<PAGE>
As filed with the Securities and Exchange Commission on April 7, 2000
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
JOSTENS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Minnesota 3911 41-0343440
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
5501 Norman Center Drive, Minneapolis, Minnesota, 55437
(Address, including ZIP Code, and telephone number, including area code, of
registrant's principal executive officers)
---------------
William J. George
Vice President, General Counsel and Corporate Secretary
Jostens, Inc.
5501 Norman Center Drive
Minneapolis, Minnesota 55437
(952) 830-3300
(Name, address, including ZIP Code, and telephone number, including area code,
of agent for service)
---------------
Copy to:
Richard L. Easton
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
(302) 651-3000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger of Saturn Acquisition Corporation ("Saturn
Acquisition") with and into the Registrant pursuant to an Agreement and Plan
of Merger, dated as of December 27, 1999, as amended, described in the
enclosed proxy statement/prospectus, have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
---------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate Amount of
securities to be registered registered(1) per share(2) offering price(2) registration fee(2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A common stock, par value $.33
1/3 per share........................ 728,124 $25.25 $18,385,131 $4,853.67
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) This Registration Statement relates to shares of common stock of the
Registrant to be retained by holders of the Registrant's common stock in
the proposed merger of Saturn Acquisition with and into the Registrant
with the Registrant continuing as the surviving corporation in the merger,
which common stock will be redesignated as Class A common stock of the
Registrant following the merger.
(2) The fee of $4,853.67 is offset by the fee of $170,234 paid by the
Registrant in connection with its Preliminary Proxy Statement on Schedule
14A filed with the Commission on January 19, 2000.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[LOGO OF JOSTENS]
April 7, 2000
Dear Shareholders:
You are cordially invited to attend a special meeting of shareholders of
Jostens, Inc., a Minnesota corporation, to be held on May 9, 2000, at 10:00
a.m., local time, in the Jostens Auditorium, 5501 Norman Center Drive,
Minneapolis, Minnesota 55437.
At this important meeting, you will be asked to consider and vote upon the
merger of Jostens with a company controlled by Investcorp, a global investment
group, and its co-investors. Approximately 94% of Jostens outstanding shares
following the transaction will be owned by affiliates of Investcorp, DB
Capital Investors, L.P. and members of Jostens management, who will retain
shares representing approximately 2.1% of the total number of shares of
Jostens common stock to be outstanding after the merger. If the transaction is
completed, Jostens shareholders will become entitled to receive $25.25 per
share in cash for all of their shares of Jostens stock, unless they elect to
retain some or all of their shares or unless not enough shareholders elect to
retain their shares. In the latter case, a number of retained shares will be
allocated among non-electing shares on a pro rata basis to ensure that Jostens
public shareholders will retain approximately 2% of the shares outstanding
immediately prior to the transaction, which will represent about 6% of the
approximately 9 million shares to be outstanding immediately following the
merger.
A special committee of Jostens independent directors negotiated the $25.25
per share price and the other terms of the transaction with Investcorp. The
special committee unanimously approved the transaction agreement with
Investcorp and recommended that the entire board of directors approve it.
Your board of directors, acting on the recommendation of the special
committee, has unanimously approved the transaction and has determined that
its terms are fair to and in the best interests of Jostens and its
shareholders. Accordingly, your board recommends that Jostens shareholders
vote "FOR" approval of the merger agreement.
We cannot complete the transaction unless the holders of a majority of the
outstanding Jostens shares vote to approve the merger agreement. Whether or
not you plan to attend the special meeting, please sign and return your proxy
as soon as possible in the enclosed self-addressed envelope so that your vote
will be recorded, or you may take advantage of our phone or Internet voting
procedures. Even if you return your proxy card, or vote by phone or Internet,
you may still attend the special meeting and vote your Jostens shares in
person. Your vote is very important. If you fail to return the proxy card,
vote by phone or Internet or vote in person at the special meeting, it will
have the same effect as a vote against the merger agreement.
The accompanying notice of meeting and proxy statement/prospectus explain
the proposed transaction and provide specific information concerning the
special meeting.
Please read these materials carefully, particularly the section describing
various risk factors relating to the transaction that begins on page 11.
Sincerely,
[LOGO OF ROBERT C. BUHRMASTER]
Robert C. Buhrmaster
Chairman of the Board, President
and Chief Executive Officer
This transaction has not been approved or disapproved by the Securities and
Exchange Commission nor has the SEC passed upon the fairness or merits of the
transaction nor upon the accuracy or adequacy of the information contained in
this document. Any representation to the contrary is unlawful.
This proxy statement/prospectus is dated April 7, 2000 and is first being
mailed to shareholders on or about April 7, 2000.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Jostens files annual, quarterly, and current reports, proxy statements, and
other information with the SEC. You may read and copy any reports, statements,
or other information that Jostens files at the SEC's public reference rooms at
450 Fifth Street, N.W., Washington, D.C. 20549, or one of its public reference
rooms in New York, New York, and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Jostens'
public filings are also available to the public from commercial document
retrieval services and at the Internet World Wide Web site maintained by the
SEC at http://www.sec.gov. Reports, proxy statements, and other information
concerning Jostens also may be inspected at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005. The SEC allows Jostens
to "incorporate by reference" information into this document, which means that
Jostens can disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be a part of this document, except for any information
superseded by information contained directly in this document. This document
incorporates by reference certain documents that Jostens has previously filed
with the SEC. These documents contain important business information about
Jostens and its financial condition.
Jostens may have sent to you some of the documents incorporated by
reference, but you can obtain any of them through Jostens or the SEC or the
SEC's Internet World Wide Web site described above. Documents incorporated by
reference are available from Jostens without charge, excluding all exhibits
unless specifically incorporated by reference as an exhibit to this document.
Shareholders may obtain documents incorporated by reference in this document
upon written or oral request to the following address or telephone number:
JOSTENS, INC.
5501 NORMAN CENTER DRIVE
MINNEAPOLIS, MINNESOTA 55437
(952) 830-3300
Attention: Corporate Secretary
Jostens will send any document so requested to the requesting shareholder
by first-class mail or other equally prompt means within one day of receiving
the request.
If you would like to request documents from Jostens, please do so at least
five business days before the date of the special meeting in order to receive
timely delivery of such documents prior to the special meeting.
You should rely only on the information contained or incorporated by
reference in this document to vote your Jostens shares at the special meeting.
Jostens has not authorized anyone to provide you with information that is
different from what is contained in this document. This document is dated
April 7, 2000. You should not assume that the information contained in this
document is accurate as of any date other than that date, and the mailing of
this document to shareholders does not create any implication to the contrary.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Jostens hereby incorporates the following documents previously filed with
the SEC (SEC File No. 1-5064) into this proxy statement/prospectus:
(1) Jostens' Annual Report on Form 10-K for the fiscal year ended January
1, 2000; and
(2) Jostens' Current Reports on Form 8-K dated January 5, 2000 and March 9,
2000.
<PAGE>
Jostens also incorporates by reference in this proxy statement/prospectus
all additional documents that it may file with the SEC between the date of
this proxy statement/prospectus and the date of the special meeting. These
documents include periodic reports, such as Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K. Any statements contained in a document
incorporated by reference in this proxy statement/prospectus will be deemed to
be modified or superseded for purposes of this proxy statement/prospectus to
the extent that a statement contained in this proxy statement/prospectus, or
in any other subsequently filed document which also is incorporated by
reference in this proxy statement/prospectus, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to be a
part of this proxy statement/prospectus except as so modified or superseded.
<PAGE>
[LOGO OF JOSTENS]
JOSTENS, INC.
5501 NORMAN CENTER DRIVE
MINNEAPOLIS, MINNESOTA 55437
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 9, 2000
Notice is hereby given that a special meeting of shareholders of Jostens,
Inc., a Minnesota corporation, will be held on May 9, 2000 at 10:00 a.m.,
local time, in the Jostens Auditorium, 5501 Norman Center Drive, Minneapolis,
Minnesota 55437, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and
Plan of Merger between Saturn Acquisition Corporation and Jostens, as
amended, pursuant to which Saturn Acquisition Corporation will be merged
with and into Jostens and shareholders of Jostens will become entitled to
receive $25.25 per share in cash for all of their shares of Jostens common
stock, unless they elect to retain some or all of their shares or unless
not enough shareholders elect to retain their shares. In the latter case, a
number of retained shares will be allocated among non-electing shares on a
pro rata basis to ensure that Jostens public shareholders will retain
approximately 2% of the shares outstanding immediately prior to the merger,
which will represent about 6% of the total number of shares to be
outstanding immediately following the merger.
2. To vote to adjourn the special meeting, if necessary.
A list of shareholders will be available for inspection by shareholders of
record during business hours at Jostens, Inc., 5501 Norman Center Drive,
Minneapolis, Minnesota 55437, and will also be available at the special
meeting.
Only those persons who were holders of record of Jostens common stock at
the close of business on March 20, 2000 are entitled to notice of, and to vote
at, the special meeting.
Approval of the merger agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Jostens common stock
entitled to vote at the special meeting. The board of directors of Jostens,
based on the recommendation of a special committee of independent directors,
has unanimously approved the merger and recommends that you vote "FOR"
approval of the merger agreement.
Under Minnesota law, dissenters' rights will be available to Jostens
shareholders who dissent from the merger and do not vote in favor of the
merger agreement. In order to exercise their dissenters' rights, shareholders
must carefully follow the procedures required by Minnesota law, which are
summarized under "DISSENTERS' RIGHTS" in the accompanying proxy
statement/prospectus. A copy of the relevant sections of the Minnesota
statutes relating to dissenters' rights is attached as Appendix C to the
accompanying proxy statement/prospectus.
The merger agreement and the merger are explained in the accompanying proxy
statement/prospectus, which you are urged to read carefully. A copy of the
merger agreement is attached as Appendix A to the proxy statement/prospectus.
By order of the Board of Directors,
[LOGO OF WILLIAM J. GEORGE]
Corporate Secretary
Minneapolis, Minnesota
April 7, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER.................................... 1
SUMMARY................................................................... 4
SUMMARY CONSOLIDATED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA OF
JOSTENS, INC............................................................. 8
HISTORICAL MARKET PRICE OF JOSTENS COMMON STOCK........................... 10
RISK FACTORS.............................................................. 11
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION............... 16
RECENT DEVELOPMENTS AFFECTING JOSTENS..................................... 17
THE MERGER................................................................ 19
The Participants........................................................ 19
Structure of the Transaction............................................ 20
Background of the Merger................................................ 21
Financial Projections................................................... 27
Reasons for the Merger; Recommendation of the Special Committee and of
the Full Jostens Board of Directors.................................... 27
Opinion of Credit Suisse First Boston................................... 29
Merger Consideration.................................................... 34
Non-Cash Election Procedure............................................. 37
Conversion/Retention of Shares; Procedures for Exchange of Certificates. 38
Fractional Shares....................................................... 38
Treatment of Existing Stock Options..................................... 38
Merger Financing........................................................ 38
Accounting Treatment.................................................... 39
United States Federal Income Tax Considerations......................... 39
Interests of Management Continuing Shareholders in the Merger........... 43
Executive Officers and Directors of Saturn Acquisition Corporation...... 48
THE MERGER AGREEMENT...................................................... 49
The Merger.............................................................. 49
Closing; Effective Time................................................. 49
Surviving Corporation................................................... 49
Representations and Warranties.......................................... 50
Conduct of Business of Jostens Prior to the Merger...................... 51
Limitations on Solicitation of Competing Transactions................... 51
Access and Information.................................................. 52
Reasonable Efforts and Cooperation...................................... 52
Delisting from NYSE..................................................... 52
Fulfillment of Financing Commitments.................................... 52
Indemnification and Insurance........................................... 53
Rights Agreement........................................................ 53
Conditions to the Consummation of the Merger............................ 53
Termination............................................................. 54
Fees and Expenses....................................................... 55
Amendment and Waiver.................................................... 55
SELECTED CONSOLIDATED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA OF
JOSTENS, INC. ........................................................... 56
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS........... 58
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE SPECIAL MEETING....................................................... 63
DISSENTERS' RIGHTS........................................................ 64
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT AND OTHERS....... 68
SATURN ACQUISITION CORPORATION............................................ 69
DESCRIPTION OF JOSTENS CAPITAL STOCK...................................... 71
EXPERTS................................................................... 77
LEGAL MATTERS............................................................. 77
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS......... 78
APPENDIX A--AGREEMENT AND PLAN OF MERGER.................................. A-1
APPENDIX B--OPINION OF CREDIT SUISSE FIRST BOSTON......................... B-1
APPENDIX C--SECTIONS 302A.471 AND 302A.473 OF THE MINNESOTA BUSINESS
CORPORATION ACT.......................................................... C-1
APPENDIX D--FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
JOSTENS, INC............................................................. D-1
</TABLE>
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What is the proposed transaction?
A: Jostens will merge with a company controlled by Investcorp S.A., a global
investment group. Jostens will continue as the surviving corporation after
the merger. Immediately following the merger, affiliates of Investcorp, DB
Capital Investors, L.P., and five members of Jostens management will hold
an aggregate of approximately 94% of the outstanding shares of Jostens
common stock. The public shareholders of Jostens will continue to hold
approximately 2% of the shares outstanding immediately prior to the merger,
which will represent about 6% of the total number of shares to be
outstanding immediately following the merger.
Q: Why is it necessary for approximately 2% of the currently outstanding
shares to be retained by existing public shareholders?
A: This is a requirement for the transaction to be treated as a
"recapitalization" for accounting purposes, which was the basis on which
Investcorp was prepared to proceed with the transaction. For a description
of "recapitalization" accounting treatment, see "THE MERGER--Accounting
Treatment" on page 39. At March 20, 2000, we had 33,327,209 common shares
outstanding, while immediately after the transaction there will be
8,993,199 common shares outstanding. This reduction in our outstanding
common stock reflects the replacement in our capital structure of a large
portion of our equity with debt incurred to make the cash payments pursuant
to the merger. As a result, the approximately 2% of currently outstanding
shares to be retained by public shareholders will represent about 6% of the
total number of shares to be outstanding immediately following the merger
allowing us to qualify for "recapitalization" accounting treatment.
Q: What will I receive in the merger?
A: You will receive $25.25 per share in cash for all of your shares of Jostens
common stock, unless you elect to retain some or all of your shares or
unless not enough shareholders elect to retain their shares. In the latter
case, a number of retained shares will be allocated among non-electing
shares on a pro rata basis to ensure that Jostens public shareholders
retain an aggregate of approximately 6% of the total number of shares
outstanding immediately following the merger. For detailed information on
the procedures for electing to retain your shares in the merger, see "THE
MERGER--Non-Cash Election Procedure" on page 37.
Q: Will I receive the type of consideration in the merger that I want?
A: Because our public shareholders must retain an aggregate of approximately
6% of the total number of shares outstanding immediately following the
merger, you may not receive all of the type of consideration that you want.
If you want to receive only cash for your shares, you may still be required
to retain up to approximately 2% of your shares. If, on the other hand, you
elect to retain all of your shares, you may still be required to exchange
some of your shares for cash. You will not know at the time of your vote or
election exactly what you will receive in exchange for your shares.
If not enough shareholders elect to retain their shares, a number of
retained shares will be allocated pro rata among non-electing shares to
ensure that public shareholders retain an aggregate of approximately 6% of
the total number of shares outstanding immediately following the merger.
If, on the other hand, shareholders elect to retain too many shares, the
number of shares that electing shareholders will be permitted to retain
will be reduced pro rata and an amount of cash will be allocated pro rata
among the electing shareholders to ensure that public shareholders retain
an aggregate of approximately 6% of the total number of shares outstanding
immediately following the merger.
Five members of Jostens management have agreed to retain a specified number
of their shares in the merger. None of their shares will be subject to
proration or eligible for election. For a detailed description of the
proration procedures, see "THE MERGER--Merger Consideration" on page 34.
1
<PAGE>
Q: When will the merger be completed?
A: If Jostens shareholders vote to approve the merger, we expect to complete
the transaction promptly following the special meeting, although we cannot
assure you as to the actual date.
Q: If I want to receive cash for my shares, should I send my stock
certificates now?
A: No. After the merger is completed, Jostens will send you instructions to
follow in order to surrender your stock certificates and receive your cash
payment.
Q: If I want to retain my shares, should I send my stock certificates now?
A: Yes. If you elect to retain some or all of your shares, you must send your
stock certificates, along with the completed form of non-cash election, to
Norwest Bank Minnesota, N.A., our exchange agent, prior to May 4, 2000. For
further information on the procedures for retaining your shares, see the
description under "THE MERGER--Non-Cash Election Procedure" on page 37.
Q: What are the tax consequences of the merger to me?
A: The receipt of cash by you in exchange for your Jostens shares will be a
taxable transaction for United States federal income tax purposes. If you
exchange all or a portion of your shares for cash, you will have a taxable
transaction to the extent of the cash you receive. The merger will not be a
taxable transaction to you if you retain all of your shares and receive no
cash. To review the United States federal income tax consequences of the
merger to you in greater detail, see "THE MERGER--United States Federal
Income Tax Considerations" on pages 39 to 43. Your tax consequences will
depend on your personal situation. You should consult your tax advisor for
a full understanding of the tax consequences of the merger to you.
Q: What am I being asked to vote upon?
A: You are being asked to approve and adopt the merger agreement, which is the
legal document governing the merger described in this proxy
statement/prospectus.
Q: What does the board of directors of Jostens recommend?
A: The Jostens board believes that the terms of the merger are fair to and in
the best interests of Jostens and its shareholders and unanimously
recommends that Jostens shareholders vote "FOR" approval of the merger
agreement. In addition, the Jostens board established a special committee
consisting of three independent directors to negotiate the price and the
other terms of the proposed merger. The special committee, like the full
board, believes that the terms of the merger are fair to and in the best
interests of Jostens and its shareholders and unanimously recommends that
Jostens shareholders vote "FOR" approval of the merger agreement.
Q: What vote is required to approve the merger agreement?
A: The merger agreement must be approved by a majority of the outstanding
shares of Jostens common stock. If you fail to vote, it will have the same
effect as a vote against the merger agreement. Therefore, it is important
that you return your signed proxy card or vote by phone or Internet.
Q: How do I vote?
A: Just indicate on the enclosed proxy card how you want to vote, and then
date, sign and mail it in the enclosed envelope, or you may vote by phone
or the Internet, as described in "THE SPECIAL MEETING-- Proxies;
Revocation" on page 63. Please vote as soon as possible to ensure that your
shares are represented at the special shareholders meeting.
2
<PAGE>
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will vote your Jostens shares only if you provide instructions
to your broker on how to vote. You should instruct your broker how to vote
your shares, following the directions your broker provides. If
you do not provide instructions to your broker, your shares will not be
voted, which will have the same effect as a vote against the merger
agreement.
Q: Can I change my vote after I have mailed my proxy card or voted by phone or
the Internet?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You may revoke your proxy by notifying the Corporate
Secretary of Jostens in writing, by submitting a new proxy, in each case,
dated after the date of the proxy being revoked, or by again following the
procedures for voting by phone or the Internet. However, simply attending
the special meeting will not revoke your proxy. If you have instructed your
broker to vote your shares, you must follow the instructions received from
your broker to change your vote.
Q: What if I object to the merger? Am I entitled to dissenters' rights?
A: Yes. You have the right to dissent from the merger and, subject to strict
compliance with the requirements and procedures of Minnesota law, to
receive payment of the "fair value" of your shares of Jostens common stock.
These rights, as well as the requirements and procedures for dissenting
under Minnesota law are described on pages 64 to 67 under "DISSENTERS'
RIGHTS." In addition, the full text of the relevant sections of the
Minnesota statute is reprinted in Appendix C to this proxy
statement/prospectus.
WHO CAN HELP ANSWER YOUR QUESTIONS:
If you would like additional copies of this document, or if you would like
to ask any questions about the merger, you should contact:
MORROW & COMPANY
1-800-566-9061
3
<PAGE>
SUMMARY
This summary highlights material information from this document and may not
contain all of the information that is important to you. For a more complete
understanding of the merger and the related transactions, and for a more
complete description of the legal terms of the merger, you should carefully
read this proxy statement/prospectus in its entirety, as well as the appendices
to this proxy statement/prospectus and the additional documents referred to or
incorporated by reference in this proxy statement/prospectus. Unless otherwise
indicated, references in this proxy statement/prospectus to the total number of
shares of our common stock outstanding exclude shares issuable upon the
exercise of options and/or warrants. For a guide as to where you can obtain
more information on Jostens, see "WHERE YOU CAN FIND MORE INFORMATION."
The Participants (Page 19)
Jostens
Jostens is a provider of products and services that help people celebrate
important moments, recognize achievements and build affiliations. Jostens'
products include yearbooks, class rings, graduation products and school
photographs, as well as sports and employee achievement awards. Jostens'
principal executive offices are located at 5501 Norman Center Drive,
Minneapolis, Minnesota 55437. Jostens' main telephone number is (952) 830-3300.
Investcorp
Investcorp is a global investment group with offices in New York, London and
Bahrain. It is principally engaged in three businesses: corporate investment,
real estate investment and asset management. Since its formation in 1982, the
firm has arranged more than 50 corporate investments in a variety of industries
with an aggregate acquisition value exceeding $16 billion. Investcorp's
principal United States-based subsidiary is Investcorp International, Inc.,
whose executive offices are located at 280 Park Avenue, New York, New York
10017. Investcorp International's main telephone number is (212) 599-4700.
Saturn Acquisition Corporation
Saturn Acquisition is a newly formed company organized for purposes of
completing the transaction. It has engaged in no business activities and it has
no assets or liabilities of any kind, other than those incident to its
formation and those incurred in connection with the merger. Immediately prior
to the merger, Saturn Acquisition will be owned by affiliates of Investcorp and
DB Capital Investors, an affiliate of Deutsche Bank.
The Management Continuing Shareholders
Five members of Jostens senior management are participating in the merger as
part of Investcorp's investor group. These individuals will retain some of
their Jostens shares in the merger, and none of their shares will be subject to
proration or eligible for election. These individuals are referred to
throughout this proxy statement/prospectus as the "Management Continuing
Shareholders." The name of, and number of shares held by, each of the
Management Continuing Shareholders are set forth in the chart below. The chart
also shows the number and percentage of shares to be retained and exchanged for
cash by each of the Management Continuing Shareholders in the merger:
<TABLE>
<CAPTION>
Percentage Number of Shares Percentage
Number of Shares Number of Shares Retained to be Exchanged Exchanged
Held Prior to to be Retained by Such for Cash in by Such
Name the Merger in the Merger Individual the Merger Individual
---- ---------------- ---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Robert C. Buhrmaster.... 121,933 93,205 76.4% 28,728 23.6%
William N. Priesmeyer... 47,171 28,034 59.4% 19,137 40.6%
Carl H. Blowers......... 41,858 41,858 100.0% 0 0%
Michael L. Bailey....... 24,648 15,913 64.6% 8,735 35.4%
Gregory S. Lea.......... 16,043 9,522 59.4% 6,521 40.6%
------- ------- ------ ------ -----
Total................... 251,653 188,532 74.9% 63,121 25.1%
</TABLE>
The total number of shares to be retained by the Management Continuing
Shareholders represents approximately 0.6% of our currently outstanding shares
and will represent about 2.1% of the shares of Jostens common stock to be
outstanding immediately following the merger.
4
<PAGE>
Structure of the Transaction (Page 20)
The transaction has been structured as a merger of Saturn Acquisition with
and into Jostens. Jostens will continue as the surviving company of the merger.
The transaction will occur as follows:
. Immediately prior to the merger, affiliates of Investcorp will make a
capital contribution of $159.8 million to Saturn Acquisition in exchange
for approximately 6.3 million shares of Saturn Acquisition's common
stock. At the same time, DB Capital Investors will make a capital
contribution of $48.9 million to Saturn Acquisition in exchange for
approximately 1.9 million shares of Saturn Acquisition's common stock. In
the merger, each share of Saturn Acquisition Class A common stock, Class
B common stock, Class C common stock, Class D common stock and Class E
common stock will be converted into one share of Jostens Class A common
stock, Class B common stock, Class C common stock, Class D common stock
and Class E common stock, respectively.
. In the merger, the shareholders of Jostens will receive $25.25 per share
in cash for all of their shares of Jostens common stock, unless they
elect to retain some or all of their shares or unless not enough
shareholders elect to retain their shares. In the latter case, a number
of retained shares will be allocated among non-electing shares on a pro
rata basis to ensure that Jostens public shareholders will retain an
aggregate of approximately 6% of the total number of shares outstanding
immediately following the merger.
. Immediately prior to the merger each outstanding option to purchase
Jostens shares will be cancelled in exchange for a cash payment from
Jostens for each share subject to the option equal to the excess of
$25.25 over the per share exercise price of the option. See "THE MERGER--
Interests of Management Continuing Shareholders in the Merger--Treatment
of Options" on page 44. Options having a per share exercise price of
$25.25 or more will be cancelled for no consideration.
. Immediately after the merger, Jostens will be owned approximately 94% by
affiliates of Investcorp, DB Capital Investors and the Management
Continuing Shareholders. The public shareholders of Jostens will continue
to own approximately 2% of the shares outstanding immediately prior to
the merger which will represent about 6% of the approximately 9 million
shares to be outstanding immediately following the merger. The shares
retained by Jostens' public shareholders will also represent
approximately 6% of Jostens' outstanding voting stock immediately
following the merger.
Credit Suisse First Boston Fairness Opinion (Page 29)
Credit Suisse First Boston, which served as financial advisor to the special
committee and the full board, has delivered a written opinion to the special
committee and the full board as to the fairness of the consideration to be
received in the merger by Jostens public shareholders. Such opinion states
that, as of the date of such opinion, the consideration to be received by
Jostens shareholders, other than Management Continuing Shareholders and other
shareholders who make a valid election to retain an equity interest in Jostens
after the merger, was fair to such shareholders from a financial point of view.
A copy of Credit Suisse First Boston's opinion, which includes a discussion of
the information reviewed, assumptions made and matters considered by Credit
Suisse First Boston, is attached to this proxy statement/prospectus as Appendix
B. You should read this opinion in its entirety, as well as the other
information described under "THE MERGER--Opinion of Credit Suisse First Boston"
beginning on page 29.
Terms of the Merger Agreement (Page 49)
The merger agreement is the legal document that governs the merger. We have
attached the merger agreement as Appendix A to this proxy statement/prospectus,
and we encourage you to read it carefully.
Conditions to the Merger. The completion of the merger depends on a number
of conditions being met. In addition to customary conditions relating to our
compliance with the merger agreement, these conditions include the following:
. approval of the merger agreement by the holders of a majority of the
outstanding Jostens shares;
5
<PAGE>
. absence of legal prohibitions to the merger; and
. financing for the merger having been obtained by Investcorp. In this
regard, Investcorp has already received written commitments from
reputable institutional investors and lenders to provide all of the
funds required to complete the merger, refinance Jostens' outstanding
debt and provide working capital going forward. These commitments are
subject to customary conditions. For a description of the financing, see
"THE MERGER--Merger Financing" on page 38.
Termination of the Merger Agreement. Jostens and Saturn Acquisition can
agree at any time to terminate the merger agreement without completing the
merger, even if Jostens shareholders have already voted to approve it. Also,
either Jostens or Saturn Acquisition can terminate the merger agreement,
without the consent of the other, in various circumstances, including the
following:
. if any court or governmental entity issues any order, decree or ruling or
takes any other final action restraining, enjoining or otherwise
prohibiting the completion of the merger, and such judgment, injunction,
order or decree has become final and nonappealable;
. if the merger has not been completed by June 30, 2000, unless the party
seeking to terminate has caused the failure of completion by failing to
fulfill any of its obligations under the merger agreement; or
. if there has been a material breach of any representation, warranty or
covenant made by the other party, which has not been cured within 30 days
from the time the breaching party receives notice of the breach and it
cannot be cured prior to June 30, 2000.
. Saturn Acquisition may, without the consent of Jostens, terminate the
merger agreement in various circumstances, including the following:
. the Jostens board withdraws or modifies its recommendation that
Jostens shareholders vote to approve the merger agreement (or publicly
announces its intention to do so); or
. the Jostens board recommends any proposal for a competing acquisition
transaction.
. Jostens, may, without the consent of Saturn Acquisition, terminate the
merger agreement in order to enter into a superior transaction in
compliance with the provisions of the merger agreement described onpages
50 and 51 under "THE MERGER AGREEMENT--Limitations on Solicitation of
Competing Transactions," but only if it complies with those provisions,
including paying Saturn Acquisition a termination fee of $19.125 million
plus reimbursement of its fees and expenses, up to $5.0 million.
Accounting Treatment (Page 39)
We expect that the merger will be treated as a "recapitalization" for
accounting purposes.
Interests of Management Continuing Shareholders in the Merger (Page 43)
The Management Continuing Shareholders have interests in the merger as
officers of Jostens, or as shareholders with a continuing equity interest in
Jostens, that are different from, or in addition to, yours as a Jostens
shareholder. In particular, the Management Continuing Shareholders will retain
some of their Jostens shares, and none of their shares will be subject to
proration or eligible for election. The Management Continuing Shareholders will
retain a total of 188,532 shares of our common stock. These shares represent
approximately 0.6% of our currently outstanding shares and will represent
approximately 2.1% of our outstanding common stock immediately after the
merger. In addition, the Management Continuing Shareholders will participate in
certain equity-based compensation plans and will be compensated for services
expected to be rendered after the merger in connection with the transition of
Jostens to new ownership in an amount equal to $2.5 million in the aggregate.
These benefits are described on pages 43 to 48 under "THE MERGER--Interests of
Management Continuing Shareholders in the Merger."
6
<PAGE>
When making the determination to approve and recommend approval of the
merger to Jostens public shareholders, both the Jostens board and the special
committee of independent directors were aware of the interests of the
Management Continuing Shareholders and considered these interests together with
the other factors described under "THE MERGER--Reasons for the Merger;
Recommendation of the Special Committee and of the Full Jostens Board of
Directors" beginning on page 27.
The Special Meeting (Page 63)
The special meeting of Jostens shareholders to vote on the merger will be
held on May 9, 2000 at 10:00 a.m., local time, in the Jostens Auditorium, 5501
Norman Center Drive, Minneapolis, Minnesota 55437. You are entitled to cast one
vote for each share of Jostens common stock you owned as of the record date,
March 20, 2000. As of that date, there were 33,327,209 shares of Jostens common
stock outstanding, of which approximately 4.9% were held by our directors,
executive officers and their affiliates, and approximately 95.1% were held by
public shareholders. There are no voting agreements or similar arrangements
between Jostens' management and Investcorp or any of its affiliates that will
affect the vote on the merger.
Merger Financing (Page 38)
Based on pro forma financial information as of January 1, 2000, we expect
that approximately $1,031.7 million will be needed to finance the merger, to
pay related expenses and to repay our outstanding indebtedness. Approximately
$208.7 million of this amount will be provided by equity contributions from
affiliates of Investcorp and from DB Capital Investors and approximately $38.0
million of this amount will be provided out of Jostens' available cash. In
addition, at the effective time of the merger, we expect that Jostens will have
available $240.0 million from the issuance of senior subordinated debt
securities, $60.0 million from the issuance of redeemable preferred stock and
borrowings under a new $635.0 million senior secured credit facility. It is
currently anticipated that $485.0 of the total $635.0 million available for
borrowing will be utilized in connection with the merger, with the balance of
$150.0 million available under a revolving credit facility.
We expect the senior subordinated debt securities will be issued in a
private offering to be consummated concurrently with the merger. Neither the
purchasers nor the terms of the senior subordinated debt securities have been
established, but will depend on market conditions at the time of funding. If we
are unable to complete the $240.0 million senior subordinated debt offering, we
have obtained bridge loan commitments from reputable financial institutions to
provide this portion of the merger financing.
DB Capital Investors has committed to purchase the $60.0 million of
redeemable preferred stock, which will accrue dividends at a rate of 14% per
annum and will be mandatorily redeemable 11 years from the issue date.
Dividends on the redeemable preferred stock will be payable quarterly and may,
at our option, be paid in additional shares of redeemable preferred stock.
All of the financing commitments, including those for the common equity,
senior secured credit facility, senior subordinated debt and bridge financing
and the redeemable preferred stock, are subject to customary closing and/or
borrowing conditions.
The proceeds of the financing arrangements will be used as follows:
.approximately $823.1 million for the exchange of common shares for cash in
the merger;
.approximately $9.7 million for the exchange of stock options for cash in
connection with the merger;
.approximately $121.2 million for the repayment of existing indebtedness;
and
.approximately $77.7 million for transaction fees and expenses.
7
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA OF
JOSTENS, INC.
The table below sets forth summary consolidated historical and unaudited pro
forma financial data relating to Jostens. The summary consolidated historical
financial data as of January 2, 1999 and January 1, 2000 and for each of the
three years in the period ended January 1, 2000 have been derived from, and
should be read in conjunction with, our audited consolidated financial
statements and the notes thereto incorporated herein by reference to our Annual
Report on Form 10-K for the year ended January 1, 2000 filed with the SEC.
The unaudited pro forma consolidated financial data set forth below, as
adjusted to give effect to the merger and the merger financing, have been
derived from, and should be read in conjunction with, the unaudited pro forma
consolidated financial statements and the notes thereto appearing elsewhere in
this proxy statement/prospectus. See "Unaudited Pro Forma Condensed
Consolidated Financial Statements" on page 58. The unaudited pro forma
consolidated balance sheet information gives effect to the merger and the
merger financing as if each had occurred on January 1, 2000. The unaudited pro
forma consolidated statement of operations information gives effect to the
merger and the merger financing, as if each had occurred on January 2, 1999 and
excludes nonrecurring items directly attributable to the merger. The summary
unaudited pro forma consolidated financial data are not necessarily indicative
of the consolidated operating results or financial position that would have
occurred if the merger had been consummated on the dates indicated, nor are
they necessarily indicative of future operating results or financial position.
The pro forma adjustments were applied to the historical consolidated financial
statements to reflect and account for the merger as a recapitalization.
Accordingly, the historical basis of our assets and liabilities have not been
impacted by the merger.
8
<PAGE>
JOSTENS, INC.
SUMMARY CONSOLIDATED HISTORICAL & UNAUDITED PRO FORMA FINANCIAL DATA
Dollars in millions
(Except share and per share data)
<TABLE>
<CAPTION>
Year ended Pro Forma
-------------------------------- ---------
January 3, January 2, January 1, January
1998 1999 2000 1, 2000
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Statement of Operations Data:
Net sales.......................... $ 742.5 $ 770.9 $ 782.4 $782.4
Cost of products sold.............. 351.3 351.8 349.7 349.7
------- ------- ------- ------
Gross margin....................... 391.2 419.1 432.7 432.7
Selling and administrative expenses
.................................. 291.5 316.9 330.8 332.3
Special charge..................... -- -- 20.2 20.2
------- ------- ------- ------
Operating income................... 99.7 102.2 81.7 80.2
Net interest expense............... 6.3 6.7 7.0 83.3
Write-off of JLC notes receivable,
net (1)........................... -- 12.0 -- --
------- ------- ------- ------
Income before income taxes......... 93.4 83.5 74.7 (3.1)
Income taxes (1)................... 36.2 41.7 31.5 0.4
------- ------- ------- ------
Net income (loss).................. 57.2 41.8 43.2 (3.5)
Dividends and accretion on
redeemable preferred stock (2).... -- -- -- 10.1
------- ------- ------- ------
Net income (loss) attributable to
common shareholders............... $ 57.2 $ 41.8 $ 43.2 $(13.6)
======= ======= ======= ======
Earnings per share:
Basic EPS--net income (loss)
attributable to common
shareholders...................... $ 1.47 $ 1.14 $ 1.27 $(1.51)
Diluted EPS--net income (loss)
attributable to common
shareholders...................... $ 1.47 $ 1.14 $ 1.27 $(1.51)
Weighted average shares
outstanding--
basic (000's)..................... 38,773 36,527 34,004 8,993
Weighted average shares
outstanding--diluted (000's)...... 38,969 36,705 34,093 8,993
Cash dividends declared per share.. $ 0.88 $ 0.88 $ 0.88 $ --
Common shares outstanding at period
end (000's)....................... 38,422 35,071 34,324 8,993
Balance Sheet Data:
Current assets..................... $ 252.5 $ 240.5 $ 286.3 $248.3
Working capital (3)................ 50.2 44.1 8.3 8.3
Property and equipment, net........ 74.1 88.6 84.6 84.6
Total assets....................... 390.7 366.2 407.7 415.9
Total debt (including short-term
borrowings and current
maturities)....................... 53.6 97.5 121.2 725.0
Redeemable preferred stock......... -- -- -- 46.0
Total stockholders' equity
(deficit)......................... 127.1 58.6 36.5 (605.1)
</TABLE>
- --------
(1) Net income for the year ended January 2, 1999 reflects a charge for the
write-off of the Jostens Learning Corporation ("JLC") notes receivable of
$12.0 million and related deferred tax assets of $3.7 million.
(2) Dividends on the redeemable preferred stock to be issued in connection with
the financing of the merger are calculated based on an annual rate of 14.0%
and includes accretion on the preferred stock discount.
(3) Represents total current assets (excluding cash, cash equivalents and
short-term investments) less total current liabilities (excluding short-
term borrowings and current maturities of long-term debt).
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<PAGE>
HISTORICAL MARKET PRICE OF JOSTENS COMMON STOCK
Jostens common stock is listed and principally traded on the New York Stock
Exchange ("NYSE") under the symbol "JOS." The following table sets forth the
high and low closing sale prices for Jostens shares on the NYSE Composite
Tape, as reported in published financial sources for the periods indicated:
<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C>
1998 (year ended January 2, 1999)
First Quarter...................................... $24 15/16 $22 1/16
Second Quarter..................................... 26 1/4 22 7/8
Third Quarter...................................... 25 5/8 19 9/16
Fourth Quarter..................................... 26 1/4 19
1999 (year ended January 1, 2000)
First Quarter...................................... $27 1/8 $21 1/4
Second Quarter..................................... 22 5/8 20 7/16
Third Quarter...................................... 21 19 1/8
Fourth Quarter..................................... 24 5/16 17 9/16
2000 (year ending December 30, 2000)
First Quarter ..................................... 24 7/16 23 7/16
Second Quarter (through April 6, 2000)............. 24 7/16 23 15/16
</TABLE>
As of March 20, 2000, there were 5,392 holders of record of Jostens common
stock. As of that date, Jostens had 33,327,209 shares of common stock
outstanding which were held by approximately 6,100 beneficial holders.
On December 27, 1999, the last full trading day prior to the announcement
of the execution of the merger agreement, the last reported sales price of
Jostens shares on the NYSE Composite Tape was $18 5/16 per share. On April 6,
2000, the last full trading day prior to the printing of this proxy
statement/prospectus, the last reported sales price of Jostens shares on the
NYSE Composite Tape was $24 5/16 per share. Shareholders are urged to obtain a
current market quotation for the shares.
In recent years, we have paid a regular quarterly cash dividend of $0.22
per share on our common stock. We do not expect to continue to pay any
dividends on our common equity following the merger. We also expect that our
new credit facility, the indenture governing the senior subordinated debt
securities and the terms of the redeemable preferred stock will restrict our
ability to pay dividends on our common stock following the merger.
10
<PAGE>
RISK FACTORS
In addition to the other information included and incorporated by reference
in this proxy statement/prospectus, you should consider the following matters
in deciding whether to vote in favor of the merger.
Following the Merger, Our Substantial Amount of Indebtedness and Redeemable
Preferred Stock May Adversely Affect Our Operations and Make us Less
Competitive
Following the merger, we will have a substantial amount of indebtedness and
redeemable preferred stock. As part of the merger, we expect to issue $240.0
million of subordinated debt and redeemable preferred stock with a face value
of $60.0 million and to enter into a new $635.0 million senior secured credit
facility. For a description of the use of the proceeds of these financing
arrangements, see "THE MERGER--Merger Financing" beginning on page 38.
As of January 1, 2000, the last date of Jostens' 1999 fiscal year, after
giving pro forma effect to the merger (including the financings):
. we would have had consolidated indebtedness of $725.0 million and
redeemable preferred stock with a face value of $60.0 million; and
. shareholders' equity would have been reduced from $36.5 million to a
deficit of $605.1 million.
This reduction in shareholders' equity will occur because the $25.25 per
share paid to shareholders in the merger and a portion of the transaction
expenses will be charged to shareholders' equity and a majority of the $60.0
million of gross proceeds received from the issuance of the redeemable
preferred stock will not be treated as shareholders' equity. In addition, we
may incur material additional indebtedness in the future.
Our substantial indebtedness and redeemable preferred stock may have
important consequences, including the following:
. the interest payments on our indebtedness may reduce the funds that would
otherwise be available to us for our operations and future business
opportunities;
. we may not be able to obtain additional financing for capital
expenditures, working capital or other purposes on terms favorable to us;
. a substantial decrease in our revenues or an increase in our expenses
could make it difficult for us to make interest payments or may force us
to modify our operations;
. we may be at a competitive disadvantage and may be more vulnerable to a
downturn in our business;
. certain of our indebtedness will be at variable interest rates, which
makes us vulnerable to increases in interest rates;
. substantially all of our assets will be pledged to collateralize our
debt, reducing our ability to obtain additional financing; and
. we may be unable to adjust to rapidly changing market conditions.
11
<PAGE>
In addition, our indebtedness and redeemable preferred stock will
negatively affect our net income. Actual and pro forma results for the fiscal
year ended January 1, 2000 were as follows:
<TABLE>
<CAPTION>
Year ended
January 1, 2000
-------------------
Dollars in millions
Pro
Historical Forma(1)
---------- --------
<S> <C> <C>
Net income (loss)................. $43.2 $ (3.5)
Net income (loss)
attributable to common
shareholders..................... $43.2 $(13.6)
Net interest expense (2).......... $ 7.0 $ 83.3
Dividends and accretion on
redeemable preferred stock (3)... $ 0.0 $ 10.1
Ratio of earnings to combined
fixed
charges and preferred stock
dividend (4)..................... 8.9x --
</TABLE>
- --------
(1) Adjusted to give effect to the merger, including the financing, but
excluding non-recurring items directly attributable to the merger
(2) Includes amortization of deferred financing charges
(3) No shares of redeemable preferred stock were outstanding as of January 1,
2000
(4) Pro forma earnings for the year ended January 1, 2000 would have been
inadequate to cover combined fixed charges and dividends on the redeemable
preferred stock. The coverage deficiency for such period would have been
$20.2 million.
There can be no assurance that our cash flow, availability under the new
credit facility and other capital resources will be sufficient for payment of
principal and interest on our indebtedness. As a result, we may be forced to:
. reduce or delay capital expenditures,
. sell assets,
. restructure or refinance our indebtedness,
. or seek additional equity capital.
There can be no assurance that any of such measures could be implemented on
satisfactory terms or, if implemented, would be successful or would permit us
to meet our debt service obligations.
Our Obligations to the Holders of Our Redeemable Preferred Stock Must Be
Satisfied Before Any Payments May be Made to the Holders of Our Common Stock
Upon liquidation of Jostens, the holders of our redeemable preferred stock
will be entitled to be paid in full before any payments are made to the
holders of our common stock. The redeemable preferred stock will initially
have a liquidation preference in the amount $60.0 million. In addition, the
holders of redeemable preferred stock are entitled to dividends, which at our
option may be payable in additional shares of redeemable preferred stock, at a
rate of 14.0% per annum compounded quarterly. These dividends will have the
effect of increasing the $60.0 million liquidation preference. After 11 years
the redeemable preferred stock must be redeemed by us for a cash payment of
$272.6 million, unless it is redeemed by us prior to such time. The redeemable
preferred stock is generally not redeemable until the fifth anniversary of the
issue date and thereafter is redeemable at a premium which reduces to par by
the year 2008. Any funds used to pay to holders of the redeemable preferred
stock will restrict our ability to use such funds for operations and must be
paid before any amounts may be paid to the holders of common stock.
Following the Merger, We Will Be Controlled By Affiliates of Investcorp
Upon completion of the merger, approximately 70% of the outstanding shares
of our voting common stock will be held by affiliates of Investcorp.
Accordingly, affiliates of Investcorp will control the power to elect our
directors, to appoint new management and to approve many actions requiring the
approval of our shareholders,
12
<PAGE>
such as adopting most amendments to our articles of incorporation and
approving mergers or sales of substantially all of our assets. The directors
so elected will have the authority to issue additional stock, implement stock
repurchase programs, declare dividends and make other such decisions about our
capital stock.
In addition, the existence of such a small group of controlling
shareholders may have the effect of discouraging or making it more difficult
for a third party to acquire a majority of our outstanding equity securities.
A third party would be required to negotiate such a transaction with the
controlling shareholders, who may have differing interests from those of our
other shareholders.
Although affiliates of Investcorp will own approximately 70% of our voting
common stock following the merger, there is no current intention to engage in
any post-merger transaction which would eliminate the remaining shares held by
our public shareholders. While it is, therefore, unlikely that such a
transaction would occur in the foreseeable future, no assurance can be given
that such a transaction will not occur.
In Connection With the Merger, We Expect to Enter a New Credit Facility and
Indenture Which Will Contain Restrictive Covenants That May Limit Our
Operating Flexibility
In connection with the merger, we expect to enter into a new senior secured
credit facility for approximately $635.0 million and an indenture governing
$240.0 million of senior subordinated notes. The new credit facility agreement
and indenture are expected to include certain covenants that, among other
things, will restrict:
. the making of investments (including acquisitions), loans and advances
and the paying of dividends and other restricted payments;
. the incurrence of additional indebtedness;
. the granting of liens, other than specified permitted liens;
. mergers, consolidations and sales of all or a substantial part of our
business or property;
. the sale of assets; and
. the making of capital expenditures.
We will also be required by the new credit agreement to maintain certain
financial ratios. Among other things, it is expected that the covenants in the
merger financings will prohibit us from continuing to pay dividends to holders
of our common stock. Our ability to comply with these and other provisions of
the new credit agreement and the indenture may be affected by changes in
business conditions or results of operations, or other events beyond our
control. The breach of any of these covenants could result in a default under
the new credit agreement, in which case the lenders could elect to declare all
amounts borrowed under the new credit agreement, together with accrued
interest, to be due and payable. Any such acceleration could, in turn, result
in an event of default under the indenture, which could result in our
subordinated debt, including all interest accrued thereon, being declared
immediately due and payable. If we are unable to repay borrowings under the
senior credit facility, such lenders could bring actions to take possession of
the pledged collateral. If the indebtedness under the new credit facility and
the subordinated notes were to be accelerated, there can be no assurance that
our assets would be sufficient to repay such indebtedness and our other
indebtedness.
As a Result of the Merger, Our Common Stock May No Longer Be Listed on the New
York Stock Exchange Which Would Adversely Affect the Liquidity and Market
Value of Such Shares
As a result of the merger, it is likely that our common stock will no
longer meet the listing requirements of the NYSE. As a result, the NYSE may
delist our common stock. We and Saturn Acquisition have each agreed to
cooperate in taking all actions necessary to cause the NYSE to delist our
common stock. The delisting of our common stock is likely to have a material
adverse effect on the trading market for, and the market value of, our common
stock and there can be no assurance that any trading market will exist for our
common stock after the merger.
13
<PAGE>
As a Result of the Merger, We May No Longer Make Publicly Available
Information Reports to the SEC
As a result of the merger, the shares of our common stock may be held by
fewer than 300 shareholders. In such case, we will deregister our common stock
under the Securities Exchange Act of 1934. If our common stock is
deregistered, we will not be required to comply with the proxy or periodic
reporting requirements of the Exchange Act. In addition, we will not provide
any reports or information to our public shareholders other than pursuant to
the right to inspect our books and records as required by Minnesota law. As a
result, the information available to shareholders on our business and
financial condition will be reduced, which could have a material adverse
effect on the value of our common stock. We currently plan to register certain
debt securities to be issued in exchange for the senior subordinated debt
securities to be issued in connection with the merger financing for sale under
the Securities Act of 1933. If we were to do so, this would again make us
subject to some of the reporting requirements of the Exchange Act. However,
unless and until such debt securities are registered, we will not be subject
to the reporting requirements of the Exchange Act after our common stock is
deregistered. In addition, under the terms of such securities, we will be
required to file under the Exchange Act only so long as such debt securities
are outstanding and to deliver reports only to the holders of such debt
securities and not to the holders of our common stock, although such filings
would be available from the SEC.
The Value of the Retained Shares May Be Less Than the Cash Consideration
Payable in the Merger
The shares to be retained by public shareholders in the merger may have a
value less than the $25.25 per share cash consideration to be received by
shareholders in the merger. No third-party appraisal or other determination of
value was requested or obtained by us with respect to the value of the
retained shares. Accordingly, shareholders who elect to retain some or all of
their shares instead of receiving the $25.25 per share cash consideration, as
well as shareholders who are allocated retained shares as a result of
proration, will be subject to the risk that the per share value of the
retained shares may be less than the $25.25 cash amount that such shareholders
would otherwise receive for their shares in the merger. Shareholders who
retain shares also should be aware of the other risks described in this proxy
statement/prospectus to which they may be subject as a result of such election
or proration, including risks associated with owning a minority position in a
leveraged company and risks associated with the anticipated lack of liquidity
of our common stock following the merger.
Shareholders Who Receive Cash and Retain Stock in the Merger May Be Required
to Treat a Portion of the Cash Received as Ordinary Income
Shareholders who receive cash for a portion of their shares and retain a
portion of their shares as a result of proration or otherwise may, depending
on the particular circumstances of the shareholder, be required to treat the
cash received in the merger as a distribution that is taxable to the
shareholder as ordinary dividend income rather than as the receipt of proceeds
from the sale or exchange of stock, which would generally be taxable to the
shareholder as capital gain eligible for a reduced rate of federal income tax
in the case of individual taxpayers. Because such dividend treatment is
determined by the particular facts and circumstances of the shareholder, it is
uncertain whether or to what extent such dividend treatment will be required
with respect to any particular shareholder who receives cash and retains
shares in the merger. If certain requirements are met, such dividend treatment
should not be applicable to shareholders who receive cash in the merger in
exchange for all of their shares.
We Intend to Issue Options and Warrants to Purchase Our Capital Stock Which,
When Exercised, Will Dilute the Holdings of Shareholders Who Retain Their
Shares
Following the merger, we intend to grant members of our management options
to purchase additional shares of our capital stock. We also expect to issue
warrants to purchase common stock to DB Capital Investors, the purchaser of
the redeemable preferred stock, as a part of the merger financings. These
warrants will be exercisable at nominal consideration for shares of our common
stock representing 5% of our total number of outstanding shares following the
merger on a fully-diluted basis. The exercise of any stock option or warrant,
or any other issuance of capital stock, will dilute the holdings of our then-
existing shareholders, including persons who retain shares of our common stock
in the merger.
14
<PAGE>
The Use of Proceeds From the Merger Financings to Pay the Cash Consideration
in the Merger May Be Challenged as a Fraudulent Conveyance by Our Creditors
The incurrence of indebtedness as part of the merger financings, and the
payment to our shareholders of $25.25 in cash per share of common stock, may
be subject to review under federal bankruptcy law or relevant state fraudulent
conveyance laws if a bankruptcy case or lawsuit is commenced by or on behalf
of our unpaid creditors. Under these laws, if a court were to find that, at
the time of the merger and the related financings:
. such indebtedness was incurred and the $25.25 per share was paid to our
shareholders with the intent of hindering, delaying or defrauding current
or future creditors; or
. we received less than reasonably equivalent value or fair consideration
in connection with the merger and the related financings and
. were insolvent or were rendered insolvent by reason of the merger or
the related financings,
. were engaged, or were about to engage, in a business or transactions
for which our assets constituted unreasonably small capital, or
. intended to incur, or believed that we would incur, debts beyond our
ability to pay as such debts matured,
then such court could determine that the cash payment of $25.25 per share to
our shareholders violated applicable provisions of the United States
Bankruptcy Code and/or applicable state fraudulent conveyance laws. Such a
determination would permit the bankruptcy trustee or debtor in possession or
unpaid creditors to rescind the $25.25 per share cash payment and recover such
$25.25 per share cash payment from our shareholders.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law of the jurisdiction that is being applied in any
such proceeding. Generally, however, we would be considered insolvent if, at
the time we incur the indebtedness, either:
. the sum of our liabilities, including contingent liabilities, is greater
than our assets, at a fair valuation; or
. the present fair saleable value of our assets is less than the amount
required to pay the probable liability on our total existing debts and
liabilities, including contingent liabilities, as they become absolute
and matured.
There can be no assurance as to what standards a court would use to
determine whether we were solvent at the relevant time. In rendering their
opinions in connection with the borrowings under the senior secured credit
facility and the issuance of the subordinated debt, none of the counsel for
us, Saturn Acquisition or the lenders will express an opinion as to the
applicability of federal or state fraudulent transfer and conveyance laws.
Following the Merger, Our Common Stock Will Be Subject to Mandatory Redemption
Under Certain Circumstances Which May Not Be At a Time or At a Price That
Shareholders Desire to Sell
Shares of our common stock retained in the merger will be redesignated as
Class A common stock and will have rights, powers, privileges and restrictions
which differ in some respects from the current rights, powers, privileges and
restrictions associated with our existing common stock. Among other things,
the Class A common stock will provide holders with rights to "tag-along" in
connection with any resale of our Class D common stock, which class will be
held by affiliates of Investcorp and will constitute, in the aggregate,
approximately 70% of the outstanding voting common stock following the merger.
Such shares will be subject to mandatory redemption if a holder does not elect
to "tag-along" in connection with a sale of Class D common stock. The effect
of this mandatory redemption provision is that holders of our Class D common
stock can cause holders of our Class A common stock to sell their Class A
common stock at the same time and upon the same terms as a proposed sale of
Class D common stock, which may not be at a time or at a price that such Class
A common shareholders desire to sell their shares. If the Class A common stock
is redeemed, the redemption will be a taxable transaction to the holders of
such stock. Generally, holders of Class A common stock who surrender all of
their Class A common stock pursuant to a tag-along mandatory redemption for
cash will recognize gain or loss equal to the difference between the amount
received in the redemption and such holder's adjusted tax basis in the stock
redeemed. Such gain or loss will be long-term capital gain or loss if at the
time of the redemption the holding period for such Class A common stock was
held by the holder for more than one year.
15
<PAGE>
We Do Not Anticipate, and Will Likely Be Prohibited From, Paying Any Dividends
on Our Common Stock Following the Merger
We do not anticipate paying any dividends on shares of any class of our
common stock following the merger, including shares of our Class A common
stock to be retained by our existing shareholders. It is anticipated that the
terms of the agreements and instruments related to the financing of the merger
will prohibit or otherwise restrict any future payment of dividends on shares
of our common stock.
We May Not Be Able to Achieve the Intended Benefits of Our Recently Announced
Corporate Realignment
In the fourth quarter of 1999, we completed a strategic review of our
product lines, manufacturing operations, infrastructure projects, and support
functions based on performance trends. In addition, we decided to refocus
Jostens on sales growth versus infrastructure improvement. The successful
completion of this realignment will require substantial attention from our
management team and may result in the diversion of management attention from
managing our core businesses and operational issues. Problems resulting from
the realignment, including employee morale problems, could have an adverse
effect on our financial position or results of operations. There can be no
assurance that the realignment will be implemented successfully or on a timely
basis or that it will not result in unanticipated costs.
