such release or announcement in advance of such issuance. The parties have agreed upon the form of a joint press release announcing the Merger and the execution of this Agreement. SECTION 7.09. THIRD PARTY CONSENTS. The Company shall use reasonable efforts, to the extent requested by Parent, to obtain and deliver to Parent at or prior to the Closing, all consents, waivers and approvals under each Company Material Contract set forth on Section 7.09 of the Company Disclosure Schedule, using a form reasonably acceptable to Parent. Unless specifically stated otherwise, "reasonable efforts" as used in this Agreement shall not require any party to expend any funds, other than customary fees and expenses, such as filing fees. SECTION 7.10. Notification. Each of the Company and Parent, as the case may be, shall act in good faith to reasonably promptly notify the other party upon becoming aware of any occurrence or event that is reasonably likely to cause any of the conditions to closing set forth in Article VIII not to be satisfied. SECTION 7.11. STOCKHOLDER LITIGATION. The Company shall promptly advise Parent orally and in writing of any stockholder litigation against the Company or its directors relating to this Agreement, the Merger or the transactions contemplated by this Agreement and shall keep Parent fully informed regarding any such stockholder litigation. The Company shall give Parent the opportunity to consult with the Company regarding the defense or settlement of any such stockholder litigation, shall give consideration to Parent's advice with respect to such stockholder litigation and, prior to the termination of this Agreement, shall not settle any such litigation without Parent's prior written consent, which consent shall not be unreasonably withheld. -56- ARTICLE VIII CONDITIONS TO THE MERGER SECTION 8.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of the Company, Parent and MergerCo to consummate the Merger are subject to the satisfaction or waiver in writing (where permissible) of the following conditions: (a) The Company Shareholder Approval shall have been obtained by the Company. (b) (1) Any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated, and any approvals required thereunder shall have been obtained. (2) Any waiting period (and any extension thereof) applicable to the consummation of the Merger under any other Regulatory Laws shall have expired or been terminated, and any approvals required thereunder shall have been obtained, unless the failure to observe such waiting periods (and any extension thereof) or to obtain such approvals would not, individually or in the aggregate, cause a Material Adverse Effect. (c) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the Merger illegal or prohibiting consummation of the Merger. SECTION 8.02. CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGERCO. The obligations of Parent and MergerCo to consummate the Merger are subject to the satisfaction or waiver in writing of the following additional conditions: (a) The representations and warranties of the Company contained in this Agreement that (i) are not made as of a specific date shall be true and correct as of the date of this Agreement and as of the Closing, as though made on and as of the Closing, and (ii) are made as of a specific date shall be true and correct as of such date, in each case except where the failure of such representations or warranties to be true and correct (without giving effect to any limitation as to "Material Adverse Effect", "in all material respects", "in any material respect", "material" or "materially" set forth in such representations and warranties (other than the representation in clause (b) of Section 4.08) does not have and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The representations and warranties of the Company contained in Section 4.01(a) (Organization and Qualification), 4.02, insofar as it relates to the Company (Organizational Documents), 4.03(a), 4.03(b), the second sentence of 4.03(c), (Capitalization), and 4.04 (Authority; Validity) shall be true and correct in all material respects as of the date of this Agreement and as of the Merger Effective Time, as though made at and as of the Merger Effective Time (except to the extent expressly made as of an earlier date, in which case as of such earlier date) (it being understood that "in all material respects" means in the case of the specified portions of Section 4.03 that all failures to be true and correct relate to less than 100,000 Company Common Shares in the aggregate. -57- (b) The Company shall have performed, in all material respects, all obligations and complied with, in all material respects, its agreements and covenants to be performed or complied with by it under this Agreement on or prior to the Merger Effective Time. (c) The Company shall have each delivered to Parent a certificate, dated the date of the Merger Effective Time, signed by a senior officer of the Company, and certifying as to the satisfaction by the Company, of the applicable conditions specified in Sections 8.02(a) and 8.02(b). (d) No action, suit, proceeding, claim or arbitration shall be pending in which a Governmental Authority is a party and where an unfavorable injunction, judgment, order, decree or ruling would (i) prevent, restrain or otherwise materially interfere with the consummation of any of the Transactions contemplated by this Agreement or (ii) materially affect adversely the right or powers of Parent to own, operate or control the Company or any material portion of the business or material assets of the Company or Parent. SECTION 8.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the Company to consummate the Merger are subject to the satisfaction or waiver in writing (where permissible) of the following additional conditions: (a) The representations and warranties of the Parent and MergerCo contained in this Agreement that (i) are not made as of a specific date shall be true and correct as of the date of this Agreement and as of the Closing, as though made on and as of the Closing, and (ii) are made as of a specific date shall be true and correct as of such date, in each case except where the failure of such representations or warranties to be true and correct (without giving effect to any limitation as to "Parent Material Adverse Effect", "in all material respects", "in any material respect", "material" or "materially" set forth in such representations and warranties) does not have and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. The representations and warranties of Parent and MergerCo contained in Section 5.01 (Organization) and 5.03 (Power and Authority) shall be true and correct as of the date of this Agreement and as of the Merger Effective Time, as though made at and as of the Merger Effective Time (except to the extent expressly made as of an earlier date, in which case as of such earlier date). (b) Parent shall have performed, in all material respects, all obligations and complied with, in all material respects, its agreements and covenants to be performed or complied with by it under this Agreement on or prior to the Merger Effective Time (other than those related to the Financing). (c) Parent shall have delivered to the Company a certificate, dated the date of the Merger Effective Time, signed by a senior officer of Parent and certifying as to the satisfaction of the conditions specified in Sections 8.03(a) and 8.03(b). ARTICLE IX TERMINATION, AMENDMENT AND WAIVER SECTION 9.01. TERMINATION. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Merger Effective Time by action taken or authorized by -58- the Company Board, or members of the terminating party or parties, notwithstanding any requisite approval of the Merger by the shareholders of the Company, and whether before or after the shareholders of the Company have approved the Merger at the Company Shareholders' Meeting, as follows (the date of any such termination, the "TERMINATION DATE"): (a) by mutual written consent of Parent and the Company; (b) by either Parent or the Company if the Merger Effective Time shall not have occurred on or before February 15, 2007 (as extended pursuant to any of the provisions set forth below, the "OUTSIDE DATE"); PROVIDED, HOWEVER, the right to terminate this Agreement under this Section 9.01(b) shall not be available to a party whose failure to fulfill any obligation under this Agreement materially contributed to the failure of the Merger Effective Time to occur on or before such date; PROVIDED FURTHER that if, as of the Outside Date, all conditions set forth in Article VIII shall have been satisfied or waived (other than those that are satisfied by action taken at the Closing) other than the condition set forth in Section 8.01(b), then either the Company or Parent may extend the Outside Date to the earlier of (i) ten Business Days after such condition is satisfied or (ii) August 15, 2007, by providing written notice to the other party; PROVIDED FURTHER, that in the event of a Fiduciary Delay the Outside Date may be extended by either Parent or the Company, at its option, to a date that is not later than the earlier of: (1) the Outside Date (without taking into account any extensions pursuant to this Section 9.01(b)) plus the number of days of the Fiduciary Delay, and (2) the third Business Day following the date on which the vote at the Company Shareholders' Meeting is taken; provided further that if, as of the Outside Date, all, conditions set forth in Article VIII shall have been satisfied or waived (other than those that are satisfied by action taken at the Closing) other than the condition set forth in Section 8.02(d), then either the Company or Parent may extend the Outside Date by up to six months but in no event beyond the earlier of (x) ten Business Days after such condition is satisfied (but no later than the Outside Date) or (y) August 15, 2007. (c) by either Parent or the Company if any Governmental Authority shall have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling or taken any other action (including the failure to have taken an action) which, in either such case, has become final and non-appealable and has the effect of making consummation of the Merger illegal or otherwise preventing or prohibiting consummation of the Merger ("GOVERNMENTAL ORDER"); PROVIDED, HOWEVER, that the terms of this Section 9.01(c) shall not be available to any party unless such party shall have used its reasonable efforts to oppose any such Governmental Order or to have such Governmental Order vacated or made inapplicable to the Merger; (d) by Parent if each of it and MergerCo is not in material breach of its obligations under this Agreement, and if (i) any of the representations and warranties of the Company herein are or become untrue or incorrect such that the condition set forth in Section 8.02(a) would be incapable of being satisfied by the Outside Date, or (ii) there has been a breach on the part of the Company of its covenants or agreements herein such that the condition set forth in Section 8.02(b) would be incapable of being satisfied by the Outside Date; (e) by the Company if it is not in material breach of its obligations under this Agreement, and if (i) any of the representations and warranties of Parent and MergerCo herein are or become untrue or inaccurate such that the condition set forth in Section 8.03(a) would be -59- incapable of being satisfied by the Outside Date or (ii) there has been a breach on the part of Parent and MergerCo or any of their respective covenants or agreements herein such that the conditions set forth in Section 8.03(b) would be incapable of being satisfied by the Outside Date; or (iii) the conditions set forth in Section 8.01 and Section 8.02 have been satisfied (other than the condition set forth in Section 8.02(c) of this Agreement) but Parent has failed to obtain the Financing by the later of: (1) November 16, 2006 and (2) 10 Business Days following the date that the conditions set forth in Sections 8.01 and 8.02 (other than the condition set forth in Section 8.02(c) of this Agreement) are satisfied; (f) by the Company or Parent if the Company Shareholder Approval is not obtained at the Company Shareholders' Meeting (including any adjournments and postponements thereof); PROVIDED, HOWEVER, that the right to terminate this Agreement under this Section 9.01(f) shall not be available to the Company where the failure to obtain the Company Shareholder Approval is caused by any action or failure to act of the Company that constitutes a material breach of this Agreement; (g) by Parent if (1) the Company Board (or any committee thereof) shall have effected a Company Change in Recommendation, (2) the Company shall have failed to include the Company Board Recommendation in the Proxy Statement, (3) the Company Board (or any committee thereof) shall have publicly recommended or approved any Company Acquisition Proposal, (4) the Company shall have entered into any letter of intent with respect to or other Contract for any Company Acquisition Proposal, (5) the Company shall have (A) materially breached any of the provisions of Section 7.03 or (B) failed to use reasonable best efforts to solicit proxies in favor of the adoption of this Agreement and to obtain the Company Shareholder Approval, and such failure shall have been a material breach of Section 7.01, (6) a tender or exchange offer relating to equity securities of the Company shall have been commenced by a Person unaffiliated with Parent, and the Company shall not have sent to its security holders pursuant to Rule 14e-2 promulgated under the Securities Act, within 10 (ten) Business Days after such tender or exchange offer is first published, sent or given, a statement disclosing that the Company recommends rejection of such tender or exchange offer or (7) the Company Board fails to reaffirm the Company Board Recommendation within ten (10) Business Days after Parent requests in writing that such recommendation be reaffirmed; (h) by the Company, if the Company Board has approved, or authorized the Company to enter into a definitive agreement with respect to, a Company Superior Proposal, but only so long as (i) the Company Shareholder Approval has not yet been obtained, (ii) the Company is in compliance in all material respects with Section 7.03 (including informing Parent of the material terms and conditions of such Company Superior Proposal and the identity of the Person making such Company Superior Proposal, (iii) the Company shall have first given Parent at least four (4) Business Days' notice of its intent to terminate pursuant to this subsection, (iv) after taking into account any amendment to this Agreement entered into, or to which Parent irrevocably covenants to enter into, within such three (3) Business Day period and for which all internal approvals of Parent have been obtained since receipt of such notice, such Company Superior Proposal continues to constitute a Company Superior Proposal (taking into account any amendment to this Agreement or amendment to this Agreement agreed to in writing by Parent), (v) the Company pays to Parent the Termination Fee in accordance with Section 9.03 concurrently with or prior to such termination and (vi) the Company intends, simultaneously or -60- substantially simultaneously with such termination, to enter into a definitive acquisition, merger, or other agreement to effect the Company Superior Proposal. The party desiring to terminate this Agreement shall give written notice of such termination to the other parties. SECTION 9.02. EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 9.01, this Agreement shall forthwith become void, and there shall be no liability under this Agreement on the part of any party hereto except that the Guaranty referred to in Section 5.07 and the provisions of Sections 7.02(b), this Section 9.02, Section 9.03 and Article X shall survive any such termination); PROVIDED, HOWEVER, except as provided in Section 9.03(e) and 9.03(f) of this Agreement, that nothing herein shall relieve any party hereto from liability for any breach of any of its representations, warranties, covenants or agreements set forth in this Agreement prior to such termination. SECTION 9.03. FEES AND EXPENSES. (a) Except as otherwise set forth in this Section 9.03, all expenses incurred in connection with this Agreement shall be paid by the party incurring such expenses, whether or not the Merger is consummated. (b) In the event this Agreement shall be terminated: (i) (A) by Parent or the Company pursuant to Section 9.01 for any reason in circumstances where Parent had the right to terminate this Agreement at or prior to such time pursuant to Section 9.01(g) provided that if such termination was not pursuant to Section 9.01(g) but the sole basis on which Parent is entitled to the Parent Termination Fee pursuant to this Section 9.03(b)(i)(A) is by reason of Section 9.01(g)(5) then Parent shall be entitled to such fee only if it has given the Company, within three Business Days, notice of its belief that it had such termination right after becoming aware of the facts giving rise thereto) or (B) by the Company pursuant to Section 9.01(h), the Company shall pay to Parent the Termination Fee; or (ii) by Parent or the Company pursuant to Section 9.01(b) or 9.01(f), or by Parent pursuant to 9.01(d), if at or prior to such termination, or in the case of Section 9.01(f), at or prior to the taking of the vote at the Company Shareholders' Meeting, the Company shall have received a bona fide Company Acquisition Proposal from a Third Party, and in the case of Section 9.01(f) such Company Acquisition Proposal shall have been publicly disclosed prior to such time, then the Company shall pay to Parent (A) 25% of the Termination Fee upon termination of this Agreement, and (B) if within 12 months following the Termination Date, the Company enters into a definitive agreement to consummate or consummates such Company Acquisition Proposal, then the remaining 75% of the Termination Fee upon the entering into of such definite agreement or the consummation of any Company Acquisition Proposal, whichever occurs first (and for purposes of this Section 9.03(b)(ii), "50%" shall be substituted for "20%" in each occurrence of "20%" in the definition of Company Acquisition Proposal). -61- (c) For purposes of this Agreement, "Termination Fee" means $81,000,000. (d) Except as set forth in Section 9.01(h), the Termination Fee shall be paid by the Company as directed by Parent in writing in immediately available funds within three (3) Business Days following the date of the event giving rise to the obligation to make such payment. (e) In the event this Agreement shall be terminated: (i) by the Company (1) pursuant to Section 9.01(e)(iii) of this Agreement or (2) pursuant to Section 9.01(b) of this Agreement by reason of the Financing not being available at such time and where the conditions set forth in Sections 8.01 and 8.02 (other than the condition set forth in Section 8.02(c) of this Agreement) are satisfied (other than under circumstances where (A) Parent is in breach of its obligations under the Financing Commitments or (B) Parent is in breach of its obligations under Section 7.06 of this Agreement or (C) the Financing is available but the Closing Cash is not available for use to make payments set forth in Section 5.08(a) or (D) the representations and warranties of Parent contained in Section 5.08(b) are untrue or incorrect as of the date of this Agreement and, in the case of clauses (A), (B) and (D), such breach or failure was a material contributing factor in Parent failing to obtain the Financing (any such occurrences set forth in clauses (A) through (D), a "PARENT FINANCING BREACH")), then Parent shall pay to the Company within three (3) Business Days of such termination $81,000,000 (the "SELLER EXPENSE FEE"). Notwithstanding anything to the contrary herein, (1) in the case of this subsection (e)(i), payment of the Seller Expense Fee and (2) in the case of subsection (e)(ii) below, payment of the Seller Expense Fee plus damages in any amount incurred by the Company (or which may pursuant to Section 10.08 be asserted by the Company on behalf of its shareholders) in an amount not to exceed the excess of the Damages Cap over the Seller Expense Fee (but subject to Section 10.07 in the case of subsection (e)(ii)), shall be the sole and exclusive remedy of the Company, any of its Affiliates and its shareholders pursuant to this Agreement for breach hereof and none of Parent or MergerCo or any of their respective Affiliates shall have any other liability or obligation of any kind or nature whatsoever arising out of the termination of this Agreement, any breach of this Agreement by Parent or MergerCo (other than a breach of any of Parent's post-closing obligations under this Agreement), any Parent Financing Breach or the failure of the transactions contemplated by this Agreement to be consummated, whether arising in contract, tort or otherwise, other than for fraud; or (ii) by the Company (1) pursuant to Section 9.01(e)(iii) of this Agreement or (2) pursuant to Section 9.01(b) of this Agreement by reason of the Financing not being available at such time and where the conditions set forth in Sections 8.01 and 8.02 (other than the condition set forth in Section 8.02(c) of this Agreement are satisfied (under circumstances where a Parent Financing Breach has occurred), then Parent shall pay to the Company within three (3) Business Days of such termination the Seller Expense Fee. In addition, Parent shall be liable to the Company for any damages incurred by the Company in connection with a Parent Financing Breach, but in no event shall Parent, MergerCo or any of their respective Affiliates be liable in connection with -62- this Agreement or the transactions contemplated hereby in an amount in excess of $270,000,000 (the "DAMAGES CAP") in the aggregate minus any amounts paid by Parent pursuant to the first sentence of this Section 9.03(e)(ii) of this Agreement, other than for fraud. (f) In any event not covered in Section 9.03(e)(i) or 9.03(e)(ii) of this Agreement, and where the Merger has not been consummated, each party hereto shall be liable in damages for any breach by it of this Agreement prior to termination, except that the Company and its Subsidiaries, on the one hand, and Parent and its Affiliates, on the other, shall in no event be liable in connection with this Agreement or the transactions contemplated hereby in an aggregate amount in excess of $270,000,000, other than for fraud, and the payment of such damages shall be the sole and exclusive remedy of such party, any of its Affiliates and its shareholders, pursuant to this Agreement for breach hereof and none of the parties hereto or any of their respective Affiliates shall have any other liability or obligation of any kind or nature whatsoever arising out of the termination of this Agreement, any breach of this Agreement by any of the parties hereto (other than a breach of any of Parent's post-closing obligations under this Agreement), any Parent Financing Breach or the failure of the transactions contemplated by this Agreement to be consummated, whether arising in contract, tort or otherwise. The parties acknowledge and agree that nothing in Section 9.03(e)(ii) or in this Section 9.03(f) shall be deemed to affect their right to specific performance under Section 10.07. (g) Each of the Company and Parent acknowledges that the agreements contained in this Section 9.03 are an integral part of the transactions contemplated by this Agreement. In the event that the Company shall fail to pay the Termination Fee when due or Parent shall fail to pay the Seller Expense Fee when due, and the Company or Parent, as the case may be, shall reimburse the other party for all reasonable costs and expenses actually incurred or accrued by such other party (including reasonable fees and expenses of counsel) in connection with the collection under and enforcement of this Section 9.03. If payable, none of the Termination Fee or Seller Expense Fee shall be payable more that once pursuant to this Agreement; PROVIDED, that the payment of 25% of the Termination Fee followed by 75% of the Termination Fee shall not be prohibited by the foregoing. SECTION 9.04. WAIVER. At any time prior to the Merger Effective Time, the Company, on the one hand, and Parent and MergerCo, on the other hand, may (a) extend the time for the performance of any obligation or other act of the other party, (b) waive any inaccuracy in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any agreement of the other party or any condition to its own obligations contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the Company or Parent (on behalf of Parent and MergerCo). The failure of any party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. -63- ARTICLE X GENERAL PROVISIONS SECTION 10.01. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties in this Agreement and in any certificate delivered pursuant hereto shall terminate at the Merger Effective Time. SECTION 10.02. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by prepaid overnight courier (providing proof of delivery), by facsimile or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses or facsimile numbers (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02): if to Parent or MergerCo: Universal Computer System Holding, Inc. 6700 Hollister Houston, TX 77040 Telecopier No: (713) 718-1461 Attention: Robert T. Brockman with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Telecopier No: 212-735-2000 Attention: Lou R. Kling, Esq. Richard J. Grossman, Esq. if to the Company: The Reynolds and Reynolds Company One Reynolds Way Dayton, Ohio 45430 Telecopier No: (937) 485-0978 Attention: Robert S. Guttman, Esq. with copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Telecopier No: (212) 403-2000 -64- Attention: Andrew R. Brownstein, Esq. James Cole, Jr., Esq. SECTION 10.03. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy or the application of this Agreement to any person or circumstance is invalid or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party. To such end, the provisions of this Agreement are agreed to be severable. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible. SECTION 10.04. AMENDMENT. This Agreement may be amended by the parties hereto by action taken by their respective board of directors (or similar governing body or entity) at any time prior to the Merger Effective Time; PROVIDED, HOWEVER, that, after approval of the Merger by the shareholders of the Company, no amendment may be made without further shareholder approval which, by Law or in accordance with the rules of the NYSE, requires further approval by such shareholders. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. SECTION 10.05. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together with the Confidentiality Agreement and the Disclosure Schedules and the Voting Agreements constitute the entire agreement among the parties with respect to the subject matter hereof, and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise). SECTION 10.06. PERFORMANCE GUARANTY. Parent hereby guarantees the due, prompt and faithful performance and discharge by, and compliance with, all of the obligations covenants, terms, conditions and undertakings of each of the MergerCo under this agreement in accordance with the terms hereof including any such obligations, covenants, terms, conditions and undertakings that are required to be performed discharged or complied with following the Merger Effective Time. SECTION 10.07. SPECIFIC PERFORMANCE. Notwithstanding any provision to the contrary, the parties hereto agree that irreparable damage would occur in the event any provision of this Agreement were not performed in accordance with the terms hereof and that money damages would not be a sufficient remedy for any breach of this Agreement, and accordingly, the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity; provided, that the Company shall not be entitled to specific performance (x) in the circumstances where Section 9.03(e)(i) applies or (y) the Financing is not available except on terms materially different in an adverse manner with respect to economic terms, -65- restrictions on the operation of business, capital structure, financial and ratio tests or the equity ownership of Parent or the Company from those set forth in the Financing Commitments. SECTION 10.08. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than (a) following the consummation of the Merger, the provisions of Article II and Section 7.05 (which are intended to be for the benefit of the persons covered thereby or the persons entitled to payment thereunder and may be enforced by such persons); and (b) the right of the Company, on behalf of its shareholders, to pursue, but subject to the dollar limitations set forth in Section 9.03(e) and 9.03(f),damages suffered by its shareholders as a group in the event of Parent's or MergerCo's breach of this Agreement or fraud, which right is hereby acknowledged and agreed by Parent and MergerCo. SECTION 10.09. GOVERNING LAW; FORUM. (a) All disputes, claims or controversies arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Ohio without regard to its rules of conflict of laws. (b) Except as set out below, each of the Company, Parent and MergerCo hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of the courts of the State of Ohio or any court of the United States located in the State of Ohio (the "OHIO COURTS") for any litigation arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Ohio Courts and agrees not to plead or claim in any Ohio Court that such litigation brought therein has been brought in any inconvenient forum. Each of the parties hereto agrees, (i) to the extent such party is not otherwise subject to service of process in the State of Ohio, to appoint and maintain an agent in the State of Ohio as such party's agent for acceptance of legal process, and (ii) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to (i) or (ii) above shall have the same legal force and effect as if served upon such party personally within the State of Ohio. In the event any party hereto fails to notify any other party hereto, of its agent for service of process in the State of Ohio, nothing herein contained shall be deemed to affect the right of any party hereto to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against any other party hereto in any other jurisdiction to enforce judgments obtained in any action, suit or proceeding brought pursuant to this Section 10.09. SECTION 10.10. WAIVER OF JURY TRIAL. Each of the parties hereto hereby waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated by this Agreement. Each of the parties hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that -66- such other party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other hereto have been induced to enter into this Agreement and the transactions contemplated by this Agreement, as applicable, by, among other things, the mutual waivers and certifications in this Section 10.10. SECTION 10.11. HEADINGS. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 10.12. COUNTERPARTS. This Agreement may be executed and delivered (including by facsimile transmission) in two or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 10.13. WAIVER. Except as provided in this Agreement, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement. The waiver by any party hereto of a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder. -67- IN WITNESS WHEREOF, Parent, MergerCo, and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. UNIVERSAL COMPUTER SYSTEMS HOLDING, INC. By: /s/ R.T. Brockman ---------------------------------------- Name: R.T. Brockman Title: Chairman & CEO RACECAR ACQUISITION CO. By: /s/ R.T. Brockman ---------------------------------------- Name: R.T. Brockman Title: Chairman & CEO THE REYNOLDS AND REYNOLDS COMPANY By: /s/ Finbarr J. O'Neill ---------------------------------------- Name: Finbarr J. O'Neill Title: Chief Executive Officer EX-10 4 finvot.txt 10.02 O'NEILL VOTING AGREEMENT EXHIBIT 10.02 EXECUTION COPY VOTING AGREEMENT VOTING AGREEMENT (this "Agreement"), dated as of August 7, 2006, by and among Universal Computer Systems Holding, Inc., a Delaware corporation ("Parent"), Racecar Acquisition Co., an Ohio corporation and a newly-formed, indirect wholly-owned subsidiary of Parent ("Acquisition Sub"), and the stockholder listed on Schedule I hereto (the "Shareholder"). W I T N E S S E T H: WHEREAS, prior to the execution and delivery of this Agreement, an Agreement and Plan of Merger (as such agreement may be amended from time to time, the "Merger Agreement") has been entered into by and among Parent, Acquisition Sub and the Reynolds and Reynolds Company, an Ohio corporation (the "Company"), pursuant to which Acquisition Sub will merge with and into the Company, with the Company continuing as the surviving corporation (the "Merger"); and WHEREAS, as a condition to, and in consideration for, Parent's and Acquisition Sub's willingness to enter into the Merger Agreement and to consummate the transactions contemplated thereby, Parent and Acquisition Sub have required that the Shareholder enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows: Section 1. DEFINITIONS. For purposes of this Agreement: "Company Securities" means, collectively, the Class A common stock of the Company, no par value per share, and the Class B common stock of the Company, no par value per share. "Proxy Shares" means the Company Securities set forth next to Shareholder's name on Schedule III. "Shareholder Shares" means (i) the Existing Securities (as defined in Section 5(a)(i) hereof) set forth on Schedule I hereto, (ii) any shares of Company Securities distributed prior to the termination of this Agreement in respect of the Shareholder's Shares by reason of a stock dividend, split-up, recapitalization, reclassification, combination, merger, exchange of shares or otherwise and (iii) any other shares of the Company Securities of which the Shareholder acquires ownership, either directly or indirectly, after the date hereof and prior to the Effective Time. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement. Section 2. AGREEMENT TO VOTE SHARES. Until the termination of this Agreement in accordance with the terms hereof, the Shareholder shall, at any meeting of the holders of any class of Company Securities, however such meeting is called and regardless of whether such meeting is a special or annual meeting of the stockholders of the Company, and at any postponement or adjournment thereof, and in connection with any written consent of the stockholders of the Company, vote, or cause to be voted, the Shareholder Shares and the Proxy Shares, (1) in favor of the Merger and the adoption of the Merger Agreement, the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof and (2) against the following actions (other than the Merger and the transactions contemplated by the Merger Agreement): (i) any action which is prohibited by the Merger Agreement or which is intended, or could reasonably be expected, to prevent, impede, interfere with, delay, postpone, discourage or materially adversely affect the contemplated economic benefits to Parent or Acquisition Sub of the Merger or the transactions contemplated hereby or by the Merger Agreement; or (ii) approval of any Company Acquisition Proposal. Section 3. REVOCATION OF PROXIES; RELIANCE. (a) The Shareholder hereby represents that any proxies heretofore given in respect of the Shareholder Shares are not irrevocable, and that any such proxies are hereby revoked. (b) The Shareholder understands and acknowledges that Parent and Acquisition Sub have entered into the Merger Agreement in reliance upon the Shareholder's execution and delivery of this Agreement. The Shareholder hereby affirms that this Agreement is given in connection with the execution of the Merger Agreement and agrees to the duties of the Shareholder under this Agreement. Section 4. COVENANTS OF THE SHAREHOLDER. The Shareholder hereby agrees and covenants that: (a) RESTRICTION ON TRANSFERS. Except as may otherwise be agreed to by Parent in writing, the Shareholder shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge, hypothecation or other disposition), or consent to any transfer of, any or all of the Shareholder Shares, or any interest therein if such transfer would result in the Shareholder no longer having the power to vote, or cause to be voted, the Shareholder Shares; (ii) enter into any 2 contract, option, derivative, hedging or other agreement or understanding with respect to any such transfer of any or all of the Shareholder Shares, or any interest therein; (iii) permit to exist any lien of any nature whatsoever with respect to any or all of the Shareholder Shares; or (iv) convert or exchange, or take any action which would result in conversion or exchange of, any of the Shareholder Shares, including without limitation conversion or exchange of any shares of Class B common stock into shares of Class A common stock. (b) RESTRICTIONS ON PROXIES AND VOTING ARRANGEMENTS. Except as otherwise provided herein, the Shareholder shall not (i) grant any proxy, power-of-attorney or other authorization in or with respect to the Shareholder Shares or (ii) deposit any of the Shareholder Shares into a voting trust or enter into a voting agreement or arrangement with respect to any of the Shareholder Shares. (c) STANDSTILL. The Shareholder agrees that he will comply with the prohibitions of Section 7.03 of the Merger Agreement that are applicable to the Company as if they were applicable to him, and that he will not, except as specifically authorized by, and on behalf of, the Company, take any of the actions permitted by Section 7.03 to be taken by the Company. (d) STOP TRANSFER. The Shareholder shall not request that the Company register any transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of the Shareholder's Existing Securities (as defined in Section 5(a)(i) hereof), unless such transfer is made in compliance with this Agreement. (e) WAIVER OF APPRAISAL RIGHTS. The Shareholder hereby irrevocably and unconditionally waives, and agrees to prevent the exercise of, any rights of appraisal or rights to dissent in connection with the Merger that the Shareholder may directly or indirectly have. (f) NO INCONSISTENT ARRANGEMENTS. The Shareholder shall not take any other action that would in any way prevent, impede, restrict, limit, delay or interfere with the performance of any of the Shareholder's obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. Section 5. REPRESENTATIONS AND WARRANTIES. (a) The Shareholder hereby represents and warrants to Parent and Acquisition Sub as follows: (i) OWNERSHIP OF SECURITIES. On the date hereof, the Shareholder owns, directly or indirectly, or has the power to direct the voting of, the Company Securities set forth next to the his name on Schedule I hereto (the "EXISTING SECURITIES"), and the Existing Securities are owned of record by the Shareholder or certain of the Shareholder's 3 subsidiaries or nominees (collectively, the "RECORD HOLDERS"). On the date hereof, the Existing Securities constitute all of the shares of voting capital stock of the Company owned of record or otherwise by the Shareholder or as to which the Shareholder has the power to direct the voting of the shares. Each Record Holder has sole voting power and sole power to issue instructions with respect to the matters set forth in Section 2 hereof, sole power of disposition, sole power of conversion, sole power (if any) to demand appraisal rights and sole power to agree to all of each of the matters set forth in this Agreement, in each case with respect to all of each such Record Holder's Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (ii) Shareholder has voting power with respect to the Proxy Shares to the extent set forth in existing agreements in respect thereof. (iii) In the event of any dividend or distribution, or any change in the capital structure of the Company by reason of any non-cash dividend, split-up, recapitalization, combination, exchange of securities or the like, the term "Existing Securities" shall refer to and include the Existing Securities as well as all such dividends and distributions of securities and any securities into which or for which any or all of the Existing Securities may be changed, exchanged or converted. (iv) POWER; BINDING AGREEMENT. The Shareholder has the power (or, if applicable, corporate power) and authority to enter into and perform all of the Shareholder's obligations hereunder. The execution, delivery and performance of this Agreement by the Shareholder will not violate any other agreement to which the he is a party including, without limitation, proxy arrangement or voting trust. This Agreement has been duly and validly executed and delivered by the Shareholder and constitutes a valid and binding agreement of the Shareholder, enforceable against him in accordance with its terms, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, moratorium, or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Shareholder is a trustee whose consent is required for the execution and delivery of this Agreement or the compliance by the Shareholder with the terms hereof. (v) NO CONFLICTS. None of the execution and delivery of this Agreement by the Shareholder, the consummation by the Shareholder of the transactions contemplated hereby or compliance by the Shareholder with any of the provisions hereof shall (A) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under any agreement or other obligation to which the he is a party or by which he is bound, or (C) violate any order, 4 writ, injunction, decree, judgment, order, statute, arbitration award, rule or regulation applicable to the him or any of his properties or assets. (vi) NO LIENS. Except as established hereby, the Existing Securities are now and, at all times during the term hereof, will be held by the Shareholder, or by a nominee or custodian for the benefit of the Shareholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements whatsoever. (b) Parent and Acquisition Sub jointly and severally hereby represent and warrant to the Shareholder as follows: (i) POWER; BINDING AGREEMENT. Each of Parent and Acquisition Sub has the corporate power and authority to enter into and perform all of its obligations under this Agreement. This Agreement has been duly and validly executed and delivered by each of Parent and Acquisition Sub and constitutes a valid and binding agreement of each of Parent and Acquisition Sub, enforceable against each of them in accordance with its terms, except as the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in effect that affect the enforcement of creditors rights generally or (b) general principles of equity, whether considered in a proceeding at law or in equity. (ii) NO CONFLICTS. None of the execution and delivery of this Agreement by Parent or Acquisition Sub, the consummation by Parent or Acquisition Sub of the transactions contemplated hereby or compliance by Parent or Acquisition Sub with any of the provisions hereof shall (A) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under any agreement or other obligation to which Parent or Acquisition Sub is a party or by which Parent or Acquisition Sub is bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, arbitration award, rule or regulation applicable to Parent or Merger Sub or any of Parent or Merger Sub's properties or assets. 5 Section 6. TERMINATION. This Agreement and the covenants, representations, warranties, and agreements contained herein shall automatically terminate upon the earliest to occur of (i) the termination of the Merger Agreement in accordance with the terms thereof, (ii) the mutual consent of Parent and the Shareholder, or (iii) the Merger Effective Time. Upon any termination of this Agreement, this Agreement shall thereupon become void and of no further force and effect, and there shall be no liability in respect of this Agreement or of any transactions contemplated hereby or by the Merger Agreement on the part of any party hereto or any of its directors, officers, partners, stockholders, employees, agents, advisors, representatives or affiliates; provided, however, that nothing herein shall relieve any party from any liability for such party's willful breach of this Agreement prior to termination. Section 7. MISCELLANEOUS. (a) NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations, warranties, covenants and agreements contained herein and in any certificate delivered pursuant hereto by any Person shall terminate at the Merger Effective Time or upon the termination of the Merger Agreement pursuant to the terms thereof, as the case may be. (b) NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by facsimile (with a confirmatory copy sent by overnight courier), by overnight courier service or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 7(b)): if to Parent or Acquisition Sub: Universal Computer Systems Holding, Inc. 6700 Hollister Houston, TX 77040 Telecopier No: (713) 718-1461 Attention: Robert T. Brockman with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Telecopier No.: (212) 735-2000 Attention: Lou R. Kling Richard J. Grossman 6 if to the Shareholder, to Shareholder and counsel as stated on Schedule III hereto. (c) SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Merger be consummated as originally contemplated to the fullest extent possible. (d) ENTIRE AGREEMENT. This Agreement and the Merger Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. (e) ASSIGNMENT. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that, except as provided herein, no party may assign, delegate or otherwise transfer any of its rights or obligations hereunder, in whole or in part, by operation of law or otherwise by any of the parties, without the consent of the other parties hereto. (f) PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing herein, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. (g) SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. (h) GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Ohio(regardless of the laws that might otherwise govern under applicable principles of conflicts of law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. (i) CONSENT TO JURISDICTION. 7 (A) Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of Ohio and the United States District Court for the State of Ohio, for the purpose of any action or proceeding arising out of or relating to this Agreement and each of the parties hereto hereby irrevocably agrees that all claims in respect to such action or proceeding may be heard and determined exclusively in any Ohio state or federal court. Each of the parties hereto hereby agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (B) Each of the parties hereto hereby irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated hereby, on behalf of itself or its property, by personal delivery of copies of such process to such party. Nothing in this Section 7(i) shall affect the right of any party to serve legal process in any other manner permitted by law. (j) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. (k) FURTHER ASSURANCES. From time to time, at the request of Parent or Acquisition Sub, the Shareholder shall execute and deliver to Parent and Acquisition Sub or cause other Record Holders to execute and deliver to Parent and Acquisition Sub such additional letters or instruments to comply with applicable laws and stock exchange rules as Parent or Acquisition Sub may reasonably request in connection with the Shareholder's obligations under this Agreement. (l) DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (m) AMENDMENT, MODIFICATION AND WAIVER. This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of the party hereto against whom such amendment, modification or waiver is sought to be entered. (n) COUNTERPARTS. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 8 IN WITNESS WHEREOF, Parent, Acquisition Sub and the Shareholder have caused this Agreement to be duly executed as of the day and year first above written. UNIVERSAL COMPUTER SYSTEMS HOLDING, INC. By: /s/ R.T. Brockman ----------------------- Name: R.T. Brockman Title: Chairman & CEO RACECAR ACQUISITION CO. By: /s/ R.T. Brockman ----------------------- Name: R.T. Brockman Title: Chairman & CEO FINBARR J. O'NEILL By: /s/ Finbarr J. O'Neill ----------------------- Name: Finbarr J. O'Neill Title: Chief Executive Officer 10 SCHEDULE I - -------------------------------------- ---------------------------------- SHAREHOLDER CLASS A COMMON STOCK - -------------------------------------- ---------------------------------- - -------------------------------------- ---------------------------------- Finbarr J. O'Neill 140,000 - -------------------------------------- ---------------------------------- 11 SCHEDULE II - ------------------------------------------------------------------------- CLASS A COMMON STOCK 577,290 - ------------------------------------------------------------------------- 12 SCHEDULE III Address for notices to the Shareholder: Finbarr J. O'Neill The Reynolds and Reynolds Company One Reynolds Way Dayton, Ohio 45430 Telecopier No: (937) 485-4211 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Telecopier No: (212) 403-2000 Attention: Andrew R. Brownstein, Esq. James Cole, Jr., Esq. 13 EX-10 5 grantagmt.txt 10.03 GRANT VOTING AGREEMENT EXHIBIT 10.03 EXECUTION COPY VOTING AGREEMENT VOTING AGREEMENT (this "Agreement"), dated as of August 7, 2006, by and among Universal Computer Systems Holding, Inc., a Delaware corporation ("Parent"), Racecar Acquisition Co., an Ohio corporation and a newly-formed, indirect wholly-owned subsidiary of Parent ("Acquisition Sub"), and the shareholder listed on Schedule I hereto (the "Shareholder"). WITNESSETH: WHEREAS, prior to the execution and delivery of this Agreement, an Agreement and Plan of Merger (as such agreement may be amended from time to time, the "Merger Agreement") has been entered into by and among Parent, Acquisition Sub and the Reynolds and Reynolds Company, an Ohio corporation (the "Company"), pursuant to which Acquisition Sub will merge with and into the Company, with the Company continuing as the surviving corporation (the "Merger"); and WHEREAS, as a condition to, and in consideration for, Parent's and Acquisition Sub's willingness to enter into the Merger Agreement and to consummate the transactions contemplated thereby, Parent and Acquisition Sub have required that the Stockholder enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows: Section 1. DEFINITIONS. For purposes of this Agreement: "Class A Shares" means the Class A common stock of the Company, no par value per share. "Company Securities" means, collectively, the Class B common stock of the Company, no par value per share, and any Class A Shares as to which the Shareholder is entitled to vote and as to which the Shareholder has power to vote, to the extent acquired after the date of this Agreement. "Shareholder Shares" means (i) the Existing Securities (as defined in Section 5(a)(i) hereof) set forth on Schedule I hereto, (ii) any shares of Company Securities distributed prior to the termination of this Agreement in respect of such Shareholder's Shares by reason of a stock dividend, split-up, recapitalization, reclassification, combination, merger, exchange of shares or otherwise and (iii) any other shares of the Company Securities of which the Shareholder acquires ownership, either directly or indirectly, after the date hereof and prior to the Effective Time. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement. Section 2. AGREEMENT TO VOTE SHARES. Until the termination of this Agreement in accordance with the terms hereof, each Shareholder shall, at any meeting of the holders of any class of Company Securities, however such meeting is called and regardless of whether such meeting is a special or annual meeting of the stockholders of the Company, and at any postponement or adjournment thereof, and in connection with any written consent of the stockholders of the Company, vote, or cause to be voted, such Shareholder Shares (1) in favor of the Merger and the adoption of the Merger Agreement, the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement and this Agreement and any actions required in furtherance thereof and hereof and (2) against the following actions (other than the Merger and the transactions contemplated by the Merger Agreement): (i) any action which is prohibited by the Merger Agreement or which is intended, or could reasonably be expected, to prevent, impede, interfere with, delay, postpone, discourage or materially adversely affect the contemplated economic benefits to Parent or Acquisition Sub of the Merger or the transactions contemplated hereby or by the Merger Agreement; or (ii) approval of any Company Acquisition Proposal. Section 3. REVOCATION OF PROXIES; RELIANCE. (a) The Shareholder hereby represents that any proxies heretofore given in respect of such Shareholder Shares are not irrevocable, and that any such proxies are hereby revoked. (b) The Shareholder understands and acknowledges that Parent and Acquisition Sub have entered into the Merger Agreement in reliance upon each Shareholder's execution and delivery of this Agreement. The Shareholder hereby affirms that this Agreement is given in connection with the execution of the Merger Agreement and agrees to the duties of the Shareholder under this Agreement. Section 4. COVENANTS OF THE SHAREHOLDER. The Shareholder hereby agrees and covenants that: (a) RESTRICTION ON TRANSFERS. Except as may otherwise be agreed to by Parent in writing, the Shareholder shall not (i) transfer (which term shall include, without limitation, any sale, gift, pledge, hypothecation or other disposition), or consent to any transfer of, any or all of such Shareholder Shares, or any interest therein if such transfer would result in the Shareholder no longer having the power to vote, or cause to be voted, such Shareholder Shares; (ii) enter into any contract, option, derivative, hedging or other agreement or understanding with respect to any 2 such transfer of any or all of such Shareholder Shares, or any interest therein; (iii) permit to exist any lien of any nature whatsoever with respect to any or all of such Shareholder Shares; or (iv) convert or exchange, or take any action which would result in conversion or exchange of, any of such Shareholder Shares, including without limitation conversion or exchange of any shares of Class B common stock into shares of Class A common stock. (b) RESTRICTIONS ON PROXIES AND VOTING ARRANGEMENTS. Except as otherwise provided herein, the Shareholder shall not (i) grant any proxy, power-of-attorney or other authorization in or with respect to such Shareholder Shares or (ii) deposit any of such Shareholder Shares into a voting trust or enter into a voting agreement or arrangement with respect to any of such Shareholder Shares. (c) STANDSTILL. The Shareholder agrees that he will comply with the prohibitions of Section 7.03 of the Merger Agreement that are applicable to the Company as if they were applicable to him, and that he will not, except as specifically authorized by, and on behalf of, the Company, take any of the actions permitted by Section 7.03 to be taken by the Company. (d) STOP TRANSFER. The Shareholder shall not request that the Company register any transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of such Shareholder's Existing Securities (as defined in Section 5(a)(i) hereof), unless such transfer is made in compliance with this Agreement. (e) WAIVER OF APPRAISAL RIGHTS. The Shareholder hereby irrevocably and unconditionally waives, and agrees to prevent the exercise of, any rights of appraisal or rights to dissent in connection with the Merger that each Shareholder may directly or indirectly have. (f) NO INCONSISTENT ARRANGEMENTS. The Shareholder shall take any other action that would in any way prevent, impede, restrict, limit, delay or interfere with the performance of his obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. Section 5. REPRESENTATIONS AND WARRANTIES. (a) The Shareholder hereby represents and warrants to Parent and Acquisition Sub as follows: (i) OWNERSHIP OF SECURITIES. On the date hereof, the Shareholder owns, directly or indirectly, or has the power to direct the voting of, the Company Securities set forth next to his name on Schedule I hereto (the "EXISTING SECURITIES"), and the Existing Securities are owned of record by him (the "RECORD HOLDER"). On the date hereof, the Existing Securities constitute all of the shares of Company Securities owned of record or otherwise by the Shareholder or as to which the Shareholder has sole power to direct the 3 voting of the shares. The Record Holder has sole voting power and sole power to issue instructions with respect to the matters set forth in Section 2 hereof, sole power of disposition, sole power of conversion, sole power (if any) to demand appraisal rights and sole power to agree to all of each of the matters set forth in this Agreement, in each case with respect to all of each such Record Holder's Existing Securities with no limitations, qualifications or restrictions on such rights, subject to applicable securities laws and the terms of this Agreement. (ii) In the event of any dividend or distribution, or any change in the capital structure of the Company by reason of any non-cash dividend, split-up, recapitalization, combination, exchange of securities or the like, the term "Existing Securities" shall refer to and include the Existing Securities as well as all such dividends and distributions of securities and any securities into which or for which any or all of the Existing Securities may be changed, exchanged or converted. (iii) POWER; BINDING AGREEMENT. The Shareholder has the capacity and power (or, if applicable, corporate power) and authority to enter into and perform all of his obligations hereunder. The execution, delivery and performance of this Agreement by the Shareholder will not violate any other agreement to which he is a party including, without limitation, proxy arrangement, voting trust, or in the case of Existing Shares held under trust, the governing documents of such trust including the trust agreement and any related documents. This Agreement has been duly and validly executed and delivered by the Shareholder and constitutes a valid and binding agreement of such Shareholder, enforceable against him in accordance with its terms, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, moratorium, or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which the Shareholder is a trustee whose consent is required for the execution and delivery of this Agreement or the compliance by the Shareholder with the terms hereof. (iv) NO CONFLICTS. None of the execution and delivery of this Agreement by the Shareholder, the consummation by him of the transactions contemplated hereby or compliance by him with any of the provisions hereof shall (A) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under any agreement or other obligation to which he is a party or by which he is bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, arbitration award, rule or regulation applicable to him or any of his properties or assets. (v) NO LIENS. Except as established hereby, the Existing Securities are now and, at all times during the term hereof, will be held by the Shareholder, or by a nominee or 4 custodian for the benefit of the Shareholder, free and clear of all Liens, proxies, voting trusts or agreements, understandings or arrangements whatsoever. (b) Parent and Acquisition Sub jointly and severally hereby represent and warrant to each Shareholder as follows: (i) POWER; BINDING AGREEMENT. Each of Parent and Acquisition Sub has the corporate power and authority to enter into and perform all of its obligations under this Agreement. This Agreement has been duly and validly executed and delivered by each of Parent and Acquisition Sub and constitutes a valid and binding agreement of each of Parent and Acquisition Sub, enforceable against each of them in accordance with its terms, except as the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization or similar laws in effect that affect the enforcement of creditors rights generally or (b) general principles of equity, whether considered in a proceeding at law or in equity. (ii) NO CONFLICTS. None of the execution and delivery of this Agreement by Parent or Acquisition Sub, the consummation by Parent or Acquisition Sub of the transactions contemplated hereby or compliance by Parent or Acquisition Sub with any of the provisions hereof shall (A) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under any agreement or other obligation to which Parent or Acquisition Sub is a party or by which Parent or Acquisition Sub is bound, or (C) violate any order, writ, injunction, decree, judgment, order, statute, arbitration award, rule or regulation applicable to Parent or Merger Sub or any of Parent or Merger Sub's properties or assets. Section 6. TERMINATION. This Agreement and the covenants, representations, warranties, and agreements contained herein shall automatically terminate upon the earliest to occur of (i) the termination of the Merger Agreement in accordance with the terms thereof, (ii) the mutual consent of Parent and the Shareholder, or (iii) the Merger Effective Time. Upon any termination of this Agreement, this Agreement shall thereupon become void and of no further force and effect, and there shall be no liability in respect of this Agreement or of any transactions contemplated hereby or by the Merger Agreement on the part of any party hereto or any of its directors, officers, partners, stockholders, employees, agents, advisors, representatives or affiliates; provided, however, that nothing herein shall relieve any party from any liability for such party's willful breach of this Agreement prior to termination. Section 7. MISCELLANEOUS. (a) NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations, warranties, covenants and agreements contained herein and in any certificate delivered pursuant hereto by 5 any Person shall terminate at the Merger Effective Time or upon the termination of the Merger Agreement pursuant to the terms thereof, as the case may be. (b) NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by facsimile (with a confirmatory copy sent by overnight courier), by overnight courier service or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 7(b)): if to Parent or Acquisition Sub: Universal Computer Systems Holding, Inc. 6700 Hollister Houston, TX 77040 Telecopier No: (713) 718-1461 Attention: Robert T. Brockman with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Telecopier No.: (212) 735-2000 Attention: Lou R. Kling Richard J. Grossman if to the Shareholder, to such Shareholder and counsel as stated on Schedule II hereto. (c) SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Merger be consummated as originally contemplated to the fullest extent possible. (d) ENTIRE AGREEMENT. This Agreement and the Merger Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede 6 all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. (e) ASSIGNMENT. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that, except as provided herein, no party may assign, delegate or otherwise transfer any of its rights or obligations hereunder, in whole or in part, by operation of law or otherwise by any of the parties, without the consent of the other parties hereto. (f) PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing herein, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. (g) SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. (h) GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of Ohio(regardless of the laws that might otherwise govern under applicable principles of conflicts of law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. (i) CONSENT TO JURISDICTION. (A) Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of Ohio and the United States District Court for the State of Ohio, for the purpose of any action or proceeding arising out of or relating to this Agreement and each of the parties hereto hereby irrevocably agrees that all claims in respect to such action or proceeding may be heard and determined exclusively in any Ohio state or federal court. Each of the parties hereto hereby agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (B) Each of the parties hereto hereby irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated hereby, on behalf of itself or its property, by personal delivery of copies of such process to such party. Nothing in this Section 7(i) shall affect the right of any party to serve legal process in any other manner permitted by law. 7 (j) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. (k) FURTHER ASSURANCES. From time to time, at the request of Parent or Acquisition Sub, the Shareholder shall execute and deliver to Parent and Acquisition Sub or cause other Record Holders to execute and deliver to Parent and Acquisition Sub such additional letters or instruments to comply with applicable laws and stock exchange rules as Parent or Acquisition Sub may reasonably request in connection with the Shareholder's obligations under this Agreement. (l) DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. (m) AMENDMENT, MODIFICATION AND WAIVER. This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of the party hereto against whom such amendment, modification or waiver is sought to be entered. (n) COUNTERPARTS. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, Parent, Acquisition Sub and the Shareholder have caused this Agreement to be duly executed as of the day and year first above written. UNIVERSAL COMPUTER SYSTEMS HOLDING, INC. By: /s/ R.T. Brockman ------------------------------------ Name: R.T. Brockman Title: Chairman & CEO RACECAR ACQUISITION CO. By: /s/ R.T. Brockman ------------------------------------ Name: R.T. Brockman Title: Chairman & CEO RICHARD H. GRANT, III By: /s/ Richard H. Grant III ------------------------------------ Name: Richard H. Grant III 8 SCHEDULE I - -------------------------------------- ---------------------------------- SHAREHOLDER CLASS B COMMON STOCK - -------------------------------------- ---------------------------------- - -------------------------------------- ---------------------------------- Richard H. Grant, III 13,500,000 - -------------------------------------- ---------------------------------- 9 SCHEDULE II Address for notices to the Shareholder: Richard H. Grant III The Reynolds and Reynolds Company One Reynolds Way Dayton, Ohio 45430 Telecopier No: (937) 485-5211 With copies to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Telecopier No: (212) 403-2000 Attention: Andrew R. Brownstein, Esq. James Cole, Jr., Esq. 10 EX-10 6 emplsumm.txt 10.04 SUMMARY OF MATERIAL TERMS EXHIBIT 10.04 AMENDED AND RESTATED EMPLOYMENT AGREEMENT BETWEEN THE REYNOLDS AND REYNOLDS COMPANY ("COMPANY") AND FINBARR J. O'NEILL ("EXECUTIVE") MATERIAL TERMS I. POSITION - Chief Executive Officer and President ("Executive") II. START DATE/TERM - August 7, 2006 - January 31, 2008, with automatic one-year extensions commencing at expiration of original term unless notice is given by either party 180 days prior to termination of the current term III. BASE SALARY - $750,000 (pro rated for partial years) IV. ANNUAL BONUS - Target annual bonus of 70% of base salary with a maximum bonus of 140% of base salary V. ADDITIONAL MATTERS - A. Participation in Company benefit plans and programs B. $14,000/year car allowance C. $1,500/year reimbursement for medical exams D. $6,000/year for estate/tax planning E. $1,500/year for health club fees F. Participation in all qualified and nonqualified retirement plans which are available to senior officers G. Supplemental executive retirement plan to provide additional benefits upon retirement of 4% of average annual compensation multiplied by Executive's years of service VI. SEVERANCE BENEFITS PRIOR - A. TERMINATION FOR GOOD REASON/WITHOUT CAUSE TO A CHANGE IN CONTROl If Executive terminates employment for good reason or the Company terminates Executive's employment without cause, Executive will be entitled to receive: 1) pro-rata target bonus for the year in which termination occurs 2) 2x annual salary 3) 2x higher of target bonus or three-year average annual bonus 4) 2 years medical benefits 5) 2 additional years of deemed service for supplemental retirement plan 6) full vesting of stock options or time-based restricted stock awards and determination of vesting under any performance-based restricted stock awards pursuant to the provisions of applicable plans (in the case of good reason termination only) B. TERMINATION FOR CAUSE If the Company terminates Executive's employment for cause, Executive will be entitled to receive: 1) Accrued obligations and any benefits under the pension plan and supplemental pension plan C. DISABILITY If Executive's employment is terminated due to disability, Executive will be entitled to receive: 1) pro-rata target bonus for the year in which termination occurs 2) annual disability benefit equal to 90% of base salary 3) 2 additional years of deemed service for supplemental retirement plan 4) full vesting of stock options or time-based restricted stock awards and determination of vesting under any performance-based restricted stock awards pursuant to the provisions of applicable plans VII. CHANGE IN CONTROL SEVERANCE BENEFITS - If Executive terminates employment for good reason or executive's employment is terminated by the Company (other than for disability or cause) during the two-year period following (or prior to and in connection with) a change in control of the Company: A. Executive will be entitled to receive: 1) pro-rata target bonus for the year in which termination occurs 2) 2.99x annual salary (at higher of level upon termination event or immediately prior to change in control) 3) 2.99x higher of target bonus or three-year average annual bonus 4) 3 years medical benefits 5) 3 additional years of service for supplemental retirement plan 6) outplacement services (up to $20,000) B. Any applicable performance-based vesting goals with respect to stock-based awards granted to Executive will be deemed 100% met and all stock-based awards will vest in full, in each case immediately prior to the occurrence of the change in control. C. Executive will not be subject to any non-compete. D. Executive will be entitled to a gross-up for excise tax on excess parachute payments, subject to a 10% "cut-back" (i.e., change in control payments will be reduced below the 280G safe harbor if the total parachute value of CIC payments are less than 10% in excess of the 280G safe harbor). E. Executive will have no duty to seek or gain new employment after termination, and no mitigation (other than for health and welfare benefits from new employer) will apply. F. Company will be obligated to reimburse Executive for any legal fees incurred in connection with contesting Executive's rights under the agreement, subject to reimbursement in the case of a bad faith claim. G. Rights under the Company's relocation policy will become irrevocable. H. The Company and Universal Computer System Holding, Inc. ("UCS") have acknowledged in writing that the completion of the proposed merger between the Company and UCS will constitute good reason under Executive's amended and restated employment agreement. EX-10 7 oneill.txt 10.05 O'NEILL EMPLOYMENT AGREEMENT EXHIBIT 10.05 EXECUTION COPY AMENDED AND RESTATED EMPLOYMENT AGREEMENT AGREEMENT, effective as of the 7th day of August, 2006 (the "Effective Date"), by and between THE REYNOLDS AND REYNOLDS COMPANY, an Ohio Corporation (the "Company") and FINBARR J. O'NEILL (the "Executive"). WHEREAS, Executive and the Company are parties to that certain employment agreement dated December 31, 2004 (the "Original Agreement"); and WHEREAS, the Board of Directors of the Company (the "Board") desires to continue to retain Executive as the Chief Executive Officer and President of the Company and to encourage the attention and dedication to the Company of Executive as a member of the Company's management, in the best interests of the Company and its shareholders; and WHEREAS, in order to effect the foregoing, the Company and Executive wish to enter into an amended and restated employment agreement on the terms and conditions set forth below. NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows: 1. EMPLOYMENT. By this Agreement, the Company and Executive set forth the terms of the Company's employment of Executive on and after the Effective Date (as defined above) of this Agreement. Any prior agreements or understandings with respect to Executive's employment by the Company (including the Original Agreement) are superseded by this Agreement as of the Effective Date. 2. TERM. The term of this Agreement shall be the period commencing on the Effective Date and terminating on January 31, 2008 (the "Initial Term"). At the end of the Initial Term and on each subsequent anniversary of such date, the term of this Agreement shall renew automatically for a period of one (1) year (the "Initial Term" and each such renewed period to be the "Term"); PROVIDED, HOWEVER, that upon the occurrence of a Change in Control (as defined in Section 8(e) of this Agreement), the Term shall automatically be extended for 24 months from the date of such Change in Control, and shall thereafter renew automatically for a period of one (1) year at the end of such 24-month period and on each subsequent anniversary of such date; PROVIDED, FURTHER, HOWEVER, that in no event shall this Agreement terminate prior to the Company's satisfaction of all of the Company's obligations to Executive hereunder. Notwithstanding the foregoing, the Term is subject to termination as provided in Section 8. 3. DUTIES. (a) Executive will serve as Chief Executive Officer and President of the Company (the "Position") and will be appointed a member of the Board. Executive will report only to the Board. (b) Executive shall furnish such managerial, executive, financial, technical, and other skills, advice, and assistance in operating the Company and its Affiliates as the Company may reasonably request. For purposes of this Agreement, "Affiliate" means each corporation which is a member of a controlled group of corporations (within the meaning of Section 1563(a) of the Internal Revenue Code of 1986, as amended (the "Code")) which includes the Company. (c) Executive shall also perform such other duties that are consistent with the Position as are reasonably assigned to Executive by the Board. (d) Executive shall devote Executive's entire time, attention, and energies to the business of the Company and its Affiliates. The words "entire time, attention, and energies" are intended to mean that Executive shall devote Executive's full effort during reasonable working hours to the business of the Company and its Affiliates and shall devote at least 40 hours per week to the business of the Company and its Affiliates. Executive shall travel to such places as are necessary in the performance of Executive's duties. (e) Executive shall have the authority and control to make and execute the decisions he deems necessary to fulfill his responsibilities under this Agreement, including, without limitation, the authority to determine the need for, select and manage personnel and all such other authority and control commensurate with the positions of chief executive officer and president of a corporation similar in size and scope subject to the Board fulfilling its duties and responsibilities. 4. COMPENSATION. As full compensation for Executive's services hereunder, the Company agrees to pay Executive as follows with respect to the Term: (a) BASE SALARY. Executive shall receive a base salary (the "Base Salary") of at least $750,000 per year, payable in 26 bi-weekly installments, subject to proration for any partial year. Such Base Salary, and all other compensation payable under this Agreement, shall be subject to withholding as required by applicable law. The Compensation Committee of the Board (the "Compensation Committee") shall review Executive's performance at least annually and consider such increase of Base Salary as the Compensation Committee shall determine to be appropriate. (b) ANNUAL INCENTIVE COMPENSATION. Executive will be eligible for an annual bonus based upon achievement of certain corporate and personal performance objectives established by the Compensation Committee. The bonus target for Executive shall be 70 percent (70%) of his Base Salary (the "Target Annual Bonus"), with the maximum annual bonus being 140 percent (140%) of his Base Salary; PROVIDED, HOWEVER, that the Compensation Committee has the right to modify the corporate and personal performance objectives on an annual basis; PROVIDED, FURTHER that, following the occurrence of a Change in Control (as defined in Section 8(e)), the Target Annual Bonus cannot be reduced from the Target Annual Bonus in effect as of the date of the Change in Control (or the prior year's Target Annual Bonus if no such Target Annual Bonus is in effect). (c) INCENTIVE COMPENSATION FOR THE FIRST YEAR. For the period from 2 January 17, 2005 to September 30, 2005 only, Executive was guaranteed a bonus of at least $393,750, subject to increase based upon achievement of corporate and personal objectives established by the Board pursuant to Section 4(b). The corporate objectives for fiscal year 2005 were EBIT-ROC = 29% and Revenue Growth = 2%. The guaranteed bonus will be paid on October 1, 2005, and any increased bonus amount based upon the achievement of corporate objectives will be paid by November 30, 2005. (d) SIGNING BONUS. Executive shall be obligated to repay the full amount of the $200,000 signing bonus that Executive received on December 31, 2004 (the "Prior Effective Date") if Executive voluntarily terminates his employment within one (1) year of such date, unless Executive terminates his employment as a result of Changed Circumstances or within one (1) year following a Change in Control, as those terms are defined in Section 8. (e) EXPENSES. The Company shall, upon submission and approval of written statements and bills in accordance with the then regular policies and procedures of Company, reimburse Executive for any and all reasonable necessary, customary and usual expenses incurred by him while traveling for or on behalf of Company, and any and all other necessary, customary or usual expenses (including entertainment) incurred by Executive for or on behalf of Company in the normal course of business. (f) PERQUISITES. Executive will also be entitled to the following additional benefits during the Term: (i) COMPANY CAR ALLOWANCE. The Company will provide Executive with $14,000 per year for the purchase or lease of a vehicle. (ii) ANNUAL PHYSICAL EXAM. The Company will reimburse Executive for the cost of any annual physical examination up to an amount of $1,500 per year. (iii) LEGAL AND FINANCIAL PLANNING. The Company will reimburse Executive for any costs and expenses incurred in relation to personal legal advice for estate planning and tax planning purposes or financial planning advice, in the aggregate for all planning up to an amount of $6,000 per year. (iv) HEALTH CLUB FEES. The Company will reimburse Executive for the cost of any health club membership obtained by Executive up to an amount of $1,500 per year. (g) INITIAL STOCK OPTION GRANT. As of the Prior Effective Date, Executive was granted options to purchase 300,000 common shares of the Company. The exercise price for these shares is the fair market value of the shares on the date of grant. These options have a seven-year life, and vest and become exercisable on each of the first three anniversaries of the grant date at a rate of 33.3 % (100,000 shares) per year. Notwithstanding the foregoing, the options to purchase the 300,000 common shares granted to Executive by the Company become one-hundred percent (100%) vested upon termination of Executive's employment without Cause in accordance with Section 8(a) during the Initial Term. Notwithstanding the foregoing, all options granted to Executive by Company become one-hundred percent (100% ) vested upon a 3 Change in Control as defined in Section 8(e), or termination of Executive's employment due to Disability in accordance with Section 8(c), due to Changed Circumstances in accordance with Section 8(d) or due to death. Notwithstanding the foregoing, with respect to subsequent option grants, upon termination of Executive's employment without Cause in accordance with Section 8(a) or due to expiration of a Term in accordance with Section 8(f), all options granted to Executive by the Company will continue to vest during the period commencing on the date of termination of Executive's employment and ending on the first anniversary of such date and will continue to be exercisable until 90 days after such first anniversary date; PROVIDED, HOWEVER, that any such options will become one-hundred percent (100%) vested upon a Change in Control as defined in Section 8(e). (h) RESTRICTED STOCK AWARD. As of the Prior Effective Date, Executive received a restricted stock award of 70,000 shares, of which (i) 35,000 shares shall vest on the third anniversary of the grant, and (ii) 35,000 shares will vest on achievement of performance-based benchmarks. For any of the performance-based restricted shares to vest, the Company's revenue growth over a three year period must exceed the 25th percentile of the initial Standard & Poor's Mid-cap 400. Restrictions will lapse on a linear basis so that upon achieving revenue growth matching the 50th percentile of the Standard & Poor's Mid-cap 400, all restrictions will lapse. If growth exceeds the 50th percentile, additional restricted shares will be awarded and restrictions will lapse on a linear basis so that upon achieving revenue growth equal to or greater than the 75th percentile, two times the original number of performance-based shares will be earned. In the event of a termination of Executive's employment without Cause in accordance with Section 8(a) during the Initial Term, the time-based restricted stock award of 35,000 shares set forth above will become fully vested at the date of termination of Executive's employment and the performance-based restricted stock award of 35,000 shares will vest as set forth in accordance with the provisions in the last sentence below. In the event of a Change in Control as defined in Section 8(e), all such restricted stock awards will become fully vested immediately prior to such Change in Control. With respect to subsequent restricted stock awards, in the event of a termination of Executive's employment without Cause in accordance with Section 8(a) or due to expiration of a Term in accordance with Section 8(f), the vesting of such restricted stock awards shall continue for an additional one (1) year commencing on the date of termination of Executive's employment and ending on the first anniversary of such date (the "First Anniversary"), and the measurement period for any performance-based stock awards will end on the First Anniversary and restricted stock subject to such awards will become vested based upon the formula set forth above but comparing the Company's revenue growth using the Company's quarterly results most recently available prior to the First Anniversary compared to the revenue growth of the Standard & Poor's Mid-cap 400 for the same quarterly period. In the event of a termination of Executive's employment due to Disability in accordance with Section 8(c), due to Changed Circumstances in accordance with Section 8(d) or due to death, then: (i) time-based restricted stock awards will become fully vested at such time; and (ii) the measurement period for any performance-based stock awards will end at the date of termination of Executive's active employment, and the restricted stock subject to such awards will become vested based upon the formula set forth above but comparing the Company's revenue growth using the Company's quarterly results most recently available prior to such employment termination date compared to the revenue growth of the Standard & Poor's Mid-cap 400 for the same quarterly period. 