**EXHIBIT2.1**

 

CONTRIBUTION AGREEMENT

 

DATED AS OF

 

JULY 21**,** 2004

 

BETWEEN

 

JOSTENS HOLDING CORP.

 

AND

 

FUSIONACQUISITION LLC

 

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| ARTICLE  1 | DEFINITIONS                                                              |                                              |
|------------|--------------------------------------------------------------------------|---------------------------------------------------|
|       |                                                                     |                                              |   |   |
|       | SECTION 1.01.                                                            | Definitions                                       |   |
|       |                                                                     |                                              |   |   |
| ARTICLE 2  | CONTRIBUTION OF CONTRIBUTED  STOCK  AND PURCHASE AND SALE OF SHARES |                                              |
|       |                                                                     |                                              |   |   |
|       | SECTION 2.01.                                                            | Contribution of  Contributed Stock                |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 2.02.                                                            | Purchase and Sales of  Financing Shortfall Shares |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 2.03.                                                            | Closing                                           |   |
|       |                                                                     |                                              |   |   |
| ARTICLE 3  | REPRESENTATIONS AND  WARRANTIES OF THE COMPANY                           |                                              |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.01.                                                            | Organization, Standing  and Corporate Power       |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.02.                                                            | Capital Structure                                 |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.03.                                                            | Valid Issuance of  Shares                         |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.04.                                                            | Authority;  Noncontravention                      |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.05.                                                            | Governmental Approvals                            |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.06.                                                            | Litigation                                        |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.07.                                                            | Compliance with Laws;  Permits                    |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.08.                                                            | Affiliate Transactions                            |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.09.                                                            | Subsidiaries                                      |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.10.                                                            | No Brokers                                        |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.11.                                                            | SEC Reports; Financial  Statements                |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.13.                                                            | Intellectual Property                             |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.14.                                                            | Contracts and  Commitments                        |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.15.                                                            | Employee Benefits                                 |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.16.                                                            | Absence of Certain  Changes                       |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.17.                                                            | Taxes                                             |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.18.                                                            | Insurance                                         |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.19.                                                            | Environmental Matters                             |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.20.                                                            | Real Property                                     |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.21.                                                            | Labor Relations                                   |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.22.                                                            | Inventories;  Receivables; Payables               |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.23.                                                            | Customers Suppliers  and Sales Representatives    |   |
|       |                                                                     |                                              |   |   |
|       | SECTION 3.24.                                                            | No Other  Representations or Warranties           |   |

 

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| ARTICLE 4 | REPRESENTATIONS AND  WARRANTIES OF THE INVESTOR      |                                                         |
|-----------|------------------------------------------------------|--------------------------------------------------------------|
|      |                                                 |                                                         |   |   |
|      | SECTION 4.01.                                        | Organization                                                 |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 4.02.                                        | Authorization;  Noncontravention; Title to Contributed Stock |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 4.03.                                        | Governmental Approvals                                       |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 4.04.                                        | Litigation                                                   |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 4.05.                                        | Brokers and Other  Advisors                                  |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 4.06.                                        | Investment  Representations                                  |   |
|      |                                                 |                                                         |   |   |
| ARTICLE 5 | COVENANTS AND AGREEMENTS                             |                                                         |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.01.                                        | Conduct of Business                                          |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.02.                                        | Access to Information;  Confidentiality                      |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.03.                                        | Efforts                                                      |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.04.                                        | Financing                                                    |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.05.                                        | Adjustments to Merger  Consideration                         |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.06.                                        | Fees and Expenses                                            |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.07.                                        | Public Announcements                                         |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.08.                                        | Further Assurances                                           |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.09.                                        | Contribution of VHH  and AHC Equity Interests                |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.10.                                        | Termination of  Affiliate Arrangements                       |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.11.                                        | Amendments to the  Merger Agreements                         |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.12.                                        | Transaction Expenses  and Excluded Transaction Expenses      |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.13.                                        | Tax Treatment                                                |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 5.14.                                        | Amendment to Certificate  of Incorporation                   |   |
|      |                                                 |                                                         |   |   |
| ARTICLE 6 | CONDITIONS TO OBLIGATIONS OF  THE PARTIES AT CLOSING |                                                         |
|      |                                                 |                                                         |   |   |
|      | SECTION 6.01.                                        | Conditions to  Obligations of Each Party                     |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 6.02.                                        | Conditions to  Obligations of the Investor                   |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 6.03.                                        | Conditions to Obligations  of the Company                    |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 6.04.                                        | Frustration of Closing  Conditions                           |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 6.05.                                        | Documents to be  Delivered by the Company                    |   |
|      |                                                 |                                                         |   |   |
|      | SECTION 6.06.                                        | Documents to be  Delivered by the Investors                  |   |

 

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| ARTICLE 7 | TERMINATION, AMENDMENT AND  WAIVER |                                            |
|-----------|------------------------------------|-------------------------------------------------|
|      |                               |                                            |   |   |
|      | SECTION 7.01.                      | Termination                                     |   |
|      |                               |                                            |   |   |
|      | SECTION 7.02.                      | Effect of Termination                           |   |
|      |                               |                                            |   |   |
|      | SECTION 7.03.                      | Amendment                                       |   |
|      |                               |                                            |   |   |
|      | SECTION 7.04.                      | Extension; Waiver                               |   |
|      |                               |                                            |   |   |
| ARTICLE 8 | GENERAL PROVISIONS                 |                                            |
|      |                               |                                            |   |   |
|      | SECTION 8.01.                      | Survival of  Representations and Warranties     |   |
|      |                               |                                            |   |   |
|      | SECTION 8.02.                      | Remedies; Specific  Enforcement                 |   |
|      |                               |                                            |   |   |
|      | SECTION 8.03.                      | Notices                                         |   |
|      |                               |                                            |   |   |
|      | SECTION 8.04.                      | Counterparts                                    |   |
|      |                               |                                            |   |   |
|      | SECTION 8.05.                      | Entire Agreement; No  Third-Party Beneficiaries |   |
|      |                               |                                            |   |   |
|      | SECTION 8.06.                      | Governing Law                                   |   |
|      |                               |                                            |   |   |
|      | SECTION 8.07.                      | Assignment                                      |   |
|      |                               |                                            |   |   |
|      | SECTION 8.08.                      | Consent to  Jurisdiction                        |   |
|      |                               |                                            |   |   |
|      | SECTION 8.09.                      | Waiver of Jury Trial                            |   |
|      |                               |                                            |   |   |
|      | SECTION 8.10.                      | No Recourse                                     |   |
|      |                               |                                            |   |   |
|      | SECTION 8.11.                      | Severability                                    |   |

 
|   | Exhibit A | Form of Stockholders Agreement                                                   |   |
|--------|-----------|----------------------------------------------------------------------------------|--------|
|   | Exhibit B | Form of Second Amended and Restated Certificate of Incorporation of  the Company |   |
|   | Exhibit C | Form of Registration Rights Agreement                                            |   |

 

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**CONTRIBUTIONAGREEMENT**

 

This Contribution Agreement(the “***Agreement***”)is entered into as of July 20, 2004, by and between Jostens Holding Corp.,a Delaware corporation (the “***Company***”), and Fusion Acquisition LLC, a Delawarelimited liability company (the “***Investor***”).

 

W I T N E S S E T H :

 

WHEREAS, the Companyproposes to issue to the Investor, and the Investor wishes to acquire from theCompany, an aggregate of 2,664,356 shares of the Company’s Class A VotingCommon Stock, par value $0.01 per share (the “***ClassA Common Stock***”) and one share of the Company’s Class C VotingCommon Stock, par value $0.01 per share (the “***ClassC Common Stock***”) in exchange for the Contribution.

 

WHEREAS, the Class A CommonStock and Class C Common Stock and any stock into which such Class A CommonStock or Class C Common Stock may thereafter be converted, changed,reclassified or exchanged are referred to herein as the “***CommonStock.***”

 

WHEREAS, the Investor hasentered into that certain Agreement and Plan of Merger (the “***VHH Merger Agreement***”), dated as ofeven date herewith, among the Investor, VHH Merger, Inc. and Von HoffmannHoldings Inc. (“***VHH***”), pursuant to which VHHMerger, Inc. will merge with and into VHH (the “***VHHMerger***”).

 

WHEREAS, the Investor hasentered into that certain Agreement and Plan of Merger (the “***AHC Merger Agreement***” and, togetherwith the VHH Merger Agreement, the “***Merger Agreements***”), dated as of even dateherewith, among the Investor, AHC Merger, Inc. and AHC I Acquisition Corp. (“***AHC***”), pursuant to which AHC Merger,Inc. will merge with and into AHC (the “***AHC Merger***”and, together with the VHH Merger, the “***Mergers***”).

 

WHEREAS, immediatelyfollowing the consummation of the Mergers, the Investor wishes to contributeall of the capital stock of VHH (as the surviving corporation in the VHHMerger) and all of the capital stock of AHC (as the surviving corporation inthe AHC Merger) (together, the “***Contributed Stock***”)to the Company in exchange for Common Stock, and the Company desires to acceptthe Contributed Stock from the Investor.

 

WHEREAS, the parties intendthat the Contribution (as defined below) shall constitute a “reorganization”within the meaning of Section 368(a) of the Internal Revenue Code of 1986, asamended (the “***Code***”).

 

WHEREAS, immediatelyfollowing the Contribution, the Company will contribute the Contributed Stockto Jostens IH Corp. and, following the repurchase or

 

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redemption of all outstanding 14% Senior Redeemable Payment-in-KindPreferred Stock of Jostens, the Company will cause Jostens IH Corp. tocontribute the Contributed Stock to Jostens.

 

NOW THEREFORE, inconsideration of the covenants and agreements contained herein, the partieshereto agree as follows:

 

ARTICLE 1DEFINITIONS

 

SECTION 1.01.                 Definitions.   (a)  The following terms, as used herein, have thefollowing meanings:

 

“***Affiliate***”means, with respect to any person, any other person directly or indirectlycontrolling, controlled by or under common control with such person; provided,that no securityholder of the Company shall be deemed an Affiliate of any othersecurityholder solely by reason of an investment in the Company.  For the purpose of this definition, the term“***control***” (including, withcorrelative meanings, the terms “***controlling***”,“***controlled by***” and “***under common control with***”), as usedwith respect to any person, shall mean the possession, directly or indirectly,of the power to direct or cause the direction of the management and policies ofsuch person, whether through the ownership of voting securities, by contract orotherwise.

 

“***AHC Cash***” shall havethe meaning ascribed to term “Company Cash” in the AHC Merger Agreement.

 

“***AHCIndebtedness***” shall have the meaning ascribed to term “CompanyIndebtedness” in the AHC Merger Agreement.

 

“***AHC Merger Consideration***”shall have the meaning ascribed to term “Merger Consideration” in the AHCMerger Agreement.

 

“***BusinessDay***” means any day except a Saturday, Sunday or other day onwhich commercial banks in New York City are authorized by law to close.

 

“***CompanyBy-laws***” means the By-laws, as amended, of the Company.

 

“***CompanyCertificate***” means the Amended and Restated Certificate ofIncorporation, as amended, of the Company.

 

“***CompanyIndebtedness***” means, collectively, as of the close of businesson the day immediately preceding the Closing Date, the sum of (i) the accretedvalue, including accrued but unpaid interest, of the Company’s outstanding10.25% Senior Discount Notes and any premiums paid to repurchase any such Notespursuant to any change of control repurchase offer and all costs and expensesarising from or relating thereto, (ii) all amounts, including accrued butunpaid interest and dividends, required to repay, redeem or repurchase (bytender offer or otherwise), whether prior to, at or

 

2

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following the Closing, all amounts outstanding under Jostens’s 14%Senior Redeemable Payment-in-Kind Preferred Stock and Jostens’s 12.75% SeniorSubordinated Notes and all costs and expenses arising from or relating thereto,including any termination or prepayment penalties, repayment or redemptionpremiums or consent solicitation costs, (iii) all amounts required torepay amounts outstanding pursuant to Term Loans, Canadian Revolving CreditLoans and up to $2,500,000 of U.S. Revolving Credit Loans under the CreditFacility (each as defined therein) and all costs arising from or relatingthereto, including any accrued and unpaid interest and any termination orprepayment penalties, (iv) any other indebtedness for borrowed money (includingthe Fleet Promissory Note dated March 15, 2004, any notes, bonds, debentures,drawn letters of credit or similar instruments or obligations, but excludingany undrawn letters of credit) of the Company and the Subsidiaries outstanding,in each case including accrued and unpaid interest and any termination orprepayment penalties or premiums relating thereto, but excluding any U.S.Revolving Credit Loans under the Credit Facility (as defined therein) in excessof $2,500,000, (v) the amount of all obligations of the Company and theSubsidiaries under leases required to be capitalized in accordance withgenerally accepted accounting principles in the United States as of the datehereof (“***GAAP***”)that would be required to be set forth as a liability on a balance sheetprepared in accordance with GAAP, (vi) 50% of the amount payable to Companymanagement under a management retention plan approved by the Company providedthis clause (vi) shall not exceed $712,500 and (vii) payments committed toRobert Buhrmaster in the aggregate amount of $480,095.  Amounts hereunder shall exclude $500,000 offees and expenses of counsel, advisors, consultants, investment bankers,actuaries, auditors and accountants in connection with such repayments,redemptions or repurchases, including such tender offers and consentsolicitations.