The Seasonality of School Product Sales May Adversely Affect Our Ability to
Service Our Debt
Our school product sales experience strong seasonal business swings
concurrent with the school year, with approximately 40% of full-year sales and
approximately 50-60% of full-year operating income occurring in the period
from April to June. Our ability to service our debt may be affected by the
seasonality of sales in this line of products.
Changes in Our Relationship with Our Independent Sales Representatives May
Adversely Affect Our Future Operating Results
Our success is highly dependent upon the efforts and abilities of our
network of independent sales representatives. Many of our relationships with
customers and schools are cultivated and maintained by our sales
representatives. If we were to experience a significant loss of our
independent sales representatives due to the change in control resulting from
this transaction, it might have a material adverse effect upon our operating
results.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION
This proxy statement/prospectus includes and incorporates by reference
statements that are not historical facts. These forward-looking statements are
based on our current estimates and assumptions and, as such, involve
uncertainty and risk. Forward-looking statements include the information
concerning our possible or assumed future results of operations and also
include those preceded or followed by the words "anticipates," "believes,"
"estimates," "expects," "hopes," "targets" or similar expressions. For each of
these statements, we claim the protection of the safe harbor for forward-
looking statements contained in the Private Securities Litigation Reform Act
of 1995.
The forward-looking statements are not guarantees of future performance,
and actual results may differ materially from those contemplated by such
forward-looking statements. Each of the factors discussed above under the
caption "Risk Factors" along with those discussed elsewhere in this proxy
statement/prospectus and in the documents which we incorporate by reference,
could affect our future results and could cause those results to differ
materially from those expressed in the forward-looking statements.
Except to the extent required under the federal securities laws, Jostens
does not intend to make publicly available any update or other revisions to
the forward-looking statements to reflect circumstances arising after the date
of the preparation of the forward-looking statements.
16
<PAGE>
RECENT DEVELOPMENTS AFFECTING JOSTENS
Special Charge
In the fourth quarter of 1999, we completed a strategic review of our
product lines, manufacturing operations, infrastructure projects, and support
functions based on performance trends. In addition, we decided to refocus
Jostens on sales growth versus infrastructure improvement. As a result of this
review, we incurred a pre-tax special charge of $20.2 million ($13.3 million
after tax or $0.39 per share), which was approved by our Board of Directors.
Information relating to the special charge follows:
<TABLE>
<CAPTION>
Balance
Initial Used in end of
Accrual 1999 1999
------- ------- -------
(In millions)
<S> <C> <C> <C>
Employee termination benefits.......................... $ 4.9 $ -- $4.9
Abandonment of internal use software under development. 6.4 6.2 0.2
Write-off of impaired goodwill related to retail class
ring sales channel.................................... 4.6 4.6 --
Write-off of goodwill related to exiting the direct
marketing sales channel to college alumni............. 3.1 3.1 --
Other costs related to exiting the direct marketing
sales channel to college alumni....................... 1.2 0.3 0.9
----- ----- ----
$20.2 $14.2 $6.0
===== ===== ====
</TABLE>
Of the $20.2 million special charge, $4.8 million relates to the School
Products segment and $15.4 million relates to the "Other" segment.
Included in other accrued liabilities on the consolidated balance sheets is
the unused portion of the special charge of $6.0 million, which will be used
or paid in 2000.
Of the total special charge, $4.9 million relates to employee termination
benefits for the elimination of about 100 full-time positions, primarily in
corporate staff and executive functions and in exiting the direct marketing
sales channel to college alumni. Headcount reductions will be completed and
termination benefits paid in 2000.
We reviewed and modified our strategies for the retail class ring product
line and, as a result, determined that the carrying value of the related
goodwill was impaired based upon anticipated inadequate projected cash flows.
Accordingly, an impairment charge of $4.6 million was recorded as part of the
special charge for the write-off of all of the goodwill.
We also reviewed the Jostens direct marketing to college alumni business
and decided in the fourth quarter of 1999 to close down the business due to
1999 performance and forecasted decline in sales volume. As a result of that
decision, the remaining balance of the related goodwill of $3.1 million was
written off and other exiting costs of $1.2 million were recorded.
We estimate the pre-tax savings of the 1999 special charge to be
approximately $8.0 million in 2000 and $10.0 million in 2001 and beyond.
Pending Litigation
In January 1999, a federal judge in Texas overturned a jury's $25.3 million
verdict against Jostens in an antitrust lawsuit brought by one of Jostens'
competitors, Taylor Publishing Company. The judge, acting on Jostens' post-
trial motions, set aside the jury's verdict and dismissed all claims against
Jostens in the case. Taylor Publishing has appealed the decision and is
seeking to have the jury verdict reinstated. Briefs have been filed
17
<PAGE>
and oral arguments were held on December 8, 1999. The date for the decision
from the Fifth Circuit Court of Appeals has not been determined. No costs were
accrued related to the lawsuit because we believe a loss is not "probable and
estimable."
Following the public announcement of the merger, three purported class
actions were filed, two on December 30, 1999 and the third on January 14,
2000, in the Fourth Judicial District of the District Court for the State of
Minnesota, County of Hennepin (the "Court"). By order of the Honorable Daniel
H. Mabley dated January 21, 2000, the Actions were consolidated, and the
Complaint in File No. MC 99-18533 was thereafter designated as the
Consolidated Complaint. An amended Consolidated Complaint was filed on
February 23, 2000 and we filed an answer on March 24, 2000 denying all
material allegations.
The Consolidated Complaint is purportedly brought on behalf of a class of
"all holders of Jostens common stock who are being and will be harmed" by the
actions alleged in the Consolidated Complaint. In the Consolidated Complaint,
the plaintiffs allege that the individual defendants, by virtue of their
positions as officers and directors of Jostens, owe fiduciary duties to the
shareholders of Jostens, and that by allegedly failing to take all steps
reasonably required to maximize the value shareholders will receive in a sale
of Jostens, the defendants have breached such duties. More specifically, the
plaintiffs allege that the defendants have taken actions designed to halt any
other offers and deter higher offers from other potential acquirers including,
among other things:
. allegedly concealing Jostens' fourth quarter results until after the
defendants entered into and disclosed the existence of the merger
agreement, thus allegedly capping the price of Jostens' common stock;
. allegedly agreeing to include in the merger agreement a termination fee
provision which would under specified circumstances require Jostens to
pay Saturn Acquisition the sum of $24 million, together with Investcorp's
expenses, in the event that Jostens receives a superior offer and
terminates the merger agreement;
. allegedly structuring a "preferential deal" pursuant to which some of the
defendants would receive "change of control" payments following the
consummation of the proposed merger; and
. allegedly failing to announce any active auction, open bidding, or any
other procedures best calculated to maximize shareholder value.
The Consolidated Complaint seeks an order of the Court:
. enjoining the defendants from proceeding with the merger;
. enjoining the defendants from consummating the merger, or a business
combination with a third party, unless and until Jostens adopts and
implements a procedure or process, such as an auction, to obtain the
highest possible price for Jostens;
. directing the individual defendants to exercise their fiduciary duties to
obtain a transaction which is in the best interests of shareholders until
the process for the sale or auction of Jostens is completed and the
highest possible price is obtained;
. awarding compensatory damages against the defendants;
. awarding the plaintiffs the cost and disbursements of the Consolidated
Complaint, including reasonable attorneys' and experts' fees; and
. granting such further relief as the Court may deem just and proper.
18
<PAGE>
THE MERGER
The Participants
Jostens
Jostens is a provider of products and services that help people celebrate
important moments, recognize achievements and build affiliations. Jostens'
products include yearbooks, class rings, graduation products and school
photographs, as well as sports and employee achievement awards. Jostens'
principal executive offices are located at 5501 Norman Center Drive,
Minneapolis, Minnesota 55437. Jostens' main telephone number is (952) 830-
3300.
A more detailed description of our business is contained in Jostens' Annual
Report on Form 10-K for the fiscal year ended January 1, 2000. Financial
statements and other information about Jostens are available at our website
www.jostens.com. The information on our website is not incorporated by
reference into this proxy statement/prospectus.
Investcorp
Investcorp is a global investment group with offices in New York, London
and Bahrain. It is principally engaged in three businesses: corporate
investment, real estate investment and asset management. Since its formation
in 1982, the firm has arranged more than 50 corporate investments in a variety
of industries with an aggregate acquisition value exceeding $16 billion.
Investcorp's principal United States-based subsidiary is Investcorp
International, Inc., whose executive offices are located at 280 Park Avenue,
New York, New York 10017. Investcorp International's main telephone number is
(212) 599-4700. Additional information about Investcorp is available at its
website www.investcorp.com. The information on Investcorp's website is not
incorporated by reference into this proxy statement/prospectus.
Saturn Acquisition Corporation
Saturn Acquisition is a newly formed Minnesota company organized for
purposes of completing the transaction. It has engaged in no business
activities and it has no assets or liabilities of any kind, other than those
incident to its formation and those incurred in connection with the merger.
Immediately prior to the merger, Saturn Acquisition will receive common equity
cash contributions of $208.7 million from affiliates of Investcorp and from DB
Capital Investors. These funds, together with the proceeds of the redeemable
preferred stock and debt financings described on page 38 under "THE MERGER--
Merger Financing," will be used to finance the merger, to pay related expenses
and to repay our outstanding indebtedness. Each share of common stock issued
to these investors by Saturn Acquisition will be converted into one share of
Jostens common stock in the merger. When we use the term "Investcorp and its
co-investors" in this proxy statement/prospectus, we are referring to
affiliates of Investcorp, as well as international investors with whom
Investcorp maintains an administrative relationship and who may at or
following completion of the merger obtain indirect equity interests in Jostens
by investing in offshore entities organized by Investcorp for that purpose and
DB Capital Investors.
The Management Continuing Shareholders
The five members of Jostens senior management who are the Management
Continuing Shareholders are participating in the merger transaction together
with Investcorp. These individuals will retain some of their Jostens shares in
the merger. All other shares held by the Management Continuing Shareholders
will be exchanged in the merger for $25.25 per share in cash. None of the
shares held by the Management Continuing Shareholders will be subject to
proration or eligible for election. The following table shows, for each of the
19
<PAGE>
Management Continuing Shareholders, his name, his current position with
Jostens, the number of shares held by him and the number of shares to be
retained and exchanged for cash in the merger.
<TABLE>
<CAPTION>
Number of
Number of Shares Number of Shares to be
Held Prior to Shares to Exchanged
Name Position with Jostens the Merger be Retained for Cash
---- --------------------- ---------------- ----------- ------------
<C> <S> <C> <C> <C>
Robert C. Buhrmaster Chairman of the Board, 121,933 93,205 28,728
President and Chief
Executive Officer
William N. Priesmeyer Senior Vice President 47,171 28,034 19,137
and Chief Financial
Officer
Carl H. Blowers Senior Vice President-- 41,858 41,858 0
Manufacturing
Michael L. Bailey Senior Vice President 24,648 15,913 8,735
and General Manager--
School Solutions
Gregory S. Lea Vice President and 16,043 9,522 6,521
General Manager--
Business Ventures
-------
251,653
</TABLE>
The total number of shares to be retained by the Management Continuing
Shareholders represent approximately 0.6% of our currently outstanding shares
and will represent about 2.1% of our outstanding shares immediately following
the merger.
In addition to continued participation in the ownership of equity, the
Management Continuing Shareholders will participate in certain equity-based
compensation plans and will be compensated for services expected to be
rendered after the merger in connection with the transition of Jostens to new
ownership, including managing the transition process from financial reporting,
public relations and sales and marketing perspectives, in an amount equal to
$2.5 million in the aggregate. These benefits are described on pages 43 to 48
under "--Interests of Management Continuing Shareholders in the Merger."
Structure of the Transaction
Under the merger agreement, Saturn Acquisition will be merged with and into
Jostens. Jostens will continue as the surviving company of the merger. The
merger will occur as follows:
. Immediately prior to the merger, affiliates of Investcorp will make a
capital contribution of $159.8 million to Saturn Acquisition in exchange
for approximately 6.3 million shares of Saturn Acquisition's common
stock. At the same time, DB Capital Investors will make a capital
contribution of $48.9 million to Saturn Acquisition in exchange for
approximately 1.9 million shares of Saturn Acquisition's common stock. In
the merger, each share of Saturn Acquisition Class A common stock, Class
B common stock, Class C common stock, Class D common stock and Class E
common stock will be converted into one share of Jostens Class A common
stock, Class B common stock, Class C common stock, Class D common stock
and Class E common stock, respectively.
. In the merger, the shareholders of Jostens will receive $25.25 per share
in cash for all of their shares of Jostens common stock, unless they
elect to retain some or all of their shares or unless not enough
shareholders elect to retain their shares. In the latter case, a number
of retained shares will be allocated among non-electing shares on a pro
rata basis, to ensure that Jostens public shareholders retain
approximately 2% of the shares outstanding immediately prior to the
merger, which will represent about 6% of the total number of shares
outstanding immediately following the merger. The shares retained by
Jostens' public shareholders will also represent approximately 6% of
Jostens outstanding voting stock immediately following the merger. Shares
retained by any shareholder will be redesignated as shares of Jostens
Class A common stock. For a description of the terms, rights and
privileges of the Class A common stock, see "DESCRIPTION OF JOSTENS
CAPITAL STOCK--Jostens Capital Stock Following the Merger" on pages 71 to
76.
20
<PAGE>
. Immediately prior to the merger, each outstanding option to purchase
Jostens shares will be cancelled in exchange for a cash payment from
Jostens for each share subject to the option equal to the excess of
$25.25 over the per share exercise price of the option. For further
information regarding the treatment of options, see "--Interests of
Management Continuing Shareholders in the Merger--Treatment of Options"
on page 44. Options having a per share exercise price of $25.25 or more
will be cancelled for no consideration.
. Immediately after the merger, Jostens will be owned approximately 94% by
affiliates of Investcorp, DB Capital Investors and the Management
Continuing Shareholders. The public shareholders of Jostens will continue
to own approximately 2% of the shares outstanding immediately prior to
the merger, which will represent about 6% of the total number of shares
to be outstanding immediately following the merger. None of the shares
owned by the Management Continuing Shareholders will be included in the
about 6% of the approximately 9 million shares to be outstanding
immediately following the merger. The shares of redeemable preferred
stock to be issued in connection with the merger financing will not
affect these ownership amounts.
The diagram below illustrates the approximate ownership of Jostens
outstanding stock immediately following the merger:
------------- -------------- ---------- ----------------
Management Investcorp DB Capital Public
Continuing and its Investors Shareholders
Shareholders Co-investors*
------------- -------------- ---------- ----------------
2.1% 70.4% 21.5% 6.0%
-------------
Jostens, Inc.
-------------
*Does not include
DB Capital Investors
Background of the Merger
In the spring of 1999, Jostens received a preliminary inquiry from a
nationally recognized private investment firm interested in pursuing a
potential business combination transaction with Jostens. Although the parties
engaged in limited preliminary discussions, such firm determined it was no
longer interested in a transaction with Jostens, for reasons that were not
made known to Jostens, and these discussions did not result in any proposal by
such firm.
In July 1999, after considering the businesses and prospects of Jostens and
its industry, the board of directors determined to ratify a three-year
business plan proposed by management. The three-year business plan called for
Jostens to invest in a number of growth initiatives to expand its products and
services in the schoolhouse. The plan contemplated investing in new products,
market research and marketing programs to improve relationships with customers
and information systems and Internet infrastructure, as well as a strategic
realignment. The strategic realignment is described on page 17 under the
heading "RECENT DEVELOPMENTS--Special Charges." Management believed that the
successful implementation of these new initiatives would result in increased
revenues and profitability.
In the summer of 1999, Investcorp began exploring the possibility of
acquiring a company in the youth and educational services industries. In
August 1999, Mr. Charles Philippin, a member of the Management Committee of
Investcorp, contacted Mr. Walker Lewis of Devon Value Advisers, a former
member of the Jostens board of directors, to discuss Investcorp's potential
interest in pursuing a negotiated acquisition of Jostens. Mr. Philippin
21
<PAGE>
explained Investcorp's investment philosophy and made it clear that Investcorp
does not engage in hostile transactions and that Investcorp would be
interested in pursuing a transaction with Jostens only if it could do so on an
exclusive basis. Mr. Philippin indicated that what Investcorp desired to do
was to conduct a limited amount of due diligence, develop a range of values
for a possible transaction, present that range of values to the Jostens board
of directors, and if the board was interested in a possible transaction within
that range, Investcorp would proceed to the next step and, if not, Investcorp
would move on to pursue other alternatives. Promptly thereafter, Mr. Lewis
telephoned Robert C. Buhrmaster, Jostens' Chairman, President and Chief
Executive Officer, and described his conversation with Mr. Philippin.
Mr. Buhrmaster thereafter contacted the members of the Jostens board of
directors individually and advised them of the interest expressed by Mr.
Philippin. It was the consensus of the members of the Jostens board that
Messrs. Buhrmaster and Lewis should respond to Mr. Philippin and permit
Investcorp to commence preliminary due diligence of Jostens, subject to the
execution of an acceptable confidentiality agreement, in order to enable
Investcorp to determine a range of values at which it would be prepared to
pursue a transaction with Jostens.
On August 16, 1999, Devon Value Advisers was retained by Jostens to assist
Jostens in providing information to and interfacing with Investcorp. In late
August 1999, Mr. Philippin and other representatives of Investcorp met with
Messrs. Buhrmaster and Lewis to discuss Investcorp's potential interest in an
acquisition of Jostens. Mr. Philippin indicated that, if Jostens were
interested in pursuing a transaction with Investcorp, Investcorp would perform
preliminary due diligence to formulate a range of values and, if such range of
values were acceptable, Investcorp would make a preliminary proposal to
Jostens. Mr. Philippin also stated that Investcorp would be interested in
retaining senior management and having them retain an equity interest in
Jostens. On August 25, 1999, Jostens and Investcorp entered into a customary
confidentiality agreement. Investcorp shortly thereafter commenced a limited
financial review of Jostens.
On September 7, 1999, Mr. Philippin, together with other representatives of
Investcorp, met with Mr. Buhrmaster and William Priesmeyer, Jostens' Chief
Financial Officer, to further discuss Investcorp's continuing interest in a
potential acquisition of Jostens and to get a better understanding of Jostens'
business, its recent financial performance and its three-year plan.
On September 13, 1999, Jostens retained Skadden, Arps, Slate, Meagher &
Flom LLP to act as legal advisors to Jostens in connection with any proposed
transaction with Investcorp.
At a meeting of the board of directors on October 6, 1999, representatives
of Skadden, Arps described to the board members the process that would be
involved in evaluating and negotiating a proposal by Investcorp and the
board's fiduciary obligations in connection with a potential transaction with
Investcorp. At that meeting, the board of directors determined to form a
special committee of independent directors to review and consider the terms of
any proposal that might be received from Investcorp and to make
recommendations to the board with respect to such proposal. The members of
that committee are: Richard A. Zona, Jack W. Eugster and Kendrick B. Melrose.
Representatives of Skadden, Arps described the functions and responsibilities
of the special committee and the role of its financial and legal advisors.
During early October, Investcorp and its advisors continued to conduct
their preliminary due diligence review of Jostens. In mid-October 1999, Mr.
Buhrmaster contacted Mr. Philippin by telephone to inquire as to the status of
Investcorp's due diligence and the expected timing of its preliminary proposal
to acquire Jostens.
We have been advised by representatives of Investcorp that in October 1999,
Investcorp entered into discussions regarding DB Capital Investors' possible
participation in the transaction. Mr. Robert G. Sharp, a Managing Director of
the general partner of DB Capital Investors, was previously an executive at
Investcorp and indicated an interest on behalf of DB Capital Investors in
investing in any potential transaction involving Jostens. During the period
from October 1999 through December 27, 1999, representatives of Investcorp and
representatives of DB Capital Investors negotiated the terms of DB Capital
Investors' participation in the transaction.
22
<PAGE>
On October 26, 1999, Mr. Philippin, together with other representatives of
Investcorp, met with representatives of Skadden, Arps to outline a preliminary
proposal by Investcorp to acquire Jostens. The transaction would be structured
as a one-step merger transaction, intended to qualify for recapitalization
accounting treatment. In the merger, Jostens shareholders would receive $25.00
per share in cash for substantially all their shares and would continue to own
approximately 6% of the outstanding shares of Jostens after the merger.
Representatives of Investcorp explained that the $25.00 per share price was
intended to fully value Jostens and was not intended as a starting point for
subsequent negotiations.
The preliminary proposal outlined by Investcorp on October 26, 1999 was
made subject to a number of conditions, including:
. the continuation of an exclusive negotiating process;
. participation by Jostens management in the transaction on terms to be
agreed upon;
. support of the proposal by the Jostens board of directors;
. confirmatory due diligence to the satisfaction of Investcorp and its
financing sources; and
. Investcorp obtaining sufficient financing to complete the merger, to pay
related expenses and to repay Jostens outstanding indebtedness.
Mr. Philippin told the representatives of Skadden, Arps that Investcorp was
confident that it would have financing commitments for the transaction by the
time a definitive transaction agreement were executed. The Investcorp
representatives indicated that, assuming appropriate access to senior
management and documentation was provided, they expected it would take
Investcorp and its financing sources approximately 3-4 weeks to complete their
due diligence and obtain financing commitment letters.
On October 27, 1999, the special committee had a telephonic meeting at
which representatives of Skadden, Arps reported on their meeting with
Investcorp and described the terms of Investcorp's preliminary proposal. The
special committee determined to apprise the full board of directors of such
preliminary proposal and that it would be advisable for the special committee
to retain a financial advisor to help it evaluate the Investcorp preliminary
proposal. Members of the special committee then contacted two nationally
recognized investment banking firms that had recently performed services for
Jostens and who were relatively familiar with Jostens' businesses and
prospects. Among other things, members of the special committee inquired of
such firms the fees they would charge for advising Jostens in this type of
transaction.
On October 28, 1999, the full Jostens board of directors had a telephonic
meeting at which representatives of Skadden, Arps described their October 26,
1999 meeting with Investcorp representatives and the terms of the Investcorp
preliminary proposal. After some discussion, the board of directors instructed
the special committee to continue discussions with Investcorp concerning its
preliminary proposal and to engage an investment banking firm to act as its
financial advisor.
That same day, a representative of Skadden, Arps contacted Mr. Philippin by
telephone to inform him that the special committee and the Jostens board of
directors wanted to give further consideration to Investcorp's proposal and
had determined to retain a financial advisor to help them evaluate the
proposal. Mr. Philippin was told that, once the advice of such financial
advisor had been obtained, Jostens would reply to Investcorp's preliminary
proposal.
On October 29, 1999, the special committee had a telephonic meeting in
which it determined to retain CSFB as its financial advisor, subject to
negotiating an acceptable fee arrangement. On October 30 and 31, 1999, members
of the special committee discussed with CSFB the terms of its engagement. The
special committee engaged CSFB as its financial advisor effective as of
October 30, 1999. Following immediately upon its engagement and continuing
through early November 1999, CSFB conducted financial due diligence of
Jostens.
On November 3, 1999, Messrs. Buhrmaster and Priesmeyer, together with other
representatives of Jostens, met with representatives of Investcorp to discuss
certain due diligence items, including Jostens' historical performance and the
three-year business plan.
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On November 8, 1999, the members of the special committee met with
representatives of CSFB. At the meeting, CSFB discussed its preliminary
evaluation of the proposal and the price of $25.00 per share. The special
committee and CSFB also discussed various possible alternatives for maximizing
shareholder value and requested CSFB to consider the possibility of conducting
a limited auction of Jostens and the likelihood of finding a financial or
strategic buyer that might be prepared to pay a higher price. At that meeting,
CSFB indicated its preliminary view that the $25.00 per share price was
possibly within the range of acceptable prices, subject to completing its due
diligence and internal review procedures.
On November 9, 1999, representatives of CSFB contacted representatives of
Goldman, Sachs & Co., one of Investcorp's financial advisors, to discuss the
Investcorp preliminary proposal and CSFB's preliminary analysis of the $25.00
per share price. CSFB advised Goldman Sachs that the $25.00 per share price
was not inappropriate and was possibly within the range of acceptable prices,
but that the special committee was not convinced that such price fully valued
the shares or that it would recommend a transaction at that price. CSFB
indicated that it was still conducting its analysis of Jostens.
Representatives of CSFB informed Goldman Sachs that Jostens expected that by
November 29, 1999, Investcorp would complete its review of the limited number
of financial and operational matters identified as potentially affecting
valuation and reconfirm its $25.00 per share price. The undertaking of broad-
based confirmatory due diligence by Investcorp and its financing sources would
begin following this valuation reconfirmation.
On November 19 and 20, 1999, representatives of Jostens' management team
and CSFB met with representatives of Investcorp and its financial advisors,
Goldman Sachs and Warburg Dillon Read. At these meetings, the parties
discussed Jostens' historical and projected financial performance by product
line as well as Jostens' growth initiatives and strategies. Additionally, the
parties discussed the components of the restructuring charge that Jostens
management was contemplating at the time in connection with its proposed
internal restructuring.
On November 29, 1999, representatives of Goldman Sachs advised CSFB that
Investcorp confirmed the $25.00 price, subject to completion of broad-based
confirmatory due diligence by Investcorp and its financing sources. In
addition, Goldman Sachs and CSFB discussed the nature and scope of the likely
conditions relating to the absence of material adverse changes in Jostens'
business and in the financing markets that would be required by Investcorp's
financing sources.
On November 30, 1999, representatives of CSFB reported to the special
committee their conversation with Goldman Sachs. At this meeting,
representatives of CSFB reported to the special committee the results of their
consideration of alternatives for maximizing shareholder value, indicating a
low probability that either a financial or a strategic buyer willing to pay
materially more than $25.00 per share for Jostens existed. CSFB reported that
its analysis indicated that a strategic buyer for Jostens would unlikely be
willing to pay a materially higher price due to the diversity of Jostens'
product lines which may not all be compelling to a single strategic buyer.
CSFB also stated that it had considered other potential financial buyers for
Jostens but, based on the financial analyses performed by CSFB, determined
that it was unlikely that any such buyer would be willing to pay a price
materially higher than the Investcorp preliminary proposal. As a result of
these analyses, the special committee instructed CSFB not to contact any third
parties regarding a possible transaction with Jostens. Neither the special
committee nor the full board requested CSFB to consider, and CSFB did not
consider, a liquidation, dissolution, or management-led buyout of Jostens.
At its November 30, 1999 meeting, the special committee discussed the need
to clarify the extent of any further due diligence as well as the nature and
scope of the conditions on Investcorp's preliminary proposal. As a result, the
special committee determined that it would be appropriate to provide
Investcorp with a term sheet outlining the extent to which Investcorp would be
permitted to conduct additional due diligence and setting forth the timetable
for completing due diligence and reaching an agreement on the transaction. The
term sheet also addressed issues relating to the structure of the transaction
and the process for negotiating the participation of management. The term
sheet included specific language to be included in the financing commitments
concerning the conditions relating to the absence of material adverse changes
in Jostens' business and in the financing
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markets. The term sheet also provided that, while any transaction agreement
could prohibit Jostens from soliciting competing proposals, the agreement
would have to permit Jostens to respond to an unsolicited proposal and
terminate the merger agreement to accept a superior proposal. Consistent with
these provisions, the term sheet provided that any termination fee could not
exceed 2% of the total value of the consideration proposed to be paid to
shareholders, including any expense reimbursement provision. The term sheet
also outlined the special committee's requirement that financing commitment
letters be delivered prior to execution of any agreement.
On December 3, 1999, the special committee met to review the proposed term
sheet and on that same day, the term sheet was delivered to representatives of
Investcorp. On December 4, 1999, Investcorp delivered to CSFB an outline
responding to the term sheet, indicating that Investcorp was not willing to
increase the $25.00 per share price and that any termination fee should equal
3.25% of the total value of the consideration proposed to be paid to
shareholders. Investcorp also suggested changes to Jostens' proposed language
relating to the conditions in the financing commitments. On that day and the
next, representatives of Investcorp discussed the provisions of that term
sheet with the special committee's legal and financial advisors. By the
evening of December 5, 1999, the advisors had reached an understanding as to
all matters except the price and the amount of the termination fee.
That evening, Mr. Philippin spoke with Mr. Zona to see if they could reach
agreement on the remaining two issues. Mr. Zona told Mr. Philippin that he
could not assure Mr. Philippin that the special committee would recommend the
transaction at a price of $25.00 per share and that, if Mr. Philippin wanted
to know that he had the support of the special committee, Investcorp needed to
increase its price. Mr. Philippin indicated that there was not much room for
an increase in price, but that he would talk to his partners and would call
Mr. Zona back. Later that evening, Mr. Philippin contacted Mr. Zona again by
telephone and offered to increase the price of the proposal to $25.25 per
share. Mr. Zona, and subsequently the other members of the special committee,
agreed to support a transaction at that price. Messrs. Philippin and Zona also
agreed to a termination fee of 2.25% of the total value of the consideration
proposed to be paid to shareholders, plus reimbursement of Investcorp's fees
and expenses incurred in connection with the transaction, up to $5.0 million.
From December 6 through December 27, 1999, Investcorp and its advisors and
financing sources conducted their confirmatory due diligence investigation of
Jostens.
At a meeting of the Jostens board of directors on December 9, 1999, the
special committee and its legal and financial advisors apprised the other
board members of the events that had transpired and of the revised price. At
that meeting, CSFB informed the board that its preliminary evaluation of the
proposal indicated that it was within the range of fairness, subject to
completing its due diligence and internal review procedures.
On December 16, 1999, Investcorp's legal advisors delivered a proposed
merger agreement to the special committee's legal advisors. The terms of the
merger agreement proposed by Investcorp included the previously agreed upon
"no solicitation" covenant which would prohibit Jostens from, among other
things, soliciting any competing transaction, but would permit Jostens to
respond to an unsolicited proposal if the Jostens board determined that
failure to take such action would be inconsistent with its fiduciary duties.
The terms of the proposed merger agreement further provided that the merger
agreement could be terminated by Jostens to accept a superior offer, but, in
such event, Jostens would pay to Investcorp a termination fee of 2.25% of the
total value of the consideration proposed to be paid to shareholders and
reimburse Investcorp's fees and expenses up to $5.0 million, as Messrs. Zona
and Philippin had agreed.
The members of the special committee directed Skadden, Arps and CSFB to
finalize the terms of the merger agreement and discuss the terms of
Investcorp's financing commitments. The special committee emphasized to its
advisors the importance of a fully financed proposal which, in the committee's
view, should include bridge financing and have as few contingencies as
reasonably practicable.
From December 16, 1999 through December 27, 1999, Skadden, Arps and CSFB
continued to negotiate the merger agreement with Investcorp and its
representatives, including conditions, financing terms, and
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representations and warranties. At the same time, Mr. Buhrmaster, together
with Devon Value Advisers, which was acting on behalf of Jostens' senior
management, and Sidley & Austin, legal advisors retained by Devon Value
Advisers to act on behalf of the company's management, continued to discuss
the terms of management's participation with Investcorp. During this period,
representatives of Investcorp and its advisors continued to negotiate the
terms of the financing commitment letters, including the conditions in such
letters, with representatives of their financing sources.
On December 22, 1999, the board of directors held a meeting with its
financial and legal advisors. At this meeting, Skadden, Arps apprised the
board of the status of negotiations with Investcorp and reviewed with the
board the terms and conditions of the proposed merger agreement and
Investcorp's financing commitments, as well as other legal issues relating to
the proposed merger. CSFB made a preliminary financial presentation and
indicated that, subject to review of a definitive agreement, it would be
prepared to deliver an opinion that the consideration to be received in the
merger by Jostens shareholders (other than Management Continuing Shareholders
and shareholders who make a valid election to retain an equity interest in
Jostens after the merger) was fair to such shareholders from a financial point
of view.
Following such meeting, representatives of Skadden, Arps and CSFB continued
to negotiate the terms of the merger agreement, including the terms of
Investcorp's financing commitments, and Mr. Buhrmaster, together with
representatives of Devon Value Advisers and Sidley & Austin, continued to
negotiate with Investcorp concerning the terms of management's participation
in the transaction. In connection with its preliminary proposal, Investcorp
indicated that participation by Jostens' management in the transaction was a
condition to its willingness to proceed. Representatives of Investcorp stated,
however, that they would discuss directly with management the terms of their
participation, and neither the special committee nor the full board took part
in the negotiations between Investcorp and Jostens' management. The special
committee and the full board viewed their roles as acting on behalf of
Jostens' shareholders, not its management. The special committee and the full
board did, however, review the final terms of management's participation to
satisfy themselves that Investcorp's condition as to management's
participation would likely be satisfied.
Early in the evening on December 27, 1999, the members of the special
committee, together with the full Jostens board, met with their legal and
financial advisors to again consider the transaction. Representatives of
Skadden, Arps reviewed the final terms of the merger agreement and noted
particularly that many of the contingencies that were in the earlier version
of the financing commitment letters had been eliminated. CSFB delivered its
oral opinion to the Jostens board that, as of December 27, 1999, the
consideration to be received in the merger by Jostens shareholders, other than
Management Continuing Shareholders and shareholders who make a valid election
to retain an equity interest in Jostens after the merger was fair to such
shareholders from a financial point of view. In considering the $25.25 per
share proposal, the special committee and the full board took into account the
fact that representatives of Investcorp had initially indicated that their
$25.00 per share price was intended to fully value Jostens and was not
intended as a starting price for further negotiations. The special committee
also considered the fact that, at the time of the price increase,
representatives of Investcorp agreed to reduce the termination fee from 3.25%
of total consideration to be paid to shareholders to 2.25%, plus reimbursement
of Investcorp's fees and expenses, up to a maximum of $5.0 million. In
addition, the special committee relied upon CSFB's opinion and the financial
analyses performed by CSFB in considering the Investcorp proposal. The special
committee, and the full board, also reviewed the terms of the financing
commitment letters relating to the equity and debt contributions and concluded
that they were acceptable.
After considerable discussion among the special committee members and the
other directors, the special committee unanimously determined that the terms
of the merger were fair to and in the best interests of Jostens public
shareholders and recommended that the Jostens board approve the merger
agreement and the transactions contemplated thereby.
After receiving the recommendation of the special committee, the Jostens
board unanimously determined that the terms of the merger agreement were fair
to and in the best interests of the shareholders of Jostens, approved the
merger agreement and the transactions contemplated thereby and voted to submit
the merger agreement to a vote of the shareholders of Jostens and to recommend
that Jostens shareholders approve the
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merger agreement. Late that evening, following the meeting of the Jostens
board, the merger agreement was executed and Mr. Buhrmaster and Investcorp
delivered term sheets describing the employment arrangements and equity
participation of the Management Continuing Shareholders following the
effective time of the merger.
Early in the morning on December 28, 1999, Jostens and Investcorp issued a
press release announcing the execution of the merger agreement.
Financial Projections
During the course of their discussions with Investcorp, representatives of
Jostens' senior management provided representatives of Investcorp with
projections of Jostens' future financial performance. These projections
included forecasts of Jostens' revenues and earnings before interest and taxes
("EBIT") for the fiscal years 2000 through 2002. The projections indicated
that from 2000 through 2002, Jostens' revenues would increase from
approximately $825 million to approximately $1 billion and Jostens' EBIT would
increase from approximately $110 million to approximately $150 million.
These projections were based on numerous variables and assumptions that are
inherently uncertain and subject to risks that are difficult to predict and
may be beyond the control of Jostens, including factors related to general
economic and competitive conditions and prevailing interest rates.
Accordingly, such projections should not be relied on, and actual results may
vary significantly from those set forth in the projections. These projections
were not prepared with a view to public disclosure or compliance with (1)
published guidelines of the SEC or (2) the guidelines established by the
American Institute of Certified Public Accountants regarding projections. The
projections are included in this proxy statement/prospectus solely because
they were furnished to Investcorp. There can be no assurance that the
projections will be realized.
Reasons for the Merger; Recommendation of the Special Committee and of the
Full Jostens Board of Directors
Both the special committee and the full Jostens board of directors
unanimously recommend that the Jostens shareholders approve the merger
agreement.
In recommending approval of the merger agreement to the full board of
directors, the special committee considered a number of factors which they
believed supported their recommendation, including:
. The historical results of operations, financial condition, assets,
liabilities, business strategy and prospects of Jostens and the nature of
the industry in which Jostens competes. Based upon its consideration of
the operations and prospects of Jostens and the nature of the industry,
the special committee concluded that it might take a considerable period
of time before the trading price of Jostens shares would equal the $25.25
per share offered, if ever.
. The risks associated with implementing the three-year business plan
adopted in July 1999, including the risks of achieving the initiatives
and realizing the benefits of such plan, and the likelihood that even if
the three-year plan were successfully implemented, the market would not
begin to recognize the benefits of the plan until 2002, if at all, and
the trading price of Jostens shares would not accurately reflect such
benefits until such time.
. The reputation and proven experience of Investcorp in completing similar
transactions.
. The opinion of CSFB, dated December 27, 1999, that, as of that date, the
consideration to be received in the merger by Jostens shareholders, other
than Management Continuing Shareholders and shareholders who make a valid
election to retain an equity interest in Jostens after the merger, was
fair to such shareholders from a financial point of view. The special
committee also considered CSFB's presentation to the special committee.
In its review of the analyses performed by CSFB, the special committee
did not weigh each of the separate analyses prepared by CSFB separately,
but rather considered them taken as a whole.
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. The relationship of the $25.25 per share cash consideration to the
current market price and the market prices for Jostens common stock
during the previous three years. The special committee considered the
fact that the common stock had traded at prices as high as $27 1/8 per
share and as low as $17 1/4 per share during the three-year period prior
to the public announcement of the merger agreement. The special committee
also considered the fact that the $25.25 per share cash consideration
represents a premium of approximately 38% over the per share closing
price of Jostens shares on December 27, 1999, the last trading day prior
to the public announcement of the merger agreement. The special committee
believed that the significant premium which the $25.25 per share cash
consideration offered to recent trading prices of the shares, coupled
with the special committee's conclusion as discussed above that it might
take a considerable period of time before the trading price of Jostens
shares would equal the $25.25 per share offered, if ever, supported the
special committee's fairness determination.
. The advice from CSFB that the $25.25 per share price was likely at the
high end of the range any financial buyer would pay and their view that
interest from strategic buyers would likely be limited.
. The special committee's belief that the risk and disruption to Jostens
and its operations due to the process involved with an auction of Jostens
was greater than the potential benefit, if any, to its shareholders. In
its consideration of this factor, the special committee considered that
the disruption caused by any effort could have had a negative effect on
the value of Jostens.
. The statements of representatives of Investcorp that Investcorp would not
participate in an auction of Jostens. The special committee did not
believe that the inability to conduct an auction in which Investcorp
would participate was a negative in maximizing shareholder value. While
Jostens might have had an opportunity to receive a higher bid if
Investcorp had been willing to participate in an auction, Investcorp
indicated that it was prepared to pay $25.25 per share and could complete
the transaction in a relatively short time frame. This did not and does
not preclude Jostens from responding to proposals for alternative
transactions that might arise even after a merger agreement had been
signed.
. The fact that, to date, no third party has come forward with a proposal
to acquire Jostens, and the advice of CSFB that the likelihood of such a
third party coming forward was low.
. The fact that approval of the merger agreement requires the affirmative
vote of a majority of the outstanding Jostens shares entitled to vote
thereon and that, under Minnesota law, Jostens shareholders have the
right to exercise their dissenters' rights to receive the "fair value" of
their shares if they dissent from the merger.
. The likelihood of the completion of the merger in light of the fact that
commitments have been received by Investcorp for the funds necessary to
complete the merger transactions.
. The arm's-length negotiations between the special committee and
Investcorp and their respective representatives, including that the
negotiations resulted in:
. an increase in the per share cash price to be received by Jostens
public shareholders;
. Jostens having the right to engage in negotiations with, and supply
information to, a person who makes an unsolicited proposal for a
competing acquisition transaction that the board believes is
reasonably capable of being completed. For a further description of
Jostens' ability to consider competing transactions, see "THE MERGER
AGREEMENT--Limitations on Solicitation of Competing Transactions" on
page 51;
. Jostens having the right to terminate the merger agreement to accept
a superior proposal;
. a reduction in the termination fee sought by Investcorp in the event
the merger agreement is terminated as a result of a competing
transaction; and
. significant changes in Investcorp's financing commitments to limit
the nature of the conditions to such financing.
. The nature of the financing commitments received by Investcorp with
respect to the merger, including the identity of the institutions
providing such commitments and their proven experience in consummating
transactions such as the merger and the conditions to the obligations of
such institutions to fund such commitment and the special committee's
belief as to the strength of the financing commitments.
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The special committee also considered many of the risks described under the
caption "RISK FACTORS" on pages 11 through 16 as potentially negative factors
in its evaluation of the Investcorp proposal. In addition, the special
committee considered the fact that as a result of the proration feature of the
merger, Jostens public shareholders may be required to retain a portion of
their shares in the merger and that, as a result of the merger, such shares
may no longer be listed on the NYSE which would adversely affect the liquidity
and market value of such shares. However, the special committee believed that
such negative factors were outweighed by the potential advantages of the
merger, particularly in light of the fact that Jostens' shareholders would
receive cash in exchange for all or substantially all of their shares, unless
they elect to retain their shares, thereby minimizing many of the risks
associated with a continuing equity interest in Jostens.
The foregoing discussion of the information and factors considered by the
special committee includes all of the material factors considered by the
special committee in reaching its conclusions and recommendations but is not
meant to be exhaustive. In view of the variety of factors considered in
reaching its determination, the special committee did not find it practicable
to, and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching its conclusions and recommendations. In
addition, individual members of the special committee may have given different
weights to different factors.
For their services on the special committee, Jostens has agreed to pay to
the committee's chairman, Mr. Zona, a fee of $50,000 and to each of the
committee's other two members, Messrs. Eugster and Melrose, a fee of $20,000
in addition to their regular directors' fees.
The Jostens board consists of seven directors, three of whom served on the
special committee. At the December 27, 1999 meeting of the Jostens board, the
special committee, with its legal and financial advisors participating,
reported to the other members of the Jostens board on its review of the merger
agreement and the related financing commitments and the factors taken into
account by the special committee in reaching its determination that the merger
was fair to and in the best interests of Jostens shareholders. Accordingly,
the same factors considered by the special committee were taken into account
by the Jostens board. In addition, the Jostens board considered the
conclusions and recommendations of the special committee and believes that
these factors supported the Jostens board's fairness determination.
Furthermore, the Jostens board considered the fact that the $25.25 per share
cash consideration and the terms and conditions of the merger agreement were
the result of arm's-length negotiations among the special committee and
Investcorp and their respective advisors. The Jostens board believes that this
factor supports the Jostens board's fairness determination.
Opinion of Credit Suisse First Boston
At a telephonic meeting of the Jostens board of directors held on December
27, 1999, Credit Suisse First Boston delivered its opinion that, as of that
date and based upon and subject to the matters described in the opinion, the
consideration to be received by the shareholders of Jostens in the merger,
other than members of Jostens management who will retain, and other
shareholders who make a valid election to retain, an equity interest in
Jostens after the merger, was fair to such shareholders from a financial point
of view.
The full text of the Credit Suisse First Boston opinion, which states the
assumptions made, procedures followed, matters considered and limitations on
the review undertaken by Credit Suisse First Boston, is attached as appendix B
to this proxy statement/prospectus. The Credit Suisse First Boston opinion has
not been updated and will not be updated prior to the closing. Jostens
shareholders are urged to read the Credit Suisse First Boston opinion
carefully and in its entirety. The Credit Suisse First Boston opinion is
directed to the Jostens Board of Directors and addresses only the fairness of
the consideration from a financial point of view to the shareholders of
Jostens, other than members of Jostens management who will retain, and other
shareholders who make a valid election to retain, an equity interest in
Jostens after the merger. The opinion does not address the merits of the
underlying decision by Jostens to engage in the transaction. Additionally, the
opinion does not constitute a recommendation to any shareholder of Jostens as
to how he or she should vote on the merger agreement or whether any such
shareholder should elect to retain any shares.
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In arriving at its opinion, Credit Suisse First Boston:
. reviewed certain publicly available business and financial information
relating to Jostens, as well as the merger agreement;
. reviewed certain other information, including financial forecasts, that
were furnished to Credit Suisse First Boston by the management of
Jostens;
. met with the management of Jostens and visited certain Jostens
manufacturing operations to discuss the business and prospects of
Jostens;
. considered certain financial and stock market data of Jostens and
compared that data with similar data for other publicly held companies in
businesses similar to Jostens;
. considered the financial terms of certain other business combinations and
other transactions which have recently been effected; and
. considered other information, financial studies, analyses and financial,
economic and market criteria which it deemed relevant.
In connection with its review, Credit Suisse First Boston:
. did not assume any responsibility for independent verification of any of
the foregoing information and relied upon its being complete and accurate
in all material respects;
. assumed that the financial forecasts had been reasonably prepared on
bases reflecting the best currently available estimates and judgments of
Jostens management as to the future financial performance of Jostens;
. did not make an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Jostens; and
. was not furnished with any evaluations or appraisals of the assets or
liabilities (contingent or otherwise) of Jostens.
In addition, Credit Suisse First Boston was not requested to, and did not,
solicit third-party indications of interest in acquiring all or any part of
Jostens. Credit Suisse First Boston did not express any opinion as to the
actual value of retained shares of Jostens following the merger or the prices
at which such shares may be purchased or sold subsequent to the merger. The
Credit Suisse First Boston opinion was necessarily based upon financial,
economic, market and other conditions as they existed and could be evaluated
on the date of the opinion.
In preparing its opinion, Credit Suisse First Boston performed a variety of
financial and comparative analyses. The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or
summary description. Credit Suisse First Boston believes that its analyses
must be considered as a whole and that selecting portions of its analyses and
portions of the factors considered by it, without considering all analyses and
factors, could create a misleading view of the processes underlying its
opinion. In performing its analyses, Credit Suisse First Boston made numerous
assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond the control of
Jostens. The analyses performed by Credit Suisse First Boston are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by these analyses. In
addition, analyses relating to the value of businesses or assets do not
purport to be appraisals or to necessarily reflect the prices at which
businesses or assets may actually be sold. The analyses performed were
prepared solely as part of Credit Suisse First Boston's analysis of the
fairness, from a financial point of view, of the merger consideration to
Jostens shareholders, other than members of Jostens management who will
retain, and other shareholders who make a valid election to retain, an equity
interest in Jostens after the merger, and were provided to the Jostens board
of directors in connection with the delivery of its opinion.
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The following is a description of the presentations made by Credit Suisse
First Boston to the Jostens board of directors on December 22, 1999 and
December 27, 1999. The explanations of the financial analyses described in the
presentations include information presented in tabular format. In order to
understand those analyses, the tables should be read together with the rest of
each explanation and do not alone constitute a complete description of the
financial analyses.
Financial Projections
Representatives of Credit Suisse First Boston discussed three sets of
projections which were analyzed based upon conversations with Jostens
management. Credit Suisse First Boston presented graphical descriptions of
historical and projected revenues and earnings before interest, taxes,
depreciation and amortization ("EBITDA") under each of the three scenarios.
Case 1: Extrapolation case based on historical growth rates and EBITDA
margins.
Case 2: Based on management projections that included contemplated
investment initiatives to accelerate growth and expand margins.
Case 3: Modified version of the second case, also prepared by management,
that only included initiatives with the highest probability of
implementation.
Methodologies Employed in Analysis
In valuing Jostens, Credit Suisse First Boston utilized a number of
methodologies: a discounted cash flow analysis, a comparable company analysis
and a comparable acquisition analysis. In performing the discounted cash flow
analysis, which produces an intrinsic, long-term theoretical value based upon
projected cash flows, Credit Suisse First Boston discounted five years of cash
flows developed from forecasts provided by the management of Jostens and added
an amount based on multiples of year-five EBITDA on a present value basis to
recognize the value of the projected cash flows beyond year five. In
performing its comparable company analysis, Credit Suisse First Boston applied
trading multiples of businesses reasonably similar to Jostens to 1999 and 2000
operating estimates provided to Credit Suisse First Boston by Jostens
management. Credit Suisse First Boston's comparable acquisition analysis
required application of multiples paid by acquirors for businesses reasonably
similar to Jostens to 1999 operating estimates provided to Credit Suisse First
Boston by Jostens management.
Discounted Cash Flow Analysis
Credit Suisse First Boston presented the results of discounted cash flow
analyses for Jostens using a range of terminal multiples and discount ranges
that it deemed appropriate. Credit Suisse First Boston estimated the present
value of the unlevered, after-tax free cash flows that Jostens could produce
over fiscal years from 2000 to 2004 based upon the financial projections
discussed above. The terminal value was based on an EBITDA multiple range of
5.5x to 7.0x trailing (year 5) EBITDA. Terminal value multiples were chosen
based on comparable company and comparable acquisition analyses as well as
Jostens' historical and projected performance. The discount rate range of 10%
to 13% was based on a weighted-average cost of capital analysis. CSFB
performed its DCF analyses for each of the three cases discussed above. The
per share value implied by the three DCF analyses ranged from a low of $21.83
to a high of $36.64. However, CSFB relied primarily on Cases 1 and 3 discussed
above, which resulted in a DCF per share value range of $21.83 to $28.40. CSFB
placed less emphasis on Case 2 described above since it included a number of
contemplated investment initiatives to accelerate growth and expand margins,
the achievement of which was less probable.
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Comparable Company Analysis
Credit Suisse First Boston presented the results of a comparable company
analysis in which it compared financial information of the following selected
companies in the printing/publishing, recognition/novelty educational
products, jewelry and photography industries that were considered by Credit
Suisse First Boston to be reasonably comparable to Jostens:
COMPARABLE COMPANIES
. Banta Corp. . Franklin Covey
. CSS Industries . Scholastic Corp.
. Houghton Mifflin Company . School Specialty, Inc.
. Thomas Nelson, Inc. . Finlay Enterprises, Inc.
. John Wiley & Sons . Tiffany & Co.
. American Greetings Corp. . Zale Corp.
. Department 56 Inc. . CPI Corp.
. Enesco Group
Credit Suisse First Boston advised the Jostens board of directors that one
of the most relevant financial measures for Jostens and other comparable
companies is EBITDA. Accordingly, in performing its comparable company
analysis, Credit Suisse First Boston compared:
. 1999 and 2000 estimated EBITDA trading multiples;
. 1999 estimated EBITDA margins;
. 1999 and 2000 estimated price to earnings ratios;
. current debt to capital ratios; and
. I/B/E/S long-term growth rates
of the comparables with corresponding data for Jostens. The comparable company
analysis was based on stock prices as of December 17, 1999 and public equity
research reports of earnings estimates.
<TABLE>
<CAPTION>
EV/EBITDA
----------- 1999 EBITDA Debt/Book I/B/E/S LT
1999E 2000E 1999P/E 2000P/E Margin Capital Growth
----- ----- ------- ------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Average................. 7.8x 7.8x 15.9x 13.0x 14.5% 43.6% 14.4%
Median.................. 6.2x 6.5x 11.6x 9.5x 13.8% 40.8% 12.5%
Jostens(/1/) - Public
Trading Multiples...... 6.0x 4.6x 11.6x 10.5x 15.5% 71.2% 10.0%
</TABLE>
EV = enterprise value, as described below.
I/B/E/S is a division of Disclosure, Inc. which gathers and publishes
consensus analysts' earnings estimates.
(1)Based on I/B/E/S estimates.
Comparable Acquisition Analysis
Credit Suisse First Boston reviewed and compared selected precedent
transactions in the business segments in which Jostens operates that it deemed
relevant to its analysis in order to compare the publicly available financial
terms of those transactions with the terms provided for in the merger
agreement.
Credit Suisse First Boston reviewed the following announced transactions:
. Castle Harlan/Taylor Publishing
. Evercore Partners/Russ Berrie
. Quebecor Printing/World Color Press
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. American Securities/CPI Corp.
. Day Runner/Filofax Group
. School Specialty/Beckley-Cardy
. Jupiter Partners/PCA International
. DLJ Merchant Banking/Insilco
. Castle Harlan/Balfour-ArtCarved
<TABLE>
<CAPTION>
Enterprise Value
as a Multiple of
LTM: Equity Purchase Price
----------------- as a Multiple of:
Sales EBITDA EBIT LTM Net Income
----- ------ ---- ---------------------
<S> <C> <C> <C> <C>
Median.................................. 1.1x 6.5x 7.9x 12.9x
Jostens(/1/) - Transaction Multiples.... 1.2x 7.3x 9.4x 16.8x
</TABLE>
(1)Based on 1999E management projections
LTM - latest twelve months
Summary Valuation Analysis
Utilizing the methodologies described above, Credit Suisse First Boston
derived:
. a reference range of values for Jostens as an enterprise
. an equity value per share reference range for Jostens
For purposes of this analysis, enterprise value means the aggregate
valuation, whether calculated by discounting free cash flows from operations
excluding interest expense in the discounted cash flow analysis or applying
applicable financial multiples in the comparable company analysis or the
comparable acquisition analysis, before adjustments to calculate equity value.
To derive equity value from enterprise value, Credit Suisse First Boston
subtracted from enterprise value, the value of estimated total debt and other
liabilities as of January 1, 2000 and added to enterprise value, the value of
estimated cash and investments as of January 1, 2000 as well as option
proceeds expected to result from the transaction. The equity value range per
share was calculated by dividing the equity value by the number of fully
diluted shares outstanding. CSFB also calculated a minimum per share cash
purchase price assuming that the approximate 6% equity interest to be retained
by current shareholders was distributed pro rata among all shareholders. This
analysis was compared to the nominal $25.25 per share offer by Investcorp.
Based upon CSFB's assessment of the valuation ranges indicated by its
various valuation methodologies and its resulting reference range of $21.97 to
$27.03 per Jostens' share, CSFB concluded that, as of December 27, 1999, the
consideration to be received in the merger by shareholders of Jostens, other
than members of Jostens management who will retain, and shareholders who make
a valid election to retain, an equity interest in Jostens after the merger,
was fair to such shareholders from a financial point of view.
<TABLE>
<CAPTION>
Enterprise
Value Equity Value
(Dollars In Millions) per Share
--------------------- -------------
<S> <C> <C>
CSFB Reference Range........................ $850-$1,000 $21.97-$27.03
Nominal Proposed Purchase Price............. $956 $25.25
Minimum Cash Purchase Price................. $24.84(1)
</TABLE>
- --------
(1) Assumes allocation of retained shares to all shareholders on a pro rata
basis.
Miscellaneous
Credit Suisse First Boston has performed, and in the future may perform,
certain investment banking services for Jostens and Investcorp and its
affiliates, and has received and expects to receive customary fees for such
services.
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<PAGE>
Pursuant to the terms of a letter agreement between Credit Suisse First
Boston and Jostens dated October 30, 1999, Credit Suisse First Boston is
entitled to receive a financial advisory fee of $150,000, $750,000 as an
opinion fee and approximately an additional $2.5 million upon consummation of
the transaction. In addition, Jostens also has agreed to reimburse Credit
Suisse First Boston for its reasonable out-of-pocket expenses, including the
fees and expenses of its counsel, and to indemnify Credit Suisse First Boston
and selected related persons against a number of liabilities, including
liabilities under the federal securities laws.
