NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS Corporate Express Australia Limited (ABN 94 000 728 398) Notice is given that an Extraordinary General Meeting of the Shareholders of Corporate Express Australia Limited (“Company”) will be held immediately following the Annual General Meeting of the Company to be held at 12 noon on Thursday 20 May 2010 at the ofﬁces of Baker & McKenzie, Sydney Room, Level 27, AMP Centre, 50 Bridge Street, Sydney, New South Wales. | 1 BUSINESS Voting Entitlements Subject to the Voting Exclusion Statement above, 1. Approval of Financial Assistance by the Company to determine the entitlements of a shareholder at To consider and if thought ﬁt to pass the following the extraordinary general meeting, the directors have resolution as a special resolution: decided that the shareholding of a Shareholder will be as it appears in the share register at 12 noon Sydney time, THAT, for the purposes of section 260B(1) of the Tuesday 18 May 2010. Corporations Act 2001 (Cth) (“Corporations Act”), approval is given for the transactions described and Proxies contemplated in the Statement of Material Information which accompanies this Notice of Meeting and all If you are a member entitled to attend and vote you are elements of those transactions which may constitute the entitled to appoint one or two proxies. Where two proxies giving of ﬁnancial assistance by the Company, including are appointed, you may specify the number or proportion (without limitation) that the Company may: of votes that each may exercise, failing which each may exercise half the votes. A proxy need not be a member (i) pay the Special Dividend; of the Company. (ii) enter into the Facility Agreement and the Subordination Deed; and If you wish to appoint one proxy, please use the form provided and return it to the share registry, at the (iii) enter into any additional documents, and do address speciﬁed on the proxy form. If you wish to all additional things, as may be necessary or appoint two proxies please obtain an additional form desirable for the purposes of or to give effect to from the share registry. To be effective a proxy form the transactions contemplated in the Statement must be received by no later than 12 noon Sydney time, of Material Information. Tuesday 18 May 2010. Address and facsimile details are The background and reasons behind the resolution contained on the proxy form. are more fully set out in the accompanying Statement If a proxy is instructed to abstain from voting on an item of Material Information which is attached to this Notice of business, that person is directed not to vote on the of Meeting. Shareholders should read the Statement of shareholder’s behalf on a show of hands or a poll and the Material Information in full and carefully consider shares the subject of the proxy appointment will not be its contents. counted in computing the required majority. Shareholders who return their proxy forms with a IMPORTANT NOTES direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the chairman Voting Exclusion Statement of the meeting to vote on their behalf. If a proxy form is The Company will disregard any votes cast in favour returned and the nominated proxy does not attend the of Resolution 1 by Staples Australia Pty Limited and meeting, the chairman of the meeting will act in place any associate of Staples Australia Pty Limited (“Staples of the nominated proxy and vote in accordance with Australia”) including, Staples International BV. However, any instructions. Proxy appointments in favour of the the Company will not disregard a vote if: chairman of the meeting, any director, or the secretary (a) it is cast by a person as proxy for the person who which do not contain a direction how to vote will be is entitled to vote, in accordance with the directions used where possible to support the resolutions proposed on the proxy form; or in this notice. (b) it is cast by a person chairing the meeting as proxy Voting Generally for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the The Company’s Constitution provides that, on a show of proxy decides. hands, every person present and qualiﬁed to vote shall have one vote. If you appoint one proxy, that proxy may If prior to the Extraordinary General Meeting, the Offer vote on a show of hands, but if you appoint two proxies, (as that term is deﬁned in the Statement of Material only one may vote on a show of hands. If a proxy has been Information) has become unconditional then, under the appointed by two or more members who specify different terms of the Offer, a Shareholder who has accepted the ways to vote on a resolution, the proxy may not vote on Offer in respect of their ordinary shares in the Company a show of hands. (“Shares”) will cease to have the right to vote those Shares. For further information, see section 12.5 of Corporate Representatives the Staples Australia Bidder’s Statement. If a holding is registered in a company name, any individual voting on behalf of that company must do so either as a proxy or a duly appointed corporate representative in accordance with the Corporations Act. 2 | STATEMENT OF MATERIAL INFORMATION Restrictions on companies giving ﬁnancial assistance Under section 260A of the Corporations Act, a company Resolution 1: Approval of Financial Assistance by the may ﬁnancially assist a person to acquire shares in the Company company or a holding company of the company only Background if giving the assistance does not materially prejudice On 17 March 2010, Staples Australia, a wholly owned (a) the interests of the company or its shareholders or subsidiary of Staples, Inc, announced an off-market (b) the company’s ability to pay its creditors, or otherwise, takeover offer (“Offer”) for all the Shares that Staples, if the ﬁnancial assistance is approved by the Company’s Inc does not, directly or indirectly, already own. Shareholders. Staples Australia is offering Shareholders A$5.60 cash for Under section 260B of the Corporations Act, the ﬁnancial each Share. assistance can be approved by Shareholders by a special resolution passed at a general meeting of the Company, As previously announced, the Company has applied for with no votes being cast in favour of the resolution by the a ruling from the Australian Taxation Ofﬁce (“ATO”) to person acquiring the shares or by their associates. facilitate the payment of a fully franked special dividend of up to A$0.78 per Share (“Special Dividend”). Subject A company may be regarded as giving ﬁnancial assistance to obtaining a favourable tax ruling, the Special Dividend if it makes a payment of money (such as a dividend) or would be declared and become payable after the Offer if it gives something needed in order that a transaction becomes unconditional. be carried out or something in the nature of aid or help. An example of ﬁnancial assistance is the giving of If the Special Dividend is declared and paid, Staples undertakings and making of representations