 

“***CompanyStock Plan***” means the Company’s 2003 Stock Incentive Plan.

 

“***Contract***”means any loan or credit agreement, bond, debenture, note, mortgage, indenture,lease, insurance policy or other written contract, subcontract, option,warranty, agreement, instrument, or other legally binding obligationcommitment, arrangement or understanding.

 

“***CreditFacility***” means that certain Credit Agreement, dated July 29,2003, among Jostens (as successor to Ring Acquisition Corp.) and Jostens CanadaLtd. as borrowers, Jostens IH Corp as guarantor, the Lenders party thereto,Credit Suisse First Boston Toronto Branch as Canadian Administrative Agent, andCredit Suisse First Boston as Administrative Agent.

 

“***DLJMB***”means DLJ Merchant Banking Partners III, L.P.

 

“***ERISA Affiliate***”means any other entity that, together with the Company, would be treated as asingle employer under Section 414 of the Code.

 

“***ExchangeAct***” means the Securities Exchange Act of 1934, as amended.

 

3

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“***ExcludedTransaction Expenses***” means (i) up to $500,000 of fees andexpenses of counsel, advisors, consultants, investment bankers, actuaries,auditors and accountants in connection with the tender offers and consent solicitations,(ii) any administration fee paid to Credit Suisse First Boston as contemplatedby the Financing Commitment, (iii) fees and expenses incurred in connectionwith obtaining fairness opinions with respect to the Contribution or theMergers, (iv) fees payable to Credit Suisse First Boston as the financialadvisor to Von Hoffman Corporation with respect to the sale of the directmarketing business of The Lehigh Press, Inc., (v) amounts paid as retentionbonuses to the employees of Jostens, and (vi) the amount paid to Marc Reisch asa signing bonus.

 

“***GovernmentalAuthority***” means any Federal, state, regional, local or foreigngovernment, court, administrative, regulatory or other governmental agency,commission, board agency, public body or authority or any non-governmentalself-regulatory agency, commission or authority.

 

“***Jostens***”means Jostens, Inc., a Minnesota corporation and an indirect Subsidiary of theCompany.

 

“***Knowledge***”of any person that is not an individual means, with respect to any matter inquestion, the actual knowledge, after reasonable inquiry, of such person’sexecutive officers and other officers having primary responsibility for suchmatter.

 

“***Liens***”means any and all pledges, claims, liens, charges, encumbrances, security interests,charges, options or restrictions of any kind whatsoever.

 

“***MaterialAdverse Effect***” shall mean any change or effect that ismaterially adverse to the business, properties, assets, financial condition orresults of operations of the Company and the Subsidiaries, taken as a whole,except for any change or effect that arises out of, results from or isattributable to (a) any change in general business or economic conditions, (b)the execution, announcement or consummation of this Agreement and the transactionscontemplated hereby, including any impact thereof on relationships, contractualor otherwise, with customers, suppliers, distributors, partners or employees,or (c) any act of terrorism or war (whether or not threatened, pending ordeclared), in each case that does not have a disproportionate effect on theCompany and the Subsidiaries taken as a whole.

 

“***person***”means an individual, corporation, partnership, limited liability company, jointventure, association, trust, unincorporated organization or other entity.

 

“***Registration Rights Agreement***”means the Registration Rights Agreement among the Company and the stockholdersparty thereto in the form attached hereto as Exhibit C.

 

“***SecuritiesAct***” means the Securities Act of 1933, as amended.

 

4

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“***Subsidiary***” means anyperson, an amount of the voting securities, other voting rights or votingpartnership interests of which is sufficient to elect at least a majority ofits board of directors or other governing body (or, if there are no such votinginterests, 50% or more of the equity interests of which) is owned directly orindirectly by the Company prior to the consummation of the Contribution.

 

*“****SyndicateStockholders****”* means the stockholders of the Company otherthan DLJMB and its Affiliates and any management or director stockholders.

 

“***TransactionExpenses***” means the aggregate amount of fees, costs and expensesand other payment obligations incurred by the Company or any of theSubsidiaries, by DLJ Merchant Banking III, Inc. or any of its Affiliates onbehalf of the Company or any of the Subsidiaries, or by the Investor inconnection with this Agreement or any of the transactions contemplated hereby,including the commitment fee for the Bridge Commitment (as defined in theFinancing Commitment) not to exceed 0.75% of the amount of the BridgeCommitment, (ii) the Transaction Expenses as defined in the VHH MergerAgreement and (iii) the Transaction Expenses as defined in the AHC MergerAgreement, but in each case excluding (A) all costs, expenses, penalties andpremiums related to the repayment, repurchase or refinancing of CompanyIndebtedness, VHH Indebtedness and AHC Indebtedness, (B) transaction advisoryfees, each in the amount of $2,000,000, to be paid to DLJ Merchant Banking II,Inc. by each of AHC and VHH, (C) any amount payable to Renaissance Brands LLCfor services performed for AHC in connection with the AHC Merger and (D) anytransaction success or retention bonus paid or payable by AHC.

 

“***VHH Cash***” shall havethe meaning ascribed to term “Company Cash” in the VHH Merger Agreement.

 

“***VHHIndebtedness***” shall have the meaning ascribed to term “CompanyIndebtedness” in the VHH Merger Agreement.

 

“***VHH Merger Consideration***”shall have the meaning ascribed to term “Merger Consideration” in the VHHMerger Agreement.

 

 (b)                              Each of the following terms is defined in the Section set forthopposite such term:

 
| **TERM**             | ** ** | **SECTION** |
|----------------------|------------|-------------|
|                 |       |        |
| AHC                  |       | recitals    |
| AHC Merger           |       | recitals    |
| AHC Merger Agreement |       | recitals    |
| Affiliate Agreement  |       | 3.08        |
| Agreement            |       | preamble    |
| Class A Common Stock |       | recitals    |
| Class C Common Stock |       | recitals    |

 

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| Closing                             |   | 2.03         |
|-------------------------------------|--------|--------------|
| Closing Date                        |   | 2.03         |
| Code                                |   | recitals     |
| Common Stock                        |   | recitals     |
| Company                             |   | preamble     |
| Company Disclosure  Schedule        |   | Article 3    |
| Company Real Property               |   | 3.20(a)      |
| Company Shares                      |   | 2.01(a)      |
| Company Stock Options               |   | 3.02         |
| Company Surviving  Representations  |   | 8.01(a)      |
| Confidentiality Agreement           |   | 5.02         |
| Contributed Stock                   |   | recitals     |
| Contribution                        |   | 2.01(a)      |
| Deal Financial Statements           |   | 5.04(c)      |
| Environmental Claim                 |   | 3.19         |
| Environmental Laws                  |   | 3.19(c)(i)   |
| Environmental Liabilities           |   | 3.19(c)(ii)  |
| Equity Value                        |   | 2.02         |
| ERISA                               |   | 3.15(a)      |
| Financial Statements                |   | 3.11(b)      |
| Financing                           |   | 5.04(a)      |
| Financing Commitment                |   | 5.04(a)      |
| Financing Shortfall Amount          |   | 2.02         |
| Financing Shortfall Shares          |   | 2.02         |
| Former Company Real  Property       |   | 3.19(c)(iii) |
| GAAP                                |   | 1.01(a)      |
| Hazardous Substances                |   | 3.19(d)(iv)  |
| HSR Act                             |   | 3.05         |
| Intellectual Property               |   | 3.13         |
| Investor                            |   | preamble     |
| Investor Indemnitees                |   | 8.01(b)      |
| Investor Surviving  Representations |   | 8.01(a)      |
| IRS                                 |   | 3.17(b)      |
| Laws                                |   | 3.04(b)      |
| Leased Real Property                |   | 3.20(a)      |
| Losses                              |   | 8.01(b)      |
| Mergers                             |   | recitals     |
| Merger Agreements                   |   | recitals     |
| Multi-Employer Plan                 |   | 3.15(d)      |
| Owned Real Property                 |   | 3.20(a)      |
| Permits                             |   | 3.07(b)      |
| Permitted Exception                 |   | 3.20(e)      |
| Per Share Purchase Price            |   | 2.02         |
| Plans                               |   | 3.15(a)      |
| Real Property Leases                |   | 3.20(a)      |

 

6

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| Reisch Letter Agreement |   | 5.03     |
|-------------------------|--------|----------|
| Restraints              |   | 6.01(b)  |
| SEC                     |   | 3.11(a)  |
| SEC Reports             |   | 3.11(a)  |
| Stockholders Agreement  |   | 3.03(a)  |
| Subsidiary Shares       |   | 3.09(b)  |
| Tax                     |   | 3.17     |
| Taxes                   |   | 3.17     |
| Tax Returns             |   | 3.17     |
| Title IV Plan           |   | 3.15(d)  |
| Vested Options          |   | 2.02     |
| VHH                     |   | recitals |
| VHH Merger              |   | recitals |
| VHH Merger Agreement    |   | recitals |

 

 (c)                               Other Definitional and Interpretive Matters. Unless otherwise expressly provided, for purposes of this Agreement, thefollowing rules of interpretation shall apply:

 

Calculation of Time Period.  Whencalculating the period of time before which, within which or following whichany act is to be done or step taken pursuant to this Agreement, the date thatis the reference date in calculating such period shall be excluded.  If the last day of such period is anon-Business Day, the period in question shall end on the next succeedingBusiness Day.

 

Dollars.  Anyreference in this Agreement to $ shall mean U.S. dollars.

 

Exhibits/Schedules.  TheExhibits and Schedules to this Agreement are hereby incorporated and made apart hereof and are an integral part of this Agreement.  All Exhibits and Schedules annexed hereto orreferred to herein are hereby incorporated in and made a part of this Agreementas if set forth in full herein.  Anycapitalized terms used in any Schedule or Exhibit but not otherwise definedtherein shall be defined as set forth in this Agreement.

 

Gender and Number.  Anyreference in this Agreement to gender shall include all genders, and wordsimparting the singular number only shall include the plural and vice versa.

 

Headings.  Theprovision of a Table of Contents, the division of this Agreement into Articles,Sections and other subdivisions and the insertion of headings are forconvenience of reference only and shall not affect or be utilized in construingor interpreting this Agreement.  Allreferences in this Agreement to any “Section” are to the corresponding Sectionof this Agreement unless otherwise specified.

 

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Herein and Including.  Thewords such as “herein,”“hereinafter,” “hereof,” and “hereunder” refer to this Agreement as awhole and not merely to a subdivision in which such words appear unless thecontext otherwise requires.  Whenever thewords “include,” “includes” or “including” are used in this Agreement, theyshall be deemed to be followed by the words “without limitation”.

 

(d)                                 Any matter disclosed in any section of theCompany Disclosure Schedule shall be deemed disclosed for all purposes and allsections of the Company Disclosure Schedule to the extent that it is readilyapparent on the face of the Company Disclosure Schedule that such matter isrelevant to another section of the Company Disclosure Schedule.

 

ARTICLE2

CONTRIBUTION OF CONTRIBUTED STOCK AND PURCHASE AND SALE OF SHARES

 

SECTION 2.01.                 Contributionof Contributed Stock.  Subject to theterms and conditions of this Agreement, (i) the Investor hereby agrees tocontribute, transfer and assign to the Company at the Closing, in exchange forthe Company Shares, all of the Investor’s right, title and interest in and tothe Contributed Stock, and (ii) the Company hereby agrees to issue theCompany Shares to the Investor at the Closing in exchange therefor.  The contribution of the Contributed Stock tothe Company and the payment by the Investor, if any, required in Section2.02 are referred to herein as the “***Contribution***.”  “***Company Shares***”means an aggregate of (i) 2,664,356 shares of Class A Common Stock and(ii) one (1) share of Class C Common Stock.

 

SECTION 2.02.                 Purchaseand Sales of Financing Shortfall Shares. If the Financing Shortfall Amount is greater than zero, then the Companyshall issue and sell the Financing Shortfall Shares on the Closing Date at thePer Share Purchase Price and upon the same terms and conditions as set forthherein.  The Investor shall, and theCompany shall offer to DLJMB the non-assignable right to, purchase 50%,respectively, of the Financing Shortfall Shares; provided that, untilsuch time as the Investor’s economic interest in the Company is equal to itsvoting interest in the Company, the Investor shall, and DLJMB shall have theright to, purchase 60% and 40%, respectively, of the Financing ShortfallShares; and provided, further, that in the event that any of theSyndicate Stockholders or the management or director stockholders of theCompany elect to exercise their preemptive rights under that certain StockPurchase and Stockholders Agreement dated as of September 3, 2003 and thatcertain Stockholders Agreement dated as of July 29, 2003, respectively, suchshares shall be deducted from the number of shares that DLJMB would be entitledto purchase pursuant to this Section 2.02.