Credit Suisse First Boston is an internationally recognized investment
banking firm and is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. In the ordinary course of their business, Credit
Suisse First Boston and its affiliates may actively trade the debt and equity
securities of Jostens for their own accounts and for the accounts of customers
and, accordingly, may at any time hold a long or short position in those
securities. Credit Suisse First Boston has consented to the use of its opinion
in this proxy statement/prospectus.
Merger Consideration
Upon completion of the merger, you will be entitled to receive $25.25 in
cash, unless you elect to retain some or all of your shares or unless not
enough shareholders elect to retain their shares. In the latter case, a number
of retained shares will be allocated among non-electing shares, excluding
shares held by the Management Continuing Shareholders, on a pro rata basis to
ensure that Jostens public shareholders retain approximately 2% of the shares
outstanding immediately prior to the merger, which will represent about 6% of
the total number of shares outstanding immediately following the merger. If
you wish to retain shares of your Jostens common stock after the merger, you
must make an election in accordance with the non-cash election procedure
described below. At the completion of the merger, each retained share of our
common stock will be redesignated as Jostens Class A common stock and will
have those rights, powers, privileges and restrictions described in this proxy
statement/prospectus under the caption "DESCRIPTION OF JOSTENS CAPITAL STOCK--
Jostens Capital Stock Following the Merger" on pages 71 to 76, which will
differ in some material respects from those of our common stock currently
outstanding.
You may not receive all of the type of consideration that you want because
the merger agreement requires that a number of shares of our common stock,
which we refer to as the "non-cash election number," must be retained by our
existing shareholders, excluding the Management Continuing Shareholders, to
ensure that our public shareholders retain a number of shares equal to
approximately 2% of the shares outstanding immediately prior to the merger,
which will represent about 6% of the total number of shares outstanding
immediately following the merger. The allocation of these retained shares
among our shareholders depends on the elections made by our shareholders.
Any fractional shares will be cashed out as described in "--Fractional
Shares" on page 38. Under applicable Minnesota law, you may dissent from the
merger and obtain payment for the fair value of your shares of common stock.
See "DISSENTERS' RIGHTS" on pages 64 to 67 for a discussion on the procedures
to properly dissent. None of the shares of our common stock held by Management
Continuing Shareholders will be subject to proration or eligible for election.
Instead, a specified number of shares held by Management Continuing
Shareholders will be converted into the right to retain the same number of
shares of our common stock after completion of the merger and the remainder of
their shares will be exchanged for $25.25 per share in cash. All shares of our
common stock held by us, our subsidiaries, Saturn Acquisition or any of its
affiliates will be canceled and retired.
In addition, as of the effective time of the merger, the shares of Saturn
Acquisition's Class A common stock, Class B common stock, Class C common
stock, Class D common stock and Class E common stock issued and outstanding
immediately prior to the effective time of the merger will be converted into
shares of Class A common stock, Class B common stock, Class C common stock,
Class D common stock and Class E common stock, respectively, of Jostens.
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<PAGE>
The Non-Cash Election Number
The non-cash election number is a calculated number which will represent 6%
of the total number of shares of all classes of Jostens common stock to be
issued and outstanding immediately after the merger. The non-cash election
number is the sum of the total number of shares of (1) Saturn Acquisition's
Class A common stock, Class B common stock, Class C common stock, Class D
common stock and Class E common stock outstanding immediately prior to the
effective time of the merger and (2) our common stock retained by the
Management Continuing Shareholders, multiplied by 0.06383 and rounded up to
the nearest whole number. The determination of the non-cash election number is
dependent on the actual common equity capitalization of Saturn Acquisition at
the time of the merger. See "--Merger Financing" on page 38 and "DESCRIPTION
OF JOSTENS CAPITAL STOCK--Jostens Capital Stock Following the Merger" on pages
71 to 76.
It is expected that the non-cash election number will be determined shortly
before our special meeting. The non-cash election number is currently expected
to be 539,592 shares, or 0.06383 multiplied by the sum of (1) 8,265,075 shares
of Saturn Acquisition Class A common stock, Class B common stock, Class C
common stock, Class D common stock and Class E common stock outstanding
immediately prior to the effective time of the merger and (2) 188,532, the
number of shares to be retained by the Management Continuing Shareholders.
Proration
If our shareholders elect to retain, in the aggregate, a number of shares
less than the non-cash election number, then all electing shares will be
retained by electing shareholders, and a number of shares equal to the
difference between the non-cash election number and the number of shares
elected to be retained will be allocated pro rata among non-electing shares.
The merger agreement provides formulas to determine such proration among non-
electing shares in the event shareholders elect to retain a number of shares
less than the non-cash election number, and such proration will not apply to
any shares owned by the Management Continuing Shareholders or any dissenting
shares.
The proration factor will be determined by dividing the difference between
the non-cash election number and the number of electing shares by the total
number of shares of our common stock, less the number of electing shares, any
dissenting shares and the shares held by the Management Continuing
Shareholders. For purposes of determining the proration factor, the total
number of shares of our common stock will not include shares underlying stock
options, since all outstanding options will be cancelled in connection with
the merger. The number of shares of our common stock required to be retained
by non-electing shareholders will be determined by multiplying the proration
factor by the total number of shares of our common stock, less the number of
electing shares, any dissenting shares and the shares held by the Management
Continuing Shareholders, rounded up to the nearest whole number. These
additional shares will be required to be retained on a pro rata basis among
shareholders, other than Management Continuing Shareholders, who held shares
as to which they did not make an election to retain shares of our common
stock.
If our shareholders elect to retain, in the aggregate, a number of shares
greater than the non-cash election number, then the number of shares that
electing shareholders will be permitted to retain will be reduced pro rata and
such shareholders will receive $25.25 in cash for each of their shares which
they are not permitted to retain. The proration factor will be determined by
dividing the non-cash election number by the total number of shares for which
a valid election to retain shares was made, which we refer to as the "electing
shares." The number of electing shares in each form of election will be
multiplied by this proration factor to determine the number of shares each
electing shareholder will be permitted to retain, rounded up to the nearest
whole number. All non-electing shareholders will receive $25.25 per share in
cash for all of their shares.
The following examples illustrate the potential effects of proration:
Example A: If you own 1,000 shares and do not elect to retain any shares
and none of our other shareholders elect to retain any of their shares,
applying the proration factor described above, you will:
. receive cash, in the amount of $24,846, for 984 of your shares; and
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<PAGE>
. retain 16 of your shares, which will be redesignated as Class A common
stock at the effective time of the merger.
Example B: If you own 1,000 shares and you elect to retain all 1,000 of
your shares and none of our other shareholders elect to retain any of their
shares, applying the proration factor described above, you will:
. receive no cash in exchange for your shares; and
. retain all 1,000 of your shares, which will be redesignated as Class A
common stock at the effective time of the merger.
Example C: If you own 1,000 shares and you elect to retain 500 of your
shares and none of our other shareholders elect to retain any of their shares,
applying the proration factor described above, you will:
. receive cash, in the amount of $12,423, for 492 of your shares; and
. retain 508 of your shares, which will be redesignated as Class A common
stock at the effective time of the merger.
The above examples assume that the non-cash election number will be 539,592
and that there are no dissenting shares. If other shareholders elect to retain
any of their shares, then, for the purposes of the above examples, you may
receive a smaller number of shares, but would receive a commensurately greater
amount of cash.
We will not issue fractional shares of Jostens common stock in the merger.
If you are otherwise entitled to a fractional share of Jostens common stock
following the merger, you will be paid cash in lieu of such fractional share
determined and paid as described under "--Fractional Shares" on page 38.
Upon completion of the merger, the non-cash election shares and any
additional shares required to be retained by the shareholders will be
redesignated as shares of Jostens Class A common stock and will have the
rights, powers, privileges and restrictions specified in the Articles of
Incorporation of Jostens and described in this proxy statement/prospectus. See
Appendix D attached hereto and "DESCRIPTION OF JOSTENS CAPITAL STOCK--Jostens
Capital Stock Following the Merger." These rights, powers, privileges and
restrictions will differ in certain respects from those of our common stock
prior to the merger. These differences will primarily relate to the rights,
powers, privileges and restrictions of the Jostens Class A common stock
relative to the other classes of capital stock of Jostens that will be
authorized in connection with the merger. The Jostens Class A common stock
will differ from the Jostens common stock in the following respects:
Relative Rights Generally. Jostens existing common stock will, following
the merger, no longer be Jostens' only class of capital stock. It will instead
be one of six classes of new common stock, and there will also be a class of
redeemable preferred stock outstanding. Immediately following the merger, the
shares of Jostens common stock held by the public shareholders and the
Management Continuing Shareholders will be redesignated as Class A common
stock and will constitute approximately 8% of Jostens outstanding voting
common stock. The outstanding shares of Jostens new Class D common stock will
constitute approximately 70% of Jostens outstanding voting common stock, and
the other outstanding shares of new common stock, Class B common stock, Class
C common stock and Class E common stock will generally have no voting rights.
The remaining 22% of Jostens' outstanding voting stock immediately after the
merger will be held by DB Capital Investors, which will receive in the merger
Class A and Class E common stock in exchange for its shares of Saturn
Acquisition Class A and Class E common stock. The rights of the holders of
Jostens new Class A common stock to receive dividends and distributions will
be subject to the rights of the holders of redeemable preferred stock and will
be co-equal to the rights of the holders of the other classes of new common
stock. In the event of any stock dividend, subdivision, combination or
reclassification of any class of new common stock, a corresponding change will
be made to Jostens new Class A common stock so that it is not adversely
affected. In the event of a public offering or sale of Jostens, the
outstanding shares of Jostens new Class A common stock, as well as the
outstanding shares of all other classes of new common stock, will
automatically convert into shares of Jostens new common stock upon the closing
of such offering or sale.
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<PAGE>
Relative Rights Upon Merger or Resale of Class D Common Stock. Jostens new
Class A common stock will also have various rights, powers, privileges and
restrictions in connection with a merger of Jostens with another entity, other
than the merger presently contemplated, or a proposed resale of shares of
Jostens new Class D common stock. In the event that Jostens merges with
another entity, other than in the merger presently contemplated, the holders
of Jostens new Class A common stock will be entitled to receive the same per
share consideration as is received by the holders of the other classes of new
common stock unless the holders of Jostens Class A common stock agree
otherwise. The holders of Jostens new Class A common stock will have the right
to "tag-along" in connection with any resale of Jostens new Class D common
stock by selling to the proposed transferee up to the same percentage of their
shares of Class A common stock as the percentage of the total number of shares
of Class D common stock being sold in the transaction. In the event the
holders of Class D common stock propose to sell a number of shares of Class D
common stock equal to or greater than 80% of the outstanding Class D common
stock, Jostens new Class A common stock will be subject to mandatory
redemption if and to the extent that the holders thereof elect not to "tag-
along" in connection with such sale of Jostens Class D common stock. The
effect of the mandatory redemption provision is that holders of Jostens Class
D common stock can cause holders of Jostens Class A common stock to sell their
Class A common stock at the time that, and upon the same terms as, holders of
Jostens Class D common stock propose to sell Jostens Class D common stock,
which may not be at a time or at a price that such holders of Jostens Class A
common stock desire to sell their shares. For a more detailed discussion of
these "tag-along" rights, see the information set forth under the caption
"DESCRIPTION OF JOSTENS CAPITAL STOCK--Jostens Capital Stock Following The
Merger--Tag-Along Rights; Mandatory Redemption" on pages 75 through 76.
A discussion of material risks related to the retention of our common stock
is contained in "Risk Factors" on pages 11 through 16.
Non-Cash Election Procedure
We are mailing a form of non-cash election to holders of record of our
common stock as of the record date for the special meeting together with this
proxy statement/prospectus. Only our shareholders of record on the third
trading day preceding the date of the special meeting will have the right to
elect to retain shares of our stock in the merger. Our shareholders who do not
wish to make an election to retain shares of our common stock in the merger
should not submit the form of non-cash election, although, as explained above,
this will not guarantee that you will not be required to retain some shares.
If your shares are held in "street name" through your broker, your broker will
mail your form of non-cash election to you under separate cover, together with
a letter of instructions for making a non-cash election. You should read your
form of non-cash election together with this proxy statement/prospectus.
For your non-cash election to be effective, you must properly complete the
form of non-cash election, and send the form, together with all of your
certificates for your electing shares, duly endorsed in blank or otherwise in
a form which is acceptable for transfer on our books or by appropriate
guarantee of delivery as described in the form of non-cash election, to
Norwest Bank, our exchange agent. Norwest Bank must receive the completed form
of non-cash election and share certificates by 5:00 p.m., New York City time,
on May 4, 2000, or, if our special meeting is postponed or adjourned for any
reason, the third trading day preceding the date of our special meeting.
You may revoke your form of non-cash election prior to 5:00 p.m., New York
City time, on May 4, 2000 or, if our special meeting is postponed or adjourned
for any reason, the third trading day preceding the date of our special
meeting, by sending written notice executed by you to the exchange agent. If
Jostens and Saturn Acquisition agree that the merger is not likely to be
completed within five business days of the date of our special meeting, the
time period to revoke your election may be extended. If you properly revoke
your election, the exchange agent will return to you the share certificates
submitted with your form of non-cash election. Share certificates submitted
with a form of non-cash election will be automatically returned to the
electing shareholders if our shareholders fail to approve the merger agreement
at the special meeting or the merger agreement is terminated for any other
reason.
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<PAGE>
The determinations of the exchange agent as to whether or not elections to
retain shares of Jostens in the merger have been properly made or revoked, and
which of these elections or revocations were received, will be binding.
Conversion/Retention of Shares; Procedures for Exchange of Certificates
The conversion of shares of our common stock, other than dissenting shares,
into the right to receive cash or the right to retain shares of our common
stock, which, upon consummation of the merger, will be redesignated as Jostens
Class A common stock, will occur at the effective time of the merger.
Promptly after the effective time of the merger, the exchange agent will
send a letter of transmittal to you, unless you make a non-cash election with
respect to all of your shares and have properly submitted forms of election
and share certificates to the exchange agent. The letter of transmittal will
contain instructions explaining how to exchange your share certificates for
cash.
Except for our common stock certificates surrendered with a form of non-
cash election, you should not send your certificates to the exchange agent
until you have received the letter of transmittal.
Any merger consideration made available to the exchange agent that remains
unclaimed by our shareholders for six months after the time the merger becomes
effective will be returned to us, as the surviving company of the merger, and
any of our shareholders who have not by that time made an exchange must then
look to the surviving company for payment of their claim for merger
consideration. Amounts unclaimed after two years will be kept by us, subject
to state unclaimed property laws.
Fractional Shares
We will not issue certificates or scrip representing fractional shares of
retained common stock in connection with the merger. Any fractional share
interests that you hold will not entitle you to vote or to any rights of a
Jostens shareholder after the merger. If you would otherwise be entitled to
retain a fraction of a share of our common stock pursuant to the merger, you
will receive, instead, a cash payment, without interest, equal to that
fraction multiplied by $25.25.
Treatment of Existing Stock Options
The merger agreement provides that each stock option outstanding
immediately prior to the effective time of the merger will be cancelled in
exchange for a cash payment from Jostens equal to the excess, if any, of
$25.25 over the per share exercise price of each stock option, reduced by any
applicable withholding taxes. Stock options with an exercise price in excess
of $25.25 per share will be cancelled in the merger for no consideration. As a
result, stock options representing an aggregate of 2,948,531 shares of our
common stock, at a weighted average exercise price of $21.96 per share, will,
based on the $25.25 per share cash consideration, be exchanged for an
aggregate cash payment of $9.7 million.
Merger Financing
Based on pro forma financial information as of January 1, 2000, we expect
that $1,031.7 million will be needed to finance the merger, to pay related
expenses and to repay our outstanding indebtedness. Approximately $208.7
million of this amount will be provided by equity contributions from
affiliates of Investcorp and from DB Capital Investors and approximately $38.0
million of this amount will be provided out of Jostens' available cash. In
addition, at the effective time of the merger, we expect that Jostens will
have available $240.0 million from the issuance of senior subordinated debt
securities, $60.0 million from the issuance of redeemable preferred stock and
borrowings under a new $635.0 million senior secured credit facility. It is
currently expected that approximately $485.0 of the total $635.0 million
available for borrowing will be utilized in connection with the
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<PAGE>
merger, with the balance of $150.0 million available under a revolving credit
facility. The senior subordinated debt securities are expected to be in the
form of senior subordinated notes due in approximately ten years. The
redeemable preferred stock is expected to be nonvoting except in certain
circumstances, and to be subject to mandatory redemption 11 years from the
issue date.
We expect the senior subordinated debt securities will be issued in a
private offering to be consummated concurrently with the merger. Neither the
purchasers, nor the terms of the subordinated debt securities have been
established, but will depend on market conditions at the time of funding. If
we are unable to complete the $240.0 million subordinated debt offering, we
have obtained bridge loan commitments from reputable financial institutions to
provide this portion of the merger financing.
DB Capital Investors has committed to purchase the $60.0 million of
redeemable preferred stock, which will accrue dividends at a rate of 14% per
annum and will be mandatorily redeemable 11 years from the issue date.
Dividends on the preferred stock will be payable quarterly and may, at our
option, be paid in additional shares of preferred stock.
All of the financing commitments, including those for the common equity,
senior secured credit facility, senior subordinated debt and bridge financing
and the redeemable preferred stock, are subject to customary closing and/or
borrowing conditions.
The proceeds of the financing arrangements will be used as follows:
. approximately $823.1 million for the exchange of common shares for cash
in the merger;
. approximately $9.7 million for the exchange of stock options for cash in
connection with the merger;
. approximately $121.2 million for the repayment of existing indebtedness;
and
. approximately $77.7 million for transaction fees and expenses.
The actual financing arrangements as well as the expected level of equity
contributions and outstanding borrowings under the new senior secured credit
facility will not be determined until shortly before the effective time of the
merger and may be different from those outlined above based on market
conditions. We also expect to issue warrants to purchase common stock to
purchasers of redeemable preferred stock as a part of the merger financings.
These warrants will be exercisable at nominal consideration for shares of our
common stock representing 5% of our total number of outstanding shares
following the merger.
Material satisfaction of the conditions to the provision of financing
commitments and the occurrence of the funding are conditions to the
consummation of the merger. Saturn Acquisition has agreed to use its
commercially reasonable best efforts to cause the financing commitments to be
fulfilled in accordance with their terms. Saturn Acquisition has also agreed
that it will have received on the closing, and will have on hand immediately
prior to the effective time of the merger, cash funds provided to it as equity
investments at least equal to the minimum cash equity requirements set forth
in the debt financing commitments. Investcorp Bank E.C., an affiliate of
Investcorp, has agreed to cause Saturn Acquisition to perform its obligations
under the merger agreement and to be liable in the event Saturn Acquisition
fails to perform any of its obligations.
Accounting Treatment
We expect that the merger will be accounted for as a recapitalization, as
opposed to a purchase. Accordingly, the historical cost bases of our assets
and liabilities will not be affected by the merger, and the aggregate amount
of cash paid to Jostens shareholders in the merger will be accounted for as a
reduction of shareholders' equity.
United States Federal Income Tax Considerations
The following is the opinion of our counsel, Skadden, Arps, Slate, Meagher
& Flom LLP as to the material United States federal income tax consequences of
the merger to shareholders of Jostens under current law. The following opinion
with respect to federal income tax consequences is based upon the Internal
Revenue Code, its
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<PAGE>
legislative history, existing and proposed Treasury regulations, judicial
authority and current administrative rulings and pronouncements of the
Internal Revenue Service as of the date of this proxy statement/prospectus,
all of which are subject to change, possibly with retroactive effect. The
opinion assumes that the merger and related transactions will take place in
accordance with all of the material terms and conditions of the merger
agreement and as described in this proxy statement/prospectus without the
waiver or modification of any such material terms or conditions. The opinion
does not address any foreign, state, or local tax consequences of the merger.
The opinion assumes that the Jostens common stock is held as a capital
asset for federal income tax purposes. Moreover, the opinion does not address
all tax consequences of the merger that may be relevant to shareholders of
Jostens in light of their particular circumstances or to some types of
shareholders subject to special treatment under United States federal income
tax law, including:
. tax-exempt entities,
. insurance companies,
. financial institutions,
. persons who acquired their shares of Jostens common stock by exercising
employee or director stock options or otherwise as compensation,
. dealers in securities or currencies,
. investors that hold Jostens common stock as part of a straddle or a
hedging or conversion transaction,
. foreign persons, and
. investors whose functional currency is not the U.S. dollar.
Furthermore, the opinion does not address the tax treatment of persons who
dissent from the merger.
You are urged to consult your own tax advisor as to the specific tax
consequences of the merger to you, including the applicable federal, state,
local and foreign tax consequences and applicable tax return reporting
requirements.
The Merger
The federal income tax consequences of the merger to you depend on your
particular circumstances. That is, your tax consequences depend on whether
you:
. retain all of your shares,
. exchange some of your shares for cash and retain some of your shares, or
. exchange all of your shares for cash in the merger.
If you exchange all or a portion of your shares for cash in the merger, the
federal income tax consequences of the merger to you will also depend on:
. the extent to which you are deemed to have sold a portion of your shares
to Investcorp and its co-investors, on the one hand, and the extent to
which you are deemed to have had the remainder of your shares redeemed by
Jostens, on the other hand, and
. whether any deemed redemption of your shares by Jostens constitutes, for
federal income tax purposes, a sale or exchange of such shares or a
dividend to the extent paid out of Jostens' current or accumulated
earnings and profits.
Shareholders Retaining Shares and Receiving No Cash
If you retain all of your shares of Jostens common stock and receive no
cash, the merger will not result in any federal income tax consequences to
you.
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<PAGE>
Shareholders Exchanging All or a Portion of Their Shares for Cash
As noted above under "Shareholders Retaining Shares and Receiving No Cash,"
the merger will not result in any federal income tax consequences to you with
respect to the shares of Jostens common stock, if any, that you retain.
The exchange of all or a portion of your shares for cash will be a taxable
transaction for federal income tax purposes. You will be treated for federal
income tax purposes as if you:
. sold a portion of your Jostens common stock to Investcorp and its co-
investors for cash, and
. had your remaining Jostens common stock redeemed by Jostens for cash.
There is no clear law explaining how you must allocate the cash you receive
between shares treated as having been sold and shares treated as having been
redeemed. In the absence of clear law, we intend to take the position that the
percentage of your shares of Jostens common stock that will be considered sold
to Investcorp and its co-investors is equal to:
. the aggregate amount of cash contributed to Saturn Acquisition by
Investcorp and its co-investors, divided by
. the aggregate amount of cash paid to holders of Jostens common stock in
the merger.
As explained below, your remaining shares of Jostens common stock exchanged
for cash should be treated as having been redeemed by Jostens. The IRS could
take a different approach in determining the percentage of your shares of
Jostens common stock which are treated as sold to Investcorp and its co-
investors, on the one hand, and treated as redeemed by Jostens, on the other
hand.
You will recognize capital gain or loss on the deemed sale for cash of your
shares of Jostens common stock to Investcorp and its co-investors equal to the
difference between the amount of cash you are considered to have received from
such persons and your adjusted tax basis in the shares of Jostens common stock
you are considered to have sold. Your gain or loss will be long-term capital
gain or loss if at the time of the sale you have held your shares of Jostens
common stock for more than one year.
Tests for Determining Whether the Redemption Constitutes a Sale or Exchange
Your shares of Jostens common stock that are considered to have been
redeemed by Jostens for cash will be treated as having been sold or exchanged
for cash if the redemption:
. is "substantially disproportionate,"
. is "not essentially equivalent to a dividend," or
. is a "complete termination" of your interest in Jostens.
In determining whether any of these tests has been met, you must take into
account the shares of stock you actually own and the shares of stock you
constructively own by reason of the constructive ownership rules set forth in
Section 318 of the Internal Revenue Code. Under the constructive ownership
rules, you will be deemed to own any shares of Jostens common stock that are
owned, actually and in some cases constructively, by certain related
individuals or entities, as well as any shares of Jostens common stock that
you have a right to acquire by exercise of an option or by conversion or
exchange of a security.
The deemed redemption of your shares by Jostens will be "substantially
disproportionate" if, among other things, the percentage of shares of Jostens
common stock outstanding that you actually or constructively own immediately
following the merger is less than 80% of the percentage of shares of Jostens
common stock outstanding that you actually and constructively owned
immediately prior to the merger.
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The deemed redemption of your shares of Jostens common stock will be "not
essentially equivalent to a dividend" if the reduction in your proportionate
interest in Jostens by reason of the merger constitutes a "meaningful
reduction" given your particular facts and circumstances. Depending upon your
specific facts and circumstances, even a small reduction in your proportionate
equity interest may satisfy this test. For example, the IRS has indicated in a
published ruling that a 3.3% reduction in the percentage interest of a
shareholder whose relative stock interest in a publicly held corporation is
minimal and who exercises no control over corporate affairs should constitute
a "meaningful reduction."
The deemed redemption of your shares of Jostens common stock will be a
"complete termination" of your interest in Jostens if (1) all of the shares of
Jostens common stock you actually own are purchased or redeemed pursuant to
the merger and (2) all of the shares of Jostens common stock you
constructively own are purchased or redeemed pursuant to the merger or, if
certain requirements are satisfied, you waive, in accordance with Section
302(c) of the Internal Revenue Code, attribution of those shares of Jostens
common stock which would otherwise be treated as constructively owned by you.
You should consult your tax advisor to determine whether, in your
particular circumstances, the deemed redemption of your shares of Jostens
common stock will be "substantially disproportionate," "not essentially
equivalent to a dividend" or a "complete termination" of your interest in
Jostens.
Meeting the Tests For Sale or Exchange Treatment
If you meet any of the tests set forth above for the redemption to be
treated as a sale or exchange of your shares of Jostens common stock, you will
recognize capital gain or loss on the redemption of your shares of Jostens
common stock equal to the difference between the amount of cash you are
treated as receiving from Jostens (as opposed to from Investcorp and its co-
investors) and your adjusted tax basis in the shares of Jostens common stock
considered to have been redeemed. Your gain or loss will be long-term capital
gain or loss if at the time of the redemption you have held your shares of
Jostens common stock for more than one year.
Failure to Meet the Tests for Sale or Exchange Treatment
If you do not meet any of the tests set forth above for the redemption to
be treated as a sale or exchange of your shares of Jostens common stock, the
cash you are considered to have received from Jostens will generally be taxed
as a dividend to the extent paid out of Jostens' current or accumulated
earnings and profits. Any amount in excess of our current or accumulated
earnings and profits would first reduce your tax basis in your shares of
Jostens common stock and thereafter would be treated as a capital gain. If you
are a corporation, you may be eligible for the dividends-received deduction,
subject to certain limitations.
Recapitalization Treatment
As described above, if you exchange all or a portion of your shares of our
common stock for cash, a portion of such cash will be treated as received from
Investcorp and its co-investors and the remaining portion will be treated as
received from Jostens in redemption of your shares. It is possible that the
IRS will try to characterize the cash you are treated as receiving from
Jostens as received in connection with a "recapitalization" of Jostens for
federal income tax purposes to the extent you hold Class A common stock after
the merger. If the IRS is successful, you would be treated as if you exchanged
all of your shares of Jostens common stock (other than the shares deemed sold
to Investcorp and its co-investors) for the new Class A common stock held by
you after the merger and the cash (or "boot" in the recapitalization) deemed
received from us in redemption of your shares. Accordingly, you would be
required to recognize gain with respect to all of your shares deemed
surrendered to us up to the full amount of cash deemed received from us in
redemption of your shares, and you would not be permitted to recognize any
loss. Your gain would be equal to the amount by which the sum of the cash
deemed received from us in redemption of your shares and the fair market value
of the new Class A common stock held by you following the merger exceeds your
adjusted tax basis in your shares deemed surrendered to us. The gain would be
treated as dividend income unless you meet any of the "substantially
disproportionate," "not
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<PAGE>
essentially equivalent to a dividend," or "complete termination" tests set
forth above, in which case the gain would be treated as capital gain. You are
urged to consult your own tax advisor regarding the specific tax consequences
of the merger to you if recapitalization treatment were to apply.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to payments made
in connection with the merger. Backup withholding at a rate of 31% will apply
to payments you receive in respect of your Jostens common stock if you fail to
provide an accurate taxpayer identification number or you are notified by the
IRS that you have failed to report all interest and dividends required to be
shown on your United States federal income tax returns. You should consult
your tax advisor concerning the application of information reporting and
backup withholding requirements to your particular circumstances.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against your United States federal income tax liability
provided the required information is furnished to the IRS.
Interests of Management Continuing Shareholders in the Merger
In considering the recommendation of the special committee and the board of
directors, you should be aware that some of Jostens' officers and directors
have interests in the merger as employees and/or directors of Jostens, or as
shareholders with a continuing equity interest in Jostens, that are different
from, or in addition to, your interests as a Jostens shareholder. In
particular, the Management Continuing Shareholders will retain some of their
Jostens shares, and none of their shares will be subject to proration or
eligible for election. When making the determination to approve and recommend
approval of the merger to Jostens public shareholders, both the Jostens board
and the special committee were aware of and took into consideration the
interests described below.
Treatment of Management Continuing Shareholders. Pursuant to the merger
agreement, the Management Continuing Shareholders will retain shares of our
common stock as follows:
<TABLE>
<CAPTION>
Name Number of Retained Shares
---- -------------------------
<S> <C>
Mr. Buhrmaster.................................. 93,205
Mr. Priesmeyer.................................. 28,034
Mr. Blowers..................................... 41,858
Mr. Bailey...................................... 15,913
Mr. Lea......................................... 9,522
-------
Total........................................... 188,532
</TABLE>
These shares represent approximately 0.6% of our currently outstanding
shares and will represent about 2.1% of the outstanding Jostens common stock
immediately following completion of the merger. These shares will be
automatically converted into the right to retain the same number of shares of
common stock, which will be redesignated as Class A common stock as of the
effective time of the merger, the same designation as the shares of common
stock to be retained by other existing Jostens shareholders. All other shares
held by Management Continuing Shareholders will be exchanged in the merger for
$25.25 in cash. None of the shares of common stock held by the Management
Continuing Shareholders will be subject to proration or eligible for election.
For additional information about the number of shares currently owned by each
of the Management Continuing Shareholders and the number of their shares that
will be exchanged for cash in the merger, see "THE MERGER--The Participants--
The Management Continuing Shareholders" on page 19.
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<PAGE>
At its meeting held on December 22, 1999, the Jostens board of directors
approved additional compensation for the Management Continuing Shareholders
for services to be rendered after the merger in connection with our transition
to new ownership, including managing the transition process from financial
reporting, public relations and sales and marketing perspectives, in an amount
equal to $2.5 million in the aggregate. It is anticipated that the $2.5
million will be allocated among the Management Continuing Shareholders as
follows:
. Mr. Buhrmaster $500,000
. Mr. Priesmeyer $800,000
. Mr. Blowers $400,000
. Mr. Bailey $500,000
. Mr. Lea $300,000
Treatment of Options. Some of our directors, officers and employees hold
options to acquire shares of our common stock under various stock option
plans. In the merger, all such outstanding options will be cancelled in
exchange for a cash payment from Jostens for each Jostens share subject to the
option equal to the excess, if any, of $25.25 over the per share exercise
price of the option.
The following table sets forth the cash amounts that directors and
executive officers of Jostens will receive in respect of their stock options
upon completion of the merger.
<TABLE>
<CAPTION>
Payment at the
Name Effective Time
---- --------------
<S> <C>
Lilyan H. Affinito....................................... $ 39,478
Michael L. Bailey........................................ 333,999
Carl H. Blowers.......................................... 290,182
Robert C. Buhrmaster..................................... 3,047,224
Jack W. Eugster.......................................... 25,166
Mannie L. Jackson........................................ 33,228
Brenda J. Lauderback..................................... 12,750
Gregory S. Lea........................................... 379,417
Kendrick B. Melrose...................................... 22,856
William N. Priesmeyer.................................... 285,337
Richard A. Zona.......................................... 22,856
</TABLE>
Severance Arrangements. The merger will be deemed to be a "change in
control" under our Executive Change In Control Severance Pay Plan as well as
other plans we currently have in place. Some of our executive officers will be
entitled to receive benefits, as described below, under the Executive Change
In Control Severence Pay Plan if they are terminated:
. within 24 months of the effective time of the merger; or
. before the effective time of the merger if the termination was either a
condition of the merger or at the request or insistence of a person
related to the merger.
Persons covered by the severance plans are not considered "terminated" for
purposes of the plan if they die or are terminated for "Cause." "Cause" is
defined as the executive's:
. gross misconduct;
. willful and continued failure to perform substantially his duties after a
demand is delivered to the executive by the chairman of the board; or
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<PAGE>
. conviction for willfully engaging in illegal conduct constituting a
felony or gross misdemeanor which is materially and demonstrably
injurious to Jostens or which impairs the executive's ability to perform
substantially his duties.
An executive will be considered "terminated" for purposes of the plan if
the executive voluntarily terminates his employment with Jostens for "Good
Reason." "Good Reason" means:
. a change that, in the executive's reasonable judgment, is adverse in
title, status, position, authority, duties or responsibilities as in
effect at any time during the 90-day period ending on the effective time
of the merger, other than any change directly attributable to the fact
that we are no longer publicly owned;
. a reduction or adverse change in base pay as in effect immediately prior
to the effective time of the merger or as thereafter increased or a
reduction in the target annual incentive award as in effect prior to the
effective time;
. failure to cover the executive under similar benefit plans at a
substantially similar total cost to the executive;
. relocation to more than 30 miles from the executive's existing office;
. a termination of the executive's employment by Jostens other than for
"Cause"; or
. our refusal to allow the executive to continue to attend to matters or
engage in activities not directly related to our business which were not
prohibited prior to the effective time of the merger.
The executive is entitled to receive the following payments and benefits
upon the triggering of the plan:
. a cash payment equal to the sum of the executive's base pay plus the
greater of the executive's target annual incentive award for the fiscal
year during which the termination occurs or the average amount of the
executive's actual annual incentive award for the three fiscal years
ending prior to the termination date, multiplied by three, in the case of
Mr. Buhrmaster; two, in the case of Messrs. Priesmeyer, Blowers and
Bailey; one and one-half in the case of Mr. Lea and any other vice
president elected by our board of directors; and one and one-quarter, in
the case of any other participant;
. a lump sum cash payment in an amount equal to the amount by which the
actuarially equivalent lump sum value of the executive's hypothetical
pension benefit, based on additional years of service, as determined by a
formula set forth in the plan, under our pension plans exceeds the
actuarial equivalent lump sum value of the benefit which the executive is
actually entitled to receive under our pension plans;
. a cash payment, if any, sufficient to cover all penalties and any tax
obligations arising from any "golden parachute" excise taxes usually
called a "Gross-up Payment";
. continuation of medical, dental, vision and life insurance and other
benefits for 15-36 months, depending on the executive's position, from
the date of termination or, if earlier, one month from the date the
executive commences full-time employment; and
. retiree health benefits under our benefit plans beginning when the
participant reaches age 55, provided the participant satisfies the
applicable age and service requirements after being credited with
additional years of service and additional years of age, as determined by
a formula set forth in the plan.
The merger will also be deemed a "change in control" under our Executive
Supplemental Retirement Agreements with a number of executives. As a result of
the merger, those executives, for the purposes of calculating their
supplemental retirement benefit, will be credited with a minimum of seven
years of service as an officer and if any such executive is terminated, other
than by reason of total disability, on or after the date of the merger but
before satisfying the age requirement, he will nevertheless be entitled to
receive the supplemental retirement benefit upon attaining the age of 55. The
benefit is a monthly payment equal to one percent of the annual base salary
that the participant is receiving at the time his employment with us is
terminated times the number of years of service, divided by 12.
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<PAGE>
The following table illustrates the amount of lump sum payments that each
executive would be entitled to receive if his employment were terminated
within 24 months of the effective time of the merger, assuming the effective
time was May 10, 2000:
<TABLE>
<CAPTION>
Estimated Amount Estimated Excise Tax
Name of Payment (1) Gross-Up Payment (2)
---- ---------------- --------------------
<S> <C> <C>
Robert C. Buhrmaster................ $2,950,000 $1,710,000
William N. Priesmeyer............... 1,310,000 960,000
Carl H. Blowers..................... 1,090,000 560,000
Michael L. Bailey................... 850,000 710,000
Gregory S. Lea...................... 570,000 390,000
</TABLE>
- --------
(1) Includes only amounts attributable to salary severance, bonus severance,
enhanced pension and welfare benefits and a lump sum cash payment with
respect to the enhanced pension benefit described above.
(2) Payment is based on all potential parachute payments (e.g., all cash
payments, a parachute value attributable to the accelerated vesting of
stock options and enhanced pension and welfare benefits).
Acceleration of Restricted Stock Awards. Pursuant to our Executive Stock
Purchase Program, some of our executive officers obtained loans, the proceeds
of which were used to purchase shares of our common stock. We matched these
purchases by awarding shares of restricted stock equal to 15% of the number of
shares purchased under the program. As a result of the merger, the loans will
become due and payable and any unvested shares of restricted stock will become
immediately vested. In addition, some of our employees have received
restricted stock awards in connection with their annual performance bonuses.
Any unvested restricted shares will immediately vest as a result of the
merger.
CEO Protection for Management. If, in the first year after the effective
time of the merger, Mr. Buhrmaster is terminated without Cause or leaves
Jostens for Good Reason, each of the other Management Continuing Shareholders
will be entitled to resign within 60 days of such event. In such case, such
Management Continuing Shareholder would be entitled to receive the same
benefits that he would have received under our benefit plans as in effect
immediately prior to the effective time of the merger as if a change in
control had occurred and such executive resigned for Good Reason.
Employment Arrangements. Mr. Buhrmaster and Investcorp have delivered term
sheets to us describing the employment agreements and equity participation of
each of the Management Continuing Shareholders following the effective time of
the merger. Pursuant to the term sheets, following the effective time of the
merger:
. Mr. Buhrmaster will serve as our Chief Executive Officer and will
receive an annual base salary of $567,000;
. Mr. Priesmeyer will serve as Senior Vice President and Chief Financial
Officer and will receive an annual base salary of $281,960;
. Mr. Blowers will serve as Senior Vice President--Manufacturing and will
receive an annual base salary of $271,337;
. Mr. Bailey will serve as Senior Vice President and General Manager--
School Solutions and will receive an annual base salary of $270,000; and
. Mr. Lea will serve as Vice President and General Manager--Business
Ventures and will receive an annual base salary of $208,600.
Under the term sheets, the salaries of each such officer will be subject to
adjustment pursuant to an annual review by our board of directors.
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<PAGE>
The Term Sheets also provide for an annual bonus to be paid to each of the
Management Continuing Shareholders. Based upon achievements of specific EBITDA
targets, Mr. Buhrmaster will be entitled to a standard bonus equal to 60% of
his base salary up to a maximum amount of 200% of standard bonus. No bonus
will be paid to Mr. Buhrmaster if Jostens fails to achieve specified
performance levels. Based upon achievements of specific EBITDA targets,
Messrs. Priesmeyer, Blowers, Bailey and Lea will be entitled to a standard
bonus as determined by the chief executive officer and the board of directors,
in maximum amounts of 200% of their standard bonus. Similarly, no bonus will
be paid to them if Jostens fails to achieve specified minimum performance
levels.
New Stock Option Plan. Following the merger, we intend to adopt a new Stock
Option Plan. The number of shares that will be available to be awarded under
the Stock Option Plan will be approximately 7.5% of the shares of our capital
stock outstanding immediately after the effective time, determined without
taking into account any shares that may be issued following the merger,
including shares issued or issuable upon exercise of options granted under the
Stock Option Plan or upon exercise of warrants to be issued to purchasers of
redeemable preferred stock. We expect to grant options to purchase
approximately 5.6% of such shares, determined on such basis, to the Management
Continuing Shareholders upon completion of the merger. We will reserve the
remaining approximately 1.9% of such shares, determined on such basis, for the
grant of options under the plan to our current or future officers and
employees.
The Stock Option Plan will be administered by our board of directors or a
committee designated by the board. The board will designate which of our
officers and employees will be eligible to receive awards under the Stock
Option Plan, and the amount, timing and other terms and conditions applicable
to such awards. Options will be exercisable in accordance with the terms
established by the board. In the case of Mr. Buhrmaster, 40% of his options
will vest irrespective of such terms if Mr. Buhrmaster is terminated within
two years after completion of the merger, except for a termination for Cause
or a resignation without Good Reason. Options will expire on the date
determined by the board, which will not be later than 30 days after the
seventh anniversary of the grant date. Under the Stock Option Plan, an
optionee will have rights to put to us, and we will have rights to call from
the optionee, vested stock options issued to the optionee under the Stock
Option Plan upon termination of the optionee's employment prior to a public
offering of Jostens common stock.
Special Success Option. The Term Sheets further provide that, in the event
of either a sale of Jostens or a public offering of our securities, we will
grant to the Management Continuing Shareholders options to purchase 1% of our
common stock on a fully diluted basis, without taking into account any shares
that may be issued following the merger, other than any shares that may be
issued upon exercise of the options granted under the Stock Option Plan, and
without taking into account any shares that may be issued upon exercise of the
warrants to be issued to purchasers of the redeemable preferred stock. In the
event of a sale of Jostens, the options would be immediately exercisable. In
the event of a public offering of our securities, the options would be
exercisable for a period of two years beginning one year after the date of the
public offering. In either case, the options are exercisable only if
Investcorp realizes a specified rate of return in such transaction on its
investment in Jostens. In either case, we would allocate such options to the
Management Continuing Shareholders who are still employed by us at the time of
such sale or offering based upon the recommendation of our chief executive
officer, subject to the approval of our board.
Stock Purchase Program. Following the effective time of the merger, we
expect to permit the Management Continuing Shareholders to purchase additional
shares of our common stock for $25.25 per share, the amount of cash
consideration payable to our shareholders in the merger. We will also loan the
Management Continuing Shareholders up to $500,000 per person to purchase any
such additional shares of our common stock following the merger.
Stock Loan Program. At the effective time of the merger, we intend to adopt
a stock loan program to make loans to the Management Continuing Shareholders
in amounts up to 100% of their currently outstanding loans, the proceeds of
which were used to purchase shares of our common stock, to permit them to
retain up to 100% of their current share ownership. Loans made under the stock
loan program will bear interest at our cost of funds
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<PAGE>
under the revolving credit facility that we will enter into upon the merger,
and will be recourse loans. The loans will be payable according to a schedule
recommended by our Chief Executive Officer. However, an individual's loan will
be repayable in whole upon termination of his employment. Loans will be
secured by the shares of our capital stock owned by such individual, and we
will require each individual to enter into a pledge agreement and to execute a
secured promissory note. It is currently expected that the Management
Continuing Shareholders will borrow the following amounts under the Stock Loan
Program:
<TABLE>
<CAPTION>
Name Expected Borrowing
---- ------------------
<S> <C>
Mr. Buhrmaster......................................... $1,010,025
Mr. Priesmeyer......................................... 368,499
Mr. Blowers............................................ 0
Mr. Bailey............................................. 291,158
Mr. Lea................................................ 105,318
----------
Total.................................................. $1,775,000
</TABLE>
Long-Term Incentive Program. We intend to adopt a long-term incentive plan
following the merger. Pursuant to this program, specified members of current
management other than the Management Continuing Shareholders will be entitled
to cash bonuses in the event we exceed specified performance-based targets.
These performance targets are primarily based on achieving specified annual
levels of EBITDA. Current members of management, other than Management
Continuing Shareholders, may receive long-term incentive awards of up to 100%
of their annual salary, dependent on achieving these EBITDA-based targets. The
long-term incentive awards will be paid out 50% at the end of 2002, with the
remaining portion of the award paid out in subsequent years. A participant's
right to be paid under this long-term incentive program is subject to
forfeiture if such participant is terminated for Cause or resigns without Good
Reason. Amounts payable under the long-term incentive program would be reduced
by any amount payable under our Executive Change in Control Severance Plan.
Indemnification and Insurance. Pursuant to the merger agreement, for six
years after the closing date of the merger, Jostens will indemnify and hold
harmless our present and former officers and directors for acts or omissions
occurring before the completion of the merger to the extent provided under our
articles of incorporation and by-laws in effect on the date of the merger
agreement. In addition, all indemnification agreements with any current or
former directors, officers and employees of Jostens or any subsidiary will
survive the merger and terminate as provided in such agreements. For six years
after the completion of the merger, Jostens will provide officers' and
directors' or fiduciary liability insurance for acts or omissions occurring
before the completion of the merger covering each such person currently
covered by our officers' and directors' or fiduciary liability insurance
policy on terms with respect to coverage and amount no less favorable than
those in effect on the date of the merger agreement, provided, that the cost
of such insurance does not exceed 200% of the most recent annual premium paid
by us.
Executive Officers and Directors of Saturn Acquisition Corporation
Saturn Acquisition is an acquisition vehicle established solely to
consummate the merger. Its executive officers are Charles J. Philippin,
Charles K. Marquis and David A. Tayeh, who have been appointed Chief Executive
Officer and President, Vice President and Chief Financial Officer and Vice
President and Secretary of Saturn Acquisition, respectively, in order to
complete the merger. Other than as set forth below, none of these individuals
have any interest in the merger other than as an executive and employee of
Investcorp. Messrs. Philippin, Marquis and Tayeh currently comprise the board
of directors of Saturn Acquisition. It is expected that prior to the merger,
Mr. Buhrmaster, as well as Mr. Robert G. Sharp, who is a designee of DB
Capital Investors, and Messrs. Savio W. Tung and James O. Egan, who are
additional designees of Investcorp will be elected as directors of Saturn
Acquisition, and that all of the directors of Saturn Acquisition will continue
as directors of Jostens after the merger. After the merger, the Management
Continuing Shareholders will continue as executive officers of Jostens, each
in the same capacity that such person currently serves.
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<PAGE>
THE MERGER AGREEMENT
This section is a summary of the material provisions of the merger
agreement. Because it is a summary, it does not include all the information
that may be important to you. We encourage you to read carefully the entire
copy of the merger agreement, which, with the exception of some exhibits, is
attached as Appendix A to this document, before you decide how to vote.
The Merger
The merger agreement requires that our shareholders approve the merger and
the adoption of the merger agreement by the vote of a majority of our
outstanding shares of common stock. Following the receipt of this approval and
the satisfaction or waiver of the other conditions to the merger, Saturn
Acquisition, a company controlled by Investcorp, will be merged with and into
Jostens, and Jostens will continue as the surviving corporation in the merger.
As a result of the merger, Jostens will be approximately 94% owned by
affiliates of Investcorp, its co-investors and the Management Continuing
Shareholders. We anticipate that the merger will occur as promptly as
practicable after our special meeting.
You may find more information regarding the merger consideration in the
following sections of this proxy statement/prospectus: "THE MERGER--Merger
Consideration" on pages 34 through 37, "THE MERGER--Non-Cash Election
Procedure" on pages 37 through 38, "THE MERGER--Conversion/Retention of
Shares; Procedures for Exchange of Certificates" on page 38 and "THE MERGER--
Fractional Shares" on page 38. You may find information regarding the
treatment in the mergers of outstanding Jostens stock options under "THE
MERGER--Treatment of Existing Stock Options" on page 38. For a discussion of
the treatment of dissenting shares, see "DISSENTERS' RIGHTS" on pages 64
through 67.
Closing; Effective Time
The closing of the merger will take place on the first business day after
all of the closing conditions have been satisfied or waived unless Jostens and
Saturn Acquisition agree upon another time. The closing of the merger is
expected to take place shortly after the approval of our shareholders at the
special meeting, which is scheduled to be held on May 9, 2000. On the closing
date, Saturn Acquisition and Jostens will file duly executed articles of
merger or other appropriate documents with the Secretary of State of the State
of Minnesota. The merger will be completed and effective upon the filing and
acceptance of the articles of merger with the Secretary of State of the State
of Minnesota, or at such later date as Saturn Acquisition and Jostens agree
upon and specify in the articles of merger.
Surviving Corporation
Jostens will be the surviving corporation of the merger. After the merger,
our amended and restated articles of incorporation attached hereto as Appendix
D and the bylaws of Saturn Acquisition, as in effect immediately prior to the
merger, will be the articles of incorporation and bylaws of the surviving
corporation, until thereafter further amended as provided by law. The initial
directors of Jostens following the merger will be the directors of Saturn
Acquisition at the effective time of the merger. The directors of Saturn
Acquisition at the effective time of the merger are expected to be Messrs.
Philippin, Marquis, Tayeh, Buhrmaster, Sharp, Tung and Egan. The Jostens board
after the merger will be subject to change from time to time. The merger
agreement also provides that our officers at the effective time of the merger
will be officers of Jostens following the merger, subject to change from time
to time. See "THE MERGER--Executive Officers and Directors of Saturn
Acquisition Corporation" on page 48 and "PRINCIPAL SHAREHOLDERS AND STOCK
OWNERSHIP OF MANAGEMENT AND OTHERS" on pages 68 through 69 for more
information on our directors and officers after the merger.
49
<PAGE>
Representations and Warranties
The merger agreement contains customary representations and warranties of
Jostens relating, with respect to Jostens and its subsidiaries, to, among
other things:
. its organization, standing and similar corporate matters;
. its capital structure;
. its subsidiaries;
. authorization, execution, delivery and enforceability of the merger
agreement and approval and recommendation of its board with respect to
the merger agreement and the merger;
. noncontravention of its governing documents and its agreements and
required consents, approvals and notices in its agreements;
. receipt of governmental approvals;
. proper filing of all required SEC reports by Jostens and the accuracy of
information contained in those documents;
. the accuracy of information supplied by Jostens in connection with this
proxy statement/prospectus;
. the absence of certain changes or events since September 30, 1999,
including those that would have a material adverse effect on Jostens;
. finders' fees and expenses;
. the required vote of Jostens shareholders;
. the absence of pending or threatened material litigation;
. filing of tax returns and payment of taxes;
. compliance with applicable laws and required consents, approvals,
licenses, permits, orders and authorizations of governmental entities
relating to the merger agreement;
. environmental liabilities and compliance with environmental laws;
. employment agreements;
. benefit plans and other matters relating to the Employee Retirement
Income Security Act of 1974, as amended, and employment matters;
. labor relations matters;
. ownership of or rights to use its intellectual property;
. real property and other real estate related matters, including title to
owned real property;
. receipt of an opinion of Jostens' financial advisor;
. non-applicability of state takeover laws; and
. the effect of the execution of the merger agreement and the merger on
Jostens' rights plan.
The merger agreement also contains customary representations and warranties
of Saturn Acquisition relating to, among other things:
. its organization, standing and similar corporate matters;
. the authorization, execution, delivery and enforceability of the merger
agreement;
. noncontravention of its governing documents and its agreements and
required consents, approvals and notices in its agreements;
. receipt of governmental approvals;
. the accuracy of information supplied by Saturn Acquisition in connection
with this proxy statement/prospectus;
50
<PAGE>
. its financing commitments;
. the term sheets relating to the employment arrangements and equity
participation of the Management Continuing Shareholders; and
. its share ownership in Jostens.
All of the representations and warranties are subject to various
qualifications and limitations, including qualifications as to materiality.
The representations and warranties in the merger agreement do not survive the
closing of the merger or termination of the merger agreement.
Conduct of Business of Jostens Prior to the Merger
We and our subsidiaries are subject to restrictions on our conduct and
operations until the completion of the merger. We have agreed, and have agreed
to cause our subsidiaries, to conduct our business only in the ordinary course
and consistent with past practices, and use reasonable efforts to preserve
intact our business organization, to keep available the services of our
present officers and employees and to maintain satisfactory relationships with
their licensors, suppliers, contractors, distributors, customers and others
having business dealings with us. Accordingly, we have agreed with limited
exceptions and except to the extent the merger agreement contemplates
otherwise or with the prior written consent of Saturn Acquisition, that we
will not, and will cause our subsidiaries not to, take any of the following
actions:
. amending organizational documents;
. authorizing, issuing, selling, pledging, encumbering or delivering any
shares of our capital stock or any securities convertible into or
exchangeable for shares of capital stock, other than as required by any
existing employee stock incentive or benefit plan;
. splitting, combining, or reclassifying any of our capital stock; or
declaring or paying any dividends or distributions, other than our
regular quarterly dividends of $0.22 per share; or redeeming capital
stock;
. incurring indebtedness or making any guarantees of indebtedness of
another person;
. acquiring, selling, leasing, encumbering, transferring or disposing of
assets;
. making any material tax elections or settling any tax liabilities;
. modifying, amending or terminating any material contracts or agreements
and settling any suits or claims against us, or paying any settlements;
. changing accounting principles, methods or practices;
. adopting any plan of liquidation, dissolution, consolidation,
restructuring, recapitalization, reorganization or merger;
. changing credit policies as to inventories or receivables;
. entering into any collective bargaining agreement; and
. taking or agreeing to take any of the foregoing or taking any action that
would make the representations or warranties untrue or incorrect.
Investcorp Bank E.C., an investment bank incorporated in the State of
Bahrain and an affiliate of Investcorp, has agreed to cause Saturn Acquisition
to perform all of its obligations and agreements under the merger agreement,
including its agreements with respect to its capitalization at the time of the
merger, and has expressly agreed to be liable in the event Saturn Acquisition
fails to perform any of its obligations or agreements under the merger
agreement. Investcorp Bank E.C.'s agreement terminates immediately following
the effectiveness of the merger.
Limitations on Solicitation of Competing Transactions
The merger agreement prevents us from, directly or indirectly, soliciting,
knowingly encouraging, participating in or initiating discussions or
negotiations with, or providing any information to, any person or group
besides Saturn Acquisition or its affiliates or associates concerning any
merger, sale of assets, sale of
51
<PAGE>
shares of capital stock or similar transaction involving us or any of our
subsidiaries or divisions, with limited exceptions. The merger agreement
provides that these restrictions will not prohibit us from furnishing
information and access pursuant to an appropriate confidentiality agreement or
participating in discussions and negotiations with a person or group if we
receive a proposal for an alternative transaction. For purposes of the merger
agreement, a transaction will be considered an "alternative transaction" if:
. we receive an unsolicited inquiry or proposal from any person or group
for the acquisition of all or substantially all of our assets or
outstanding shares which our board reasonably believes in good faith is
capable of being completed, taking into account all legal, financial,
regulatory and other aspects of the proposal and the person making it;
and
. our board determines in good faith, after consultation with outside
counsel, that failing to respond to such inquiry or proposal would be
reasonably likely to be inconsistent with its fiduciary duties to our
shareholders.
Even if we are allowed to provide information and access to another person
or group as described above, we may terminate the merger agreement and engage
in the alternative transaction only if it constitutes a "superior proposal."
See "--Termination" on page 54.
In any event, we are required to promptly notify Saturn Acquisition if any
discussions or negotiations are sought to be initiated, any inquiry or
proposal is made, or any information is requested in respect of any such
transaction. We must promptly communicate to Saturn Acquisition the terms of
any material proposal, discussion, negotiation or inquiry which we receive in
respect of any transaction and the identity of the offeror. We also have
agreed not to release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which we may be a party, unless our
board determines in good faith that failing to release such third party or
waive such provisions would be reasonably likely to be inconsistent with its
fiduciary duties to our shareholders.
Access and Information
Subject to applicable provisions regarding confidentiality, we have agreed
in the merger agreement to, and to cause our subsidiaries to, afford Saturn
Acquisition and its representatives reasonable access during normal business
hours to all properties, contracts, commitments, personnel, books and records.
We have also agreed to furnish Saturn Acquisition with all state and federal
securities filings, monthly financial statements and all other information
regarding our business, properties, assets and personnel as Saturn Acquisition
may from time to time reasonably request.
Reasonable Efforts and Cooperation
Pursuant to the merger agreement, Jostens and Saturn Acquisition have
agreed to cooperate with each other and to use their respective reasonable
efforts to take all actions necessary, proper or advisable so that the
transactions contemplated by the merger agreement may be completed, including
cooperation in the arrangement of financing.
Delisting from NYSE
Pursuant to the merger agreement, Jostens and Saturn Acquisition have each
agreed to cooperate with each other in taking all actions necessary to delist
the Jostens common stock from the NYSE after the effective time of the merger.
Fulfillment of Financing Commitments
Saturn Acquisition has agreed that it will have received on the closing
date, and will have on hand immediately prior to the effective time of the
merger, cash funds provided to it as equity in amounts at least
52
<PAGE>
equal to the minimum cash equity requirements set forth in the debt financing
commitments. Saturn Acquisition has agreed to use its commercially reasonable
best efforts to cause the financing commitments to be fulfilled in accordance
with their terms. For a description of such financing commitments, see "THE
MERGER--Merger Financing" on pages 38 through 39.
Indemnification and Insurance
Following the merger, the articles of incorporation and by-laws of the
surviving corporation and its subsidiaries will contain indemnification and
exculpation provisions at least as favorable to the beneficiaries of such
provisions as are contained in our and our subsidiaries' articles of
incorporation and by-laws in effect when the merger agreement was signed,
respectively. These indemnification and exculpation provisions will not be
amended, repealed or otherwise modified for a period of six years from the
effective time of the merger in any manner that would adversely affect the
rights of persons who at the effective time were directors, officers,
employees or agents of Jostens. In addition, Saturn Acquisition has agreed to
cause Jostens to honor any existing indemnification agreements with any of our
or our subsidiaries' current or former directors, officers or employees as in
effect as of the date of the merger agreement.
The surviving corporation will cause to be maintained in effect for not
less than six years from the effective time of the merger, policies of the
directors' and officers' and fiduciary liability insurance no less
advantageous than those in effect as of the date of the merger. The surviving
corporation is not obligated to pay annual premiums for such insurance in
excess of 200% of the last annual premium paid prior to the date of the merger
agreement.
In addition, the surviving corporation will indemnify our and our
subsidiaries' directors, officers and employees, to the fullest extent
permitted by law, in respect of all actions arising out of the merger.
Rights Agreement
In connection with our execution of the merger agreement, we amended the
rights agreement, dated as of July 23, 1998, by and between us and Norwest
Bank, as rights agent, to provide that:
. neither Saturn Acquisition nor its affiliates will become an acquiring
person, as such term is defined in the rights agreement;
. the execution and delivery of the merger agreement will not give rise to
a distribution date or a triggering event, as such terms are defined in
the rights agreement; and
. no holder of rights shall be entitled to exercise such rights as a result
of the execution and delivery of the merger agreement.
The amendment of the rights agreement has been approved by our board with
the concurrence of a majority of our independent directors, as such term is
defined in the rights agreement.
Conditions to the Consummation of the Merger
The respective obligations of Jostens and Saturn Acquisition to complete
the merger are subject to the fulfillment of the following conditions at or
prior to the effective time of the merger:
. approval of the merger agreement by the holders of a majority of Jostens
outstanding shares;
. absence of any order, injunction, judgment, writ, determination, decree,
law, statute, rule or regulation of any court or governmental entity or
other legal restraint, requirement or prohibition preventing the
consummation of the merger, provided that Jostens and Saturn Acquisition
are required to use their reasonable efforts to have any such injunction,
order, restraint, requirement or prohibition vacated; and
. the registration statement of which this proxy statement/prospectus is a
part will have become effective under the Securities Act and shall not be
the subject of any stop order or proceeding seeking a stop order.
53
<PAGE>
In addition, the obligation of Saturn Acquisition to complete the merger is
subject to the following conditions in addition to customary closing
conditions:
. Saturn Acquisition shall have received a statement from Jostens
certifying that it is not a United States Real Property Holding
Corporation; and
. all of the conditions to the provision of financing set forth in the
financing commitments, except any provisions regarding the payment of
fees within the control of Saturn Acquisition and/or relating to the
provision of equity, must have been satisfied in all material respects
and the funding must have occurred.
Our obligations to complete the merger are further subject to customary
closing conditions and the condition that Saturn Acquisition or Jostens shall
have sufficient funds to consummate the merger at or prior to the effective
time of the merger. Because no material federal or state regulatory approvals
are required in connection with the merger, completion of the merger is not
conditioned upon receipt of any such approvals.
Termination
The merger agreement may be terminated and the merger may be abandoned at
any time prior to the completion of the merger, whether or not it has been
approved by our shareholders:
. by mutual written consent of Saturn Acquisition and Jostens;
. by either Saturn Acquisition or Jostens:
. if a court or other governmental entity has issued an order or taken
any other action permanently restraining, enjoining or otherwise
prohibiting the merger that has become final and nonappealable; or
. if the merger has not been completed on or prior to June 30, 2000,
unless the party seeking to terminate the merger agreement has caused
the failure of completion by failing to perform any of its
obligations under the merger agreement; or
. in the event of a material breach by the other party of the merger
agreement which has not been cured within 30 days after the breaching
party receives written notice of the breach and which is incapable of
being cured prior to June 30, 2000;
. By Jostens, if prior to the completion of the merger, we receive a
superior proposal and our board determines in good faith, after
consultation with outside counsel, that the failure to accept the
superior proposal would be reasonably likely to be inconsistent with its
fiduciary duties to our shareholders.
A proposal for an alternative transaction will be deemed to be a
"superior proposal" under the merger agreement only if:
. it is an "alternative transaction" as described in "THE MERGER
AGREEMENT--Limitations on Solicitation of Competing Transactions" on
pages 51 through 52; and
. our board reasonably believes in good faith, after consultation with
its outside counsel and financial advisors, that the alternative
transaction is more favorable to our shareholders than the merger.
. By Saturn Acquisition, if our board of directors:
. withdraws, modifies or amends in any respect adverse to Saturn
Acquisition its approval or recommendation of the merger agreement or
the merger,
. recommends another proposal for an alternative transaction, or
. resolves to do any of the foregoing.
In the event of termination of the merger agreement by either Jostens or
Saturn Acquisition, the merger agreement will terminate, without any liability
or obligation on the part of Jostens or Saturn Acquisition, other than
specified provisions in the merger agreement relating to payment of fees and
expenses, certain confidentiality provisions and liability for any willful
breaches of the merger agreement. See "--Fees and Expenses."
54
<PAGE>
Fees and Expenses
The merger agreement obligates us to pay a fee to Saturn Acquisition equal
to $19.125 million if:
. we terminate the merger agreement to accept a "superior proposal" as
described in "--Termination" on page 54, or
. Jostens or Saturn Acquisition terminates the merger agreement because the
merger has not been completed by June 30, 2000 because:
. our shareholders do not approve the merger at the special meeting;
. at the time of the special meeting, a proposal for an alternative
transaction is pending or has been publicly announced and not
withdrawn; and
. within twelve months of the special meeting, we enter into a
definitive agreement for an alternative transaction, which is
subsequently consummated or an alternative transaction is otherwise
consummated.
In addition, if the termination fee becomes payable, we have agreed to
reimburse Saturn Acquisition for all actual incurred out-of-pocket fees and
expenses incurred by or on behalf of Saturn Acquisition in connection with the
merger up to $5.0 million in the aggregate. Except as otherwise provided
above, all costs and expenses incurred in connection with the merger agreement
and the transactions contemplated thereby shall be paid by the party incurring
the expenses.
Amendment and Waiver
The merger agreement may be amended by action taken by Jostens and Saturn
Acquisition at any time before or after approval of the merger by our
shareholders. However, after approval by our shareholders, the parties may not
amend the merger agreement in any way which changes the form or decreases the
amount of the consideration per share to be paid in the merger, which changes
any term of the articles of incorporation of the surviving corporation or
which otherwise adversely affects the rights of our shareholders under the
merger agreement. At any time prior to the effective time of the merger,
Saturn Acquisition or Jostens may, subject to the immediately preceding
sentence, waive compliance by the other party with any of the obligations,
covenants, agreements or conditions contained in the merger agreement. Any
waiver must be in writing signed by the party granting the waiver. Jostens and
Saturn Acquisition currently do not intend or expect to amend or waive any of
the material agreements or conditions in the merger agreement. In the unlikely
event that Jostens waives any material agreement or condition to its
obligations, we will issue a press release announcing such waiver and will
provide our shareholders with supplemental proxy materials to the extent
required by applicable law.
55
<PAGE>
SELECTED CONSOLIDATED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA OF
JOSTENS, INC.
The table below sets forth selected consolidated historical and unaudited
pro forma financial data relating to Jostens. The selected consolidated
historical financial data as of January 2, 1999 and January 1, 2000 and for
each of the three years in the period ended January 1, 2000 have been derived
from, and should be read in conjunction with, our audited consolidated
financial statements and the notes thereto incorporated herein by reference to
our Annual Report on Form 10-K for the year ended January 1, 2000 filed with
the SEC. The selected consolidated historical financial information with
respect to the six month period ended December 28, 1996 and for the years
ended June 30, 1996 and 1995 have been derived from the consolidated financial
statements of Jostens that are not included or incorporated by reference
herein.
The unaudited pro forma consolidated financial data set forth below, as
adjusted to give effect to the merger and the merger financing, have been
derived from, and should be read in conjunction with, the unaudited pro forma
consolidated financial statements and the notes thereto appearing elsewhere in
this proxy statement/prospectus. See "Unaudited Pro Forma Condensed
Consolidated Financial Statements" beginning on page 58. The unaudited pro
forma consolidated balance sheet information gives effect to the merger and
the merger financing as if each had occurred on January 1, 2000. The unaudited
pro forma consolidated statement of operations information gives effect to the
merger and the merger financing as if each had occurred on January 2, 1999 and
excludes nonrecurring items directly attributable to the merger. The selected
unaudited pro forma consolidated financial data are not necessarily indicative
of the consolidated operating results or financial position that would have
occurred if the merger had been consummated on the dates indicated, nor are
they necessarily indicative of future operating results or financial position.
The pro forma adjustments were applied to the historical consolidated
financial statements to reflect and account for the merger as a
recapitalization. Accordingly, the historical basis of our assets and
liabilities have not been impacted by the merger.
56
<PAGE>
JOSTENS, INC.
SELECTED CONSOLIDATED HISTORICAL & UNAUDITED PRO FORMA FINANCIAL DATA
Dollars in millions
(Except share and per share data)
<TABLE>
<CAPTION>
Year ended Six months Year ended Pro Forma
------------------ ended -------------------------------- ---------
June 30, June 30, December 28, January 3, January 2, January 1, January
1995 1996 1996(6) 1998 1999 2000 1, 2000
-------- -------- ------------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net sales.............. $ 665.1 $ 695.1 $ 277.1 $ 742.5 $ 770.9 $ 782.4 $782.4
Cost of products sold.. 313.7 332.2 141.5 351.3 351.8 349.7 349.7
------- ------- ------- ------- ------- ------- ------
Gross margin........... 351.4 362.9 135.6 391.2 419.1 432.7 432.7
Selling and
administrative
expenses ............. 256.8 268.1 131.5 291.5 316.9 330.8 332.3
Special charge......... -- -- -- -- -- 20.2 20.2
------- ------- ------- ------- ------- ------- ------
Operating income....... 94.6 94.8 4.1 99.7 102.2 81.7 80.2
Net interest expense... 0.7 7.3 4.1 6.3 6.7 7.0 83.3
Write-off of JLC notes
receivable, net (1)... -- -- -- -- 12.0 -- --
------- ------- ------- ------- ------- ------- ------
Income from continuing
operations before
income taxes.......... 93.9 87.5 -- 93.4 83.5 74.7 (3.1)
Income taxes (1)....... 38.0 35.9 0.8 36.2 41.7 31.5 0.4
------- ------- ------- ------- ------- ------- ------
Net income (loss) from
continuing
operations............ 55.9 51.6 (0.8) 57.2 41.8 43.2 (3.5)
Discontinued
operations (2):
Loss from operations,
net of tax.......... (4.9) -- -- -- -- -- --
Cumulative effect of
changes in accounting
principle, net of tax
(3)................... (0.6) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------
Net income (loss)...... 50.4 51.6 (0.8) 57.2 41.8 43.2 (3.5)
Dividends and
accretion on
redeemable preferred
stock (4)............. -- -- -- -- -- -- 10.1
------- ------- ------- ------- ------- ------- ------
Net income (loss)
attributable to
common shareholders... $ 50.4 $ 51.6 $ (0.8) $ 57.2 $ 41.8 $ 43.2 $(13.6)
======= ======= ======= ======= ======= ======= ======
Earnings per share:
Basic EPS--continuing
operations............ $ 1.23 $ 1.29 $ (0.02) $ 1.47 $ 1.14 $ 1.27 $(1.51)
Basic EPS--net income
(loss) attributable
to common
shareholders.......... $ 1.11 $ 1.29 $ (0.02) $ 1.47 $ 1.14 $ 1.27 $(1.51)
Diluted EPS--
continuing
operations............ $ 1.22 $ 1.28 $ (0.02) $ 1.47 $ 1.14 $ 1.27 $(1.51)
Diluted EPS--net
income (loss)
attributable to
common shareholders... $ 1.10 $ 1.28 $ (0.02) $ 1.47 $ 1.14 $ 1.27 $(1.51)
Weighted average
shares outstanding--
basic (000's)......... 45,492 40,157 38,647 38,773 36,527 34,004 8,993
Weighted average
shares outstanding--
diluted (000's)....... 45,588 40,337 38,647 38,969 36,705 34,093 8,993
Cash dividends
declared per share.... $ 0.88 $ 0.88 $ 0.22 $ 0.88 $ 0.88 $ 0.88 $ --
Common shares
outstanding at period
end (000's)........... 45,482 38,653 38,665 38,422 35,071 33,324 8,993
Balance Sheet Data:
Current assets......... $ 402.4 $ 251.3 $ 257.5 $ 252.5 $ 240.5 $ 286.3 $248.3
Working capital (5).... 33.2 73.2 100.0 50.2 44.1 8.3 8.3
Property and
equipment, net........ 67.8 67.0 67.6 74.1 88.6 84.6 84.6
Total assets........... 548.0 384.0 383.8 390.7 366.2 407.7 415.9
Total debt (including
short term borrowings
and current
maturities)........... 54.3 81.5 94.8 53.6 97.5 121.2 725.0
Redeemable preferred
stock................. -- -- -- -- -- -- 46.0
Total stockholders'
equity (deficit)...... 270.6 121.8 112.6 127.1 58.6 36.5 (605.1)
</TABLE>
- --------
(1) Net income for the year ended January 2, 1999 reflects a charge for the
write-off of the Jostens Learning Corporation ("JLC") notes receivable of
$12.0 million and related deferred tax assets of $3.7 million.
(2) Discontinued operations for fiscal 1995 reflects JLC and Wicat Systems.
(3) Net income for fiscal 1995 reflects the cumulative effect of adopting SFAS
112.
(4) Dividends on the redeemable preferred stock to be issued in connection
with the financing of the merger are calculated based on an annual rate of
14.0% and includes accretion on the preferred stock discount.
(5) Represents total current assets (excluding cash, cash equivalents and
short-term investments) less total current liabilities (excluding short
term borrowings and current maturities of long-term debt).
(6) In October 1996, we elected to change our fiscal year end from June 30 to
the 52- or 53-week period ending the Saturday closest to December 31,
effective December 29, 1996.
57
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
statements have been derived by the application of pro forma adjustments to
our historical consolidated financial statements incorporated by reference in
this proxy statement/prospectus. The unaudited pro forma condensed
consolidated statement of operations for the period presented gives effect to
the merger and the merger financing, as if each had occurred on January 2,
1999 and exclude non-recurring items directly attributable to the merger. The
unaudited pro forma condensed consolidated balance sheet gives effect to the
merger and the merger financing as if each had occurred on January 1, 2000.
The adjustments are described in the accompanying notes. The pro forma
financial statements should not be considered indicative of actual results
that would have been achieved had the merger and the merger financing been
consummated on the dates indicated, nor are they necessarily indicative of
future operating results or financial position. The pro forma financial
statements should be read in conjunction with our historical consolidated
financial statements and the notes thereto incorporated herein by reference to
our Annual Report on Form 10-K for the year ended January 1, 2000 filed with
the SEC. The pro forma adjustments were applied to the historical consolidated
financial statements to reflect and account for the merger as a
recapitalization. Accordingly, the historical basis of our assets and
liabilities have not been impacted by the merger.
58
<PAGE>
JOSTENS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of January 1, 2000
Dollars in millions
<TABLE>
<CAPTION>
Pro Forma Pro
Historical Adjustments Forma
---------- ----------- -------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 38.5 $ (38.0)(a) $ 0.5
Accounts receivable, net ................ 107.6 107.6
Inventories.............................. 87.9 87.9
Deferred income taxes.................... 17.4 17.4
Other receivables, net .................. 26.2 26.2
Prepaid expenses and other current as-
sets.................................... 8.7 8.7
------ ------- -------
Total current assets................... 286.3 (38.0) 248.3
Property, plant and equipment, net......... 84.6 84.6
Goodwill and other intangible assets, net.. 18.9 18.9
Other assets............................... 17.9 46.2 (b) 64.1
------ ------- -------
Total assets........................... $407.7 $ 8.2 $ 415.9
====== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable......................... $ 23.6 $ 23.6
Accrued liabilities...................... 55.6 55.6
Customer deposits........................ 113.0 113.0
Income taxes payable..................... 17.2 17.2
Other accrued liabilities................ 30.1 30.1
Short-term debt, including current
maturities of long-term debt............ 117.6 $(117.6)(c) --
------ ------- -------
Total current liabilities.............. 357.1 (117.6) 239.5
Long-term debt net of current maturities... -- 725.0 (d) 725.0
Other noncurrent liabilities............... 14.1 (3.6)(e) 10.5
------ ------- -------
Total liabilities...................... 371.2 603.8 975.0
------ ------- -------
Redeemable preferred stock................. 46.0 (f) 46.0
Shareholders' equity (deficit):
Common stock............................. 11.1 (10.9)(g) 0.2
Retained earnings (deficit).............. 31.1 (630.7)(g) (599.6)
Accumulated other comprehensive loss..... (5.7) (5.7)
------ ------- -------
36.5 (641.6) (605.1)
------ ------- -------
Total liabilities and shareholders'
equity................................ $407.7 $ 8.2 $ 415.9
====== ======= =======
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance
Sheet
59
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) Reflects the following sources and uses of funds related to the financing
of the merger:
<TABLE>
<S> <C>
Total sources:
Borrowings under the new senior secured credit facility (1)... $ 485.0
Cash on hand ................................................. 38.0
Proceeds of the senior subordinated notes..................... 240.0
Proceeds from issuance of redeemable preferred stock (2)...... 60.0
Proceeds from the issuance of 8,265,075 shares of common stock
at $25.25 per
share (3).................................................... 208.7
----------
$ 1,031.7
==========
Total uses:
Payment for 32,599,085 existing shares of Jostens common stock
at $25.25 per
share (3).................................................... $ 823.1
Refinancing of existing short-term debt....................... 117.6
Refinancing of existing long-term debt........................ 3.6
Payment for 2,948,531 outstanding options at a weighted
average exercise price of $21.96............................. 9.7
Estimated transaction fees and expenses....................... 77.7
----------
$ 1,031.7
==========
(b) Reflects the following:
Estimated debt issuance costs related to the transaction (4)....... $ 38.7
Management fees prepaid to Investcorp International as part of
the transaction................................................... 7.5
----------
$ 46.2
==========
(c) Reflects the refinancing of the existing short-term debt
(d) Reflects the following:
Borrowings under the new senior secured credit facility (1)........ $ 485.0
Proceeds of the senior subordinated notes.......................... 240.0
----------
$ 725.0
==========
(e) Reflects the repayment of the existing industrial revenue bonds
(f) Reflects the issuance of redeemable preferred stock (2)
(g) Reflects the following:
Issuance of 8,265,075 shares of common stock at $25.25 per
share (3).................................................... $ 208.7
Issuance of warrants (2)...................................... 14.0
Payment for 32,599,085 existing common shares--par value (3).. (10.9)
Payment for 32,599,085 existing common shares--additional
paid-in capital (3).......................................... (812.2)
Payment for 2,948,531 outstanding options at a weighted
average exercise price of $21.96............................. (9.7)
Loans to shareholders (5)..................................... (1.8)
Estimated transaction fees and expenses....................... (34.0)
Tax benefit related to certain transaction costs.............. 4.3
----------
$ (641.6)
==========
</TABLE>
(1) We also expect to have additional available borrowing under a $150.0
million revolving credit facility, none of which will be drawn at the
time of closing.
(2) Total proceeds to Jostens from the issuance of the redeemable
preferred stock and detachable warrants will total $60.0 million.
Based on a discounted cash flow analysis, of the $60.0 million in
total proceeds, $46.0 million will be ascribed to the redeemable
preferred stock and $14.0 million will be ascribed to the warrants.
(3) At March 20, 2000 we had 33,327,209 common shares outstanding and
immediately following to the merger there will be 8,993,199 shares
outstanding. The number of shares outstanding after the merger will be
comprised of 8,265,075 shares issued to Investcorp and its co-
investors, 188,532 shares retained by the Management Continuing
Shareholders and 539,592 shares to be retained by public shareholders.
(4) Includes an approximately $12.7 million advisory fee which will be
paid to Investcorp International in connection with obtaining the
financing for the merger. See "SATURN ACQUISITION CORPORATION"
beginning on page 69.
(5) At the effective time of the merger, we expect to extend loans
totaling approximately $1.8 million to the Management Continuing
Shareholders as part of our stock loan program. The Management
Continuing Shareholders are expected to use these proceeds to repay
existing loans to a third party lender at the effective time.
60
<PAGE>
JOSTENS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended January 1, 2000
Dollars in millions
(Except share and per share data)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- ----------
<S> <C> <C> <C>
Net sales................................ $ 782.4 $ $ 782.4
Cost of products sold.................... 349.7 349.7
----------- ------ ----------
Gross margin............................. 432.7 432.7
Selling and administrative expenses...... 330.8 1.5 (a) 332.3
Special charge........................... 20.2 20.2
----------- ------ ----------
Operating income......................... 81.7 (1.5) 80.2
Net interest expense..................... 7.0 76.3 (b) 83.3
----------- ------ ----------
Income before income taxes............... 74.7 (77.8) (3.1)
Income taxes............................. 31.5 (31.1)(c) 0.4
----------- ------ ----------
Net income (loss)........................ 43.2 (46.7) (3.5)
Dividends and accretion on redeemable
preferred stock......................... 10.1 (d) 10.1
----------- ------ ----------
Net income (loss) attributable to common
shareholders............................ $ 43.2 $(56.8) $ (13.6)
=========== ====== ==========
Ratio of earnings to combined fixed
charges and preferred stock dividend.... 8.9x (e)
Net income (loss) attributable to common
shareholders per share:
Basic.................................. $ 1.27 $ (1.51)
Diluted................................ $ 1.27 $ (1.51)
Weighted average number of common shares
used in per share computations:
Basic.................................. 34,004,000 8,993,199
Diluted................................ 34,093,000 8,993,199
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement
of Operations
61
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATEDSTATEMENTS OF OPERATIONS
(a) Reflects the amortization of prepaid management advisory and consulting
services fees that will be paid to Investcorp International as described
under "SATURN ACQUISITION CORPORATION" on pages 69 through 70. The fees
will be amortized over the five year term of the management and consulting
agreement.
(b) Reflects the following:
<TABLE>
<S> <C>
Elimination of historical net interest expense including historical
amortization of debt issuance costs on retired debt................ $(7.0)
Interest on borrowings under the $150.0 million revolving credit
facility at an assumed interest rate of LIBOR plus 3.00% (1)....... 2.5
Interest on borrowings under the $150.0 million Tranche A term loan
at an assumed interest rate of LIBOR plus 3.00%.................... 13.6
Interest on borrowings under the $335.0 million Tranche B term loan
at an assumed interest rate of LIBOR plus 3.50%.................... 32.2
Interest on $240.0 million indebtedness issued under the senior
subordinated notes at an assumed interest rate of 12.50%........... 30.0
Amortization of debt issuance costs of $38.7 million associated with
the financings over the respective terms of the related
indebtedness....................................................... 5.0
-----
$76.3
=====
</TABLE>
(1) Due to the seasonal nature of our business the borrowings under the
revolving credit facility will fluctuate throughout the year. Based on
an analysis of our historical working capital, interest expense is
calculated assuming a $20.0 million outstanding seasonal balance plus a
0.50% fee on the unused portion.
(2) A 0.125% change in the interest rate on indebtedness would change
annual pro forma interest expense by $0.9 million.
(c) Reflects the tax effect of the foregoing adjustments at our effective tax
rate of 40%.
(d) Reflects the following:
<TABLE>
<S> <C>
Dividends on the redeemable preferred stock calculated based on an
annual rate of 14.00% and a liquidation value of $60.0 million....... $ 8.8
Accretion of preferred stock discount of $14.0 million over the
eleven-year term of the redeemable preferred stock................... 1.3
-----
$10.1
=====
</TABLE>
(e) For purposes of this calculation, "earnings" consist of income before
income taxes and fixed charges and "combined fixed charges and preferred
stock dividends" consist of interest, amortization of debt issuance costs,
the component of rent expense believed by management to be representative
of the interest factor thereon and the amount of pre-tax earnings required
to cover accretion on preferred stock dividends. Pro forma earnings for
the year ended January 1, 2000 would have been inadequate to cover
combined fixed charges and preferred stock dividends. The coverage
deficiency for such period would have been $20.2 million.
The unaudited pro forma condensed consolidated statement of operations
exclude the following non-recurring items that are directly attributable to
the merger. All of the following items will be recorded as period costs at the
time of the merger.
(1) $34.0 million of estimated fees and expenses to be incurred by us in
connection with the merger.
(2) $9.7 million compensation charge resulting from the cancellation of
outstanding stock options in exchange for cash payments in connection with
the merger, and related income tax benefit of $3.9 million.
(3) $1.0 million compensation charge resulting from the accelerated vesting of
restricted stock in connection with the merger, and related income tax
benefit of $0.4 million.
62
<PAGE>
THE SPECIAL MEETING
General
This proxy statement/prospectus is being furnished to Jostens shareholders
as part of the solicitation of proxies by the Jostens board for use at a
special meeting to be held on May 9, 2000, at 10:00 a.m., local time, in the
Jostens Auditorium, 5501 Norman Center Drive, Minneapolis, Minnesota 55437.
The purpose of the special meeting is for our shareholders to consider and
vote upon a proposal to approve and adopt the merger agreement between Jostens
and Saturn Acquisition.
Record Date and Voting
The holders of record of Jostens shares as of the close of business on
March 20, 2000 are entitled to receive notice of, and to vote at, the special
meeting. On that date, there were 33,327,209 shares of Jostens common stock
outstanding held by 5,392 holders of record. The presence of holders of a
majority of the outstanding shares of Jostens common stock on March 20, 2000,
represented in person or by proxy, will constitute a quorum for purposes of
the special meeting. A quorum is necessary to hold the special meeting. If a
shareholder abstains from voting on the merger agreement, then the shares held
by that shareholder will be deemed present at the meeting for purposes of
determining a quorum. If a broker returns a "non-vote" proxy, indicating a
lack of authority to vote on the merger, then the shares covered by such non-
vote will be deemed present at the special meeting for purposes of determining
a quorum.
Required Vote
You are entitled to cast one vote at the special meeting for each share of
Jostens common stock you held on March 20, 2000. Completion of the merger
requires the approval of the merger agreement by the affirmative vote of the
holders of a majority of the outstanding shares of Jostens common stock. You
must vote your shares (1) by voting your proxy or (2) by appearing at the
special meeting and voting in person. Abstentions and broker "non-votes" will
have the same effect as a vote against the merger agreement. Public
shareholders hold approximately 99% of our outstanding common stock. There are
no voting agreements or similar arrangements between Jostens' management and
Investcorp or any of its affiliates that will affect the vote on the merger.
Proxies; Revocation
There are three ways to vote your proxy. Your telephone or Internet vote
authorizes the proxies to vote your shares in the same manner as if you mark,
sign and return your proxy card.
. Vote by phone--toll free--1-800-240-6326
Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week. You will be prompted to enter your 3-digit company number and your
7-digit control number, both of which appear on the enclosed proxy card.
Follow the simple instructions the voice provides you.
. Vote by Internet--http://www.eproxy.com/jos/
Access the above Internet site to vote your proxy 24 hours a day, 7 days a
week. You will be prompted to enter your 3-digit company number and your
7-digit control number, both of which appear on the enclosed proxy card,
to create an electronic ballot.
. Vote by mail
Mark, sign and date your proxy card and return it in the postage-paid
envelope provided.
If you vote by phone or Internet, please do not mail your proxy card.
If you vote your shares of Jostens common stock by signing and returning a
proxy card, your shares will be voted at the special meeting as you indicate
on the card. If no instructions are indicated on your signed proxy card, your
shares of Jostens common stock will be voted "FOR" the approval of the merger
agreement.
If your shares are held in "street name" by your broker, do not follow the
above voting instructions. Rather, your broker will provide you with separate
written instructions on voting your shares, and you should follow those
instructions.
63
<PAGE>
You may revoke your proxy at any time before the proxy is voted at the
special meeting. A proxy may be revoked prior to the vote at the special
meeting by submitting a written revocation to the Secretary of Jostens at 5501
Norman Center Drive, Minneapolis, Minnesota 55437, or by submitting a new
proxy, in either case, dated after the date of the proxy that is being
revoked, or by again following the procedures for voting by phone or the
Internet. However, simply attending the special meeting will not revoke a
proxy.
All expenses incurred in connection with solicitation of the enclosed proxy
will be paid by Jostens. Officers and employees of Jostens may solicit proxies
by telephone or in person. However, they will not be paid for soliciting
proxies. Jostens also will request that persons and entities holding shares in
their names or in the names of their nominees that are beneficially owned by
others send proxy materials to and obtain proxies from those beneficial
owners, and will reimburse those holders for their reasonable expenses in
performing those services. Jostens has retained Morrow & Company to assist it
in the solicitation of proxies, using the means referred to above, at an
anticipated cost of $7,500, plus reimbursement of out-of-pocket expenses.
Adjournments
Although it is not expected, the special meeting may be adjourned for the
purpose of soliciting additional proxies. Any adjournment of the special
meeting may be made without notice, other than by an announcement made at the
special meeting, by approval of the holders of a majority of the outstanding
shares of Jostens common stock present in person or represented by proxy at
the special meeting, whether or not a quorum exists. Any proxies received by
Jostens will be voted in favor of an adjournment of the special meeting if the
purpose of the adjournment is to provide additional time to solicit votes to
approve the merger agreement, unless the shareholder directs otherwise by
voting against or abstaining from voting on the adjournment proposal included
on the enclosed proxy card or the shareholder has voted against the merger
agreement. Thus, proxies voting against the merger will not be used to vote
for adjournment of the special meeting for the purpose of providing additional
time to solicit votes to approve the merger agreement. Any adjournment or
postponement of the special meeting for the purpose of soliciting additional
proxies will allow Jostens shareholders who have already sent in their proxies
to revoke them at any time prior to their use.
DISSENTERS' RIGHTS
If the merger is completed, holders of Jostens common stock on March 20,
2000, who did not vote in favor of the merger agreement will have the right to
dissent from the merger and to obtain payment for the "fair value" of their
Jostens shares, plus interest, in accordance with Sections 302A.471 and
302A.473 of the Minnesota Business Corporation Act. The term "fair value"
means the value of the shares of common stock immediately before the effective
time of the merger and the term "interest" means interest commencing five days
after the effective time of the merger up to and including the date of payment
at the rate provided by Minnesota law for interest on verdicts and judgments,
currently 5% per annum.
Any Jostens shareholder contemplating the exercise of dissenters' rights is
urged to review carefully the provisions of Sections 302A.471 and 302A.473 of
the Minnesota Business Corporation act, particularly with respect to the
procedural steps required to perfect dissenters rights. Failure to comply with
the statutory requirements will result in the loss of the shareholder's
dissenters' rights. The following is a summary of the material provisions of
the dissenters' rights statute but it is not a complete statement of the
relevant provisions of Minnesota Law. This summary should be read in
conjunction with the full text of Sections 302A.471 and 302A.473, which is
attached to this proxy statement/prospectus as Appendix C, and any amendments
to such Sections as may be adopted after the date of this proxy
statement/prospectus.
Filing Written Objection
Shareholders of record who desire to exercise their dissenters' rights must
satisfy all of the following conditions. A written notice of intent to demand
fair value for shares must be delivered to the executive offices
64
<PAGE>
of Jostens before the taking of the shareholder vote to approve the merger
agreement at the special meeting on May 9, 2000. This written demand must be
in addition to and separate from any proxy or vote against approval of the
merger agreement. Voting against, abstaining from voting or failing to vote to
approve the merger agreement does not constitute a demand for fair value of
the shares within the meaning of the MBCA.
The written demand should be delivered to the Corporate Secretary of
Jostens at 5501 Norman Center Drive, Minneapolis, Minnesota 55437. The written
demand should specify the shareholder's name and mailing address, the number
of shares owned and that the shareholder intends to demand the "fair value,"
plus interest, of his or her shares.
No Voting in Favor of the Merger Agreement
Shareholders electing to exercise their dissenters' rights under the MBCA
must not vote for approval of the merger agreement. A shareholder's failure to
vote against approval of the merger agreement will not constitute a waiver of
dissenters' rights. However, if a shareholder returns a signed proxy but does
not specify a vote against approval of the merger agreement or direction to
abstain, the proxy will be voted for approval of the merger agreement, and the
shareholder's dissenters' rights will be waived.
A shareholder may not assert dissenters' rights as to less than all of the
shares registered in such holder's name except where certain shares are
beneficially owned by another person but registered in such holder's name. If
a record owner, such as a broker, nominee, trustee or custodian, wishes to
dissent with respect to shares beneficially owned by another person, the
shareholder must dissent with respect to all of such shares and must disclose
the name and address of the beneficial owner on whose behalf the dissent is
made. A beneficial owner of shares of Jostens common stock who is not the
record owner of those shares may assert dissenters' rights as to shares held
on such person's behalf, provided that the beneficial owner submits a written
consent of the record owner to Jostens at or before the time such rights are
asserted.
Notice by Jostens
After approval of the merger agreement by the shareholders at the special
meeting, Jostens will send a written notice to each shareholder who filed a
written demand for dissenters' rights. The notice will contain
. the address to which the shareholder must send a demand for payment and
the stock certificates in order to obtain payment;
. the date by which they must be received;
. any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
. a form to be used to certify the date on which such shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired the
shares, or an interest in them, and to demand payment; and
. a copy of Sections 302A.471 and 302A.473 of the MBCA and a brief
description of the procedures to be followed under these Sections.
Remittance of Certificates
In order to receive the fair value for his or her shares under Section
302A.473, a dissenting shareholder must, within 30 days after the date Jostens
gives the notice described in the preceding paragraph, demand payment and
deposit his or her stock certificates, at the address specified in the notice.
Under Minnesota law, notice by mail is given by Jostens when deposited in the
U.S. mail. A dissenting shareholder will retain all rights as a shareholder
until the effective time of the merger. After a valid demand for payment and
the related stock certificates are timely received, or after the effective
time of the merger, whichever is later, Jostens will remit to each dissenting
shareholder who has complied with the statutory requirements the amount that
Jostens estimates to be the fair value of the dissenting shareholder's shares,
with interest commencing five days after the effective
65
<PAGE>
time of the merger at a rate prescribed by statute, currently 5% per annum.
Jostens has no current intention of offering to pay more than $25.25 per share
as its estimate of fair value of a dissenting shareholder's shares and
reserves the right to offer less. Jostens will also send its closing balance
sheet and statement of income for a fiscal year ending not more than 16 months
before the effective time of the merger, together with
. the latest available interim financial statements,
. an estimate of the fair value of the shareholder's shares and a brief
description of the method used to reach the estimate,
. a brief description of the procedure to be followed if the dissenting
shareholder decides to make a demand for a supplemental payment and
. copies of Sections 302A.471 and 302A.473 of the MBCA.
As described below, Jostens is not required at that time to send its estimated
payment to any person who was not a shareholder and who is not dissenting on
behalf of a person who was the beneficial owner of shares of common stock, of
Jostens on December 28, 1999. If, however, the merger is not completed or
Jostens disputes a shareholder's right to dissent, Jostens will not send to
the shareholder the fair value of such shareholder's share or the additional
information listed above.
Acceptance or Settlement of Demand
If the dissenting shareholder believes that the amount remitted by Jostens
is less than the fair value of the holder's shares, plus interest, if any, the
shareholder must give written notice to Jostens of such holder's own estimate
of the fair value of the shares, plus interest, if any, within 30 days after
the mailing date of the remittance and demand payment of the difference. The
notice must be given at the executive offices of Jostens at the address set
forth above. A shareholder who fails to give written notice within this time
period is entitled only to the amount remitted by Jostens.
Within 60 days after receipt of a demand for supplemental payment, Jostens
must either (1) pay the shareholder the amount demanded or agreed to by the
shareholder after discussion with Jostens, or (2) petition a court in Hennepin
County, Minnesota for the determination of the fair value of the shares, plus
interest, if any. Upon payment of the agreed value, the dissenting shareholder
will cease to have any interest in Jostens. Jostens has no current intention
of offering to pay more than $25.25 per share in respect of any dissenting
shareholder's shares.
Court Determination
If, within the 60 days after the receipt of demand for supplemental
payment, any one or more of the dissenting shareholders and Jostens do not
agree on the fair value of the shares, then Jostens must file a petition with
the court to obtain a judicial finding and determination of the fair value of
the dissenting shareholder's shares of Jostens common stock. The petition must
name as parties all shareholders who have demanded supplemental payment and
have not reached an agreement with Jostens.
The court, after determining that the shareholder or shareholders in
question have complied with all statutory requirements, may use any valuation
method or combination of methods it deems appropriate to use, whether or not
used by Jostens or a dissenting shareholder, and may appoint appraisers to
recommend the amount of the fair value of the shares. The court's
determination will be binding on all shareholders of Jostens who properly
exercised dissenters' rights and did not agree with Jostens as to the fair
value of the shares and may be less than, equal to or more than the merger
consideration. Dissenting shareholders are entitled to judgment in cash for
the amount by which the court-determined fair value per share, plus interest,
exceeds the amount per share, plus interest, remitted to the shareholders by
Jostens. The shareholders shall not be liable to Jostens for any amounts paid
by Jostens which exceed the fair value of the shares as determined by the
court, plus interest.
The costs and expenses of such a proceeding, including the expenses and
compensation of any appraisers, will be determined by the court and assessed
against Jostens, except that the court may, in its discretion, assess
66
<PAGE>
part or all of those costs and expenses against any shareholder whose action
in demanding supplemental payment is found to be arbitrary, vexatious or not
in good faith. The court may award fees and expenses to an attorney for the
dissenting shareholders out of the amount, if any, awarded to such
shareholders. The court may assess fees and expenses of experts or attorneys
against any person who acted arbitrarily, vexatiously or not in good faith in
bringing the proceeding and also may award fees and expenses of experts or
attorneys against Jostens if Jostens fails to comply substantially with
Section 302A.473.
Jostens may withhold the remittance of the estimated fair value, plus
interest, for any shares owned by any person who was not a shareholder or who
is dissenting on behalf of a person who was not a beneficial owner on December
28, 1999, the date on which the proposed merger was first announced to the
public. Jostens will forward to any dissenting shareholder who was not a
shareholder on December 28, 1999 but who has complied with all requirements in
exercising dissenters' rights the notice and all other materials sent after
shareholder approval of the merger agreement to all shareholders who have
properly exercised dissenters' rights, together with a statement of the reason
for withholding the remittance and an offer to pay the dissenting shareholder
the amount listed in the materials if the shareholder agrees to accept that
amount in full satisfaction. The shareholder may decline this offer and demand
payment by following the same procedure as that described for demand of
supplemental payment by shareholders who owned their shares as of December 28,
1999. Any shareholder who did not own shares on December 28, 1999 and who
fails properly to demand payment will be entitled only to the amount offered
by Jostens. Upon proper demand by any shareholder, rules and procedures
applicable in connection with receipt by Jostens of the demand for
supplemental payment given by a dissenting shareholder who owned shares on
December 28, 1999 will also apply to any shareholder properly giving a demand
but who did not own shares of record or beneficially on December 28, 1999,
except that any such shareholder is not entitled to receive any remittance
from Jostens until the fair value of the shares, plus interest, has been
determined pursuant to such rules and procedures.
Shareholders considering exercising dissenters' rights should bear in mind
that the fair value of their shares determined under Sections 302A.471 and
302A.473 of the MBCA could be more than, the same as or, in certain
circumstances, less than the consideration they would receive pursuant to the
merger agreement if they did not seek appraisal of their shares. Furthermore,
the opinion of any investment banking firm as to fairness, from a financial
point of view, is not an opinion as to fair value under Sections 302A.471 and
302A.473 of the MBCA.
Under Section 302A.471 a shareholder of Jostens has no right at law or
equity to set aside the adoption of the merger agreement or the consummation
of the merger, unless such shareholder can establish that adoption or
consummation was fraudulent with respect to such shareholder or Jostens.
Any holder who fails to comply fully with the statutory procedures
summarized above within the time periods specified above will forfeit his or
her rights of dissent and will receive the cash and/or stock consideration
payable in the merger for his or her shares, which may be more or less than or
equal to the fair value of the shares determined under section 302A.473.
67
<PAGE>
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP
OF MANAGEMENT AND OTHERS
The following table sets forth, as of March 20, 2000, the beneficial
ownership of our common stock by all of our directors and executive officers
and all shareholders beneficially owning in excess of five percent of our
outstanding shares.
<TABLE>
<CAPTION>
Common Shares
Owned Beneficially Percentage
as of of Shares
Name March 20, 2000 (5) (6) (7) Outstanding
- ---- -------------------------- -----------
<S> <C> <C>
Capital Group International, Inc. (1). 4,004,910 12.00%
11100 Santa Monica Blvd.
Los Angeles, CA 90025
ESL Partners, L.P. (2)................ 3,169,700 9.50%
One Lafayette Pl.
Greenwich, CT 06830
Barclays Global Investors, N.A. (3)... 2,036,782 6.10%
45 Fremont Street
San Francisco, CA 94105
Lilyan H. Affinito.................... 25,912 *
Carl H. Blowers....................... 128,857 *
Robert C. Buhrmaster.................. 646,266 1.91%
Jack W. Eugster....................... 14,845 *
Mannie L. Jackson..................... 17,760 *
Thomas W. Jans........................ 108,142 *
David J. Larkin....................... 140,626 *
Brenda Lauderback..................... 1,857 *
John J. Mann (4)...................... 51,267 *
Kendrick B. Melrose................... 13,024 *
William N. Priesmeyer................. 134,503 *
Richard A. Zona....................... 12,714 *
All directors and executive officers
as a group (20 members).............. 1,702,809 4.93%
</TABLE>
- --------
*Less than 1% of outstanding shares.
(1) According to a Schedule 13G filed with the SEC on February 11, 2000,
this entity had sole dispositive power over all of the shares set forth
above opposite its name as of December 31, 1999. Capital Group
International, Inc. does not have investment power or voting power over
any of the securities reported herein; however, Capital Group
International, Inc. may be deemed to "beneficially own" such securities
by virtue of Rule 13d-3 under the Act. Capital Guardian Trust Company, a
bank as defined in Section 3(a)(6) of the Exchange Act is deemed to be
the beneficial owner of 2,484,770 shares as a result of its serving as
the investment manager of various institutional accounts. Capital Group
International, Inc. and Capital Guardian Trust Company are affiliated
entities.
(2) According to a Schedule 13G filed with the SEC on November 30, 1999,
this entity had sole dispositive power over 2,531,120 of the shares set
forth above opposite its name as of December 1, 1999; ESL Limited had
sole dispositive power over 591,135 of such shares; and ESL
Institutional Partners, L.P. had sole dispositive power over 47,445 of
such shares. These three entities may be deemed to be the beneficial
owners of all of the shares set forth above opposite the name of ESL
Partners, L.P.
(3) According to a Schedule 13G filed with the SEC on February 14, 2000,
this entity had the sole power to dispose or to direct the disposition
of all of the shares set forth opposite its name as of
68
<PAGE>
December 31, 1999. Barclays Global Investors, LTD, a bank as defined in
Section 3(a)(6) of the Exchange Act, is deemed to be the beneficial owner
of the securities reported as a result of holding trust accounts for the
economic benefit of the beneficiaries of those accounts. The securities
reported include 1,963,827 shares for Barclays Global Investors, N.A.,
40,655 shares for Barclays Global Fund Advisors, 3,000 shares for
Barclays Fund Limited, and 29,300 shares for Barclays Global Investors,
LTD, all of which are deemed to be beneficial owners as a result of its
serving as the investment manager of various accounts. Barclays Global
Investors LTD, Barclays Global Investors, N.A., Barclays Global Fund
Advisors and Barclays Funds Limited are affiliated entities.
(4) Mr. Mann's vested options expire in August 2000 as part of his
separation agreement.
(5) Unless otherwise noted, each person and group identified possesses sole
voting and investment power with respect to the shares shown opposite
such person's or group's name. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire
them within 60 days are treated as outstanding only when determining the
amount and percent owned by such individual or group. Unless otherwise
noted, each person and group has an address of Jostens, Inc., 5501
Norman Center Drive, Minneapolis, Minnesota 55437.
(6) Includes the following number of shares which may be acquired upon the
exercise of options by the named persons or group within 60 days: Ms.
Affinito, 10,449 shares; Mr. Blowers, 86,999 shares; Mr. Buhrmaster,
524,333 shares; Mr. Eugster, 5,449 shares; Mr. Jackson, 6,449 shares;
Mr. Jans, 78,586 shares; Mr. Larkin, 84,999 shares; Ms. Lauderback,
1,333 shares; Mr. Mann, 46,333 shares; Mr. Melrose, 4,449 shares; Mr.
Priesmeyer, 87,332 shares; Mr. Zona, 4,449 shares; and all directors and
executive officers as a group, 1,234,845 shares. Also includes the
following number of restricted shares held subject to forfeiture: Mr.
Blowers, 4,817 shares; Mr. Buhrmaster, 10,135 shares; Mr. Jans, 2,534
shares; Mr. Larkin, 6,411 shares; Mr. Priesmeyer, 5,673 shares; and all
directors and executive officers as a group, 43,579 shares.
(7) Includes the following number of shares held for the account of the
named person participating in the Jostens, Inc. Deferred Compensation
Plan: Ms. Affinito, 13,663 shares; Mr. Eugster, 8,396 shares; Mr.
Jackson, 11,311 shares; Ms. Lauderback, 524 shares; Mr. Melrose, 6,575
shares; Mr. Zona, 1,582 shares and all directors and executive officers
as a group, 44,415 shares.
SATURN ACQUISITION CORPORATION
Saturn Acquisition Corporation is a newly formed Minnesota corporation
organized for purposes of financing and completing the merger. It has engaged
in no business activities and it has no assets or liabilities of any kind,
other than those related to the merger. At the effective time of the merger,
Saturn Acquisition will be merged into Jostens and the separate corporate
existence of Saturn Acquisition will cease.
In connection with obtaining the financing for the merger, we will pay
Investcorp International, an affiliate of Investcorp, advisory fees of
approximately $12.7 million. In addition, in connection with the closing of
the merger, Jostens will enter into an agreement with Investcorp International
for management advisory and consulting services for a five-year term. Jostens
will prepay Investcorp International $7.5 million of the fees payable pursuant
to the agreement at the closing of the merger.
Prior to the effective time of the merger, Saturn Acquisition's Class A and
Class D common stock will be the only outstanding classes of Saturn
Acquisition's stock that have voting rights. DB Capital Investors will make a
capital contribution of $48.9 million to Saturn Acquisition in exchange for
approximately 600,000 shares of Saturn Acquisition's Class A common stock and
approximately 1.3 million shares of Class E common stock, which will be
convertible into Class A common stock. Prior to the effective time of the
merger, DB Capital Investors will own 100% of the outstanding shares of Saturn
Acquisition's Class A common stock and Class E common stock. Each share of
Class A common stock will be entitled to one vote.
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Immediately prior to the effective time of the merger there are expected to
be 20,000 shares of Saturn Acquisition's Class D common stock issued and
outstanding. The table below sets forth the beneficial ownership of Saturn
Acquisition by each person who is expected to own more than 5% of the
outstanding Class D common stock immediately prior to the effective time of
the merger:
<TABLE>
<CAPTION>
Number of
Shares Percent of
Name (1) Class (1)
---- --------- ----------
<S> <C> <C>
INVESTCORP S.A.(2)(3)................................ 20,000 100.0%
SIPCO Limited(4)..................................... 20,000 100.0
CIP Limited(5)(6).................................... 18,400 92.0
Ballet Limited(5)(6)................................. 1,840 9.2
Denary Limited(5)(6)................................. 1,840 9.2
Gleam Limited(5)(6).................................. 1,840 9.2
Highlands Limited(5)(6).............................. 1,840 9.2
Noble Limited(5)(6).................................. 1,840 9.2
Outrigger Limited(5)(6).............................. 1,840 9.2
Quill Limited(5)(6).................................. 1,840 9.2
Radial Limited(5)(6)................................. 1,840 9.2
Shoreline Limited(5)(6).............................. 1,840 9.2
Zinnia Limited(5)(6)................................. 1,840 9.2
Investcorp Investment Equity Limited(3).............. 1,600 8.0
</TABLE>
- --------
(1) As used in this table, beneficial ownership means the sole or shared power
to vote, or to direct the voting of a security, or the sole or shared
power to dispose, or direct the disposition of, a security.
(2) Investcorp does not directly own any stock in Saturn Acquisition. The
number of shares shown as owned by Investcorp includes all of the shares
owned by Investcorp Investment Equity Limited (see (3) below). Investcorp
owns no stock in Ballet Limited, Denary Limited, Gleam Limited, Highlands
Limited, Noble Limited, Outrigger Limited, Quill Limited, Radial Limited,
Shoreline Limited, Zinnia Limited, or in the beneficial owners of these
entities (see (6) below). Investcorp may be deemed to share beneficial
ownership of the shares of voting stock held by these entities because the
entities have entered into revocable management services or similar
agreements with an affiliate of Investcorp, pursuant to which each of such
entities has granted such affiliate the authority to direct the voting and
disposition of the Saturn Acquisition voting stock owned by such entity
for so long as such agreement is in effect. Investcorp is a Luxembourg
corporation with its address at 37 rue Notre-Dame, Luxembourg.
(3) Investcorp Investment Equity Limited is a Cayman Islands corporation, and
a wholly-owned subsidiary of Investcorp, with its address at P.O. Box
1111, West Wind Building, George Town, Grand Cayman, Cayman Islands.
(4) SIPCO Limited does not directly own any stock in Saturn Acquisition, but
may be deemed to control Investcorp through its ownership of a majority of
a company's stock that indirectly owns a majority of Investcorp's shares.
SIPCO Limited's address is P.O. Box 1111, West Wind Building, George Town,
Grand Cayman, Cayman Islands.
(5) CIP Limited does not directly own any stock in Saturn Acquisition. CIP
Limited indirectly owns less than 0.1% of the stock in each of Ballet
Limited, Denary Limited, Gleam Limited, Highlands Limited, Noble Limited,
Outrigger Limited, Quill Limited, Radial Limited, Shoreline Limited and
Zinnia Limited (see (6) below). CIP Limited may be deemed to share
beneficial ownership of the shares of voting stock of Saturn Acquisition
held by such entities because CIP Limited acts as a director of such
entities and the ultimate beneficial shareholders of each of those
entities have granted to CIP Limited revocable proxies in companies that
own those entities' stock. None of the ultimate beneficial owners of such
entities beneficially owns individually more than 5% of Saturn
Acquisition's voting stock.
(6) Each of CIP Limited, Ballet Limited, Denary Limited, Gleam Limited,
Highlands Limited, Noble Limited, Outrigger Limited, Quill Limited, Radial
Limited, Shoreline Limited and Zinnia Limited is a Cayman Islands
corporation with its address at P.O. Box 2197, West Wind Building, George
Town, Grand Cayman, Cayman Islands.
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DESCRIPTION OF JOSTENS CAPITAL STOCK
Jostens Existing Capital Stock
General. Jostens is authorized by its existing articles of incorporation to
issue an aggregate of 100,000,000 shares of common stock, par value $0.33 1/3
per share, and 4,000,000 shares of preferred stock, par value $0.01 per share.
There are no shares of preferred stock issued or outstanding. The following is
a summary of current rights and privileges pertaining to Jostens common stock.
For a full description of Jostens common stock, please refer to Jostens'
existing articles of incorporation and bylaws, as currently in effect, copies
of which are on file with the SEC.
Voting Rights of Common Stock. Holders of Jostens existing common stock are
entitled to one vote per share on all matters submitted to a vote of
shareholders. Approval of matters brought before the shareholders requires the
affirmative vote of a majority of shares present and voting, except as
otherwise required by law. Jostens current shareholders may nominate
candidates for director nomination in accordance with Jostens' bylaws, as
amended.
Dividend Rights of Common Stock. Holders of Jostens existing common stock
are entitled to participate in dividends as and when declared by the Jostens
board of directors out of funds legally available therefor. Jostens' ability
to pay cash dividends is subject to certain restrictions.
Liquidation Rights of Common Stock. Subject to the rights of creditors and
holders of preferred stock, if any, holders of Jostens existing common stock
are entitled to share ratably in a distribution of Jostens' assets upon
Jostens' liquidation or dissolution or a winding-up of Jostens' affairs.
Preferred Stock. The Jostens board of directors is authorized to issue, by
resolution and without any action by Jostens shareholders, up to 4,000,000
shares of preferred stock and may establish the designations, dividend rights,
dividend rate, conversion rights, voting rights, terms of redemption,
liquidation preference, sinking fund terms and all other preferences and
rights of any series of Jostens preferred stock, including rights that could
adversely affect the voting power of the holders of Jostens existing common
stock. The Jostens board of directors has established such terms, and filed a
certificate of designations containing such terms, in respect of 1,000,000 of
such shares, designated as Series A Junior Participating Preferred Stock, a
copy of which is on file with the SEC. No shares of Jostens preferred stock,
including Series A Junior Participating Preferred Stock, are currently
outstanding.
Jostens Capital Stock Following the Merger
Introduction. Assuming the merger is approved by the requisite vote of
Jostens shareholders at the special meeting, at the effective time of the
merger, Jostens' existing articles of incorporation will be replaced by the
restated articles of incorporation substantially in the form of Appendix D
attached hereto. The restated articles of incorporation will authorize various
classes of common stock and establish the rights and privileges of such
classes in accordance with the terms of the merger agreement. In addition, the
restated articles will not contain certain provisions of Jostens' existing
articles of incorporation that are not typically included in a charter of a
substantially privately held company, which Jostens is expected to become upon
consummation of the merger.
The following is a summary of certain of the rights and privileges
pertaining to Jostens capital stock as it is expected to exist immediately
after giving effect to the merger. For a full description, please see Appendix
D attached hereto.