4 (i) OTHER STOCK AWARDS. Each December 1 during the Term, Executive will be eligible for consideration for an annual restricted stock award consisting of both time-based and performance-based shares, which shall vest over a three-year period (the "Other Stock Awards"). Notwithstanding the foregoing, in the event of a Change in Control as defined in Section 8(e), all such Other Stock Awards (and any other equity based awards including any restricted units and other restricted stock grants) will become fully vested immediately prior to such Change in Control. (j) VACATION. Executive shall be entitled to five (5) weeks of paid vacation per year. 5. BENEFITS. (a) Executive will be entitled to participate in all of the various employee benefit plans and programs of the Company, including its Flexible/Medical/Vision/Dental Plan, 401(k) Savings Plan, and life insurance and disability insurance plans. Executive agrees to purchase the maximum amount of disability insurance coverage available under the Company's plan. Executive and his spouse will be eligible to receive retiree medical benefits after five (5) years of service pursuant to the Company's plan. (b) During the Term, the Company agrees to provide Executive with additional disability insurance coverage beyond the maximum amounts purchased by Executive under the Company's plan, which will provide Executive with up to ninety percent (90%) of his Base Salary in the event that Executive becomes temporarily disabled and is unable to perform his duties under this Agreement. (c) Notwithstanding anything contained herein to the contrary, the Base Salary, as defined in Section 6(a)(i) below, shall be reduced by any benefits paid to Executive by the Company under any disability plans made available to Executive by the Company. (d) In addition to the basic life insurance provided to the Company's other employees, the Company will provide Executive with life insurance in the amount of $2,000,000 as long as Executive remains employed by the Company. (e) The Company has amended its Retiree Medical Plan to provide only for Executive that Executive and his spouse will become eligible to participate in such plan after he has achieved five (5) years of active employment with the Company or its Affiliates. In addition, the Company has agreed that it will pay Executive's and Executive's spouse's cost to obtain COBRA coverage for 18 months following termination of Executive's employment for any reason except termination for Cause in accordance with Section 8(b). (f) During the Term and for the later of ten (10) years following the end of the Term or the conclusion of any litigation, including all possible appeals, for which such indemnifications may apply and such errors and omissions insurance may provide coverage, Company will provide Executive with indemnifications and coverage under an errors and omissions insurance policy provided to other directors and officers of the Company or any successor. 5 6. RETIREMENT. (a) The following definitions will be applicable only to Section 6 of this Agreement, except as expressly provided herein: (i) "Base Salary" shall mean the then-current annual base salary (exclusive of Bonuses) paid to Executive. (ii) "Bonuses" shall mean bonus payments earned by Executive under any incentive compensation plans or future incentive compensation plans of the Company for its executive officers. (b) "Final Average Annual Compensation" shall mean the average of Executive's Base Salary and Bonuses (excluding any compensation attributable to stock options of any type granted by the Company and any compensation determined by the Board to be a long-term incentive arrangement) for the three (3) consecutive calendar years out of the prior five (5) calendar years that yield the highest sum. For purposes of this calculation, the fifth prior calendar year shall be the full or partial year in which Executive's active employment with the Company terminates, and Base Salary and Bonuses for such year shall be annualized. Notwithstanding the foregoing, for purposes of this calculation, if Executive has been employed for less than five calendar years, "Final Average Annual Compensation" shall be determined as set forth above for the greater of (i) three consecutive calendar years or (ii) the period of time for which Executive has been actively employed.Executive will be entitled to participate in all qualified and nonqualified retirement plans which are available to other senior officers of the Company and according to the terms of those plans. In addition, Executive will be entitled to participate in a supplemental executive retirement plan (the "SERP") put in place for Executive. Under this plan, Executive shall be entitled to receive an annual retirement benefit equal to the difference between (i) four percent (4%) of his Final Average Annual Compensation multiplied by his years of service to the Company, and (ii) the annual benefits payable to him under the Reynolds & Reynolds Retirement Plan (the "Qualified Plan") and the Reynolds & Reynolds "Supplemental Plan" which restores benefits lost under the Qualified Plan due to Code Section 415 and 401(a)(17) limits. For purposes of the calculation set forth in the immediately preceding sentence, it shall be assumed that the benefits under the SERP, Qualified Plan and Supplemental Plan begin when Executive's employment terminates and are payable in the form of a single life annuity. Such SERP benefit generally shall be payable in the form of a single life annuity for Executive's life; PROVIDED, HOWEVER, that if Executive is married at the time he commences to receive benefits under this plan, his benefit will be paid in the form of a 100% joint and survivor annuity for the lives of Executive and Executive's spouse at the time Executive's benefits commence (if Executive's spouse survives him) that is actuarially equivalent to the single life annuity. Executive acknowledges that the annual payment under a 100% joint and survivor annuity will be actuarially reduced compared to the annual payment that he would otherwise have received if payment were in the form of a single life annuity. Executive will commence to receive his SERP payments beginning whenever his employment terminates, PROVIDED that, if such termination is prior to age sixty-two (62), the amount of the benefits will be discounted by 4.8% per year multiplied by the number of years difference between age sixty-two (62) and Executive's age at the time of termination. To the extent permissible under Section 409A of the Code and regulations thereunder, Executive may elect to defer commencement of the receipt of 6 SERP payments. If the commencement of SERP payments is so deferred, the payments shall be increased to be the actuarial equivalent of the payments Executive would have received commencing as of his employment termination date. For purposes of this Section, a "year of service" shall mean each twelve (12) month period or part thereof measured from the Effective Date of this Agreement in which Executive works at least one thousand (1,000) hours, and actuarial equivalence for a given purpose shall be determined using the most recent actuarial assumptions that would be used for such purpose under the Qualified Plan, provided, however, that any increase to reflect the deferred commencement of benefits shall use the 4.8% per year factor for each applicable year prior to age 62 instead of the Qualified Plan actuarial assumptions. 7. NON-COMPETITION AND CONFIDENTIALITY. (a) NON-COMPETITION. (i) In order to protect the Company, it is understood that a covenant not to compete is a necessary and appropriate adjunct to this Agreement. During Executive's employment and for a period of two (2) years from and after the date on which Executive's employment with the Company terminates for any reason and after he shall have ceased receiving retirement benefits (PROVIDED that such retirement benefits have begun to be paid during such two (2) year period), severance benefits or disability benefits, whichever shall be the last to occur, but in no event longer than five (5) years from and after termination of employment, Executive shall not compete with the Company. Executive shall be deemed to be competing with the Company if Executive: (1) calls on, solicits, takes away, accepts or attempts to do business in the "Restricted Business" (as defined below) with any person or entity that is presently a client or customer of the Company (or any of its related or affiliated entities) or about which Executive learned or had access to "Company Confidential Information" (as defined below) while a Company employee, except for the benefit of the Company; and/or (2) enters into or attempts to enter into any business engaged in the Restricted Business anywhere the Company does business (whether acting (alone or in association) as an agent, representative, consultant, officer, director, independent contractor, employee, owner, partner, limited partner, joint venturer, investor, creditor, stockholder or member); and/or (3) hires or attempts to hire for Executive's or person's behalf, any employee who is at the time of the hire or attempted hire an employee of the Company or any of its related or affiliated entities. (ii) For the purposes of this Agreement, the "Restricted Business" means: the provision of (1) information technology (including customer relationship management and web services) solutions or related services (including consulting, training, networking/communication and support services) to the Auto Industry, or (2) forms or other consumables to the Auto Industry. "Auto Industry" is intended to mean entities that are engaged in the manufacture, distribution, sale (retail or wholesale), short-term rental, extended-term lease or general or special service or repair of new or used automobiles, pickups, trucks, vans, motorcycles, recreational vehicles or other vehicles (including fleets) or the installation, repair, sale or distribution of parts or 7 accessories for new or used automobiles, pickups, trucks, vans, motorcycles, recreational vehicles or other vehicles, or boats. (iii) Executive specifically acknowledges and agrees that the geographic restriction on Executive's ability to compete with the Company, as set forth in this Agreement, is reasonable and necessary to protect the Company' business interests in the relevant market. Executive understands that the Company Confidential Information (as defined below) may be used to the Company's disadvantage should Executive work for or otherwise become associated with a competitor of the Company anywhere that the Company does business, regardless of the competitor's specific geographic location. (iv) Notwithstanding the foregoing, the following shall not constitute competing with the Company or any of its related or affiliated companies or a violation of any provision of this Agreement: (a) ownership of voting securities or other equity interests representing less than one percent (1%) of the voting power of an entity the securities of which are traded on a national or foreign securities exchange or in the over-the-counter market; or (b) following Executive's employment with the Company, employment in any capacity by an original equipment manufacturer, distributor, dealer group or supplier to an original equipment manufacturer engaged in the Auto Industry (individually, an "Auto Entity"), PROVIDED that Executive's employment is not with a supplier or distributor primarily engaged in the Restricted Business or with any Auto Entity's division, subsidiary (or affiliate of such subsidiary) or affiliate that engages directly in the Restricted Business. (b) CONFIDENTIALITY. (i) "Company Confidential Information" includes, among other things: (1) any information relating to the Company's financial position, business operations, plans or strategies, research and development and personnel; (2) the names of the Company's actual or prospective customers and the nature of the Company's relationships (including types, prices and amounts of products acquired or anticipated to be acquired from the Company) with such customers, including specific individuals employed by customers, compiled in a format such as an account record card, customer buying patterns, group run concepts and combination ordering patterns of the Company's customers, information related to, for instance, special needs, sizes, ink, thickness, paper type for particular applications of the Company's customers, information related to value added services provided by the Company to its customers, information related to targeted and/or anticipated product or service needs of the Company's customers and the policies and/or business practices of the Company's customers; (3) sales, marketing, operational and product development plans and forecasts, including identification of the Company's most profitable customer accounts and service/product lines, information related to vendors used by the Company to service the 8 Company's customers, creativity concepts on multiple location accounts developed or implemented by the Company and the Company's production costs; (4) non-public price lists and sales volume and other information, including the prices at which the Company sells products or services to particular customers or customer groups; (5) the Company's various computer systems and information technology, as such systems and technology may exist from time to time, including without limitation, computer and related equipment, computer programs (whether identified as software, firmware or other and on whatever media), databases, documentation, manuals, hardware and software support systems and methods, techniques or algorithms of organizing or applying the same; (6) developments, improvements, inventions and processes that are or may be produced in the course of the Company's operations; (7) confidential and private matters of the Company's customers and potential customers submitted to the Company for handling and processing; (8) any information licensed to the Company on a confidential basis from third parties for the Company's own internal use and/or for sublicense to end users; and (9) any other information, not generally known, concerning the Company or its operations, products, personnel, customers or business, acquired, disclosed or made known to Executive while in the employ of the Company which, if used or disclosed other than in the performance of Executive's job duties for the Company, could with reasonable possibility adversely affect the business of the Company or give to a competitor a competitive advantage. (ii) Executive will not, during Executive's employment with the Company or following termination of employment for any reason, use for Executive's own benefit or, without the prior written consent of the Company, disclose to any person (other than in the ordinary conduct of the Company's business) any Company Confidential Information. Executive acknowledges and agrees that Executive's obligations not to disclose any Company Confidential Information, as that term is defined herein or otherwise under the law, is in addition to any obligation Executive has pursuant to (i) any other agreement Executive has entered into or may in the future enter into with the Company; and (ii) any applicable law. The restrictions set forth in this Section 7(b) shall not be applicable (i) with respect to any information that is either known to or could readily be determined by third parties, or (ii) with respect to any disclosure Executive is required to provide in connection with litigation, government investigations or any other legal process, PROVIDED that Executive provides the Company with prompt notice of its disclosure obligations so that the Company may seek an appropriate protective order or other appropriate remedy. 9 (c) OWNERSHIP OF INVENTIONS. (i) Executive will fully and completely disclose to the Company during Executive's employment with the Company any inventions, ideas, works of authorship and other trade secrets or confidential and proprietary information made, developed and/or conceived by Executive alone or jointly with others arising out of or relating to Executive's employment by the Company. (ii) Executive agrees that any inventions, ideas or original works of authorship, in whole or in part conceived or made by Executive, which are made through the use of any Company Confidential Information or any Company equipment, facilities, supplies or time, which relate to the Company's business or the Company's actual or demonstrably anticipated research and development, or which resulted or result from any work performed by Executive for the Company, shall belong exclusively to the Company and shall be deemed the Company's Confidential Information whether or not fixed in a tangible medium of expression. Without limiting the foregoing, Executive agrees that any such original works of authorship shall be deemed to be "works made for hire" and that the Company shall be deemed the author thereof under the U.S. Copyright Act. In any event, Executive hereby irrevocably assigns and transfers to the Company all rights, title and interest in such works, including, but not limited to, copyrights. (iii) Executive hereby assigns to the Company, its successors or assigns, any and all inventions, patents and rights in patents, and applications for patents both in the United States and in any foreign country, in connection with any of Executive's inventions, improvements or developments, whether existing now or created in the future, and to do any and all acts, and to execute any and all instruments, which the Company may request to secure to itself, its successors or assigns, all rights relating to such inventions or improvements or developments or patents or applications in the United States or in any foreign country, including the right to file in the Company's name. (d) RETURN OF MATERIALS. Within three (3) business days following the termination of employment, in any manner or for any reason, Executive will promptly return to the Company all Company equipment and other property in Executive's possession, custody or control including, but not limited to, documents and any copies of documents pertaining to Company Confidential Information. (e) BREACH. In the event of a material breach by Executive of his obligations under Section 7 of this Agreement (as modified by Section 8(e) hereof), all of the Company's obligations to provide additional compensation or benefits set forth in Section 8 under this Agreement shall cease. 8. TERMINATION. (a) TERMINATION OR DISCHARGE WITHOUT CAUSE. (i) The Company reserves the right to discharge Executive at any time and for any reason; but, subject to the express terms of the other subsections of this Section 8 regarding discharge and termination of employment, upon a discharge or 10 termination of Executive's employment by the Company without Cause, Executive shall be entitled to the following severance benefits, PROVIDED that Executive executes, delivers to the Company and does not rescind a waiver of claims substantially in the form attached as Exhibit A hereto (the "Release"): (1) No later than 10 days following the date of termination of Executive's employment, a Bonus for the year in which termination occurs (the "Terminating Year") equal to the Target Annual Bonus for such year, multiplied by a fraction, the numerator of which is the number of days Executive was employed during the Terminating Year and the denominator of which is 365 (the "Pro-Rata Target Bonus"). If a Target Annual Bonus has not been established for the Terminating Year, the "Target Annual Bonus" shall mean the prior year's Target Annual Bonus for purposes of this Section 8. (2) No later than 10 days following the date of termination of Executive's employment, a lump sum cash payment in an amount equal to: (i) two (2) times the scheduled Base Salary in the Terminating Year plus (ii) two (2) times the sum of the greater of (x) the Target Annual Bonus or the (y) the average of the annual Bonus (excluding any compensation attributable to stock options of any type granted by the Company and any compensation determined by the Board to be a long-term incentive arrangement) for each of the three (3) fiscal years ended immediately prior to the date of termination, or if Executive has received an annual Bonus in fewer than the three (3) fiscal years prior to termination, the average will be based on the annual Bonus received for each fiscal year prior to the date of termination in which Executive received an annual bonus, with any partial year bonus annualized for purposes of this provision (the greater of (x) or (y) to be defined as the "Reference Bonus"). (3) Executive's benefits under the Supplemental Plan, calculated as though Executive had remained actively employed by the Company for an additional two (2) years. (4) Continuation of medical and dental benefits to the extent that Executive is entitled to receive such benefits under the Company's retiree medical plan and subject to the terms and conditions of such plan. (ii) In the event of termination of employment under this Section 8(a), Executive shall be subject to and bound by all of the restrictive provisions of Section 7 above. Executive shall not be required to seek other employment or to take other actions to mitigate any damages suffered by the Company nor shall any compensation received by Executive from any other sources reduce any payments or benefits to which he is entitled under this Agreement. (b) DISCHARGE FOR CAUSE. (i) If Executive's employment with the Company is terminated by a Discharge For Cause, regardless of whether such Discharge For Cause occurs after the occurrence of any of the events set forth in Sections 8(d) or 8(e) below, he shall be entitled to receive only his Base Salary and any other payments or reimbursements due under this Agreement up to the date of his discharge and no further payments hereunder 11 shall be required from the Company; PROVIDED, HOWEVER, that Executive shall be entitled to receive his benefits, if any, under the pension plan and the supplemental plan in accordance with the terms of the respective plan documents. (ii) In the event of termination of employment under this Section 8(b), Executive acknowledges that he shall remain subject to and bound by the restrictive provisions of Section 7 above. (iii) In the event Executive disagrees that Executive's discharge was a Discharge For Cause, such claim shall be submitted to arbitration in accordance with Section 14 below. (iv) "Discharge For Cause" shall be construed to have occurred whenever occasioned by (a) reason of actions by Executive which are felonious, involve moral turpitude or other material misconduct by Executive, in each case, which has diminished or has a reasonably foreseeable risk of diminishing either the Company's reputation or Executive's ability to act on the Company's behalf, or (b) material breach of Section 7 of this Agreement. The Company shall provide written notice to Executive detailing the grounds and facts in support thereof for the Company claim that cause exists under this provision, and Executive shall have thirty days from the date of that notice to remedy the cause to the reasonable satisfaction of the Company. Following a Change in Control, as defined in Section 8(e), the cessation of employment of Executive shall not be deemed to be a Discharge For Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board or, if the Company is no longer publicly traded on an established securities market and any parent of the Company is publicly traded, the board of directors of such parent(s) of the Company (excluding Executive, if Executive is a member of such board) at a meeting of such board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity, together with counsel for Executive, to be heard before the board), finding that, in the good faith opinion of the board, Executive is guilty of the conduct described in Section 8(b)(iv)(a) or 8(b)(iv)(b), and specifying the particulars thereof in detail. (c) TERMINATION DUE TO DISABILITY. (i) If, by reason of illness, disability, or other incapacity certified by two (2) physicians competent to do so in the opinion of the Board and reasonably acceptable to Executive or his legal representative, Executive is unable to perform the duties required of him under this Agreement for a period of six (6) consecutive months, the Company, following the giving of thirty (30) days written notice to Executive and the failure of Executive by reason of illness, disability, or other incapacity to resume his duties within such thirty (30) days and thereafter perform the same for a period of two (2) consecutive months, the Company may terminate Executive's employment by giving him written notice thereof. Executive shall cooperate with the Company and the physicians appointed by the Company and submit to reasonable medical examinations. If information is provided to any member of the Board about Executive's 12 medical condition in connection with the Board's assessment of Executive's capacity hereunder, it shall be accompanied by a reminder that such information should be treated as confidential. (ii) Provided that Executive delivers to the Company and does not rescind the Release, Executive shall be entitled to: (1) No later than 10 days following the date of termination of Executive's employment, a Pro-Rata Target Bonus for the Terminating Year. (2) An annual disability benefit equal to ninety percent (90%) of his Base Salary. The disability benefit shall be provided through the then existing Company-sponsored disability plan with the Company making any additional contributions as may be necessary to pay Executive the required amount. The disability benefit, including any Company-required contribution, shall be paid so long as and on the same terms and conditions as the payments being made under the Company-sponsored disability plan. (3) Executive's benefits under the Supplemental Plan calculated as though Executive had remained employed by the Company for an additional two (2) years after his active employment ended due to his disability. (4) Full vesting under any stock option or time-based restricted stock awards provided to Executive and determination of vesting under any performance-based restricted stock awards pursuant to the provisions of applicable plans. (iii) In the event of termination of employment under this Section 8(c), Executive acknowledges that he shall remain subject to and bound by the restrictive provisions of Section 7 above. Executive shall not be required to seek other employment or to take other actions to mitigate any damages suffered by the Company nor shall any compensation received by Executive from any other sources reduce any payments or benefits to which he is entitled under this Agreement. (d) BENEFITS UPON TERMINATION FOLLOWING CHANGED CIRCUMSTANCES. (i) If Executive voluntarily terminates his employment within eighteen (18) months after the occurrence of any of the following events: (1) Executive is required by the Company, prior to a Change in Control, to perform duties or services which differ significantly from those performed by him on the Effective Date hereof or which are not ordinarily and generally performed by a Chief Executive Officer of a corporation similar in size and scope to the Company or there is a diminution of Executive's authority or responsibility; (2) The nature of the duties or services which the Company, prior to a Change in Control, requires him to perform necessitates absence overnight from his place of residence on the Effective Date hereof, because of travel involving the business or affairs of the Company, for more than ninety (90) days during any period of twelve (12) consecutive months; 13 (3) Executive no longer is a Director of the Company (except as a result of Executive's death, resignation or removal pursuant to O.R.C. Sec. 1701.58) or Executive is required to report to some person or entity other than the Board; or (4) Default by the Company in the payment of any sum, the provision of any benefit, or the grant of any stock option or restricted stock award as required by this Agreement. (ii) Then, provided that Executive delivers to the Company and does not rescind the Release, Executive shall be entitled to: (1) No later than 10 days following the date of termination of Executive's employment, a lump sum cash payment in an amount equal to: (i) two (2) times the scheduled Base Salary in the year in which termination occurs plus (ii) two (2) times the Reference Bonus. (2) Executive's benefits under the Supplemental Plan, calculated as though Executive had remained actively employed by the Company for an additional two (2) years. (3) Continuation of medical and dental benefits to the extent that Executive is entitled to receive such benefits under the Company's retiree medical plan and subject to the terms and conditions of such plan. (4) Full vesting under any stock option or time-based restricted stock awards provided to Executive and determination of vesting under any performance-based restricted stock awards pursuant to the provisions of applicable plans. (5) No later than 10 days following the date of termination of Executive's employment, a Pro-Rata Target Bonus for the Terminating Year. (iii) In the event of termination of employment under this Section 8(d), Executive shall be subject to and bound by all of the restrictive provisions of Section 7 above. Executive shall not be required to seek other employment or to take other actions to mitigate any damages suffered by the Company nor shall any compensation received by Executive from any other sources reduce any payments or benefits to which he is entitled under this Agreement. (e) BENEFITS UPON A CHANGE IN CONTROL. (i) The Company recognizes that the threat of a Change in Control would be of significant concern to Executive. The following provisions provide termination protection for Executive in the event of a Change in Control. These provisions, among other purposes, are intended to foster and encourage Executive's continued attention and dedication to his duties in the event of such potentially disturbing and disruptive circumstances. For purposes of this Section 8(e), Good Reason means that following a Change in Control (A) Executive's Base Salary and Target Annual Bonus are reduced below the amount of such Base Salary and Target Annual Bonus in effect 14 immediately preceding the Change in Control without Executive's written consent; (B) Executive's benefits or fringe benefits (including bonuses, vacation, health and disability insurance, etc.) cease to be substantially equivalent to those in effect immediately preceding the Change in Control without Executive's written consent; (C) Executive is required to perform, or is assigned, by the Company or any successor any duties or services which are inconsistent in any respect with Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or which are not ordinarily and generally performed by a Chief Executive Officer of a corporation similar in size and scope to the Company or there is a diminution of his position, authority, duties, responsibility or reporting responsibility (in each case whether or not occurring solely as a result of the Company's ceasing to be a publicly traded entity or becoming a subsidiary), excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by Executive; (D) the nature of the duties or services which the Company or any successor requires him to perform necessitates absence overnight from his place of residence prior to the Change in Control, because of travel involving the business affairs of the Company, for more than ninety (90) days during any period of twelve (12) consecutive months; (E) Executive is required to be based at a location other than the principal executive offices of the Company if Executive was employed at such location immediately preceding the date of such Change in Control; (F) Executive's principal place of employment is relocated in excess of fifty (50) miles from Dayton, Ohio; or (G) any failure by the Company to comply with and satisfy Section 10. Prior to terminating employment for Good Reason, Executive may request in Executive's sole discretion a determination by final and binding arbitration in accordance with Section 14 below of whether Good Reason exists. If the arbitrator determines that Good Reason does not exist, Executive may continue employment without prejudice. For purposes of this Section 8(e)(i), any good faith determination of "Good Reason" made by Executive shall be conclusive. Executive's mental or physical incapacity following the occurrence of an event described in clauses (A) through (G) shall not affect Executive's ability to terminate employment for Good Reason. "Change in Control" shall mean the occurrence of any of the following: (1) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); PROVIDED, HOWEVER, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by Richard H. Grant, Jr., his children or his grandchildren,(iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (v) any acquisition by any 15 corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 8(e)(i); (2) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, PROVIDED that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; (3) Consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company, the acquisition of assets of another corporation, a statutory share exchange or other similar transactions (a "Corporate Transaction"), in each case, unless, following such Corporate Transaction, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding (1) Richard H. Grant, Jr., his children or his grandchildren or (2) any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or at the time of the action of the Board, providing for such Corporate Transaction; (4) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. (ii) If (A) within the twenty-four (24) month period following a Change in Control, either the Company terminates Executive's employment for any reason other than a Discharge For Cause, or if Executive terminates his employment with the Company for Good Reason or (B) a Change in Control occurs and if Executive's employment with the Company is terminated by the Company other than for a Discharge 16 For Cause prior to the date on which the Change in Control occurs (in which case the Change in Control will be deemed to have occurred immediately prior to the date of such termination for purposes of this Agreement), and if it is reasonably demonstrated by Executive that such termination of employment (1) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (2) otherwise arose in connection with or anticipation of a Change in Control, PROVIDED that, in each case, Executive delivers to the Company and does not rescind the Release, Executive shall be entitled to receive from the Company the following benefits: (1) No later than 10 days following the date of termination of Executive's employment, a lump sum severance payment (the "Severance Payment"), in cash, equal to 2.99 times the sum of (i) Executive's annual Base Salary in effect immediately prior to the occurrence of the event or circumstance upon which such termination of employment is based or in effect immediately prior to the Change in Control (whichever is higher), and (ii) the Reference Bonus. (2) Executive shall be entitled, during the period expiring on the earlier of his securing other employment or thirty-six months from the date of such termination of employment, to continued coverage under the Company-sponsored medical benefits program in existence on such date of termination or, if such continued coverage is barred, or otherwise at the option of the Company, the Company shall provide substantially equivalent medical benefit coverage (including with respect to the tax impact upon Executive) through the purchase of insurance or otherwise (at substantially equivalent cost to Executive). (3) No later than 10 days following the date of termination of Executive's employment, a Pro-Rata Target Bonus for the Terminating Year. (4) Executive's benefits under the SERP and Supplemental Plan as contemplated by Section 6 shall be calculated as though Executive had remained employed by the Company for the three (3) year period following such termination of employment (it being understood that upon a termination of the Employee's employment under this Section 8(e) such three year period will be the number of years (without duplication) credited pursuant to Section 9(a)(ii) of the Supplemental Plan (or any applicable successor provision of the Supplemental Plan or any applicable successor plan) or any similar provision of the SERP. Notwithstanding anything to the contrary in any Supplemental Plan or the SERP, Executive shall not be subject to any minimum service requirement in the Supplemental Plan or the SERP. For the avoidance of doubt, in no event will the Severance Payment (as defined below) or the Gross-Up Payment (as defined below) be included in Executive's earnings for the purpose of calculating Executive's benefit under the SERP or the Supplemental Plan. (5) Executive shall be reimbursed for up to twenty thousand dollars ($20,000) for outplacement fees if he chooses to seek other employment following his discharge by the Company. (6) The benefits provided in this Section 8(e) shall be in lieu of, and not in addition to, any other benefits provided under this Agreement. 17 (iii) Effective upon a Change in Control, Executive's rights under the Company's relocation policy then in effect, including any addenda thereto (the "Relocation Policy") shall become irrevocable, PROVIDED that, in addition to any such rights under the Relocation Policy (a) Executive shall not be required to reimburse the Company or any successor thereto for any amounts that Executive has or is otherwise entitled to receive pursuant to the Relocation Policy and (b) the Company or any successor thereto shall make Executive whole with respect to any expenses incurred by Executive due to any relocation (whether or not consummated), including any applicable tax gross-ups. (iv) In the event of termination of employment under this Section 8(e), Executive shall not be subject to the restrictive provisions of Section 7(a) above. Executive shall not be required to seek other employment or to take other actions to mitigate any damages suffered by the Company nor shall any compensation received by Executive from any other sources reduce any payments or benefits to which he is entitled under this Agreement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Employer may have against Executive or others. (v) The Company or the consolidated, surviving or transferee entity in the event of a consolidation, merger or sale of assets, shall pay as incurred (within 10 days following the Company's receipt of an invoice from Executive), to the full extent permitted by law, all legal fees and expenses that Executive may reasonably incur as a result of any contest, including, without limitation, any arbitration pursuant to the provisions of Section 8(e)(i) of this Agreement, (regardless of the outcome thereof) by the Company, Executive or others with respect to the enforcement of Executive's rights under this Section 8(e) or under any plan for the benefit of employees of the Company, including without limitation the stock option plan, pension plans, payroll-based stock ownership plan, tax deferred savings and protection plan, bonus arrangements, supplemental pension plan, deferred compensation agreements, incentive compensation plans, and life insurance and compensation program; PROVIDED, HOWEVER, that Executive shall be required to reimburse the Company or such consolidated, surviving or transferee entity, for the cost of such legal fees and expenses if Executive is deemed by the arbitrator or court, as the case may be, to have brought or defended such contest in bad faith. (f) TERMINATION UPON EXPIRATION OF A TERM. (i) The Company may choose not to renew and thereby terminate the Agreement at the end of the Initial Term or any extension of the Term by providing written notice to Executive of its intention not to renew the Agreement at least 180 days prior to the end of any such Term; PROVIDED, HOWEVER, that in the event of non-renewal pursuant to this provision, Executive will be paid the severance amounts and benefits set forth in Section 8(a) above. (ii) Executive may choose not to renew and thereby terminate the Agreement at the end of the Initial Term or any extension of the Term by providing 18 written notice to the Company at least 180 days prior to the end of any such Term; PROVIDED, HOWEVER, that, in the event of non-renewal pursuant to this provision, Executive shall be entitled to receive only his Base Salary, a Pro-Rata Target Bonus for the Terminating Year and any other benefits and reimbursements up to the date of his termination and no further payments hereunder shall be required from the Company; PROVIDED, HOWEVER, that Executive shall be entitled to receive his benefits, if any, under the Qualified Plan, the Supplemental Plan and any other benefit plan in accordance with the terms of the respective plan documents. (iii) In the event of termination of employment under this Section 8(f), Executive acknowledges that he shall remain subject to and bound by the restrictive provisions of Section 7 above. Executive shall not be required to seek other employment or to take other actions to mitigate any damages suffered by the Company nor shall any compensation received by Executive from any other sources reduce any payments or benefits to which he is entitled under this Agreement. (g) SECTION 409A OF THE CODE. The benefits provided under this Agreement, including without limitation the SERP provided under Section 6(b) and any severance pay provided under Section 8, shall comply with Section 409A of the Code and the regulations thereunder. To the extent so required in order to comply with Section 409A of the Code, amounts and benefits to be paid or provided under this Agreement shall be paid or provided to Executive in a single lump sum on the first business day after the date that is six months following the date of termination of Executive's employment. To the extent that Executive's entitlement to continued coverage under the Company's health and welfare benefit plans is so delayed, (i) Executive shall be entitled to COBRA continuation coverage under Section 4980B of the Code ("COBRA Coverage") during such period of delay, (ii) the Company shall reimburse Executive for any Company portions of such COBRA Coverage in the seventh month following the Date of Termination and (iii) such continued coverage shall begin in the seventh month following the Date of Termination. 9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (the "Gross-Up Payment") in an amount such that, after payment by Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it shall be determined that Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments under Section 8(e)(ii)(1), unless an alternative method of reduction is elected by Executive, and in any event shall be made in such a manner as to 19 maximize the Value of all Payments actually made to Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant to this Section 9(a). The Company's obligation to make Gross-Up Payments under this Section 9 shall not be conditioned upon termination of Executive's employment. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP, or such other nationally recognized certified public accounting firm as may be designated by Executive (the "Accounting Firm"). The Accounting Firm shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the receipt of notice from Executive that there has been a Payment or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to Executive within 5 days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (the "Underpayment"), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 9(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive. (c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after Executive is informed in writing of such claim. Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that the Company desires to contest such claim, Executive shall: (1) give the Company any information reasonably requested by the Company relating to such claim, (2) take such action in connection with contesting such claim 20 as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (3) cooperate with the Company in good faith in order effectively to contest such claim, and (4) permit the Company to participate in any proceedings relating to such claim; PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either pay the tax claimed to the appropriate taxing authority on behalf of Executive and direct Executive to sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; PROVIDED, HOWEVER, that, if the Company pays such claim and directs Executive to sue for a refund, the Company shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and PROVIDED, FURTHER, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by Executive of a Gross-Up Payment or payment by the Company of an amount on Executive's behalf pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, Executive shall (subject to the Company's complying with the requirements of Section 9(c), if applicable) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after payment by the Company of an amount on Executive's behalf pursuant to Section 9(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. (e) Notwithstanding any other provision of this Section 9, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other 21 applicable taxing authority, for the benefit of Executive, all or any portion of any Gross-Up Payment, and Executive hereby consents to such withholding. (f) DEFINITIONS. The following terms shall have the following meanings for purposes of this Section 9. (1) "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax. (2) "Parachute Value" of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a "parachute payment" under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment. (3) A "Payment" shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise. (4) The "Safe Harbor Amount" means 2.99 times Executive's "base amount," within the meaning of Section 280G(b)(3) of the Code. (5) "Value" of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code. 10. ASSIGNMENT OF RIGHTS AND DUTIES. This Agreement and Executive's rights and obligations hereunder may not be assigned by Executive. The Company shall assign the Company's rights and duties hereunder to any person, firm, corporation or other business entity that succeeds to substantially all of the assets and operations of the Company. This Agreement shall not be terminated by any merger in which Company is not the surviving or resulting corporation, or on any transfer of all or substantially all of Company's assets. In the event of any such merger or transfer of assets, the provisions of this Agreement shall be binding on and inure to the benefit of the surviving business entity or the business entity to which such assets shall be transferred. 11. PRIOR EMPLOYMENT. Executive represents to the best of his knowledge that he is under no binding obligation that would prevent him from entering into this Agreement. Notwithstanding the foregoing, should Executive's prior employer nevertheless make any claims with respect to Executive's right to resign his prior employment or enter into this Agreement, the Company agrees to defend and indemnify Executive from any legal challenge or other lawsuit that may be brought against him arising out of such claims. 12. MODIFICATION AND WAIVER OF BREACH. No waiver or modification of this Agreement or any term hereof shall be binding unless it is in writing signed by the parties hereto. No failure to insist upon compliance with any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or 22 constructed as a waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. In the event of any claimed breach of this Agreement, the party alleged to have committed such breach shall be entitled to written notice of such alleged breach and a period of fifteen (15) days to remedy such breach. Executive understands that a breach of any one or more of the covenants set forth in Section 7 above will result in irreparable and continuing damage to the Company for which there exists no adequate remedy at law, and in the event of any breach or threatened breach of Executive's obligations under Section 7, the Company may, instead of arbitrating its claim of breach of Section 7, file suit to enjoin Executive from the breach or the threatened breach of such covenants. 13. NOTICES. All notices and other communications required under this Agreement to be in writing shall be served personally on, or sent by relievable overnight courier to, the party to be charged with receipt thereof. Notices and other communications served by overnight courier shall be deemed given hereunder twenty-four (24) hours after deposit of such notice or communications with such reputable overnight courier which guarantees 24-hour delivery under the particular circumstances (such as holidays or weekends) duly addressed to the party to whom such notice or communication is to be given as follows: (a) If to the Company: The Reynolds and Reynolds Company One Reynolds Way Kettering, Ohio 45430 Attention: Vice President, Corporate Finance and Chief Financial Officer (b) If to Executive at his last address shown on the Company's records. Either Executive or the Company may change the address for purposes of this Section by giving to the other party a written notice of such change. 14. ARBITRATION. (a) Except for the breach or threatened breach by Executive of the covenants set forth in Section 7 above, which may be enforced through litigation including injunctive relief at the option of the Company, any dispute or controversy arising out of or relating to this Agreement, including, but not limited to, whether Executive has been Discharged For Cause or whether Executive can terminate his employment hereunder for Good Reason, shall be submitted to and settled by arbitration in Dayton, Ohio in accordance with the rules then-pertaining of the American Arbitration Association applicable to employment disputes to the extent that such rules are not inconsistent with this Section 14. (b) Any dispute submitted to arbitration hereunder shall be heard by a panel of three (3) arbitrators, one of whom shall be selected by the Company, another of whom shall be selected by Executive, and the third of whom shall be selected by the two arbitrators so appointed. The decision of a majority of this panel of arbitrators on the question submitted shall 23 be final and conclusive upon the Company and upon Executive and his wife or widow, personal representatives, designated beneficiaries and heirs, and shall be enforceable in any court having competent jurisdiction thereof. The Company shall bear the fees and expenses of the arbitrators and costs charged by the American Arbitration Association to administer the arbitration. 15. SEVERABILITY. In the event any provision of this Agreement is held invalid, then the remaining provisions of this Agreement shall not be affected thereby. 16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Ohio. 17. COMPLETE AGREEMENT. This Agreement, together with the letter from the Company and Universal Computer System Holding, Inc. to Executive, contains the entire agreement between the parties hereto with respect to the subject matter contemplated by this Agreement and supersedes all previous and all contemporaneous negotiations, commitments, writing, and understandings, including, without limitation, the Original Agreement, except as expressly provided herein. This Agreement may be modified, changed or added to only by an agreement in writing executed by both parties. 