 

The “***Financing Shortfall Amount***”means (A) the sum of (i) the aggregate amount of Company Indebtedness(other than Company Indebtedness of the type described in clause (i) of thedefinition thereof to the extent not subject to repurchase and other thanCompany Indebtedness of the type described in clause (v) of the definitionthereof), (ii) the aggregate amount of Transaction Expenses (excluding anyTransaction

 

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Expenses included in AHC Merger Consideration and VHH MergerConsideration), (iii) the VHH Merger Consideration, (iv) the AHC MergerConsideration, (v) the VHH Indebtedness net of VHH Cash and (vi) the AHCIndebtedness net of AHC Cash, less (B) the sum of (i) funded debt receivedpursuant to the Financing Commitments and (ii) the total amount of the equitycommitted pursuant to the equity commitment letter from KKR Millennium FundL.P. to the Investor dated as of the date hereof.

 

The “***Financing Shortfall Shares***”means an additional number of shares of Class A Common Stock in the aggregateequal to the Financing Shortfall Amount divided by the Per Share PurchasePrice.

 

“***Per Share Purchase Price***”means the Equity Value divided by the sum of all shares of Common Stock issuedand outstanding as of the Closing Date (immediately prior to the Closing) andall shares of Common Stock issuable pursuant to Company Stock Options vested asof the Closing Date (the “***VestedOptions***”).  “***Equity Value***” meansan amount equal to (a) $1,275,000,000, minus (b) the aggregateamount of Company Indebtedness, plus (c) the aggregate amount ofthe exercise price for the Vested Options (whether or not such Vested Optionsare actually exercised prior to the Closing).

 

SECTION 2.03.                 Closing.  The Contribution, theissuance of Company Shares in exchange therefor, and the sale and purchase ofthe Financing Shortfall Shares (if any) (the “***Closing***”)shall take place on the date on which the VHH Merger and the AHC Merger shallbecome effective pursuant to the terms of the VHH Merger Agreement and the AHCMerger Agreement (the “***Closing Date***”),and shall occur immediately after each of the VHH Merger and the AHC Mergerbecomes effective, at the offices of Weil, Gotshal & Manges LLP, 767 FifthAvenue, New York, New York 10153, unless another date or place is agreed to inwriting by the parties hereto.  Paymentof the purchase price for the Financing Shortfall Shares (if any) shall be madeby the Investor and DLJMB, if applicable, (against receipt of share certificatesdelivered by the Company) to the Company, in respect of the number of FinancingShortfall Shares to be purchased pursuant to Section 2.02, at theClosing by wire transfer of immediately available funds denominated in U.S.dollars to the accounts designated in writing to the Investor and DLJMB, ifapplicable, by the Company not less than two (2) Business Days in advance ofthe Closing. The sale and purchase of the Financing Shortfall Shares, if any,shall occur concurrently with the Closing.

 

ARTICLE3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as disclosed in thedisclosure schedule delivered by the Company to the Investor prior to theexecution of this Agreement (the “***Company DisclosureSchedule***”), the Company represents and warrants to the Investoras follows:

 

SECTION 3.01.                 Organization, Standing and Corporate Power.  Eachof the Company and the Subsidiaries is a corporation or limited liabilitycompany, as the case may be, duly organized, validly existing and in goodstanding under the Laws of the

 

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jurisdictionin which it is incorporated or formed, as the case may be, and has allrequisite corporate or limited liability company, as the case may be, power andauthority to own, lease and operate its properties and assets and to carry onits business as now being conducted.  TheCompany and each of the Subsidiaries is duly qualified to do business and ingood standing in the jurisdictions where the nature of the property owned orleased by it, or the nature of the business conducted by it, makes suchqualification necessary, except where the failure to be so in good standing orto have such qualification would not reasonably be likely to have a MaterialAdverse Effect. The Company has made available, or will make available to theInvestor prior to the Closing Date, true and complete copies of (i) thecertificates of incorporation and by-laws (or equivalent governinginstruments), as currently in effect, of the Company and each Subsidiary, (ii)the minute books of the Company and, to the extent in existence, eachSubsidiary covering the period beginning no earlier than January 1, 2001, and(iii) to the extent in the Company or any Subsidiary’s possession, stockcertificate books and stock transfer ledgers of the Company and theSubsidiaries since January 1, 2001.

 

SECTION 3.02.                 Capital Structure.  Theauthorized capital stock of the Company consists of 700,000 shares of Class ACommon Stock, 4,050,000 shares of Class B Non-Voting Common Stock, par value$0.01 per share, and 250,000 shares of Preferred Stock, par value $0.01 pershare.  As of the date hereof, (a) 504,584 shares of Class A Common Stockare issued and outstanding, (b) 2,724,759shares of Class B Common Stock are issued and outstanding, and (c) 297,923 shares of Class B Common Stockare reserved for issuance upon the exercise of outstanding options (“***Company Stock Options***”) to purchaseshares of Class B Common Stock granted under the Company Stock Plan.  Section 3.02 of the Company DisclosureSchedule sets forth, as of the date hereof, all holders of record of the issuedand outstanding Company Common Stock and Company Stock Options, identifying, inthe case of Company Stock Options, the number of shares of Class B Common Stockcovered thereby, the applicable exercise price as of the date hereof andwhether such Company Stock Options are vested as of the date hereof or will bevested as of the Closing Date. Except as set forth above in this Section3.02, as of the date hereof, no shares of capital stock or other votingsecurities of the Company are issued, reserved for issuance or outstanding.Except as set forth above in this Section 3.02, there are no authorizedor outstanding stock appreciation rights, phantom stock, profit participationrights, rights to receive shares of Common Stock on a deferred basis or otherrights that are linked to the Company or the value of Common Stock grantedunder the Company Stock Plan or otherwise by the Company.  There are no bonds, debentures, notes orother indebtedness of the Company having the right to vote (or convertibleinto, or exchangeable for, securities having the right to vote) on any matterson which stockholders of the Company may vote. All outstanding shares ofcapital stock of the Company:  (i) havebeen duly authorized and validly issued; (ii) are fully paid andnon-assessable; and (iii) were not issued in violation of, or subject to, anypreemptive, subscription or other similar rights of any person. Except as setforth above in this Section 3.02 or in Section 3.02 of the CompanyDisclosure Schedule, (i) there are not issued, reserved for issuance oroutstanding as of the date hereof (A) any securities of the Company or any ofthe Subsidiaries convertible into, exchangeable or exercisable for

 

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sharesof capital stock or equity securities of the Company or any of theSubsidiaries, or (B) any subscriptions, warrants, calls, options, rights,commitments, proxies, voting trusts, arrangements or undertakings of any kindto which the Company or any of the Subsidiaries is a party or by which any ofthem is bound obligating the Company or any of the Subsidiaries to issue, sell,transfer, redeem or otherwise acquire, dispose or vote any shares of capitalstock or other equity securities of the Company or any of the Subsidiaries and(ii) the Company is not a party to or bound by any agreement or commitmentpursuant to which the Company is or could be required to register anysecurities under the Securities Act.

 

SECTION 3.03.                 Valid Issuance of Shares.

 

 (a)                               All requisite corporate action has been taken by the Company and itsshareholders to duly and validly authorize the Company Shares, if any, and theFinancing Shortfall Shares, if any. The Company Shares, if any, and theFinancing Shortfall Shares, if any, have been duly and validly authorized andwhen issued, sold and delivered in accordance with the terms hereof will bevalidly issued, fully paid and nonassessable, will be delivered to the Investorfree and clear of all Liens and, except as set forth in the StockholdersAgreement, in the form of Exhibit A attached hereto (the “***Stockholders Agreement***”),such shares shall not be subject to any voting or transfer restrictions (otherthan restrictions generally imposed on securities under U.S. federal, state orforeign securities laws).

 

 (b)                              Assuming the accuracy of the representations and warranties of theInvestor contained in Section 4.06 hereof, the offer, sale and issuance of theCompany Shares, if any, and the Financing Shortfall Shares, if any, will beexempt from the registration requirements of the Securities Act and will havebeen registered or qualified (or are exempt for registration or qualification)under the registration, permit or qualification requirements of all applicablestate securities laws.

 

SECTION 3.04.                 Authority; Noncontravention.

 

 (a)                               The Company has all requisite corporate power and authority to executeand deliver this Agreement and to consummate the transactions contemplated bythis Agreement. The execution and delivery of this Agreement by the Company andthe consummation by the Company of the transactions contemplated by thisAgreement have been duly and validly authorized by all necessary corporateaction on the part of the Company, and no other corporate proceedings on thepart of the Company are necessary to authorize this Agreement or to consummatethe transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and,assuming the due authorization, execution and delivery by each of the otherparties hereto, constitutes a legal, valid and binding obligation of theCompany, enforceable against the Company in accordance with its terms (subjectto applicable bankruptcy, insolvency, moratorium, or other similar Lawsaffecting creditors’ rights generally and general equitable principles(regardless of whether such enforceability is considered in a proceeding inequity or at law).

 

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 (b)                              The execution and delivery of this Agreement do not, and theconsummation of the transactions contemplated by this Agreement and compliancewith the provisions of this Agreement will not, require any consent, approvalor notice under, conflict with, or result in any violation, termination,suspension or breach of, or default (with or without notice or lapse of time orboth) under, or give rise to a right of termination, cancellation oracceleration of any obligation or result in the creation of any Lien in or uponany of the properties or other assets of the Company or any Subsidiary under,(i) the Company Certificate, the Company By-laws or the organizationaldocuments of any Subsidiary, (ii) except as set forth in Section 3.04 of theCompany Disclosure Schedule, any Contract to which the Company or any of theSubsidiaries is a party or (iii) subject to the governmental filings and othermatters referred to in Section 3.05, any statute, law, rule, regulation,order or ordinance of any Governmental Authority (collectively, “***Laws***”) applicable tothe Company or any of the Subsidiaries, other than, in the case of clauses (ii)and (iii), with respect to matters that are not reasonably likely to (A) resultin a Material Adverse Effect, (B) impair the ability of the Company to performits obligations under this Agreement in any material respect or (C) delay inany material respect or prevent the consummation of any of the transactionscontemplated by this Agreement.

 

SECTION 3.05.                 Governmental Approvals.  Noconsent, approval, order or authorization of, action by or in respect of, orregistration, declaration or filing with, any Governmental Authority isrequired by or with respect to the Company or any of the Subsidiaries inconnection with the execution and delivery of this Agreement by the Company orthe consummation by the Company of the transactions contemplated hereby, exceptfor (i) the filing of a notification and report form by the Company, and theexpiration or termination of all waiting periods, under the Hart-Scott-RodinoAntitrust Improvements Act of 1976, as amended, and the regulations promulgatedthereunder (the “***HSR Act***”), or any otherapplicable filings and approvals under similar foreign antitrust Laws as setforth in Section 3.05 of the Company Disclosure Schedule and (ii) consents,approvals, orders authorizations, actions, registrations, declarations orfilings that, if not obtained or made, would not reasonably be expected to (A)result in a Material Adverse Effect, (B) impair the ability of the Company toperform its obligations under this Agreement in any material respect or (C)delay in any material respect or prevent the consummation of any of thetransactions contemplated by this Agreement.

 

SECTION 3.06.                 Litigation.  Except as set forth inthe SEC Reports filed prior to the date hereof or in Section 3.06 of theCompany Disclosure Schedule: (i) there is no claim, suit, action, arbitration,investigation or proceeding pending or, to the Knowledge of the Company,threatened against the Company or any of the Subsidiaries which if adverselydetermined would, individually or in the aggregate, reasonably be expected toresult in damages payable by the Company or any Subsidiary in excess of$1,000,000 or injunctive relief against the Company or any of the Subsidiaries,or that would materially and adversely affect the ability of the Company toconsummate the transactions contemplated hereby or which seeks to enjoin theconsummation of the transactions contemplated hereby; and (ii) there is nojudgment, decree, award,

 

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injunction,rule, or order of any Governmental Authority or arbitrator outstanding againstthe Company or any of the Subsidiaries that would reasonably be expected tomaterially and adversely affect the ability of the Company to consummate thetransactions contemplated hereby.

 

SECTION 3.07.                 Compliance with Laws; Permits.

 

 (a)                               Except as set forth in Section 3.07(a) of the Company DisclosureSchedule, the conduct of the business by the Company and each of theSubsidiaries since January 1, 2001 has not violated or breached and does notcurrently violate or breach (and no event has occurred which with notice or thelapse of time, or both, would constitute a violation or breach of) any Laws applicableto the Company or any of the Subsidiaries, their respective properties or otherassets, except for violations and breaches which have not given and would notreasonably be expected to give rise to a material liability. Except as setforth in the SEC Reports filed prior to the date hereof or as set forth inSection 3.07(a) of the Company Disclosure Schedule, there are no unresolvednotices of deficiency or charges of violation with respect to the matterscovered by this Section 3.07(a) brought or, to the Knowledge of the Company,threatened or pending against the Company which have given or would reasonablybe expected to give rise to a material liability.

 

 (b)                              Except as disclosed in Section 3.07(b) of the Company DisclosureSchedule, each of the Company and the Subsidiaries have obtained all permits,licenses, authorizations, grants, consents, certificates, registrations,qualifications, variances, exemptions, orders, franchises, exceptions,identification and registration numbers, approvals or orders of anyGovernmental Authority necessary to own, lease and to operate its properties orotherwise to carry on each of their respective businesses as it is now beingconducted (collectively, the “***Permits***”), except those the absence of which has notmaterially impaired and would not reasonably be expected to materially impairthe ability of the Company and the Subsidiaries to conduct their businesses ascurrently conducted.  Neither the Companynor any of the Subsidiaries has received any notice or claim pertaining to thefailure to obtain any Permit, except for any such notice or claim that has notgiven and would not reasonably be expected to give rise to a materialliability.

 

SECTION 3.08.                 Affiliate Transactions.  Exceptas set forth in Section 3.08 of the Company Disclosure Schedule, none of theCompany or any of the Subsidiaries is a party to any Contract with any (i)officer, director or employee of the Company or any of the Subsidiaries, (ii)record or beneficial owner of five percent or more of the capital stock of theCompany, or (iii) affiliate of any such officer, director or record orbeneficial owner of the Company (each, an “***Affiliate Agreement***”),except any transaction on arm’s length terms and in the ordinary course ofbusiness consistent with past practice with respect to the officers anddirectors of the Company and the Subsidiaries, including the payment ofcustomary directors fees and expenses. Except as described in Section 3.08 ofthe Company Disclosure Schedule, neither the Company nor

 

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anySubsidiary has any loans receivable from any affiliate of the Company or fromany director, officer or employee of the Company or any Subsidiary.

 

SECTION 3.09.                 Subsidiaries.

 

 (a)                               Except as set forth in the SEC Reports filed prior to the date hereofor Section 3.09 of the Company Disclosure Schedule, the Company does notown, directly or indirectly, any shares of capital stock or any other equityinterest in any person, domestic or foreign.

 

 (b)                              All of the outstanding shares of capital stock or equity interests ofeach of the Subsidiaries that are owned by the Company or any other Subsidiary(collectively, the “***SubsidiaryShares***”) have been duly authorized and are validly issued, fullypaid and non-assessable and were not issued in violation of any preemptiverights or comparable rights.  Thereare no irrevocable proxies or similar obligations with respect to any of theSubsidiary Shares.  There are no securities convertible into,exchangeable for, or carrying the right to acquire, equity securities (orsecurities convertible into or exchangeable for equity securities) of any ofthe Subsidiaries, or subscriptions, warrants, options, calls, convertiblesecurities, registration or other rights or other arrangements or commitmentsobligating any Subsidiary to issue, transfer or dispose of any of its equitysecurities or any ownership interest therein.

 

 (c)                               The Company owns the Subsidiary Shares free and clear of any Liens.Except as disclosed in Section 3.09 of the Company Disclosure Schedule, theCompany owns and has full voting power over all of the equity interests of eachof the Subsidiaries. No stock appreciation rights, phantom stock, profitparticipation or other similar rights with respect to any Subsidiary or anycapital stock of any Subsidiary are authorized or outstanding.

 

SECTION 3.10.                 No Brokers.  Except as set forth in Section3.10 of the Company Disclosure Schedule, neither the Company nor any of itsofficers or directors has employed any investment banker, business consultant,financial advisor, broker or finder in connection with the transactionscontemplated by this Agreement, or obligated the Company or any of theSubsidiaries to pay any investment banking, business consultancy, financialadvisory, brokerage or finders’ fees or commissions in connection with thetransactions contemplated hereby.  Theamount of such fees payable pursuant to the items listed in Section 3.10 of theCompany Disclosure Schedule and the terms related thereto have been previouslyand accurately disclosed in writing to the Investors.

 

SECTION 3.11.                 SEC Reports; Financial Statements.

 

 (a)                               The Company has made all filings with the U.S. Securities and ExchangeCommission (the “***SEC***”)(collectively, and in each case including all exhibits and schedules theretoand documents incorporated by reference therein, the “***SEC Reports***”)required to be filed by the Company or any Subsidiary with the SEC sinceJanuary 1, 2001.  As of its date offiling, each SEC Report complied as to form in all material respects withapplicable requirements of the Exchange Act and the rules and regulationspromulgated thereunder,

 

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and none of such SEC Reports contained any untruestatement of a material fact or omitted to state a material fact required ornecessary to make the statements made therein, in light of the circumstancesunder which they were made, not misleading.

 

 (b)                              Each of the consolidated financial statements (including the notes thereto)included in the SEC Reports filed prior to the date hereof (the “***Financial Statements***”):(i) comply as to form in all material respects with applicable accountingrequirements and the published rules and regulations of the SEC with respectthereto, (ii) were prepared in accordance with GAAP applied on a consistentbasis during the periods involved (except as may be indicated in the notesthereto); and (iii) present fairly in all material respects, as of itsrespective date and for the period set forth therein, the consolidatedfinancial position, results of operations or cash flows, as the case may be, ofthe Company and the Subsidiaries (subject, in the case of unaudited interimfinancial statements, to exceptions permitted by Form 10-Q under the ExchangeAct).

 

SECTION 3.12.                 Undisclosed Liabilities.  Exceptfor the liabilities (i) set forth on, reflected in, reserved against orotherwise described in the most recent Financial Statements, (ii) set forth inSection 3.12 of the Company Disclosure Schedule or (iii) liabilitiesincurred in the ordinary course of business consistent with past practice sinceJanuary 3, 2004 or as contemplated by this Agreement, neither the Company norany Subsidiary has any material indebtedness, obligation or liability of anykind, whether absolute, accrued, contingent or otherwise and whether due or tobecome due, that would be required to be reflected on a balance sheet preparedin accordance with GAAP consistently applied in order for such balance sheet topresent fairly in all material respects the consolidated financial position ofthe Company and the Subsidiaries.

 

SECTION 3.13.                 Intellectual Property.  Exceptas set forth in Section 3.13 of the Company Disclosure Schedule, the Company orone of the Subsidiaries owns or possess adequate rights to use all materialpatents, trademarks, trade names, inventions, processes, designs, formulas,know-how and other intellectual property rights (collectively “***Intellectual Property***”)necessary for the conduct of the business of the Company and the Subsidiariesas presently conducted. Except as set forth in Section 3.13 of the CompanyDisclosure Schedule, neither the Company nor any of the Subsidiaries hasreceived any written notice, nor, to the Knowledge of the Company, has the Companyor any of the Subsidiaries received since January 1, 2003 any written claimthat any Intellectual Property owned or used by the Company or any of theSubsidiaries infringes in any material respect on similar rights owned oralleged to be owned by others.  To theKnowledge of the Company, neither the execution and delivery of this Agreement,nor the transactions contemplated hereby, nor the conduct of the business ascurrently conducted, will materially conflict with or result in a materialbreach of the terms, conditions or provisions of, or constitute a materialdefault under, any contract relating to the Intellectual Property that ismaterial to the Company and the Subsidiaries, taken as a whole, under which theCompany or any of the Subsidiaries or any employees or officers of the Companyor any of the Subsidiaries are now obligated.

 

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SECTION 3.14.                 Contracts and Commitments.

 

 (a)                               Section 3.14(a) of the Company Disclosure Schedule lists, as of the datehereof: (i) all Contracts to which the Company or any of its Subsidiariesis currently a party or by which it or any such Subsidiary is currently boundwhich require payments to be made in excess of $2,000,000 per fiscal year andare not terminable by the Company or any of its Subsidiaries on less than sixty(60) days’ notice, (ii) all Contracts to which the Company or any of itsSubsidiaries is a party and which (x) in the fiscal year ended January 3,2004 generated, or (y) are expected to generate in any fiscal yearthereafter, revenues in excess of $2,000,000; (iii) all agreements which,individually or in the aggregate, provide for, or relate to, the incurrence bythe Company or any Subsidiary of indebtedness for borrowed money in an aggregateamount greater than $1,000,000; (iv) all guaranties of any indebtedness ofpersons other than the Company or any Subsidiary which individually or in theaggregate exceed $1,000,000; (v) all agreements that limit (or would limitafter the date hereof) the ability of the Company or any of the Subsidiaries tocompete in any material manner in any line of business or in a geographic area;(vi) all material partnership, limited liability company, joint venture orother similar agreements; (vii) all Affiliate Agreements and (viii) allemployment agreements with employees of the Company or any Subsidiary whichprovide for annual compensation (salary and bonus) in excess of $200,000 orwhich are not terminable by the Company or a Subsidiary within 6 months withoutpenalty or premium.

 

SECTION 3.15.                 Employee Benefits.

 

 (a)                               Each of the Company and the Subsidiaries has complied since January 1,2001, and currently is in compliance with, the applicable provisions of theEmployee Retirement Income Security Act of 1974, as amended (“***ERISA***”), the Code,and all other applicable laws with respect to each compensation or benefitplan, agreement, policy, practice, program, or arrangement (whether or notsubject to ERISA) maintained by the Company or any of the Subsidiaries for thebenefit of any employee, former employee, independent contractor or director ofthe Company or any of the Subsidiaries (including any employment agreements orany 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 wheresuch noncompliance has not given and would not reasonably be expected to giverise to a material liability.

 

 (b)                              The Company has provided or made available to the Investor a current,accurate and complete copy of each Plan and, to the extent applicable, summaryplan descriptions, Forms 5500 for the last three years and actuarial reports.Section 3.15(b) of the Company Disclosure Schedule is a correct and completelist of all of the Plans.

 

 (c)                               Each Plan intended to qualify under Section 401 of the Code is soqualified and each trust maintained pursuant thereto is exempt from federalincome taxation under Section 501 of the Code, and nothing has occurred withrespect to the operation of such Plans which would cause the loss of suchqualification or exemption or

 

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the imposition of any liability, penalty or taxunder ERISA or the Code, and, with respect to any such Plan for which anapplication for a determination letter is pending, to the Knowledge of theCompany, there are no facts that would reasonably be expected to result in thenon-issuance of such determination letter.

 

 (d)                              Except as set forth in Section 3.15(d) of the Company DisclosureSchedule, neither the Company, any of the Subsidiaries nor any ERISA Affiliatehas since January 1, 2001 maintained, adopted or established, contributed orbeen required to contribute to, or otherwise participated in or been requiredto participate in, any employee benefit plan or other program or arrangementsubject to Title IV of ERISA (including any employee pension or welfare benefitplan to which more than one unaffiliated employer contributes and which ismaintained pursuant to one or more collective bargaining agreements (a “***Multi-Employer Plan***”))or any plan otherwise subject to the minimum funding standards of Section 302of ERISA or Section 412 of the Code (a “***Title IV Plan***”). The Company has no liability(contingent or otherwise) under Section 4069 of ERISA by reason of a transferof an underfunded Title IV Plan.

 

 (e)                               Except as set forth in Section 3.15(e) of the Company DisclosureSchedule, no Plan provides any health or medical benefits (whether or notinsured) with respect to current or former employees of the Company beyondtheir retirement or other termination of service with the Company (other thancoverage mandated by Section 4980B of the Code or applicable law).

 

 (f)                                 Except as set forth in Section 3.15(f) of theCompany Disclosure Schedule, neither the Company nor any of the Subsidiarieshas incurred any withdrawal liability with respect to any Title IV Plan that isa Multi-Employer Plan. The Company and its subsidiaries have not during thepreceding six years had any obligation or liability (contingent or otherwise)with respect to a Plan which is described in Section 4(b)(4), 4063 or 4064 ofERISA.

 

 (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 whichthe 30-day notice period is waived), prohibited transaction (within the meaningof Section 4975 of the Code or Section 406 of ERISA) or breach of fiduciaryduty occurred with respect to any Plan has given or would reasonably beexpected to give rise to a material liability.

 

 (h)                              All benefits due under each Plan have been timely paid and there is nolawsuit or claim, other than routine uncontested claims for benefits, pendingor, to the Knowledge of the Company, threatened against any Plan or thefiduciaries of any such plan or otherwise involving or pertaining to any suchPlan that has given or would be reasonably expected to give rise to a materialliability.

 

 (i)                                  Except as set forth in Section 3.15(i) of theCompany Disclosure Schedule, neither the execution and delivery of thisAgreement nor the consummation of the transactions contemplated hereby will (i)result in any payment becoming due to any

 

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employee (current, former or retired) of theCompany, (ii) increase any benefits otherwise payable under any Plan, (iii)result in the acceleration of the time of payment or vesting of any suchbenefits under any Plan or (iv) constitute a “change in control” as defined inany Plan.

 

 (j)                                  No civil or criminal action brought pursuantto the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or, to theKnowledge of the Company, threatened against any fiduciary of any Plan, and, tothe Knowledge of the Company, none of the Plans nor any fiduciary thereof hasbeen the direct or indirect subject of an audit investigation or examination byany governmental or quasi-governmental agency that has given or would bereasonably expected to give rise to a material liability.