General. Following the merger, Jostens will be authorized to issue an
aggregate of 29,940,000 shares of capital stock, consisting of 4,000,000
shares of preferred stock, with a par value of $0.01 per share and 25,940,000
shares of common stock comprised of the six classes of common stock described
below, (these six classes are sometimes referred to collectively as the "new
common stock"). The Jostens board of directors will be authorized, without
further action by Jostens shareholders, but subject to the limitations set
forth in the articles
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<PAGE>
of designation of such series of preferred stock, to provide for the issue of
additional shares of preferred stock, in one or more additional series, and to
fix for each such additional series such voting powers, full or limited, and
such designations, preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof as
will be stated and expressed in the resolution or resolutions adopted by the
Jostens board of directors providing for the issue of such series and as may
be permitted by the MBCA.
Redeemable Preferred Stock. In connection with the financings expected to
take place at the time the merger is completed, Jostens expects to issue to DB
Capital Investors a new series of redeemable, payment-in-kind preferred stock
having an initial liquidation preference of $60.0 million, which redeemable
preferred shares will be entitled to receive dividends at a rate of 14.0% per
annum compounded quarterly and payable in additional shares of the same series
of preferred stock. The redeemable preferred shares will be subject to
mandatory redemption by Jostens 11 years after issuance. The holders of these
shares will, under specified circumstances involving a default by Jostens, be
entitled to additional dividends at a rate of 1% of the liquidation preference
per share of redeemable preferred stock and also will be entitled to designate
up to two members of the Jostens board of directors. The redeemable preferred
stock will generally not be redeemable by Jostens until the fifth anniversary
of the issue date and thereafter will be redeemable at a premium which will
decline to par by the year the 2008. The redeemable preferred stock will also
be redeemable in part with the proceeds of a public equity offering by
Jostens. In the event of a change of control of Jostens, Jostens will be
required to make an offer to purchase the outstanding redeemable preferred
shares at a price equal to 101% of the applicable liquidation preference
including accrued but unpaid dividends. The terms of the redeemable preferred
stock are expected to contain covenants placing restrictions on Jostens with
respect to:
. incurrence of debt;
. mergers and consolidations;
. SEC reports;
. dividends, stock repurchases and investments; and
. transactions with affiliates.
The shares of redeemable preferred stock will not be subject to any
restrictions on transferability, other than restrictions imposed by applicable
federal and state securities laws.
DB Capital Investors will be entitled to registration rights similar to
those customarily offered for comparable securities. These rights will require
Jostens to file a shelf registration with respect to the redeemable preferred
stock within 120 days after the issuance of the redeemable preferred stock and
to use its best efforts to have the shelf registration become effective within
180 days after the issuance of the redeemable preferred stock. Jostens will be
required to maintain the effectiveness of the shelf registration statement for
a period of two years or, if earlier, until such time as the holders of the
redeemable preferred stock have sold all shares of redeemable preferred stock
held by them. Jostens will bear the reasonable expenses, exclusive of
underwriting discounts and commissions, of the shelf registration statement
and will enter into customary indemnification arrangements. These registration
rights are transferable in connection with any transfer of any shares of
redeemable preferred stock.
Common Stock Purchase Warrants. In connection with the issuance of the
redeemable preferred stock, we also expect to issue to DB Capital Investors
detachable warrants to purchase shares of our Class E common stock
representing 5% of the total number of shares of our common equity (of all
classes) on a fully diluted basis to be outstanding immediately after the
merger. Principal terms of the warrants are expected to include the following:
. exercise price: $0.01 per share
. term: 11 years
. customary anti-dilution provisions
. customary registration rights, similar to those set forth above
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<PAGE>
DB Capital Investors will also have registration rights with respect to any
shares of common stock which it will own, including the Class A common stock
it will acquire in the merger and the Class E common stock issuable upon the
exercise of the warrants, as well as any shares of Class A common stock into
which the Class E common stock may be converted. Following an initial public
offering of Jostens common stock, DB Capital Investors will have two demand
registration rights, which DB Capital Investors may require to be a shelf
registration. Upon exercise of such registration rights, Jostens will be
required to use its best efforts to file and cause to become effective a
registration statement in respect of the shares requested to be registered.
Jostens will not be obligated to effect more than one such registration in any
12-month period.
DB Capital Investors will be entitled to unlimited "piggy-back"
registration rights on all registrations of Jostens common stock by Jostens or
any other shareholder, subject to customary conditions.
Jostens will bear reasonable expenses, exclusive of underwriting discounts
and commissions, of all demand and piggy-back registrations and will enter
into customary indemnification arrangements. DB Capital Investors'
registration rights will be fully transferable to any transferees who acquire
more than 10,000 shares of Jostens common stock from DB Capital Investors.
New Common Stock. The new common stock will consist of Class A common
stock, Class B common stock, Class C common stock, Class D common stock, Class
E common stock and common stock. The number of authorized shares for each of
the six classes of new common stock is set forth below.
The precise numbers of shares of the various classes of new common stock to
be outstanding immediately following the effective time of the merger will not
be known until shortly before such time, because the total amount of the
common equity contribution to Saturn Acquisition in exchange for its Class A
common stock, Class B common stock, Class C common stock, Class D common stock
and Class E common stock, which will be converted on a one-for-one basis into
Jostens Class A common stock, Class B common stock, Class C common stock,
Class D common stock and Class E common stock, respectively, at the effective
time of the merger, will not be known until shortly before the effective time
of the merger. The purchase price per share of Saturn Acquisition Class A
common stock, Class B common stock, Class C common stock, Class D common stock
and Class E common stock has been fixed at $25.25 to correspond to the cash
consideration per share of Jostens common stock being paid in the merger. As
the aggregate number of shares of Jostens Class A common stock is derived from
the non-cash election number, which, in turn, is derived from the aggregate
number of shares of Saturn Acquisition Class A common stock, Class B common
stock, Class C common stock, Class D common stock and Class E common stock,
the fact that the equity contribution to Saturn Acquisition will not be known
until shortly before the effective time of the merger also results in the
number of shares of Jostens Class A common stock to be outstanding immediately
following the effective time of the merger not being known until shortly
before such time. The Class B common stock and Class C common stock will be
issued to Investcorp and its co-investors, except that no shares of Class B
common stock or Class C common stock will be issued to DB Capital Investors.
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<PAGE>
As discussed above under the caption "The MERGER--Merger Financing," the
expected aggregate common equity contribution to Saturn Acquisition in
exchange for its Class B common stock, Class C common stock, Class D common
stock and Class E common stock is approximately $208.7 million. The following
discussion of the new common stock assumes, for purposes of illustration, that
the amount of this equity contribution will be $208.7 million, and the non-
cash election number will be 539,592. Based on this assumption, the number of
shares to be outstanding immediately following the effective time of the
merger for each of the six classes of new common stock will be as follows:
<TABLE>
<CAPTION>
Authorized Outstanding
Title Shares Shares
----- ---------- -----------
<S> <C> <C>
Class A common stock............................... 4,200,000 1,318,124
Class B common stock............................... 5,300,000 5,300,000
Class C common stock............................... 2,500,000 1,009,039
Class D common stock............................... 20,000 20,000
Class E common stock............................... 1,900,000 1,346,036
Common stock....................................... 12,020,000 0
---------- ---------
Total.......................................... 25,940,000 8,993,199
========== =========
</TABLE>
Voting. Following the merger, holders of shares of Jostens new Class A
common stock and new common stock will be entitled to one vote per share on
all matters as to which shareholders may be entitled to vote pursuant to the
MBCA. Following the merger, holders of shares of Jostens new Class D common
stock would be entitled to 316.45 votes per share on all matters as to which
shareholders may be entitled to vote pursuant to the MBCA.
Holders of Jostens new Class B common stock, Class C common stock and Class
E common stock will not have any voting rights, except that holders of shares
of such classes will have the right to vote as a class to the extent required
under the laws of the State of Minnesota.
Each outstanding share of Class E common stock will be convertible at the
option of the holder thereof into one share of Class A common stock at any
time commencing 30 days after the original date of issuance of such share of
Class E common stock.
Any amendment, alteration or repeal of any provision of Jostens' restated
articles of incorporation, whether by merger, consolidation or otherwise, that
would alter or change the relative powers, preferences, or special rights of
any class of capital stock so as to affect the holders of Jostens new Class A
common stock or Class E common stock materially and adversely, will require,
in addition to any other approvals required by the MBCA and the restated
articles of incorporation, the approval by the holders of a majority of the
then outstanding shares of the respective class of stock.
Liquidation; Dividends; Certain Adjustments; Merger. Subject to the rights
of the holders of any shares of then outstanding preferred stock, any
distribution made upon Jostens' liquidation or dissolution or a winding up of
Jostens' affairs, whether voluntary or involuntary, will be allocated pro rata
based upon the number of shares of new common stock held by each shareholder.
Subject to the rights of the holders of any shares of then outstanding
preferred stock, holders of Jostens new common stock, regardless of class or
series, will be entitled to share ratably as a single class in all dividends
and other distributions of cash or any other right or property as may be
declared thereon by Jostens' board of directors from time to time out of
Jostens' assets or funds that are legally available for such dividends or
distribution.
Whenever, during the period that shares of Jostens new Class A common stock
will be outstanding, we:
. declare a dividend on shares of any class of new common stock in shares
of such class of new common stock or in securities convertible into or
exchangeable for shares of such class of new common stock,
. subdivide the outstanding shares of any class of new common stock,
. combine the outstanding shares of any class of new common stock into a
smaller number of shares, or
. issue any shares of any class of new common stock upon reclassification
of such shares,
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<PAGE>
a corresponding dividend, subdivision, combination or other adjustment will be
made with respect to the shares of the other class or classes of new common
stock if and to the extent necessary to prevent the interests of the holders
of Jostens new Class A common stock and Class E common stock from being
materially and adversely affected.
In the event that Jostens merges into or consolidates with another entity,
whether or not Jostens is the surviving entity, the holders of each share of
Jostens Class A common stock and Class E common stock will be entitled to
receive not less than the same per share consideration as the per share
consideration, if any, received by the holders of Jostens Class B common
stock, Class C common stock and Class D common stock in such merger or
consolidation, unless, in addition to such other approvals, if any, as may be
required by the MBCA and the restated articles of incorporation, a different
treatment is approved by holders of a majority of the then outstanding shares
of the respective class of stock.
Tag-Along Rights; Mandatory Redemption. If other than in connection with an
initial public offering of Jostens, any holder or holders of Jostens Class D
common stock (for purposes of this provision singularly or collectively, the
"Proposed Transferor"), at any time or from time to time in one transaction or
in a series of transactions, desire to enter into an agreement, whether oral
or written, to transfer its shares of Class D common stock or any part thereof
in a transaction which is a sale to any person other than a Permitted
Transferee (as defined in the articles of incorporation) (the "Proposed
Transferee"), such proposed transfer will be deemed a "Tag-Along Transfer" and
each holder of Jostens new Class A common stock, Class B common stock, Class C
common stock and Class E common stock (collectively, the "Other Shareholders")
will have the right, but not the obligation, as a condition to such Tag-Along
Transfer, to sell to the Proposed Transferee up to the same percentage of its
shares (the "Tag-Along Pro Rata Amount") of stock as the percentage of the
total number of shares of Class D common stock that the Proposed Transferor
proposes to transfer in the "Tag-Along Transfer" (the "Proposed Purchase
Amount"). All Tag-Along Transfers by Other Shareholders will be on the same
terms and conditions as the proposed Tag-Along Transfer by the Proposed
Transferor, provided that no Other Shareholder may be required to make any
representation or warranty in connection with the Tag-Along Transfer other
than as to its ownership and authority to transfer the shares of new common
stock to be transferred by it, free and clear of any and all liens and
encumbrances and in compliance with all applicable laws. Each Proposed
Transferor and each Other Shareholder whose shares are sold in a Tag-Along
Transfer will be required to bear its pro rata share of the expenses of the
transaction, based on the number of shares included in such Tag-Along
Transfer. Holders of Class E common stock will have similar "tag-along" rights
with respect to sales of Class B and Class C common stock.
In the event of a Tag-Along Transfer in which the Proposed Transferor
proposes to transfer a number of shares of Class D common stock equal to or
greater than 80% of the outstanding shares of Class D common stock, Jostens
will redeem, to the extent permitted by law, from each holder of Class A
common stock, Class B common stock, Class C common stock and Class E common
stock, the number of shares of Class A common stock, Class B common stock,
Class C common stock or Class E common stock equal to the difference between:
. the number of shares that the Class A common shareholder, Class B common
shareholder, Class C common shareholder or Class E common shareholder
elected to include in the Tag-Along Transfer pursuant to the foregoing
Tag-Along Transfer provisions and
. the Tag-Along Pro Rata Amount, the number of shares such holder was
entitled to include in the Tag-Along Transfer,
at a redemption price (the "Tag-Along Redemption Price") per share equal to
the per share price paid for the Class D common stock by the Proposed
Transferee less such Other Shareholder's pro rata share of the expenses of the
Tag-Along Transfer. After such redemption, Jostens will issue to the Proposed
Transferee shares of Class A common stock, Class B common stock, Class C
common stock and Class E common stock in amounts equal to the respective
numbers of shares of such classes of new common stock so redeemed, and the
Proposed Transferee will pay to Jostens for each such share a purchase price
equal to the Tag-Along Redemption Price if the Proposed Transferee does not
purchase all of the shares of new common stock of the Proposed Transferor,
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<PAGE>
all of the shares that the Other Shareholders elect to include in such
proposed Tag-Along Transfer, and all of the shares to be issued by Jostens in
amounts equal to the numbers of redeemed shares, then the proposed Tag-Along
Transfer to such Proposed Transferee will be prohibited and any attempt to
consummate the proposed Tag-Along Transfer will be null and void and of no
force and effect.
Conversion. Upon the occurrence at any future date of a sale of 100% of
Jostens' outstanding equity securities or substantially all of Jostens' assets
or a merger or similar transaction in which all of Jostens' stock is converted
or exchanged or the initial public offering of Jostens' common stock, each
share of Jostens new Class A common stock, Class B common stock, Class C
common stock, Class D common stock and Class E common stock not otherwise
redeemed by Jostens pursuant to the mandatory redemption provisions described
above will convert into one share of new common stock; provided that shares of
Class E common stock will not be converted if such conversion is prohibited by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Shareholder Agreement. In connection with the merger, we intend to enter
into a Shareholder Agreement with DB Capital Investors and each of the
shareholders that are affiliated with Investcorp, including Investcorp
Investment Equity Limited ("IIEL"). We expect the Shareholder Agreement to
have the following provisions:
. If, prior to an initial public offering of Jostens, DB Capital Investors
or any permitted transferee of DB Capital Investors proposes to sell its
shares of Jostens common stock to any person other than a permitted
transferee, Jostens and IIEL shall each have the irrevocable option to
purchase such shares at the same price and on the same terms and
conditions as offered by the other person.
. If, prior to an initial public offering of Jostens, any of the
Investcorp-affiliated shareholders propose to sell any of their equity
interests and such sale is not a "Tag-Along Transfer" within the meaning
of Article IV of the Articles of Incorporation, DB Capital Investors,
will have the right to include in such sale, at the same price and on the
same terms and conditions as the Investcorp affiliates, the percentage of
shares held by DB Capital Investors equal to the percentage of the equity
securities held by the other selling shareholders being sold by such
selling shareholders.
. For the period prior to an initial public offering by Jostens and so long
as DB Capital Investors beneficially owns at least one-half of the shares
of Jostens common stock it owns immediately following the merger or at
least $30 million in aggregate liquidation preference of redeemable
preferred stock, holders of Class D common stock will vote in favor of
one nominee to Jostens' board of directors specified by DB Capital
Investors.
. If, prior to an initial public offering, we engage in any equity
financing, DB Capital Investors will have the option to participate as a
purchaser in such financing such that DB Capital Investors would maintain
its percentage interest in our outstanding common equity securities.
Changes to Terms of Jostens Common Stock
General. Jostens existing common stock will, following the merger, be
denominated as Class A common stock. Jostens new Class A common stock will
have the rights, powers, privileges and restrictions specified in Jostens'
restated articles of incorporation, which are summarized above. These rights,
powers, privileges and restrictions will differ in certain respects from those
of Jostens existing common stock. These differences relate primarily to the
rights, powers, privileges and restrictions of the new Class A common stock
relative to the other classes of new common stock and the redeemable preferred
stock to be authorized in connection with the merger, including rights,
powers, privileges and restrictions in connection with a merger of Jostens
with another entity, other than the merger presently contemplated, or a
proposed resale of shares of Jostens Class D common stock. The following is a
summary of these differences. This summary is qualified in its entirety by
reference to the information set forth above under "--Jostens Existing Capital
Stock" and "--Jostens Capital Stock Following the Merger" and to Jostens'
existing articles of incorporation and bylaws in the case of Jostens existing
common stock and to Jostens' form of restated articles of incorporation in the
case of Jostens new Class A common stock.
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Relative Rights Generally. Jostens existing common stock will, following
the merger, no longer be Jostens' only class of capital stock. It will instead
be one of six classes of new common stock, and there will also be a class of
redeemable preferred stock outstanding. Immediately following the merger, the
outstanding shares of Jostens existing common stock will be redesignated as
Class A common stock and will constitute approximately 30% of Jostens
outstanding voting common stock. The outstanding shares of Jostens new Class D
common stock will constitute approximately 70% of Jostens outstanding voting
common stock, and the other outstanding shares of new common stock (Class B
common stock and Class C common stock) will generally have no voting rights.
The rights of the holders of Jostens new Class A common stock to receive
dividends and distributions will be subject to the rights of the holders of
the redeemable preferred stock and will be co-equal to the rights of the
holders of the other classes of new common stock. In the event of any stock
dividend, subdivision, combination or reclassification of any class of new
common stock, a corresponding change will be made to Jostens new Class A
common stock so that it is not adversely affected. In the event of an initial
public offering or sale of Jostens, the outstanding shares of Jostens new
Class A common stock as well as the outstanding shares of all other classes of
new common stock will automatically convert into shares of Jostens new common
stock upon the closing of such offering or sale.
Relative Rights Upon Merger or Resale of Class D Common Stock. Jostens new
Class A common stock will also have certain rights, powers, privileges and
restrictions in connection with a merger of Jostens with another entity, other
than the merger presently contemplated, or a proposed resale of shares of
Jostens new Class D common stock. In the event that Jostens merges with
another entity,other than in the merger presently contemplated, the holders of
Jostens new Class A common stock will be entitled to receive the same per
share consideration as is received by the holders of the other classes of new
common stock unless the holders of Jostens Class A common stock agree
otherwise. The holders of Jostens new Class A common stock will have the right
to "tag-along" in connection with any resale of Jostens new Class D common
stock by selling to the proposed transferee up to the same percentage of their
shares of Class A common stock as the percentage of the total number of shares
of Class D common stock being sold in the transaction. Jostens new Class A
common stock will be subject to mandatory redemption if and to the extent that
the holders thereof elect not to "tag-along" in connection with any such
resale of Jostens Class D common stock. The effect of the mandatory redemption
provision is that holders of Jostens Class D common stock can cause holders of
Jostens Class A common stock to sell their Class A common stock at the time
and, upon the same terms, as holders of Jostens Class D common stock propose
to sell their Class D common stock, which may not be at a time or at a price
that such holders of Jostens Class A common stock desire to sell their shares.
Other Changes. The restated articles of incorporation will not contain the
provision currently contained in Jostens' existing charter that provides for a
staggered board. Such a provision is not typically included in a charter of a
substantially privately-held company, which Jostens is expected to become upon
consummation of the Merger. In addition, the restated articles of
incorporation will contain indemnification provisions which are substantially
identical to the provisions currently contained in Jostens' existing bylaws.
EXPERTS
The consolidated financial statements of Jostens appearing in Jostens'
Annual Report on Form 10-K for the year ended January 1, 2000 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the shares of Jostens Class A common stock to be retained
in the merger is being passed upon for Jostens by William J. George, Vice
President, General Counsel and Corporate Secretary of Jostens.
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SHAREHOLDER PROPOSALS FOR
THE 2000 ANNUAL MEETING OF SHAREHOLDERS
If the merger is approved by Jostens shareholders and the merger is
completed, we do not expect to hold an annual meeting of shareholders. If the
merger agreement is not approved by Jostens shareholders or the merger is not
completed for any other reason, your board of directors requests that any
shareholder proposals intended for presentation at the 2000 annual meeting be
submitted to the Corporate Secretary, in writing no later than ten days after
the first public announcement of the date of such meeting for consideration
for inclusion in Jostens' proxy materials for such meeting. Members of the
Jostens proxy committee will have discretionary voting authority with respect
to all shares represented by proxies held by them at the 2000 annual meeting
for any matters raised at that meeting about which Jostens does not receive
proper notice prior to ten days after the first public announcement of the
date of such meeting.
By order of the Board of Directors,
/s/ William J. George
Corporate Secretary
Minneapolis, Minnesota
Dated: April 7, 2000
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Appendix A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 27, 1999 (the
"Agreement"), by and between Jostens, Inc., a Minnesota corporation (the
"Company"), and Saturn Acquisition Corporation, a Minnesota corporation
("MergerCo").
WHEREAS, the Board of Directors of the Company (the "Board") and the Board
of Directors of MergerCo have determined that the merger of MergerCo with and
into the Company (the "Merger"), in accordance with the Minnesota Business
Corporation Act (the "MBCA") and upon the terms and subject to the conditions
set forth in this Agreement, would be fair to and in the best interests of
their respective shareholders, and such Boards of Directors have approved such
Merger, pursuant to which each share of Common Stock, par value $.33 1/3 per
share of the Company (the "Common Stock") issued and outstanding immediately
prior to the Effective Time (as defined in Section 1.2) will be converted into
either (i) the right to receive cash or (ii) subject to the terms hereof and
other than as set forth herein, the right to retain at the election of the
holder thereof one share of Common Stock (which will thereafter be denominated
as a share of Class A Common Stock);
WHEREAS, (i) the Board has, in light of and subject to the terms and
conditions set forth herein, determined that the consideration to be paid for
each share of Common Stock in the Merger is fair to the shareholders of the
Company, and the Merger is otherwise in the best interest of the Company and
its shareholders, (ii) the Board and the Board of Directors of MergerCo have
approved this Agreement and the transactions contemplated hereby, (iii) the
shareholders of MergerCo have approved and adopted this Agreement and the
transactions contemplated hereby, and (iv) the Board has resolved to submit
this Agreement to a vote of the shareholders of the Company and, subject to
the terms hereof, to recommend approval and adoption of this Agreement by the
shareholders of the Company;
WHEREAS, it is intended that the Merger be recorded as a recapitalization
for financial reporting purposes; and
WHEREAS, MergerCo and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2) and in accordance
with the provisions of the MBCA, MergerCo shall be merged with and into the
Company, whereupon the separate corporate existence of MergerCo shall cease,
and the Company shall continue as the surviving corporation (the "Surviving
Corporation"). From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, immunities, powers and franchises,
of a public as well as a private nature, of the Company and MergerCo and be
subject to all the liabilities, obligations and duties of the Company and
MergerCo, all as more fully described in the MBCA.
Section 1.2 Closing: Effective Time. Subject to the provisions of Article
6, the closing of the Merger (the "Closing") shall take place in New York City
at the offices of Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, New
York 10166, as soon as practicable but in no event later than 10:00 a.m. New
York City time on the first business day after the date on which each of the
conditions set forth in Article 6 has been satisfied or waived by the party or
parties entitled to the benefit of such conditions, or at such other place, at
such other time
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or on such other date as MergerCo and the Company may mutually agree. The date
on which the Closing actually occurs is hereinafter referred to as the
"Closing Date." At the Closing, MergerCo and the Company shall cause articles
of merger for the Merger (the "Articles of Merger") to be executed and filed
with the Secretary of State of the State of Minnesota in the form required by
and executed in accordance with the applicable provisions of the MBCA. The
Merger shall become effective as of the date and time of such filings or such
other time after such filings as MergerCo and the Company shall agree to in
the Articles of Merger (the "Effective Time").
Section 1.3 Articles of Incorporation. At the Effective Time, and without
any further action on the part of the Company or MergerCo, the articles of
incorporation of the Company (as amended and restated in substantially the
form of which is set forth in Exhibit A hereto) shall be the articles of
incorporation of the Surviving Corporation and thereafter may be amended or
repealed as provided by law.
Section 1.4 Bylaws. The bylaws of MergerCo, as in effect immediately prior
to the Effective Time, shall become, from and after the Effective Time, the
bylaws of the Surviving Corporation, until thereafter altered, amended or
repealed as provided therein or in the articles of incorporation of the
Surviving Corporation and in accordance with applicable law.
Section 1.5 Directors and Officers. The directors of MergerCo and officers
of the Company, respectively, immediately prior to the Effective Time shall
become, from and after the Effective Time, the directors and officers of the
Surviving Corporation, until their respective successors are duly elected or
appointed or their earlier resignation or removal.
ARTICLE 2
CONVERSION OF SHARES; SHAREHOLDER APPROVAL
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Common Stock or any shares of capital stock of MergerCo:
(a) Capital Stock of MergerCo. Each share of Class A Common Stock, Class
B Common Stock, Class C Common Stock, Class D Common Stock and Class E
Common Stock of MergerCo issued and outstanding immediately prior to the
Effective Time shall be converted into and become one share of Class A
Common Stock, Class B Common Stock, Class C Common Stock, Class D Common
Stock and Class E Common Stock, as the case may be, of the Surviving
Corporation.
(b) Treasury Stock and MergerCo-Owned Stock. Each share of Common Stock
that is owned by the Company or any subsidiary of the Company and each
share of Common Stock that is owned by MergerCo or any affiliate of
MergerCo shall automatically be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion (Or Retention) of Common Stock. Except as otherwise
provided in Section 2.1(b) or 2.1(d) and subject to Sections 2.2 and 2.3
hereof, each issued and outstanding share of Common Stock (each, a "Share")
shall be converted into the following (the consideration set forth in
clauses (i), (ii) and (iii) below being collectively referred to as the
"Merger Consideration"):
(i) each Share with respect to which an election to retain such
Share has been effectively made pursuant to Section 2.2 and not revoked
or lost ("Electing Shares"), shall remain as one fully paid and
nonassessable Share (a "Non-Cash Election Share"), which shall be
denominated as a share of Class A Common Stock of the Surviving
Corporation at the Effective Time;
(ii) each Share listed on Exhibit B held by the persons set forth on
such Exhibit B (such persons, the "Management Continuing Shareholders,"
and such Shares, the "Management Rollover Shares"), shall remain as one
fully paid and nonassessable Share, which shall be denominated as a
share of Class A Common Stock of the Surviving Corporation at the
Effective Time; and
(iii) each other Share, other than Dissenting Shares (as defined in
Section 2.1(d)), shall be converted into the right to receive in cash,
without interest, from the Company following the Merger an amount equal
to $25.25 (the "Cash Election Price").
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(d) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, each share of Common Stock that is issued and outstanding
immediately prior to the Effective Time and that is held by a shareholder
who has properly demanded and perfected such shareholder's rights to
dissent from the Merger and to be paid the fair value of such shares in
accordance with Sections 302A.471 and 302A.473 of the MBCA (the "Dissenting
Shares"), shall not be converted into or exchangeable for the right to
receive the Merger Consideration, but the holder thereof shall be entitled
to such rights as are granted by the MBCA and the Surviving Corporation
shall make all payments to the holders of the shares of Common Stock with
respect to such demands in accordance with the MBCA; provided, however,
that if such holder shall have failed to perfect or shall have lost the
right to dissent and payment under the MBCA, each share of Common Stock
held such holder shall thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective Time, solely the right
to receive Merger Consideration as follows: subject to compliance with
Section 2.6, the holder of such Dissenting Shares shall be entitled to
receive the same combination of cash (without interest) and Non-Cash
Election Shares as a holder of the same number of shares who did not make a
Non-Cash Election with respect to any of such shares would be entitled to
receive in the Merger. The Company shall give reasonably prompt notice to
MergerCo of any demands received by the Company for payment under Sections
302A.471 and 302A.473 of the MBCA, and MergerCo shall have the right to
participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
MergerCo, make any payment with respect to, or settle or offer to settle,
such demands.
(e) Cancellation and Retirement of Common Stock. Each Share converted
into the right to receive the Cash Election Price pursuant to Section
2.1(c) shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall, to the extent such certificate
represents such Shares, cease to have any rights with respect thereto,
except the right to receive the cash applicable thereto, upon surrender of
such certificate in accordance with Section 2.5.
Section 2.2 Common Stock Elections. (a) Each person who, on or prior to the
Election Date referred to in clause (b) below, is a record holder of Shares
will be entitled, with respect to all or any portion of such holder's Shares
(other than Shares described in Section 2.1(b), Dissenting Shares, Management
Rollover Shares and any other Shares held by any of the Management Continuing
Shareholders), to make an unconditional election (a "Non-Cash Election") on or
prior to such Election Date to retain such Shares, on the basis set forth
below, subject to Section 2.3.
(b) MergerCo shall prepare and mail a form of election, which form shall be
subject to the reasonable approval of the Company (the "Form of Election"), to
be mailed by the Company with the Proxy Statement (as defined in Section 2.5)
to the record holders of Shares as of the record date for the Shareholders
Meeting (as defined in Section 2.5), which Form of Election shall be used by
each record holder of Shares who wishes to elect to retain, subject to the
provisions of Section 2.3, any or all Shares held by such holder. The Company
will use its reasonable efforts to make the Form of Election and the Proxy
Statement available to all persons who become holders of Shares during the
period between such record date and the Election Date (as defined below). Any
such holder's election to retain Shares shall have been properly made only if
the Exchange Agent (as defined in Section 2.6) shall have received at its
designated office, by 5:00 p.m., New York City time on the third trading day
preceding the date of the Shareholders Meeting (the "Election Date"), a Form
of Election properly completed and signed and accompanied by certificates for
the Shares to which such Form of Election relates, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of the Company (or by
an appropriate guarantee of delivery of such certificates as set forth in such
Form of Election from a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States, provided such certificates are in fact delivered to the
Exchange Agent within three New York Stock Exchange trading days after the
date of execution of such guarantee of delivery).
(c) Any Form of Election may be revoked by the holder submitting it to the
Exchange Agent only by written notice received by the Exchange Agent prior to
5:00 p.m., New York City time, on the Election Date (unless
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MergerCo and the Company determine not less than two business days prior to
the Election Date that the Effective Time is not likely to occur within five
business days following the date of the Shareholders Meeting, in which case
the Form of Election will remain revocable until a subsequent date which shall
be a date prior to the Effective Time determined by MergerCo and the Company).
In addition, all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by MergerCo and the Company that this
Agreement has been terminated in accordance with its terms and the Merger has
been abandoned. If a Form of Election is revoked, the certificate or
certificates (or guarantees of delivery, as appropriate) for the Shares to
which such Form of Election relates shall be promptly returned to the
shareholder submitting the same to the Exchange Agent.
(d) The determination of the Exchange Agent shall be binding as to whether
or not elections to retain Shares have been properly made or revoked pursuant
to this Section 2.2 with respect to Shares and when elections and revocations
were received by it. If the Exchange Agent determines that any election to
retain Shares was not properly made, such Shares shall be treated by the
Exchange Agent as Shares for which no election was received and such Shares
shall be converted in accordance with Section 2.1(c)(iii). The Exchange Agent
shall also make all computations as to the allocation and the proration
contemplated by Section 2.3, and any such computation shall be conclusive and
binding on the holders of Shares. The Exchange Agent may, with the mutual
agreement of MergerCo and the Company, make such rules as are consistent with
this Section 2.2 for the implementation of the elections provided for herein
as shall be necessary or desirable fully to effect such elections.
Section 2.3 Proration. (a) Notwithstanding anything in this Agreement to
the contrary, the aggregate number of Shares (excluding for purposes of this
Section 2.3 Management Rollover Shares) to be converted into the right to
retain Shares at the Effective Time (the "Non-Cash Election Number") shall be
equal to the sum of (i) the number of shares of Class A Common Stock, Class B
Common Stock, Class C Common Stock, Class D Common Stock and Class E Common
Stock of MergerCo which are outstanding as of immediately prior to the
Effective Time and (ii) the number of Management Rollover Shares, multiplied
by 0.06383, rounded up to the nearest whole number.
(b) If the number of Electing Shares exceeds the Non-Cash Election Number,
then each Electing Share shall be converted into the right to retain Non-Cash
Election Shares or receive the Cash Election Price in the following manner:
(i) a proration factor (the "Non-Cash Proration Factor") shall be
determined by dividing the Non-Cash Election Number by the total number of
Electing Shares;
(ii) the number of Electing Shares covered by each Non-Cash Election to
be converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Non-Cash Proration Factor by the total number
of Electing Shares covered by such Non-Cash Election rounded up to the
nearest whole number; and
(iii) all Electing Shares, other than those shares converted into the
right to retain Non-Cash Election Shares in accordance with Section
2.3(b)(ii), shall be converted into the right to receive the Cash Election
Price in accordance with Section 2.1(c)(iii) (on a consistent basis among
shareholders who made a Non-Cash Election in Section 2.1(c)(i), pro rata to
the number of Shares as to which they made such Non-Cash Election) as if
such Shares were not Electing Shares.
(c) If the number of Electing Shares is less than the Non-Cash Election
Number, then:
(i) all Electing Shares shall be converted into the right to retain
Shares in accordance with the terms of Section 2.1(c)(i);
(ii) additional Shares (other than Electing Shares, Dissenting Shares,
Management Rollover Shares and any other Shares held by any of the
Management Continuing Shareholders) shall be converted into the right to
retain Non-Cash Election Shares in accordance with the terms of Section
2.1(c) in the following manner:
(1) a proration factor (the "Cash Proration Factor") shall be
determined by dividing (x) the difference between the Non-Cash Election
Number and the number of Electing Shares, by (y) the total number of
Shares (other than Shares described in Section 2.1(b), Electing Shares,
Dissenting Shares and Management Rollover Shares); and
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(2) the number of Shares in addition to Electing Shares to be
converted into the right to retain Non-Cash Election Shares shall be
determined by multiplying the Cash Proration Factor by the total number
of Shares (other than Shares described in Section 2.1(b), Electing
Shares, Dissenting Shares and Management Rollover Shares); and
(iii) subject to Section 2.1(d), Shares subject to clause (ii) of this
paragraph (c) shall be converted into the right to retain Non-Cash Election
Shares in accordance with Section 2.1(c)(i) (on a consistent basis among
shareholders who held Shares as to which they did not make a Non-Cash
Election (other than shares described in Section 2.1(b), Dissenting Shares
and Management Rollover Shares), pro rata to the number of Shares as to
which they did not make a Non-Cash Election).
Section 2.4 Treatment of Options. (a) Subject to Section 2.4(b), the
Company shall take all action necessary so that each option to purchase shares
of Common Stock (each, a "Company Stock Option") (and any rights thereunder)
outstanding immediately prior to the Effective Time shall be canceled
immediately prior to the Effective Time in exchange for the right to receive
an amount in cash equal to the product of (i) the number of shares of Common
Stock subject to such Company Stock Option immediately prior to the Effective
Time and (ii) the excess, if any, of the Cash Election Price over the per
share exercise price of such Company Stock Option, to be delivered by the
Surviving Corporation immediately following the Effective Time. All applicable
withholding taxes attributable to the payments made hereunder or to
distributions contemplated hereby shall be deducted from the amounts payable
under this Section 2.4 and all such taxes attributable to the exercise of
Company Stock Options shall be withheld from the proceeds received in respect
of the shares of Common Stock issuable upon such exercise. Notwithstanding the
foregoing, any Company Stock Option with an exercise price greater than the
Cash Election Price immediately prior to the Effective Time shall be cancelled
immediately prior to the Effective Time, without any payment being made
therefor. The Company shall use its reasonable best efforts to obtain the
consent of each holder of Options to the foregoing treatment of such Options
to the extent required under the option plan of the Company pursuant to which
such Options were granted.
(b) Notwithstanding the provisions of Section 2.4(a), and subject to
agreeing with MergerCo upon a mutually satisfactory tax-free "rollover"
mechanism, each person listed on Exhibit C who, on or prior to the Election
Date, is the holder of a Company Stock Option will be entitled, with respect
to all or any portion of such holder's Company Stock Option, to make an
unconditional election to the Company in writing (a "Retention Election") on
or prior to the Election Date, to retain such portion of their Company Stock
Options as may be specified in such Retention Election in lieu of receiving a
cash payment, if any, in consideration for the cancellation of such portion of
their Company Stock Options in the manner described in Section 2.4(a). Any
portion of a Company Stock Option with respect to which a timely Retention
Election has been delivered to the Company (the "Elected Portion") shall,
whether or not then vested or exercisable, effective as of the Effective Time,
become and represent an option (a "Continuing Option") for the number of
Shares subject to the Elected Portion of such Company Stock Option immediately
prior to the Effective Time at an exercise price per share and on such terms
and conditions as may be mutually agreed upon with MergerCo. After the
Effective Time, each Continuing Option shall as of the Effective Time be
immediately fully vested and exercisable.
(c) Prior to the Effective Time, the Company shall have taken all actions
necessary or appropriate in the judgment of MergerCo to ensure that all stock
option, stock appreciation right or other equity-based plans maintained with
respect to the Shares, including the Jostens, Inc. 1992 Stock Incentive Plan,
shall terminate as of the Effective Time and the provisions in any other
compensation or benefit plan providing for the issuance, transfer or grant of
any capital stock of the Company or any interest in respect of any capital
stock of the Company shall be terminated as of the Effective Time, and the
Company shall use its reasonable best efforts to ensure that following the
Effective Time neither the Company nor any of its subsidiaries is or will be
bound by any Options (other than Continuing Options) which would entitle any
person, other than MergerCo or its affiliates, to beneficially own, or receive
any payments (other than as otherwise contemplated by Section 2.1 and this
Section 2.4) in respect of, any capital stock of the Company or the Surviving
Corporation.
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Section 2.5 Shareholders' Meeting; Proxy Statement. (a) Shareholders
Meeting. The Company, acting through the Board, will, as promptly as
practicable following the date of this Agreement and in consultation with
MergerCo:
(i) duly call, give notice of, convene and hold a meeting of its
shareholders for the purpose of approving and adopting this Agreement and
the transactions contemplated hereby (the "Shareholders Meeting"); and
(ii) (A) include in the Proxy Statement (as defined in Section 2.6(b))
the recommendation of the Board that the shareholders of the Company vote
in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby, as well as the written opinion of Credit
Suisse First Boston Corporation ("CSFB"), the Board's financial advisor,
that, as of the date of such opinion, the consideration to be received by
the shareholders of the Company pursuant to the Merger (other than members
of the Company's management who will retain, and other shareholders who
make a valid election to retain, an equity interest in the Company after
the Merger) is fair to such shareholders from a financial point of view and
(B) use its reasonable best efforts to obtain the necessary approval and
adoption of this Agreement and the transactions contemplated hereby by its
shareholders, provided, however, that the Board may fail to make or may
withdraw or modify such recommendation or fail to seek such approval if one
or more persons or group shall have made a Superior Proposal (as defined in
Section 7.1), and the Board has determined in good faith after consultation
with outside counsel that failure to so act would reasonably likely be
inconsistent with its fiduciary duties to the Company's shareholders.
(b) Proxy Statement. Promptly following the date of this Agreement, the
Company shall prepare a proxy statement relating to the Shareholders Meeting
(as amended or supplemented, the "Proxy Statement") and the Company shall
prepare and file with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-4 (as amended or supplemented, the "Form S-
4"), in which the Proxy Statement will be included. The Company shall use its
reasonable best efforts to have the Form S-4 declared effective under the
Securities Act of 1933, as amended (the "Securities Act"), as promptly as
practicable after such filing. The Company will use its reasonable best
efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after the Form S-4 is declared
effective under the Securities Act. The Company shall also take any action
required to be taken under any applicable state securities laws in connection
with the registration and qualification of the Non-Cash Election Shares in
connection with the Merger. MergerCo and the Company will cooperate with each
other in the preparation of the Proxy Statement. Without limiting the
generality of the foregoing, the Company will as promptly as practicable
notify MergerCo of the receipt of any comments from the SEC and any request by
the SEC for any amendment to the Proxy Statement or for additional
information. All filings with the SEC, including the Proxy Statement and any
amendment thereto, and all mailings to the Company's shareholders in
connection with the Merger, including the Proxy Statement, shall be subject to
the prior review, comment and approval of MergerCo (which approval by MergerCo
shall not be unreasonably withheld or delayed). MergerCo will furnish to the
Company the information relating to it required by the Securities Act,
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder, to be set forth in the Proxy
Statement. The Company agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof filed by it and cause such Proxy Statement to be
mailed to the Company's shareholders at the earliest practicable time.
Section 2.6 Payment for Common Stock. (a) Exchange Agent. At or before the
Effective Time, MergerCo shall designate a bank or trust company reasonably
acceptable to the Company to act as Exchange Agent in connection with the
Merger (the "Exchange Agent") for the purpose of exchanging certificates
representing Shares for the Merger Consideration. On the Closing Date,
MergerCo will make available to the Exchange Agent the cash portion of the
Merger Consideration to be paid in respect of the Shares. For purposes of
determining the cash portion of the Merger Consideration to be made available,
MergerCo shall assume that no holder of Shares will exercise dissenters
rights.
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(b) Exchange. Promptly after the Effective Time, the Surviving Corporation
shall cause the Exchange Agent to mail to each record holder, except the
holders of Dissenting Shares, as of the Effective Time, of any outstanding
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Common Stock (the "Certificates"), a form
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and instructions for use
in effecting the surrender of the Certificates for payment therefor. In
effecting the payment of the Cash Election Price in respect of Shares
represented by Certificates entitled to the payment of the Cash Election Price
pursuant to Section 2.1 (the "Cashed Shares"), upon the surrender of each such
Certificate, the Exchange Agent shall pay the holder of such Certificate the
Cash Election Price multiplied by the number of Cashed Shares, in
consideration therefor. Upon such payment (and the exchange, if any, of
Certificates formerly representing Shares for certificates representing Non-
Cash Election Shares) such Certificate shall forthwith be canceled. In
effecting the exchange of Non-Cash Election Shares in respect of Shares
represented by Certificates which, at the Effective Time, shall become Non-
Cash Election Shares, upon surrender of each such Certificate, the Exchange
Agent shall deliver to the holder of such Certificate a certificate
representing that number of whole Non-Cash Election Shares which such holder
has the right to receive pursuant to the provisions of Section 2.1, and cash
in lieu of fractional Non-Cash Election Shares as determined pursuant to
Section 2.6(e). Upon such exchange (and any payment of the Cash Election Price
for Cashed Shares), such Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates. If any certificate for any Non-Cash Election
Share is to be issued in a name, or if cash is to be remitted to a person,
other than that in which the Certificate for Shares surrendered for exchange
is registered, it shall be a condition of such exchange or payment (a) that
the Certificate so surrendered shall be properly endorsed, with signature
guaranteed, or otherwise in proper form for transfer and (b) the person
requesting such exchange shall pay any transfer or other taxes required by
reason of the issuance of certificates in a name of, or payment of cash to a
person, other than that of the registered holder of the Certificate
surrendered, or establish to the satisfaction of the Surviving Corporation
that such tax has been paid or is not applicable. Until surrendered in
accordance with the provisions of this Section 2.6, each Certificate (other
than Certificates representing Shares owned by the Company or any subsidiary
of the Company or by MergerCo or any affiliate of MergerCo and Certificates
representing Dissenting Shares) shall represent for all purposes only the
right to receive the Merger Consideration applicable thereto, without any
interest thereon, subject to any required withholding taxes.
(c) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions with respect to unexchanged Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
for Shares with respect to the unexchanged Shares represented thereby and no
cash payment in lieu of fractional Shares shall be paid to any such holder
pursuant to Section 2.6(e) until the surrender of such Certificate in
accordance with Article 2. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
Certificate representing whole shares of unexchanged Shares issued in
connection therewith, without interest, at the time of such surrender or as
promptly thereafter as practicable, the amount of any cash payable in lieu of
a fractional Share to which such holder is entitled pursuant to Section 2.6(e)
and the proportionate amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
unexchanged Shares, and at the appropriate payment date, the proportionate
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date subsequent to
such surrender payable with respect to such whole unexchanged Shares.
(d) No Further Ownership Rights in Shares Exchanged for Cash. The cash paid
upon the surrender for exchange of Certificates representing Shares in
accordance with the terms of Article 2 shall be deemed to have been paid in
full satisfaction of all rights pertaining to the Shares exchanged for cash
theretofore represented by such Certificates.
(e) No Fractional Shares. No certificates or scrip representing fractional
Non-Cash Election Shares shall be issued in connection with the Merger, and
such fractional share interests will not entitle the owner thereof to vote or
to any rights of a shareholder of the Surviving Corporation after the Merger.
Notwithstanding any other
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provision of this Agreement, each record holder of Shares exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of
a Non-Cash Election Share (after taking into account all Shares delivered by
such holder) shall receive, in lieu thereof, a cash payment (without interest)
equal to such fraction multiplied by the Cash Election Price.
(f) Termination of Exchange Fund. Any portion of the Merger Consideration
deposited with the Exchange Agent pursuant to this Section 2.2 (the "Exchange
Fund") which remains undistributed to the holders of the Certificates
representing Shares for six months after the Effective Time shall be delivered
to the Surviving Corporation, upon demand, and any holders of Shares prior to
the Merger who have not theretofore complied with Articles 1 and 2 shall
thereafter look only to the Surviving Corporation and only as general
creditors thereof for payment of their claim for cash, if any, for unexchanged
Shares, if any, for any cash in lieu of fractional Non-Cash Election Shares or
for any dividends or distributions with respect to unexchanged Shares, as
applicable, to which such holders may be entitled.
(g) No Liability. None of MergerCo, the Surviving Corporation nor the
Exchange Agent shall be liable to any person in respect of any Non-Cash
Election Shares (or dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to MergerCo as follows:
Section 3.1 Organization. Each of the Company and each of its subsidiaries
is duly incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of the Company and each of its
subsidiaries is duly qualified to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where such failures to be so duly qualified and in good standing,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect (as defined in Section 8.1(b)) with
respect to the Company. The Company has previously delivered or made available
to MergerCo correct and complete copies of the articles or certificates of
incorporation and bylaws (or equivalent governing instruments), as currently
in effect, of the Company and each of its subsidiaries.
Section 3.2 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, par value $.33 1/3 per share,
and 4,000,000 shares of Preferred Stock, par value $1.00 per share. As of
December 15, 1999, there were (i) no shares of Preferred Stock issued and
outstanding, (ii) 33,324,721 shares of Common Stock issued and outstanding and
(iii) no shares of Common Stock of the Company held in the treasury of the
Company. Section 3.2 of the letter delivered to MergerCo concurrently herewith
(the "Disclosure Letter") sets forth a complete and accurate schedule as of
the date hereof of all outstanding options to purchase Common Stock,
identifying the holder of each such option and the applicable exercise price.
Since December 15, 1999, no additional shares of capital stock have been
issued by the Company (except such shares of Common Stock, if any, that have
been issued pursuant to the exercise of stock options so identified in Section
3.2 of the Disclosure Letter) and, no additional stock options or other stock
rights have been granted. No stock appreciation rights have been granted or
are outstanding. All of the issued and outstanding shares of Common Stock have
been duly authorized and are validly issued, fully paid, nonassessable and
were not issued in violation of any preemptive rights or rights of any person
to acquire such shares. Except as disclosed in this Section 3.2 or in Section
3.2 of the Disclosure Letter, as of the date hereof, (A) there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or
any of its subsidiaries is a party or by which any of them is bound
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obligating the Company or any of its subsidiaries to issue, sell, redeem or
otherwise acquire or vote any shares of capital stock or other equity
securities of the Company or of any of its subsidiaries and (B) the Company is
not a party to or bound by (x) any agreement or commitment pursuant to which
the Company is or could be required to register any securities under the
Securities Act or (y) any debt agreements or instruments which grant any
rights to vote (contingent or otherwise) on matters on which shareholders of
the Company may vote.
Section 3.3 Subsidiaries. Except as disclosed in the SEC Filings (as
defined in Section 8.1(d)) or in Section 3.3 of the Disclosure Letter, the
Company does not own, directly or indirectly, (a) any shares of capital stock
of any corporation or (b) any other equity interest in any person, domestic or
foreign. All of the outstanding shares of capital stock and all equity
interests of each of the Company's subsidiaries that are owned by the Company
or any other subsidiary of the Company (collectively, the "Subsidiary Shares")
have been duly authorized and are validly issued, fully paid and nonassessable
and were not issued in violation of any preemptive rights or rights of any
person to acquire such shares. There are no irrevocable proxies or similar
obligations with respect to any of the Subsidiary Shares and, except as set
forth in the SEC Filings or in Section 3.3 of the Disclosure Letter, all of
the Subsidiary Shares are owned by the Company free and clear of all liens,
claims, pledges, charges, options, security interests, encumbrances or
restrictions of any kind whatsoever (collectively, "Liens") with respect
thereto. Except as disclosed in Section 3.3 of the Disclosure Letter, the
Company owns and has full voting and disposition power over all of the equity
interests of each of its subsidiaries.
Section 3.4 Authority Relative to this Agreement. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject to obtaining the necessary approval of its shareholders in
accordance with MBCA, to consummate the transactions contemplated hereby. The
Board at a meeting duly called and held, has unanimously (i) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are fair to and in the best interests of the shareholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby, including
the Merger, and (iii) resolved to recommend that the holders of the Shares
approve and adopt this Agreement and the transactions contemplated hereby,
including the Merger. No other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than, with respect to the Merger, the
approval and adoption of this Agreement by a majority of the outstanding
Shares in accordance with the MBCA). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by MergerCo, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
Section 3.5 Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(a) conflict with or result in any violation of any provision of the articles
of incorporation or bylaws (or equivalent governing instruments) of the
Company or any of its subsidiaries, (b) except as set forth in Section 3.5 of
the Disclosure Letter, require any consent, approval or notice under, or
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
agreement or other instrument or obligation (collectively, "Contracts and
Other Agreements") to which the Company or any of its subsidiaries is a party
or by which any of them or any portion of their properties or assets may be
bound or (c) subject to the approvals, filings and consents referred to in
Section 3.6, violate any order, judgment, writ, injunction, determination,
aware, decree, law, statute, rule or regulation (collectively, "Legal
Requirements") applicable to the Company or any of its subsidiaries or any
portion of their properties or assets, except in the case of clauses (b) and
(c), with respect to matters that are not, individually or in the aggregate,
reasonably likely to (x) result in a Material Adverse Effect with respect to
the Company, (y) impair the ability of the Company to perform its obligations
under this Agreement in any material respect or (z) delay in any material
respect or prevent the consummation of any of the transactions contemplated by
this Agreement.
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Section 3.6 Governmental Approvals. Except as set forth in Section 3.6 of
the Disclosure Letter, no consent, approval or authorization of, or
declaration or filing with, any foreign, federal or state, governmental
department, commission, board, bureau, agency or instrumentality (each, a
"Governmental Entity") on the part of the Company or any of its subsidiaries
that has not been obtained or made is required in connection with the
execution or delivery by the Company of this Agreement or the consummation by
the Company of the transactions contemplated hereby, other than (i) the filing
and recordation of the appropriate merger documents as required by the MBCA
and compliance with Sections 302A.471 and 302A.473 of the MBCA regarding
dissenters rights, (ii) the filing with the SEC of the Proxy Statement and the
Form S-4 and compliance with provisions of the Securities Act or Exchange Act
applicable to the transactions contemplated by this Agreement, (iii) such
filings as may be required by any applicable state securities or "blue sky"
laws or state takeover laws, and (iv) consents, approvals, authorizations,
declarations or filings that, if not obtained or made, are not, individually
or in the aggregate, reasonably likely to (x) result in a Material Adverse
Effect with respect to the Company, (y) impair the ability of the Company to
perform its obligations under this Agreement in any material respect or (z)
delay in any material respect or prevent the consummation of any of the
transactions contemplated hereby.
Section 3.7 SEC Filings; Financial Statements. The Company has made all
required SEC Filings. As of their respective dates, the SEC Filings complied
as to form in all material respects with the requirements of the Exchange Act,
and the rules and regulations of the SEC promulgated thereunder applicable to
such SEC Filings, and the SEC Filings did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements set forth
in the SEC Filings comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
promulgated under the Exchange Act and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes to such
financial statements) and fairly present in all material respects the
consolidated financial position of the Company and its subsidiaries at the
respective dates thereof and the consolidated results of operations and cash
flows for the respective periods then ended (subject, in the case of unaudited
interim financial statements, to exceptions permitted by Form 10-Q under the
Exchange Act).
Section 3.8 Information Supplied. Neither the Form S-4 nor the Proxy
Statement will, either at the date the Proxy Statement is first mailed to the
Company's shareholders or at the time of the Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company
with respect to statements made based on information supplied by MergerCo or
any of its affiliates in writing specifically for inclusion therein. The Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder
except that no representation or warranty is made by the Company with respect
to statements made therein based on information supplied by MergerCo or any of
its affiliates in writing specifically for inclusion therein.
Section 3.9 Absence of Certain Changes. Except as set forth in the SEC
Filings or set forth in Section 3.9 of the Disclosure Letter, since September
30, 1999, except in connection with this transaction, the Company and its
subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been (i) any change, condition, event or
occurrence which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect with respect to the
Company, (ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock, (iii) any split, combination or reclassification
of any of its capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (iv) (x) any granting by the Company or any
of its subsidiaries to any executive officer or other key employee of the
Company or any of its subsidiaries of any increase in compensation, except for
normal increases in the ordinary course of business consistent with past
practice or as required under employment agreements in effect as of September
30, 1999, (y) any granting by the Company or
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any of its subsidiaries to any such executive officer of any increase in
severance or termination pay, except as was required under any employment,
severance or termination agreements in effect as of September 30, 1999 or (z)
any entry by the Company or any of its subsidiaries into any employment,
severance or termination agreement with any such executive officer except in
the ordinary course of business consistent with past practice, (v) any damage,
destruction or loss to property, whether or not covered by insurance, that has
had or would reasonably be expected to have a Material Adverse Effect with
respect to the Company or (vi) except insofar as may have been disclosed in
the SEC Filings or required by a change in generally accepted accounting
principles ("GAAP"), any change in accounting methods, principles or
practices.
Section 3.10 Finders and Investment Bankers. Neither the Company nor any of
its officers or directors has employed any investment banker, business
consultant, financial advisor, broker or finder in connection with the
transactions contemplated by this Agreement, except for CSFB and Devon Value
Advisers, or obligated the Company or any of its subsidiaries to pay any
investment banking, business consultancy, financial advisory, brokerage or
finders' fees or commissions in connection with the transactions contemplated
hereby, except for fees payable to CSFB and Devon Value Advisers. The amount
of such fees payable to CSFB and Devon Value Advisers and the terms related
thereto have been previously and accurately disclosed in writing to MergerCo.
Section 3.11 Voting Requirement. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock in favor of approval and
adoption of this Agreement and the Merger is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby under any applicable law,
rule or regulation or pursuant to the requirements of the Company's articles
of incorporation or bylaws.
Section 3.12 Litigation. Except as disclosed in the SEC Filings or in
Section 3.12 of the Disclosure Letter, there is no action, suit,
investigation, arbitration, claim, or proceeding pending or, to the knowledge
of the Company, threatened, involving the Company or any of its subsidiaries
before any court, arbitral authority or Governmental Entity which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect or have a Material Adverse Effect on the
ability of the Company to consummate the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
court, Governmental Entity or arbitrator outstanding against the Company or
any of its subsidiaries having any such effect.
Section 3.13 Taxes. Each of the Company and any consolidated, combined,
unitary or aggregate group for tax purposes of which the Company is or has
been a member has timely filed all Tax Returns (defined below) required to be
filed by it and has paid, or has set up an adequate reserve in accordance with
GAAP for the payment of, all Taxes (defined below) required to be paid for the
taxable periods covered by such returns, other than Taxes that it is
contesting in good faith in appropriate proceedings and except such an amount
of Taxes the nonpayment of which has not had or would not reasonably be
expected to have a Material Adverse Effect with respect to the Company, and
the most recent financial statements contained in the SEC Filings reflect an
adequate reserve in accordance with GAAP for all material Taxes payable by the
Company and each of its subsidiaries accrued through the date of such
financial statements whether or not shown as being due on any returns. All
material Taxes that the Company and its subsidiaries are required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid or accrued. The unpaid Taxes, including any contingent tax
liabilities and net deferred tax liabilities, of the Company and each of its
subsidiaries which have accrued as of the date of the most recent financial
statements contained in the SEC Filings do not materially exceed the reserve
for accrued tax liability set forth or included in such financial statements.
Except as set forth in the SEC Filings or in Section 3.13 of the Disclosure
Letter, neither the Company nor any of its subsidiaries has been notified in
writing that any Tax Return of the Company or any of its subsidiaries is
currently under audit by the Internal Revenue Service (the "IRS") or any state
or local tax agency and no action, suit, investigation, claim or assessment is
pending or, to the knowledge of the Company, proposed with respect to any
material amount of Taxes of the Company or any of its subsidiaries; no
agreements have been made by the Company or any of its subsidiaries for the
extension of time or the waiver of the statute of limitations for the
assessment or payment of any federal, state or local Taxes; neither the
Company nor any of its subsidiaries has
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been notified in writing of that any material claim for unpaid Taxes has
become a lien or encumbrance of any kind against the property of the Company
or any of its subsidiaries or is being asserted against the Company or any of
its subsidiaries; neither the Company nor any subsidiary has made, is
obligated to make, or is party to any agreement that could obligate it to
make, any payment that will not be deductible by the Company either by reason
of Section 280G or Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"); and the Company is not a United States Real Property
Holding Corporation (a "USRPHC") within the meaning of Section 897 of the Code
and was not a USRPHC on any "determination date" (as defined in Section 1.897-
2(c) of the Treasury Regulations) that occurred in the five-year period
preceding the Closing Date. As used herein, "Taxes" shall mean any taxes of
any kind, including but not limited to those on or measured by or referred to
as income, gross receipts, capital, sale, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, real estate, personal property or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to
tax or additional amounts imposed by any Governmental Entity. As used herein,
"Tax Return" shall mean any return, report or statement required to be filed
with any Governmental Entity with respect to Taxes.
Section 3.14 Compliance with Laws. (a) Except as disclosed in Section
3.14(a) of the Disclosure Letter, the conduct of business by the Company and
its subsidiaries since January 1, 1997 has not violated or breached and
currently does not violate or breach (and no event has occurred which with
notice or the lapse of time, or both, would constitute a violation or breach
of) any laws, statutes, ordinances or regulations of any Governmental Entity
required for the Company and its subsidiaries to conduct its business as
currently conducted, or applicable to the Company or any of its properties or
assets including, without limitation, federal and state (a) laws and
regulations affecting the protection of the health and safety of employees,
and (b) laws and regulations affecting equal employment opportunity, except
for violations and breaches which, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect
with respect to the Company. Except as set forth in the SEC Filings or in
Section 3.14(a) of the Disclosure Letter, there are no unresolved notices of
deficiency or charges of violation brought or, to the knowledge of the
Company, threatened or pending against the Company, which individually or in
the aggregate have had or would reasonably be expected to have a Material
Adverse Effect with respect to the Company.
(b) Except as disclosed in Section 3.14(b) of the Disclosure Letter, each
of the Company and each of its subsidiaries has all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity (including, but not limited to any nongovernmental self-
regulatory agency) necessary for it to own or lease and to operate its
properties or otherwise to carry on its business as it is now being conducted
(all of these matters are hereinafter referred to collectively as "Company
Permits"), except those the absence of which, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Company. Neither the Company nor
any of its subsidiaries has received any notice or claim pertaining to the
failure to obtain any Company Permit, except for any such notice or claim
regarding any such failure that, individually or in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect with
respect to the Company.
Section 3.15 Environmental Matters. (a) Except for such matters that are
specifically disclosed in the SEC Filings or in Section 3.15 of the Disclosure
Letter (i) the assets, Real Property, Former Real Property, businesses and
operations of the Company and its subsidiaries are and have been in compliance
with applicable Environmental Laws (as defined below); (ii) the Company and
its subsidiaries have obtained and, as currently operating, are and have been
in compliance with all Company Permits necessary under any Environmental Law
for the conduct of the business and operations of the Company and its
subsidiaries in the manner now conducted; (iii) all Hazardous Substances
generated at the Real Property or Former Real Property or in connection with
any operations of the Company have been transported and otherwise handled,
treated and disposed of in compliance with all applicable Environmental Laws
and in a manner that does not result in liability under Environmental Laws;
(iv) no Hazardous Substances have been disposed of or otherwise released,
handled or stored by the
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Company on the Real Property or Former Real Property on which the Company's
business is or has been conducted or elsewhere in violation of applicable
Environmental Laws and (v) neither the Company nor any of its subsidiaries nor
any of their respective assets, Real Property, Former Real Property,
businesses or operations has received or is subject to any outstanding order,
decree, judgment, complaint, agreement, claim, citation, notice,
investigation, inquiry or proceeding indicating that the Company or any of its
subsidiaries is or may be (a) liable for a violation of any Environmental Law
or (b) liable for any Environmental Liabilities and Costs (including, without
limitation, any such Environmental Liabilities and Costs incurred in
connection with being designated as a "potentially responsible party" pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act or
any analogous state law), except to the extent such non-compliance, liability,
violation or failure to hold Company Permits as described in the
representations in the preceding clauses (i) through (v), individually or in
the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect with respect to the Company.
(b) For purposes of Section 3.15(a), the terms below shall have the
following meanings:
"Environmental Law" means any law (including, without limitation, common
law), regulation, ordinance, guideline, code, decree, judgment, order,
permit or authorization or other legally enforceable requirement of any
Governmental Entity relating to toxic torts, worker or public safety or
health and the indoor and outdoor environment, including, without
limitation, pollution, contamination, Hazardous Substances, cleanup,
regulation and protection of the air, water or soils in the indoor or
outdoor environment;
"Environmental Liabilities and Costs" means all damages, penalties,
obligations or clean-up costs assessed or levied pursuant to any
Environmental Law; and
"Hazardous Substances" means petroleum products, asbestos, radioactive
material, or hazardous or toxic substances or wastes as defined or
regulated under any Environmental Law or the presence of which poses a
hazard to the health or safety of persons.
"Former Real Property" means any real property in which the Company or
any of its Subsidiaries previously held, but no longer holds, any legal,
beneficial, equitable or leasehold interest; provided however, that any
representation or warranty contained in this Section 3.15 shall only apply
to Former Real Property during the periods such real property was owned or
operated by the Company.
Section 3.16 Certain Employment Agreements. Except as disclosed in Section
3.16 of the Disclosure Letter or in the SEC Fillings, neither the Company nor
any of its subsidiaries is a party to or bound by any Contract or Other
Agreement regarding the employment, services, consulting, termination or
severance from employment of any director, officer or employee of the Company
or any of its subsidiaries that provides for or could result in payments in
excess of $200,000 in any twelve month period.
Section 3.17 Employee Benefit Matters. (a) Each of the Company and each of
its subsidiaries since January 1, 1997 has complied, and currently is in
compliance with the applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Code and all other applicable
laws with respect to each compensation or benefit plan, agreement, policy,
practice, program, or arrangement (whether or not subject to ERISA) maintained
by the Company or any of its subsidiaries for the benefit of any employee,
former employee, independent contractor or director of the Company or any of
its subsidiaries (including, without limitation, any employment agreements or
any pension, savings, profit-sharing, bonus, medical, insurance, disability,
severance, executive compensation, fringe benefit, incentive, stock option,
performance pay, loan or loan guarantee, plant closing, change of control,
equity-based or deferred compensation plans) (collectively, the "Plans"),
except where such non-compliance which, individually or in the aggregate, has
not had and would not reasonably be expected to have a Material Adverse Effect
with respect to the Company.
(b) The Company has provided or made available to MergerCo a current,
accurate and complete copy of each Plan and, to the extent applicable to the
Plans, (i) summary plan descriptions, (ii) Forms 5500, for 1998 and (iii)
actuarial reports.
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(c) Each of the Plans that is intended to qualify under Section 401(a) of
the Code has received, or has filed for, a favorable determination letter from
the IRS ruling that the Plan does so qualify and that the trust is exempt from
taxation pursuant to Section 501(a) of the Code.
(d) Except as set forth in Section 3.17(d) of the Disclosure Letter,
neither the Company nor any of its subsidiaries has since January 1, 1997
maintained, adopted or established, contributed or been required to contribute
to, or otherwise participated in or been required to participate in, any
employee benefit plan or other program or arrangement subject to Title IV of
ERISA (including, without limitation, a "multi-employer plan" (as defined in
Section 3(37) of ERISA) and a defined benefit plan (as defined in Section
3(35) of ERISA)) or any plan otherwise subject to the minimum funding
standards of ERISA Section 302 or Code Section 412.
(e) Except as set forth in the SEC Filings or Section 3.17(e) of the
Disclosure Letter, no Plan provides any health or medical benefits (whether or
not insured) with respect to current or former employees of the Company beyond
their retirement or other termination of service with the Company (other than
coverage mandated by Code Section 4980B or applicable law).
(f) Except as set forth in Section 3.17(f) of the Disclosure Letter,
neither the Company nor any of its subsidiaries has incurred any withdrawal
liability with respect to any Plan that is a multiemployer plan (within the
meaning of Section 3(37)) of ERISA).
(g) No audit or investigation by any governmental authority is pending or,
to the knowledge of the Company, threatened, nor has any reportable event
(within the meaning of Section 4043 of ERISA) (other than an event for which
the 30-day notice period is waived) prohibited transaction (within the meaning
of Section 4975 of the Code or Section 406 of ERISA) or breach of fiduciary
duty occurred with respect to any Plan that has had or would be reasonably
expected to have a Material Adverse Effect with respect to the Company.
(h) All benefits due under each Plan have been timely paid and there is no
lawsuit or claim, other than routine uncontested claims for benefits, pending,
or to the knowledge of the Company, threatened against any Plan or the
fiduciaries of any such plan or otherwise involving or pertaining to any such
plan, and no basis exists for any such lawsuit or claim, except where such
claim or basis, if proven, would not be reasonably likely to have a Material
Adverse Effect with respect to the Company.
(i) Except as set forth in Section 3.17(i) of the Disclosure Letter, no
payments or benefits under any Plan are triggered (in whole or in part) solely
as a result of the transactions contemplated by this Agreement.
(j) No civil or criminal action brought pursuant to the provisions of Title
I, Subtitle B, Part 5 is pending or, to the knowledge of the Company, is
threatened against any fiduciary of any Plan, and none of the Plans nor any
fiduciary thereof has been the direct or indirect subject of an audit
investigation or examination by any governmental or quasi-governmental agency
that has had or would be reasonably expected to have a Material Adverse Effect
with respect to the Company.
(k) Except as set forth in Section 3.17(k) of the Disclosure letter, no
agreement, commitment or obligation exists to materially increase any benefit
under any Plan or to adopt any new Plan.
(l) Each Plan that is a group health plan has been operated in compliance
in all material respects with Code Section 4980B and Sections 601-609 of
ERISA.
(m) No Plan has any material unfunded accrued benefits that are not fully
reflected in the Company's financial statements.
Section 3.18 Labor Relations. Except as set forth in Section 3.18 of the
Disclosure Letter, there are: (i) no collective bargaining agreements or other
labor agreements to which the Company or any of its subsidiaries is a party or
by which it is bound; and (ii) no pending or, to the knowledge of the Company,
threatened
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developments concerning labor matters with respect to the Company or any of
its subsidiaries; except for such agreements or developments which,
individually or in the aggregate, have not had and would not be reasonably
expected to have a Material Adverse Effect with respect to the Company.
Section 3.19 Intellectual Property. Except as set forth in Section 3.19 of
the Disclosure Letter, the Company or one of its subsidiaries owns or
possesses adequate rights to use all material patents, trademarks, trade
names, inventions, processes, designs, formulas, know-how and other
intellectual property rights necessary for the conduct of the business of the
Company and its subsidiaries as presently conducted (other than commercially
available software). Except as set forth in Section 3.19 of the Disclosure
Letter, neither the Company nor any of its subsidiaries has received any
written notice, nor has any claim been made in writing in the past year, that
any intellectual property owned or used by the Company or any of its
subsidiaries is invalid or ineffective, that its use infringes in any material
respect on similar rights owned or alleged to be owned by others or that any
of such intellectual property is being infringed upon by others.
Section 3.20 Real Property. (a) Set forth in SEC Filings or in Section
3.20(a) of the Disclosure Letter is (i) a complete list of all real property
(the "Owned Property") owned by the Company or any of its subsidiaries,
together with the principal use(s) for which each such Owned Property is used,
and (ii) is a complete list of all real property with respect to which the
Company or any of its subsidiaries is lessee, sublessee, licensee or other
occupant or user (the "Leased Property") together with the principal use(s)
for which each Leased Property is used. The Leased Property is sometimes
referred to collectively herein with the Owned Property as the "Real
Property". A true and complete copy of each material lease with all amendments
and modifications (the "Real Property Leases" has been delivered or made
available to MergerCo.
(b) With respect to the Real Property Leases, the Company has not received
written notice of, and is not aware of, any breach or event of default on its
part except where such breach, default or condition, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect with respect to the Company.
(c) The Company and, as applicable, each of its subsidiaries, has good and
marketable title in fee simple to the Owned Property, in each case free and
clear of any Liens, mortgages, deeds of trust, judgments, rights,
encroachments, easements, rights-of-way, ordinances, covenants, conditions,
restrictions and other matters except where such impairment to title,
individually or in the aggregate, has not had or would not reasonably be
expected to have a Material Adverse Effect with respect to the Company.
Section 3.21 Opinion of Financial Advisor. The Company has received the
written opinion of CSFB, dated the date of this Agreement, to the effect that,
as of the date of such opinion, the consideration to be received in the Merger
by the Company's shareholders (other than members of the Company's management
who will retain, and other shareholders who make a valid election to retain,
an equity interest in the Company after the merger) is fair to the holders of
the Shares from a financial point of view.
Section 3.22 State Takeover Laws. The provisions of Sections 302A.671 and
302A.673 of the MBCA are not applicable to this Agreement or any of the
transactions contemplated by this Agreement.
Section 3.23 Rights Agreement. The Company has taken all necessary action
so that neither the execution of this Agreement nor the consummation of the
Merger will (i) cause the Rights (as such term is defined in the Company's
Rights Agreement, dated July 23, 1998 (the "Rights Agreement")) to become
exercisable, (ii) cause MergerCo or any of its affiliates to become an
Acquiring Person (as such term is defined in the Rights Agreement) or (iii)
give rise to a Distribution Date or a Triggering Event (each as defined in the
Rights Agreement). The Company has furnished or made available to MergerCo
true and complete copies of the Rights Agreement and all amendments thereto.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGERCO
MergerCo hereby represents and warrants to the Company as follows:
Section 4.1 Organization. MergerCo is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. MergerCo is a newly formed corporation, and except for
activities incident to the Merger, has not engaged in any business activities
of any type or kind whatsoever. MergerCo has no direct or indirect
subsidiaries. MergerCo has delivered to the Company true and correct copies of
its articles of incorporation and bylaws as in effect on the date hereof and
as proposed to be in effect immediately prior to the Effective Time.
Section 4.2 Authority Relative to this Agreement. MergerCo has requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by MergerCo and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Board of Directors and shareholders of MergerCo and no other corporate
proceedings on the part of MergerCo are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by MergerCo and, assuming the due
authorization, execution and delivery hereof by the Company, constitutes a
valid and binding agreement of MergerCo, enforceable against it in accordance
with its terms, except that such enforceability (a) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and (b) is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
Section 4.3 Noncontravention. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(a) conflict with or result in any violation of any provision of the
certificate of incorporation or bylaws of MergerCo, (b) require any consent,
approval or notice under, or conflict with or result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contracts and Other
Agreements to which MergerCo is a party or by which it or any portion of its
properties or assets may be bound or (c) subject to the matters referred to in
clauses (i) and (ii) of Section 4.4 below, violate any Legal Requirements
applicable to MergerCo or any material portion of its properties or assets;
except with respect to matters that, individually or in the aggregate, have
not had and would not reasonably be expected to (x) have a Material Adverse
Effect with respect to MergerCo, (y) impair the ability of MergerCo to perform
its obligations under this Agreement in any material respect or (z) delay in
any material respect or prevent the consummation of any of the transactions
contemplated by this Agreement.
Section 4.4 Governmental Approvals. Except as set forth in Section 3.6 of
the Disclosure Letter, no consent, approval or authorization of, or
declaration or filing with any Governmental Entity on the part of the Company
or any of its subsidiaries that has not been obtained or made is required in
connection with the execution or delivery by the Company of this Agreement or
the consummation by the Company of the transactions contemplated hereby, other
than (i) the filing and recordation of the appropriate merger documents as
required by the MBCA and compliance with Section 302A.471 and 302A.473 of the
MBCA regarding dissenters rights, (ii) the filing with the SEC of the Proxy
Statement and the Form S-4, and compliance with provisions of the Securities
Act or Exchange Act applicable to the transactions contemplated by this
Agreement, (iii) such filings as may be required by any applicable state
securities or "blue sky" laws or state takeover laws, and (iv) consents,
approvals, authorizations, declarations or filings that, if not obtained or
made, individually or in the aggregate, have not had and would not reasonably
be expected to have a Material Adverse Effect with respect to MergerCo, (y)
impair the ability of MergerCo to perform its obligations under this Agreement
in any material respect or (z) delay in any material respect or prevent the
consummation of any of the transactions contemplated hereby.
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Section 4.5 Information Supplied. None of the information supplied or to be
supplied in writing by MergerCo or any of its affiliates specifically for
inclusion in the Form S-4 or the Proxy Statement will, either at the date the
Form S-4 or the Proxy Statement is first mailed to the Company's shareholders
or the time of the Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Notwithstanding the
foregoing, MergerCo makes no representation or warranty with respect to any
information supplied by the Company or any of its representatives which is
contained in or incorporated by reference in any of the foregoing documents.
Section 4.6 Financing. MergerCo has provided the Company with true and
correct copies of signed written financing commitments (the "Financing
Commitments") with respect to the Merger obtained as of the date of this
Agreement.
Section 4.7 Management Arrangements. MergerCo has provided the Company with
true and correct copies of agreed upon written term sheets relating to the
participation of certain members of the Company's management in the
transactions contemplated by this Agreement.
Section 4.8 Ownership of Shares. MergerCo does not own any shares of Common
Stock of the Company.
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Company will, and will cause each of its
subsidiaries to, conduct its operations according to its ordinary and usual
course of business and consistent with past practices, and the Company will,
and will cause each of its subsidiaries to, use their respective reasonable
best efforts, consistent with prudent business judgment, to preserve intact
its business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with licensors,
suppliers, contractors, distributors, customers and others having business
relationships with it. Without limiting the generality of the foregoing, and
except as otherwise expressly contemplated by this Agreement, prior to the
Effective Time, the Company will not, and will cause each of its subsidiaries
not to, without the prior written consent of MergerCo (which consent will not
be unreasonably withheld or delayed):
(a) amend their respective articles or certificates of incorporation or
bylaws (or equivalent governing instruments);
(b) authorize for issuance, issue, sell, pledge, encumber or deliver or
agree or commit to issue, sell, pledge, encumber or deliver any shares of
capital stock, or issue any securities convertible into, exchangeable for
or representing a right to purchase or receive, or enter into any contract
or arrangement with respect to the issuance of, shares of capital stock,
except in the ordinary course of business under current employee benefit
plans and as required by employee stock option agreements in effect on the
date hereof and other than Shares issuable upon exercise of Company Stock
Options in accordance with the terms thereof;
(c) split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or to any affiliate of a shareholder, except for the payment
by the Company of regular quarterly cash dividends not to exceed $0.22 per
share of Common Stock and except that any wholly owned subsidiary of the
Company may pay dividends to the Company or to another wholly owned
subsidiary of the Company; or redeem or otherwise acquire any of its
securities or any securities of its subsidiaries;
(d) except as set forth in Section 5.1(d) of the Disclosure Letter, (i)
incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee
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any debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition to another person
or enter into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary course
of business consistent with past practice, or (ii) make any loans, advances
or capital contributions to, or investments in, any other person other than
to or in the Company or any direct or indirect wholly owned subsidiary of
the Company;
(e) except as set forth in Section 5.1(e) of the Disclosure Letter,
acquire or sell (whether by merger, consolidation or otherwise), or lease,
encumber, transfer or dispose of assets for aggregate consideration in
excess of $5 million, except in the ordinary course of business;
(f) make any material Tax elections, settle or compromise any material
federal, state or local income Tax liability, or waive or extend the
statute of limitations in respect of any such Taxes;
(g) except as set forth in Section 5.1(g) of the Disclosure Letter, (i)
materially modify, amend or terminate any material Contract or Other
Agreement to which it is a party (other than by allowing it to expire in
accordance with its terms if substitute arrangements are made) or waive,
release or assign any material rights or claims thereunder, (ii) settle any
suit or claim of liability against the Company which is reasonably likely
to materially negatively impact the Company's position with respect to any
similar pending or threatened material suit or claim, or (iii) pay or agree
to pay in settlement or compromise of any suits or claims of liability
against the Company, net of insurance recoveries, more than $1 million for
any such suit or claim or more than an aggregate of $5 million for all such
suits and claims;
(h) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles, methods or practices used by it;
(i) except as set forth in Section 5.1(i) of the Disclosure Letter,
adopt a plan of complete or partial liquidation, dissolution,
consolidation, restructuring (except as contemplated by this Agreement),
recapitalization, reorganization or (except with respect to MergerCo)
merger;
(j) change in any material respect its credit policy as to sales of
inventories or collection of receivables or inventory consignment parties;
(k) enter into any collective bargaining agreement; or
(l) take, or agree in writing or otherwise to take, any of the foregoing
actions or take or fail to take any action which would make any
representation or warranty of the Company contained in this Agreement
untrue or incorrect as of the date when made or as if made as of the
Effective Time (other than representations and warranties which address
matters only as of a certain date(s), in which case untrue or incorrect as
of such certain date(s)).
Section 5.2 No Solicitation. Except as set forth below, the Company shall
not, directly or indirectly, solicit, knowingly encourage, participate in or
initiate discussions or negotiations with, or provide any information or
access to, any person or group (other than MergerCo or any of its affiliates
or associates) concerning any merger, sale of assets, sale of shares of
capital stock or similar transaction involving the Company or any subsidiary
or division of the Company (other than as set forth in Section 5.2(a) of the
Disclosure Letter). The Company will notify MergerCo promptly if any
discussions or negotiations are sought to be initiated, any inquiry or
proposal is made, or any such information is requested in respect of any such
transaction and will promptly communicate to MergerCo the terms of any
material proposal, discussion, negotiation or inquiry which it may receive in
respect of any such transaction and the identity of the offeror or potential
offeror. Notwithstanding the foregoing, if (i) the Company receives an
unsolicited inquiry or proposal from any person or group for the acquisition
of all or substantially all of the assets or outstanding shares of the Company
which the Board reasonably believes in good faith is capable of being
completed, taking into account all legal, financial regulatory and other
aspects of the proposal and the person making the proposal and (ii) the Board
determines in good faith (after consulting with its outside counsel) that
failure to respond to such inquiry or proposal would be reasonably likely to
be inconsistent with its fiduciary duties to the Company's shareholders (an
"Alternative Transaction"), then the Company may, directly or indirectly,
furnish information and access pursuant to an appropriate confidentiality
agreement and may participate in discussions and negotiate with such person or
group.
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The Company agrees not to release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which the
Company may be a party, unless the Board shall have determined in good faith
that failing to release such third party or waive such provisions would be
reasonably likely to be inconsistent with its fiduciary duties to the
Company's shareholders.
Section 5.3 Access and Information. Between the date of this Agreement and
the Effective Time, the Company shall, and shall cause each of its
subsidiaries to, afford MergerCo and its affiliates and their authorized
representatives (including their accountants, financial advisors and legal
counsel) reasonable access during normal business hours to the properties,
personnel, Contracts and Other Agreements, books and records of the Company
and its subsidiaries and shall promptly deliver or make available to MergerCo
(a) a copy of each report, schedule or other document filed by the Company
pursuant to the requirements of federal or state securities laws, (b) monthly
financial statements in the form currently produced for management review and
(c) all other information concerning the business, properties, assets and
personnel of the Company and its subsidiaries as MergerCo and its affiliates
may from time to time reasonably request. MergerCo agrees on its own behalf
and on behalf of its affiliates that any information furnished pursuant to
this Section 5.3 will be subject to the provisions of the letter agreement,
dated August 25, 1999 (the "Confidentiality Agreement") between Devon Value
Advisers and Investcorp International, Inc., the terms of which are
incorporated herein by reference.
Section 5.4 Reasonable Efforts; Additional Action. (a) Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all action, and to
do or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by, and in
connection with, this Agreement, including using all reasonable efforts to (i)
obtain all consents, amendments to or waivers under the terms of any of the
Company's contractual arrangements required by the transactions contemplated
by this Agreement, and (ii) effect promptly all necessary or appropriate
registrations and filings with Governmental Entities, including, without
limitation, filings and submissions pursuant to the Securities Act, the
Exchange Act, the MBCA and shall (A) take all action necessary to ensure that
no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement or any of the other transactions
contemplated by this Agreement and (B) if any state takeover statute or
similar statute or regulations becomes applicable to the Merger, this
Agreement or any other transaction contemplated by this Agreement, take all
action reasonably necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this
Agreement and the other transactions contemplated by this Agreement.
Notwithstanding the foregoing, no party shall be prohibited from taking any
action permitted by the terms of this Agreement.
(b) The Company agrees to provide, and will cause its subsidiaries and its
and their respective officers, employees and advisers to provide, commercially
reasonable cooperation in connection with (i) the arrangement of any financing
to be consummated contemporaneous with or at or after the Effective Time in
respect of the transactions contemplated by this Agreement, including without
limitation, participation in meetings, due diligence sessions, road shows, the
preparation of offering memoranda, private placement memoranda, prospectuses
and similar documents, the execution and delivery of any commitment letters,
underwriting or placement agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents,
including a customary certificate of the chief financial officer of the
Company with respect to solvency matters, comfort letters of accountants,
legal opinions and real estate title documentation as may be reasonably
requested by MergerCo. In addition, in conjunction with the obtaining of any
such financing, the Company agrees, at the request of MergerCo, to call for
prepayment or redemption, or to prepay, redeem and/or renegotiate, as the case
may be, any then existing indebtedness of the Company; provided that no such
prepayment or redemption shall themselves actually be made until
contemporaneously with or after the Effective Time.
(c) Each of the parties agrees to cooperate with each other in taking, or
causing to be taken, all actions necessary to de-list the Shares from the New
York Stock Exchange, provided that such de-listing shall not be
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effective until after the Effective Time. The parties also acknowledge that it
is MergerCo's intent that the Shares following the Merger will not be quoted
on the New York Stock Exchange or listed on any other national securities
exchange.
Section 5.5 Fulfillment of Financing Commitments. MergerCo hereby covenants
that, subject to the satisfaction of the conditions set forth in Sections 6.1
and 6.2, MergerCo will have received on the Closing Date, and will have on
hand immediately prior to the Effective Time, cash funds provided to it as
equity in amounts at least equal to the minimum cash equity requirements set
forth in the debt Financing Commitments. MergerCo shall use its commercially
reasonable best efforts to cause the Financing Commitments to be fulfilled in
accordance with their terms (to the extent such fulfillment is within the
control of MergerCo).
Section 5.6 Notification of Certain Matters. The Company shall give notice
to MergerCo, and MergerCo shall give notice to the Company, promptly upon
becoming aware of (a) any occurrence, or failure to occur, of any event, which
occurrence or failure to occur has caused or is reasonably likely to cause any
representation or warranty in this Agreement to be untrue or inaccurate in any
material respect at any time after the date hereof and prior to the Effective
Time and (b) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided that the delivery of any notice pursuant to this Section
5.6 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.7 Public Announcements. The initial press release or releases
with respect to the transactions contemplated by this Agreement shall be in
the form agreed to by MergerCo and the Company. Thereafter, for as long as
this Agreement is in effect, MergerCo, on the one hand, and the Company, on
the other hand, shall not, and shall cause their subsidiaries and affiliates
not to, issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
transactions contemplated hereby without the consent of the other (which
consent shall not be unreasonably withheld or delayed), except where such
release or announcement is required by applicable law or pursuant to any
listing agreement with, or the rules or regulations of, any securities
exchange or any other regulatory requirement.
Section 5.8 Indemnification and Insurance. (a) MergerCo agrees that (i) the
articles of incorporation or the bylaws of the Surviving Corporation and its
subsidiaries immediately after the Effective Time shall contain provisions
with respect to indemnification and exculpation from liability that are at
least as favorable to the beneficiaries of such provisions as those provisions
that are set forth in the articles of incorporation and bylaws of the Company
and its subsidiaries, respectively, on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period
of six years following the Effective Time in any manner that would adversely
affect the rights thereunder of persons who at or prior to the Effective Time
were directors, officers, employees or agents of the Company or any of its
subsidiaries, unless such modification is required by law and (ii) all rights
to indemnification as provided in any indemnification agreements with any
current or former directors, officers and employees of the Company or any of
its subsidiaries as in effect as of the date hereof with respect to matters
occurring at or prior to the Effective Time shall survive the Merger and
thereafter terminate as provided in such agreements.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall maintain officers' and directors' liability insurance and
fiduciary liability insurance covering the persons described in paragraph (a)
of this Section 5.8 (whether or not they are entitled to indemnification
thereunder) who are currently covered by the Company's existing officers' and
directors' or fiduciary liability insurance policies on terms no less
advantageous to such indemnified parties than such existing insurance;
provided, that the Surviving Corporation shall not be obligated to pay annual
premiums for such insurance in excess of 200% of the last annual premium paid
prior to the date of this Agreement.
(c) The Surviving Corporation shall indemnify and hold harmless (and shall
advance expenses to), to the fullest extent permitted under applicable law,
each director, officer and employee of the Company or any subsidiary of the
Company, including, without limitation, officers and directors, serving as
such on the date
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hereof against any reasonable expenses (including reasonable attorneys' fees
and disbursements), judgments, penalties, fines and settlements in connection
with any threatened, pending or completed civil, criminal, administrative,
arbitration or investigative proceeding relating to any of the transactions
contemplated hereby, and in the event of any such proceeding (whether arising
before or after the Effective Time), the parties hereto will cooperate in the
defense of any such matter; provided, however, that the Surviving Corporation
shall not be liable for any settlement effected without its prior written
consent, which consent shall not unreasonably be withheld or delayed.
(d) The Surviving Corporation shall pay all reasonable expenses, including
attorneys' fees, that may be incurred by any indemnified parties in enforcing
the indemnity and other obligations provided for in this Section 5.8 to the
fullest extent permitted by applicable law.
(e) In the event the Surviving Corporation or any of its respective
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, proper provisions shall be made so that
the successors and assigns of the Surviving Corporation assume the obligations
set forth in this Section 5.8.
(f) This Section 5.8, which shall survive the consummation of the Merger at
the Effective Time and shall continue for the periods specified herein, is
intended to benefit the Company, the Surviving Corporation, and any person or
entity referenced in this Section 5.8 or indemnified hereunder, each of whom
may enforce the provisions of this Section 5.8 (whether or not parties to this
Agreement).
Section 5.9 Affiliates. Prior to the Effective Time, the Company shall
deliver to MergerCo a letter identifying all persons who may be deemed, at the
time this Agreement is submitted for approval to the shareholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its reasonable best efforts to cause
each such person to deliver to MergerCo at or prior to the Effective Time a
written agreement substantially in the form attached as Annex A hereto.
Section 5.10 Rights Agreement. The Company will not (i) redeem the Rights,
(ii) amend the Rights Agreement or (iii) take any action which would allow any
person (as defined in the Rights Agreement) other than pursuant to this
Agreement to acquire beneficial ownership of 20% or more of the Common Shares
without causing a Distribution Date or a Triggering Event (as such terms are
defined in the Rights Agreement) to occur.
Section 5.11 Changes to Charter. During the period from the date of this
Agreement until the time of the mailing of the Proxy Statement, MergerCo may
make any changes it deems necessary to the form of the Company's restated
articles of incorporation described in Section 1.3 and set forth as Exhibit A
hereto with the prior written consent of the Company (which consent shall not
be unreasonably delayed or withheld).
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) this Agreement shall have been adopted by the affirmative vote of
the shareholders of the Company by the requisite vote in accordance with
applicable law;
(b) no Legal Requirements (including, without limitation, any temporary
restraining order or preliminary injunction) shall have been enacted,
entered, promulgated, issued or enforced by any court or Governmental
Entity, and no other legal restraint or prohibition shall be in effect,
that prohibits or prevents the consummation of the Merger; provided, that
the party or parties invoking this condition shall use reasonable efforts
to have any such Legal Requirement vacated or removed;
A-21
<PAGE>
(c) The Form S-4 shall have become effective under the Securities Act
and shall not be the subject of any stop order or proceedings seeking a
stop order.
Section 6.2 Conditions to Obligation of MergerCo to Effect the Merger. The
obligation of MergerCo to effect the Merger is further subject to the
satisfaction (or waiver by it) at or prior to the Effective Time of the
following:
(a) (i) the representations and warranties set forth in Section 3.2
(Capitalization) shall be true and correct as of the date of this Agreement
and as of the Effective Time as if made at and as of the Effective Time;
and (ii) the other representations and warranties contained in Article 3
hereof shall be true and correct as of the date of this Agreement and as of
the Effective Time as if made at and as of the Effective Time, except for
such inaccuracies as in the aggregate have not had and would not reasonably
be expected to have a Material Adverse Effect (ignoring for the purposes of
this clause (ii) any qualifications by Material Adverse Effect or otherwise
by material adversity and any materiality qualification or words of similar
import contained in such representations or warranties);
(b) the Company shall have performed in all material respects all
agreements herein required to be performed at or prior to the Effective
Time;
(c) MergerCo shall have received a certificate signed on behalf of the
Company by the chief executive officer and chief financial officer of the
Company to the effect of subsections (a) and (b) above; and
(d) MergerCo shall have received a statement from the Company that meets
the requirements of Treasury Regulation Section 1.1445-2(c)(3) certifying
that the Company is not a USRPHC;
(e) Each of the conditions to the provision of the financing set forth
in the Financing Commitments provided to the Company, excluding any
provisions regarding the payment of fees within the control of MergerCo
and/or relating to the provision of equity, shall have been satisfied in
all material respects, and the funding shall have occurred.
Section 6.3 Conditions to Obligation of the Company to Effect the Merger.
The obligation of the Company to effect the Merger is further subject to the
satisfaction (or waiver by it) at or prior to the Effective Time of the
following:
(a) the representations and warranties of MergerCo shall be true and
correct as of the date of this Agreement and as of the Effective Time as if
made at and as of such time (other than representations and warranties
which address matters only as of a certain date(s) which shall be true and
correct in all material respects as of such certain date(s)).
(b) MergerCo shall have performed in all material respects all
agreements herein required to be performed on or prior to the Effective
Time;
(c) the Company shall have received a certificate signed on behalf of
MergerCo by its chief executive officer to the effect of subsections (a)
and (b) above; and
(d) MergerCo and/or the Company shall have sufficient funds to
consummate the Merger.
ARTICLE 7
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether before or after approval thereof by the shareholders of the Company:
(a) by mutual written consent of MergerCo and the Company;
(b) by MergerCo or the Company if:
(i) any court or other Governmental Entity of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable; or
A-22
<PAGE>
(ii) the Effective Time shall not have occurred on or prior to June
30, 2000; provided, however, that the right to terminate the Agreement
under this Section 7.1(b)(ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on
or before such date;
(c) subject to the concurrent payment of the amounts required by Section
7.2 below, by the Company if prior to the consummation of Merger, (i) the
Company receives a proposal for an Alternative Transaction which the Board
reasonably believes in good faith, after consultation with its outside
counsel and financial advisors, is more favorable to the Company's
shareholders than the Merger (a "Superior Proposal"), and (ii) the Board
determines in good faith (after consulting with its outside counsel) that
failure to terminate this Agreement in order to accept the Superior
Proposal would be reasonably likely to be inconsistent with the Board's
fiduciary duties to the Company's shareholders;
(d) by MergerCo in the event of a material breach by the Company of this
Agreement which has not been cured within 30 days after the giving of
written notice to the Company and which is incapable of being cured prior
to June 30, 2000;
(e) by the Company in the event of a material breach by MergerCo of this
Agreement which has not been cured within 30 days after the giving of
written notice to MergerCo and which is incapable of being cured prior to
June 30, 2000; or
(f) by MergerCo if prior to the Effective Time the Board shall have (1)
failed to make (or, if necessary, reaffirm), or shall have withdrawn,
modified or amended in any respect adverse to MergerCo, its approval or
recommendation of this Agreement or the Merger, (2) failed to include in
the Proxy Statement such recommendation, (3) recommended another proposal
for an acquisition of all or any substantial part of the business,
properties or capital stock of the Company or any of its subsidiaries,
whether by merger, consolidation, share exchange, tender offer, purchase of
assets or shares of the Company, or (4) resolved to do any of the
foregoing.
Section 7.2 Fees and Expenses. In the event that (i) this Agreement is
terminated by the Company pursuant to Section 7.1(c) to accept a Superior
Proposal, or (ii)(A) the Company's shareholders do not approve the Merger at
the Shareholders Meeting and the Agreement is terminated pursuant to Section
7.1(b)(ii), (B) at the time of the Shareholders Meeting, a proposal for an
Alternative Transaction is pending or has been publicly announced and not
withdrawn, and (C) within 12 months of the date of the Shareholders Meeting,
the Company enters into a definitive agreement for an Alternative Transaction
(which is subsequently consummated) or an Alternative Transaction is otherwise
consummated, then the Company shall pay MergerCo a fee in the amount of
$19,125,000 (the "Termination Fee"). In addition, in any event that the
Termination Fee becomes payable, the Company shall reimburse MergerCo for all
out-of-pocket fees and expenses actually incurred by MergerCo on its behalf in
connection with the Merger (including, without limitation, fees payable to
equity sources, banks, financial institutions, investment bankers and their
respective agents in connection with this Agreement (including, without
limitation, any fees and expenses incurred in connection with any debt or
equity financing) and reasonable attorneys' fees), the amount of such
reimbursement not to exceed $5,000,000. The Company acknowledges that the
Termination Fee and expense reimbursement provided for above are an integral
part of the transactions contemplated by this Agreement and not a penalty, and
that, without the Termination Fee and expense reimbursement provided for
above, MergerCo would not enter into this Agreement. If the Company fails to
pay promptly the Termination Fee and expense reimbursement due pursuant to
this Section 7.2, the Company shall also pay to MergerCo its costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of the unpaid fee under this
section, accruing from its due date, at an interest rate per annum equal to
the prime commercial lending rate quoted by The Chase Manhattan Bank. Any
change in the interest rate hereunder resulting from a change in such prime
rate shall be effective at the beginning of the day of such change in such
prime rate. The Termination Fee shall be due upon the date of termination in
the case of (i) above and on the date of the consummation of the Alternative
Transaction in the case of (ii) above.
Section 7.3 Effect of Termination. In the event that this Agreement is
terminated and the Merger is abandoned pursuant to Section 7.1, written notice
of such termination and abandonment shall forthwith be given
A-23
<PAGE>
to the other parties and this Agreement shall terminate and the Merger shall
be abandoned without further action. If this Agreement is terminated as
provided herein, no party hereto shall have any liability or further
obligation to any other party under the terms of this Agreement except with
respect to the willful breach by any party hereto and except that the
provisions of this Section 7.3, Section 7.2, Article 8 and the final sentence
of Section 5.3 shall survive the termination of this Agreement.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them in this Section 8.1:
(a) "affiliate," with respect to any person, shall mean any person
controlling, controlled by or under common control with such person;
(b) "Material Adverse Effect," with respect to any person, shall mean a
Material Adverse Effect on the business, financial condition or results of
operations of such person and its subsidiaries taken as a whole, excluding
in all cases: any events or conditions generally affecting the industries
in which such person operates or arising from changes in general business
or economic conditions. In the case of the Company, a material adverse
change in the Company's results of operations is not be measured against
any forecasts or projections provided to MergerCo (or its affiliates or
advisors).
(c) "person" shall mean and include an individual, a partnership, a
joint venture, a limited liability company, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof;
(d) "SEC Filings" means filings by the Company required to be made under
the Exchange Act with the SEC since January 1, 1997; provided that, with
respect to all representations and warranties of the Company contained in
Article 3 (except those in Section 3.7), references to SEC Filings shall
refer only to those filings made prior to the date hereof; and
(e) "subsidiary," with respect to any person, shall mean any corporation
50% or more of the outstanding voting power of which, or any partnership,
joint venture, limited liability company or other entity, 50% or more of
the total equity interest of which, is directly or indirectly, owned by
such person.
Section 8.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by a written agreement
signed by each of the parties hereto at any time prior to the Effective Time
with respect to any of the terms contained herein; provided, however, that
after this Agreement is approved and adopted by the Company's shareholders, no
such amendment or modification shall (a) alter or change the amount or kind of
the consideration to be delivered to the shareholders of the Company, (b)
alter or change any term of the articles of incorporation of the Surviving
Corporation or (c) alter or change any of the terms or conditions of this
Agreement if such alteration or change would adversely affect the shareholders
of the Company.
Section 8.3 Survival of Representations and Warranties. The respective
representations and warranties of MergerCo and the Company contained herein
shall terminate at, and not survive, the Closing.
Section 8.4 Waiver of Compliance; Consents. Any failure of MergerCo, on the
one hand, or the Company, on the other hand, to comply with any obligation,
covenant, agreement or condition herein may, subject to Section 8.2, be waived
by MergerCo or the Company, respectively, only by a written instrument signed
by the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 8.4.
A-24
<PAGE>
Section 8.5 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other parties.
Section 8.6 Expenses. Except as otherwise provided herein, whether or not
the Merger is consummated, all fees, charges and expenses incurred in
connection with this Agreement and transactions contemplated hereby shall be
paid by the party incurring such fees, charges or expenses.
Section 8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 8.8 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given (a) upon receipt if
given by delivery in person or by facsimile; or (b) on the next business day
when sent by overnight courier service, to the parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
if to MergerCo:
MergerCo
c/o Investcorp International, Inc.
280 Park Avenue
37th Floor West
New York, New York 10017
Facsimile: (212) 983-7073
Telephone: (212) 599-4700
Attention: Charles J. Philippin
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
48th Floor
New York, New York 10166
Facsimile: (212) 351-4035
Telephone: (212) 351-4000
Attention: E. Michael Greaney
if to the Company:
Jostens, Inc.
5501 Norman Center Drive
Minneapolis, Minnesota 55437
Facsimile: (612) 830-3380
Telephone: (612) 830-3309
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom, LLP
One Rodney Square
P.O. Box 636
Wilmington, DE 19899
Facsimile: (302) 651-3001
Telephone: (302) 651-3000
Attention: Richard L. Easton, Esq.
A-25
<PAGE>
Section 8.9 Interpretation. The table of contents and descriptive headings
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
Section 8.10 Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never
been contained herein unless the deletion of such provision or provisions
would result in such a material changes as to cause completion of the
transactions contemplated hereby to be unreasonable.
Section 8.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 8.12 Entire Agreement. This Agreement (including the exhibits and
other documents referred to herein) and the Confidentiality Agreement embody
the entire agreement and understanding of the parties hereto in respect of the
subject matter hereof and thereof and supersede all prior agreements and
understandings, both written and oral, among the parties, or between any of
them, with respect to the subject matter hereof and thereof.
Section 8.13 No Third Party Beneficiaries. Except as expressly provided in
Section 5.7, this Agreement is not intended to, and does not, create any
rights or benefits of any party other than the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed as of the day and year first above written.
Saturn Acquisition Corporation
/s/ David A. Tayeh
By: _________________________________
David A. Tayeh
Vice President and Secretary
Jostens, Inc.
/s/ Robert C. Buhrmaster
By: _________________________________
Robert C. Buhrmaster
Chairman, President & CEO
A-26
<PAGE>
The undersigned, INVESTCORP BANK E.C., hereby unconditionally and
absolutely undertakes and agrees to cause Saturn Acquisition Corporation
("MergerCo") to perform MergerCo's obligations and agreements under this
Agreement and the undersigned expressly agrees to be liable in the event
MergerCo fails to perform any of its obligations or agreements under this
Agreement; provided, however, that this undertaking and agreement shall
terminate as of immediately following the Effective Time of the Merger. The
undersigned hereby represents and warrants to Jostens, Inc. that (i) it has
full corporate power and authority to execute and deliver this Agreement and
perform its obligations hereunder, (ii) it has taken all actions necessary to
authorize the execution, delivery and performance of this Agreement by it,
(iii) such execution, delivery and performance do not conflict with, violate
or otherwise results in a default under its Certificate of Incorporation,
Bylaws or other organizational documents, and (iv) this Agreement is the
legal, valid and binding obligation of the undersigned, enforceable in
accordance with its terms.
Investcorp Bank E.C.
/s/ H. Richard Lukens III
By: _________________________________
H. Richard Lukens III
Authorized representativefor
Investcorp Bank E.C.
A-27
<PAGE>
FIRST AMENDMENT
TO THE
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
JOSTENS, INC.
AND
SATURN ACQUISITION CORPORATION
This FIRST AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER, by and between
Jostens, Inc. and Saturn Acquisition Corporation (this "Amendment"), dated as
of March 31, 2000, is entered into by and between Jostens, Inc., a Minnesota
corporation (the "Company"), and Saturn Acquisition Corporation, a Minnesota
corporation ("MergerCo").
A. The Company and MergerCo entered into that certain Agreement and Plan of
Merger, dated as of December 27, 1999 (the "Agreement"), providing for the
merger of MergerCo with and into Company.
B. The Company and MergerCo desire to amend the terms of the Agreement as
set forth in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and MergerCo agree as
follows:
1. Unless otherwise defined in this Amendment, capitalized terms used
herein shall have the meanings given to them in the Agreement, as amended
hereby.
2. Exhibit A of the Agreement is deleted in its entirety and replaced with
Exhibit A attached hereto.
3. Exhibit B of the Agreement is deleted in its entirety and replaced with
Exhibit B attached hereto.
4. Exhibit C of the Agreement is deleted in its entirety and replaced with
Exhibit C attached hereto.
5. The Agreement, as modified and amended by this Amendment, constitutes
the entire agreement of the parties and supersedes all prior agreements,
written or oral, between the parties with respect to the subject matter
hereof.
6. This Amendment will be governed, construed and interpreted in accordance
with the laws of the State of Minnesota applicable to agreements made and
performed entirely within such state, without regard to the choice of law
principles thereof.
7. Except as specifically modified by this Amendment, the Company and
MergerCo acknowledge that the Agreement shall remain binding upon them and all
provisions of the Agreement shall remain in full force and effect.
8. In the event of any inconsistency between the provisions of this
Amendment and any provision in the Agreement, the terms and provisions of this
Amendment shall govern.
9. This Amendment may be executed in identical counterpart copies, each of
which shall be an original, but all of which taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Amendment by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Amendment.
A-28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date and year first written above.
Jostens, Inc.
By:/s/ Robert C. Buhrmaster
Name: Robert C. Buhrmaster
Title:Chairman, President and CEO
Saturn Acquisition Corporation
By: /s/ David A. Tayeh
Name: David A. Tayeh
Title:Vice President and Secretary
A-29
<PAGE>
EXHIBIT A
FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
(attached to this Proxy Statement/Prospectus as Appendix D)
A-30
<PAGE>
EXHIBIT B
MANAGEMENT ROLLOVER SHARES
<TABLE>
<CAPTION>
Name Number
---- -------
<S> <C>
Robert C. Buhrmaster............................................. 93,205
William N. Priesmeyer............................................ 28,034
Carl H. Blowers.................................................. 41,858
Michael Bailey................................................... 15,913
Gregory S. Lea................................................... 9,522
Total.......................................................... 188,532
</TABLE>
A-31
<PAGE>
EXHIBIT C
RETENTION ELECTIONS
<TABLE>
<CAPTION>
Name Number
---- ------
<S> <C>
Robert C. Buhrmaster.............................................. 0
William N. Priesmeyer............................................. 0
Michael Bailey.................................................... 0
Carl H. Blowers................................................... 0
Gregory S. Lea.................................................... 0
Total........................................................... 0
</TABLE>
A-32
<PAGE>
Appendix B
December 27, 1999
Special Committee of the Board of Directors
Board of Directors
Jostens, Inc.
5501 Norman Center Drive
Minneapolis, Minnesota 55437
Members of the Special Committee:
You have asked us to advise you with respect to the fairness from a
financial point of view to the shareholders of Jostens, Inc. (the "Company")
(other than members of the Company's management who will retain, and other
shareholders who make a valid election to retain, an equity interest in the
Company) of the Consideration (as defined below) to be received by such
shareholders pursuant to the terms of an Agreement and Plan of Merger, dated
as of December 27, 1999 (the "Merger Agreement"), by and between the Company
and Saturn Acquisition Corporation ("MergerCo"). The Merger Agreement provides
for the merger (the "Merger") of MergerCo with and into the Company, pursuant
to which each outstanding share of common stock, par value $0.33 1/3 per share
("Shares"), of the Company (other than Shares that will remain outstanding
following the Merger pursuant to the terms of the Merger Agreement) will be
converted into the right to receive $25.25 in cash, subject to proration as
provided in the Merger Agreement (the "Consideration").
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company, as well as the
Merger Agreement. We have also reviewed certain other information, including
financial forecasts, provided to us by the Company and have met with the
Company's management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data of the
Company, and we have compared that data with similar data for other publicly
held companies in businesses similar to the Company and we have considered the
financial terms of certain other business combinations and other transactions
which have recently been effected. We also considered such other information,
financial studies, analyses and financial, economic and market criteria which
we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied
on its being complete and accurate in all material respects. With respect to
the financial forecasts, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the Company's management as to the future financial performance
of the Company. In addition, we have not been requested to make, and have not
made, an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company, nor have we been furnished with any
such evaluations or appraisals. Our opinion is necessarily based upon
financial, economic, market and other conditions as they exist and can be
evaluated on the date hereof. We are not expressing any opinion as to the
actual value of retained shares of the Company following the Merger or the
prices at which such shares may be purchased or sold subsequent to the Merger.
We were not requested to, and did not, solicit third party indications of
interest in acquiring all or any part of the Company.
We have acted as financial advisor to the Special Committee of the Board of
Directors in connection with the Merger and will receive a fee for our
services, a significant portion of which is contingent upon the consummation
of the Merger. We will also receive a fee for rendering this opinion.
We have performed, and in the future may perform, certain investment
banking services for the Company and Investcorp S.A. and its affiliates, which
are affiliates of MergerCo, and have received and expect to receive customary
fees for such services.
B-1
<PAGE>
In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of the Company for our and such
affiliates' own accounts and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Special
Committee of the Board of Directors in connection with its consideration of
the Merger, does not constitute a recommendation to any shareholder as to how
such shareholder should vote on the proposed Merger or whether any such
shareholder should elect to retain any Shares and is not to be quoted or
referred to, in whole or in part, in any registration statement, prospectus or
proxy statement, or in any other document used in connection with the offering
or sale of securities, nor shall this letter be used for any other purposes,
without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Consideration to be received by the shareholders of the
Company in the Merger, other than members of the Company's management who will
retain, and other shareholders who make a valid election to retain, an equity
interest in the Company after the Merger, is fair to such shareholders from a
financial point of view.
Very truly yours,
By: /s/ Credit Suisse First Boston Corporation
B-2
<PAGE>
Appendix C
302A.471 RIGHTS OF DISSENTING SHAREHOLDERS
Subdivision 1. Actions creating rights. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's
shares in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects
the rights or preferences of the shares of the dissenting shareholder in
that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the
redemption of the shares, including a provision respecting a sinking
fund for the redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the
shares to acquire shares, securities other than shares, or rights to
purchase shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a
matter, or to cumulate votes, except as the right may be excluded or
limited through the authorization or issuance of securities of an
existing or new class or series with similar or different voting
rights; except that an amendment to the articles of an issuing public
corporation that provides that section 302A.671 does not apply to a
control share acquisition does not give rise to the right to obtain
payment under this section;
(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation, but not
including a transaction permitted without shareholder approval in section
302A.661, subdivision 1, or a disposition in dissolution described in
section 302A.725, subdivision 2, or a disposition pursuant to an order of a
court, or a disposition for cash on terms requiring that all or
substantially all of the net proceeds of disposition be distributed to the
shareholders in accordance with their respective interests within one year
after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B,
to which the corporation is a constituent organization, except as provided
in subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter
322B, to which the corporation is a party as the corporation whose shares
will be acquired by the acquiring corporation, if the shares of the
shareholder are entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their
shares.
Subd. 2. Beneficial owners. (a) A shareholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the
shareholder, unless the shareholder dissents with respect to all the shares
that are beneficially owned by another person but registered in the name of
the shareholder and discloses the name and address of each beneficial owner on
whose behalf the shareholder dissents. In that event, the rights of the
dissenter shall be determined as if the shares as to which the shareholder has
dissented and the other shares were registered in the names of different
shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of
this section and section 302A.473, if the beneficial owner submits to the
corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
Subd. 3. Rights not to apply. (a) Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain
payment under this section does not apply to a shareholder of the surviving
corporation in a merger, if the shares of the shareholder are not entitled to
be voted on the merger.
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(b) If a date is fixed according to section 302A.445, subdivision 1, for
the determination of shareholders entitled to receive notice of and to vote
on an action described in subdivision 1, only shareholders as of the date
fixed, and beneficial owners as of the date fixed who hold through
shareholders, as provided in subdivision 2, may exercise dissenters'
rights.
Subd. 4. Other rights. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at
law or in equity to have a corporate action described in subdivision 1 set
aside or rescinded, except when the corporate action is fraudulent with regard
to the complaining shareholder or the corporation.
302A.473 PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
Subdivision 1. Definitions. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action referred to in section 302A.471, subdivision 1
or the successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective
date of the corporate action referred to in section 302A.471, subdivision
1, up to and including the date of payment, calculated at the rate provided
in section 549.09 for interest on verdicts and judgments.