to a person Australia is entitled to reduce the Offer consideration under a loan facility agreement. payable to Shareholders by the amount of the Special Dividend. Accordingly, the payment of the Special Dividend may be considered to be ﬁnancially assisting Staples Australia Staples International BV, an indirect wholly owned to acquire Shares under the Offer and the giving of subsidiary of Staples, Inc, will be a Shareholder as at undertakings and making of representations by the dividend record date for the Special Dividend and so will Company in the Facility Agreement and Subordination be entitled to receive the Special Dividend. Deed may give ﬁnancial assistance to Staples Australia The Company intends to fund the Special Dividend out of in connection with the Offer. existing cash and debt facilities, and a loan facility from Reasons for giving ﬁnancial assistance Staples Corp BV ("Lender"), a subsidiary of Staples, Inc, Subject to obtaining a favourable ATO ruling and the on arm’s length terms. Offer becoming unconditional, the Company proposes To the extent the Special Dividend will be funded via to pay the Special Dividend to Shareholders which will a debt facility provided by the Lender, the Company be deducted from the Offer consideration payable to and the Lender will enter into a Facility Agreement Shareholders. documenting the loan. Further, a Subordination Deed The payment of the Special Dividend will enable will be entered between the Company’s existing lenders Shareholders to receive some of the Offer consideration National Australia Bank Limited, Commonwealth Bank of in the form of a fully franked dividend. This may, in Australia, Westpac Banking Corporation, Australia and turn, give certain Shareholders the ability to obtain the New Zealand Banking Group Limited, ANZ National Bank imputation beneﬁt associated with the franking credit Limited (collectively, “Senior Creditors”), the Company attaching to the Special Dividend. and Staples, Inc. Certain subsidiaries of the Company may guarantee the loan amounts advanced to the Company by The tax implications of the proposed Special Dividend the Lender. will depend on the individual circumstances of each Shareholder. Further, the ATO ruling to be obtained Under the terms of the Facility Agreement, the Lender by the Company will set out the ATO’s view of the tax agrees to advance to the Company an amount of up to implications of the proposed Special Dividend. approximately $132 million on standard commercial arm’s length terms. The key terms of the Facility Agreement Shareholders are advised to seek their own ﬁnancial and regulating the activities of the Company, being the tax advice. representations, covenants and events of default, are Effect of ﬁnancial assistance typical for an arm’s length transaction of this nature. They are based on the representations, covenants and events The Company has concluded that providing the ﬁnancial of default in the club ﬁnancing documents entered into assistance described above is in the best interests of the between the Company and the Senior Creditors on 3 Company and its Shareholders. September 2009. The directors have no reason to believe that the payment The debt under the Facility Agreement is fully of the Special Dividend is not in the best interests of subordinated to the debt to the Senior Creditors under the Company and its Shareholders and do not have any the terms of the Subordination Deed. reason to believe that the Company may default in its obligations under either existing debt facilities, the Facility Agreement or the Subordination Deed (each a, "Facility"). | 3 Nonetheless, if there is a default by the Company under Prior notice to Australian Securities & Investments the terms of any Facility, the relevant lenders may become Commission entitled to enforce any of their rights under those As required by section 260B(5) of the Corporations agreements and such enforcement may materially prejudice Act, copies of this Notice of Meeting and Statement the interests of the Company. However, at such a point it is of Material Information, as sent to Shareholders, were quite possible that the Company would be a wholly owned lodged with the Australian Securities & Investments subsidiary of Staples, Inc. Commission prior to despatch to Shareholders. Advantages of proposed resolution Disclosure The payment of the Special Dividend and entry into the related Facility Agreement and Subordination Deed The directors consider that this Statement of Material should enable Shareholders to receive that portion of Information contains all information known to the the Offer consideration that is represented by the Special Company that would be material to the Shareholders Dividend as a fully franked dividend. in deciding how to vote on the proposed resolution other than information which it would be unreasonable This may, in turn, give certain Shareholders the ability to require the Company to include because it has been to obtain the imputation beneﬁt associated with the previously disclosed to the Shareholders of the Company. franking credit attaching to the Special Dividend. All Shareholders on the dividend record date will receive Recommendation the Special Dividend from the Company. The directors recommend that the Shareholders vote in favour of Resolution 1 to approve the giving of ﬁnancial Disadvantages of the proposed resolution assistance. As outlined above, an Australian resident Shareholder will only be in a position to obtain the beneﬁt of franking credits attached to the Special Dividend if certain pre- 19 April 2010 requisites are satisﬁed. In some cases, a Shareholder that is not an Australian resident may be subject to Australian dividend withholding tax even if the Special Dividend is fully franked Shareholders are advised to seek their own ﬁnancial and tax advice. Further, if there is a default by the Company under the terms of any Facility, the relevant lenders may become Kathleen Forbes entitled to enforce any of their rights under those Company Secretary agreements and such enforcement may materially prejudice the interests of the Company. Passing the Financial Assistance Resolution Under section 260B of the Corporations Act, Shareholder approval for ﬁnancial assistance by the Company must be given by: (a) a special resolution passed at a General Meeting of the Company with no votes being cast in favour of the Resolution by Staples Australia or its associates (including Staples International BV); or (b) a resolution agreed to, at a General Meeting, by all ordinary Shareholders of the Company. In the present circumstances, given that it is unlikely all ordinary Shareholders will vote on the Resolution, the proposed ﬁnancial assistance must be approved by the Shareholders of the Company passing the Resolution by special majority of 75% of those present and voting at the Extraordinary General Meeting. 4 |
"NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS"