<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
------------------------
Date of Report (Date of earliest event reported): June 29, 1995
JOSTENS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 1-5064 41-0343440
(State of Incorporation) (Commission File (I.R.S. Employer
File Number) Identification No.)
5501 NORMAN CENTER DRIVE, MINNEAPOLIS, MINNESOTA 55437
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 830-3300
<PAGE>
Item 2. Acquisition or Disposition of Assets. On June 29, 1995, the Company
sold its subsidiary, Jostens Learning Corporation, to a group lead by Bain
Capital. The Company sold all of the capital stock of Jostens Learning
Corporation and received the following as consideration: $50 million in cash, a
$36 million note maturing in eight years and a separate $4 million note
convertible into 19% of the common stock of Josten Learning Corporation, subject
to some dilution. The Company will retain the Wicat Systems, Inc. subsidiary of
Josten Learning Corporation. The Company intends to sell the Wicat business
which accounted for $12 million of Josten Learning Corporation's $177 million of
fiscal 1994 sales.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial statements of businesses acquired. Not required.
b. Pro forma financial information.
Selected Consolidated Financial Information
Historical and Pro Forma Information
Set forth below is certain selected historical and pro forma consolidated
financial information with respect to the Company. Historical consolidated
financial information for the fiscal year ended June 30, 1994 was derived from
the audited consolidated financial statements of the Company contained in the
Company's Annual Report on Form 10-K for the year ended June 30, 1994.
Historical consolidated financial information for the nine-month period ended
March 31, 1995 was derived from the unaudited consolidated financial statements
of the Company contained in the Quarterly Reports on Form 10-Q for the period
ended March 31, 1995. The historical consolidated financial information below is
qualified in its entirety by reference to such reports and the consolidated
financial statements and related notes contained therein.
The selected pro forma consolidated financial information set forth below gives
effect to the sale of Jostens Learning Corporation. The pro forma information
relating to the sale of Jostens Learning Corporation assumes, with respect to
the balance sheet data, that the Company consummated the sale of Jostens
Learning Corporation on that date and assumes, with respect to the statements
of income data, that the Company consummated the sale of Jostens Corporation at
the beginning of the period shown.
In accordance with Commission rules and regulations, no pro forma interest
income is recognized in the pro forma results of operations for any funds
assumed invested in cash equivalents or other marketable securities as a result
of the sale of Jostens Learning Corporation. The selected pro forma consolidated
financial information should be read in conjunction with the selected historical
consolidated financial information of the Company and does not purport to be
indicative of the results that actually would have been obtained had the sale of
Jostens Learning Corporation been completed at the dates indicated or that may
be obtained in the future.
JOSTENS, INC. AND SUBSIDIARIES
SELECTED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(in thousands)
<TABLE>
<CAPTION>
Consolidated Balance Sheet Data:
Nine Months Ended March 31, 1995
--------------------------------
Pro Forma
Adjustment
For Sale Pro
Historical of JLC Forma
---------- ------------ --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and short-term investments $ 65,906 $ 50,470 $116,376
Accounts receivable 150,722 (32,921) 117,801
-------- -------- --------
Inventories -
Finished products 28,786 (3,040) 25,746
Work-in-process 76,453 (5,499) 70,954
Materials and supplies 36,389 (1,224) 35,165
-------- -------- --------
141,628 (9,763) 131,865
Other receivables 23,855 - 23,855
Deferred income taxes 39,985 9,000 48,985
Prepaid expenses 5,432 (2,582) 2,850
-------- -------- --------
Total Current Assets 427,528 14,204 441,732
OTHER ASSETS
Notes Receivable
net of deferred gain of $14,165 0 14,835 14,835
Intangibles 45,826 (11,790) 34,036
Software development costs 26,139 (26,139) 0
Other 15,206 (3,235) 11,971
-------- -------- --------
Total Other Assets 87,171 (26,329) 60,842
PROPERTY AND EQUIPMENT 218,245 (40,006) 178,239
Accumulated depreciation (147,421) 33,068 (114,353)
-------- -------- --------
Total Property and Equipment 824 (6,938) 63,886
-------- -------- --------
$585,523 $(19,063) $566,460
======== ======== ========
Liabilities and Shareholders'
Investment
CURRENT LIABILITIES:
Accounts payable $20,842 (8,227) $12,615
Salary, wages, and commissions 47,282 (11,164) 36,118
Customer deposits 97,764 (1,883) 95,881
Other Liabilities 53,802 (6,789) 47,013
Income taxes 16,917 9,000 25,917
-------- -------- --------
Total Current Liabilities 236,607 (19,063) 217,544
LONG-TERM DEBT 54,097 - 54,097
OTHER NON-CURRENT LIABILITIES 30,646 - 30,646
DEFERRED INCOME TAXES 5,943 - 5,943
SHAREHOLDERS' INVESTMENT:
Preferred shares, par value
$1.00 per share -
Authorized 4,000 shares
None issued - - -
Common shares, par value
$.33 1/3 per share -
Authorized 100,000 shares
Issued - 45,507, 45,451
and 45,482 shares, respectively 15,210 - 15,210
Capital surplus 153,478 - 153,478
Retained earnings 94,384 - 94,384
Foreign Currency Translation (4,842) - (4,842)
-------- -------- --------
258,230 - 258,230
-------- -------- --------
$585,523 $(19,063) $566,460
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Income Data:
Nine Months Ended Twelve Months Ended
March 31, 1995 June 30, 1994
------------------------------------ ------------------------------------
Pro Forma Pro Forma
Adjustment Adjustment
For Sale Pro For Sale Pro
Historical of JLC Forma Historical of JLC Forma
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $484,567 $(89,883) $394,684 $827,338 $(177,469) $649,869
Cost of products sold 241,038 (56,683) 184,355 426,482 (112,727) 313,755
------------------------------------ ------------------------------------
243,529 (33,200) 210,329 400,856 (64,742) 336,114
Selling and administrative expenses 205,146 (37,482) 167,664 360,295 (86,155) 274,140
Restructuring charges - - - 69,359 (60,859) 8,500
------------------------------------ ------------------------------------
OPERATING INCOME (LOSS) 38,383 4,282 42,665 (28,798) 82,272 53,474
Net interest expense 488 - 488 4,980 - 4,980
------------------------------------ ------------------------------------
37,895 4,282 42,177 (33,778) 82,272 48,494
Income taxes 15,727 1,057 16,784 (7,432) 27,972 20,540
------------------------------------ ------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 22,168 3,225 25,393 (26,346) 54,300 27,954
==================================== ====================================
EARNINGS (LOSS) PER COMMON SHARE:
------------------------------------ ------------------------------------
Continuing operations $ .48 $ .07 $ .55 $ (.58) $ 1.19 $ .61
==================================== ====================================
</TABLE>
c. Exhibits.
2.1 Stock Purchase Agreement.
28.1 Press Release.
2
<PAGE>
SIGNATURES
----------
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 thereunto duly authorized.
JOSTENS, INC.
(Registrant)
By: /s/ Robert C. Buhrmaster
----------------------------
Robert C. Buhrmaster
President and Chief Executive
Officer
Dated: July 14, 1995
3
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit Page
- ------- ----
2.1 Stock Purchase Agreement dated June 29, 1995
28.1 Press Release dated June 29, 1995
4
<PAGE>
EXHIBIT 2.1
===============================================================================
STOCK PURCHASE AGREEMENT
by and between
JLC HOLDINGS, INC.
SOFTWARE SYSTEMS CORP.
AND
JLC ACQUISITION, INC.
(Purchasers)
and
JOSTENS, INC.
(Seller)
JUNE 29, 1995
===============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. SALE AND PURCHASE OF SHARES AND INTERCOMPANY NOTE................ 1
1.1. Purchase and Sale of Shares and Intercompany Note....... 1
1.2. Time and Place of Closing............................... 2
1.3. Consideration........................................... 2
1.4. Deliveries at the Closing by the Seller and the Company. 3
1.5. Deliveries at the Closing by the Purchasers............. 4
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER..................... 5
2.1. Title to Shares, etc.................................... 5
2.2. Authority............................................... 6
2.3. Capitalization of the Company........................... 6
2.4. Organization and Standing............................... 7
2.5. No Default.............................................. 7
2.6. Transaction Not a Breach................................ 10
2.7. Compliance with Law..................................... 11
2.8. Government Consents or Approvals........................ 12
2.9. Financial Statements.................................... 12
2.10. Absence of Changes...................................... 13
2.11. Patents and Other Intangible Rights..................... 14
2.12. Employee Benefit Plans.................................. 16
2.13. Environmental Laws...................................... 18
2.14. No Brokers or Finders................................... 20
2.15. Taxes................................................... 21
2.16. Litigation.............................................. 23
2.17. Tangible Assets of the Company.......................... 24
2.18. Disclosure.............................................. 24
2.19. Accounts Receivable..................................... 25
2.20. Inventories............................................. 25
2.21. Suppliers and Customers................................. 25
2.22. Related Party Transactions.............................. 26
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................. 27
3.1. Organization and Standing............................... 27
3.2. Authority............................................... 28
3.3. Transaction Not a Breach................................ 28
3.4. Governmental Consents or Approvals...................... 29
3.5. No Brokers or Finders................................... 29
3.6. Acquisition of Stock.................................... 29
3.7. Certain Knowledge and Disclosure........................ 30
<PAGE>
4. COVENANTS OF THE SELLER.......................................... 30
4.1. Conduct of Business of the Company...................... 30
4.2. Changes in Capitalization; Other Transactions........... 31
4.3. Third Party Consents.................................... 32
4.4. Kernan/Zeiger........................................... 32
4.5. Wicat Divestiture....................................... 32
4.6. Certain Transition Matters.............................. 33
4.7. Confidentiality Agreements.............................. 33
4.8. Further Assurances...................................... 33
5. MUTUAL COVENANTS................................................. 34
5.1. Access.................................................. 34
5.2. Public Announcements.................................... 38
5.3. Regulatory Filings...................................... 38
5.4. Access to Records....................................... 38
5.5. Tax Election............................................ 39
5.6. Taxes................................................... 39
5.7. Employment Agreements................................... 43
5.8. Intercompany Note and Wicat Note........................ 43
5.9. Restructuring Expenses.................................. 44
5.10. Contingent Payments..................................... 44
5.11. IBM Royalties........................................... 46
5.12. Sureties................................................ 46
6. COVENANTS OF PURCHASERS.......................................... 47
6.1. Change of Name.......................................... 47
6.2. Plant Closings.......................................... 47
6.3. Stock Option Plan....................................... 47
7. CONDITIONS PRECEDENT............................................. 48
7.1. Conditions to Seller's Obligation....................... 48
7.2. Conditions to Purchasers's Obligation................... 49
8. TERMINATION PRIOR TO CLOSING..................................... 51
8.1. Termination............................................. 51
8.2. Procedure and Effect of Termination..................... 52
9. SURVIVAL; INDEMNIFICATION....................................... 52
9.1. Survival................................................ 52
9.2. Indemnification......................................... 53
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<PAGE>
10. MISCELLANEOUS................................................... 59
10.1. Notices................................................ 59
10.2. Expenses............................................... 59
10.3. Governing Law.......................................... 60
10.4. Arbitration............................................ 60
10.5. Consent to Jurisdiction................................ 62
10.6. Waiver of Jury Trial................................... 63
10.7. Reliance............................................... 64
10.8. Entire Agreement....................................... 64
10.9. Successors and Assignment.............................. 65
10.10. Amendment and Waiver................................... 66
10.11. Further Assurances..................................... 67
10.12. Section Headings....................................... 67
10.13. Counterparts........................................... 67
10.14. Definitions, etc....................................... 67
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<PAGE>
GLOSSARY OF DEFINED TERMS
"AAA" ........................................................... Section 10.4.1
"Administrative Services Agreement".............................. Section 1.4(e)
"Affiliate"..................................................... Section 10.14.1
"Ancillary Agreement............................................. Section 1.4(f)
"Audited Financial Statements"...................................... Section 2.9
"Balance Sheets".................................................... Section 2.9
"Basket Exclusion"............................................... Section 9.2(e)
"Closing"........................................................... Section 1.2
"Closing Date"...................................................... Section 1.2
"Closing Income Statement"......................................... Section 5.10
"Code".......................................................... Section 2.15(a)
"Company".............................................................. Preamble
"Company Plans"................................................. Section 2.12(a)
"Consideration".................................................. Section 1.3(a)
"Contract"................................................... Section 2.5(a)(ii)
"Employment Agreements"............................................. Section 5.7
"Encumbrances"...................................................... Section 2.1
"Environmental Laws"............................................ Section 2.13(a)
"ERISA"......................................................... Section 2.12(a)
"ERISA and Insurance Transition Agreement"....................... Section 4.6(a)
"Evaluation Material".......................................... Section 5.1.2(a)
"Exchangeable Note".............................................. Section 1.3(a)
"Hazardous Substances"...................................... Section 2.13(b)(ii)
"HSR Act"........................................................... Section 3.4
"IBM Agreement".................................................... Section 5.11
"Indemnitee"..................................................... Section 9.2(c)
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<PAGE>
"Indemnitor"..................................................Section 9.2(c)
"Intercompany Note".................................................Preamble
"Interim Financial Statements"...................................Section 2.9
"Issuance Agreement...........................................Section 1.4(b)
"Interim Balance Sheet"..........................................Section 2.9
"Kernan/Zeiger Agreement"........................................Section 4.4
"Kernan/Zeiger Dispute"..........................................Section 4.4
"Knowledge"..................................................Section 10.14.2
"Losses"......................................................Section 9.2(a)
"Merger"...................................................... Section 10.14
"Non-Compete Agreement".......................................Section 1.4(d)
"Phone Service Agreement".....................................Section 4.6(b)
"Proprietary Rights".........................................Section 2.11(a)
"Purchasers"........................................................Preamble
"Purchasers Indemnitees"......................................Section 9.2(a)
"RCRA".......................................................Section 2.13(a)
"Related Party Agreements".......................................Section 4.5
"Second Accounting Firm"........................................Section 5.10
"Securities Act".................................................Section 2.8
"Seller"............................................................Preamble
"Seller Closing Agreements"...................................Section 1.4(g)
"Seller Held Material"........................................ Section 5.1.3
"Seller Indemnitees"..........................................Section 9.2(b)
"Seller Note".................................................Section 1.3(a)
"Seller's Notice"...............................................Section 5.10
"Severance Plan".............................................Section 2.12(e)
"Shares".........................................................Section 1.1
"Software Products"..........................................Section 2.11(a)
"Stockholders Agreement"......................................Section 1.4(a)
-v-
<PAGE>
"Stock Option Plan"..............................................Section 2.3
"Tax Basis Allocation"...........................................Section 5.5
"Taxes".......................................................Section 5.6(d)
"Trademark License Agreement".................................Section 1.4(c)
"TSCA".......................................................Section 2.13(a)
"Unaudited Financial Statements".................................Section 2.9
"Warrant".....................................................Section 1.3(a)
"Wicat Note".....................................................Section 4.5
-vi-
<PAGE>
List of Exhibits and Schedules
- ------------------------------
Exhibit 1.4(b) - Form of Issuance Agreement
Exhibit 1.4(c) - Form of Trademark License Agreement
Exhibit 1.4(d) - Form of Non-Competition Agreement
Exhibit 1.4(e) - Form of Ancillary Agreement
Exhibit 1.4(g) - Form of Stockholders Agreement
Exhibit 2.5(vii) - Form of Standard Company Distributorship Agreement
Exhibit 7.1(c) - Form of Opinion of Ropes & Gray
Exhibit 7.2(c) - Form of Opinion of General Counsel
Form of Opinion of Oppenheimer Wolff & Donnelly
Exhibit 7.2(g) - Commitment Letter
Schedule 1.1 - Shares of the Company to be Purchased
Schedule 2.4 - Subsidiaries
Schedule 2.5 - Defaults under Governing Documents and Contracts
Schedule 2.7 - Compliance with Law
Schedule 2.9 - Financial Statements
Schedule 2.10 - Material Changes
Schedule 2.11(a) - Property Rights
Schedule 2.11(b) - Non-Competition and Non-Disclosure Agreements
Schedule 2.12 - Employee Benefit Claims
Schedule 2.12(b) - Employee Benefit Compliance Matters
Schedule 2.13 - Environmental Matters
Schedule 2.15(a) - Tax Returns
Schedule 2.15(b) - Payment of Taxes
Schedule 2.15(c) - Audit History
Schedule 2.15(h) - Powers of Attorney
Schedule 2.16 - Litigation
Schedule 2.17 - Assets
Schedule 2.21 - Suppliers and Customers
Schedule 2.22 - Related Party Transactions
Schedule 4.1 - Conduct of Business
Schedule 4.3 - Third Party Consents
Schedule 5.7 - Employment Agreements (including Form of)
Schedule 5.8 - Note Adjustments
Schedule 5.9 - Restructuring Expenses
Schedule 10.14.2 - Knowledge
-vii-
<PAGE>
STOCK PURCHASE AGREEMENT
This Agreement, dated as of June 29, 1995 is by and between Jostens, Inc., a
Minnesota corporation (the "Seller"), and JLC Holdings, Inc., a Delaware
corporation ("Holdings"), Software Systems Corp., a Delaware corporation
("SSC"), and JLC Acquisition, Inc., a Delaware corporation ("Acquisition";
Holdings, SSC and Acquisition being, collectively, the "Purchasers").