Subd. 2. Notice of action. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subd. 3. Notice of dissent. If the proposed action must be approved by the
shareholders, a shareholder who is entitled to dissent under section 302A.471
and who wishes to exercise dissenters' rights must file with the corporation
before the vote on the proposed action a written notice of intent to demand
the fair value of the shares owned by the shareholder and must not vote the
shares in favor of the proposed action.
Subd. 4. Notice of procedure; deposit of shares. (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the
corporation shall send to all shareholders who have complied with subdivision
3 and to all shareholders entitled to dissent if no shareholder vote was
required, a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all
other rights of a shareholder until the proposed action takes effect.
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Subd. 5. Payment; return of shares. (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment,
whichever is later, the corporation shall remit to each dissenting shareholder
who has complied with subdivisions 3 and 4 the amount the corporation
estimates to be the fair value of the shares, plus interest, accompanied by:
(1) the corporation's closing balance sheet and statement of income for
a fiscal year ending not more than 16 months before the effective date of
the corporate action, together with the latest available interim financial
statements;
(2) an estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) a copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a person
who was not a beneficial owner on that date. If the dissenter has complied
with subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for
withholding the remittance, and an offer to pay to the dissenter the amount
listed in the materials if the dissenter agrees to accept the amount in full
satisfaction. The dissenter may decline the offer and demand payment under
subdivision 6. Failure to do so entitles the dissenter only to the amount
offered. If the dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under subdivision
4 and require deposit or restrict transfer at a later time.
Subd. 6. Supplemental payment; demand. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest,
within 30 days after the corporation mails the remittance under subdivision 5,
and demand payment of the difference. Otherwise, a dissenter is entitled only
to the amount remitted by the corporation.
Subd. 7. Petition; determination. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand,
either pay to the dissenter the amount demanded or agreed to by the dissenter
after discussion with the corporation or file in court a petition requesting
that the court determine the fair value of the shares, plus interest. The
petition shall be filed in the county in which the registered office of the
corporation is located, except that a surviving foreign corporation that
receives a demand relating to the shares of a constituent domestic corporation
shall file the petition in the county in this state in which the last
registered office of the constituent corporation was located. The petition
shall name as parties all dissenters who have demanded payment under
subdivision 6 and who have not reached agreement with the corporation. The
corporation shall, after filing the petition, serve all parties with a summons
and copy of the petition under the rules of civil procedure. Nonresidents of
this state may be served by registered or certified mail or by publication as
provided by law. Except as otherwise provided, the rules of civil procedure
apply to this proceeding. The jurisdiction of the court is plenary and
exclusive. The court may appoint appraisers, with powers and authorities the
court deems proper, to receive evidence on and recommend the amount of the
fair value of the shares. The court shall determine whether the shareholder or
shareholders in question have fully complied with the requirements of this
section, and shall determine the fair value of the shares, taking into account
any and all factors the court finds relevant, computed by any method or
combination of methods that the court, in its discretion, sees fit to use,
whether or not used by the corporation or by a dissenter. The fair value of
the shares as determined by the court is binding on all shareholders, wherever
located. A dissenter is entitled to judgment in cash for the amount by which
the fair value of the shares as determined by the court, plus interest,
exceeds the
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amount, if any, remitted under subdivision 5, but shall not be liable to the
corporation for the amount, if any, by which the amount, if any, remitted to
the dissenter under subdivision 5 exceeds the fair value of the shares as
determined by the court, plus interest.
Subd. 8. Costs; fees; expenses. (a) The court shall determine the costs and
expenses of a proceeding under subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses
of any experts or attorneys as the court deems equitable. These fees and
expenses may also be assessed against a person who has acted arbitrarily,
vexatiously, or not in good faith in bringing the proceeding, and may be
awarded to a party injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an
attorney for the dissenters out of the amount awarded to the dissenters, if
any.
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Appendix D
FORM OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
JOSTENS, INC.
ARTICLE I
NAME
The name of the corporation is Jostens, Inc. (the "Corporation").
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the Corporation in the State of
Minnesota is 33 South Sixth Street, Multifoods Tower, Minneapolis, Minnesota
55402, and the name of its registered agent at that office is Prentice-Hall
Corporation System, Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be incorporated under the Minnesota Business
Corporation Act (the "MBCA").
ARTICLE IV
CAPITALIZATION
As used in these Articles of Incorporation, the following terms shall have
the following meanings:
"Affiliate", with respect to a Class D Shareholder that is not a natural
person, means (i) any Person which, directly or indirectly, is in control of,
is controlled by, or is under common control with, such Class D Shareholder or
(ii) any Person who is a director or officer (a) of such Class D Shareholder,
(b) of any subsidiary of such Class D Shareholder or (c) of any Person
described in clause (i) above. For purposes of this definition, "control" of a
Person shall mean the power, directly or indirectly, (y) to vote 50% or more
of the securities having ordinary voting power for the election of directors
of such Person whether by ownership of securities, contract, proxy or
otherwise, or (z) to direct or cause the direction of the management and
policies of such Person whether by ownership of securities, contract, proxy or
otherwise.
"Articles of Incorporation" means these Amended and Restated Articles of
Incorporation of the Corporation, as amended from time to time in accordance
with the MBCA and these Articles of Incorporation.
"Board" means the Board of Directors of the Corporation.
"Business Day" means any day other than a Saturday, Sunday, federal holiday
or other day on which commercial banks in New York City are authorized or
required to close under the laws of the State of New York.
"Class A Shareholder" means a record holder of one or more shares of Class
A Stock.
"Class B Shareholder" means a record holder of one or more shares of Class
B Stock.
"Class C Shareholder" means a record holder of one or more shares of Class
C Stock.
"Class D Shareholder" means a record holder of one or more shares of Class
D Stock.
"Class E Shareholder" means a record holder of one or more shares of Class
E Stock.
"Class A Stock" means the Class A Common Stock described in Section 2(c).
"Class B Stock" means the Class B Common Stock described in Section 2(c).
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"Class B Warrant" means the Class B Stock Purchase Warrants to be issued on
or about the Effective Date by the Corporation which entitle the Warrant
Holder(s), upon the occurrence of a Warrant Triggering Event, to purchase a
number of shares of Common Stock of the Corporation as specified therein.
"Class C Stock" means the Class C Common Stock described in Section 2(c).
"Class D Stock" means the Class D Common Stock described in Section 2(c).
"Class E Stock" means the Class E Common Stock described in Section 2(c).
"Class E Warrants" means the Class E Stock Purchase Warrants to be issued
on or about the Effective Date by the Corporation which entitle the holders
thereof to purchase a number of shares of Class E Stock of the Corporation as
specified therein.
"Class E Warrant Holders" means the holders of the Class E Warrants.
"Common Shareholder" means a record holder of one or more shares of Common
Stock.
"Common Stock" has the meaning set forth in Section 2(c).
"Conversion Date" has the meaning set forth in Section 6.
"Difference Shares" has the meaning set forth in Section 5.
"Effective Date" means the date on which the merger of Saturn Acquisition
Corporation with and into the Corporation becomes effective under the MBCA.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Initial Public Offering" means the effectiveness after December 31, 1999
of a registration statement under the Securities Act on any of Forms S-1, S-2,
S-3 or any similar successor form covering any of the Stock, and the
completion of a sale of such Stock thereunder, (i) following which the
Corporation is, or becomes, a reporting company under Section 12(b) or 12(g)
of the Exchange Act, and (ii) as a result of which the Stock is traded on the
New York Stock Exchange or the American Stock Exchange, or quoted on the
Nasdaq Stock Market or is traded or quoted on any other national stock
exchange.
"IPO Date" means the closing date of the Initial Public Offering.
"MBCA" means the Minnesota Business Corporation Act.
"Non-Redeemable Shares" means all shares of Class A Stock, Class B Stock,
Class C Stock and Class E Stock that have been previously sold (whether under
Section 4 or Section 5(c)) pursuant to a Tag-Along Transfer other than
pursuant to a Single Transaction Sale.
"Notice Date" has the meaning set forth in Section 4(b).
"Other Securityholders" has the meaning set forth in Section 4(a).
"Permitted Transferee", with respect to a Transfer by a Class D
Shareholder, means (i) with respect to any Class D Shareholder who is a
natural person, a Transfer to (a) such Shareholder's spouse or issue, or (b) a
trust the beneficiaries of which, or a partnership the limited and general
partners of which, include only the Class D Shareholder, his spouse or issue;
(ii) with respect to any Class D Shareholder that is not a natural person, (A)
a Transfer to an Affiliate of such Class D Shareholder; or (B) a Transfer to
another Class D Shareholder or its Affiliates; provided such Class D
Shareholder referenced in clauses (i) and (ii) did not acquire its shares of
Class D Stock pursuant to a Tag-Along Transfer.
"Person" means any natural person, partnership, limited liability company,
corporation (including the Corporation), trust or unincorporated organization
or a government or a political subdivision thereof.
"Preferred Stock" has the meaning set forth in Section 2(a).
"Preferred Stock Designation" has the meaning set forth in Section 2(b).
"Proposed Purchase Amount" has the meaning set forth in Section 4(a).
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"Proposed Transferee" has the meaning set forth in Section 4(a).
"Proposed Transferor" has the meaning set forth in Section 4(a).
"Redemption Date" has the meaning set forth in Section 5(d).
"Sale of the Corporation" means, (i) the sale of 100% of the outstanding
shares of Stock; (ii) a sale of all of the assets of the Corporation; or (iii)
a merger, consolidation, statutory share exchange or recapitalization of the
Corporation as a result of which, upon the consummation of such transaction,
all of the outstanding shares of Stock held by Shareholders of the Corporation
as of immediately prior to such transaction are converted into or exchanged
for cash, securities of another entity and/or other consideration, unless, in
connection with a transaction covered by clause (iii), such Shareholders
receive equity securities of another entity representing a majority of the
voting power of such entity.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Shareholder" means a record holder of one or more shares of Class A Stock,
Class B Stock, Class C Stock, Class D Stock, Class E Stock or Common Stock.
"Single Transaction Sale" means a Sale of the Corporation in a single
transaction.
"Staggered Sale" means a Sale of the Corporation in more than one
transaction, each such transaction also being referred to individually as a
"Staggered Sale."
"Stock" has the meaning set forth in Section 2(c).
"Tag-Along Acceptance Date" has the meaning set forth in Section 4(c).
"Tag-Along Notice" has the meaning set forth in Section 4(c).
"Tag-Along Pro Rata Amount" has the meaning set forth in Section 4(a).
"Tag-Along Redemption Price" has the meaning set forth in Section 5(a).
"Tag-Along Transfer" has the meaning set forth in Section 4(a).
"Transfer", with respect to any share of Stock, means the sale, assignment,
pledge, hypothecation, gift or any other disposition whatsoever of such share
(other than pursuant to the Initial Public Offering or pursuant to the
redemption or conversion of any such share of Stock, in either case in
accordance with the terms of these Articles of Incorporation), or the
encumbrance or granting of any rights or interests whatsoever in or with
respect to such share.
"Transfer Notice" has the meaning set forth in Section 4(b).
"Warrant Date" means, (i) if the Warrant Triggering Event is the Initial
Public Offering, the IPO Date, or (ii) if the Warrant Triggering Event is a
Sale of the Corporation, the closing date of (A) the Single Transaction Sale,
if the Sale of the Corporation is pursuant to a Single Transaction Sale, or
(B) the Staggered Sale that causes a Sale of the Corporation to occur, if the
Sale of the Corporation is pursuant to a series of Staggered Sales.
"Warrant Holder(s)" means the holder(s) of the Class B Warrants.
"Warrant Redemption Price" has the meaning set forth in Section 5(b).
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"Warrant Shares" means the shares of Common Stock purchasable by the
Warrant Holder(s) pursuant to the exercise of the Class B Warrants, which
shall equal in all cases the number of shares of Class B Stock redeemed in
connection with the exercise of such warrant.
"Warrant Triggering Event" means the first to occur of (i) an Initial
Public Offering or (ii) a Sale of the Corporation, whether such sale occurs
pursuant to a Single Transaction Sale or a series of Staggered Sales.
2. Designation and Number. (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is 29,940,000, of
which 4,000,000 shares shall be preferred stock and shall have a par value of
$0.01 per share ("Preferred Stock") and 25,940,000 shares shall be common
stock, as set forth in paragraph (c) below.
(b) Preferred Stock. The Board is expressly authorized to provide for the
issue of all or any shares of the Preferred Stock, in one or more series, and
to fix for each such series the designation of such series and such voting
powers, full or limited, if any, and the relative rights and preferences of
such series (including, without limitation, participating, optional,
conversion or other special rights, if any), and such qualifications,
limitations or restrictions thereof (including, without limitation, any
obligations to sell all or a part of any such series to the Corporation
pursuant to any redemption rights of the Corporation), if any, as shall be
stated and expressed in the resolution or resolutions adopted by the Board
providing for the establishment of such series (a "Preferred Stock
Designation") and as may be permitted by the MBCA. The Corporation may, by an
amendment to the Articles of Incorporation duly adopted, increase or decrease,
at any time and from time to time (but not below the number of shares of
Preferred Stock then outstanding), the number of authorized shares of
Preferred Stock. Unless otherwise provided in a Preferred Stock Designation,
shares of Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation pursuant to the terms hereof shall constitute authorized but
unissued Preferred Stock and may be reissued.
(c) Common Stock. There shall be six classes of common stock of the
Corporation. The first class of common stock of the Corporation shall have a
par value of $0.33 1/3 per share and shall be designated as "Class A Common
Stock" and the number of shares constituting such class shall be 4,200,000.
The second class of common stock of the Corporation shall have a par value of
$0.01 per share and shall be designated as "Class B Common Stock" and the
number of shares constituting such class shall be 5,300,000. The third class
of common stock of the Corporation shall have a par value of $0.01 per share
and shall be designated as "Class C Common Stock" and the number of shares
constituting such class shall be 2,500,000. The fourth class of common stock
of the Corporation shall have a par value of $0.01 per share and shall be
designated as "Class D Common Stock" and the number of shares constituting
such class shall be 2,000. The fifth class of common stock of the Corporation
shall have a par value of $0.01 per share and shall be designated as "Class E
Common Stock" and the number of shares constituting such class shall be
1,900,000. The sixth class of common stock of the Corporation shall have a par
value of $0.01 per share and shall be designated as "Common Stock" and the
number of shares constituting such class shall be 12,020,000. The Class A
Stock, Class B Stock, Class C Stock, Class D, Class E Stock and Common Stock
are sometimes referred to collectively herein as the "Stock". The Corporation
may, by an amendment to the Articles of Incorporation duly adopted, increase
or decrease, at any time and from time to time (but not below the number of
shares of Class A Stock, Class B Stock, Class C Stock, Class D Stock, Class E
Stock or Common Stock then outstanding), the number of authorized shares of
Class A Stock, Class B Stock, Class C Stock, Class D Stock, Class E Stock or
Common Stock, as the case may be. Shares of Stock redeemed, purchased or
otherwise acquired by the Corporation pursuant to the terms hereof shall
constitute authorized but unissued Class A Stock, Class B Stock, Class C
Stock, Class D Stock, Class E Stock or Common Stock, as the case may be, and
may be reissued.
3. Restrictions on Transfer. Except for Transfers to a Permitted
Transferee, no Class D Shareholder shall Transfer any share of Class D Stock
owned by such Class D Shareholder except in accordance with the terms of these
Articles of Incorporation. Any Transfer or attempt to Transfer any share of
Class D Stock in violation of the terms and conditions of these Articles of
Incorporation shall be null and void and of no force and effect, the
transferee thereof shall not be deemed to be the registered holder thereof nor
entitled to any rights with respect thereto, and the Corporation shall refuse
to Transfer any of such Class D Stock on its books to such alleged transferee.
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4. Tag-Along Rights. (a) Transfer by Class D Shareholders. If, other than
in connection with the Initial Public Offering, any Class D Shareholder or
Class D Shareholders (for purposes of this Section 4, singularly or
collectively, the "Proposed Transferor"), at any time or from time to time in
one transaction or in a series of transactions, desire to enter into an
agreement (whether oral or written) to Transfer shares of Class D Stock or any
part thereof in a transaction which is a sale to any Person other than a
Permitted Transferee (the "Proposed Transferee"), such proposed Transfer shall
be deemed a "Tag-Along Transfer" and, each of the Class A Shareholders, Class
B Shareholders, Class C Shareholders, Class E Shareholders and Class E Warrant
Holders (collectively, the "Other Securityholders") shall have the right, as a
condition to such Tag-Along Transfer, to have the Proposed Transferee purchase
from each such Other Securityholder up to the number of shares (including, if
such Other Securityholder delivers to the Company an exercise notice of the
nature described in Section 4(c) with respect to Class E Warrants held by such
Other Securityholder, up to the number of shares of Class E Stock received
upon exercise of such Class E Warrants pursuant to the exercise notice) (the
"Tag-Along Pro Rata Amount") of Class A Stock, Class B Stock, Class C Stock or
Class E Stock derived by multiplying the total number of shares of Class A
Stock, Class B Stock, Class C Stock or Class E Stock, including Class E Stock
issuable upon exercise of Class E Warrants (in each case exclusive of Non-
Redeemable Shares), as the case may be, owned by such Other Securityholder by
a fraction, the numerator of which is equal to the number of shares of Class D
Stock that is proposed to be Transferred by the Proposed Transferor to the
Proposed Transferee (the "Proposed Purchase Amount") and the denominator of
which is the total number of shares of Class D Stock (other than shares of
Class D Stock that have previously been Transferred pursuant to a Tag-Along
Transfer) outstanding as of the Notice Date (as defined in Section 4(b)). All
Tag-Along Transfers by Other Securityholders shall be on the same terms and
conditions (with such changes as are necessary to apply such terms and
conditions to a sale by such Other Securityholders; it being understood that
all terms relating to economic matters, including, without limitation, terms
related to price, escrow and indemnity shall be the same for all
securityholders) as the proposed Tag-Along Transfer by the Proposed
Transferor.
(b) Transfer Notice. The Proposed Transferor participating in a Tag-Along
Transfer shall at least 10 Business Days prior to the closing date thereof
provide the Corporation and each of the Other Securityholders with a separate
written notice (the "Transfer Notice") of the proposed Tag-Along Transfer
containing the following:
(i) the name and address of the Proposed Transferor and the Proposed
Transferee;
(ii) the Proposed Purchase Amount;
(iii) the proposed amount to be paid for such shares of Class D Stock,
the terms and conditions of payment offered by the Proposed Transferee, the
closing date for the proposed Tag-Along Transfer and the estimated expenses
payable pursuant to Section 4(d);
(iv) the aggregate number of shares of Class A Stock, Class B Stock,
Class C Stock or Class E Stock, as the case may be, and the aggregate
number of shares underlying Class E Warrants held of record as of the date
the Transfer Notice is sent (the "Notice Date") by the Other Securityholder
to whom the notice is sent;
(v) the aggregate number of shares of Class A Stock, Class B Stock,
Class C Stock or Class E Stock, as the case may be, and the aggregate
number of shares underlying Class E Warrants held of record as of the
Notice Date by all Other Securityholders as a group;
(vi) the Tag-Along Pro Rata Amount for the Other Securityholder to whom
the notice is sent; and
(vii) a statement confirming that the Proposed Transferee has agreed (i)
to the tag-along rights, and (ii) pursuant to Section 5(c), to purchase the
number of shares of Stock redeemed pursuant to Section 5(a).
Upon written request by the Proposed Transferor, the Corporation shall
provide to the Proposed Transferor the information referred to in (iv) and (v)
above for inclusion in the Transfer Notice and such other information as may
be required to enable the Proposed Transferor to comply with the terms of this
Section 4(b).
(c) Tag-Along Notice. Each Other Securityholder desiring to participate in
the proposed Tag-Along Transfer shall provide a written notice (the "Tag-Along
Notice") to the Proposed Transferor on or before the expiration of 5 Business
Days after the Notice Date (the "Tag-Along Acceptance Date") stating the
number of shares held by
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such Other Securityholder (up to its Tag-Along Pro Rata Amount) to be included
in the proposed Tag-Along Transfer on the terms and conditions specified in
the Transfer Notice; if the number of shares to be included in the proposed
Tag-Along Transfer includes shares of Class E Stock to be issued upon exercise
of Class E Warrants, the Other Securityholder shall include with the Tag-Along
Notice an exercise notice with respect to such Class E Warrants (which
exercise notice may be conditioned on the consummation of the Tag-Along
Transfer). The Tag-Along Notice given by each Other Securityholder shall
include and constitute such Other Securityholder's binding agreement to
include a number of shares equal to its Tag-Along Pro Rata Amount (or such
lesser amount as stated in the Tag-Along Notice) in the Tag-Along Transfer on
the terms and conditions specified in the Transfer Notice and in these
Articles of Incorporation. If the Proposed Transferee does not purchase all of
the shares of Stock of the Proposed Transferor and the Other Securityholders
included in such proposed Tag-Along Transfer, as well as shares to be issued
under Section 5(c) in connection with the Tag-Along Transfer, then the
proposed Tag-Along Transfer to such Proposed Transferee shall be prohibited
and any attempt to consummate the proposed Tag-Along Transfer shall be null
and void and of no force and effect.
(d) Each Proposed Transferor and each Other Securityholders whose shares
are sold in a Tag-Along Transfer shall be entitled to receive the proceeds of
such Tag-Along Transfer less its pro rata share, based on the number of shares
included in such Tag-Along Transfer, of the expenses of the transaction
including, without limitation, legal, accounting and investment banking fees
and expenses, such determination of expenses to be made in the good faith
determination of the Board.
(e) The provisions of this Section 4 shall not apply to a subsequent
Transfer of any share of Class D Stock that has previously been the subject of
a completed Tag-Along Transfer which complied with the provisions of this
Section 4.
5. Redemption. (a) In the event of a Tag-Along Transfer in which the
Proposed Transferor proposes to Transfer a number of shares of Class D Stock
equal to or greater than 80% of the outstanding shares of Class D Stock, the
number of shares of Class A Stock, Class B Stock, Class C Stock or Class E
Stock equal to the difference ("Difference Shares") between (i) the number of
shares included in any Tag-Along Transfer by a Class A Shareholder, Class B
Shareholder, Class C Shareholder, Class E Shareholder or Class E Warrant
Holder pursuant to Section 4 and (ii) the Tag-Along Pro Rata Amount for each
such Class A Shareholder, Class B Shareholder, Class C Shareholder, Class E
Shareholder or Class E Warrant Holder shall be redeemed by the Corporation, to
the extent it is lawfully permitted to do so, out of funds legally available
therefor pro rata, based on the number of Difference Shares held by such
Securityholders , from each of the Class A Shareholders, Class B Shareholders,
Class C Shareholders, Class E Shareholders and Class E Warrant Holders who
elected to include in the Tag-Along Transfer a number of shares of Stock less
than the number of shares that constitute their Tag-Along Pro Rata Amount or
any such Securityholders that did not elect to participate in a Tag-Along
Transfer at a redemption price (the "Tag-Along Redemption Price") for each
share of Class A Stock, Class B Stock, Class C Stock, or Class E Stock so
redeemed equal to the per share consideration paid for the Class D Stock by
the Proposed Transferee less such Other Securityholder's pro rata share, based
on the number of shares of Stock so redeemed from such Other Securityholder,
of the expenses of the Tag-Along Transfer including, without limitation,
legal, accounting and investment banking fees and expenses, such determination
of expenses to be made in the good faith determination of the Board. Any Class
E Warrant Holder that has not yet exercised its Class E Warrants shall be
required to exercise such Warrants to the extent necessary to effect the
foregoing. The provisions of this Section 5(a) shall not apply to the Non-
Redeemable Shares. Redemption under this subsection is conditioned upon the
contemporaneous purchase by the Proposed Transferee of the shares issuable
under Section 5(c) in connection with the applicable Tag-Along Transfer.
(b) If the Warrant Holder(s) exercise(s) the Class B Warrant, the
Corporation shall redeem, to the extent it is lawfully permitted to do so,
from the Class B Shareholders, pro rata based on the number of shares of such
Class B Stock then owned by each such Shareholder, out of funds legally
available therefor, a number of shares of Class B Stock equal to the number of
Warrant Shares at a redemption price (the "Warrant Redemption Price") equal to
the par value of each share of Class B Stock so redeemed. No exercise of the
Class B Warrant shall be permitted and no shares of Class B Stock shall be
issued thereunder unless the Corporation shall have redeemed
D-6
<PAGE>
shares of Class B Stock from the Class B Shareholders in accordance with this
Section 5 at the same price to be paid for the Class B Stock by the Warrant
Holder(s) pursuant to the exercise of the Class B Warrant. The provisions of
this Section 5(b) shall not apply to the Non-Redeemable Shares. If a
redemption pursuant to this Section 5(b) occurs as a result of a Sale of the
Corporation, such redemption shall occur immediately prior to any redemption
pursuant to Section 5(a) hereof. Redemption under this subsection is
conditioned upon the contemporaneous purchase of the Warrant Shares by the
Warrant Holder(s) pursuant to the Class B Warrant.
(c) The shares of Class B Stock redeemed by the Corporation pursuant to a
Section 5(b) mandatory redemption shall, immediately after such redemption, on
the Redemption Date (as defined in Section 5(d)), constitute authorized but
unissued shares of Class B Stock, and the Corporation shall, on the Redemption
Date, but immediately after such redemption, issue, to the extent it is
lawfully permitted to do so, to the Warrant Holder(s) a number of shares of
Common Stock equal to the number of Warrant Shares. The shares of Class A
Stock, Class B Stock, Class C Stock, or Class E Stock redeemed by the
Corporation pursuant to a Section 5(a) mandatory redemption pursuant to a Tag-
Along Transfer shall, immediately after such redemption, on the Redemption
Date, constitute authorized but unissued shares of Class A Stock, Class B
Stock Class C Stock or Class E Stock, and the Corporation shall, on the
Redemption Date, but immediately after such redemption, issue, to the extent
it is lawfully permitted to do so, to the Proposed Transferee a number of
shares of Class A Stock, Class B Stock, Class C Stock or Class E Stock equal
to the number of shares of such classes of Stock so redeemed. Upon any
issuance of shares of Class A Stock, Class B Stock, Class C Stock and Class E
Stock equal to the number of shares of such class of Stock redeemed pursuant
to a Section 5(a) mandatory redemption (and as a condition to such issuance),
the Corporation shall receive from the Proposed Transferee as the purchase
price for such shares consideration in an amount equal to the Tag-Along
Redemption Price.
(d) The Corporation shall give to each holder of record of the shares of
Class A Stock, Class B Stock, Class C Stock and Class E Stock to be redeemed
pursuant to the terms of this Section 5 prior written notice of such
redemption not less than two Business Days prior to the date such shares will
be redeemed (the "Redemption Date") which (i) in the case of a redemption
pursuant to Section 5(a) shall be the closing date of the Tag-Along Transfer
and (ii) in the case of a redemption pursuant to Section 5(b) shall be the
Warrant Date. Each such notice shall state: (A) the Redemption Date; (B) the
total number of shares of the Class A Stock, Class B Stock, Class C Stock and
Class E Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (C) the Tag-Along Redemption Price or the Warrant Redemption Price, as
relevant; and (D) the fact that the certificates for the shares subject to
redemption are to be surrendered in exchange for the Tag-Along Redemption
Price or Warrant Redemption Price, as relevant, at the principal executive
office of the Corporation or at such other place as the Corporation shall
designate.
(e) On the Redemption Date, the shares of Class A Stock, Class B Stock,
Class C Stock and Class E Stock required to be redeemed pursuant to the terms
of this Section 5 shall be deemed to have been so redeemed, notwithstanding
that the certificates representing such Class A Stock, Class B Stock, Class C
Stock or Class E Stock shall not have been surrendered at the principal
executive office of the Corporation or such other place as the Corporation may
have designated or that notice from the Corporation shall not have been given
by the Corporation or, if given, shall not have been received by any holder of
Class A Stock, Class B Stock, Class C Stock or Class E Stock whose shares of
Stock are to be so redeemed and notwithstanding anything to the contrary in
Section 5(d). All certificates representing the redeemed shares of Class A
Stock, Class B Stock, Class C Stock and Class E Stock, including all
certificates not so delivered by such Class A Shareholders, Class B
Shareholders, Class C Shareholders and Class E Shareholders, shall be, or
shall be deemed to be, canceled by the Corporation as of the Redemption Date
and shall thereafter no longer be of any force or effect and shall instead
represent only the right to receive the Tag-Along Redemption Price or the
Warrant Redemption Price, as applicable.
6. Conversion. (a) If the Initial Public Offering or a Sale of the
Corporation (whether pursuant to a Single Transaction Sale or a series of
Staggered Sales) occurs, each issued and outstanding share of Class A Stock,
Class B Stock, Class C Stock, Class D Stock and Class E Stock not otherwise
redeemed by the Corporation
D-7
<PAGE>
pursuant to the mandatory redemption provisions of Section 5(a) or 5(b) hereof
shall automatically convert into one share of Common Stock effective on the
Redemption Date (or, in the case of an Initial Public Offering in which no
Redemption Date occurs, the IPO Date, or, in the case of a Sale of the
Corporation in which no Redemption Date occurs, then effective immediately
prior to the consummation of such Sale of the Corporation), but immediately
after the redemptions and issuances, if any, described in Section 5 (the
"Conversion Date"). Prior to or on the Conversion Date, each holder of shares
of Class A Stock, Class B Stock, Class C Stock, Class D Stock and Class E
Stock shall surrender such holder's certificates evidencing such shares at the
principal executive office of the Corporation or at such other place as the
Corporation shall designate to such holder in writing at least 10 Business
Days prior to the Conversion Date, and shall, within 10 Business Days after
the Conversion Date, be entitled to receive from the Corporation certificates
evidencing the number of shares of Common Stock into which such shares are
converted. On the Conversion Date, each holder of shares of Class A Stock,
Class B Stock, Class C Stock, Class D Stock or Class E Stock shall be deemed
to be a holder of record of the Common Stock issuable upon such conversion,
notwithstanding that the certificates representing such Class A Stock, Class B
Stock, Class C Stock, Class D Stock or Class E Stock shall not have been
surrendered at the principal executive office of the Corporation or such other
place as the Corporation may have designated, that notice from the Corporation
shall not have been given or, if given, shall not have been received by any
such holder, or that certificates evidencing such shares of Common Stock shall
not then be actually delivered to such holder. All certificates representing
the converted shares, including all certificates not so delivered by such
holders, shall be, or shall be deemed to be, canceled by the Corporation as of
the Conversion Date and shall thereafter no longer be of any force or effect
and the Corporation shall not thereafter issue any such shares of Class A
Stock, Class B Stock, Class C Stock, Class D Stock or Class E Stock.
(b) Each issued and outstanding share of Class E Stock shall convert into
one share of Class A Stock at the option of the holder thereof; provided that
such option to convert may not be exercised prior to thirty (30) days after
the issuance of such share of Class E Stock. On or as soon as practicable
following the date a Class E Shareholder elects to convert any shares of Class
E Stock, such Class E Shareholder shall surrender such holder's certificates
evidencing such shares at the principal executive office of the Corporation or
at such other place as the Corporation shall designate to such holder in
writing, and shall, within 10 Business Days after such date, be entitled to
receive from the Corporation certificates evidencing the number of shares of
Class A Stock into which such shares are converted. On the date the election
to convert the shares is made, the electing Class E Shareholder shall be
deemed to be a holder of record of the Class A Stock issuable upon such
conversion, notwithstanding that the certificates representing such Class E
Stock shall not have been surrendered at the principal executive office of the
Corporation or such other place as the Corporation may have designated or that
certificates evidencing such shares of Class A Stock shall not then be
actually delivered to such holder. All certificates representing the converted
Class E Stock, including all certificates not so delivered by such holders,
shall be, or shall be deemed to be, canceled by the Corporation as of the date
the election to convert is made and shall thereafter no longer be of any force
or effect and the Corporation shall not thereafter issue any such shares of
Class E Stock.
(c) Notwithstanding anything contained in Section 6(a) above, no shares of
Class E Stock shall be converted into Common Stock pursuant to Section 6(a) if
such conversion is prohibited under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
7. Voting Rights. (a) Holders of shares of Class A Stock and Common Stock
shall be entitled to one vote for each share of such stock held on all matters
as to which shareholders may be entitled to vote pursuant to the MBCA.
(b) Holders of Class B Stock, Class C Stock and Class E Stock shall not
have any voting rights, except as required by the MBCA and, where so required,
the holders of the Class B Stock, Class C Stock and Class E Stock shall be
entitled to one vote per share.
(c) Holders of shares of Class D Stock shall be entitled to 316.45 votes
for each share of such stock held on all matters as to which shareholders may
be entitled to vote pursuant to the MBCA.
D-8
<PAGE>
(d) Except as otherwise required by the MBCA, the holders of any class of
Stock entitled to vote on any matter submitted to shareholders for a vote
shall vote together with the holders of each other class of Stock so entitled
to vote as a single group and not as separate classes.
8. Liquidation; Dividends; Certain Adjustments; Merger. (a) Subject to the
rights of the holders of any shares of then outstanding Preferred Stock, any
distribution made upon the liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, shall be
allocated pro rata based upon the number of shares of Stock held by each
Shareholder. None of the sale, transfer, conveyance or lease of all or
substantially all of the property or business of the Corporation, the merger
or consolidation of the Corporation into or with any other corporation, the
merger or consolidation of any other corporation into or with the Corporation
or a statutory share exchange of any Stock or Preferred Stock of the
Corporation shall be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, for the purposes of this Section 8(a).
(b) Subject to the rights of the holders of any shares of then outstanding
Preferred Stock, holders of Class A Stock, Class B Stock, Class C Stock, Class
D Stock, Class E Stock and Common Stock shall be entitled to share ratably as
a single class in all dividends and other distributions of cash or any other
right or property as may be declared thereon by the Board from time to time
out of assets or funds of the Corporation legally available therefor.
(c) Whenever, during the period that shares of Class A Stock or Class E
Stock shall be outstanding, the Corporation shall (i) declare a dividend on
shares of any class of Stock in shares of such class of Stock or in securities
convertible into or exchangeable for shares of such class of Stock, (ii)
divide the outstanding shares of any class of Stock into a larger number of
shares, (iii) combine the outstanding shares of any class of Stock into a
smaller number of shares, or (iv) issue any shares of any class of Stock upon
reclassification of such shares, a corresponding dividend, division,
combination or other adjustment shall be made with respect to the shares of
the other class or classes of Stock if and to the extent necessary to prevent
the interests of the holders of Class A Stock or Class E Stock from being
adversely affected.
(d) In the event of a merger or consolidation of the Corporation with or
into another entity (whether or not the Corporation is the surviving entity)
or a statutory share exchange involving any class or series of Stock, the
holders of each share of Class A Stock and Class E Stock shall be entitled to
receive not less than the same per share consideration as the per share
consideration, if any, received by the holders of Class B Stock, Class C Stock
and Class D Stock in such merger, consolidation or exchange (unless, in
addition to such other approvals, if any as may be required by the MBCA and
these Articles of Incorporation, in the case of Class A Stock, a different
treatment is approved by holders of a majority of the then outstanding shares
of Class A Stock and, in the case of Class E Stock, a different treatment is
approved by holders of a majority of the then outstanding shares of Class E
Stock).
9. Legends. (a) All certificates representing shares of Class A Stock,
Class B Stock, Class C Stock and Class E Stock shall, in addition to other
legends that may be required by state or federal securities laws, bear the
following legends:
"THESE SECURITIES ARE SUBJECT TO MANDATORY REDEMPTION BY THE
CORPORATION. SUCH REDEMPTION CAN BE ACCOMPLISHED WITHOUT THE CERTIFICATES
REPRESENTING SUCH SECURITIES BEING SURRENDERED AND WHETHER OR NOT THE
CORPORATION GIVES NOTICE OF SUCH REDEMPTION. THE CORPORATION WILL FURNISH
WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A FULL STATEMENT OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF EACH CLASS OF
STOCK OR SERIES OF STOCK OF THE CORPORATION AUTHORIZED TO BE ISSUED, SO FAR
AS THEY HAVE BEEN DETERMINED, AND THE AUTHORITY OF THE BOARD OF DIRECTORS
TO DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT CLASSES OR
SERIES.
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<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
(b) All certificates representing shares of Class D Stock shall, in
addition to other legends that may be required by state or federal securities
laws, bear the following legend:
"THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO
REQUESTS A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND
RELATIVE RIGHTS OF EACH CLASS OF STOCK OR SERIES OF STOCK OF THE
CORPORATION AUTHORIZED TO BE ISSUED, SO FAR AS THEY HAVE BEEN DETERMINED,
AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO DETERMINE THE RELATIVE
RIGHTS AND PREFERENCES OF SUBSEQUENT CLASSES OR SERIES.
AS SPECIFIED IN THE ARTICLES OF INCORPORATION OF THE CORPORATION, THE
TRANSFERABILITY OF THESE SECURITIES IS SUBJECT TO THE RESTRICTIONS SET
FORTH IN THE ARTICLES OF INCORPORATION. THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE AND MAY BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
10. Record Holders. The Corporation shall be entitled to recognize the
exclusive right of a person registered in its records as the holder of shares
of Class A Stock, Class B Stock, Class C Stock, Class D Stock, Class E Stock
or Common Stock and such record holders shall be deemed the holders of such
shares for all purposes.
ARTICLE V
NO CUMULATIVE VOTING
No shareholder of the Corporation shall have any cumulative voting rights.
ARTICLE VI
NO PREEMPTIVE RIGHTS
No shareholder of the Corporation shall have any preemptive rights by
virtue of Section 302A.413 of the MBCA (or any similar provisions of future
law) to subscribe for, purchase or acquire (i) any shares of the Corporation
of any class or series, whether unissued or now or hereafter authorized, or
(ii) any obligations or other securities convertible into or exchangeable for
(or that carry any other right to acquire) any such shares, securities or
obligations, or (iii) any other rights to purchase any such shares, securities
or obligations. The Corporation shall have the power, however, in its
discretion to grant such rights by agreement or other instrument to any person
or persons (whether or not they are shareholders).
ARTICLE VII
NO DIRECTOR LIABILITY
To the fullest extent permitted by law, no director of the Corporation
shall be personally liable to the Corporation or its shareholders for monetary
damages for breach of fiduciary duty by such director as a director, provided
that (except as set forth below) this Article VII does not eliminate or limit
any such liability to the extent imposed by applicable law: (i) for any breach
of the director's duty of loyalty to the Corporation or its shareholders; (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing
D-10
<PAGE>
violation of law; (iii) under Section 302A.599 of the MBCA or 80A.23 of the
Minnesota Statutes, or (iv) for any transaction from which the director
derived an improper personal benefit. If the MBCA hereafter is amended to
authorize the further elimination or limitation of the liability of directors,
then the liability of a director of the Corporation shall be further
eliminated or limited pursuant to this Article VII to the fullest extent
permitted by the MBCA as so amended. Unless applicable law requires otherwise,
any repeal of this Article VII by the shareholders of the Corporation, and any
amendment of or modification to this Article VII (other than one further
eliminating or limiting director personal liability) shall be prospective only
and shall not adversely affect any elimination of, or limitation on, the
personal liability of a director of the Corporation existing at the time of
such repeal or modification.
ARTICLE VIII
INDEMNIFICATION
1. Indemnification. The Corporation shall indemnify all directors, officers
employees and members of committees of the Corporation's Board of Directors
for such expenses and liabilities, in such manner, under such circumstances,
and to the fullest extent permitted by Section 302A.521 of the MBCA, as now
enacted or hereafter amended.
2. Insurance. The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, or employee of the
Corporation acting in his or her official capacity against any expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the MBCA
or this Article VIII.
ARTICLE IX
AMENDMENTS
From time to time any of the provisions of these Articles of Incorporation
may be amended, altered or repealed, and other provisions authorized by the
laws of the State of Minnesota at the time in force may be added or inserted
in the manner and at the time prescribed by said laws, and all rights at any
time conferred upon the shareholders of the Corporation by these Articles of
Incorporation are granted subject to the provisions of this Article IX.
After the initial Bylaws of the Corporation have been adopted in accordance
with the provisions of Section 302A.181 of the MBCA, the power to adopt,
amend, or repeal the Bylaws of the Corporation, other than: (i) the adoption,
amendment or repeal of Bylaws fixing a quorum for meetings of shareholders,
(ii) the prescription of procedures for removal of directors or filling
vacancies in the Board or (iii) the fixing of the number of directors or their
classifications, qualifications or terms of office (except the adoption or
amendment of a Bylaw to increase the number of directors), may continue to be
exercised by the Board.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 302A.521 of the Minnesota Business Corporation Act (the "MBCA")
requires a Minnesota corporation to indemnify a person made a party to a
proceeding by reason of his or her former or present official capacity with
Jostens, against judgments, penalties, fines, including without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorney's fees and
disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person:
. has not been indemnified by another organization or employee benefit
plan for the same liabilities in connection with the same proceedings;
. acted in good faith;
. received no improper benefit;
. in the case of a criminal proceeding, had no reason to believe the
conduct was unlawful; and
. in the case of acts or omissions occurring in directors' or officers'
official capacity, reasonably believed that the conduct was not opposed
to the best interests of the Jostens officers, directors, employees and
agents for actions taken in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the
corporation, and with respect to any criminal action, which they had no
reasonable cause to believe was unlawful.
The Jostens' bylaws provide that Jostens shall indemnify all directors and
officers for such expenses and liabilities, in such manner, under such
circumstances, and to the extent permitted by law.
The MBCA states that a person made or threatened to be made a party to a
proceeding, is entitled, upon written request to Jostens, to payment or
reimbursement by Jostens of reasonable expenses, including attorney's fees and
disbursements, incurred by the person in advance of the final disposition of
the proceeding, (1) upon receipt by Jostens of a written affirmation by the
person of a good faith belief that the criteria for indemnification set forth
in MBCA 302A.521 have been satisfied and a written undertaking by the person
to repay all amounts so paid or reimbursed by Jostens, if it is ultimately
determined that such criteria for indemnification have not been satisfied and
(2) if, after a determination of the facts then known to those making the
determination, such facts would not preclude indemnification under the
statute.
The applicability of this provision may be limited by a corporation's
articles of incorporation or bylaws, however, Jostens' Articles and bylaws are
silent with regard to the advancement of expenses.
The MBCA provides that the articles of a company cannot eliminate or limit
director's liability for:
. any breach of the director's duty of loyalty to Jostens or shareholders;
. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. any transaction from which the director derived an improper personal
benefit; or
. any act or omission occurring prior to the date when the provision in
the articles eliminating or limiting liability became effective.
The Jostens' articles of incorporation state that no director shall be
personally liable to Jostens or its shareholders for monetary damages for
breach of fiduciary duty as a director, except as otherwise required by law.
While these provisions provide directors with protection from awards for
monetary damages for breaches of their duty of care, they do not eliminate
such duty. Accordingly, these provisions will have no effect on the
availability of equitable remedies such as an injunction or rescission based
on a director's breach of his or her duty of care.
<PAGE>
Item 21. Exhibits and Financial Statement Schedules
(a) See Exhibit Index for the list of exhibits at page II- of this Form
S-4, which is incorporated herein by reference.
Item 22. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona fide offering
thereof.
(g) (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph (i) immediately preceding, or (ii) that purports
to meet the requirements of section 10(a)(3) of the Securities Act and is
used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the securities Act, each such post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
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<PAGE>
(h) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on this 7th day of April, 2000.
Jostens, inc.
/s/ William N. Priesmeyer
By: _________________________________
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated below.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert C. Buhrmaster Chairman, President, Chief April 7, 2000
___________________________________________ Executive Officer and
Robert C. Buhrmaster Director
/s/ William N. Priesmeyer Senior Vice President, April 7, 2000
___________________________________________ Chief Financial Officer
William N. Priesmeyer and Chief Accounting
Officer
/s/ Lilyan H. Affinito Director April 7, 2000
___________________________________________
Lilyan H. Affinito
/s/ Jack W. Eugster Director April 7, 2000
___________________________________________
Jack W. Eugster
/s/ Mannie L. Jackson Director April 7, 2000
___________________________________________
Mannie L. Jackson
/s/ Brenda J. Lauderback Director April 7, 2000
___________________________________________
Brenda J. Lauderback
/s/ Kendrick B. Melrose Director April 7, 2000
___________________________________________
Kendrick B. Melrose
/s/ Richard A. Zona Director April 7, 2000
___________________________________________
Richard A. Zona
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
The following exhibits are filed with this report or are incorporated by
reference to previously filed material.
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
------- ----------------------
<C> <C> <S>
(a)
2.1 -- Agreement and Plan of Merger, dated as of December 27, 1999, by
and between Jostens, Inc. and Saturn Acquisition Corporation,
attached as Appendix A to the Proxy Statement/Prospectus which is
a part of this Registration Statement on Form S-4
2.2 -- First Amendment to the Agreement and Plan of Merger, dated as of
March 31, 2000, by and between Jostens, Inc. and Saturn
Acquisition Corporation, attached as Appendix A to the Proxy
Statement/Prospectus which is a part of this Registration
Statement on Form S-4
3.1 -- Form of Amended and Restated Articles of Incorporation of Jostens,
Inc., attached as Appendix D to the Proxy Statement/Prospectus
which is a part of this Registration Statement on Form S-4
3.2 -- By-Laws of Saturn Acquisition Corporation*
4.1 -- Rights Agreement, dated July 23, 1998, between Jostens, Inc. and
Norwest Bank Minnesota, N.A.**
4.2 -- First Amendment to Rights Agreement, dated as of December 27,
1999, between Jostens, Inc. and Norwest Bank Minnesota, N.A.*
5.1 -- Opinion of William J. George, Esq., regarding the legality of the
Class A Common Stock retained in the merger*
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP*
23.1 -- Consent of Independent Auditors--Ernst & Young LLP*
23.2 -- Consent of William J. George, Esq. (included in Exhibit 5.1)
23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 8.1)
99.1 -- Form of proxy for Special Meeting of the Shareholders of Jostens,
Inc.*
99.2 -- Non-Cash Election Form*
99.3 -- Letter of Transmittal
99.4 -- Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9*
99.5 -- Consent of Credit Suisse First Boston Corporation*
99.6 -- Sections 302A.471 and 302A.473 of the Minnesota Business
Corporation Act, attached as Appendix C to the Proxy
Statement/Prospectus which is a part of this Registration
Statement on Form S-4
99.7 -- Letter to optionholders with respect to the cancellation of
options*
</TABLE>
- --------
* Filed herewith.
** Incorporated by reference to Jostens' Form 8-A filed on August 5, 1998.
(b) Not applicable.
(c) Opinion of Credit Suisse First Boston Corporation, attached as Appendix B
to the Proxy Statement/Prospectus which is a part of the Registration
Statement on Form S-4.
<PAGE>
Exhibit 3.2
BY-LAWS
of
SATURN ACQUISITION CORPORATION
<PAGE>
BY-LAWS
of
SATURN ACQUISITION CORPORATION
TABLE OF CONTENTS
SHAREHOLDERS ............................................................... 1
Section 1.01 Place of Meetings ........................................... 1
Section 1.02 Regular Meetings ............................................ 1
Section 1.03 Special Meetings ............................................ 1
Section 1.04 Meetings Held Upon Shareholder Demand ....................... 1
Section 1.05 Adjournments ................................................ 2
Section 1.06 Notice of Meetings .......................................... 2
Section 1.07 Waiver of Notice ............................................ 2
Section 1.08 Voting Rights ............................................... 2
Section 1.09 Proxies ..................................................... 2
Section 1.10 Quorum ...................................................... 3
Section 1.11 Acts of Shareholders ........................................ 3
Section 1.12 Action Without a Meeting .................................... 3
DIRECTORS .................................................................. 3
Section 2.01 Number; Qualifications ...................................... 3
Section 2.02 Term ........................................................ 3
Section 2.03 Vacancies ................................................... 4
Section 2.04 Place of Meetings ........................................... 4
Section 2.05 Regular Meetings ............................................ 4
Section 2.06 Special Meetings ............................................ 4
Section 2.07 Waiver of Notice; Previously Scheduled Meetings ............. 4
Section 2.08 Quorum ...................................................... 4
Section 2.09 Acts of Board ............................................... 5
Section 2.10 Participation by Electronic Communications .................. 5
Section 2.11 Absent Directors ............................................ 5
Section 2.12 Action Without a Meeting .................................... 5
Section 2.13 Committees .................................................. 5
Section 2.14 Special Litigation Committee ................................ 6
Section 2.15 Compensation ................................................ 6
OFFICERS ................................................................... 6
Section 3.01 Number and Designation ...................................... 6
Section 3.02 Chief Executive Officer ..................................... 6
Section 3.03 Chief Financial Officer ..................................... 6
Section 3.04 President ................................................... 7
i
<PAGE>
Section 3.05 Vice Presidents ............................................. 7
Section 3.06 Secretary ................................................... 7
Section 3.07 Treasurer ................................................... 7
Section 3.08 Authority and Duties ........................................ 7
Section 3.09 Term ........................................................ 8
Section 3.10 Salaries .................................................... 8
INDEMNIFICATION ............................................................ 8
Section 4.01 Indemnification ............................................. 8
Section 4.02 Insurance ................................................... 8
SHARES ..................................................................... 8
Section 5.01 Certificated and Uncertificated Shares ...................... 8
Section 5.02 Declaration of Dividends and Other Distributions ............ 9
Section 5.03 Transfer of Shares .......................................... 9
Section 5.04 Record Date ................................................. 9
MISCELLANEOUS .............................................................. 9
Section 6.01 Execution of Instruments .................................... 9
Section 6.02 Advances .................................................... 10
Section 6.03 Corporate Seal .............................................. 10
Section 6.04 Fiscal Year ................................................. 10
Section 6.05 Amendments .................................................. 10
This Table of Contents is not part of the By-Laws of the Corporation.
It is intended merely to aid in the utilization of the By-Laws.
ii
<PAGE>
BY-LAWS
of
SATURN ACQUISITION CORPORATION
SHAREHOLDERS
------------
Section 1.01 Place of Meetings. Each meeting of the shareholders
------------ -----------------
shall be held at the principal executive office of the Corporation or at such
other place as may be designated by the Board of Directors or the Chief
Executive Officer; provided, however, that any meeting called by or at the
demand of a shareholder or shareholders shall be held in the county where the
principal executive office of the Corporation is located.
Section 1.02 Regular Meetings. Regular meetings of the shareholders
------------ ----------------
may be held on an annual or other less frequent basis as determined by the Board
of Directors; provided, however, that if a regular meeting has not been held
during the immediately preceding 15 months, a shareholder or shareholders
holding three percent or more of the voting power of all shares entitled to vote
may demand a regular meeting of shareholders by written demand given to the
Chief Executive Officer or Chief Financial Officer of the Corporation. At each
regular meeting the shareholders shall elect qualified successors for directors
who serve for an indefinite term or whose terms have expired or are due to
expire within six months after the date of the meeting and may transact any
other business, provided, however, that no business with respect to which
special notice is required by law shall be transacted unless such notice shall
have been given.
Section 1.03 Special Meetings. A special meeting of the
------------ ----------------
shareholders may be called for any purpose or purposes at any time by the Chief
Executive Officer; by the Chief Financial Officer; by the Board of Directors or
any two or more members thereof; or by one or more shareholders holding not less
than ten percent of the voting power of all shares of the Corporation entitled
to vote (except that a special meeting for the purpose of considering any action
to directly or indirectly facilitate or effect a business combination, including
any action to change or otherwise affect the composition of the Board for that
purpose, must be called by shareholders holding not less than 25 percent of the
voting power of all shares of the Corporation entitled to vote), who shall
demand such special meeting by written notice given to the Chief Executive
Officer or the Chief Financial Officer of the Corporation specifying the
purposes of such meeting.
Section 1.04 Meetings Held Upon Shareholder Demand. Within 30 days
------------ -------------------------------------
after receipt of a demand by the Chief Executive Officer or the Chief Financial
Officer from any shareholder or shareholders entitled to call a meeting of the
shareholders, it shall be the duty of the Board of Directors of the Corporation
to cause a special or regular meeting of shareholders,
<PAGE>
as the case may be, to be duly called and held on notice no later than 90 days
after receipt of such demand. If the Board fails to cause such a meeting to be
called and held as required by this Section, the shareholder or shareholders
making the demand may call the meeting by giving notice as provided in Section
1.06 hereof at the expense of the Corporation.
Section 1.05 Adjournments. Any meeting of the shareholders may be
------------ ------------
adjourned from time to time to another date, time and place. If any meeting of
the shareholders is so adjourned, no notice as to such adjourned meeting need be
given if the adjourned meeting is to be held not more than 120 days after the
date fixed for the original meeting and the date, time and place at which the
meeting will be reconvened are announced at the time of adjournment.
Section 1.06 Notice of Meetings. Unless otherwise required by law,
------------ ------------------
written notice of each meeting of the shareholders, stating the date, time and
place and, in the case of a special meeting, the purpose or purposes, shall be
given at least ten days and not more than 60 days prior to the meeting to every
holder of shares entitled to vote at such meeting except as specified in Section
1.05 or as otherwise permitted by law. The business transacted at a special
meeting of shareholders is limited to the purposes stated in the notice of the
meeting.
Section 1.07 Waiver of Notice. A shareholder may waive notice of
------------ ----------------
the date, time, place and purpose or purposes of a meeting of shareholders. A
waiver of notice by a shareholder entitled to notice is effective whether given
before, at or after the meeting, and whether given in writing, orally or by
attendance. Attendance by a shareholder at a meeting is a waiver of notice of
that meeting, unless the shareholder objects at the beginning of the meeting to
the transaction of business because the meeting is not lawfully called or
convened, or objects before a vote on an item of business because the item may
not lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
Section 1.08 Voting Rights. Subdivision 1. Except or otherwise
------------ -------------
provided in the Articles of Incorporation, a shareholder shall have one vote for
each share held which is entitled to vote. Except as otherwise required by law,
a holder of shares entitled to vote may vote any portion of the shares in any
way the shareholder chooses. If a shareholder votes without designating the
proportion or number of shares voted in a particular way, the shareholder is
deemed to have voted all of the shares in that way.
Subdivision 2. The Board of Directors may fix, or authorize an
officer to fix, a date not more than 60 days before the date of a meeting of
shareholders as the date for the determination of the holders of shares entitled
to notice of and entitled to vote at the meeting. When a date is so fixed, only
shareholders on that date are entitled to notice of and permitted to vote at
that meeting of shareholders.
Section 1.09 Proxies. A shareholder may cast or authorize the
------------ -------
casting of a vote by filing a written appointment of a proxy, signed by the
shareholder, with an officer of the Corporation at or before the meeting at
which the appointment is to be effective. In addition, as long as the
Corporation is a publicly-held corporation, a shareholder may cast or authorize
the
2
<PAGE>
written appointment by telegram, cablegram or other means of electronic
transmission, including telephonic transmission, whether or not accompanied by
written instructions of the shareholder. The electronic transmission must set
forth or be submitted with information from which it can be determined that the
appointment was authorized by the shareholder. Any copy, facsimile,
telecommunication or other reproduction of the original of either the writing or
transmission may be used in lieu of the original, provided that it is a complete
and legible reproduction of the entire original.
Section 1.10 Quorum. The holders of a majority of the voting power
------------ ------
of the shares entitled to vote at a shareholders meeting are a quorum for the
transaction of business. If a quorum is present when a duly called or held
meeting is convened, the shareholders present may continue to transact business
until adjournment, even though the withdrawal of a number of the shareholders
originally present leaves less than the proportion or number otherwise required
for a quorum.