 

 (k)                               Except as set forth in Section 3.15(k) of the Company DisclosureSchedule, no agreement, commitment or obligation on the part of the Company orany of the Subsidiaries exists to increase materially any benefit under anyPlan or to adopt any new Plan.

 

 (l)                                  No Plan has any material unfunded accruedbenefits that are not reflected in the SEC Reports filed prior to the datehereof.  No “accumulated fundingdeficiency” as defined in Section 412 of the Code, has been incurred withrespect to any Title IV Plan subject to Section 412 of the Code, whether or notwaived, and remains outstanding. The Company has not incurred, and does notreasonably expect to incur (A) any liability under Title IV of ERISA arising inconnection with the termination of, or a complete or partial withdrawal from,any Title IV Plan or (B) any liability under Section 4971 of the Code that ineither case could become a liability of the Company after the Closing Date.

 

 (m)                            The Company has provided to the Investor with respect to each Plandescribed in Section 3(2) of ERISA (other than a Multi-Employer Plan), eachother Plan that provides for the deferral of compensation, and each Plandisclosed on Section 3.15(e) of the Company Disclosure Schedule, true,accurate, and complete copies of each such Plan’s most recent financialstatements and all other financial information requested by the Investor withrespect to such Plans. Since the date to which such financial informationrelates, there has been no material amendment or modification to any such Planor any of the financial statements so provided.

 

SECTION 3.16.                 Absence of Certain Changes.

 

 (a)                               Except as set forth in the SEC Reports filed prior to the date hereofor to the extent set forth in Section 3.16 of the Company Disclosure Schedule,since January 3, 2004, except in connection with this Agreement, the Companyand the Subsidiaries have conducted their business in the ordinary courseconsistent with past practice and there has not been:

 

(i)                                     any change, condition, event or occurrencethat has had or would reasonably be expected to have a Material Adverse Effect;

 

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(ii)                                  any declaration, setting aside or payment ofany dividend or other distribution (whether in cash, stock or property) withrespect to any of the Company’s or any of the Subsidiaries’ capital stockexcept with respect to regularly paid regular scheduled dividends on theCompany’s 14% Senior RedeemablePayment-in-Kind Preferred Stock;

 

(iii)                               any split, combination or reclassification of any of the Company’s orany Subsidiary’s capital stock or any issuance or the authorization of anyissuance of any other securities in respect of, in lieu of or in substitutionfor shares of its capital stock;

 

(iv)                              (A) any granting by the Company or any of the Subsidiaries to anyexecutive officer or other key employee of the Company or any of theSubsidiaries of any increase in compensation, except for normal increases inthe ordinary course of business consistent with past practice or as requiredunder employment agreements in effect as of the date hereof which havepreviously been provided or made available to the Investor, (B) any granting bythe Company or any of the Subsidiaries to any such executive officer of anyincrease in severance or termination pay, except as was required under any employment,severance or termination agreements in effect as of the date hereof which havepreviously been provided or made available to the Investor or (C) any entry bythe Company or any of the Subsidiaries into any employment, severance ortermination agreement with any such executive officer except in the ordinarycourse of business consistent with past practice;

 

(v)                                 any material damage, destruction or loss toany material property, whether or not covered by insurance;

 

(vi)                              except insofar as may have been disclosed in the SEC Reports filedprior to the date hereof or required by a change in GAAP, any significantchange in accounting methods, principles or practices (for financial accountingor tax purposes);

 

(vii)                           any making or revocation of any Tax elections or any settlement orcompromises of any federal, state, foreign or local Tax liability or anywaivers or extensions of the statute of limitations in respect of such Taxeswhere the amount of such Taxes subject to settlement, compromise or waiver or extensionof the statute of limitations is greater than $100,000 individually or $500,000in the aggregate;

 

(viii)                        any entry by the Company or any of the Subsidiaries into any materialtransaction or Contract;

 

(ix)                                any failure to pay and discharge current liabilities in the ordinarycourse of business consistent with past practice except where a

 

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liability is disputed in good faith by appropriate proceedings or anysignificant change that is adverse to the Company in policies or practices withrespect to the collection of accounts receivable or the payment of salesrepresentative draws;

 

(x)                                   any making of loans, advances or capitalcontributions to, or investments in, any person (other than by the Company inany wholly owned Subsidiary of the Company or by any Subsidiary of the Companyin a wholly owned Subsidiary of the Company or other than advances by theCompany and the Subsidiaries made to sales representatives in the ordinarycourse of business) in excess of $1,000,000 in the aggregate or payment of anyfees or expenses to any of the Company’s stockholders or any Affiliate of anyof such stockholders, except as required under any management agreement ineffect as of the date hereof  which haspreviously been provided or made available to the Investor;

 

(xi)                                the incurrence of a Lien on any of its assets with a value in excess of$500,000, except for any Lien that is a Permitted Exception, or acquisition ofany assets or sale, assignment, transfer, conveyance, lease or otherdisposition of any assets of the Company or any Subsidiary, except for assetsacquired or sold, assigned, transferred conveyed, leased or otherwise disposedof (A) in the ordinary course of business consistent with past practice and (B)other indebtedness for borrowed money in an amount not in excess of $1,000,000in the aggregate;

 

(xii)                             any incurrence of any indebtedness for borrowed money, other than (A)borrowings under the Credit Facility in the ordinary course of business consistentwith past practice and (B) other indebtedness for borrowed money in an amountnot in excess of $1,000,000 in the aggregate;

 

(xiii)                          any cancellation or compromise of any debt or claim or amendment,cancellation, termination, relinquishment, waiver or release of any Contract orright except in the ordinary course of business and which, in the aggregate,would not be material to the Company and the Subsidiaries taken as a whole;

 

(xiv)                         any material delay in making any capital expenditure for an approved capitalproject as set forth in the Company’s 2004 budget or the making or commitmentto make any capital expenditures or capital additions or betterments materiallyin excess of amounts for such purposes set forth in the Company’s 2004 budget;

 

(xv)                            any grant of any material license or sublicense of any rights under orwith respect to any Intellectual Property;

 

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(xvi)                         any institution or settlement of any material legal proceeding;

 

(xvii)                      any acceleration of any options or other equity-based compensationgranted to any director, officer, employee or other person;

 

(xviii)                   other than in connection with the transactions contemplated by thisAgreement, any adopted or proposed material change in the organizationaldocuments of the Company or any of the Subsidiaries; or

 

(xix)                           any agreement to do anything set forth in this Section 3.16.

 

SECTION 3.17.                 Taxes.  “***Tax***” or “***Taxes***” shall mean (i)all federal, state, local or foreign taxes, duties, fees, premiums, assessments,imposts, levies and governmental impositions of any kind, including, but notlimited to, those on or measured by or referred to as income, franchise,profits, gross receipts, goods and services, capital, *ad valorem,*advance, corporation,**custom duties, alternative or add-on minimum taxes,estimated, environmental, disability, registration, value added, sales, use,service, real or personal property, capital stock, license, payroll,withholding, employment, social security, workers’ compensation, unemploymentcompensation, utility, severance, production, excise, stamp, occupation,premiums, windfall profits, transfer and gains taxes, and (ii) any interest,penalties and additions to tax imposed with respect thereto; and “***Tax Returns***” shallmean returns, reports and information statements, including any schedule orattachment thereto, with respect to Taxes required to be filed with theInternal Revenue Service or any other governmental or taxing authority oragency, domestic, state, local or foreign, including consolidated, combined andunitary Tax returns.  Except as set forthin Section 3.17 of the Company Disclosure Schedule:

 

 (a)                               Each of the Company and the Subsidiaries and any consolidated,combined, unitary or aggregate group for Tax purposes of which the Company orany of the Subsidiaries is or has been a member has timely filed or caused tobe filed (or will file or cause to be filed) with the appropriate taxingauthorities in all jurisdictions in which such Tax returns are required to befiled all income Tax Returns, and all other Tax Returns which, if properlyprepared and filed, would involve more than an immaterial amount of Taxes,required to be filed by it (taking into account applicable extension periods)for all taxable or reporting periods ending on or before the Closing Date, andhas paid all Taxes required to be paid and has made adequate provision on itsfinancial statements in accordance with GAAP for all Taxes which are not yetdue and payable. All such Tax Returns are true, correct and complete in allmaterial respects, and there are no liens on any of the assets of the Companyor any of the Subsidiaries that arose in connection with any failure (oralleged failure) to pay any Tax. The Company and the Subsidiaries have compliedin all material respects with all applicable laws, rules and regulationsrelating to the payment and withholding of Taxes and have duly and timelywithheld and collected from employee salaries, wages and other compensation andfrom all other amounts and have paid over to the appropriate taxing authoritiesall amounts required to be so withheld and paid over for all periods under allapplicable laws.

 

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 (b)                              Neither the Company nor any of the Subsidiaries has (i) been notifiedthat any Tax Return is currently under audit by the United States InternalRevenue Service (“***IRS***”)or any state or local taxing authority or that it intends to conduct such anaudit and no action, suit, investigation, claim or assessment is pending or, tothe Knowledge of the Company, proposed with respect to any Taxes; (ii) made anyagreement for the extension of time or the waiver of the statute of limitationsfor the assessment, collection or payment of any Taxes; (iii) been notified inwriting that any material claim for unpaid Taxes has become a lien orencumbrance of any kind against the property of the Company or any of theSubsidiaries or is being asserted against the Company or any of theSubsidiaries; or (iv) executed any power of attorney with respect to any Taxmatter that is currently in force.

 

 (c)                               Neither the Company nor any of the Subsidiaries has any liability forTaxes as a result of Section 1.1502-6 of the Treasury Regulations or anycomparable provision of state, local or foreign law (other than as a result ofbeing in a group of which the Company is the common parent). The Company is nota USRPHC and was not a USRPHC on any “determination date” (as defined inSection 1.897-2(c) of the Treasury Regulations) that occurred in the five-yearperiod preceding the Closing Date.

 

 (d)                              No claim has been made by a taxing authority in a jurisdiction wherethe Company or any of the Subsidiaries does not file Tax Returns to the effectthat such entity is or may be subject to taxation by that jurisdiction.

 

 (e)                               The Investor has been provided or given access to (i) all income TaxReturns of the Company and the Subsidiaries for all taxable periods ending onor after December 31, 1999 and (ii) all United States and Canadian federalrevenue agents’ reports and other similar reports relating to the audit orexamination of the Tax Returns of the Company and the Subsidiaries for alltaxable periods ending on or after December 31, 1999.  Except as set forth in Section 3.17 of theCompany Disclosure Schedule, no issue has been raised by a domestic or federal,state, local or foreign taxing authority in any current or prior examination,which, by application of the same or similar principles, could reasonably beexpected to result in a proposed deficiency for any subsequent taxable period.

 

 (f)                                 Neither the Company nor any other person(including any of the Subsidiaries) on behalf of the Company or any of theSubsidiaries has (i) agreed to or are required to make any adjustments pursuantto Section 481(a) of the Code or any similar provision of state, local orforeign law by reason of a change in accounting method or has any Knowledgethat the IRS has proposed any such adjustment or change in accounting method,or has any application pending with any taxing authority requesting permissionfor any changes in accounting methods that relate to the business or operationsof the Company or any of the Subsidiaries, or (ii) filed a consent pursuant toSection 341(f) of the Code or agreed to have Section 341(f)(2) of the Codeapply to the disposition of a subsection (f) asset (as such term is defined inSection 341(f) of the Code) owned by the Company or any of the Subsidiaries.

 

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 (g)                              No property owned by the Company or any of the Subsidiaries (i) isproperty required to be treated as being owned by another person pursuant tothe provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, asamended and in effect immediately prior to the enactment of the Tax Reform Actof 1986, (ii) constitutes “tax-exempt use property” within the meaning ofSection 168(h)(1) of the Code or (iii) is “tax-exempt bond financed property”within the meaning of Section 168(g) of the Code.

 

 (h)                              Neither the Company nor any of the Subsidiaries is a party to (i) anytax sharing, or similar agreement or arrangement (whether or not written)pursuant to which they will have any obligation to make any payment after theClosing, (ii) any agreement that could obligate it to make any payment inconnection with the transactions contemplated by this Agreement that will notbe deductible by the Company or any of the Subsidiaries by reason of Section280G of the Code, (iii) a closing agreement pursuant to Section 7121 of theCode or any predecessor provision thereof or any similar provision of state,local or foreign law with respect to the Company or any of the Subsidiariesinvolving more than $100,000 of Taxes or (iv) otherwise bound by any privateletter ruling of the IRS or comparable rulings or guidance issued by any othertaxing authority. The Company has provided to the Investor all information thatis necessary in order to accurately determine the applicability of Section 280Gof the Code to the contractual arrangements between the Company or theSubsidiaries and their respective employees.