The Seller is the owner of all of the issued and outstanding shares of capital
stock of Jostens Learning Corporation, an Illinois corporation and wholly-owned
subsidiary of Seller (the "Company"), and the Intercompany Note made by the
Company in favor of the Seller and referred to in the Balance Sheets (the
"Intercompany Note").
The Seller wishes to sell, and the Purchasers wish to acquire, the Seller's
share interest in the Company and the Intercompany Note, upon the terms and
subject to the conditions hereinafter set forth.
Accordingly, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES AND INTERCOMPANY NOTE
-------------------------------------------------
1.1. Purchase and Sale of Shares and Intercompany Note. Upon and subject to
the terms and conditions of this Agreement, at the Closing hereunder, the Seller
shall sell to the Purchasers and each Purchaser shall purchase from the Seller
that number of shares of Class A Common Stock of the Company, par value $0.001
per share (the "Shares") indicated as Schedule 1.1 attached hereto and the
Seller shall sell to Acquisition and Acquisition shall purchase the Intercompany
Note.
<PAGE>
1.2. Time and Place of Closing. The Closing of the purchase of the Shares and
the Intercompany Note contemplated hereby (the "Closing") shall take place at
the Conference Center of Ropes & Gray, 885 Third Avenue, New York, NY, 10:30
a.m., local time, on June 29, 1995, or at such time or place as the parties
hereto shall mutually agree (the date on which the Closing takes place is
hereinafter called the "Closing Date").
1.3. Consideration.
(a) Purchase Price. In payment of the total purchase price for the Shares
and the Intercompany Note and as consideration for the covenants and agreements
of Seller herein, and as additional consideration for the covenants and
agreements of the Seller in the Seller Closing Agreements (the "Consider-
ation"), the Purchasers shall respectively pay and deliver (i) Fifty Million
Dollars ($50,000,000) made at the Closing by Acquisition by bank wire transfer
or otherwise in immediately available United States funds to an account or
accounts specified by the Seller at or prior to the Closing, (ii) a note made by
SSC in the principal amount of Thirty-Six Million Dollars ($36,000,000) (the
"Seller Note") pursuant to the Issuance Agreement, (iii) an exchangeable note
made by SSC in the principal amount of Four Million One Hundred and Fifteen
Dollars ($4,000,115) (the "Exchangeable Note") pursuant to the Issuance
Agreement, and (iv) a warrant of Holdings to purchase 119,500 shares of Class A
Non-Voting Common Stock of Holdings (the "Warrant") pursuant to the Issuance
Agreement.
(b) Transfer or Other Transaction Taxes. Purchasers shall be solely
responsible for and shall promptly pay any and all applicable sales, transfer or
other
-2-
<PAGE>
transaction taxes imposed by any state, county or municipality except any
taxes based upon or measured by income (including without limitation taxes
attributable to the Section 338(h)(10) Election described in Section 5.5 hereof
arising from the purchase and transfer of the Shares and Intercompany Note).
1.4. Deliveries at the Closing by the Seller and the Company. The following
documents shall be delivered by either the Seller or the Company at the Closing:
(a) Share Certificate and Intercompany Note. Seller shall, upon delivery of
the Consideration, deliver to the Purchasers (i) valid, endorsed
certificates for the Shares registered in the name of the appropriate
Purchaser, which certificates shall represent all of the then issued and
outstanding capital stock of the Company, and (ii) the Intercompany Note,
duly endorsed for transfer to Acquisition.
(b) Issuance Agreement. Seller shall deliver a duly executed agreement
substantially in the form of Exhibit 1.4(b) hereto pursuant to which the
Seller Note, the Convertible Note and the Warrant shall be issued at the
Closing (the "Issuance Agreement").
(c) Trademark License Agreement. Seller shall deliver a duly executed
Trademark License Agreement in substantially the form of Exhibit 1.4(c)
hereto (the "Trademark License Agreement").
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<PAGE>
(d) Non-Competition Agreement. Seller shall deliver a duly executed Non-
Competition Agreement in substantially the form of Exhibit 1.4(d) hereto
(the "Non-Competition Agreement").
(e) Ancillary Agreement. Seller shall deliver a duly executed Ancillary
Agreement in substantially the form of Exhibit 1.4(e) hereto (the
"Ancillary Agreement").
(f) Administrative Services Agreement. Seller shall deliver a duly executed
Administrative Services Agreement in substantially the form of Exhibit
1.4(f) hereto (the "Administrative Services Agreement").
(g) Stockholders Agreement. Seller shall deliver a duly executed Stockholders
Agreement in substantially the form of Exhibit 1.4(g) herewith duly
executed by the Seller (the "Stockholders Agreement", and, together with
the Issuance Agreement, the Trademark License Agreement, the Non-
Competition Agreement, the Administrative Services Agreement, the ERISA and
Insurance Transition Agreement, the Phone Service Agreement, the Kernan/
Zeiger Agreement, the Related Party Agreement and the Ancillary Agreement
collectively, the "Seller Closing Agreements").
1.5. Deliveries at the Closing by the Purchasers. The following shall be
delivered by the Purchasers at the Closing:
(a) Payment. At the Closing, Purchasers shall deliver the Consideration called
for in Section 1.3 above.
-4-
<PAGE>
(b) Issuance Agreement. SSC and Holdings shall deliver the Issuance Agreement.
(c) Non-Competition Agreement. Purchasers shall deliver a duly executed Non-
Competition Agreement.
(d) Stockholders Agreement. Purchasers shall deliver a duly executed
Stockholders Agreement in substantially the form of Exhibit 1.4(g).
(e) Kernan/Zeiger Agreement. Purchasers shall deliver a duly executed
Kernan/Zeiger Agreement.
(f) Related Party Agreement. Purchasers shall deliver a duly executed Related
Party Agreement.
(g) Other Agreements. Such other of the Seller Closing Agreements to which any
Purchaser is a party.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents and
warrants to the Purchasers as follows:
2.1. Title to Shares, etc. The Seller owns the Shares and the Intercompany
Note beneficially and of record, free and clear of any liens, encumbrances,
security interests and claims of every kind ("Encumbrances"). Upon the
consummation of the transactions contemplated hereby, each of the Purchasers
will acquire good and marketable title to such of the Shares and the
Intercompany Note specified by Section 1.1 to be acquired by such
-5-
<PAGE>
Purchaser, free and clear of any Encumbrances, except as created by the
Purchasers, and such Shares upon such consummation will constitute all of the
issued and outstanding shares of capital stock of the Company. There are no
voting trusts, shareholder agreements, commitments, undertakings,
understandings, proxies (coupled with an interest or otherwise) or other
restrictions to which the Seller is a party which directly or indirectly
restrict or otherwise limit in any manner the voting, sale or other disposition
of Shares.
2.2. Authority. The Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Minnesota and has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by the Seller of all obligations to be performed by it hereunder
have been duly approved by all necessary corporate action of the Seller. This
Agreement has been duly and validly authorized, executed and delivered by, and
constitutes the valid and binding agreement of the Seller enforceable in
accordance with its terms.
2.3. Capitalization of the Company. The Company has an authorized capital
stock consisting of 120,565,000 shares of Class A Common Stock, par value
$0.001, of which 120,565,000 shares are outstanding, all of which are validly
issued, fully paid and nonassessable and 21,174,000 shares of Class B Common
Stock, $0.001 par value, of which none have been issued or are outstanding.
There are no shares of the Company's stock held in its treasury. There are no
other options, warrants, rights, stockholder agreements or other instruments or
agreements outstanding giving any person the right to acquire any shares of the
capital stock or other securities of the Company nor are there any commitments
to issue or execute any such options, warrants, rights, instruments or
agreements. The Seller has terminated the Jostens Learning Corporation 1989
Stock Option
-6-
<PAGE>
Plan (the "Stock Option Plan") and all options granted thereunder.
2.4. Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of Illinois.
The Company has the requisite corporate power and authority to carry on its
business as now being conducted. The Company is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not result, individually or in the aggregate, in a
material adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of the Company. The articles of
incorporation and amendments thereto of the Company and its bylaws, are complete
and correct as of the date hereof. Except as set forth on Schedule 2.4, the
Company does not own or control, any other firm, corporation, association or
business organization or any capital stock or other equity interest therein.
2.5. No Default. (a) Except as provided in Schedule 2.5, the Company
(i) is not in violation of its articles of incorporation or bylaws or other
governing documents; and
(ii) is not, nor is alleged to be, in default under or in breach of any term or
provision of any contract, agreement, lease, license, commitment, mortgage,
indenture, bond, note, instrument or other obligation (each a "Contract")
to which it is party or by which it is bound, except such defaults and
breaches which, individually or in the aggregate, would not result in a
material adverse effect on
-7-
<PAGE>
the business, operations, assets, prospects or condition, financial or
otherwise, of the Company, and there exists no condition or event which, after
notice or lapse of time or both, would constitute a default or breach by the
Company under any Contract, except such defaults and breaches which,
individually or in the aggregate, would not result in a material adverse effect
on the business, operations, assets, prospects or condition, financial or
otherwise, of the Company.
(b) The Company has previously furnished to the Purchasers true and
complete copies of all of the following Contracts and other documents to which
the Company is party or by which it is bound, each as in effect on the date
hereof, including all amendments thereto:
(i) All collective bargaining agreements and other similar labor
agreements; all employment or consulting agreements; and all other plans,
agreements or arrangements which constitute compensation or benefits to any of
the senior executive officers or employees or consultants of the Company,
including without limitation each of the Company Plans.
(ii) All Contracts under which the Company has incurred or may
incur any severance pay or other special obligations which would become payable
by reason of this Agreement or the consummation of the transactions contemplated
hereby.
(iii) All Contracts under which the Company is restricted in any
significant respect from carrying on any business or other activities.
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(iv) All Contracts required to be listed on Schedule 2.22, 4.3 or any
other Schedule to this Agreement.
(v) All Contracts under which the Company has any material liability or
obligation for debt or constituting or giving rise to a guarantee of any
material liability or obligation of any person, or under which any person has
any material liability or obligation constituting or giving rise to a guarantee
of any material liability or obligation of the Company (including without
limitation partnership and joint venture agreements).
(vi) All Contracts under which the Company is or may become obligated to
pay any amount in respect of indemnification obligations, purchase price
adjustment or otherwise in connection with any (A) acquisition or disposition of
assets or securities (other than purchases of inventory or equipment in the
ordinary course of business), (B) merger, consolidation or other business
combination, or (C) series or group of related transactions or events of a type
specified in subclauses (A) and (B).
(vii) All distributorship agreements and all other Contracts with
customers (including without limitation distributors) or suppliers, other than
(i) purchase orders and sales orders entered into in the ordinary course of
business; (ii) customer license agreements in the Company's standard form, a
true and correct copy of which has been previously provided to the Purchasers;
and (iii) other Contracts involving not more than $50,000 in the case of any
particular agreement.
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(viii) All Contracts with any customer which was among the 20 largest
customers of the Company during either the fiscal year ended June 30, 1994 or
the nine-month period ended March 31, 1995, in terms of sales.
(ix) All leases and other Contracts (other than bills of sale) under
which any equipment listed on Schedule 2.17 and any real property is held or
used by the Company.
(x) A schedule of all property and liability and workers' compensation
insurance policies under which the Company was insured as of June 15, 1995.
(xi) All Contracts (other than purchase orders or sales orders) which
individually involve liabilities of the Company in excess of $500,000.
2.6. Transaction Not a Breach. Neither the execution, delivery and performance
of this Agreement by the Seller or the Company, nor the consummation by the
Seller or the Company of the transactions contemplated hereby, nor compliance by
the Seller or the Company with any of the provisions hereof will (a) conflict
with or result in a breach of any provision of their respective Articles of
Incorporation or Bylaws, (b) cause a violation or default (or acceleration)
under any of the terms, conditions or provisions of any Contract to which the
Company, the Seller or any of their respective Affiliates is a party or by which
any of the foregoing is bound, except for such violation or default (or
acceleration) as to which requisite waivers or consents will have been obtained
by the
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Closing or which, individually or in the aggregate, would not result in a
material adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of the Company or the Purchasers, or (c)
violate any statute, rule or regulation or judgment, order, writ, injunction or
decree of any court, administrative agency or governmental body, applicable to
the Company, the Seller or any of their respective Affiliates, except for
violations which would not, individually or in the aggregate, result in a
material adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of the Company or the Purchasers.
2.7. Compliance with Law. Except as set forth in Schedule 2.7 hereto, neither
the Company nor its predecessors has at any time been in violation in any
material respect of any federal, state, local or foreign law, ordinance or
regulation and is not and has not at any time been in violation in any material
respect of any judgment, decree, injunction or order of any court or other
governmental entity. The Company has procured and is currently in possession of
all material licenses, permits and other governmental authorizations required by
federal, state or local laws for the operation of the business of the Company in
each jurisdiction in which it is currently conducting such business, except
where the failure to obtain such license, permit or authorization would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, assets, prospects or condition, financial or otherwise, of
the Company.
2.8. Government Consents or Approvals. No consent, approval or authorization of,
designation or declaration by, or filing with, any governmental authority on the
part of the Seller or the Company or any of their respective Affiliates is
required in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except (a) pursuant to the
Securities Act of 1933, as amended (the
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"Securities Act"), (b) such filings and approvals as may be required under the
"blue sky" or securities laws of various states, (c) filings in Illinois and
Delaware in respect of the Merger or (d) where the failure to obtain such
consent, approval or authorization, have such designation or declaration made or
make such filing, would not individually or in the aggregate result in a
material adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of the Company.
2.9. Financial Statements. Attached as annexes to Schedule 2.9 hereto are (i)
audited consolidated balance sheets of the Company as of June 30, 1994, June 30,
1993 and June 30, 1992 (the "Balance Sheets") and the related consolidated
statements of earnings and changes in retained earnings and cash flow of the
Company for each of the fiscal years then ended, together with the reports
thereon of Ernst & Young, independent certified public accountants (the "Audited
Financial Statements"), and (ii) the unaudited consolidated balance sheet of the
Company as of March 31, 1995 (the "Interim Balance Sheet"), and the related
consolidated statements of earnings and changes in retained earnings and of cash
flow of the Company for the nine-month period ended on such date (the "Unaudited
Financial Statements"). Such financial statements and notes (and the Wicat
Financials, as defined below) fairly present in all material respects the
financial condition and results of operations of the Company or Wicat, as the
case may be, as of the dates thereof and for the periods therein indicated, all
in accordance with generally accepted accounting principles consistently applied
on a consistent basis (except as described on Schedule 2.9 hereto), subject in
the case of the Unaudited Financial Statements and the Wicat Financials to
normal recurring year-end adjustments which will not in the aggregate be
significant and the absence of notes. Except as set forth on Schedule 2.9
hereto, the Company has no liabilities or obligations of any nature of the type
required to be reflected or disclosed in a balance sheet (or the notes thereto)
prepared in
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accordance with generally accepted accounting principles that were not fully
reflected or reserved against in the Balance Sheets or the Interim Balance
Sheet, except liabilities and obligations incurred in the ordinary course of
business since the respective date thereof. Except as set forth on Schedule 2.9
hereto, or on the Balance Sheets or Interim Balance Sheet, the Company has no
liabilities, whether absolute or contingent or otherwise, which, in the
aggregate, would have a material adverse affect on the business, operations,
assets, prospects or condition, financial or otherwise, of the Company. Also
attached to Schedule 2.9 as an annex are monthly consolidated financial
information prepared since the Unaudited Financial Statements, which monthly
financial information has been prepared consistent with past practices (the
"Interim Financial Statements"). For purposes hereof, the "Wicat Financials"
means the attached unaudited balance sheets as of June 30, 1994, December 31,
1994 and May 31, 1995 and the related consolidated statements of earnings and
changes in retained earnings and cash flow of Wicat for the respective twelve-
month, six-month and eleven-month periods then ended.
2.10. Absence of Changes. Except as and to the extent (a) reflected and reserved
against in the balance sheets included in the Interim Financial Statements
attached to Schedule 2.9, (b) set forth in Schedule 2.9 or 2.10, (c) arising
from changes in general or industry-wide economic, business, social, political
or military conditions, or (d) incurred in the ordinary course of business in
usual amounts (in proportion to the revenues of the Company or the item being
adjusted) after the date of the balance sheets included in the Interim Financial
Statements on Schedule 2.9 or not material to the Company, since March 31, 1995
the Company has incurred no liabilities, whether absolute, accrued or otherwise,
and no event has occurred nor condition come to exist which, individually or in
the aggregate, has had or will have a material adverse effect on the business,
operations, assets, prospects or condition, financial or otherwise, of the
Company. Since March 31,
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1995 there has not been any actions which if taken from and after the execution
and delivery of this Agreement would not be permitted by or would violate
Section 4.1. Except as set forth in Schedule 2.10, no officer of the Company has
notified the Seller of an intention to terminate their employment with the
Company immediately following the Closing.
2.11. Patents and Other Intangible Rights.
(a) The patents, patent applications, trademarks, service marks and trade
names, and applications and registrations for such trademarks, service
marks and trade names, copyrights, computer software (including computer
software compromising the Company's products (such computer software
hereinafter referred to as the "Software Products")), and other
intellectual property rights used by the Company in the operation of its
business are referred to herein as the "Proprietary Rights". The
Proprietary Rights constitute all of the material patents, trademarks,
service marks, trade names, copyrights, computer software and other
intellectual property necessary to conduct the business of the Company as
currently conducted and as necessary to conduct the proposed business
described in Schedule 2.11(a). Except as set forth on Schedule 2.11(a), the
Company exclusively owns, or, pursuant to license agreements furnished to
the Purchasers, has the right to use, the Proprietary Rights as necessary
to conduct the business of the Company as currently conducted and as
necessary to conduct the proposed business described in Schedule 2.11(a),
in each case free and clear of any liens, claims, charges, licenses,
encumbrances, royalty obligations or sublicenses without infringing the
intellectual property rights of any third party. Except as set forth in
Schedule 2.11(a), no claims have been asserted in writing by any third
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party with respect to the validity of, or the Company's ownership or right
to use the Proprietary Rights, or claiming the Company's use of any of the
Property Rights infringes any intellectual property right of any third
party. Except as set forth in Schedule 2.11(a), the consummation of the
transactions contemplated by this Agreement will not alter or impair any
Proprietary Rights or the Company's right to use, sublicense or alienate
any use of the Proprietary Rights.
(b) Except pursuant to license agreements furnished to the Purchasers, (i)
the Company has not granted any third party the right to sublicense,
distribute, sell or acquire title to any Proprietary Rights, including,
without limitation, the Software Products, (ii) the Company has not granted
any third party a license (contingent or otherwise) with respect to the
source code for any of the Software Products, and (iii) the Company has not
granted any third party a paid-up license with respect to any of the
Software Products. The Company has taken all reasonably appropriate
measures necessary to protect the confidential and proprietary nature of
the Software Products, including, without limitation, the use of
confidentiality agreements with all of its employees having access to the
source code for the Software Products and the use of licenses with all
persons provided access to the object code for the Software Products
containing provisions restricting copying and prohibiting decompiling or
disassembly of the Software Products. Seller has previously furnished to
the Purchasers true and complete copies of all agreements with any third
parties which have prepaid royalties, license fees, service or software
maintenance fees, or renewal or similar fees with respect to the Software
Products, or any service, maintenance or similar agreements with respect to
the Software Products, which in either case obligate the Company to provide
such third parties amendments, modifications,
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enhancements, or new versions of, or the services with respect to, the
software products.
(c) Other than nondisclosure agreements entered into in the ordinary course
of business or set forth on Schedule 2.11(c), there is no agreement,
whether written or oral, containing any prohibition or restriction on
competition or solicitation of customers or requiring such person to assign
any interest in, or to keep confidential, any trade secrets or inventions,
with any person (other than the Company or the Seller) which is now in
effect binding upon the Company, or any of its officers or directors.
2.12. Employee Benefit Plans
(a) Disclosure. A true and complete copy of each "employee benefit plan"
within the meaning of the Employee Retirement Income Security Act of 1974
("ERISA") and each other plan, program or arrangement providing a benefit
(other than regular cash compensation to employees, former employees or
their beneficiaries, arrangements with individual employees and cash bonus
plans, in each case to the extent reflected in the Financial Statements)
which is maintained or contributed to by the Company or with respect to
which the Company has or may have any obligation or liability, other than
any obligation or liability arising solely as a result of the Company, the
Seller and any other direct or indirect Affiliate of the Seller being
treated as a single employer pursuant to Section 414 of the Internal
Revenue Code or Section 3(5) or 4001(b) of ERISA, including any such plan,
program or arrangement which was terminated within the previous six
calendar years, (the "Company Plans"), together with, in each case where
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applicable, true and complete copies of related insurance contracts, trusts
or other funding agreements, administrative agreements, plan descriptions,
and required government filings for the three previous years have been made
available to the Purchasers.
(b) Compliance. Except as set forth on Schedule 2.12, the Company has at
all times complied and each Company Plan has at all times complied in form
and operation in all material respects with all applicable laws relating to
the employment of labor, including without limitation, ERISA, those
provisions of the Internal Revenue Code relating to employee or fringe
benefits, and those relating to wage, hours, collective bargaining,
unemployment insurance, workers' compensation, equal employment opportunity
and the payment of withholding taxes, including income and social security
taxes, and has withheld (and paid over to the appropriate authorities) all
amounts required by law or agreement to be held from the wages or salaries
of its employees. No Company employee is represented by a collective
bargaining unit.
(c) Absence of Claims. Except as set forth on Schedule 2.12, with respect
to each Company Plan there are no actions, Company Plan terminations, suits
or investigations or claims pending or, to the knowledge of Seller,
threatened with respect to the assets thereof (other than routine claims
for benefits).
(d) No Defined Benefit or Money Purchase Plans. No Company Plan is subject
to Part 3 of Subtitle B of Title I of ERISA or Title IV of ERISA or Section
412 of the Internal Revenue Code.
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(e) No Executive is currently receiving or entitled to receive severance
benefits under the Company's Key Executive Severance Pay Plan as adopted
effective as of November 30, 1994 (the "Severance Plan") and no Executive
has been terminated in a manner which would give rise to any payments under
Section 5(e) of the several Employment Agreements.
2.13. Environmental Laws.
(a) "Environmental Laws" shall mean the common law and all federal, state
or local statutes, regulations, ordinances, permits and permit conditions,
administrative and judicial orders, consent decrees, notice letters,
demands or any other governmental requirement relating to health, safety,
the environment (including without limitation ambient air, indoor air,
surface and ground water, surface and subsurface soils and other natural
resources), or to the manufacture, generation, processing, distribution,
use, treatment, storage, handling, transportation or disposal of Hazardous
Substances. Such laws specifically include but are not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. 6901 et seq., as amended; the Toxic Substances Control
Act ("TSCA"), 15 U.S.C. 2601 et seq., as amended; and the Clean Water Act,
33 U.S.C. et seq., as amended; the Clean Air Act, 42 U.S.C. 7401 et seq.
(b) Except as otherwise specifically stated in Schedule 2.13 hereto:
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(i) neither the Company nor any of its predecessors is or has not been in
violation of, and is not subject to liability under, any applicable
Environmental Laws where such violation or liability would, individually or
in the aggregate, have a material adverse effect on the business,
operations, assets, prospects or condition, financial or otherwise, of the
Company;
(ii) neither the Company nor any of its predecessors has released or
disposed of or otherwise handled or permitted the release or disposal of
any hazardous substances, pollutants, hazardous constituents, contaminants,
toxic substances or any other chemicals, waste or materials of any kind
whatsoever including, without limitation, crude oil, petroleum, or any
faction thereof ("Hazardous Substances") so as to be liable under any
Environmental Laws or otherwise where such liability would, individually or
in the aggregate, have a material adverse effect on the business,
operations, assets, prospects or condition, financial or otherwise, of the
Company;
(iii) the Company has all permits, licenses, orders, approvals and other
authorizations related to Environmental Laws of governmental or
administrative authorities required to permit it to carry on its business
as currently conducted;
(iv) neither the Company nor any of its predecessors is a Responsible or
Potentially Responsible Person (as those terms are defined or used in the
Environmental Laws) or otherwise liable with respect to the release or
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threatened release of any Hazardous Substances from or at any facility in
the United States or elsewhere;
(v) no notice exists under any Environmental Law with respect to any asset
of the Company; and
(vi) all information, data, studies, assessments, audits or other
evaluations related to compliance and or liability under Environmental Laws
by the Company of which the Company is aware have been provided to the
Purchaser.
2.14. No Brokers or Finders. Other than for those fees and expenses payable to
Goldman Sachs & Co. (which the Seller will pay), no person is entitled to
receive as a result of any action of the Company, the Seller or any of their
respective Affiliates any commission, fee or other compensation as a finder or
broker in connection with the transactions contemplated by this Agreement.
2.15. Taxes.
(a) General. The Company and its predecessors have been (since the taxable
year ended June 30, 1985) and the Company will be (through the Closing)
included in the affiliated group (as defined in Section 1504 of the
Internal Revenue Code, of 1986, as amended (the "Code")) and the
consolidated federal income tax returns of the Seller (the "Seller
Consolidated Group"). Except as indicated on Schedule 2.15(a), all tax
returns required to have been filed on or prior to the date hereof (taking
into account all extensions of due dates) by or on behalf of the
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Company or its predecessors for each taxable period have been filed on or
prior to the date hereof and such returns are true and correct in all
material respects. Except as indicated on Schedule 2.15(a), all tax returns
(including extensions) required to be filed on or prior to Closing by or on
behalf of the Company or its predecessors shall be filed on or prior to
Closing and such returns shall be accurate and complete in all material
respects.
(b) Payment of Taxes. Except as indicated on Schedule 2.15 (b), with
respect to all amounts of taxes that are due and payable on or before the
Closing (whether or not shown on a tax return), all such amounts required
to be paid by or on behalf of the Company or its predecessors to taxing
authorities or others on or before the Closing have been paid.
(c) Audit History. Except as indicated on Schedule 2.15(c), there is no
dispute or claim currently pending concerning any tax return of the Company
or its predecessors either (i) claimed or raised by any authority in
writing or (ii) as to which Seller and directors and officers of the
Company have knowledge based upon personal contact with any agent of such
authority. Except as indicated on Schedule 2.15(c), no waivers of statutes
of limitation with respect to taxes have been given by or requested from
the Seller Consolidated Group or the Company or any of its predecessors.
(d) Tax-Sharing or Allocation Agreements. Any tax-indemnity, tax-sharing,
tax-allocation or similar agreements of the Company or any of its
predecessors and any liability or obligation of the Company or any of its
predecessors under such agreements, if any, will terminate and be canceled
without any payment by
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the Company or by the Seller Consolidated Group, except as provided for in
this Agreement, as of the Closing Date and be of no further force or effect
(whether for the current year, a future year or a past year).
(e) Prior Affiliated Groups. Except for the Seller Consolidated Group,
since 1984 neither the Company nor any of its predecessors has been a
member of an affiliated group of corporations as defined in Code Section
1504.
(f) Tax Liens. There are no security interests on any of the assets of the
Seller or any of its subsidiaries that arose in connection with any failure
(or alleged failure) to pay any tax when due.
(g) Withholding Taxes. The Company and its predecessors have withheld and
paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(h) Powers of Attorney. Except as detailed in Schedule 2.15(h), there are
no powers of attorney with respect to taxes of the Company currently in
force, and all such powers of attorney (other than for federal income taxes
for the period through the Closing Date) will be terminated effective as of
the Closing.
(i) Withholding on Purchase Price. Seller shall furnish a certificate to
the Purchasers that it is not a foreign person.
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(j) Golden Parachute. Neither the Company, any of its predecessors nor any
Affiliate with respect to the Company or any of its predecessors has made
any payments, is obligated to make any payments, nor is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Section 280G of the Code.
2.16. Litigation. Except as set forth in Schedule 2.16 hereto, there is no suit,
action, claim or other legal, administrative or arbitration proceeding pending
or, to the best of the Seller's knowledge is there any material proceeding
threatened, before any court or governmental commission, bureau or other
regulatory authority or any arbitrator (a) against the Company or any of its
properties or assets, or (b) against the Seller relating to or affecting the
title of the Seller to the Shares or the Intercompany Note or the rights or
ability of the Seller to execute and deliver this Agreement. There is no
outstanding order, writ, injunction or decree of any court, administrative
agency or governmental body or arbitration tribunal against or affecting the
Company or any of its capital stock, business, properties, prospects or
condition, financial or otherwise, which individually or in the aggregate would
have a material adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of the Company.
2.17. Tangible Assets of the Company. The assets owned or leased by the Company
constitute all of the assets held for use or used in connection with its
business other than the assets used partially by the Company and partially by
the Seller described in Schedule 2.17. The assets owned or leased by the Company
are adequate to carry on its business as presently conducted. Schedule 2.17 is
an accurate and complete list as of May 31, 1995 of all tangible personal
property, owned or leased by, in the possession of, or used by the Company in
connection with its business for which the total book value or total annual
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lease payments exceed $25,000 individually (except property sold or otherwise
disposed of since March 31, 1995 in the ordinary course of business consistent
with past custom and practices, cash and cash equivalents and inventories of raw
materials, work in process and finished goods). The Company has good and
marketable title to, or a valid leasehold interest in, (a) each item listed on
Schedule 2.17 and (b) each item of real property held or used by the Company, in
each case, free and clear of any liens, except for liens for current property
taxes not yet due and payable and liens disclosed on Schedule 2.17. The Company
does not own any real estate.
2.18. Disclosure. Neither this Agreement (including without limitation the
Schedules hereto), nor the Audited or Unaudited or Interim Financial Statements,
nor the Wicat Financials, nor any certificate furnished or to be furnished by or
on behalf of the Seller or any of its Affiliates, contains or will contain any
untrue statement of a material fact. This Agreement (including without
limitation the Schedules hereto) and the Audited and Unaudited and Interim
Financial Statements do not, considered as a whole, omit to state a material
fact necessary in order to make the statements contained herein and therein not
misleading. For purposes of this Section 2.18, no fact, condition or state of
affairs giving rise to any misrepresentation or breach of or inaccuracy in any
representation or warranty of the Purchasers in Article III hereof or in Section
4 of the Issuance Agreement (including without limitation the schedules thereto
and any confirmation of such representations or warranties pursuant to any
certificate of the Purchasers) shall be construed to give rise to a
misrepresentation or beach of or inaccuracy in the representations and
warranties contained in the first two sentences of this Section 2.18.
2.19. Accounts Receivable. Subject to the reserve for bad debts, returns and
allowances set forth on the Interim Balance Sheet, which reserve has been
calculated in accordance
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with the past practices of the Company as reflected in the Balance Sheets in
accordance with generally accepted accounting principles, all of the accounts
receivable reflected on the Interim Balance Sheet are valid, have arisen in the
ordinary course of business, and will contain no balances which will not be
collectable in the ordinary course of business.
2.20. Inventories. The inventories of the Company on the Closing Date will be
reflected on its books and records at the lower of cost or market on a first-in,
first-out basis and will consist of a quality and quantity useable and saleable
in the ordinary course of business consistent with past practices.
2.21. Suppliers and Customers. The relationships of the Company with its
customers (including without limitation distributors) and suppliers are good
commercial working relationships and, except as disclosed on Schedule 2.21, no
customer or supplier has canceled or otherwise terminated, or threatened in
writing to cancel or otherwise terminate, its relationship with the Company
during the last twelve (12) months or has during the last twelve (12) months
decreased materially, or threatened to decrease or limit materially, its
services, supplies or material to the Company or its usage or purchase of the
services or products from the Company, as the case may be. The Company has not
received any notification of any change in its arrangements with customers or
suppliers which would have a material adverse effect, nor is the Company aware
of any notification that any of the Company's customers or suppliers or vendors
will propose any such change, nor is there any other material fact regarding or
pertaining to the Company's customers or suppliers which would have a material
adverse effect on the Company after the consummation of the transactions
contemplated hereby.
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2.22. Related Party Transactions. Schedule 2.22 sets forth a description of all
significant transactions and relationships between the Company on the one hand
and the Seller or Wicat or any of the corporations in which the Company holds
minority investments or any other Affiliate of the Seller or the Company or
Wicat on the other hand (other than the Company) since July 1, 1993, including
without limitation a description of all Contracts or other assets used or
currently proposed to be used in the business of the Company to which such other
persons are party or which are owned or leased or licensed by such other
persons. During the period from July 1, 1993 to the date hereof, there have been
no transactions or relationships between or among any of the Seller, Wicat, or
any of the corporations in which the Company has minority investments or any of
their respective Affiliates (other than the Company) other than (i) solely by
virtue of the relationships of each of the foregoing with the Company or (ii) as
described on Schedule 2.22. Except for the obligations identified on Schedule
2.22 as Continuing Affiliate Relationships, immediately after giving effect to
the Closing there shall be no obligations between the Company on the one hand
and the Seller, Wicat or any of the corporations in which the Company holds
minority investments or any other Affiliate of the Seller or the Company or
Wicat on the other.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the Purchasers
represents and warrants to the Seller as follows:
3.1. Organization and Standing. Each of the Purchasers is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of the Purchasers has the requisite corporate power and authority
to carry on its business as proposed to be conducted. Each of the Purchasers is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where the character of its
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properties owned or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or in good standing has
not resulted and will not result, individually or in the aggregate, in a
material adverse effect on the business, operations, assets, prospects or
condition, financial or otherwise, of the Purchasers. The certificates of
incorporation and amendments thereto of each of the Purchasers and its bylaws,
are complete and correct as of the date hereof. The Purchasers do not own or
control, any other firm, corporation, association or business organization or
any capital stock or other equity interest therein, except for the interest of
Holdings in SSC and of SSC in Acquisition. SSC is a direct wholly owned
subsidiary of Holdings, and Acquisition is a direct wholly owned subsidiary of
SSC.
3.2. Authority. Each of the Purchasers has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each Purchaser and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of each Purchaser and its Affiliates. This
Agreement has been duly and validly authorized, executed and delivered by, and
constitutes the valid and binding agreement of each Purchaser, enforceable in
accordance with its terms.
3.3. Transaction Not a Breach. Neither the execution, delivery and
performance of this Agreement by each Purchaser, nor the consummation by each
Purchaser or its Affiliates of the transactions contemplated hereby, nor
compliance by each Purchaser or its Affiliates with any of the provisions hereof
will (a) conflict with or result in a breach of any provision of the respective
Certificate of Incorporation or Bylaws of each Purchaser or its Affiliates, (b)
cause a violation or default (or acceleration) under any of the terms,
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conditions or provisions of any Contract to which any Purchaser or its
Affiliates is a party, except for such violation or default (or acceleration) as
to which requisite waivers or consents will have been obtained by the Closing or
which, in the aggregate, would not result in a material adverse effect on any
Purchaser, the Seller or the Company or (c) violate any statute, rule or
regulation or judgment, order, writ, injunction or decree of any court,
administrative agency or governmental body, in each case applicable to each
Purchaser or its Affiliates or any of their respective properties or assets,
except for violations which would not in the aggregate result in a material
adverse effect on any Purchaser, the Seller or the Company.
3.4. Governmental Consents or Approvals. No consent, approval or authorization
of, designation or declaration by, or filing with, any governmental authority on
the part of any Purchaser or its Affiliates is required in connection with the
execution and delivery of this Agreement or the consummation at Closing of the
transactions contemplated hereby, except (a) pursuant to the Securities Act, (b)
such filings and approvals as may be required under the "blue sky" or securities
laws of various states, or (c) where the failure to obtain such consent,
approval or authorization, have such designation or declaration made or make
such filing, would not in the aggregate result in a material adverse effect on
either the Company or the Seller. Furthermore, Holdings is the "acquiring
person" within the meaning of Rule 801.2(a) promulgated pursuant to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and
does not within the meaning of Rule 801.1 of the HSR Act directly or indirectly
control any entities other than SSC and Acquisition. Holdings does not have a
regularly prepared balance sheet within the meaning of Rule 801.11(c)(2) of the
HSR Act and has assets of less than Ten Million Dollars ($10,000,000) as
determined under Rule 801.11(e)(1) of the HSR Act.
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3.5. No Brokers or Finders. No person is entitled to receive as a result of
any action of the Purchasers or any of their respective Affiliates any
commission, fee or other compensation as a finder or broker in connection with
the transactions contemplated by this Agreement.
3.6. Acquisition of Stock. Each Purchasers is acquiring the Shares for
investment and not with a view toward, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
such Shares. Each Purchaser is an "accredited investor," as such term is
defined in Rule 501(a) under the Securities Act.