Section 1.11 Acts of Shareholders. Subdivision 1. Except as
------------ ---------------------
otherwise required by law or specified in the Articles of Incorporation of the
Corporation, the shareholders shall take action by the affirmative vote of the
holders of the greater of (a) a majority of the voting power of the shares
present and entitled to vote on that item of business or (b) a majority of the
voting power of the minimum number of shares entitled to vote that would
constitute a quorum for the transaction of business at a duly held meeting of
shareholders.
Subdivision 2. A shareholder voting by proxy authorized to vote on
less than all items of business considered at the meeting shall be considered to
be present and entitled to vote only with respect to those items of business for
which the proxy has authority to vote. A proxy who is given authority by a
shareholder who abstains with respect to an item of business shall be considered
to have authority to vote on that item of business.
Section 1.12 Action Without a Meeting. Any action required or
------------ ------------------------
permitted to be taken at a meeting of the shareholders of the Corporation may be
taken without a meeting by written action signed by all of the shareholders
entitled to vote on that action. The written action is effective when it has
been signed by all of those shareholders, unless a different effective time is
provided in the written action.
DIRECTORS
---------
Section 2.01 Number; Qualifications. Except as authorized by the
------------ ----------------------
shareholders pursuant to a shareholder control agreement or unanimous
affirmative vote, the business and affairs of the Corporation shall be managed
by or under the direction of a Board of one or more directors. Directors shall
be natural persons. The number of directors to constitute the Board shall be
determined from time to time by resolution of the Board. Directors need not be
shareholders.
Section 2.02 Term. Each director shall serve for an indefinite term
------------ ----
that expires at the next regular meeting of the shareholders. A director shall
hold office until a successor is
3
<PAGE>
elected and has qualified or until the earlier death, resignation, removal or
disqualification of the director.
Section 2.03 Vacancies. Vacancies on the Board of Directors
------------ ---------
resulting from the death, resignation, removal or disqualification of a director
may be filled by the affirmative vote of a majority of the remaining members of
the Board, though less than a quorum. Vacancies on the Board resulting from
newly created directorships may be filled by the affirmative vote of a majority
of the directors serving at the time such directorships are created. Each
person elected to fill a vacancy shall hold office until a qualified successor
is elected by the shareholders at the next regular meeting or at any special
meeting duly called for that purpose.
Section 2.04 Place of Meetings. Each meeting of the Board of
------------ -----------------
Directors shall be held at the principal executive office of the Corporation or
at such other place as may be designated from time to time by a majority of the
members of the Board or by the Chief Executive Officer. A meeting may be held
by conference among the directors using any means of communication through which
the directors may simultaneously hear each other during the conference.
Section 2.05 Regular Meetings. Regular meetings of the Board of
------------ ----------------
Directors for the election of officers and the transaction of any other business
shall be held without notice at the place of and immediately after each regular
meeting of the shareholders.
Section 2.06 Special Meetings. A special meeting of the Board of
------------ ----------------
Directors may be called for any purpose or purposes at any time by any member of
the Board by giving not less than two days' notice to all directors of the date,
time and place of the meeting, provided that when notice is mailed, at least
four days' notice shall be given. The notice need not state the purpose of the
meeting.
Section 2.07 Waiver of Notice; Previously Scheduled Meetings.
------------ -----------------------------------------------
Subdivision 1. A director of the Corporation may waive notice of the date, time
and place of a meeting of the Board. A waiver of notice by a director entitled
to notice is effective whether given before, at or after the meeting, and
whether given in writing, orally or by attendance. Attendance by a director at
a meeting is a waiver of notice of that meeting, unless the director objects at
the beginning of the meeting to the transaction of business because the meeting
is not lawfully called or convened and thereafter does not participate in the
meeting.
Subdivision 2. If the day or date, time and place of a Board meeting
have been provided herein or announced at a previous meeting of the Board, no
notice is required. Notice of an adjourned meeting need not be given other than
by announcement at the meeting at which adjournment is taken of the date, time
and place at which the meeting will be reconvened.
Section 2.08 Quorum. The presence in person of a majority of the
------------ ------
directors currently holding office shall be necessary to constitute a quorum for
the transaction of business. In the absence of a quorum, a majority of the
directors present may adjourn a meeting from time to time without further notice
until a quorum is present. If a quorum is present when
4
<PAGE>
a duly called or held meeting is convened, the directors present may continue to
transact business until adjournment, even though the withdrawal of a number of
the directors originally present leaves less than the proportion or number
otherwise required for a quorum.
Section 2.09 Acts of Board. Except as otherwise required by law or
------------ -------------
specified in the Articles of Incorporation of the Corporation, the Board shall
take action by the affirmative vote of the greater of (a) a majority of the
directors present at a duly held meeting at the time the action is taken or (b)
a majority of the minimum proportion or number of directors that would
constitute a quorum for the transaction of business at the meeting.
Section 2.10 Participation by Electronic Communications. A director
------------ ------------------------------------------
may participate in a Board meeting by any means of communication through which
the director, other directors so participating and all directors physically
present at the meeting may simultaneously hear each other during the meeting. A
director so participating shall be deemed present in person at the meeting.
Section 2.11 Absent Directors. A director of the Corporation may
------------ ----------------
give advance written consent or opposition to a proposal to be acted on at a
Board meeting. If the director is not present at the meeting, consent or
opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as the vote of a director present at the meeting in favor of or against
the proposal and shall be entered in the minutes or other record of action at
the meeting, if the proposal acted on at the meeting is substantially the same
or has substantially the same effect as the proposal to which the director has
consented or objected.
Section 2.12 Action Without a Meeting. An action required or
------------ ------------------------
permitted to be taken at a Board meeting may be taken without a meeting by
written action signed by all of the directors. Any action, other than an action
requiring shareholder approval, if the Articles of Incorporation so provide, may
be taken by written action signed by the number of directors that would be
required to take the same action at a meeting of the Board at which all
directors were present. The written action is effective when signed by the
required number of directors, unless a different effective time is provided in
the written action. When written action is permitted to be taken by less than
all directors, all directors shall be notified immediately of its text and
effective date.
Section 2.13 Committees. Subdivision 1. A resolution approved by
------------ ----------
the affirmative vote of a majority of the Board may establish committees having
the authority of the Board in the management of the business of the Corporation
only to the extent provided in the resolution. Committees shall be subject at
all times to the direction and control of the Board, except as provided in
Section 2.14 or otherwise provided by law.
Subdivision 2. A committee shall consist of one or more natural
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present at a duly held Board meeting.
5
<PAGE>
Subdivision 3. Section 2.04 and Sections 2.06 to 2.12 hereof shall
apply to committees and members of committees to the same extent as those
sections apply to the Board and directors.
Subdivision 4. Minutes, if any, of committee meetings shall be made
available upon request to members of the committee and to any director.
Section 2.14 Special Litigation Committee. Pursuant to the
------------ ----------------------------
procedure set forth in Section 2.13, the Board may establish a committee
composed of one or more independent directors or other independent persons to
determine whether it is in the best interests of the Corporation to consider
legal rights or remedies of the Corporation and whether those rights and
remedies should be pursued. The committee, once established, is not subject to
the direction or control of, or (unless required by law) termination by, the
Board. To the extent permitted by law, a vacancy on the committee may be filled
by a majority vote of the remaining committee members. The good faith
determinations of the committee are binding upon the Corporation and its
directors, officers and shareholders to the extent permitted by law. The
committee terminates when it issues a written report of its determinations to
the Board.
Section 2.15 Compensation. The Board may fix the compensation, if
------------ ------------
any, of directors.
OFFICERS
--------
Section 3.01 Number and Designation. The Corporation shall have one
------------ ----------------------
or more natural persons exercising the functions of the offices of Chief
Executive Officer and Chief Financial Officer. The Board of Directors may elect
or appoint such other officers or agents as it deems necessary for the operation
and management of the Corporation, with such powers, rights, duties and
responsibilities as may be determined by the Board, including, without
limitation, a President, one or more Vice Presidents, a Secretary and a
Treasurer, each of whom shall have the powers, rights, duties and
responsibilities set forth in these By-Laws unless otherwise determined by the
Board. Any of the offices or functions of those offices may be held by the same
person.
Section 3.02 Chief Executive Officer. Unless provided otherwise by
------------ -----------------------
a resolution adopted by the Board of Directors, the Chief Executive Officer (a)
shall have general active management of the business of the Corporation; (b)
shall, when present, preside at all meetings of the shareholders and Board; (c)
shall see that all orders and resolutions of the Board are carried into effect;
(d) may maintain records of and certify proceedings of the Board and
shareholders; and (e) shall perform such other duties as may from time to time
be assigned by the Board.
Section 3.03 Chief Financial Officer. Unless provided otherwise by
------------ -----------------------
a resolution adopted by the Board of Directors, the Chief Financial Officer (a)
shall keep accurate financial records for the Corporation; (b) shall deposit all
monies, drafts and checks in the name of and to the credit of the Corporation in
such banks and depositories as the Board shall
6
<PAGE>
designate from time to time; (c) shall endorse for deposit all notes, checks and
drafts received by the Corporation as ordered by the Board, making proper
vouchers therefor; (d) shall disburse corporate funds and issue checks and
drafts in the name of the Corporation, as ordered by the Board; (e) shall render
to the Chief Executive Officer and the Board, whenever requested, an account of
all of such officer's transactions as Chief Financial Officer and of the
financial condition of the Corporation; and (f) shall perform such other duties
as may be prescribed by the Board or the Chief Executive Officer from time to
time.
Section 3.04 President. Unless otherwise determined by the Board of
------------ ---------
Directors, the President shall be the Chief Executive Officer of the
Corporation. If an officer other than the President is designated Chief
Executive Officer, the President shall perform such duties as may from time to
time be assigned by the Board.
Section 3.05 Vice Presidents. Any one or more Vice Presidents, if
------------ ---------------
any, may be designated by the Board of Directors as Executive Vice Presidents or
Senior Vice Presidents. During the absence or disability of the President, it
shall be the duty of the highest ranking Executive Vice President, and, in the
absence of any such Vice President, it shall be the duty of the highest ranking
Senior Vice President or other Vice President, who shall be present at the time
and able to act, to perform the duties of the President. The determination of
who is the highest ranking of two or more persons holding the same office shall,
in the absence of specific designation of order of rank by the Board, be made on
the basis of the earliest date of appointment or election, or, in the event of
simultaneous appointment or election, on the basis of the longest continuous
employment by the Corporation.
Section 3.06 Secretary. The Secretary, unless otherwise determined
------------ ---------
by the Board of Directors, shall attend all meetings of the shareholders and all
meetings of the Board, shall record or cause to be recorded all proceedings
thereof in a book to be kept for that purpose, and may certify such proceedings.
Except as otherwise required or permitted by law or by these By-Laws, the
Secretary shall give or cause to be given notice of all meetings of the
shareholders and all meetings of the Board.
Section 3.07 Treasurer. Unless otherwise determined by the Board of
------------ ---------
Directors, the Treasurer shall be the Chief Financial Officer of the
Corporation. If an officer other than the Treasurer is designated Chief
Financial Officer, the Treasurer shall perform such duties as may from time to
time be assigned by the Board.
Section 3.08 Authority and Duties. In addition to the foregoing
------------ --------------------
authority and duties, all officers of the Corporation shall respectively have
such authority and perform such duties in the management of the business of the
Corporation as may be designated from time to time by the Board of Directors.
Unless prohibited by a resolution approved by the affirmative vote of a majority
of the directors present, an officer elected or appointed by the Board may,
without the approval of the Board, delegate some or all of the duties and powers
of an office to other persons.
7
<PAGE>
Section 3.09 Term. Subdivision 1. All officers of the Corporation
------------ ----
shall hold office until their respective successors are chosen and have
qualified or until their earlier death, resignation or removal.
Subdivision 2. An officer may resign at any time by giving written
notice to the Corporation. The resignation is effective without acceptance when
the notice is given to the Corporation, unless a later effective date is
specified in the notice.
Subdivision 3. An officer may be removed at any time, with or without
cause, by a resolution approved by the affirmative vote of a majority of the
directors present at a duly held Board meeting.
Subdivision 4. A vacancy in an office because of death, resignation,
removal, disqualification or other cause may, or in the case of a vacancy in the
office of Chief Executive Officer or Chief Financial Officer shall, be filled
for the unexpired portion of the term by the Board.
Section 3.10 Salaries. The salaries of all officers of the
------------ --------
Corporation shall be fixed by the Board of Directors or by the Chief Executive
Officer if authorized by the Board.
INDEMNIFICATION
---------------
Section 4.01 Indemnification. The Corporation shall indemnify its
------------ ---------------
officers and directors for such expenses and liabilities, in such manner, under
such circumstances, and to such extent, as required or permitted by Minnesota
Statutes, Section 302A.521, as amended from time to time, or as required or
permitted by other provisions of law.
Section 4.02 Insurance. The Corporation may purchase and maintain
------------ ---------
insurance on behalf of any person in such person's official capacity against any
liability asserted against and incurred by such person in or arising from that
capacity, whether or not the Corporation would otherwise be required to
indemnify the person against the liability.
SHARES
------
Section 5.01 Certificated and Uncertificated Shares. Subdivision 1.
------------ --------------------------------------
The shares of the Corporation shall be either certificated shares or
uncertificated shares. Each holder of duly issued certificated shares is
entitled to a certificate of shares.
Subdivision 2. Each certificate of shares of the Corporation shall
bear the corporate seal, if any, and shall be signed by the Chief Executive
Officer, or the President or any Vice President, and the Chief Financial
Officer, or the Secretary or any Assistant Secretary, but when a certificate is
signed by a transfer agent or a registrar, the signature of any such officer and
the corporate seal upon such certificate may be facsimiles, engraved or printed.
If a person signs or has a facsimile signature placed upon a certificate while
an officer, transfer agent or registrar of the Corporation, the certificate may
be issued by the Corporation, even if the person
8
<PAGE>
has ceased to serve in that capacity before the certificate is issued, with the
same effect as if the person had that capacity at the date of its issue.
Subdivision 3. A certificate representing shares issued by the
Corporation shall, if the Corporation is authorized to issue shares of more than
one class or series, set forth upon the face or back of the certificate, or
shall state that the Corporation will furnish to any shareholder upon request
and without charge, a full statement of the designations, preferences,
limitations and relative rights of the shares of each class or series authorized
to be issued, so far as they have been determined, and the authority of the
Board to determine the relative rights and preferences of subsequent classes or
series.
Subdivision 4. A resolution approved by the affirmative vote of a
majority of the directors present at a duly held meeting of the Board may
provide that some or all of any or all classes and series of the shares of the
Corporation will be uncertificated shares. Any such resolution shall not apply
to shares represented by a certificate until the certificate is surrendered to
the Corporation.
Section 5.02 Declaration of Dividends and Other Distributions. The
------------ ------------------------------------------------
Board of Directors shall have the authority to declare dividends and other
distributions upon the shares of the Corporation to the extent permitted by law.
Section 5.03 Transfer of Shares. Shares of the Corporation may be
------------ ------------------
transferred only on the books of the Corporation by the holder thereof, in
person or by such person's attorney. In the case of certificated shares, shares
shall be transferred only upon surrender and cancellation of certificates for a
like number of shares. The Board of Directors, however, may appoint one or more
transfer agents and registrars to maintain the share records of the Corporation
and to effect transfers of shares.
Section 5.04 Record Date. The Board of Directors may fix a time,
------------ -----------
not exceeding 60 days preceding the date fixed for the payment of any dividend
or other distribution, as a record date for the determination of the
shareholders entitled to receive payment of such dividend or other distribution,
and in such case only shareholders of record on the date so fixed shall be
entitled to receive payment of such dividend or other distribution,
notwithstanding any transfer of any shares on the books of the Corporation after
any record date so fixed.
MISCELLANEOUS
-------------
Section 6.01 Execution of Instruments. Subdivision 1. All deeds,
------------ ------------------------
mortgages, bonds, checks, contracts and other instruments pertaining to the
business and affairs of the Corporation shall be signed on behalf of the
Corporation by the Chief Executive Officer, or the President, or any Vice
President, or by such other person or persons as may be designated from time to
time by the Board of Directors.
9
<PAGE>
Subdivision 2. If a document must be executed by persons holding
different offices or functions and one person holds such offices or exercises
such functions, that person may execute the document in more than one capacity
if the document indicates each such capacity.
Section 6.02 Advances. The Corporation may, without a vote of the
------------ --------
directors, advance money to its directors, officers or employees to cover
expenses that can reasonably be anticipated to be incurred by them in the
performance of their duties and for which they would be entitled to
reimbursement in the absence of an advance.
Section 6.03 Corporate Seal. The seal of the Corporation, if any,
------------ --------------
shall be a circular embossed seal having inscribed thereon the name of the
Corporation and the following words:
"Corporate Seal Minnesota".
Section 6.04 Fiscal Year. The fiscal year of the Corporation shall
------------ -----------
be determined by the Board of Directors.
Section 6.05 Amendments. The Board of Directors shall have the
------------ ----------
power to adopt, amend or repeal the By-Laws of the Corporation, subject to the
power of the shareholders to change or repeal the same, provided, however, that
the Board shall not adopt, amend or repeal any By-Law fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors or
filling vacancies in the Board, or fixing the number of directors or their
classifications, qualifications or terms of office, but may adopt or amend a By-
Law that increases the number of directors.
10
<PAGE>
Exhibit 4.2
FIRST AMENDMENT TO RIGHTS AGREEMENT
-----------------------------------
THIS FIRST AMENDMENT TO RIGHTS AGREEMENT, dated as of December 27,
1999 ("Amendment"), is entered into between Jostens, Inc., a Minnesota
corporation (the "Company"), and Norwest Bank Minnesota, N.A., as Rights Agent
(the "Rights Agent").
WHEREAS, the Company and the Rights Agent are parties to that certain
Rights Agreement, dated as of July 23, 1998 (the "Rights Agreement");
WHEREAS, the Company and the Rights Agent desire to amend the Rights
Agreement in accordance with the provisions of Section 27 thereof;
WHEREAS, this Amendment has been approved by the Board of Directors of
the Company, with the concurrence of a majority of the Independent Directors (as
defined in the Rights Agreement), which Independent Directors constitute a
majority of the number of directors on the Board; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, the parties hereto agree as follows:
1. A new Section 34 shall be added to the Rights Agreement which
shall read as follows:
Section 34. Exception. Notwithstanding any provision of this
---------
Agreement to the contrary, neither Saturn Acquisition Corporation, a
Minnesota corporation ("MergerCo") nor any of its Affiliates shall be
deemed to have become an Acquiring Person, nor shall a Distribution Date or
a Triggering Event be deemed to have occurred, and no holder of Rights
shall be entitled to exercise such Rights as a result of the execution or
delivery of the Agreement and Plan of Merger, dated as of December 27, 1999
(the "Merger Agreement"), by and between the Company and MergerCo, as such
agreement may be amended from time to time, or the consummation of the
Merger (as defined in the Merger Agreement).
2. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Rights Agreement.
<PAGE>
3. This Amendment shall be deemed to be a contract made under the
laws of the State of Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of such State, without regard to the
principles of conflicts of laws thereof.
4. This Amendment may be executed in any number of counter parts.
It shall not be necessary that the signature of or on behalf of each party
appears on each counterpart, but it shall be sufficient that the signature of or
on behalf of each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement.
5. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
6. If any term, provision, covenant or restriction of this Amend
ment is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Amendment and of the Rights Agreement, shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the date and year first above written.
JOSTENS, INC.
By: /s/ William J. George
----------------------------------
Name: William J. George
Title: V.P., General Counsel and Secretary
NORWEST BANK MINNESOTA, N.A.
By: /s/ Susan J. Roeder
----------------------------------
Name: Susan J. Roeder
Title: Vice President
3
<PAGE>
Exhibit 5.1
[Letterhead of William J. George - Jostens, Inc.]
April 7, 2000
Jostens, Inc.
5501 Norman Center Drive
Minneapolis, MN 55437
Re: Jostens, Inc.
Registration Statement on Form S-4
----------------------------------
Ladies and Gentlemen:
I am the Vice President, General Counsel and Corporate Secretary of
Jostens, Inc., a Minnesota corporation (the "Company"), and am rendering this
opinion in connection with the Registration Statement on Form S-4 (the "Registra
tion Statement") being filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"). The Registration Statement relates to the shares (the
"Shares") of common stock, par value $.33 1/3 per share, of the Company (the
"Common Stock") to be retained by the Company's shareholders in the merger (the
"Merger") of Saturn Acquisition Corporation, a Delaware corporation ("Saturn")
and an affiliate of Investcorp S.A., with and into the Company pursuant to the
Agreement and Plan of Merger, dated as of December 27, 1999, by and between the
Company and Saturn (as amended, the "Merger Agreement"). Following the Merger,
the Shares will be redesignated as shares of class A common stock, par value
$.33 1/3 per share, of the Company (the "Class A Common Stock").
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act.
<PAGE>
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of (i) the Registration
Statement, as amended to date; (ii) the Merger Agreement; (iii) a specimen
certificate represent ing shares of the Class A Common Stock; (iv) the form of
Amended and Restated Articles of Incorporation of the Company, filed as Appendix
D to the Registration Statement, which will be the articles of incorporation of
the Company at the effective time of the Merger (the "Effective Time"); (iv) the
By-Laws of Saturn, as currently in effect, filed as an Exhibit to the
Registration State ment, which will be the by-laws of the Company at the
Effective Time and (v) certain resolutions of the Board of Directors of the
Company. I also have examined originals or copies, certified or otherwise
identified to my satisfaction, of such other documents, certificates and records
as I have deemed necessary or appropriate as a basis for the opinions set forth
herein.
In my examination, I have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submit ted to me as originals, the conformity to original documents of all
documents submitted to me as certified, facsimile, conformed or photostatic
copies and the authenticity of the originals of such copies. In making my
examination of executed documents, I have assumed that the parties thereto,
other than the Company, had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on such
parties. As to any facts material to the opinions expressed herein which I have
not independently established or verified, I have relied upon the oral or
written statements and representations of officers and other represen tatives of
the Company and others.
I am admitted to the bar in the State of Minnesota and I do not
express any opinion as to the laws of any other jurisdiction, and I do not
express any opinion as to the effect of any other laws on the opinion stated
herein.
Based upon and subject to the foregoing, I am of the opinion that when
(i) the Registration Statement becomes effective under the Act; (ii) the Merger
becomes effective; and (iii) certificates representing the Class A Common Stock
in the form of the specimen certificate examined by me have been duly executed
and
<PAGE>
delivered to Jostens shareholders in exchange for shares of Common Stock as
provided in the Merger Agreement, such Shares of Class A Common Stock will be
validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. I also consent to the reference to me
under the caption "Legal Matters" in the Registration Statement. In giving this
consent, I do not thereby admit that I am included in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
Very truly yours,
/s/ William J. George
William J. George
Vice President, General Counsel,
Corporate Secretary
<PAGE>
Exhibit 8.1
[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
April 7, 2000
Jostens, Inc.
5501 Norman Center Drive
Minneapolis, Minnesota 55437
Ladies and Gentlemen:
We have acted as counsel to Jostens, Inc., a Minnesota corporation
("Jostens"), in connection with the preparation of the Proxy
Statement/Prospectus, which is included in the Registration Statement on Form S-
4 (the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the proposed merger (the "Merger") pursuant to the Minnesota
Business Corporation Act of Saturn Acquisition Corporation, a Minnesota
corporation ("MergerCo") with and into Jostens, pursuant to the Agreement and
Plan of Merger dated as of December 27, 1999 by and between Jostens and MergerCo
(the "Merger Agreement"). In accordance with the require ments of Item
601(b)(8) of Regulation S-K we are rendering our opinion concerning certain
federal income tax consequences of the Merger. Capitalized terms used and not
defined herein shall have the meaning ascribed to them in the Merger Agreement.
In rendering our opinion, we have examined and relied upon the
accuracy and completeness of the facts, information, covenants and
representations contained in originals or copies, certified or otherwise
identified to our satisfaction, of the Merger Agreement (including the exhibits
and schedules thereto), the Regis tration Statement, and such other documents as
we have deemed necessary or appropriate as a basis for the opinion set forth
below. Our opinion is conditioned on, among other things, the initial and
continuing accuracy of the facts, information,
<PAGE>
Jostens, Inc.
April 7, 2000
Page 2
covenants and representations set forth in the documents referred to above and
the statements, representations and agreements made by Jostens, MergerCo and
others. For purposes of rendering our opinion, have assumed that such
statements, represen tations and covenants made by Jostens, MergerCo and others
are true without regard to any qualification as to knowledge or belief.
In our examination we have assumed the genuineness of all signa tures,
the legal capacity of natural persons, the authenticity of all documents submit
ted to us as originals, the conformity to original documents of all documents
submit ted to us as certified or photostatic copies and the authenticity of the
originals of such copies. We also have assumed that the transactions related to
the Merger or contem plated by the Merger Agreement will be consummated in
accordance with the Merger Agreement and as described in the Registration
Statement, and that none of the terms and conditions contained therein will have
been waived or modified in any material respect prior to the Effective Time.
In rendering our opinion, we have considered applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder (the "Regulations"), pertinent judicial authorities,
rulings of the Internal Revenue Service and such other authorities as we have
considered relevant. It should be noted that the Code, Regulations, judicial
decisions and administrative interpretations are subject to change at any time
and, in some circum stances, with retroactive effect. A change in any of the
authorities upon which our opinion is based could affect our conclusions herein.
Opinion
Based solely upon and subject to the foregoing, and the
qualifications, assumptions and limitations set forth under the caption "THE
MERGER - United States Federal Income Tax Considerations" in the Proxy
Statement/Prospectus, the discussion set forth under the caption "THE MERGER -
United States Federal Income Tax Considerations" in the Proxy
Statement/Prospectus, to the extent relating to matters of U.S. federal income
tax law, is our opinion as to the material U.S. federal income tax consequences
of the Merger to holders of Jostens common stock under current law.
<PAGE>
Jostens, Inc.
April 7, 2000
Page 3
Except as set forth above, we express no opinion to any party as to
the tax consequences, whether federal, state, local or foreign, of the Merger or
of any transactions related thereto or contemplated by the Merger Agreement or
the Regis tration Statement. We disclaim any undertaking to advise you of any
subsequent changes of the facts stated or assumed herein or any subsequent
changes in applica ble law. We hereby consent to the filing of this opinion as
an exhibit to the Registra tion Statement. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement on Form S-4 and related Proxy Statement/Prospectus of
Jostens, Inc. and to the incorporation by reference therein of our report
dated February 2, 2000, with respect to the consolidated financial statements
and schedule of Jostens Inc. included in its Annual Report on Form 10-K for
the year ended January 1, 2000, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
April 4, 2000
<PAGE>
Exhibit 99.1
[LOGO] JOSTENS
JOSTENS, INC.
SPECIAL MEETING
MAY 9, 2000
10:00 a.m. local time
Auditorium of Jostens, Inc.
5501 Norman Center Drive
Minneapolis, Minnesota 55437
- --------------------------------------------------------------------------------
Jostens, Inc.
5501 Norman Center Drive, Minneapolis, MN 55437 Proxy
- -------------------------------------------------------------------------------
This Proxy is Solicited on Behalf of the Board of Directors
By signing this proxy, you revoke all prior proxies and appoint ROBERT C.
BUHRMASTER and WILLIAM J. GEORGE, or either one of them, as Proxies, each with
the power to appoint his substitute and to act without the other, and authorize
each of them to represent and to vote, as designated herein, all shares of
common stock of Jostens, Inc. held of record by the undersigned on March 20,
2000, at the Special Meeting of Shareholders of the Company to be held on May 9,
2000 or any adjournment thereof.
If no choice is specified, the proxy will be voted "FOR" Items 1 and 2.
See reverse for voting instructions.
<PAGE>
JOSTENS, INC. COMPANY #
CONTROL #
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Proxies to vote your shares in
the same manner as if you mark, sign and return your proxy card.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number, both of which appear above.
. Follow the simple instructions the voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/jos/
. Access the above Internet site to vote your proxy 24 hours a day, 7 days a
week.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number, both of which appear above, to create an electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
provided.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
- Please detach here -
- --------------------------------------------------------------------------------
The Board of Directors Recommends a vote FOR Each Item Below.
1. Approval of the merger and of the Merger Agreement between Jostens, Inc.
and Saturn Acquisition Corporation.
[_] For [_] Against [_] Abstain
2. To adjourn the meeting, if necessary, to solicit additional proxies.
[_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED, IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR EACH ITEM.
---
Address Change? Mark Box [_] Date_____________________________
Indicate changes below:
[________________________________]
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full name
of corporation and title of
authorized officer signing the Proxy.
<PAGE>
EXHIBIT 99.2
NON-CASH ELECTION FORM
DO NOT SUBMIT THIS FORM IF YOU WANT TO RECEIVE CASH FOR ALL OF YOUR SHARES.
If you are electing to retain all or a portion of your shares ("Non-Cash
Election Shares") of common stock, par value $0.33 per share ("Jostens Common
Stock") of Jostens, Inc. ("Jostens" or the "Company") in connection with the
proposed merger (the "Merger") of Saturn Acquisition Corporation with and into
Jostens (a "Non-Cash Election"), this Non-Cash Election Form (this "Form")
must be completed and signed by you, and submitted, together with your stock
certificate, to our exchange agent at the address or facsimile number
specified below. Upon consummation of the Merger, all Non-Cash Election Shares
will be redesignated as shares of Jostens Class A Common Stock.
Holders of Jostens Common Stock who do not wish to make a Non-Cash Election
(any such holder, a "Non-Electing Holder") and would like to receive cash for
all of their shares of Jostens Common Stock, should NOT complete this form.
Each share of Jostens Common Stock owned by you will automatically be
converted into the right to receive an amount equal to $25.25 in cash from
Jostens following the Merger UNLESS you elect to retain some or all of your
shares of Jostens Common Stock OR unless not enough Jostens shareholders elect
to retain their shares of Jostens Common Stock. In the latter case, a number
of retained shares will be allocated on a pro rata basis to all of Jostens
shareholders to ensure that Jostens public shareholders retain an aggregate of
6% of the total number of shares outstanding immediately following the Merger
(approximately 2% of the total number of shares outstanding immediately prior
to the merger), as set forth in the Proxy Statement/Prospectus previously
mailed to you, dated April 7, 2000 (including all annexes and schedules
thereto, and as it may be amended or supplemented from time to time, the
"Proxy Statement/Prospectus"). The procedures for proration of shares are set
forth in the Proxy Statement/Prospectus under the heading "THE MERGER--Non-
Cash Election Procedure".
Answers to questions and requests for assistance or additional copies of
this Form may be obtained from:
Morrow & Company 1-800-566-9061.
Please submit this form to:
To: Norwest Bank, Exchange Agent
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Courier:
Norwest Bank Minnesota, N.A. (651) 450-4163 Norwest Bank Minnesota, N.A.
PO Box 64858 (For Eligible Financial Institutions Only) Reorganization Department
St. Paul, MN 55164-0858 161 North Concord Exchange Street
South St. Paul, MN 55075
</TABLE>
Confirm by Telephone to:
(651) 450-4110
Delivery of this Form to an address, or transmission of this Form via a
facsimile transmission number, other than as set forth above, does not
constitute a valid delivery.
Please read carefully the accompanying instructions.
BOX I
<TABLE>
<CAPTION>
Shares Submitted
Name and Address of Registered Holder* (Attach additional list if necessary)
- --------------------------------------------------------------------------------------
Number
Total Number of Shares
of Shares Elected to
Certificate Represented by be
Number Certificate(s) Retained**
-----------------------------------------
<S> <C> <C> <C>
-----------------------------------------
-----------------------------------------
-----------------------------------------
Total Shares
- --------------------------------------------------------------------------------------
</TABLE>
* Only certificates registered in a single form may be deposited with this
Form. If certificates are registered in different forms (e.g., John R.
Doe and J.R. Doe), it will be necessary to fill in, sign and submit as
many separate Forms as there are different registrations of
certificates.
** Unless otherwise indicated, it will be assumed that all shares
represented by certificates herewith submitted are to be treated as
having made a Non-Cash Election.
[_]Check here if you cannot locate certificates. Shortly after receipt of
this Form, the Exchange Agent will contact you directly with
instructions.
<PAGE>
Ladies and Gentlemen:
In connection with the merger (the "Merger") of Saturn Acquisition
Corporation with and into Jostens, Inc. ("Jostens" or the "Company"), the
undersigned hereby submits the certificate(s) for shares of Common Stock, par
value $0.33 per share, of Jostens ("Jostens Common Stock") listed above and
elects, subject as set forth below, to have all or a portion of the shares of
Jostens Common Stock represented by such certificates as set forth below,
converted into the right to retain shares of Jostens Common Stock following
the Merger which, upon consummation of the Merger, will be redesignated as
shares of Class A Common Stock, par value $0.33 per share, of Jostens ("Non-
Cash Election Shares"), subject to the proration set forth below and described
in detail in the Proxy Statement/Prospectus.
Delivery of the enclosed certificate(s) shall be effected, and risk of loss
of and title to such certificates shall pass, only upon delivery thereof by
you.
It is understood that the following election is subject to (i) the terms,
conditions and limitations set forth in the Proxy Statement/Prospectus,
receipt of which is acknowledged by the undersigned, (ii) the terms of the
Agreement and Plan of Merger, dated as of December 27, 1999 (as the same may
be amended or supplemented from time to time, the "Merger Agreement"), a
conformed copy of which appears as Appendix A to the Proxy
Statement/Prospectus, and (iii) the accompanying instructions.
By delivering certificates for shares of Jostens Common Stock, the
registered holder of such certificates releases the Company, Saturn
Acquisition and their respective affiliates, directors, officers, employees,
partners, agents, advisors and representatives, and their respective
successors and assigns, from any and all claims arising from or in connection
with the purchase or ownership of such Jostens Common Stock or the retention
or conversion of such Jostens Common Stock pursuant to the Merger Agreement.
The undersigned authorizes and instructs you, as Exchange Agent, to deliver
such certificates of Jostens Common Stock to the Company and to receive on
behalf of the undersigned, in exchange for the shares of Jostens Common Stock
represented thereby, any certificate for Non-Cash Election Shares or any check
for cash issuable in the Merger pursuant to the terms of the Merger Agreement.
Unless otherwise indicated under Special Payment Instructions below, please
issue any certificate for Non-Cash Election Shares and/or any check issuable
in exchange for the shares of Jostens Common Stock represented by the
certificates submitted hereby in the name of the registered holder(s) of such
Jostens Common Stock. Similarly, unless otherwise indicated under Special
Delivery Instructions, please mail any certificate for Non-Cash Election
Shares and/or any check for cash issuable in exchange for the shares of
Jostens Common Stock represented by the certificates submitted hereby to the
registered holder(s) of the Jostens Common Stock at the address or addresses
shown above.
BOX II BOX III
SPECIAL DELIVERY INSTRUCTIONS
SPECIAL PAYMENT INSTRUCTIONS (See Instruction C(7))
(See Instructions C(5) and C(6))
To be completed ONLY if the
To be completed ONLY if the check or certificates representing
check or certificates representing Non-Cash Election Shares is to be
Non-Cash Election Shares is to be made payable to the registered
made payable to someone other than holder(s) of shares of Jostens
the registered holder(s) of the Common Stock, but is to be sent to
shares of Jostens Common Stock. The someone other than the registered
check will be sent to the name and holder(s) or to an address other
address specified in this Box. than the address of the registered
holder(s) set forth above.
Name(s) ____________________________
(Please Print) Name(s) ____________________________
(Please Print)
------------------------------------
------------------------------------
Address ____________________________
Address ____________________________
------------------------------------
(Including Zip Code) ------------------------------------
(Including Zip Code)
------------------------------------
(Tax Identification or Social
Security Number)
<PAGE>
BOX IV
SIGN HERE AND HAVE SIGNATURES GUARANTEED
(See Instructions D(1) and D(7) Concerning Signature Guarantee)
Name(s): _____________________________________________________________________
(Please Print)
Name(s): _____________________________________________________________________
(Please Print)
______________________________________________________________________________
Signature(s) of Owner(s)
______________________________________________________________________________
Signature(s) of Owner(s)
______________________________________________________________________________
(Tax Identification or Social Security Number(s))
______________________________________________________________________________
Guaranteed
Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or by person(s) authorized to become registered
holder(s) by certificates and documents transmitted herewith. If signature is
by a trustee, executor, administrator, guardian, officer of a corporation,
attorney-in-fact or any other person acting in a fiduciary capacity, set
forth full title in such capacity and see Instruction D(3).
Dated: ________________, 2000
BOX V
GUARANTEE OF DELIVERY
(To be Used Only if Certificates are not Surrendered herewith)
The undersigned is a member of a national securities exchange, a member of
the National Association of Securities Dealers, Inc., or a commercial bank or
trust company in the United States; and guarantees to deliver to the Exchange
Agent the certificates for shares of Jostens Common Stock to which this Form
relates, duly endorsed in blank or otherwise in form acceptable for transfer
on the books of Jostens, no later than 5:00 p.m. New York City time on the
third NYSE trading day after the date of execution of this guarantee of
delivery.
______________________________________________________________________________
(Firm--Please Print)
______________________________________________________________________________
(Authorized Signature)
______________________________________________________________________________
(Address)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Area Code and Telephone Number)
______________________________________________________________________________
(Contact Name)
3
<PAGE>
PAYER: NORWEST BANK MINNESOTA, N.A.
- -------------------------------------------------------------------------------
Name (sole proprietors must provide individual's name):
SUBSTITUTE
Form W-9 ------------------------------------------------------
Department of the Business name, if different from above:
Treasury
Internal Revenue -------------------------------------------------------
Service Address:
Payor's Request for -------------------------------------------------------
Taxpayer Part 1--PLEASE PROVIDE YOUR TIN TIN:
Identification IN THE BOX AT THE RIGHT AND Social Security
Number ("TIN") and CERTIFY BY SIGNING AND DATING Number or
Certification BELOW Employer
Identification Number
-------------------------------------------------------
Part 2--For payers NOT subject to backup withholding,
see the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-
9" and complete as instructed therein.
CERTIFICATION--Under penalty of perjury, I certify
that:
(1) The number shown on this Form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me),
(2) I am not subject to backup withholding either
because: (a) I am exempt from backup withholding,
or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to
backup withholding.
The Internal Revenue Service does not require your
consent to any provision of this document other than
the certificates required to avoid backup
withholding.
Signature ___________________________ Date ___, 2000
-------------------------------------------------------
Part 3--Awaiting TIN [_]
- -------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you are subject to
backup withholding, you received another notification from the IRS stating
that you are no longer subject to backup withholding, do not cross out item
(2).
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE MERGER
AND PENALTIES IMPOSED BY THE INTERNAL REVENUE SERVICE. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (2) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of all reportable
payments made to me will be withheld, but that such amounts will be
refunded to me if I then provide a certified Taxpayer Identification Number
within sixty (60) days and so request.
------------------------------------ ------------------------------------
Signature Date
4
<PAGE>
INSTRUCTIONS
A. Special Conditions.
1. Time in Which to Elect. To be effective, an election pursuant to the
terms and conditions set forth herein (an "Election") on this Form or a
facsimile hereof, accompanied by the above-described certificates representing
shares of Jostens Common Stock, must be received by the Exchange Agent, at the
address set forth above, no later than the later of 5:00 P.M., New York City
time, on May 4, 2000 or, in the event that the Special Meeting relating to the
Merger is postponed or delayed for any reason, 5:00 P.M., New York City time,
on the date that is three NYSE trading days prior to the date of the Special
Meeting (in either case, the "Election Date"). Holders of Jostens Common Stock
whose stock certificates are not immediately available may also make an
effective Election by completing this Form or a facsimile hereof, having the
Guarantee of Delivery box (BOX V) properly completed and duly executed
(subject to the condition that the certificates for which delivery is thereby
guaranteed are in fact delivered to the Exchange Agent, duly endorsed in blank
or otherwise in form acceptable for transfer on the books of Jostens, no later
than 5:00 P.M., New York City time, on the third NYSE trading day after the
date of execution of such guarantee of delivery). Each certificate evidencing
shares of Jostens Common Stock outstanding at the Effective Time of the Merger
with respect to which the Exchange Agent shall have not received an effective
Election by 5:00 p.m. on the Election Date will be treated as if the holder
thereof elected to receive cash for all of the shares of Jostens Common Stock
represented by such certificate, which will be subject to the proration
procedures set forth in the Proxy Statement/Prospectus. See Instruction C.
2. Revocation of Election. Any Election may be revoked by the person who
submitted this Form to the Exchange Agent and the certificate(s) for shares
withdrawn by written notice duly executed and received by the Exchange Agent
prior to the Election Date. Such notice must specify the person in whose name
the shares of Jostens Common Stock to be withdrawn are deposited, the number
of shares to be withdrawn, the name of the registered holder thereof, and the
serial numbers shown on the certificate(s) representing the shares to be
withdrawn. If an Election is revoked, and the certificate(s) for shares
withdrawn, the Jostens Common Stock certificate(s) submitted therewith will be
promptly returned by the Exchange Agent to the person who submitted such
certificate(s).
3. Termination of Right to Elect. If for any reason the Merger is not
consummated, all Forms will be void and of no effect. Certificate(s) for
Jostens Common Stock previously received by the Exchange Agent will be
returned promptly by the Exchange Agent to the person who submitted such stock
certificate(s).
B. Election and Proration Procedures.
A description of the election and proration procedures is set forth in the
Proxy Statement/Prospectus under "THE MERGER--Merger Consideration" and "THE
MERGER--Non-Cash Election Procedure." A full statement of the election and
proration procedures is contained in the Merger Agreement and all Elections
are subject to compliance with such procedures. In connection with making any
election, a holder of Jostens Common Stock should read carefully, among other
matters, the aforesaid description and statement and the information contained
in the Proxy Statement/Prospectus under "THE MERGER--United States Federal
Income Tax Considerations." See also "RISK FACTORS--Shareholders Who Receive
Cash and Retain Stock in the Merger May Be Required to Treat a Portion of Cash
Received as Ordinary Income" in the Proxy Statement/Prospectus for a
discussion of the possibility that the receipt of cash as a result of
proration by a holder who has made a Non-Cash Election may be treated as a
distribution that is taxable as ordinary income as opposed to gain or loss
from the sale or exchange of Jostens Common Stock.
AS A RESULT OF THE PRORATION PROCEDURES, HOLDERS OF JOSTENS COMMON STOCK
MAY RECEIVE NON-CASH ELECTION SHARES OR CASH IN AMOUNTS WHICH VARY FROM THE
AMOUNTS SUCH HOLDERS ELECT TO RECEIVE. SUCH HOLDERS WILL NOT BE ABLE TO CHANGE
THE NUMBER OF NON-CASH ELECTION SHARES OR THE AMOUNT OF CASH ALLOCATED TO THEM
PURSUANT TO SUCH PROCEDURES.
5
<PAGE>
C. Receipt of Non-Cash Election Shares or Checks.
Promptly after the effective time of the Merger (the "Effective Time"), the
Exchange Agent will mail certificate(s) for Non-Cash Election Shares and/or
cash payments by check to the holders of Jostens Common Stock with respect to
all Non-Cash Election Shares included in any effective Election. Holders of
Jostens Common Stock who did not make an Election with respect to all their
shares, or failed to make an effective Election with respect to all their
shares prior to the Election Date will be treated as if the holder thereof
elected to receive cash for all of the shares of Jostens Common Stock, subject
to the proration procedures set forth in the Proxy Statement/Prospectus. As
soon as practicable after the Effective Time, the Exchange Agent will send a
letter of transmittal to each holder of shares of Jostens Common Stock (other
than holders who have made an effective Non-Cash Election with respect to all
of their shares). As soon as practicable after the certificate(s) representing
such share or shares are submitted to the Exchange Agent, together with a
letter of transmittal, the Exchange Agent will deliver to such holder
certificates representing retained shares issuable as a result of proration.
No fractional shares will be issued in connection with the Merger. Each
holder of shares of Jostens Common Stock who would otherwise have been
entitled to receive a fraction of a share issuable as a result of proration
(after taking into account all shares of Jostens Common Stock submitted by
such holder) will receive, in lieu thereof, a cash payment (without interest)
equal to such fraction multiplied by $25.25.
D. General.
1. Execution and Delivery. This Form or a facsimile hereof must be properly
filled in, dated and signed in BOX IV, and must be delivered (together with
stock certificates representing the shares of Jostens Common Stock as to which
the Election is made or with a duly signed guarantee of delivery of such
certificates) to the Exchange Agent at any of the addresses or the facsimile
number set forth on the first page of this Form.
The method of delivery of all documents is at the option and risk of the
stockholder, but, if sent by mail, registered mail, return receipt requested,
properly insured, is suggested.
2. Inadequate Space. If there is insufficient space on this Form to list
all your stock certificates being submitted to the Exchange Agent, please
attach a separate list.
3. Signatures. The signature (or signatures, in the case of certificates
owned by two or more joint holders) on this Form should correspond exactly
with the name(s) as written on the face of the certificate(s) submitted,
unless the shares of Jostens Common Stock described in this Form have been
assigned by the registered holder(s), in which event this Form should be
signed in exactly the same form as the name of the last transferee indicated
on the transfers attached to or endorsed on the certificates.
If this Form is signed by a person or persons other than the registered
owner(s) of the certificates listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered owner(s) appear on the certificates.
If this Form or any stock certificate(s) or stock power(s) are signed by a
trustee, executor, administrator, guardian, officer of a corporation,
attorney-in-fact or any other person acting in a representative or fiduciary
capacity, the person signing must give such person's full title in such
capacity and appropriate evidence of authority to act in such capacity must be
forwarded with this Form.
4. Partial Elections. If an Election is being made in respect of fewer than
all of the shares represented by any certificate being delivered to the
Exchange Agent, the number of shares in respect of which an Election is being
made in the box entitled "Number of Shares Elected to be Retained" should be
indicated. All shares represented by certificates submitted hereunder will be
deemed to have made a Non-Cash Election unless otherwise indicated.
5. Lost or Destroyed Certificates. If your stock certificate(s) has been
either lost or destroyed, please check the box on the front of this Form below
Box 1 and the appropriate forms will be sent to you, as applicable. You will
then be instructed as to the steps you must take in order to receive a stock
certificate(s) representing Non-Cash Election Shares and/or any checks in
accordance with the Merger Agreement.
6
<PAGE>
6. New Certificates and Checks in Same Name. If all stock certificate(s)
representing Non-Cash Election Shares and all check(s) in respect of Non-Cash
Election Shares are to be registered in, or payable to the order of, exactly
the same name(s) that appears on the certificate(s) representing shares of
Jostens Common Stock submitted with this Form, no endorsement of
certificate(s) or separate stock power(s) are required.
7. New Certificate and Checks in Different Name. If any stock
certificate(s) representing Non-Cash Election Shares or any check(s) in
respect of Non-Cash Election Shares are to be registered in, or payable to the
order of, any name other than exactly the name that appears on the
certificate(s) representing shares of Jostens Common Stock submitted herewith,
such registration and/or payment shall not be made by the Exchange Agent
unless the certificates submitted are endorsed, BOX II is completed, and the
signature is guaranteed in BOX IV by a member of a national securities
exchange, a member of the National Association of Securities Dealers, Inc. or
a commercial bank (not a savings bank or a savings & loan association) or
trust company in the United States which is a member in good standing of the
Agent's Medallion Program.
8. Special Delivery Instructions. If the checks are to be payable to the
order of, or the certificates for Non-Cash Election Shares are to be
registered in, the name of the registered holder(s) of shares of Jostens
Common Stock, but are to be sent to someone other than the registered
holder(s) or to an address other than the address of the registered holders,
it will be necessary to indicate such person or address in BOX III.
9. Miscellaneous. A single check and/or a single stock certificate
representing Non-Cash Election Shares will be issued.
All questions with respect to this Form and the Elections (including,
without limitation, questions relating to the timeliness or effectiveness of
revocation of any Election and computation as to proration) will be determined
by Jostens and the Exchange Agent, which determination shall be conclusive and
binding.
10. Substitute Form W-9. Under Federal income tax law, a holder who
receives a cash payment pursuant to the Merger must, unless an exemption
applies, provide the Exchange Agent (as payer) with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
holder is an individual, the TIN is his or her social security number. If the
Exchange Agent is not provided with the correct TIN, payments that are made by
the Exchange Agent to such holder or other payee with respect to the Merger
may be subject to backup withholding at a rate of 31% and the holder may be
subject to penalties imposed by the Internal Revenue Service. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld,
provided that the required information is given to the Internal Revenue
Service. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as exempt from
backup withholding and reporting requirements, the holder must submit a Form
W-8, signed under penalties of perjury, attesting to that individual's exempt
status. A Form W-8 can be obtained from the Exchange Agent. Exempt holders,
other than foreign holders, should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9 and sign, date and return the Substitute Form
W-9 to the Exchange Agent. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
shares of Jostens Common Stock. If the shares of Jostens Common Stock are in
more than one name or are not in the name of the actual owner, consult the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which number to report. If the
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future, the holder should check the box in Part 3 of the
Substitute Form W-9 and sign and date the Substitute Form W-9. If the box in
Part 3 is checked, the holder or other payee must also complete the
Certificate of Awaiting Taxpayer Identification Number below in order to avoid
backup withholding. Notwithstanding that the box in Part 3 is checked and the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Exchange Agent will withhold 31% on all payments made prior to the time a
properly certified TIN is provided to the Exchange Agent. However, such
amounts may be refunded to such holder if a TIN is provided to the Exchange
Agent within 60 days.
---------------
7
<PAGE>
Questions and requests for assistance or additional copies of the Proxy
Statement/Prospectus or this Form may be directed to the phone number set forth
below:
Morrow & Company
1-800-566-9061
8
<PAGE>
EXHIBIT 99.4
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of --
- -------------------------------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one
of the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only
contributor, the
minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. The usual revocable sav-
ings trust account The grantor-
(grantor is also trustee) trustee(1)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship account The owner(4)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
- ------------------------------------------------------------------------------
<S> <C>
9. A valid trust, estate, or pension trust Legal entity (Do
not furnish the
identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
account
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of Agriculture in the name The public
of a public entity (such as a State or local entity
government, school district, or prison) that receives
agricultural program payments
</TABLE>
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
If only one person on a joint account has an SSN, that person's number
should be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish
such person's social security number.
(4) You must show your individual name, but you may also enter your
business or "doing business as" name. You may use either your SSN or EIN
(if you have one).
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you don't have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and ap-
ply for a number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a)
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by indi- viduals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not pro-
vided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments of mortgage interest to you.
Exempt payees described above should file Form W-9 to avoid possible errone-
ous backup withholding.
FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE
THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.-- Section 6109 requires most recipients of dividend, in-
terest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are re-
quired to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Cer-
tain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includable payment for interest, dividends, or pat-
ronage dividends in gross income, such failure will be treated as being due to
negligence and will be subject to a penalty of 20% on any portion of an under-
payment attributable to that failure unless there is clear and convincing evi-
dence to the contrary.
(3) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or im-
prisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
EXHIBIT 99.5
CONSENT
OF
CREDIT SUISSE FIRST BOSTON CORPORATION
Special Committee of the Board of Directors
Board of Directors
Jostens, Inc.
5501 Norman Center Drive
Bloomington, MN 55437
Members of the Special Committee and Board of Directors:
We hereby consent to the inclusion of our opinion letter, dated December 27,
1999, to the Special Committee of the Board of Directors and the Board of
Directors of Jostens, Inc. (the "Company") as Appendix B to the Registration
Statement on Form S-4 and the related Proxy Statement/Prospectus dated April 7,
2000, of the Company filed today with the Securities and Exchange Commission by
the Company under Schedule 14A (the "Schedule 14A") relating to the proposed
merger of Saturn Acquisition Corporation with and into the Company pursuant to
the Agreement and Plan of Merger, dated as of December 27, 1999, as amended, by
and between Jostens, Inc. and Saturn Acquisition Corporation and to the
references to our opinion contained in the Schedule 14A.
/s/ CREDIT SUISSE FIRST BOSTON CORPORATION
April 7, 2000
<PAGE>
Exhibit 99.7
[JOSTENS LETTERHEAD]
April , 2000
PERSONAL AND CONFIDENTIAL
- -------------------------
[Insert name and address
of Addressee]
Dear _______,
You are the holder of the following option(s) to purchase an aggregate
of [__________] shares of common stock, par value $.33 _ per share ("Common
Stock") of Jostens, Inc. (the "Company") granted under the Company's 1992 Stock
Incentive Plan, 1987 Stock Option Plan and/or 1984 Stock Option Plan, as
applicable (the "Option Plans"):
Date of Number of Shares Per Share
Grant Subject to Option Exercise Price
--------- ----------------- --------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
As you are aware, on December 27, 1999, the Company entered into an
Agreement and Plan of Merger (as amended, the "Agreement") providing for the
merger (the "Merger") of Saturn Acquisition Corporation, a Minnesota corporation
("Saturn"), with and into the Company. A copy of the Company's proxy state
ment/prospectus dated April _______ , 2000 relating to the Merger is enclosed
for your information. The Agreement provides that immediately prior to the
Merger, each outstanding option to purchase shares of Common Stock will be
cancelled in exchange for the right to receive a cash payment from the Company,
<PAGE>
for each share of Common Stock subject to such option, equal to the excess, if
any, of $25.25 over the per share exercise price of such option.
The purpose of this letter is to seek your agreement to the
cancellation of all options (collectively, the "Options") to purchase shares of
Common Stock granted to you under the Option Plans. Such cancellation will
apply to all Options held by you immediately prior to the effective time of the
Merger (the "Effective Time") and will take effect immediately prior to the
Effective Time. In consideration of such cancellation, and in exchange and
settlement of each Option, whether or not then exercisable, the Company shall
pay to you (promptly after the Effective Time) for each share of the Common
Stock subject to each such cancelled Option an amount (net of any applicable
withholding taxes) in cash equal to the amount, if any, by which $25.25 (the per
share amount to be paid to shareholders of the Company in the Merger) exceeds
the exercise price per share of the Common Stock subject to the relevant Option
(the "Option Consideration"). Options having a per share exercise price of
$25.25 or more will be cancelled for no consideration.
Upon receipt of the Option Consideration, you shall forfeit any and
all rights in connection with the Options and all Options shall be cancelled.
In addition, all agreements, rights, covenants and obligations under any of the
Option Plans, stock option agreement or similar agreements or arrangement shall
terminate with respect to the Company and you upon receipt of the Option
Consideration.
The cancellation of the Options and the receipt by you of the Option
Consideration in accordance with this letter shall release the Company from any
and all obligations and liabilities that the Company has or may have in respect
of such Options.
This letter shall have no effect if the Merger is not consummated and,
unless and until the Merger is consummated, your Options shall remain
outstanding and exercisable to the same extent as if this letter had not been
executed.
If you agree to the cancellation of your Options on the terms and
conditions specified above, please so indicate by signing this letter where
indicated below and returning it to William J. George, Vice President, General
Counsel and Corporate Secretary of the Company, in the enclosed return envelope.
The second copy of this letter is included for your own records.
2
<PAGE>
Very truly yours,
JOSTENS, INC.
By:_____________________________
William J. George
Vice President, General Counsel
and Corporate Secretary
Agreed to:
_________________________________
(Optionholder)
3