 

 (i)                                  Neither the Company nor any of theSubsidiaries (i) has constituted either a “distributing corporation” or a“controlled corporation” (within the meaning of Section 355(a)(1)(A) of theCode) in a distribution of stock qualifying for tax-free treatment underSection 355 of the Code (x) in the two years prior to the date of thisAgreement or (y) in a distribution which could otherwise constitute part of a“plan” or “series of related transactions” (within the meaning of Section355(e) of the Code) in conjunction with the transactions contemplated by thisAgreement or (ii) is or was a member of any consolidated, combined, unitary oraffiliated group of corporations that filed or was required to file aconsolidated, combined or unitary Tax Return, other than the group of which itis now a member.

 

SECTION 3.18.                 Insurance.  All insurance policiesto which the Company or any Subsidiary is a party or that provide coverage tothe Company, any Subsidiary or any director or officer of the foregoing: (i)are valid, outstanding, and enforceable; (ii) are issued by an insurer that isfinancially sound and reputable; and (iii) taken together, provideadequate insurance coverage for the assets and the operations of the Companyand the Subsidiaries for all risks normally insured against by a personcarrying on the same business or businesses as the Company and theSubsidiaries.  Except as set forth inSection 3.18 of the Company Disclosure Schedule, neither the Company nor anySubsidiary has received any notice of premature cancellation or terminationwith respect to any existing material insurance policy of the Company or anySubsidiary.

 

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SECTION 3.19.                 Environmental Matters.

 

 (a)                               Except for such mattersthat are disclosed in the SEC Reports filed prior to the date hereof or Section3.19 of the Company Disclosure Schedule, and for such matters as have notresulted and would not reasonably be expected to result in the Company or theSubsidiaries incurring material Environmental Liabilities: (i) the assets,Company Real Property, Former Company Real Property, businesses and operationsof the Company and its Subsidiaries are and have been in compliance withapplicable Environmental Laws; (ii) the Company and its Subsidiaries haveobtained and, as currently operating, are and have been in compliance with allPermits necessary under any Environmental Law for the conduct of the businessand operations of the Company and its Subsidiaries in the manner now conducted;(iii) all Hazardous Substances generated at the Company Real Property or FormerCompany Real Property or in connection with any operations of the Company havebeen transported and otherwise handled, treated and disposed of in compliancewith all applicable Environmental Laws and in a manner that does not result inliability under Environmental Laws; (iv) no Hazardous Substances have beendisposed of or otherwise released, handled or stored by the Company on theCompany Real Property or Former Company Real Property on which the Company’sbusiness is or has been conducted or elsewhere in violation of applicableEnvironmental Laws or in a manner that would reasonably be expected to result inthe Company incurring Environmental Liabilities and (v) neither the Company norany Subsidiary nor any of their respective assets, Company Real Property,Former Company Real Property, businesses or operations has received or issubject to any outstanding order, decree, judgment, complaint, agreement,claim, citation, notice, investigation, inquiry or proceeding indicating thatthe Company or any of its Subsidiaries is or may be (a) liable for a violationof any Environmental Law or (b) liable for any Environmental Liabilities(including, without limitation, any such Environmental Liabilities incurred inconnection with being designated as a “potentially responsible party” pursuantto the Comprehensive Environmental Response, Compensation and Liability Act orany analogous state law) (collectively, “***Environmental Claims***”), and, to the Knowledgeof the Company, no such Environmental Claims are threatened).

 

 (b)                              Copies of all “Phase I” or “Phase II” environmental siteassessments reports, asbestos reports, compliance audits, reports to seniormanagement or similar reports in the possession or control of the Company orany of the Subsidiaries containing material information concerningenvironmental issues that could affect the Company or any of the Subsidiaries atany property currently or formerly owned or leased by the Company or any of theSubsidiaries, or at any other location for which the Company or any of theSubsidiaries may be liable, have been made available to the Investor.

 

 (c)                               The transactions contemplated by this Agreement do not involve anyproperty in Connecticut or New Jersey that would require notification to anyGovernmental Authority with jurisdiction over the environment and the possibleobligation to investigate or remediate such property under either theConnecticut Transfer Act or the New Jersey Industrial Site Recovery Act.

 

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 (d)                              Definitions.  For purposes of thisAgreement, the terms below shall have the following respective meanings:

 

(i)                                     “***Environmental Laws***” shall mean any law(including, without limitation, common law), regulation, ordinance, guideline,code, decree, judgment, order, permit or authorization or other legallyenforceable requirement of any Governmental Authority 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 oroutdoor environment.

 

(ii)                                  “***Environmental Liabilities***”shall mean all liabilities, responsibilities, damages, penalties, obligationsor clean-up costs, response, remedial and removal costs, investigation andfeasibility study costs, capital costs, operation and maintenance costs,losses, punitive damages, property damages, natural resource damages,consequential damages, treble damages, costs and expenses (including allreasonable fees, disbursements and expenses of counsel, experts andconsultants), fines, sanctions and interest incurred as a result of or relatedto any claim, suit, action, investigation, proceeding or demand by any person,assessed or levied pursuant to any Environmental Law or in connection with anyrelease of a Hazardous Substance whether on, at, in, under, from or about or inthe vicinity of any real or personal property.

 

(iii)                               “***Former Company Real Property***” shall mean anyreal property in which the Company or the Subsidiaries previously held, but nolonger holds, any legal, beneficial, equitable or leasehold interest.

 

(iv)                              “***Hazardous Substances***” shallmean any material, substance or waste classified, characterized or regulated ashazardous, toxic, pollutant or contaminant under any Environmental Law,including, but not limited to, petroleum products, asbestos, radioactivematerial, or hazardous or toxic substances or wastes that pose a hazard to thehealth or safety of persons.

 

 (e)                               Notwithstanding anything to the contrary, any representation orwarranty contained in this Section 3.19 that relates to Former Company RealProperty shall only apply to Former Company Real Property during the periodssuch real property was owned or operated by the Company or by any of itsSubsidiaries.

 

SECTION 3.20.                 Real Property.

 

 (a)                               Section 3.20(a) of the Company Disclosure Schedule sets forth(i) a complete list of all real property owned (the “***Owned Real Property***”)by the Company or any of the Subsidiaries and (ii) a complete list of all realproperty leased (the

 

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“***Leased Real Property***” and, together with the Owned RealProperty, the “***CompanyReal Property***”) by the Company or any of the Subsidiaries.  A true and complete copy of each materiallease with all amendments and modifications (the “***Real Property Leases***”) has beendelivered or made available to the Investor.

 

 (b)                              Except as set forth in Section 3.20(b) of the Company DisclosureSchedule, the Company, or one or more of the Subsidiaries, has (i) goodand marketable fee simple title to each of the Owned Real Properties, free andclear of all Liens except for the Permitted Exceptions, and (ii) has avalid leasehold interest in the Leased Real Property, free and clear of allLiens except for the Permitted Exceptions.

 

 (c)          With respect to the Real Property Leases, (i) neither theCompany nor any of the Subsidiaries has sent or received a written notice that,and is not aware that, any party to a Real Property Lease has materiallybreached or is in material default of any of its obligations thereunder, whichbreach or default remains uncured and no event has occurred that, with thegiving of notice or the passage of time or both, would constitute such a breachor default thereunder and (ii) all material covenants to be performed by theCompany or any of the Subsidiaries or, to the Knowledge of the Company, anylandlord under any Real Property Lease have been performed in all materialrespects

 

 (d)                              Each of the Company and the Subsidiaries has the right to use the RealProperty, subject to the Permitted Exceptions and such other exceptions aswould not materially effect the use thereof, in the manner and for the purposesas each is currently being used.

 

 (e)                               “***Permitted Exceptions***” means(i) all defects, exceptions, restrictions, easements, covenants, reservations,encroachments, utility agreements, rights of way and encumbrances disclosed inpolicies of title insurance which have been made available to the Investor andwhich have not had, nor would be reasonably expected to have, with respect toany material property of the Company and the Subsidiaries, taken as a whole, amaterial adverse effect on the use of such affected property; (ii) Liensfor current taxes, assessments or other governmental charges not yet delinquentor the amount or validity of which is being contested in good faith byappropriate proceedings (provided an appropriate reserve is establishedtherefor on the most recent balance sheet included in the SEC Reports filedprior to the date hereof in accordance with GAAP); (iii) landlord’s, warehouseman’s,mechanics’, carriers’, workers’, repairers’ and similar Liens arising orincurred in the ordinary course of business in respect of obligations which arenot yet due or which are bonded or which are being contested in good faith andby appropriate proceedings (provided any required reserves with respectthereto are maintained on the books of the Company or such Subsidiary, as thecase may be, in accordance with GAAP); (iv) zoning, entitlement and otherland use and environmental regulations by any Governmental Authority, theviolation of which has not had, nor would be reasonably expected to have withrespect to any material property of the Company and the Subsidiaries, taken asa whole, a material adverse effect on such property; (v) such other imperfectionsin title, charges, easements, restrictions, covenants,

 

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reservations, encroachments, utility agreements andencumbrances which do not materially detract from the value of or materiallyinterfere with the present use of any property subject thereto or affectedthereby; and (vi) Liens securing any financings disclosed in the FinancialStatements.

 

SECTION 3.21.                 Labor Relations.  Exceptas set forth in Section 3.21 of the Company Disclosure Schedule:(i) neither the Company nor any Subsidiary is a party to any collectivebargaining or other labor contract; (ii) since January 3, 2004, there hasnot been, and there presently is no unfair labor practice charge or complaintpending or, to the Knowledge of the Company, threatened against the Company orany Subsidiary which, if adversely determined, would be reasonably likely togive rise to a material liability; and (iii) since January 3, 2004, therehas not been, and there presently is no labor strike, slowdown, work stoppage,lockout or other labor controversy in effect or, to the Knowledge of theCompany, threatened against the Company or any Subsidiary which would bereasonably likely to have a Material Adverse Effect.

 

SECTION 3.22.                 Inventories;Receivables; Payables.  Theinventories of the Company and the Subsidiaries are in good and marketablecondition in all material respects, and are saleable in all material respectsin the ordinary course of business consistent with past practice, except for shorts,obsolete or otherwise unusable inventory, for which adequate reserves have beenreflected in the Financial Statements, in accordance with GAAP consistentlyapplied.

 

 (a)                               All accounts receivable, including salespersons overdrafts representingreceivables for sales representative draws paid in excess of earnedcommissions, of the Company and the Subsidiaries reflected in the FinancialStatements are good and collectible in all material respects at the aggregaterecorded amounts thereof, net of any applicable reserve for returns, doubtfulaccounts or uncollectible amounts reflected thereon, which reserves areadequate and were calculated in a manner consistent with past practice and inaccordance with GAAP consistently applied. All accounts receivable arising after January 3, 2004 are good andcollectible in all material respects at the aggregate recorded amounts thereof,net of any applicable reserve for returns, doubtful accounts or uncollectibleamounts reflected thereon, which reserves are adequate and were calculated in amanner consistent with past practice and in accordance with GAAP consistentlyapplied and, since January 3, 2004, neither the Company nor any of theSubsidiaries has made any significant change in its policies or practices regardingcollection of its accounts receivable.

 

 (b)                              All accounts, commission and other trade payables of the Company andthe Subsidiaries reflected in the Financial Statements or arising after January3, 2004 are the result of bona fide transactions in the ordinary course ofbusiness consistent with past practice in all material respects and werecalculated in a manner consistent with past practice and in accordance withGAAP consistently applied and neither the Company nor any of the Subsidiarieshas adversely changed its policies or practices regarding the payment of itsaccounts, commission and other trade payables since January 3, 2004.

 

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SECTION 3.23.                 Customers Suppliers and Sales Representatives.  Section3.23 of the Company Disclosure Schedule sets forth a list (for the Company andthe Subsidiaries taken as a whole) of: (i) the largest thirty (30) educationalinstitutions who represented the largest sources of revenue to the Company andthe Subsidiaries based upon the Company’s consolidated revenues during thefiscal year ended January 3, 2004; (ii) each supplier from whom the Companypurchased greater than $5,000,000 of goods during the fiscal year ended January3, 2004; and (iii) each independent sales representative for whom netcommissions were greater than $500,000during the fiscal year ended January 3, 2004. Since January 3, 2004, to the Knowledge of the Company, there has notbeen any material adverse change in the business relationship of the Companyand the Subsidiaries with any customer, supplier or sales representative listedon Section 3.23 of the Company Disclosure Schedule.

 

SECTION 3.24.                 No Other Representations or Warranties.  Exceptfor the representations and warranties contained in this ARTICLE III (asmodified by the Company Disclosure Schedule), the Company and its Subsidiariesare making no representation or warranty whatsoever, express or implied,including, but not limited to, any implied warranty or representation as tocondition, merchantability or suitability as to any of the properties or assetsof the Company or any of its Subsidiaries and that except for therepresentations and warranties contained herein, Investor is entering into thetransactions contemplated hereby on the basis that the Company and itsSubsidiaries are “as is” and “where is.” It is understood that any projections provided or addressed to Investorare not and shall not be deemed to be or to include representations or warrantiesof the Company or its Subsidiaries.