Each Purchaser acknowledges that the Shares may not be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act, except pursuant to an exemption from such
registration under the Securities Act.
3.7. Certain Knowledge and Disclosure. Each of the Purchasers has received
such information regarding the Company as it has requested to date, and has had
an opportunity to ask questions of and receive answers from the Company and the
Seller concerning the Company's business and financial condition.
4. COVENANTS OF THE SELLER. The Seller covenants that:
4.1. Conduct of Business of the Company. Except for the transactions
contemplated by this Agreement and without the prior written consent of the
Purchasers, from and after the execution and delivery of this Agreement and
until the Closing Date, the Seller will conduct itself, and will cause the
Company to conduct itself, so that: (a) the Company will not engage in any
activities or transactions outside the ordinary and usual course of its business
consistent with past practice; (b) the Company will not grant, pay or authorize
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any increase in the salary or other compensation of any employee; (c) the
Company will conduct its business and operation in substantially the same manner
in which the same have heretofore been conducted and maintain its books of
account in a manner that fairly presents its income, expenses, assets and
liabilities, in accordance with generally accepted accounting principles and
otherwise consistent with past practices; (d) the Company will use reasonable
efforts to preserve its existing licenses, franchises and registrations
pertinent to its respective business and credit arrangements with banks and
other financial institutions; (e) the Company will use reasonable efforts to
preserve intact its business organizations, and will use reasonable efforts to
keep available to the Purchasers the services of its current officers,
employees, distributors and agents thereof, preserve for the Purchasers the good
will of its suppliers, customers and others having business relations with it,
and will continue to develop its business; (f) the Company will not declare, set
aside or pay any dividend or make any distributions with respect to its capital
stock or redeem, purchase or otherwise acquire any of its capital stock; (g) the
Company will maintain its present debt and lease instruments and not enter into
any new or amended debt or lease instruments; and (h) the Company and the
corporations in which it holds minority investments shall not enter into or
perform any transaction with the Seller or any Affiliate of the Seller (other
than the Company and such corporations) except as set forth on Schedule 4.1.
4.2. Changes in Capitalization; Other Transactions. Anything in Section 4.1
hereof to the contrary notwithstanding, between the date hereof and the Closing
Date, without the prior written consent of the Purchasers, the Company will
conduct itself, and the Seller will cause the Company to conduct itself, so that
the Company will not: (a) make any change in its authorized capital stock; (b)
issue any stock options, warrants or other rights to acquire capital stock; (c)
pay or declare any stock dividends or make any reclassification in respect of
its outstanding shares of capital stock; (d) issue or sell any shares of its
capital
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stock, other than shares issuable pursuant to the terms of outstanding
options; (e) declare, pay or set apart in respect of its capital stock any
dividends or other distribution or payment, (g) make any acquisition of a
material amount of assets or securities, any disposition of a material amount of
assets or securities or any material change in its capitalization, or enter into
a material contract or release or relinquish any material contract rights not in
the ordinary course of
business; or (h) propose or adopt any amendments to the Articles of
Incorporation or Bylaws of the Company.
4.3. Third Party Consents. Schedule 4.3 sets forth a complete and accurate list
of (i) all Contracts relating to the Business (as defined in the Non-Competition
Agreement) to which the Company is not a named party, each of which Contracts
will be assigned to the Company at or prior to the Closing without cost or
expense to the Company; and (ii) all consents of third parties required for any
assignment of a material Contract referred to in clause (i) above or required
under any material Contract to which the Company is a party by reason of the
transactions contemplated hereby, each of which shall have been obtained at or
prior to the Closing without cost or expense to the Company .
4.4. Kernan/Zeiger. The Seller shall prior to the Closing assume from the
Company the responsibility for the agreements and disputes between the Company
and Messrs. Kernan and Zeiger (the "Kernan/Zeiger Dispute") pursuant to
documentation reasonably satisfactory to the Seller and the Purchasers (the
"Kernan/Zeiger Agreement").
4.5. Wicat Divestiture. At or prior to the Closing, Seller shall cause Wicat
Systems, Inc., a Delaware corporation ("Wicat") to become a direct wholly-owned
subsidiary of the Seller, and the Seller shall have entered into a mutually
satisfactory agreement pursuant to which Seller shall (i) assume all liabilities
for any claims or damages or other liabilities of any kind relating to Wicat or
the operation of the Wicat business, and (ii) cause the
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Company to have repaid in full all indebtedness outstanding under the
intercompany note (the "Wicat Note") of the Company payable to Wicat (the
"Related Party Agreement").
4.6. Certain Transition Matters.
(a) At or prior to the Closing, the Purchasers, the Company and the
Seller shall have entered to a mutually satisfactory agreement with respect
to transition matters relating to the Company's pre-closing insurance
coverage and the Company Plans (the "ERISA and Insurance Transition
Agreement"), and obtained such consents of third parties as may be required
with respect thereto.
(b) At or prior to the Closing, the Purchasers, the Company and the
Seller shall have entered into a mutually satisfactory agreement with
respect to telephone services (the "Phone Service Agreement").
4.7. Confidentiality Agreements. Seller hereby assigns to Acquisition Seller's
interest in each of the Confidential Agreements listed on Schedule 2.11(c)
hereto, to the extent that it applies to information relating to the Company,
which agreements represent all such agreements obtained by Seller in connection
with the proposed sale of the Company. The Seller agrees to cooperate with
Acquisition in connection with any effort by Acquisition to enforce any rights
under any such agreement.
4.8. Further Assurances. Seller shall from time to time prior to the Closing,
upon the request of Purchasers, use reasonable efforts to do, execute,
acknowledge and deliver, and cause to be done, executed, acknowledged or
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney or assurances as may be required
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for the vesting in the
Purchasers of good title to the Shares and the
Intercompany Note and otherwise more effectively consummating the transaction
contemplated by this Agreement.
5. MUTUAL COVENANTS.
5.1. Access and Confidentiality.
5.1.1. Access. Prior to the Closing, the Company shall, and the Seller
shall cause the Company to: (a) permit the Purchasers and their prospective
lenders and investors and their respective counsel, accountants and other
representatives full access, during normal business hours throughout the period
from the date hereof to the Closing Date, to the offices, personnel, properties,
books, contracts, commitments, records and affairs of the Company so that the
Purchasers may inspect and audit the same at Purchasers' expense, and (b)
furnish to the Purchasers and such persons such information concerning the
Company and its businesses, properties and operations as the Purchasers and such
persons reasonably may request prior to the Closing Date. Purchasers and such
persons shall conduct such a review in a manner which minimizes disruption to
normal operations of the Company and maintain confidentiality of all information
gathered.
5.1.2. Purchasers' Confidentiality Obligation. Prior to the Closing:
(a) Each of the Purchasers agrees to treat any information concerning the
Company (whether prepared by the Seller, the Company, their advisors
or otherwise) which is furnished to Purchasers by or on behalf of the
Company (herein collectively referred to as the "Evaluation
Material") in accordance with the provisions of this Section 5.1 and
to take or abstain from taking certain other actions herein set
forth. The term "Evaluation
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Material" does not include information which (i) was in the possession of
Bain Capital, Inc. or Information Partners, Inc. prior to December 6, 1994,
provided that such information was not known by such persons to be subject
to another confidentiality agreement with or other obligation of secrecy to
the Company or another party, or (ii) becomes generally available to the
public other than as a result of a disclosure by the Purchasers or
Purchasers' directors, officers, employees, agents, advisors, lenders or
investors or prospective lenders or investors, or (iii) was or becomes
available to the Purchasers on a non-confidential basis from a source other
than the Seller, the Company or their advisors, provided that such source
is not known by the Purchasers to be bound by a confidentiality agreement
with or other obligation of secrecy to the Company or another party.
(b) Each of the Purchasers hereby agrees that the Evaluation Material will be
used solely for the purpose of evaluating the transaction contemplated by
this Agreement, and that such information will be kept confidential by the
Purchasers and the Purchasers' advisors; provided, however, that (i) any of
such information may be disclosed (a) to a Purchasers' directors, officers
and employees and representatives of a Purchasers' advisors, lenders or
investors or prospective lenders or investors, who need to know such
information for such purpose of evaluating such transaction (it being
understood that such directors, officers, employees and representatives
shall be informed by the Purchasers of the confidential nature of such
information and shall be directed by the Purchasers to treat such
information confidentially), or (b) in exercising any right or remedy
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hereunder or as required by law, and (ii) any disclosure of such
information may be made to which the Company consents in writing.
(c) In addition, without the prior written consent of Seller, Purchasers will
not and will direct such directors, officers, employees and representatives
not to, disclose to any person either the fact that discussions or
negotiations are taking place concerning the transaction contemplated by
this Agreement, or any of the terms, conditions or other facts with respect
to any such transaction, including the status thereof, except in exercising
any right or remedy hereunder or as required by law.
(d) In the event that this Agreement is terminated, or the Closing otherwise
does not occur, Purchasers shall promptly redeliver to the Company all
written Evaluation Material and any other written material containing or
reflecting any information in the Evaluation Material (whether prepared by
the Seller, the Company, their advisors or otherwise) and will not retain
any copies, extracts or other reproductions in whole or in part of such
written material. All documents, memoranda, notes and other writings
whatsoever prepared by the Purchasers or the Purchasers' advisors based on
the information in the Evaluation Material shall be destroyed, and such
destruction shall be certified in writing to Seller by an authorized
officer supervising such destruction. The Purchasers agree to use
reasonable efforts to cause their lenders and investors and prospective
lenders and investors so to return and destroy evaluation material and so
to certify the same to the Seller. The provisions of this Section 5.1.2
supersede that certain letter agreement between Bain Capital, Inc. and
Seller dated December 6, 1994.
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5.1.3. Seller's Confidentiality Obligation. Seller recognizes and
acknowledges that it has in the past and currently has access to (a) certain
confidential information of the Company, such as lists of customers, operational
policies, pricing and cost policies and other information, that are valuable
assets of the Company, and (b) certain confidential information relating to the
Purchasers and their Affiliates (herein collectively referred to as the "Seller
Held Material"). The term "Seller Held Material" does not include information
which (i) becomes generally available to the public other than as a result of
disclosure by the Seller or the Seller's directors, officers, employees, agents
or advisors, or (ii) becomes available to the Seller after the Closing on a non-
confidential basis from a source other than the Company, the Purchasers or their
advisors or shareholders, provided the such source is not known by the Seller to
be bound by a confidentiality agreement with or other obligation of secrecy to
the Company, the Purchasers or their advisors or shareholders. The Seller
agrees that it will not use Seller Held Material for its own benefit or disclose
Seller Held Material to any person for any purpose or reason whatsoever, except
in exercising its rights and remedies or as required by law.
5.1.4. Equitable Remedies. In the event of a breach or threatened breach
by any person of the provisions of this Section 5.1, the Purchasers or the
Seller, as the case may be, shall be entitled, in addition to damages, to seek
an injunction and other equitable remedies. Nothing herein shall be construed
as prohibiting any person from pursuing any other available remedy for such
breach or threatened breach, including without limitation the recovery of
damages.
5.2. Public Announcements. No party will issue or cause the publication of any
press release or other public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of Purchasers (in the
case of Seller) or Seller (in the case of Purchasers), which consent will not be
unreasonably withheld or
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delayed; provided, however, that nothing herein will prohibit any party from
issuing or causing publication of any such press release or public announcement
to the extent that such party determines such action to be required by law (or
stock exchange rules), in which case the party making such determination will,
if practicable in the circumstances, use reasonable efforts to allow the other
parties reasonable time to comment on such release or announcement in advance of
its issuance. To the extent feasible, all press releases or other announcements
or notices regarding the transactions contemplated by this Agreement shall be
made jointly by the parties.
5.3. Regulatory Filings. The Purchasers and the Seller will use their best
efforts to make or cause to be made any filings or submissions as may be
required under applicable laws and regulations, if any, for the consummation of
the transactions contemplated by this Agreement. The Purchasers and the Seller
will coordinate and cooperate with one another in exchanging such information
and providing reasonable assistance as the other may request in connection with
the foregoing.
5.4. Access to Records. Following the Closing each party hereto shall (a)
upon request, provide the other parties, their accountants and attorneys
reasonable access to its books and records which relate to the Company, and the
right to make copies thereof at the requesting party's expense, and (b), except
to the extent disposed of in the ordinary course of business consistent with
past practice, maintain such books and records for a period of at least seven
years after the Closing Date.
5.5. Tax Election. Seller and Purchasers agree to jointly make the election
pursuant to Code Section 338(h)(10) (and any corresponding elections under
state, local or foreign tax law) (collectively a "Section 338(h)(10) Election")
relating to this transaction and to cooperate fully in completing and filing all
documents and forms necessary for complying
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with the requirements necessary to implement such election, in allocating the
"adjusted gross up basis" and "modified aggregate deemed sales price" (as
defined in applicable Treasury Regulations) among the assets of the Company (the
"Tax Basis Allocation") and in delivery to the Purchasers within 3 months after
the Closing Date an executed IRS Form 8023. Purchasers and Seller shall jointly
determine the Tax Basis Allocation and Seller shall file all its tax returns
consistent with such allocation. Seller will pay any taxes attributable to the
making of the Section 338(h)(10) Election and will indemnify the Buyer and the
Company against any such taxes. Seller will also pay any state, local, or
foreign taxes (and indemnify the Buyer and the Company against any such taxes)
attributable to an election under state, local or foreign law similar to the
election available under Code Section 338(g) (or which results from the making
of an election under Code Section 338(g)) with respect to the purchase and sale
of stock of the Company hereunder where the state, local, or foreign tax
jurisdiction (i) does not provide or recognize a Code Section 338(h)(10)
election or (ii) does not apply its provisions corresponding to Code Section
338(h)(10) (for example, because the Company files a separate company tax return
in such jurisdiction).