18. LEGAL REVIEW AND DRAFTING; ATTORNEYS' FEES. Executive acknowledges that he has had the opportunity to have this Agreement reviewed by competent legal counsel. It is agreed this Agreement shall be constructed with the understanding that both parties were responsible for drafting it. Company will reimburse Executive for reasonable attorneys' fees incurred by Executive in connection with negotiating and preparing this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 24 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first written above. THE REYNOLDS AND REYNOLDS COMPANY /s/ Robert S. Guttman ------------------------------------- Name: Robert S. Guttman Title: Vice President and General Counsel EXECUTIVE /s/ Finbarr J. O'Neill --------------------------------------- Finbarr J. O'Neill SIGNATURE PAGE TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT RELEASE OF CLAIMS For and in consideration of the payments and other benefits due to Finbarr J. O'Neill (the "EXECUTIVE") pursuant to the Amended and Restated Change in Control Agreement, dated as of August 7, 2006 (the "AGREEMENT"), by and between the Executive and The Reynolds and Reynolds Company (the "COMPANY") and for other good and valuable consideration, Executive hereby releases the Company, its divisions, affiliates, subsidiaries, parents, branches, predecessors, successors, assigns, officers, directors, trustees, employees, agents, shareholders, administrators, representatives, attorneys, insurers and fiduciaries, past, present and future (the "RELEASED PARTIES") from any and all claims of any kind arising out of, or related to, Executive's employment with the Company, its affiliates and subsidiaries (collectively, with the Company, the "AFFILIATED ENTITIES"), and Executive's separation from employment with the Affiliated Entities, which Executive now has or may have against the Released Parties, whether known or unknown to Executive, by reason of facts which have occurred on or prior to the date that Executive has signed this Release. Such released claims include, without limitation, any and all claims relating to the foregoing under federal, state or local laws pertaining to employment, including, without limitation, the Age Discrimination in Employment Act ("ADEA"), Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e ET. SEQ., the Fair Labor Standards Act, as amended, 29 U.S.C. Section 201 ET. SEQ., the Americans with Disabilities Act, as amended, 42 U.S.C. Section 12101 ET. SEQ. the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981 ET. SEQ., the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701 ET. SEQ., the Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 ET. SEQ., and any and all state or local laws regarding employment discrimination and/or federal, state or local laws of any type or description regarding employment, including but not limited to any claims arising from or derivative of Executive's employment with the Affiliated Entities, as well as any and all such claims under state contract or tort law. Executive has read this Release of Claims carefully, acknowledges that Executive has been given at least 21 days to consider all of its terms and has been advised to consult with any attorney and any other advisors of Executive's choice prior to executing this Release of Claims, and Executive fully understands that by signing below Executive is voluntarily giving up any right which Executive may have to sue or bring any other claims against the Released Parties, including any rights and claims under the ADEA. Executive also understands that Executive has a period of seven days after signing this Release of Claims within which to revoke his agreement, and that neither the Company nor any other person is obligated to make any payments or provide any other benefits to Executive pursuant to the Agreement until eight days have passed since Executive's signing of this Release of Claims without Executive's signature having been revoked other than any accrued obligations or other benefits payable pursuant to the terms of the Company's normal payroll practices or employee benefit plans. Finally, Executive has not been forced or pressured in any manner whatsoever to sign this Release of Claims, and Executive agrees to all of its terms voluntarily. Executive understands that in order to revoke this Release of Claims, Executive must send a written revocation of Executive's intent to do so to [NAME AND ADDRESS OF NOTICE PERSON]. A-1 Notwithstanding anything else herein to the contrary, this Release of Claims shall not affect: (i) any rights that Executive may have with respect to matters which by their terms, are to be performed after the date hereof by the Company (including, without limitation, obligations to Executive under any stock option, stock award or agreements or obligations under any pension, deferred compensation, retention or other compensation or benefit plan, all of which shall remain in effect in accordance with their terms); (ii) rights to indemnification Executive may have under (A) applicable corporate law, (B) the by-laws or certificate of incorporation of the Affiliated Entities, (C) any other agreement between Executive and a Released Party, (D) as an insured under any director's and officer's liability insurance policy now or previously in force or (E) Section 7.05 of the Agreement and Plan of Merger, dated as of August 7, 2006, among the Company, Universal Computer System Holding, Inc. and Racecar Acquisition Co.; (iii) any right Executive may have to obtain contribution in the event of the entry of judgment against Executive as a result of any act or failure to act for which both Executive and any of the Affiliated Entities are jointly responsible; (iv) any rights that Executive may have under the Agreement to the extent not satisfied, including without limitation any rights to reimbursement of legal fees and expenses; and (v) any rights of Executive as a shareholder of the Company or any of the Affiliated Entities. This Release of Claims, and the attached covenants, are final and binding and may not be changed or modified except in a writing signed by both parties. August 7, 2006 /s/ Finbarr J. O'Neill - ------------------------- -------------------------------- Date Finbarr J. O'Neill August 7, 2006 /s/ Robert Guttman - ------------------------- -------------------------------- Date The Reynolds and Reynolds Company EX-10 8 cicsumm.txt 10.06 SUMMARY OF CHANGE IN CONTROL EXHIBIT 10.06 AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT MATERIAL TERMS TYPE OF PROGRAM - Change in Control agreement for executives. Agreement has initial term through 1/31/08, subject to annual renewals. ELIGIBLE EMPLOYEES - 8 members of senior management PROTECTION PERIOD - 24-months following a Change in Control and prior to, if in connection with, a Change in Control SEVERANCE BENEFITS - IF CHANGE IN CONTROL OCCURS,- Employee is terminated by the Company (other AND than for disability or cause) or Employee terminates employment for good reason, Employee shall receive: 1) pro-rata target bonus for the year in which termination occurs 2) 2.99x annual salary (at higher of level upon termination event or immediately prior to Change in Control) 3) 2.99x higher of target bonus or three- year average annual bonus 4) 3 years medical benefits 5) 3 additional years of service for SERP 6) outplacement services (up to $20,000) EQUITY VESTING - In the event of a Change in Control, any applicable performance-based vesting goals with respect to stock-based awards granted to the Employee shall be deemed 100% met and all stock -based awards shall vest in full, in each case immediately prior to the occurrence of such Change in Control. ADDITIONAL PROVISIONS - A. Employee will not be subject to any non- compete. B. Employee is entitled to a gross-up for excise tax on excess parachute payments, subject to a 10% "cut-back" (i.e., change in control payments will be reduced below the 280G safe harbor if the total parachute value of CIC payments are less than 10% in excess of the 280G safe harbor). C. Employee has no duty to seek or gain new employment after termination, and no mitigation (other than for health and welfare benefits from new employer) will apply. D. Upon a Change in Control,Company is obligated to reim- burse Employee for any legal fees incurred in connection with contesting Employee's rights under the agreement, subject to reimbursement in the case of a bad faith claim. E. Rights under relocation policy are irrevocable upon a Change in Control. F. The Company and Universal Computer System Holding, Inc. ("UCS") have acknowledged in writing that consummation of the merger between the Company and UCS will constitute good reason with respect to Mr. Geswein (Chief Financial Officer) and that the occurrence of the six month anniversary of consummation of the merger will constitute good reason for Mr. Guttman (General Counsel). EX-10 9 cicagmt.txt 10.07 FORM OF CHANGE IN CONTROL AGREEMENT EXHIBIT 10.07 EXECUTION COPY AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT This AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement") is made and entered into the 7th day of August, 2006 (the "Effective Date") by and between THE REYNOLDS AND REYNOLDS COMPANY, a corporation existing under the laws of the State of Ohio (hereinafter referred to as the "Employer"), and [___] (hereinafter referred to as the "Employee"). WITNESSETH: WHEREAS, the Employee is currently an employee of the Employer; and WHEREAS, the Employee and the Employer are currently parties to a Change in Control Agreement (the "Original Agreement"); and WHEREAS, the Employee and the Employer desire to amend and restate the Original Agreement; and WHEREAS, the Employer considers the Employee a key member of the management team of the Employer and recognizes that the occurrence of a change in the control of the Employer would be of significant concern to the Employee; and WHEREAS, the parties hereto desire to set forth their mutual agreement regarding the terms of the Employee's employment under certain specified circumstances in order to foster and encourage continued attention and dedication to the Employee's assigned duties in the event of such circumstances; NOW, THEREFORE, in consideration of the foregoing premises, the Employee's continued employment for any period after execution of this Agreement, and the mutual promises set forth herein, the parties hereby agree as follows: 1. DEFINITIONS. For purposes of this Agreement: (a) "Base Compensation" shall mean the then-current annual base salary (exclusive of Bonuses) of the Employee, as the same may be fixed from time to time by the Board of Directors of the Employer (the "Board") or its Compensation Committee or, if applicable, by the appropriate executive officer of the Employer. (b) "Bonuses" shall mean bonus payments earned by the Employee under the Employer's incentive compensation plans and under any future bonus or incentive compensation plans of the Employer for its officers in which the Employee participates. (c) "Change in Control" shall mean the occurrence of any of the following events: 1 (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (a) the then outstanding shares of common stock of the Employer (the "Outstanding Employer Common Stock") or (b) the combined voting power of the then outstanding voting securities of the Employer entitled to vote generally in the election of directors (the "Outstanding Employer Voting Securities"); PROVIDED, HOWEVER, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (a) any acquisition directly from the Employer, (b) any acquisition by the Employer, (c) any acquisition by Richard H. Grant, Jr., his children or his grandchildren, (d) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Employer or any corporation controlled by the Employer or (e) any acquisition by any corporation pursuant to a transaction which complies with clauses (a), (b) and (c) of subsection (iii) of this Section 1(c); (ii) Individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, PROVIDED that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Employer's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; (iii) Consummation by the Employer of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Employer, the acquisition of assets of another corporation, a statutory share exchange or other similar transactions (a "Corporate Transaction"), in each case, unless, following such Corporate Transaction, (a) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Employer Common Stock and Outstanding Employer Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation 2 resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Employer or all or substantially all of the Employer's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Employer Common Stock and Outstanding Employer Voting Securities, as the case may be, (b) no Person (excluding (i) Richard H. Grant, Jr., his children or his grandchildren and (ii) any employee benefit plan (or related trust) of the Employer or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (c) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or at the time of the action of the Board, providing for such Corporate Transaction; or (iv) Approval by the shareholders of the Employer of a complete liquidation or dissolution of the Employer. (d) "Date of Termination" means (1) if the Employee's employment is terminated by the Employer due to a Discharge For Cause, or by the Employee for Good Reason, the date of receipt of the Notice of Termination or any later date specified in the Notice of Termination, (which date shall not be more than 30 days after the giving of such notice), as the case may be, (2) if the Employee's employment is terminated by the Employer other than due to a Discharge For Cause or Disability, the date on which the Employer notifies the Employee of such termination, (3) if the Employee resigns without Good Reason, the date on which the Employee notifies the Employer of such termination, and (4) if the Employee's employment is terminated by reason of death or Disability, the date of death of the Employee or the Disability Effective Date (as defined below), as the case may be. (e) "Disability" means the absence of the Employee from the Employee's duties with the Employer on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness that is determined to be total and permanent by a physician selected by the Employer or its insurers and acceptable to the Employee or the Employee's legal representative. If the Employer determines in good faith that the Disability (as defined herein) of the Employee has occurred during the Term (pursuant to the definition of "Disability"), and gives to the 3 Employee written notice in accordance with Section 14 of its intention to terminate the Employee's employment for Disability, the Employee's employment with the Employer shall terminate effective on the 30th day after receipt of such notice by the Employee (the "Disability Effective Date"), PROVIDED that, within the 30 days after such receipt, the Employee shall not have returned to full-time performance of the Employee's duties. (f) "Discharge For Cause" shall be construed to have occurred whenever occasioned by (i) reason of felonious acts on the part of the Employee, actions by the Employee involving serious moral turpitude, or the Employee's material misconduct, in each case which has diminished or has a reasonably foreseeable risk of diminishing either the Employer's reputation or the Employee's ability to act on the Employer's behalf, (ii) the Employee's material breach of the non-competition provisions of the Officer Agreement executed by the Employee (the "Officer Agreement") which agreement is incorporated herein by reference, or (iii) the Employee's material breach of the confidentiality provisions of the Officer Agreement. The discharge of employment of the Employee shall not be deemed to be a Discharge For Cause unless and until there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board or, if the Employer is no longer publicly traded on an established securities market and any parent of the Employer is publicly traded, the board of directors of such parent(s) of the Employer at a meeting of such board (excluding the Employee, if the Employee is a member of such board) called and held for such purpose (after reasonable notice is provided to the Employee and the Employee is given an opportunity, together with counsel for the Employee, to be heard before the board), finding that, in the good faith opinion of the board, the Employee is guilty of the conduct described in Section 1(f)(i), 1(f)(ii) or 1(f)(iii), and specifying the particulars thereof in detail. In the event the Employee contests that the Employee's discharge was a Discharge For Cause, such claim shall be submitted to arbitration in accordance with Section 12 below. (g) "Good Reason" shall mean the occurrence or failure to cause the occurrence of any of the following, without the Employee's written consent: (i) the Employee's Base Compensation or target Bonus opportunity is reduced below the amount of such Base Compensation or target Bonus opportunity in effect immediately preceding the Change in Control; (ii) the Employee's benefits or fringe benefits (including bonuses, vacation, health and disability insurance, etc.) cease to be substantially equivalent to those in effect immediately preceding the Change in Control; (iii) there is a material diminution of (or a change which is materially inconsistent with) the Employee's position (including offices or titles), authority, duties, responsibility or reporting responsibility as in effect 4 immediately prior to the Change in Control, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Employer promptly after receipt of notice thereof given by the Employee; PROVIDED, HOWEVER, that in no event will there be deemed to be Good Reason solely by reason (A) of the consummation of a Change in Control (including by reason of the Company becoming a subsidiary of another company); or (B) of the Employee ceasing to serve as an executive of a publicly held corporation; (iv) the nature of the duties or services which the Employer or any successor requires the Employee to perform necessitates absence overnight from his place of residence prior to the Change in Control, because of travel involving the business affairs of the Employer, for more than ninety (90) days during any period of twelve (12) consecutive months unless such travel is consistent with the Employee's travel obligations in effect immediately preceding the Change in Control; (v) the Employee is required to be based at a location other than the principal executive offices of the Employer if the Employee was employed at such location immediately preceding the date of such Change in Control; (vi) the Employee's principal place of employment is relocated in excess of fifty (50) miles from Dayton, Ohio; or (vii) any failure by the Employer to comply with and satisfy the obligations set forth in Section 6(b). The Employee's mental or physical incapacity following the occurrence of an event described in clauses (i) through (vii) shall not affect the Employee's ability to terminate employment for Good Reason. Prior to terminating employment for Good Reason, the Employee may request in the Employee's sole discretion (by written notice to the Employer) a determination by final and binding arbitration in accordance with Section 12 below of whether Good Reason exists. If the arbitrator determines that Good Reason does not exist, the Employee may continue employment without prejudice. (h) "Notice of Termination" means a written notice that (1) indicates the specific termination provision in this Agreement relied upon, (2) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee's employment under the provision so indicated, and (3) if the Date of Termination (as defined above) is other than the date of receipt of such notice, specifies the Date of Termination (which Date of Termination shall be not more than 30 days after the giving of such notice). Any termination by the Employer due to a Discharge For Cause, or by the Employee for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 14. The failure by the Employee or the Employer to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Good Reason or a Discharge For Cause shall not waive any right of the Employee or the Employer, respectively, hereunder or preclude the Employee or the Employer, respectively, from asserting such fact or 5 circumstance in enforcing the Employee's or the Employer's respective rights hereunder. (i) "Retirement Plan" shall mean the Employer's existing Retirement Plan as the same may be amended or replaced from time to time, including the Employer's 401(k) Plan (the "401(k) Plan"). (j) "Supplemental Plan" shall mean the Employer's existing Supplemental Retirement Plan (the "DB Supplemental Plan") as the same may be amended or replaced from time to time, including under any account based supplemental plan established by the Employer (the "DC Supplemental Plan"). (k) "Term" shall mean the term of this Agreement as described in Section 2 hereof. 2. TERM OF AGREEMENT (a) The term of this Agreement shall be the period commencing on the Effective Date and terminating on January 31, 2008 (the "Initial Term"). At the end of the Initial Term and on each subsequent anniversary of such date, the term of this Agreement shall renew automatically for a period of one (1) year (the "Initial Term" and each such renewed term of the Agreement to be the "Term"); PROVIDED, HOWEVER, that upon the occurrence of a Change in Control, the Term shall automatically be extended for 24 months from the date of such Change in Control, and shall thereafter renew automatically for a period of one (1) year at the end of such 24-month period and on each subsequent anniversary of such date unless, at least 90 days prior to such renewal date, the Employer shall give written notice to the Employee that the Term shall not be so extended; PROVIDED, FURTHER, HOWEVER, that in no event shall this Agreement terminate prior to the Employer's satisfaction of all of the Employer's obligations to Employee hereunder. 3. BENEFITS TO THE EMPLOYEE. (a) Upon the occurrence of a Change in Control during the Term, the Employer shall not take any actions or inactions which would otherwise give the Employee the right to terminate employment hereunder for Good Reason (as defined in Section 1(g) above). (b) If, during the Term, (A) a Change in Control shall occur and thereafter, either (i) the Employer terminates the Employee's employment for any reason other than a Discharge For Cause within the twenty-four (24) month period following the date of the Change in Control or (ii) the Employee terminates his employment with the Employer for Good Reason within the twenty-four (24) month period following the date of the Change in Control or (B) a Change in Control shall occur and if the Employee's 6 employment with the Employer is terminated by the Employer for any reason other than a Discharge For Cause prior to the date on which the Change in Control occurs (in which case the Change in Control will be deemed to have occurred immediately prior to the date of such termination for purposes of this Agreement), and if it is reasonably demonstrated by the Employee that such termination of employment (1) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (2) otherwise arose in connection with or anticipation of a Change in Control, and in either case, PROVIDED that the Employee delivers to the Employer and does not rescind a waiver of claims substantially in the form attached as Exhibit A hereto, the Employer shall pay or provide to the Employee the following benefits: (i) No later than 10 days following the Date of Termination, Bonuses for the fiscal year in which termination occurs equal to the Employee's target Bonuses for such year (collectively, the "Target Annual Bonus") multiplied by a fraction, the numerator of which is the number of days the Employee was employed in the year of the Date of Termination and the denominator of which is 365. For purposes of this Agreement, "Target Annual Bonus" shall be no less than the Employee's last Target Annual Bonus prior to the Change in Control. (ii) No later than 10 days following the Date of Termination, a lump sum severance payment (the "Severance Payment"), in cash, equal to 2.99 times the sum of (i) the higher of the Employee's annual Base Compensation (a) in effect immediately prior to the occurrence of the event or circumstance upon which such termination of employment is based or (b) in effect immediately prior to the Change in Control and, (ii) the higher of (a) the Target Annual Bonus and (b) the average of the Employee's annual Bonuses (excluding any compensation attributable to the Employer's grant of any stock options, restricted stock, stock appreciation rights or other stock incentives and any compensation determined by the Board of Directors to be a long-term incentive arrangement) during the three (3) fiscal years immediately preceding the year in which the Date of Termination occurs, or if the Employee has received Bonuses in fewer than three (3) fiscal years prior to termination, the sum of the annual Bonuses received for each fiscal year prior to the Date of Termination shall be divided by the number of years in which the Employee received annual Bonuses (any partial year bonus shall be annualized for purposes of this provision). (iii) During the period expiring on the earlier of the Employee securing other employment or thirty-six (36) months from the Date of Termination, continued coverage under the Employer's sponsored 7 medical benefits program in existence on such Date of Termination, or, if such continued coverage is barred, or otherwise at the option of the Employer, the Employer shall provide substantially equivalent medical benefit coverage through the purchase of insurance or otherwise (at substantially equivalent cost, including tax treatment, to the Employee). (iv) For purposes of determining the Employee's benefits under the Supplemental Plan and the Retirement Plan, the Employee shall receive credit toward his "Years of Service" under each of the Supplemental Plan and the Retirement Plan for the three (3) year period following his termination of employment (the "Three Year Period") (it being understood that upon a termination of the Employee's employment under Section 3(b) such Three Year Period will be the number of years (without duplication) credited pursuant to Section 9(a)(ii) of the DB Supplemental Plan (or any applicable successor provision of the DB Supplemental Plan or any applicable successor plan, including the DC Supplemental Plan). In addition, with respect to the Three Year Period, for purposes of determining "Final Average Pay" as referred to in Section 2(a) of the DB Supplemental Plan or any successor provision under the DB Supplemental Plan or any Supplemental Plan, each of the Employee's Base Compensation and Bonus (it being understood that for purposes hereof Bonus shall mean Target Annual Bonus) shall be deemed to be increased (but not decreased) by an incremental five percent (5%) for each year during the Three Year Period. Thus, for purposes of determining "Final Average Pay" as referred to in Section 2(a) of the DB Supplemental Plan or any successor provision under the DB Supplemental Plan or any Supplemental Plan, assuming, solely for illustrative purposes, that the sum of Employee's Base Compensation and Bonus (it being understood that for purposes hereof Bonus shall mean Target Annual Bonus) during the year of the Date of Termination were $500,000, the deemed increases contemplated by the immediately preceding sentence would cause the sum of Employee's Base Compensation and Bonus (it being understood that for purposes hereof Bonus shall mean Target Annual Bonus) to be deemed as follows during the Three Year Period: $525,000 in year one (1), $551,250 in year two (2) and $578,813 in year three (3). Under the DB Supplemental Plan, in order to calculate the Employee's highest earnings during five (5) consecutive years out of the last ten (10) years prior to retirement under the DB Supplemental Plan (and for purposes of determining such highest earnings the Employee will be treated as retiring under the DB Supplemental Plan immediately following the end of the Three Year Period). Notwithstanding anything to the contrary in any Supplemental Plan, the Employee shall not be subject to any minimum service 8 requirement in the Supplemental Plan. Any credited service under this Section which would apply for purposes of additional benefits under the 401(k) Plan shall not provide any additional benefits under the 401(k) Plan, but such benefits shall be paid out as additional benefits under the DC Supplemental Plan. If the DB Supplemental Plan has been frozen as of the Date of Termination, no additional service will be credited under the DB Supplemental Plan and the additional contributions (based on three (3) additional years of maximum Employer contributions, including transition contributions) will be made to the DC Supplemental Plan within ten (10) days following the Date of Termination without discount for the contributions being made early in a lump sum. For the avoidance of doubt, in no event will the Severance Payment (as defined below) or the Gross-Up Payment (as defined below) be included in Employee's earnings for the purpose of calculating Employee's benefit under the Retirement Plan or the Supplemental Plan. (v) The Employee shall be reimbursed for up to $20,000 for outplacement fees if he chooses to seek other employment following his termination of employment with the Employer. (c) Notwithstanding anything to the contrary in this Agreement, the Employee shall not be entitled to any payments pursuant to Section 3(b) if prior to a termination of the Employee's employment by the Employer other than due to a Discharge For Cause or by the Employee for Good Reason: (i) The Employee dies; (ii) The Employer terminates the Employee's employment because of a Discharge For Cause or as a result of the Employee's Disability; or (iii)The Employee voluntarily terminates his employment with the Employer for reasons other than for Good Reason. (d) In the event of termination of employment under Section 3(b), the Employee shall not be subject to the non-competition provisions of the Officer Agreement or any other agreement. (e) The Employee shall not be required to mitigate damages with respect to the amount of any payments provided for in Section 3(b) by seeking other employment or otherwise nor, except as provided for in Section 3(b)(iii), shall any compensation received by the Employee from any other sources reduce any payments or benefits to which the Employee is entitled under this Agreement. The Employer's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations 9 hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Employer may have against the Employee or others. (f) In the event of a Change in Control, (i) any applicable performance-based vesting goals with respect to stock-based awards granted to the Employee shall be deemed 100% met and (ii) all stock-based awards shall vest in full, in each case immediately prior to the occurrence of such Change in Control. For purpose of this Section 3(f), stock-based awards shall include stock options, restricted shares, restricted units and any other equity-based compensation awards. (g) Effective upon a Change in Control, the Employee's rights under the Employer's relocation policy then in effect, including any applicable addenda thereto (the "Relocation Policy") shall become irrevocable, PROVIDED that, in addition to any such rights under the Relocation Policy (i) the Employee shall not be required to reimburse the Employer or any successor thereto for any amounts that the Employee has, or is otherwise entitled to, receive pursuant to the Relocation Policy and (ii) the Employer or any successor thereto shall make the Employee whole with respect to any expenses incurred by the Employee due to any relocation (whether or not consummated), including any applicable tax gross-ups. (h) Effective upon a Change in Control, the Employer or the consolidated, surviving or transferee entity in the event of a consolidation, merger or sale of assets, shall pay as incurred (within 10 days following the Employer's receipt of an invoice from the Employee) to the full extent permitted by law all legal fees and expenses that the Employee may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Employer, the Employee or others with respect to the enforcement of the Employee's rights under this Agreement or under any plan for the benefit of employees of the Employer, including without limitation, the Employer's stock plans, Supplemental Plan, payroll-based stock ownership plan, tax deferred savings and protection plan, bonus arrangements, supplemental pension plan, deferred compensation agreements, incentive compensation plans, and life insurance and compensation program; PROVIDED, HOWEVER, that the Employee shall be required to reimburse the Employer or such consolidated, surviving or transferee entity for the cost of such legal fees and expenses if the Employee is deemed by the arbitrator or court, as the case may be, to have brought or defended such contest in bad faith. 4. INJUNCTIVE RELIEF. The Employee agrees that, in the event of a breach or threatened breach by the Employee of this Agreement, the Employer's remedies at law would be inadequate, and the Employer shall be entitled to an injunction (without any bond 10 or other security being required), but nothing here shall be construed to preclude the Employer from pursuing any action or further remedy, at law or in equity, for any breach or threatened breach including, but not limited to, the recovery of damages. 5. UNFUNDED AGREEMENT. The Employer's obligations under this Agreement are unfunded, but the Employer reserves the right to provide for its liability under this Agreement in any manner it deems advisable, including the purchasing of such assets as it may deem necessary or proper. Any asset so purchased by the Employer shall be the sole property of the Employer and shall not be deemed to provide funding of the Employer's obligations under this Agreement. Any other provision in this Agreement to the contrary notwithstanding, the Employee shall be only an unsecured general creditor of the Employer with respect to all payments to be made under the terms of this Agreement and shall have no claim, equity, interest, or right in or to any specific assets or funds of the Employer as security for said payments. 6. ASSIGNMENT OF RIGHTS AND DUTIES. (a) The Employee shall not have the right to anticipate or commute with any third party, or to sell, assign, transfer, or otherwise alienate or convey the right to receive any payments hereunder, whether by his voluntary or involuntary act, or by operation of law and, in particular, any payments due hereunder shall not be subject to attachment or garnishment or any other legal proceedings by any creditor, or be in any way responsible for the debts or liabilities of the Employee. Should any attempt be made to reach any payments hereunder by other than the Employee, the Employer shall make each payment as it becomes due to such person or persons, for the sole benefit of the Employee as the Employer may deem expedient. (b) The Employer shall assign the rights and duties hereunder to any person, firm, corporation or other business entity that succeeds to substantially all of the assets and operations of the Employer. This Agreement shall not be terminated by any merger in which the Employer is not the surviving or resulting corporation, or on any transfer of all or substantially all of the Employer's assets. In the event of any such merger or transfer of assets, the provisions of this Agreement shall be binding on and inure to the benefit of the surviving business entity or the business entity to which such assets shall be transferred. 7. FACILITY OF PAYMENT; LIMITATION. In the event of a Disability of the Employee after the Employee is entitled to payments hereunder, such payments as may thereafter be due shall be paid to such person or persons for the benefit of the Employee as the Employer may deem 11 proper after reasonable investigation. In the event of the Employee's death after the Employee is entitled to payments hereunder, the Employer shall pay such amounts as thereafter are due to such beneficiary or beneficiaries as the Employee shall have designated in writing on Exhibit B attached hereto and made a part hereof, or failing such writing, to his estate. No liability shall accrue to the Employer for any alleged payment to an improper person or representative if so made after such reasonable investigation and the Employer shall have no responsibility to see to the proper application of such payments. 8. CERTAIN ADDITIONAL PAYMENTS BY THE EMPLOYER. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Employee shall be entitled to receive an additional payment (the "Gross-Up Payment") in an amount such that, after payment by the Employee of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be determined that the Employee is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Employee and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments under Section 3(b)(ii), unless an alternative method of reduction is elected by the Employee, and in any event shall be made in such a manner as to maximize the Value of all Payments actually made to the Employee. For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant to this Section 8(a). The Employer's obligation to make Gross-Up Payments under this Section 8 shall not be conditioned upon the Employee's termination of employment. (b) Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers LLP, or such other nationally recognized certified public accounting firm as may be designated by the Employee (the "Accounting Firm"). The Accounting Firm shall provide detailed 12 supporting calculations both to the Employer and the Employee within 15 business days of the receipt of notice from the Employee that there has been a Payment or such earlier time as is requested by the Employer. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Employee may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Employer. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Employer to the Employee within 5 days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Employer and the Employee. As a result of the uncertainty in the application of Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Employer should have been made (the "Underpayment"), consistent with the calculations required to be made hereunder. In the event the Employer exhausts its remedies pursuant to Section 8(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Employer to or for the benefit of the Employee. (c) The Employee shall notify the Employer in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Employer of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after the Employee is informed in writing of such claim. The Employee shall apprise the Employer of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which the Employee gives such notice to the Employer (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Employer notifies the Employee in writing prior to the expiration of such period that the Employer desires to contest such claim, the Employee shall: (i) give the Employer any information reasonably requested by the Employer relating to such claim, (ii) take such action in connection with contesting such claim as the Employer shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Employer, 13 (iii) cooperate with the Employer in good faith in order effectively to contest such claim, and (iv) permit the Employer to participate in any proceedings relating to such claim; PROVIDED, HOWEVER, that the Employer shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Employer shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either pay the tax claimed to the appropriate taxing authority on behalf of the Employee and direct the Employee to sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Employer shall determine; PROVIDED, HOWEVER, that, if the Employer pays such claim and directs the Employee to sue for a refund, the Employer shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and PROVIDED, FURTHER, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Employer's control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of a Gross-Up Payment or payment by the Employer of an amount on the Employee's behalf pursuant to Section 8(c), the Employee becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Employee shall (subject to the Employer's complying with the requirements of Section 8(c), if applicable) promptly pay to the Employer the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after payment by the Employer of an amount on the Employee's behalf pursuant to Section 8(c), a determination is made that the Employee shall not be 14 entitled to any refund with respect to such claim and the Employer does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. (e) Notwithstanding any other provision of this Section 8, the Employer may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Employee, all or any portion of any Gross-Up Payment, and the Employee hereby consents to such withholding. (f) Definitions. The following terms shall have the following meanings for purposes of this Section 8. (i) "Excise Tax" shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax. (ii) "Parachute Value" of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a "parachute payment" under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment. (iii) A "Payment" shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Employee, whether paid or payable pursuant to this Agreement or otherwise. (iv) The "Safe Harbor Amount" means 2.99 times the Employee's "base amount," within the meaning of Section 280G(b)(3) of the Code. (v) "Value" of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code. 9. RESPONSIBILITY FOR LEGAL EFFECT. Neither party hereto makes any representations or warranties, express or implied, or assumes any responsibility concerning the legal, tax, or other implications or effects of this Agreement. The Employer shall take all actions required by law with respect to any payments due hereunder including but not limited to, withholding of tax from such payments. 15 10. INDEPENDENCE OF AGREEMENT; EMPLOYMENT TERMINATION. This Agreement shall be independent of any other contract or agreement that may exist between the parties hereto from time to time. This Agreement shall not restrict the Employer's rights to terminate the Employee's employment with the Employer nor the Employee's rights to terminate employment with the Employer; PROVIDED, HOWEVER, that the Employer shall not terminate the Employee's employment prior to a Change in Control solely to avoid its obligations under this Agreement. 11. SECTION 409A OF THE CODE The benefits provided under this Agreement, including without limitation any severance pay provided under Section 3, shall comply with Section 409A of the Code and the regulations thereunder. To the extent so required in order to comply with Section 409A of the Code, amounts and benefits to be paid or provided under this Agreement shall be paid or provided to the Employee in a single lump sum on the first business day after the date that is six months following the Employee's "separation from service" within the meaning of Section 409A of the Code. To the extent that the Employee's entitlement to continued coverage under the Employer's health and welfare benefit plans is so delayed, (i) the Employee shall be entitled to COBRA continuation coverage under Section 4980B of the Code ("COBRA Coverage") during such period of delay, (ii) the Employer shall reimburse the Employee for any employer portions of such COBRA Coverage in the seventh month following the date of such "separation from service", and (iii) such continued coverage shall begin in the seventh month following such "separation from service". 12. ARBITRATION. (a) Any dispute or controversy arising out of or relating to this Agreement, including, but not limited to, whether the Employee has been Discharged For Cause or whether the Employee can terminate his employment hereunder for Good Reason, shall be submitted to and settled by arbitration in Dayton, Ohio in accordance with the rules then-pertaining of the American Arbitration Association applicable to employment disputes to the extent that such rules are not inconsistent with this Section 12. (b) Any dispute submitted to arbitration hereunder shall be heard by a panel of three (3) arbitrators, one of whom shall be selected by the Employer, another of whom shall be selected by the Employee, and the third of whom shall be selected by the two arbitrators so appointed. The decision of a majority of this panel of arbitrators on the question submitted shall be final and conclusive upon the Employer and upon the Employee and his spouse or widow or widower, personal representatives, designated beneficiaries and heirs, and shall be enforceable in any court having competent jurisdiction thereof. The Employer shall bear the fees and 16 expenses of the arbitrators and costs charged by the American Arbitration Association to administer the arbitration. The Employer shall, in turn, reimburse the Employee for all reasonable fees and costs incurred by the Employee in connection with such arbitration as such fees and costs are incurred (as soon as practicable following receipt of an invoice from the Employee), PROVIDED, that if the arbitrator determines the Employee has proceeded in such arbitration in bad faith, the Employee shall return such reimbursements as soon as practicable after such determination. 13. SECTION HEADINGS. The Section headings used in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement. 14. NOTICES. Any notices required or permitted to be given under this Agreement, including without limitation, a Notice of Termination, shall be sufficient if in writing and if personally delivered or sent by certified or registered mail to his residence as last shown on the employment records of the Employer in the case of the Employee, or to the corporate headquarters to the attention of the President in the case of the Employer. 15. NON-WAIVER. The waiver by the Employer or the Employee of a breach of any provision of this Agreement by the Employee or the Employer shall not operate or be construed as a waiver of any subsequent breach by the Employee or the Employer of the same or any other provision hereof. 16. ENTIRE AGREEMENT; AMENDMENT This Agreement and the documents incorporated by reference herein represent the entire understanding of the parties with respect to the subject matter hereof and supersedes all previous understandings, written or oral. Any amendment to this Agreement shall be executed in writing with the same formality as this Agreement. 17. BINDING EFFECT. This Agreement shall be binding upon the Employee and the Employee's heirs, executors, administrators, successors and assigns and upon the Employer and its successors and assigns. 18. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio without regard to that state's conflict of laws principles. 17 19. SEVERABILITY. Each provision of the Agreement is severable. Should any court or other tribunal of competent jurisdiction declare any provision(s) of the Agreement invalid or unenforceable by reason of any rule of law or public policy, all other provisions hereof shall remain in full force and effect. The Employee hereby authorizes any court or other tribunal of competent jurisdiction to modify any provision(s) held to be invalid or unenforceable to the extent permissible and to then enforce the provision(s) as modified. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 18 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. EMPLOYER: THE REYNOLDS AND REYNOLDS COMPANY By: ---------------------------------------- Name: Finbarr J. O'Neill Title: Chief Executive Officer EMPLOYEE: ------------------------------------------- SIGNATURE PAGE TO AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT RELEASE OF CLAIMS For and in consideration of the payments and other benefits due to [___] (the "EMPLOYEE") pursuant to the Amended and Restated Change in Control Agreement, dated as of August 7, 2006 (the "AGREEMENT"), by and between the Employee and The Reynolds and Reynolds Company (the "COMPANY") and for other good and valuable consideration, Employee hereby releases the Company, its divisions, affiliates, subsidiaries, parents, branches, predecessors, successors, assigns, officers, directors, trustees, employees, agents, shareholders, administrators, representatives, attorneys, insurers and fiduciaries, past, present and future (the "RELEASED PARTIES") from any and all claims of any kind arising out of, or related to, Employee's employment with the Company, its affiliates and subsidiaries (collectively, with the Company, the "AFFILIATED ENTITIES"), and Employee's separation from employment with the Affiliated Entities, which Employee now has or may have against the Released Parties, whether known or unknown to Employee, by reason of facts which have occurred on or prior to the date that Employee has signed this Release. Such released claims include, without limitation, any and all claims relating to the foregoing under federal, state or local laws pertaining to employment, including, without limitation, the Age Discrimination in Employment Act ("ADEA"), Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e ET. SEQ., the Fair Labor Standards Act, as amended, 29 U.S.C. Section 201 ET. SEQ., the Americans with Disabilities Act, as amended, 42 U.S.C. Section 12101 ET. SEQ. the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981 ET. SEQ., the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701 ET. SEQ., the Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 ET. SEQ., and any and all state or local laws regarding employment discrimination and/or federal, state or local laws of any type or description regarding employment, including but not limited to any claims arising from or derivative of Employee's employment with the Affiliated Entities, as well as any and all such claims under state contract or tort law. Employee has read this Release of Claims carefully, acknowledges that Employee has been given at least 21 days to consider all of its terms and has been advised to consult with any attorney and any other advisors of Employee's choice prior to executing this Release of Claims, and Employee fully understands that by signing below Employee is voluntarily giving up any right which Employee may have to sue or bring any other claims against the Released Parties, including any rights and claims under the ADEA. Employee also understands that Employee has a period of seven days after signing this Release of Claims within which to revoke his agreement, and that neither the Company nor any other person is obligated to make any payments or provide any other benefits to Employee pursuant to the Agreement until eight days have passed since Employee's signing of this Release of Claims without Employee's signature having been revoked other than any accrued obligations or other benefits payable pursuant to the terms of the Company's normal payroll practices or employee benefit plans. Finally, Employee has not been forced or pressured in any manner whatsoever to sign this Release of Claims, and Employee agrees to all of its terms voluntarily. Employee understands that in order to revoke this Release of Claims, Employee must send a written revocation of Employee's intent to do so to [NAME AND ADDRESS OF NOTICE PERSON]. A-1 Notwithstanding anything else herein to the contrary, this Release of Claims shall not affect: (i) any rights that Employee may have with respect to matters which by their terms, are to be performed after the date hereof by the Company (including, without limitation, obligations to Employee under any stock option, stock award or agreements or obligations under any pension, deferred compensation, retention or other compensation or benefit plan, all of which shall remain in effect in accordance with their terms); (ii) rights to indemnification Employee may have under (A) applicable corporate law, (B) the by-laws or certificate of incorporation of the Affiliated Entities, (C) any other agreement between Employee and a Released Party, (D) as an insured under any director's and officer's liability insurance policy now or previously in force or (E) Section 7.05 of the Agreement and Plan of Merger, dated as of August 7, 2006, among the Company, Universal Computer System Holding, Inc. and Racecar Acquisition Co.; (iii) any right Employee may have to obtain contribution in the event of the entry of judgment against Employee as a result of any act or failure to act for which both Employee and any of the Affiliated Entities are jointly responsible; (iv) any rights that Employee may have under the Agreement to the extent not satisfied, including without limitation any rights to reimbursement of legal fees and expenses; and (v) any rights of Employee as a shareholder of the Company or any of the Affiliated Entities. This Release of Claims, and the attached covenants, are final and binding and may not be changed or modified except in a writing signed by both parties. - ------------------------- ------------------------- Date [___] - ------------------------- ------------------------- Date The Reynolds and Reynolds Company A-2 EXHIBIT B BENEFICIARY DESIGNATION TO: THE REYNOLDS AND REYNOLDS COMPANY Pursuant to the Agreement dated August 7, 2006, the undersigned hereby designates the following beneficiary (beneficiaries) to receive any benefits which may be payable under said Agreement subsequent to the undersigned's death: (1) ------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (2) If the beneficiary (beneficiaries) named in (1) above is not living or is no longer in existence, as the case may be, then to: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- This Beneficiary Designation revokes all prior designations made by the undersigned and is subject to all the terms of the Agreement. Dated: --------------, 2006 ------------------------------------------- EX-99.1 10 pressrelease.txt PRESS RELEASE, DATED AUGUST 7, 2006 EXHIBIT 99.1 [REYNOLDS & REYNOLDS LOGO] [UCS LOGO] NEWS - -------------------------------------------------------------------------------- REYNOLDS AND UNIVERSAL COMPUTER SYSTEMS TO MERGE IN ALL-CASH TRANSACTION VALUED AT $2.8 BILLION COMBINED ORGANIZATION TO OPERATE UNDER THE REYNOLDS AND REYNOLDS BRAND DAYTON, OHIO, AND HOUSTON, AUGUST 8, 2006 -The Reynolds and Reynolds Company (NYSE:REY) and Universal Computer Systems, Inc., today announced a definitive agreement to merge their two organizations to create the world's pre-eminent dealer services company. Under the terms of the agreement, holders of Reynolds' common stock will receive $40 per share in cash. The transaction is valued at $2.8 billion, including the assumption of Reynolds' debt. The transaction is subject to approval by Reynolds shareholders and regulatory clearances. Reynolds' board members Richard H. Grant III and Fin O'Neill, president and CEO, have agreed to vote their shares in favor of the transaction. The combined company will continue to be named The Reynolds and Reynolds Company, with the products and services of both Reynolds and UCS marketed under the Reynolds brand. The UCS brand will be discontinued. Reynolds will continue to have headquarters and principal operations in Dayton, Ohio. "Today is a great day for Reynolds," said O'Neill. "We're creating the world's pre-eminent dealer services provider by leveraging the great product and strong technical capabilities of UCS while continuing to build on Reynolds' relentless focus on serving our customers. "The transaction we are announcing today is consistent with the objective Reynolds announced in July of delivering substantial shareholder value," O'Neill said. "Our shareholders will receive a substantial and immediate premium on their investment. "The merger also creates a dealer services powerhouse that is uniquely positioned to deliver the outcomes that dealers need to succeed. "As we go forward, we will continue to execute on our initiatives, announced on July 21, to drive growth and productivity. With this merger, we will leverage UCS technology and build on Reynolds' products and our legacy of serving dealers with dedication, innovation and experience," O'Neill said. O'Neill said that Reynolds is committed to protecting customers' investments regardless of the platforms they are currently using, including the 10,000 customers on the REYNOLDSYSTEM(TM). Bob Brockman, UCS chairman and CEO, said, "Reynolds has distinguished itself in the marketplace through its commitment to helping dealers succeed in selling and servicing more cars and by measuring its success by dealers' success. We are proud to bring forward our solutions to build on Reynolds' great tradition of customer focus." 1 Reynolds was founded in Dayton as a business forms printing company in 1866. It began serving dealers in 1927 with standardized accounting forms. UCS was founded in Houston and provides fully integrated dealership management systems solutions to some of the largest dealerships in the United States. "Meeting our customer commitments continues to be our top priority," O'Neill said. "We will integrate the two organizations, putting the right resources against the right needs to better serve our customers and grow our business. Details on how we will accomplish the integration will be determined as we fully develop our plan. "Associates at both companies will see new opportunities, additional responsibilities, and professional challenges," he said. Reynolds expects to schedule a special meeting of its shareholders during the fourth calendar quarter of 2006 to vote on the transaction. The transaction is being financed by a combination of equity primarily from a group of investors led by the Goldman Sachs Capital Partners, Vista Equity Partners, and others, with debt provided by Deutsche Bank and Credit Suisse. JPMorgan served as financial advisor to Reynolds and Reynolds, and Wachtell Lipton Rosen and Katz served as its legal advisor. UCS was advised by Credit Suisse, and Skadden, Arps, Slate, Meagher & Flom LLP served as its legal advisor. CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contain forward looking statements, including statements relating to results of operations. These forward-looking statements are based on current expectations, estimates, forecasts and projections of future company or industry performance based on management's judgment, beliefs, current trends and market conditions. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in any forward-looking statement. Forward-looking statements made by the company may be identified by the use of words such as "will," "expects," "intends," "plans," "anticipates," "believes," "seeks," "estimates," and similar expressions. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this document. For example, (1) Reynolds may be unable to obtain shareholder approval required for the transaction; (2) Reynolds may be unable to obtain regulatory approvals required for the transaction, or required regulatory approvals may delay the transaction or result in the imposition of conditions that could have a material adverse effect on Reynolds or cause the parties to abandon the transaction; (3) conditions to the closing of the transaction may not be satisfied; (4) Reynolds may be unable to achieve cost reduction and revenue growth plans; (5) the transaction may involve unexpected costs or unexpected liabilities; (6) the credit ratings of Reynolds or its subsidiaries may be different from what the parties expect; (7) the businesses of Reynolds may suffer as a result of uncertainty surrounding the transaction; (8) the timing of the initiation, progress or cancellation of significant contracts or arrangements, the mix and timing of services sold in a particular period; and (9) Reynolds may be adversely affected by other economic, business, and/or competitive factors. These and other factors that could cause actual results to differ materially from those expressed or implied are discussed under "Risk Factors" in the Business section of our most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. ABOUT REYNOLDS Reynolds and Reynolds (WWW.REYREY.COM) has helped automobile dealers sell cars and take care of customers since 1927. Today, more than 15,000 dealers worldwide rely on Reynolds to help run their dealerships. In the U.S. and Canada, the REYNOLDSYSTEM(TM) combines comprehensive solutions, 2 experienced people and proven practices that drive total dealership performance through a full range of retail Web and customer relationship management solutions, e-learning and consulting services, documents, data management and integration, networking and support and leasing services. Internationally, Reynolds serves dealers in more than 35 countries through a broad range of retailing solutions and consulting services. ABOUT UNIVERSAL COMPUTER SYSTEMS Universal Computer Systems offers a comprehensive solution for the computing and business needs of automobile dealerships. The company is the leader in innovation for dealership computer systems. Throughout the 1980s, 1990s, and into the new millennium, Universal Computer Systems has been the first to introduce many of the dealership software applications available today. As a result of this aggressive software development, Universal Computer Systems meets and exceeds every dealership software need. ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed transaction, a proxy statement of Reynolds and other materials will be filed with SEC. WE URGE INVESTORS TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT REYNOLDS AND THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the proxy statement (when available) as well as other filed documents containing information about Reynolds at http://www.sec.gov, SEC's Web site. Free copies of Reynolds' SEC filings are also available on Reynolds' Web site at www.reyrey.com. PARTICIPANTS IN THE SOLICITATION Reynolds and its executive officers and directors and Universal Computer Systems may be deemed, under SEC rules, to be participants in the solicitation of proxies from Reynolds' shareholders with respect to the proposed transaction. Information regarding the officers and directors of Reynolds is included in its definitive proxy statement for its 2006 annual meeting filed with SEC on May 15, 2006. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by securities, holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with the proposed transaction. ### CONTACT INFO: REYNOLDS UNIVERSAL COMPUTER SYSTEMS MEDIA Mark Feighery Trey Hiers 937.485.8107 713.718.1800 MARK_FEIGHERY@REYREY.COM TREYHIERS@UNIVERSALCOMPUTERSYSTEMS.COM INVESTORS John E. Shave 937.485.1633 JOHN_SHAVE@REYREY.COM 3 EX-99.1 11 communications.txt INTERNAL AND EXTERNAL COMMUNICATIONS MATERIALS EXHIBIT 99.1 CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contain forward looking statements, including statements relating to results of operations. These forward-looking statements are based on current expectations, estimates, forecasts and projections of future company or industry performance based on management's judgment, beliefs, current trends and market conditions. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in any forward-looking statement. Forward-looking statements made by the company may be identified by the use of words such as "will," "expects," "intends," "plans," "anticipates," "believes," "seeks," "estimates," and similar expressions. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this document. For example, (1) Reynolds may be unable to obtain shareholder approval required for the transaction; (2) Reynolds may be unable to obtain regulatory approvals required for the transaction, or required regulatory approvals may delay the transaction or result in the imposition of conditions that could have a material adverse effect on Reynolds or cause the parties to abandon the transaction; (3) conditions to the closing of the transaction may not be satisfied; (4) Reynolds may be unable to achieve cost reduction and revenue growth plans; (5) the transaction may involve unexpected costs or unexpected liabilities; (6) the credit ratings of Reynolds or its subsidiaries may be different from what the parties expect; (7) the businesses of Reynolds may suffer as a result of uncertainty surrounding the transaction; (8) the timing of the initiation, progress or cancellation of significant contracts or arrangements, the mix and timing of services sold in a particular period; and (9) Reynolds may be adversely affected by other economic, business, and/or competitive factors. These and other factors that could cause actual results to differ materially from those expressed or implied are discussed under "Risk Factors" in the Business section of our most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. ABOUT REYNOLDS Reynolds and Reynolds (WWW.REYREY.COM) has helped automobile dealers sell cars and take care of customers since 1927. Today, more than 15,000 dealers worldwide rely on Reynolds to help run their dealerships. In the U.S. and Canada, the REYNOLDSYSTEM(TM) combines comprehensive solutions, experienced people and proven practices that drive total dealership performance through a full range of retail Web and customer relationship management solutions, e-learning and consulting services, documents, data management and integration, networking and support and leasing services. Internationally, Reynolds serves dealers in more than 35 countries through a broad range of retailing solutions and consulting services. ABOUT UNIVERSAL COMPUTER SYSTEMS Universal Computer Systems offers a comprehensive solution for the computing and business needs of automobile dealerships. The company is the leader in innovation for dealership computer systems. Throughout the 1980s, 1990s, and into the new millennium, Universal Computer Systems has been the first to introduce many of the dealership software applications available today. As a result of this aggressive software development, Universal Computer Systems meets and exceeds every dealership software need. ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed transaction, a proxy statement of Reynolds and other materials will be filed with SEC. WE URGE INVESTORS TO READ THE PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT REYNOLDS AND THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the proxy statement (when available) as well as other filed documents containing information about Reynolds at http://www.sec.gov, SEC's Web site. Free copies of Reynolds' SEC filings are also available on Reynolds' Web site at www.reyrey.com. PARTICIPANTS IN THE SOLICITATION Reynolds and its executive officers and directors and Universal Computer Systems may be deemed, under SEC rules, to be participants in the solicitation of proxies from Reynolds' shareholders with respect to the proposed transaction. Information regarding the officers and directors of Reynolds is included in its definitive proxy statement for its 2006 annual meeting filed with SEC on May 15, 2006. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by securities, holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with the proposed transaction. ### CONTACT INFO: REYNOLDS UNIVERSAL COMPUTER SYSTEMS MEDIA Mark Feighery Trey Hiers 937.485.8107 713.718.1800 MARK_FEIGHERY@REYREY.COM TREYHIERS@UNIVERSALCOMPUTERSYSTEMS.COM INVESTORS John E. Shave 937.485.1633 JOHN_SHAVE@REYREY.COM FACT SHEET REYNOLDS AND REYNOLDS AND UNIVERSAL COMPUTER SYSTEMS AUGUST 2006 Reynolds and Reynolds and UCS have announced they will merge to create the world's pre-eminent dealer services provider. o The new company will be known as the Reynolds and Reynolds Company o The headquarters will be located at the current Reynolds Headquarters campus in Kettering, Ohio o The brand in the market will be Reynolds Reynolds chose to merge with UCS for business and competitive reasons. o First, the merger delivers a substantial and immediate premium to shareholders. o Second, Reynolds will be a stronger competitor in the marketplace by adding UCS's advanced products and world-class development capacity. o Third, the merger is one more engine behind growth and is consistent with our performance improvement plan to drive revenue, deliver more value to customers, and improve the productivity and operating effectiveness of the company. o Finally, this is an opportunity to create something very special in a dealer services provider - and that can mean growth and opportunity for individuals. Overall, associates should see new opportunities, additional responsibilities, and professional challenges as a result of the merger. Reynolds operates in a fiercely competitive environment, where customers continually expect more from our business in order to succeed at higher levels in their business. o The merger is the best way for us to compete successfully, effectively, and profitably long-term, solidifying our position as THE leading dealer services provider. Across Reynolds, our immediate focus is to deliver results in the fourth quarter and build momentum for 2007. o The merger requires regulatory clearance and shareholder approval. o Shortly, an integration team will be named, which will manage the practical and business aspects of the merger. What we do best is help automobile dealers sell more cars, reach more customers, and improve their business results. o Now, we will be able to fulfill that mission in ways never imagined before. # # # REYNOLDS AND REYNOLDS Q&A (ASSOCIATES) GENERAL Q&A 1. QUESTION: Why is Reynolds merging with Universal Computer Systems? ANSWER: First, it delivers a substantial and immediate premium to shareholders. Second, Reynolds will be a stronger competitor in the marketplace by adding UCS's advanced products and world-class development capacity. Third, the merger is one more engine behind our growth and is consistent with our performance improvement plan to drive revenue, deliver more value to customers, and improve the productivity and operating effectiveness of the company. Finally, this is an opportunity to create the world's pre-eminent dealer services provider - and that can mean growth and opportunity for individuals. 2. QUESTION: Will jobs be added or reduced as a result of the merger? ANSWER: It's unlikely employment levels will increase at headquarters as a result of the merger. Reynolds already is in the midst of streamlining the organization and eliminating a number of positions over the next three years. That will continue. Further, we are merging the operations of two fully functioning companies and there will be duplication in roles and functions. Overall, a net addition of new positions is unlikely, even though there may be new or different positions in the future, both as a result of the business streamlining and the merger. 3. QUESTION: What will happen over the next few months at Reynolds? ANSWER: The first priority is to deliver results in the fourth quarter and build momentum going into 2007. The merger requires regulatory clearance and shareholder approval, which we expect by the end of the calendar year. Finally, an integration team will be named, which will manage the practical and business aspects of the merger. 4. QUESTION: What will happen to activities in specific functions - sales, customer service, development and engineering, and so forth? ANSWER: There are no changes immediately. 5. QUESTION: What does this mean for Reynolds International? ANSWER: There are no changes immediately. We will continue with the integration of DCS into Reynolds International and continue to build our international business. BENEFITS Q&A 1. QUESTION: Will benefits change? ANSWER: Under the terms of the merger agreement, the new company has agreed to honor the current benefit plans for a year. After that, benefit plans will be reviewed regularly, just as Reynolds has reviewed its benefit plans. 2. QUESTION: Does this change the recent announcements by Reynolds that it will freeze the pension plan and enhance the 401(k) plan? Will profit sharing still be added for U.S. employees? ANSWER: The defined benefit (pension) plan will be frozen September 30. Under the terms of the merger agreement, the new company has agreed to honor the enhanced 401(k) plan and profit sharing for a year. After that, the 401(k) plan and profit sharing will be reviewed in the context of total compensation and benefits. 3. QUESTION: What happens to any restricted shares or stock options for associates? ANSWER: All outstanding stock options and restricted shares (time-based and performance based) will vest on the date of closing; performance based shares will vest at target. 4. QUESTION: What impact will the merger have on the FY2006 bonus plan? ANSWER: The merger will not affect the FY 2006 bonus plan. # # # August 8, 2006 CEO O'Neill e-mail To: All Reynolds associates Today, Reynolds and Reynolds announced that it will merge with Universal Computer Systems to create the world's pre-eminent dealer services provider. The new company will be known as the Reynolds and Reynolds Company, headquartered at the current Reynolds Headquarters campus. This merger adds substantial strength to Reynolds immediately, providing us with advanced products and world-class development capability - more resources with which to grow and serve customers. The platform for growth will continue to be the Reynolds brand and the Reynolds way of doing business. We will continue to put our customers first and "Remember Who's Boss." By combining the companies as Reynolds and Reynolds, we will offer customers the benefits of UCS's advanced products, complemented by our own products, reputation and reach in the market, and by our unrelenting focus on customer satisfaction. The actions we announced in July to drive revenue and improve productivity were aimed squarely at one overarching target: growth - more substantial, more consistent, more profitable. This merger is one more engine behind our growth. It provides Reynolds with the opportunity to serve automobile dealers MORE completely and MORE effectively, meeting MORE of their needs. It's everyone's responsibility to seize this opportunity and deliver sustained growth behind the Reynolds brand - that is the key to our success in this merger and in the marketplace. The NEW Reynolds and Reynolds is moving forward, more solidly than ever, with all that is implied in our brand and from our associates. The possibilities - and opportunities - of this merger are truly exciting. Immediately, we expand our customer base and extend our reach in the marketplace. Immediately, we strengthen our range of products and services so that we are better able to meet customer needs. And, immediately, we gain depth and capability in engineering and development and in our technology underpinnings. Now, no one in the dealer services business anywhere in the world will be more capable, more knowledgeable, or more passionately committed to customers than the new Reynolds and Reynolds. This merger also will create new opportunities, additional responsibilities, and professional challenges for associates. As we combine the two organizations, we will take advantage of our mutual strengths. As a result, Reynolds will be a stronger company that can grow more substantially and meet the needs of customers more profitably. All of this will unfold as we move forward. I realize there are questions to be answered, which we will answer in the coming months. There will be no immediate changes in how we do our jobs, how we conduct business, or how dealers do business with Reynolds. In the midst of the excitement about what this means for Reynolds - and anticipation about how the two companies will be combined - it's important to remember that the transaction needs regulatory clearance and shareholder approval, which currently we expect before the end of the calendar year. Until the transaction closes, how you did your job yesterday is how you should do your job tomorrow. Collectively and individually, we have business objectives to meet this quarter and this year. That is the first priority - and our objectives have not changed. We are in the midst of executing the initiatives that we announced in late July that will drive revenue growth, improve productivity, and lower our costs. This latest news does not diminish the requirement to continue to implement those changes forcefully and effectively. Of course, we will also have the challenge of integrating our two companies. Shortly, we will put a team in place to lead that effort. At the moment, what's most important for all of us is to maintain a critical focus - as never before - on our customers and on our business as we deliver results in the fourth quarter and generate momentum for a successful 2007. In the meantime, let's all remember that our core competency - the way we create value for our customers - is by helping automobile dealers sell more cars, reach more customers, and improve their profitability. Now, we will be able to fulfill that mission in ways we could not have imagined before. /s/ Fin O'Neill August 8, 2006 CEO O'Neill Web site posting Today, Reynolds and Reynolds announced that we will merge with Universal Computer Systems (UCS) to create the world's pre-eminent dealer services provider. The new company will be known as the Reynolds and Reynolds Company, defined by the Reynolds brand and the Reynolds way of doing business. We will continue to put our customers first and "Remember Who's Boss." By combining the companies as Reynolds and Reynolds, we will offer customers the benefits of UCS's advanced products, complemented by Reynolds' products, our reputation and reach in the market, and our unrelenting focus on customer satisfaction. The possibilities - and opportunities - of this merger are truly exciting. Immediately, we strengthen our customer base and extend our reach in the marketplace. Immediately, we expand our range of products and services so that we are better able to meet customer needs. And, immediately, we add world-class engineering and development capability - more resources with which to serve customers. Now, no one in the dealer services business anywhere in the world will be more capable, more knowledgeable, or more passionately committed to customers than the new Reynolds and Reynolds. The transaction, of course, requires regulatory clearance and approval from shareholders, which we expect before the end of the calendar year. In the meantime, nothing will change in how we serve customers or how customers do business with Reynolds and Reynolds. As I said publicly in the news release announcing the merger, we are committed to protecting our customers' investments, regardless of the platforms they currently are using. Meeting our commitments to customers remains our one priority. At Reynolds and Reynolds, what we do best is help automobile dealers sell more cars, reach more customers, and improve their profitability. Now, we will be able to fulfill that mission in ways not imagined before. /s/ Fin O'Neill Fin O'Neill Voice Mail to All Associates August 8, 2006 Hello, this is Fin O'Neill with a message for all associates. Welcome to the world's pre-eminent dealer services provider! This morning, as you saw, we announced the merger of Reynolds and Reynolds and UCS. This is exciting news and a watershed day for Reynolds. The combined companies will be known as the Reynolds and Reynolds Company, headquartered where we are today, with a singular focus on growing the Reynolds brand and putting customers first - remembering who's boss. The possibilities - and opportunities - of this merger are truly exciting - for the business and for associates. - - Immediately, we expand our customer base and extend our reach in the marketplace. - - We strengthen our range of products and services so that we are better able to meet customer needs. - - We gain depth and capability in engineering and development, and in our technology underpinnings. - - Now, no one in the dealer services business anywhere in the world will be more capable, more knowledgeable, or more passionately committed to customers than the NEW Reynolds and Reynolds. At the same time, the merger will create new opportunities, additional responsibilities, and professional challenges for associates. As we combine the two organizations, we plan to take advantage of our mutual strengths. The result will be a much stronger Reynolds and Reynolds. All of this will unfold as we move forward. There are questions to be answered, I realize, and we will answer them in the coming months. But, there will be no immediate changes in how we do our jobs, how we conduct business, or how dealers do business with Reynolds. Collectively and individually, we have business objectives to meet this quarter and this year. That is the first priority - and our objectives have not changed. All of us are accountable for delivering results in the fourth quarter and generating momentum for a successful 2007. With the actions we announced in July and our news today, we have accelerated the pace of change almost exponentially. At the same time, we have opened possibilities for growth that any company would envy. I am confident that we are up to this challenge. In the meantime, let's all remember that our core competency - the way we create value for our customers - is by helping automobile dealers sell more cars, reach more customers, and improve their profitability. Now, we will be able to fulfill that mission in ways we could not have imagined before. # # # FOR CUSTOMER FACING AND CALL CENTER ASSOCIATES: COMMENTS IN RESPONSE TO QUESTIONS FROM DEALERS Reynolds and Universal Computer Systems have announced their intention to merge. - - The merger will create the world's pre-eminent dealer services provider focused on helping customers succeed. o Stronger in products and solutions o Stronger in service and support o Stronger in development and engineering o Stronger in ability to meet customer needs The new company will be known as the Reynolds and Reynolds Company, defined by the Reynolds brand and the Reynolds way of doing business. - - We will continue to put our customers first and "Remember Who's Boss." Nothing changes in how we serve customers or how customers do business with Reynolds and Reynolds. - - We are committed to protecting our customers' investments, regardless of the platforms they currently are using. - - Meeting our commitments to customers remains our one priority. The news release and a letter from Fin are available at WWW.REYREY.COM # # # -----END PRIVACY-ENHANCED MESSAGE-----