 

ARTICLE4

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

 

The Investor represents andwarrants to the Company that:

 

SECTION 4.01.                 Organization.  TheInvestor is duly formed, validly existing and in good standing under the lawsof its jurisdiction of formation and has all requisite authority to enter intoand perform its obligations under this Agreement.

 

SECTION 4.02.                 Authorization; Noncontravention; Title toContributed Stock.

 

 (a)                               The Investor has all requisite power and authority to execute and deliverthis Agreement and to consummate the transactions contemplated by thisAgreement.  The execution and delivery ofthis Agreement by the Investor and the consummation by the Investor of thetransactions contemplated by this Agreement has been duly authorized by allnecessary action on the part of the Investor, and no other proceedings on thepart of the Investor are necessary to authorize this Agreement or to consummatethe transactions contemplated hereby. This Agreement has been duly executed and delivered by the Investor and,assuming the due authorization, execution and delivery by each of the otherparties hereto, constitutes a legal, valid and binding

 

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obligation of the Investor, enforceable against theInvestor in accordance with its terms (subject to applicable bankruptcy,insolvency, moratorium, or other similar Laws affecting creditors’ rightsgenerally and general equitable principles (regardless of whether suchenforceability is considered in a proceeding in equity or at law).

 

 (b)                              The execution and delivery of this Agreement do not, and theconsummation of the transactions contemplated by this Agreement and compliancewith the provisions of this Agreement will not, require any consent, approvalor notice under, conflict with, or result in any violation, termination,suspension or breach of, or default (with or without notice or lapse of time orboth) under, or give rise to a right of termination, suspension cancellation oracceleration of any obligation or to the loss of a benefit under, or result inthe creation of any Lien upon any of the properties or other assets of theInvestor under (i) the organizational documents of the Investor, (ii) anymaterial Contract to which the Investor is a party or any of its properties orother assets is subject or (iii) subject to the governmental filings and othermatters referred to in Section 4.03, any Law applicable to the Investoror its properties or other assets, other than, in the case of clauses (ii) and(iii), with respect to matters that are not reasonably likely to impair theability of the Investor to perform its obligations under this Agreement in anymaterial respect or delay in any material respect or prevent the consummationof any of the transactions contemplated by this Agreement.

 

 (c)                               Upon the consummation of the Mergers, the Investor will own, and uponthe consummation of the transactions contemplated hereby, the Company willacquire, all right, title, and interest in and to the Contributed Stock, freeand clear of all Liens.

 

SECTION 4.03.                 Governmental Approvals.  Noconsent, approval, order or authorization of, action by or in respect of, orregistration, declaration or filing with, any Governmental Authority isrequired by or with respect to the Investor in connection with the executionand delivery of this Agreement by the Investor or the consummation by theInvestor of the transactions contemplated by this Agreement, except for (a) thefiling of a notification and report form by the Investor, and the expiration ortermination of all waiting periods, under the HSR Act, or any other applicablefilings and approvals under similar foreign antitrust Laws and (b) consents,approvals, authorizations, declarations or filings that, if not obtained ormade, are not reasonably likely to impair the ability of the Investor toperform its obligations under this Agreement in any material respect or delayin any material respect or prevent the consummation of any of the transactionscontemplated by this Agreement.

 

SECTION 4.04.                 Litigation.  There is no claim,suit, action, arbitration, investigation or proceeding pending or, to theKnowledge of the Investor, threatened against the Investor or any of itsAffiliates which if adversely determined would, individually or in theaggregate, materially and adversely affect the ability of the Investor toperform its obligations hereunder or which seeks to enjoin the consummation ofthe transactions contemplated hereby; nor is there any judgment, decree, award,injunction, rule, or order of any Governmental Authority or arbitratoroutstanding against the

 

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Companyor any of the Subsidiaries that would reasonably be expected to materially andadversely affect the ability of the Investor to perform its obligationshereunder.

 

SECTION 4.05.                 Brokers and Other Advisors.  TheInvestor has not incurred any obligation or liability, contingent or otherwise,for brokers’ or finders’ fees or commissions in connection with thetransactions contemplated hereby.

 

SECTION 4.06.                 Investment Representations.

 

 (a)                               The Company Shares to be received by the Investor will be acquired byit for investment for its own account, not as a nominee or agent, and not witha view to the sale or distribution of any part thereof in violation ofapplicable federal and state securities laws.

 

 (b)                              The Investor understands that the Company Shares have not beenregistered under the Securities Act or any state securities laws.

 

 (c)                               The Investor is an “accredited investor” as such term is defined inRule 501 of Regulation D promulgated under the Securities Act.

 

 (d)                              The Investor understandsthat the Company Shares may not be sold, transferred or otherwise disposed ofwithout registration under the Securities Act or an exemption therefrom, andthat in the absence of an effective registration statement covering suchCompany Shares or an available exemption from registration under the SecuritiesAct, the Investor must be prepared to bear the economic risk of this investmentfor an indefinite period of time.

 

ARTICLE5

COVENANTS AND AGREEMENTS

 

SECTION 5.01.                 Conduct of Business.  Exceptas set forth in Section 5.01 of the Company Disclosure Schedule or expresslycontemplated by this Agreement, during the period from the date of thisAgreement to the Closing Date, the Company shall, and shall cause each of theSubsidiaries to: (A) carry on its business in the ordinary course consistentwith past practice in all material respects; (B) use reasonable best efforts,consistent with prudent business judgment, to preserve intact its businessorganization and keep available the services of its executive officers and keyemployees; (C) use reasonable best efforts, consistent with prudentbusiness judgment, to maintain their relationships with their materiallicensors, suppliers, contractors, distributors, customers and others havingmaterial business relationships with it and (D) make all Canadian income taxpayments in cash in the ordinary course of business consistent with pastpractice in all material respects and without regard to the impact oranticipated impact of the transactions contemplated hereby.  Without limiting the foregoing, except asexpressly contemplated by this Agreement and except as set forth in Section5.01 of the Company Disclosure Schedule, during the period from the date ofthis Agreement to

 

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the Closing Date, the Company shall not, and shall not permit any ofthe Subsidiaries to, without the Investor’s prior written consent:

 

 (a)                               (i) declare, set aside or pay any dividends on, or make any otherdistributions (whether in cash, stock or property) in respect of, any of itscapital stock, other than dividends or distributions by a direct or indirectwholly owned Subsidiary of the Company or by Jostens to its parent or toanother wholly-owned Subsidiary of the Company or to Jostens; or(ii) split, combine or reclassify any of its capital stock;

 

 (b)                              authorize for issuance, issue, sell, pledge, encumber or deliver oragree or commit to issue, sell, pledge, encumber or deliver (whether throughthe issuance or granting of options, warrants, commitments, subscriptions,rights to purchase or otherwise) any shares of its capital stock, or issue anysecurities convertible into, exchangeable for or representing a right topurchase or receive, or enter into any Contract with respect to the issuanceof, shares of its capital stock, other than (i) in the ordinary course ofbusiness under current employee benefit plans and other shares of Common Stockissuable upon exercise of Company Stock Options in accordance with the termsthereof and (ii) the issuance of Class A Shares in exchange for Class B Shares;

 

 (c)                               other than the adoption of the amendment and restatement of the Amendedand Restated Certificate of Incorporation of the Company in the form set forthas Exhibit B, amend the Company Certificate or Company By-laws or amendthe certificate of incorporation or bylaws or equivalent organizationaldocuments of any Subsidiary of the Company;

 

 (d)                              except as set forth on Section 5.01(d) of the Company DisclosureSchedule, (i) incur or assume any indebtedness for borrowed money orguarantee any such indebtedness or issue or sell any debt securities orwarrants or rights to acquire any debt securities of the Company or any of theSubsidiaries or guarantee (or become liable for) any indebtedness for borrowedmoney of others, enter into any “keep well” or other agreement to maintain anyfinancial statement condition to another person or enter into any arrangementhaving the economic effect of any of the foregoing, except for borrowings underthe Credit Facility in the ordinary course of business consistent with pastpractice and for other borrowings not exceeding $1,000,000 in the aggregate or(ii) make any loans, advances or capital contributions to, or investmentsin, any other person other than to or in the Company or any direct or indirectwholly-owned Subsidiary of the Company;

 

 (e)                               except as set forth in Section 5.01(e) of the Company DisclosureSchedule, acquire or sell (whether by merger, consolidation or otherwise), orlease, transfer, encumber or otherwise dispose of any of its assets foraggregate consideration in excess of $1,000,000, except in the ordinary courseof business consistent with past practice;

 

 (f)                                 (i) make or change any Tax election,(ii) settle or compromise any federal, state, local or foreign Taxliability, (iii) waive or extend the statute of limitations

 

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in respect of any such Taxes , in the case of (ii)or (iii) where the amount of Taxes at issue is greater than $100,000 or(iv) prepare or file any Tax return (including any amendment thereof) (x)other than in a manner consistent with past practice or (y) in the case of anyTax Return in respect of income or similar taxes (other than Tax returns withrespect to quarterly deposits, deposits of employee payroll withholding orsimilar Tax returns), with respect to the filing thereof, without havingprovided the Investor with a copy (together with the supporting work papers) atleast 5 days before the due date thereof for the Investor’s review and comment;

 

 (g)                              materially modify, amend or terminate or waive compliance with theterms of or breaches under, or release or assign any material rights or claimsunder, any material Contract except in the ordinary course of businessconsistent with the past practices of the Company and the Subsidiaries;

 

 (h)                              except as may otherwise be required by applicable law or regulation orgenerally accepted accounting principle, change any of the accountingprinciples or  practices used by it (forfinancial accounting or Tax purposes);

 

 (i)                                  adopt a plan of complete or partialliquidation, dissolution, merger, consolidation, restructuring,recapitalization or other reorganization;

 

 (j)                                  settle any litigation or other legalproceeding or claim of liability against the Company, which is reasonablylikely to materially negatively impact the Company’s position with respect tosimilar pending or threatened material claim or suit;

 

 (k)                               pay or agree to pay in settlement or compromise of any litigation orother legal proceedings or claims of liability against the Company, net ofinsurance recoveries, more than $750,000 for any such suit or claim or morethan an aggregate of $1,500,000 for all such suits and claims;

 

 (l)                                  change in any material respect its creditpolicy as to sales of inventories or its policies or practices with respect tothe payment of current liabilities, the collection of accounts receivable orthe payment of sales representative;

 

 (m)                            enter into any commitment for capital expenditures of the Company andthe Subsidiaries in excess of $250,000 for any individual commitment and$500,000 for all commitments in the aggregate other than for capitalexpenditures contemplated by the capital forecast for the fiscal year 2004, acopy of which has been made available to the Investor;

 

 (n)                              enter into, materially modify or terminate any labor or collectivebargaining agreement of the Company or any of the Subsidiaries or, throughnegotiation or otherwise, make any commitment or incur any liability to anylabor organization with respect to the Company or any of the Subsidiaries;

 

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 (o)                              enter into any transaction, contract, commitment, arrangement orunderstanding that limits, restrains, impedes or otherwise restricts theability of the Company or any of the Subsidiaries from competing with orengaging in any business in any geographic location;

 

 (p)                              take any action to accelerate any option or other equity-basedcompensation granted to any director, officer, employee or other person;

 

 (q)                              prepay or otherwise make any payments, other than scheduled interestpayments, with respect to any indebtedness for borrowed money, other thanrequired principal payments with respect to (i) the U.S. and Canadian RevolvingCredit Loans (as defined in the Credit Facility), (ii) the Fleet PromissoryNote, dated March 15, 2004, (iii) the Letter Agreement for Fee Consignment andPurchase of Gold and Silver by and between Jostens and the Bank of Nova Scotia,dated as of August 25, 2000, and (iv) indebtedness of the type described inclause (v) of the definition of Company Indebtedness; provided that theCompany can repay the Canadian Revolving Credit Loans only with theproceeds of cash flow from operations in Canada; or

 

 (r)                                 commit, propose or agree to take any of, theforegoing actions or intentionally and knowingly take any action that wouldmake any representation or warranty of the Company contained in this Agreementuntrue or incorrect in any material respect as of the date when made or as ifmade as of the Closing Date.

 

SECTION 5.02.                 Accessto Information; Confidentiality. Subject to applicable Laws relating to the exchange of information, theCompany shall afford, upon reasonable advance notice, to the Investor and toits general partners, accountants, counsel, environmental consultants,financial advisors and other representatives, including Marc Reisch, reasonableaccess during normal business hours during the period prior to the Closing Dateor the termination of this Agreement to all its and the Subsidiaries’properties (including for the purposes of environmental site visits),  books, contracts, commitments, personnel andrecords.  Any disclosure whatsoeverduring such investigation by the Investor shall not constitute any enlargementor additional representations or warranties of the Company beyond thosespecifically set forth in this Agreement. The Investor acknowledges that the information provided to it inconnection with this Agreement and the transactions contemplated hereby issubject to the terms of the confidentiality agreement between Kohlberg KravisRoberts & Co. and Credit Suisse First Boston Private Equity, Inc. datedDecember 12, 2003 (the “***Confidentiality Agreement***”),the terms of which are incorporated herein by reference.