5.6. Taxes.
(a) Cooperation and Records Retention. Seller and Purchasers shall (i) each
provide the other with such assistance as may reasonably be requested by
either of them in connection with the preparation of any return, audit or
other examination by any taxing authority or judicial or administrative
proceedings relating to liability for taxes, (ii) except to the extent
disposed of in the ordinary course of business consistent with past
practice, each retain and provide to the other any records or other
information which may be necessary to prepare such return, audit or
examination, proceeding or determination (other than such items
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for which a party reasonably asserts the attorney-client or
attorney-work product privilege), and (iii) each provide the other with any
final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any return of the
other for any period.
(b) Tax Indemnity.
(i) After the Closing Date, the Seller shall be liable for and indemnify
and hold harmless the Purchasers, the Company, and their respective
successors and assigns against any and all liability (excluding any
penalties or interest arising from any act or omission of the Purchasers
after the Closing Date) for or with respect to (A) federal, state, local
and foreign income taxes of the Company assessed or finally determined for
taxable periods ended on or prior to the Closing Date and (B) taxes of any
person other than the Purchasers and the Company for any taxable year
imposed under Treas. Reg. (S) 1.1502-6 (or any similar provision of state,
local or foreign law), as a transferee or successor, or by contract or
otherwise. Any refunds of income or other taxes of the Company and its
successors and assigns for periods up to and including the Closing Date
which are received by the Purchasers shall be refunded promptly to the
Seller.
(ii) Tax liabilities and refunds for all other taxes not measured by income
attributable to the taxable periods up to and including the Closing Date
shall be for the account of the Seller.
(iii) If any party pays any taxes that, pursuant to this Agreement are to
be borne by another party, the other party shall promptly reimburse such
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paying party for the taxes paid. If any party receives any refunds or credits
which, pursuant to this Agreement are the property of another party, such party
shall promptly pay the amount of such refunds or credits to the other party.
(iv) In order appropriately to apportion any income taxes relating to any
taxable year or period that begins before and ends after the Closing Date, the
parties hereto shall, to the extent permitted by applicable law, elect with the
relevant taxing authority to terminate the taxable year as of such date. In any
case where applicable law does not permit the Company to treat such date as the
end of a taxable year of the Company, then whenever it is necessary to determine
the liability for income taxes of the Company for a portion of a taxable year,
such determination shall (unless otherwise agreed to in writing by Purchaser and
Seller) be determined by a closing of the Company's books, except that
exemptions, allowances or deductions that are calculated on an annual basis,
such as the deduction for depreciation be apportioned on a time basis. In order
appropriately to apportion any taxes, other than income taxes, relating to any
taxable year or period that begins before and ends after the Closing Date, (i)
ad valorem taxes (including, without limitation, real and personal property
taxes) shall be accrued on a monthly basis over the period for which the taxes
are levied, or if it cannot be determined over what period the taxes are being
levied, over the fiscal period of the relevant taxing authority, in each case
irrespective of the lien or assessment date of such taxes, and (ii) franchise an
other privilege taxes not measured by income shall be accrued on a monthly basis
over the period to which the privilege relates.
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(c) Notice. Each party shall promptly provide written notice to each of the
other parties upon receiving written notice from a taxing authority that may
materially increase taxes for which the other party is responsible; provided,
however, that the failure to so notify a party shall not relieve such party of
its obligations under this Section 5.6 except to the extent such failure shall
have materially harmed such party.
(d) Taxes. As used in this Agreement, "taxes" shall mean all federal, state,
local, foreign or other taxes, imposts, rates, levies, assessments or other
charges of whatever nature, and shall include any obligation to contribute to
the payment of taxes determined on a consolidated, combined or unitary basis
with respect to the Seller Consolidated Group, and any interest, penalty, or
addition thereto, whether disputed or not.
(e) Seller shall be responsible for filing tax returns due for the taxable
period ending prior to and including the Closing. The Company shall be
responsible for filing tax returns for periods ending after the Closing. With
respect to any tax returns required to be filed by or on behalf of the Company
for a taxable period ending after the Closing and for which Seller may be liable
in any part by reason of subparagraph (b)(iv) hereof, the Company shall provide
to Seller and its authorized representatives copies of such completed tax
returns at least 20 business days prior to the due date for the filing of such
tax returns, and Seller and its authorized representatives shall have the right
to review such tax returns prior to the filing of such tax returns. The Company
shall consider in good faith any written objections to such tax returns received
from Seller at least five business days prior to the due date for such tax
returns.
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5.7. Employment Agreements. Set forth in Schedule 5.7 is a list of all employees
of the Company who are parties to Employment Agreements in the respective forms
attached, together with a related summary of terms, to Schedule 5.7 (the
"Employment Agreements"). Seller shall be responsible for (i) the payments
contemplated by Section 5(c) of the Employment Agreements, (ii) any payments
under Section 5(e) of the Employment Agreements with respect to any Executive
terminated on or prior to the closing and (iii) any payments under the Severance
Plan in excess of the amounts required under Section 5(f) of the Employment
Agreements (after applicable offsets for payments made by the Seller under
Section 5(c) of the Employment Agreement), and Purchasers shall be responsible
for all other payments due under the Employment Agreements which arise after the
Closing.
5.8. Intercompany Note and Wicat Note. In addition to the purchase price paid in
accordance with Section 1.3(a) hereof, at the Closing, (i) the Seller shall
cause Wicat to release the Company from all obligations under the Wicat Note,
and (ii) the Company shall pay to the Seller, as a payment in respect of the
Intercompany Note an amount equal to $2,000,000, adjusted as set forth in
Schedule 5.8 hereto.
5.9. Restructuring Expenses. Seller shall pay to Acquisition by wire transfer of
immediately available funds the amounts set forth on Schedule 5.9 on the dates
set forth in such Schedule 5.9. The obligations of Seller under this Section 5.9
shall not be subject to any right of set-off or any other claims which Seller
may have against Acquisition or any of its Affiliates.
5.10. Contingent Payments. To the extent that the actual net income (or loss) of
the Company for the fiscal year of the Company ending June 30, 1995, as revealed
by the Company's audited financial statements, are better than the projected
gain for such period
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of $3,000 (the amount by which such actual results are better than such
projected results, if any, being the "1995 Improvements") Acquisition shall on
June 30, 1996 pay to the Seller 50% of the 1995 Improvements by wire transfer of
immediately available funds; provided, however, that the maximum amount of any
such payment shall not exceed $500,000. By August 31, 1995 the Purchasers will
provide to the Seller an income statement of the Company (excluding Wicat) for
the fiscal year ending on June 30, 1995 (the "Closing Income Statement")
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with the Company's audited income statement for the year
ended June 30, 1994 (excluding Wicat). Within 60 days of the date the Closing
Income Statement is prepared, the Purchasers will cause Price Waterhouse to
complete an audit of the Closing Income Statement in accordance with generally
accepted auditing standards. Upon completion of the audit, Purchasers will send
copies of the report and a statement of the payment due under Section 5.10 to
the Seller. Within 30 days after the delivery of the audited Closing Income
Statement to Seller, Seller will deliver written notice (the "Seller's Notice")
to Purchaser stating whether or not Seller objects to any of the information
contained in the Closing Income Statement which would affect the calculation of
net income or loss and, if Seller so objects, setting forth Seller's objections
together with the reasons therefor. In reviewing the Closing Income Statement,
the Seller may be assisted by such accounting firm as it selects, and the
Seller's accounting firm shall have reasonable access to the books and records
of the Company, including, without limitation, the work papers of the
accountants who prepared the Closing Income Statement and to such parties'
representatives. If no objections are set forth in the Seller's Notice, or if no
Seller's Notice is delivered within 30 days after the delivery of the audited
Closing Income Statement to Seller, any objections to the Closing Income
Statement will be deemed to have been waived. If the Seller's Notice is timely
delivered setting forth objections to the Closing Income Statement and such
objections are not resolved by Purchasers and Seller within 30 days after the
delivery of the Seller's Notice to Purchasers,
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either of the parties may submit all unresolved matters for resolution as soon
as practicable thereafter to Coopers & Lybrand (the "Second Accounting Firm").
The determinations of the Second Accounting Firm as to all unresolved matters
under this Section 5.10 shall be final and binding on Purchasers and Seller.
Each of the Purchasers and Seller agrees to permit the other party and such
other party's accounting firm and the Second Accounting Firm, if any, to have
reasonable access during normal business hours to its books and records as they
relate to the Company and to the books and records of the Company, including,
without limitation, the work papers of its accountants, and to have reasonable
access to such party's representatives or its accountants in connection with the
preparation and review of the Closing Income Statement. The Purchasers will bear
all costs and expenses in connection with the preparation of the Closing Income
Statement. The costs and expenses of the Second Accounting Firm will be borne by
the party whose position with respect to net income, as first submitted to the
Second Accounting Firm, is at greater variance from the actual amount of net
income or loss, as determined by the Second Accounting Firm.
5.11. IBM Royalties. Acquisition shall, within 30 days of receipt, pay to
the Seller the first $600,000 of distributions received by the Company from the
Basics Limited Partnership, whether in respect of its interest as a general
partner or limited partner of such partnership, on or prior to June 30, 1997
with respect to royalties due from IBM under to the IBM Project Agreement ASW098
dated February 12, 1985 between the Company, in its capacity as general partner,
and IBM (the "IBM Agreement"). The Purchasers shall have no obligations to the
Seller in respect of any such distributions received by the Company after such
date and pursuant to royalties due after such date. The Purchasers shall not
permit the Company, during the period after the Closing Date through June 30,
1997, to consent to any amendment of the Basics Limited Partnership Agreement or
the IBM Agreement or to any offset against royalty payments due to the
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Company thereunder which amendment or offset would affect the amount of
royalties due and receivable pursuant to the Basics Limited Partnership
Agreement or the IBM Agreement prior to June 30, 1997 without the consent of the
Seller, which consent shall not be unreasonably withheld.
5.12. Sureties. Seller agrees that it shall continue to maintain for the
account of the Company after the Closing all surety or indemnification
agreements with Safeco, Inc. (the "Surety") in effect on the Closing Date and
will continue to provide indemnity, substantially in accordance with past
practice, pursuant to similar agreements to be entered into by Company with the
Surety in the ordinary course of business prior to December 31, 1995.
Acquisition agrees to indemnify Seller and hold it harmless for any and all
payments required to be made by Seller to the Surety pursuant to such
agreements.
6. COVENANTS OF PURCHASERS. Each of the Purchasers covenants that:
6.1. Change of Name. Purchasers shall at or immediately after the Closing
take all necessary actions and file all appropriate documents to effect the
change of the registered corporate name of the Company to JLC Learning
Corporation or another name not confusingly similar to any trademark, trade
name or corporate name being used or owned by the Seller. The Purchasers shall
use such trademarks, trade names or corporate names being used or owned by the
Seller after the Closing Date only pursuant to the terms and conditions of the
Trademark License Agreement entered into pursuant to Section 1.4(b).
6.2. Plant Closings. The Purchasers agree to comply with all plant closing
and notification laws and regulations of any federal, state or municipality
which may apply to any of the facilities currently occupied by employees of the
Company for actions taken on or after the Closing Date.
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6.3. Stock Option Plan. The Purchasers shall cause the terms of the
management stock option plan contemplated to be adopted at or following the
Closing to contain the following sentence:
"The provisions of this plan supersede all stock option or other stock
plans of Jostens Learning Corporation or its affiliates in effect prior to
the adoption of this plan and acceptance of any grant hereunder shall be
deemed to constitute a waiver of any claims the recipient may have with
respect to each such plan and any grants thereunder."
7. CONDITIONS PRECEDENT.
--------------------
7.1. Conditions to Seller's Obligation. The obligation of the Seller to sell
the Shares and the Intercompany Note hereunder at the Closing shall be subject
to the following conditions:
(a) Legal Action. Neither the Purchasers nor Seller nor the Company shall
be subject to a judgment, order or decree of a court of competent
jurisdiction within the United States which materially restrains or
prohibits any of the transactions contemplated hereby.
(b) Consents and Approvals. The Purchasers shall have received the consent
or approval of any and all governmental authorities, including any consent
required under the HSR Act, the consent or the approval of which is
necessary for the Purchasers to consummate the transactions contemplated
hereby and acquire and to continue to operate the business of the Company
as heretofore operated.
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(c) Opinion of Purchasers's Counsel. The Purchasers shall have furnished
Seller with a legal opinion of their legal counsel dated as of the Closing
in the form of Exhibit 7.1(c).
(d) No Breach of Deliveries or Covenants; True and Correct Representations
and Warranties. There shall have been no material breach by the Purchasers
in the performance of any of the deliveries or covenants herein to be
performed by them in whole or in part prior to or at the Closing, and the
representations and warranties of the Purchasers contained in this
Agreement shall be true and correct in all respects as of the Closing. The
Seller shall receive at the Closing a certificate dated as of the Closing
and executed by an officer on behalf of the Purchasers certifying, in such
detail as the Seller may reasonably require, the fulfillment of the
foregoing conditions, and restating and reconfirming as of the Closing all
of the representations and warranties of the Purchasers contained in this
Agreement.
7.2. Conditions to Purchasers's Obligation. The obligation of the Purchasers
to purchase the Shares and the Intercompany Note hereunder at the Closing shall
be subject to the following conditions:
(a) Legal Action. Neither the Purchasers nor Seller nor the Company shall
be subject to a judgment, order or decree of a court of competent
jurisdiction within the United States which materially restrains or
prohibits any of the transactions contemplated hereby.
(b) Consents and Approvals. The Seller and the Company shall have received
the consent or approval of any and all governmental authorities, including
any
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consent required under the HSR Act, the consent or the approval of which
is necessary for the Seller and the Company to consummate the transactions
contemplated hereby and for the Purchasers to acquire and to continue to
operate the business of the Company as heretofore operated. The Purchasers
shall have been furnished copies, in form and substance reasonably
satisfactory to them, of all consents, approvals and authorities listed in
Schedule 4.3, each of which shall be in full force and effect.
(c) Opinion of Seller's Counsel. Seller shall have furnished buyer with
the legal opinions of its legal department and Oppenheimer Wolff &
Donnelly dated as of the Closing in the respective forms of Exhibit
7.2(c)(i) and (ii) hereto. Such opinions shall at the request of the
Purchasers be confirmed to any person providing financing in connection
with the transactions contemplated hereby, including without limitation
the lenders referred to in Exhibit 7.2(g) below.
(d) Ancillary Agreements. The Seller shall have delivered the Seller
Closing Agreements.
(e) No Breach of Deliveries or Covenants; True and Correct Representations
and Warranties. There shall have been no breach by the Seller in the
performance of any of its deliveries or covenants herein to be performed
by it in whole or in part prior to or at the Closing, and the
representations and warranties of the Seller contained in this Agreement
shall be true and correct as of the Closing. The Purchasers shall receive
at the Closing a certificate dated and validly executed by an officer on
behalf of the Seller certifying, in such detail as the Purchasers may
reasonably require, the fulfillment of the foregoing conditions, and
restating and
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reconfirming as of the Closing all of the representations and warranties of
the Seller contained in this Agreement.
(f) Schedule Delivery. The Seller shall have caused Schedule 2.19(a) to
be prepared and delivered to the Purchasers within the time period and in
the format required by Section 2.19, which such schedule shall be
reasonably satisfactory to the Purchasers in form and substance.
(g) Financing. The Purchasers shall have obtained financing in the
amounts and on the terms and conditions described in the commitment letter
attached as Exhibit 7.2(g).
8. TERMINATION PRIOR TO CLOSING.
8.1. Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written consent of the Purchasers and the Seller;
(b) by any one of the Purchasers or the Seller in writing, without
liability of the terminating party to the other party on account of such
termination (provided that the terminating party is not otherwise in
default or in breach of this Agreement or any duty relating hereto), if the
Closing shall not have occurred on or before August 10, 1995; or
(c) by any one of the Purchasers or Seller in writing, without liability
of the terminating party to the other party on account of such termination
(provided that the terminating party is not otherwise in default or in
breach of this Agreement or any duty relating hereto), if the Purchasers,
on one hand, or the Seller, on the
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other hand, shall (i) fail to perform in any material respect its covenants
and agreements contained herein required to be performed before the Closing
Date, or (ii) materially breach any of their representations, warranties or
covenants contained herein if such breach would cause a condition to the
obligation of the terminating party to close not to be satisfied and if
such failure to perform or breach has not been waived by the terminating
party.
8.2. Procedure and Effect of Termination. In the event of termination of this
Agreement and abandonment of the transactions contemplated hereby by either of
the parties in accordance with Section 8.1, this Agreement shall terminate
(other than Sections 5.1.2, 5.1.3, 5.1.4, 5.2, 10.4, 10.5, 10.6, 10.7, and the
first sentence of 10.8, and this Section 8) and the transactions contemplated
hereby shall be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein: (a) each party shall, upon
request, deliver all documents, work papers and other material of any other
party (and all copies thereof) relating to the transactions contemplated herein,
whether so obtained before or after the execution hereof, to the party
furnishing the same; and (b) no party shall have any further liability in
respect of this Agreement, provided, however, that the foregoing provisions of
this clause (b) shall not apply to Sections 5.1.2, 5.1.3, 5.1.4, 5.2, 10.4,
10.5, 10.6, 10.7 or the first sentence of 10.8, or this Section 8; and provided,
further, that no termination of this Agreement shall relieve any party of
liability for any breach or violation prior to such termination of this
Agreement or of any duty relating hereto.
9. SURVIVAL; INDEMNIFICATION.
-------------------------
9.1. Survival. The representations and warranties of the Seller and each of
the Purchasers herein shall survive the execution of and delivery of this
Agreement and the consummation
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of the transactions contemplated hereby and the same shall be effective until
the relevant time limitation for making any indemnity claim in respect of such
representations and warranties under Section 9.2(d) shall have been reached and
no longer regardless of any investigation that may have been made at any time by
or on behalf of the party to which such representations and warranties are made.
9.2. Indemnification.
---------------
(a) Indemnification of Purchasers. Seller agrees to indemnify each of the
Purchasers, the Company, the Purchasers' Affiliates and their respective
shareholders, Affiliates, directors, officers, employees, agents,
representatives, successors and permitted assigns (collectively, the
"Purchaser Indemnitees"), and save and hold each of them harmless from and
against and pay on behalf of or reimburse such party as and when incurred
for any and all damages, losses, liabilities, obligations, claims, demands,
judgments, amounts paid in settlement, costs and expenses ("Losses") which
any such party may suffer, sustain or become subject to, in connection
with, incident to, resulting from or arising out of or in any way relating
to or by virtue of:
(i) Any misrepresentation or breach of or inaccuracy in any
representation or warranty (as each such representation or warranty
would read if all qualifications as to materiality were deleted
therefrom) on the part of Seller under Article 2 of this Agreement or
any certificate furnished hereunder;
(ii) Any nonfulfillment or breach of any covenant or agreement on the
part of Seller under this Agreement; or
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(iii) The Stock Option Plan, any option granted thereunder, or the
termination of the Stock Option Plan or any such option.
(b) Indemnification of Seller. Each of the Purchasers hereby agrees, and
agrees to cause the Company, to indemnify each of Seller, its Affiliates
and their respective shareholders, Affiliates, directors, officers,
employees, agents, representatives, successors, and permitted assigns
(collectively, "Seller Indemnitees") and save and hold each of them
harmless from and against and pay on behalf of or reimburse such party, as
and when incurred, for any and all Losses which any such party may suffer,
sustain or become subject to, in connection with, incident to, resulting
from or arising out of or in any way relating to or by virtue of:
(i) Any misrepresentation or breach of or inaccuracy in any
representation or warranty (as each such representation or warranty
would read if all qualifications as to materiality were deleted
therefrom) on the part of Purchasers under Article 3 of this Agreement
or any certificate furnished hereunder; or
(ii) Any nonfulfillment or breach of any covenant or agreement on the
part of any of the Purchasers under this Agreement.
(c) Defense of Claims. Any party making a claim for indemnification
hereunder (an "Indemnitee") shall notify the indemnifying party (an
"Indemnitor") of the claim in writing promptly after receiving written
notice of any action, lawsuit, proceeding, investigation or other claim
against (if by a third party)
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describing the claim, the amount thereof (if known and quantifiable), and
the basis thereof, all with reasonable specificity in light of the facts
then known, provided that the failure to so notify an Indemnitor shall not
relieve the Indemnitor of its obligations hereunder except to the extent
such failure shall have materially harmed the Indemnitor. Any Indemnitor
shall be entitled to appoint lead counsel in such defense at its expense
with counsel reasonably acceptable to Indemnitee; provided, however that:
(i) The Indemnitee shall be entitled to participate in the defense of
such claim and to employ counsel of its choice for such purpose, the
fees and expenses of such separate counsel which shall be borne by
Indemnitee;
(ii) The Indemnitor shall not be entitled to assume control of such
defense and shall pay the reasonable fees and expenses as incurred of
counsel retained by the Indemnitee if (A) the claim for
indemnification relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation, (B)
Indemnitee reasonably believes an adverse determination with respect
to the action, lawsuit, investigation, proceeding or other claim
giving rise to such claim for indemnification would be materially
detrimental to or materially injure Indemnitee's reputation or future
business prospects, (C) the claim seeks an injunction or equitable
relief against Indemnitee or (D) the Indemnitor failed or is failing
to vigorously prosecute or defend such claim; provided, however, that
(x) in no event shall Indemnitor be required to pay the fees and
expenses of more than one lead counsel and, if necessary, one local
counsel, and (y) in the case of an election by the Indemnitee pursuant
to clause (B) above, the fees and expenses of such lead counsel and,
if
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necessary, such local counsel shall be borne twenty percent (20%) by
the Indemnitee and eighty percent (80%) by the Indemnitor; and
(iii) If the Indemnitor pursuant to this Section 9.2(c) shall control
the defense of any such claim, the Indemnitor shall obtain the prior
written consent of the Indemnitee (which shall not be unreasonably
withheld) before entering into any settlement of a claim or ceasing to
defend such claim.
(d) Time Limitation. Notwithstanding anything to the contrary set forth
herein (but subject to the proviso set forth in this sentence), any
indemnification claim pursuant to Section 9.2(a)(i) or (b)(i) must be
asserted by written notice with reasonable specificity in light of the
facts then known on or prior to September 30, 1996; provided, however,
that, notwithstanding the foregoing, (i) claims based on the
representations and warranties in Sections 2.7, 2.12 or 2.15 must be
asserted prior to the expiration of thirty (30) days beyond the applicable
statute of limitations period, (ii) claims based on the representations and
warranties in Sections 2.1 or 2.2 or based on fraud may be asserted at any
time, (iii) claims based on the representations and warranties in Section
2.13 must be asserted on or prior to September 30, 2001, and (iv) claims
based on the representations and warranties in Section 2.19 must be
asserted on or prior to December 31, 1996. A claim based on the alleged
breach of any of the representations or warranties of the parties contained
herein which has not been made in writing prior to expiration of the
applicable time period as provided herein shall be forever barred and
foreclosed. For purposes of clause (i) of the first sentence of this
Section 9.2(d), the applicable statute of limitations period shall be
calculated without giving effect to any waiver of such limitations granted
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by the Company or the Purchasers without the consent of the Seller, which
consent the Seller shall not unreasonably withhold.
(e) Threshold Limitation on Remedies. Notwithstanding anything to the
contrary set forth in this Agreement (but subject to the proviso set forth
in this sentence), the Seller shall not be liable hereunder as a result of
any misrep resentation or breach of or inaccuracy in any representation or
warranty contained in this Agreement or any certificate furnished
hereunder, except to the extent that the aggregate Losses incurred by the
Purchaser Indemnitees relating to all such misrepresentations or breaches
of or inaccuracies in any representation or warranty contained in this
Agreement or any certificate furnished hereunder shall exceed in the
aggregate $1,000,000 (the "Basket Exclusion"), and then only to the extent
of such excess; provided, however, that (i) in calculating the aggregate
amount of Losses in determining whether $1,000,000 in aggregate Losses have
been incurred for purposes of determining the Basket Exclusion, there shall
be excluded each Loss which does not exceed $25,000 determined by treating
as a single Loss all Losses which relate to (a) the same underlying set of
facts or circumstances or (b) a single representation and warranty
(determined by treating each Section of Article 2 and 3 as a single
separate representation and warranty), and (ii) the Basket Exclusion shall
not apply to claims based on the representations and warranties contained
in Sections 2.1, 2.2, 2.3, 2.12, 2.14, 2.15 on 2.22, on the covenant
contained in Section 4.3 to the extent that it relates to the lease of the
premises at 7878 N. 16th Street, Phoenix, Arizona 85020 (Point Corridor
Centre IV), or on fraud.
(f) Cap Limitation on Remedies. Notwithstanding anything to the contrary
set forth in this Agreement, the aggregate amount required to be paid by
Seller under
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this Article 9 in respect of any misrepresentation or breach of or
inaccuracy in any representation or warranty contained in this Agreement or
any certificate (other than claims based on the representations and
warranties contained in Sections 2.1, 2.2, 2.3, 2.12, 2.14, 2.15 or 2.22
and claims based on fraud, for which there is no limit) shall not exceed
$50,000,000 in the aggregate.
(g) Determination of Damages and Related Matters. The amount of any
liability for Loss as to which indemnification exists under this Agreement
shall be measured taking into account (i) any income tax savings (and
income tax cost attributable to the indemnity payment) actually realized
(or incurred) that affect the overall economic impact of the Loss to the
Indemnitee, and (ii) any insurance proceeds actually realized and adverse
insurance consequences incurred (such as premium adjustments and other
detriments) that affect the overall economic impact of the Loss to the
Indemnitee. In the event that an Indemnitee claims that an Indemnifying
Party has breached its obligation to make any payment under this Section 9,
the time and monetary limitations contained herein shall be inapplicable to
resolution of such claim for payment (but such limitations shall be
operative as provided herein to determination of the underlying claim).
Reference in this Section 9 to claims based upon a representation or
warranty set forth in a particular Section shall be deemed to include
without limitation claims relating to such representations or warranties
based upon the certificates to be furnished pursuant to Sections 7.1(d) and
7.2(e). The Seller and each of the Purchasers hereby waive any insurer's
right of subrogation under this Agreement except solely to the extent that
such waiver would result in a limitation or termination of coverage under
any policy.
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10. MISCELLANEOUS.
-------------
10.1. Notices. Any notice, demand, request or other communication under this
Agreement shall be in writing and shall be deemed to have been given on the date
of service if personally served or on the third business day after mailing if
mailed by registered or certified mail, return receipt requested, addressed as
follows (or to such other address of which either of the parties hereto shall
have notified the other party hereto in accordance herewith) or on the next
business day if sent by overnight courier:
To the Purchasers: JLC Holdings, Inc.
Software Systems Corp.
JLC Acquisition, Inc.
6170 Cornerstone Court
San Diego, CA 92121
Attn: President
With a copy to: Bain Capital, Inc.
Two Copley Place, 7th Floor
Boston, MA 02116
Attn: Mark Nunnelly
With a copy to: Ropes & Gray
One International Place
Boston, MA 02110
Attn: R. Bradford Malt
To the Seller: Jostens, Inc.
5501 Norman Center Drive
Minneapolis, Minnesota 55437
Attn: Orville E. Fisher, Jr., General
Counsel
Facsimile: (612) 830-3293
10.2. Expenses. Subject to Article 9, whether or not the Closing occurs, each
party hereto and the Company shall pay its own expenses incident to this
Agreement or the
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transactions contemplated hereby, including without limitation all legal and
accounting fees and disbursements; provided, however, that all legal and
accounting fees and disbursements or other expenses incurred by the Company on
or prior to the Closing Date incident to this Agreement or the transactions
contemplated hereby shall be deemed to be expenses of and shall be paid by the
Seller, rather than the Company.
10.3. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic substantive laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the domestic substantive laws of any other state.
10.4. Arbitration.
10.4.1. Generally. Except solely as set forth in Section 10.4.3, each
dispute, difference, controversy or claim arising in connection with or related
or incidental to, or question occurring under, this Agreement or the subject
matter hereof shall be finally settled under the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA") by an arbitral tribunal
composed of three arbitrators, at least one of whom shall be an attorney
experienced in corporate transactions, appointed by agreement of the parties in
accordance with said Rules. In the event the parties fail to agree upon a panel
of arbitrators from the first list of potential arbitrators proposed by the AAA,
the AAA will submit a second list in accordance with said Rules. In the event
the parties shall have failed to agree upon a full panel of arbitrators from
said
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second list, any remaining arbitrators to be selected shall be appointed by the
AAA in accordance with said Rules. If, at the time of the arbitration, the
parties agree in writing to submit the dispute to a single arbitrator, said
single arbitrator shall be appointed by agreement of the parties in accordance
with the foregoing procedure, or, failing such agreement, by the AAA in
accordance with said Rules. The arbitrator(s) will entertain such presentation
of sworn testimony and other evidence, written briefs, and/or oral argument as
the parties may wish to present; provided, however, no testimony or exhibits
will be admissible unless the adverse party was afforded an opportunity to
examine such witnesses and to inspect and copy such exhibits during the pre-
arbitration proceeding discovery phase. Upon the request of either party, the
arbitrator(s) will provide both parties with written findings of fact and
conclusions of law. The foregoing arbitration proceedings may be commenced by
any party by notice to all other parties. In any arbitration proceedings under
this Section 10, the arbitrator(s) shall be instructed to begin such proceedings
within 30 days of appointment, and to reach a decision within 45 days of the
conclusion of the submission of all evidence and, in the event that a decision
is not so rendered, the arbitrator shall lose all jurisdiction over such
dispute.
10.4.2. Place of Arbitration. The place of arbitration shall be San
Diego, California.
10.4.3. Recourse to Courts. The parties hereby exclude any right of
appeal to any court on the merits of the dispute. The provisions of this
Section 10.4 may be enforced in any court having jurisdiction over the award or
any of the parties (including, without limitation, jurisdiction pursuant to
Section 10.5 below) or any of their respective assets and judgment on the award
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(including without limitation equitable remedies) granted in any arbitration
hereunder may be entered in any such court. Nothing contained in this Section
10.4 shall prevent any party from seeking interim measures of protection in the
form of pre-award attachment of assets or preliminary or temporary equitable
relief.
10.5. Consent to Jurisdiction. Subject to the provisions of Section 10.4, each
of the parties agrees that all actions, suits or proceedings arising out of or
based upon this Agreement or the subject matter hereof may be brought and
maintained in the federal and state courts of the State of Delaware. Subject to
the provisions of Section 10.4, each of the parties hereto by execution hereof
(i) hereby irrevocably submits to the jurisdiction of the federal and state
courts in the State of Delaware for the purpose of any action, suit or
proceeding arising out of or based upon this Agreement or the subject matter
hereof and (ii) hereby waives to the extent not prohibited by applicable law,
and agrees not to assert, by way of motion, as a defense or otherwise, in any
such action, suit or proceeding, any claim that he or it is not subject
personally to the jurisdiction of the above-named courts, that he or it is
immune from extraterritorial injunctive relief or other injunctive relief, that
his or its property is exempt or immune from attachment or execution, that any
such action, suit or proceeding may not be brought or maintained in one of the
above-named courts, that any such action, suit or proceeding brought or
maintained in one of the above-named courts should be dismissed on grounds of
forum non conveniens, should be transferred to any court other than one of the
above-named courts, should be stayed by virtue of the pendency of any other
action, suit or proceeding in any court other than one of the above-named
courts, or that this Agreement or the subject matter hereof may not be enforced
in or by any of the above-named
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courts. Each of the parties hereto hereby consents to service of process in any
such suit, action or proceeding in any manner permitted by the laws of the State
of Delaware, agrees that service of process by registered or certified mail,
return receipt requested, at the address specified in or pursuant to Section
10.1 hereof is reasonably calculated to give actual notice and waives and agrees
not to assert by way of motion, as a defense or otherwise, in any such action,
suit or proceeding any claim that such service of process does not constitute
good and sufficient service of process.
10.6. Waiver of Jury Trial. To the extent not prohibited by applicable law
which cannot be waived, each of the parties hereto hereby waives, and covenants
that he or it will not assert (whether as plaintiff, defendant, or otherwise),
any right to trial by jury in any forum in respect of any issue, claim, demand,
cause of action, action, suit or proceeding arising out of or based upon this
Agreement or the subject matter hereof, in each case whether now existing or
hereafter arising and whether in contract or tort or otherwise. Any of the
parties hereto may file an original counterpart or a copy of this Section 10.6
with any court as written evidence of the consent of each of the parties hereto
to the waiver of his or its right to trial by jury.
10.7. Reliance. Each of the parties hereto acknowledges that he or it has been
informed by each other party that the provisions of Sections 10.4, 10.5 and 10.6
constitute a material inducement upon which such party is relying and will rely
in entering into this Agreement and the transactions contemplated hereby.
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10.8. Entire Agreement. This Agreement, including the Schedules hereto, sets
forth the entire agreement and understanding of the parties with respect to its
subject matter and supersedes any prior written or oral understandings with
respect thereto, provided, however, that the foregoing is not meant to modify or
limit the rights or obligations of the parties under any of the Seller Closing
Agreements. All representations, warranties, covenants and agreements made by or
on behalf of any party hereto in this Agreement (including without limitation
the Schedules hereto), or pursuant to any certificate, financial statement,
agreement or other document referred to herein or delivered in connection with
the transactions contemplated hereby, shall be deemed to have been relied upon
by the parties hereto, notwithstanding any investigation made by or on behalf of
any of the parties hereto or any opportunity therefor or any actual or
constructive knowledge thereby obtained, and shall survive the execution and
delivery of this Agreement and the Closing, as provided herein. Neither the
listing nor description of any item, matter or document in any Schedule hereto
nor the furnishing or availability for review of any document shall be construed
to modify, qualify or disclose an exception to any representation or warranty of
any party made herein or in connection herewith, except to the extent that such
representation or warranty specifically refers to such Schedule and such
modification, qualification or exception is clearly described in such Schedule.
Notwithstanding the foregoing, if any party establishes by clear and convincing
documentary evidence (i) that another party seeking indemnification hereunder by
reason of an alleged breach of
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representation and warranty knew that the representation or warranty forming the
basis for such claim of indemnification was false and (ii) that such party
seeking indemnification hereunder, with the specific intent and purpose of
making a claim hereunder with respect to such known falsity, did not disclose
such known falsity to the party making such representation or warranty, then
such representation or warranty, to the extent of such known falsity, shall not
provide a basis for any claim of indemnification hereunder by such party.
10.9. Successors and Assignment. All the terms, representations and warranties
of this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors, heirs at
law, legatees, distributees, executors, administrators and other legal
representatives, but this Agreement and the rights and obligations hereunder
shall not be assignable by any party hereto to any other person; provided,
however, that the Purchasers may assign its rights and obligations hereunder to
(i) any corporation controlling, controlled by or under common control with the
Purchasers, (ii) any person providing financing in connection with the
transactions contemplated hereby, including without limitation the lenders
referred to in Section 7.2(g) or any direct or indirect refinancing thereof or
(iii) any person acquiring all or substantially all of the business and assets
of the Company, in each case substituting such assignee or assignees in the
place of the Purchasers under this Agreement, with the same force and
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effect as if this Agreement were, in whole or in part, originally made with such
assignee or assignees; and, provided, further, that any such assignment to any
corporation controlling, controlled by or under common control with the
Purchasers shall be accompanied by a guaranty of the Purchasers and (if such
assignment occurs after the Closing) the Company, satisfactory to the Seller.
10.10. Amendment and Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, representations, warranties or
covenants hereof may be waived, only by a written instrument executed by the
Seller and the Purchasers, or in the case of a waiver, by the party waiving
compliance. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by any party of any condition or of
any breach of any term, representation, warranty or covenant under this
Agreement, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any other condition or of any breach of any
other term, representation, warranty or covenant under this Agreement.
10.11. Further Assurances. The Seller and the Purchasers agree to execute
such further documents or instruments and take such further actions as may
reasonably be requested by one of them to effect the purposes of this Agreement.
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<PAGE>
10.12. Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
10.13. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, but all of which, when taken
together shall constitute but one instrument.
10.14. Definitions, etc. Any reference to the masculine gender herein shall be
deemed to include the feminine and neuter unless the context otherwise requires.
Substantially contemporaneously with the Closing hereunder, Acquisition shall be
merged with and into the Company (the "Merger"). After giving effect to the
Merger, direct and indirect references to the "Company" and "Acquisition" shall
be deemed references to the Company as survivor of the Merger. In addition, the
following terms shall have the following meanings:
10.14.1. Affiliate. The term "Affiliate" shall mean, as to any specified
person at any time, (i) each person directly or indirectly controlling,
controlled by or under direct or indirect common control with such specified
person at the time in question, (ii) each
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person who is at the time in question an officer, director or indirect
beneficial holder of at least 5% of any class of the outstanding capital stock
of such specified person and the members of the immediate family of each such
officer, director or holder (and, if such specified person is a natural person,
of such specified person), and (iii) each person of which such specified person
or an Affiliate (as defined in clauses (i) or (ii) above) thereof shall,
directly or indirectly, beneficially own at least 5% of any class of outstanding
capital stock or other evidence of beneficial interest at the time in question.
10.14.2. Knowledge. Where any representation or warranty of Seller
contained in this Agreement is expressly qualified by the reference "to the
knowledge of" or such other reference to "knowledge," it refers to the actual
knowledge of those employees and officers of Seller and the Company whose names
are set forth on Schedule 10.14.2, as to the existence or absence of facts that
are the subject of such representations and warranties after due inquiry and
consultation with such persons.
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The parties have duly executed this Agreement on and as of the day and
year first above written.
SELLER:
JOSTENS, INC.
By ____________________________
Its____________________________
PURCHASERS:
JLC HOLDINGS, INC.
By_____________________________
Its____________________________
SOFTWARE SYSTEMS CORP.
By_____________________________
Its____________________________
JLC ACQUISITION, INC.
By_____________________________
Its____________________________
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EXHIBIT 28.1
Media: Kevin Whalen
(612) 830-3251
Investor Relations: Robb Prince
(612) 830-3262
Release #5527-695
FOR IMMEDIATE RELEASE
JOSTENS INC., BAIN CAPITAL
COMPLETE JOSTENS LEARNING TRANSACTION
MINNEAPOLIS, June 29, 1995 -- Jostens Inc. (NYSE: JOS) said today it
has completed the sale of its Jostens Learning unit to Bain Capital, a Boston-
based investment firm, concluding a previously announced transaction. June 2 is
the effective closing date of the transaction, Jostens said.
Under the transaction, Jostens received from Bain Capital $50 million
in cash, a $36 million note maturing in eight years and a separate $4 million
note convertible into 19 percent of Jostens Learning equity, subject to some
dilution. Jostens retains, but will sell, Wicat Systems, a computer-based
aviation training division that generates annual sales of about $12 million.
Jostens Learning is a leading producer of educational software for
students in kindergarten through grade 12. In addition to Bain Capital, the
entities investing in Jostens Learning include Information Partners, an
investment group led by Bain Capital and Dun & Bradstreet.
Jostens said it is evaluating ways to employ cash from the
transaction.
As previously reported, Jostens' current-year financial results will
include neither a gain nor a loss on the transaction. The company's gain of
approximately $11 million to $13 million is deferred.
The June 2 closing date will result in Jostens reporting a reduction
of earnings of about 12 cents from discontinued operations in its year-end
financial results, the company said.
"Our traditional businesses, taken together, are completing a very
good year," said Robert C. Buhrmaster, president and chief executive officer of
Jostens. "I anticipate double-digit profit improvements from those businesses
and expect overall earnings to be within the range of current Wall Street
expectations."
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JOSTENS COMPLETES JOSTENS LEARNING DEAL/page 2
Buhrmaster said the Jostens Learning transaction increases Jostens'
ability to focus on its traditional businesses.
"We will now direct more attention and resources on expanding the
scope of our current businesses," he said. "At the same time, we retain the
opportunity to share in Jostens Learning's upside potential, with minimal risk."
Jostens Inc., based in Minneapolis, is a leading provider of
performance awards and services for the youth, education, sports and corporate
recognition markets. The company had 1994 sales of $827 million.
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