 

 (a)                               The Company shall promptly provide the Investor with copies of allfilings made by the Company or the Subsidiaries with or any other state orfederal Governmental Authority in connection with this Agreement, or thetransactions contemplated hereby.

 

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 (b)                              For each fiscal month, quarter and year ending between the date of thisAgreement and the Closing Date, the Company will deliver to the Investorpromptly after made available by management of the Company:

 

(i)                                     unaudited monthly consolidated financialstatements;

 

(ii)                                  unaudited quarterly consolidated financialstatements;

 

(iii)                               audited annual consolidated financial statements; and

 

(iv)                              copies of any financial statements that it receives from either VHH orAHC pursuant to the terms of the Merger Agreements.

 

SECTION 5.03.                 Efforts.  Upon the terms andsubject to the conditions set forth in this Agreement, each of the partiesagrees to use, except as otherwise provided below, its commercially reasonableefforts to take, or cause to be taken, all actions, and to do, or cause to bedone, and to assist and cooperate with the other parties in doing, all thingsnecessary, proper or advisable to consummate and make effective, in the mostexpeditious manner practicable, the transactions contemplated by thisAgreement, including using commercially reasonable efforts to accomplish thefollowing: (i) the taking of all acts necessary to cause the conditions toClosing to be satisfied as promptly as practicable, (ii) the obtaining of allnecessary actions or nonactions, waivers, consents and approvals from allrelevant Governmental Authorities and the making of all necessary registrationsand filings with all relevant Governmental Authorities and the taking of allsteps as may be necessary to obtain an approval or waiver from, or to avoid anaction or proceeding by any Governmental Authority and (iii) the execution anddelivery of any additional instruments necessary to consummate the transactionscontemplated by, and to fully carry out the purposes of, this Agreement.  No party hereto shall take any action betweenthe date of this Agreement and the Closing Date to dissuade Marc Reisch fromserving as the Chief Executive Officer of the Company following the Closing orto interfere with the satisfaction of the closing condition set forth inSection 6.01(g); provided that the negotiation of employment and investmentarrangements with Marc Reisch consistent with the terms of the letter agreemententered into between the Company and Marc Reisch dated as of the date hereof(the “***Reisch Letter Agreement***”)shall not be deemed to be a breach of this Section 5.03.

 

SECTION 5.04.                 Financing.

 

 (a)                               Annex A hereto sets forth a complete and correct copy of a debtcommitment letter and related terms sheet from Credit Suisse First Boston (the“***Financing Commitment***”) for the financingto be used in connection with the transactions contemplated hereby (the “***Financing***”).

 

 (b)                              No party hereto shall take any action between the date of thisAgreement and the Closing Date that would reasonably be expected to make theFinancing unavailable for any reason. Each party hereto shall use its reasonable efforts to

 

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enter into definitive documentation with respect toand to obtain the Financing.  Withoutlimiting the generality of the preceding sentence, each party hereto shall useits reasonable efforts to negotiate and finalize definitive loan documentationfor the Financing.  Each party heretoshall keep the other parties hereto reasonably informed as to the status of theFinancing.

 

 (c)                               The Company agrees to provide, and shallcause the Subsidiaries and its and their respective representatives to provide,all cooperation reasonably necessary in connection with the arrangement of theFinancing, including: (i) participation in meetings, drafting sessions, duediligence sessions, management presentation sessions, road shows and sessionswith rating agencies; (ii) preparation of business projections, financialstatements, offering memoranda, private placement memoranda, prospectuses andsimilar documents; (iii) execution and delivery of any underwriting, purchaseor placement agreements, pledge and security documents, other definitivefinancing documents, or other requested certificates or documents, including acertificate of the chief financial officer of the Company or an opinion withrespect to solvency matters, comfort letters of accountants, consents ofaccountants for use of their reports in any materials relating to the Financingand customary legal opinions, each on terms and conditions as may be reasonablysatisfactory to the Company, as may be reasonably requested by prospectivelenders, underwriters, initial purchasers or placement agents and (iv)providing (x) GAAP audited consolidated balance sheets and related statementsof income, stockholders equity and cash flow statements of Jostens, VHH and AHCfor the three most recently completed fiscal years (including the relatednotes), (y) GAAP unaudited consolidated balance sheets and related statementsof income, stockholders’ equity and cash flows of Jostens, VHH and AHC for eachsubsequent fiscal quarter ended 45 days before the Closing Date (including therelated notes) and (z) a pro forma consolidated balance sheet and related proforma consolidated statement of income of Jostens as of and for the 12-monthperiod ending on the last day of the most recently completed four-fiscalquarter period (including the related notes), prepared after giving effect tothe transactions contemplated by this Agreement, including the Mergers, as if suchtransactions had occurred as of such date (in the case of the balance sheet) orat the beginning of such period (in the case of the other financialstatements), in each case, such financial statements to be prepared inaccordance with the requirements of the Securities Act or the Exchange Act andthe related rules thereunder (such financial statements, collectively, the “***Deal Financial Statements***”);provided that the Financing may not require the payment of anycommitment or other similar fee by the Company or any of its Subsidiaries orimpose any other liability on the Company or any of its Subsidiaries prior tothe Closing Date.

 

 (d)                              The Company will use commercially reasonable efforts to initiate thetender offers and buy-backs of the indebtedness set forth in items 1-4, 6 and 7of Schedule I on terms to be agreed to by the parties hereto so that suchtransactions will close concurrently with the Closing.

 

SECTION 5.05.                 Adjustments to Merger Consideration.  TheInvestor shall furnish to the Company copies of the Estimated Working CapitalStatement (as

 

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definedin the VHH Merger Agreement) on the same date as such statements are deliveredto the Investor. The Investor shall furnish to the Company copies of theEstimated Working Capital Statement (as defined in the AHC Merger Agreement) onthe same date as such statements are delivered to the Investor.

 

SECTION 5.06.                 Fees and Expenses.  Exceptas otherwise expressly provided in this Agreement, all fees and expensesincurred by the parties hereto in connection with this Agreement and thetransactions contemplated hereby shall be paid by the party incurring such feesand expenses; provided, that, if the Closing occurs, the Company shallbear and pay all Transaction Expenses and Excluded Transaction Expenses.  In connection with services related to thisAgreement and the transactions contemplated hereby, the Company will pay, onthe Closing Date, (i) to the Investor, a transaction fee in the amount of$18,000,000 and (ii) to DLJ Merchant Banking III, Inc., a transaction fee inthe amount of $7,000,000; provided that such transaction fees shall beproportionately reduced to the extent that such transaction fees would causethe total Transaction Expenses to exceed the Transaction Expenses Cap.

 

SECTION 5.07.                 Public Announcements.  Eachof the Investor and the Company agree that it shall not make any publicannouncement or issue any press release in connection with the transactionsconsummated hereby except as provided in this Section 5.07 and except if eitherthe Investor or the Company (i) is ordered to make such disclosure by acourt of competent jurisdiction or (ii) is advised by legal counsel thatsuch disclosure is required under applicable laws, in which case the partymaking the required disclosure shall inform the other party as to the timingand contents of such disclosure prior to making such disclosure.  The Investor and the Company shall jointlyagree upon and approve one or more press releases (which need not be jointpress releases) to be issued on or about the date hereof and/or on or about theClosing Date, as mutually determined by the parties hereto.  Any subsequent press release or publicannouncement made by either party hereto after approval of any such pressrelease shall be consistent with (including in scope) the mutually agreed uponpress release or releases.  This Section5.07 shall survive the Closing.

 

SECTION 5.08.                 Further Assurances.  Fromtime to time after the Closing, upon the reasonable request of any partyhereto, the other party or parties hereto shall execute and deliver or cause tobe executed and delivered such further instruments, and take such furtheraction, as the requesting party may reasonably request in order to effectuatefully the purposes, terms and conditions hereof.

 

SECTION 5.09.                 Contribution of VHH and AHC Equity Interests.  Immediatelyfollowing the Contribution, the Company shall contribute the Contributed Stockto Jostens IH Corp., and then as soon as practicable following Jostens’sredemption or repurchase of all of its outstanding 14% Senior RedeemablePayment-in-Kind Preferred Stock, the Company shall cause Jostens IH Corp. tocontribute the Contributed Stock to Jostens.

 

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SECTION 5.10.                 Termination of Affiliate Arrangements.  Theagreements set forth in item 3 of Section 3.08(i) and items 1 and 2 of Section3.08(ii) of the Company Disclosure Schedule shall be terminated as of theClosing Date, and all obligations and liabilities thereunder shall be canceledwithout payment or any further liability on the part of the Company or any ofthe Subsidiaries other than obligations or liabilities incurred or accrued asof the Closing Date.

 

SECTION 5.11.                 Amendments to the Merger Agreements.  TheInvestor agrees that it will, and will cause each of the Merger Subs (asdefined in the Merger Agreements) to, not amend, waive or modify, or agree toamend, waive or modify, any provision of either Merger Agreement or any otheragreement or document relating to the Mergers without the express prior writtenconsent of the Company.  The Investorshall not determine that the closing conditions specified in the MergerAgreements have been met until the Company shall have given its prior writtenconsent to such action.

 

SECTION 5.12.                 Transaction Expenses and Excluded TransactionExpenses.  The Company shall pay all TransactionExpenses and Excluded Transaction Expenses simultaneously with the Closing.

 

SECTION 5.13.                 TaxTreatment.  The parties hereto agreeto (i) report the contribution of the Contributed Stock and the issuance of theCompany Shares as a reorganization within the meaning of Section 368(a) of theCode for federal income tax purposes and (ii) take no action to cause the contributionof the Contributed Stock and the issuance of the Company Shares to fail to soqualify.

 

SECTION 5.14.                 Amendment to Certificate of Incorporation.  TheCompany shall cause the Company’s Amended and Restated Certificate ofIncorporation to be amended and restated inthe form set forth as Exhibit B prior to or of as of the Closing.

 

ARTICLE6

CONDITIONS TO OBLIGATIONS OF THE PARTIES AT CLOSING

 

SECTION 6.01.                 Conditions to Obligations of Each Party.  Therespective obligations of each party to effect the Closing is subject to thesatisfaction or waiver on or prior to the Closing Date of the followingconditions:

 

 (a)                               Regulatory Matters.  Thewaiting period (and any extension thereof) applicable to the transactionscontemplated hereby and the Merger Agreements under the HSR Act, EuropeanUnion, Switzerland and Canada and similar foreign antitrust Laws shall havebeen terminated or shall have expired, other than any expiration or terminationunder similar foreign antitrust Laws, the failure of which to occur or obtainindividually or in the aggregate would not reasonably be expected to materiallyimpair the ability of the parties to consummate the transactions contemplatedhereby.

 

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 (b)                              No Injunctions or Restraints.  Notemporary restraining order, preliminary or permanent injunction or otherjudgment or order issued by any court of competent jurisdiction or other Law,legal restraint or prohibition (collectively, “***Restraints***”)shall be in effect preventing the consummation of the transactions contemplatedhereby.

 

 (c)                               Concurrent Transactions.  TheMergers shall have been consummated on the terms set forth in the MergerAgreements shall have been consummated or shall be consummated concurrentlywith the Closing.

 

 (d)                              Financing.  The Financing shall have beenreceived on terms and conditions consistent with the terms and conditions setforth in the Financing Commitment.

 

 (e)                               Indebtedness Repurchase and Repayment Costs.  Theindebtedness set forth on Schedule I shall have been repaid, repurchased orredeemed concurrently with the Closing or irrevocably called for redemptionconcurrently with the Closing.

 

 (f)                                 Transaction Expenses Cap.  Theaggregate amount of Transaction Expenses (other than Excluded TransactionExpenses) shall not exceed $75,000,000.

 

 (g)                              Management Investment.  MarcReisch shall have made an investment in the Common Stock of the Company onterms consistent with those set forth in the Reisch Letter Agreement.

 

SECTION 6.02.                 Conditions to Obligations of the Investor.  Theobligations of the Investor to effect the Closing are further subject to thesatisfaction or waiver on or prior to the Closing Date of the followingconditions:

 

 (a)                               Representations and Warranties.  Therepresentations and warranties of the Company contained in this Agreement thatare qualified as to materiality or Material Adverse Effect shall be true andcorrect, and the representations and warranties of the Company contained inthis Agreement that are not so qualified shall be true and correct in allmaterial respects, in each case as of the Closing Date as though made on theClosing Date, except to the extent such representations and warrantiesexpressly relate to an earlier date, in which case as of such earlier date, andexcept further to the extent that the facts or matters as to which suchrepresentations and warranties are not so true and correct as of such dates(without giving effect to any qualifications or limitations as to materialityor Material Adverse Effect set forth therein), individually or in theaggregate, have not had and would not reasonably be expected to have a MaterialAdverse Effect.

 

 (b)                              Performance of Obligations of the Company.  TheCompany shall have performed in all material respects all obligations requiredto be performed by it under this Agreement at or prior to the Closing Date.

 

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 (c)                               Stockholders’ Agreement.  TheCompany and each of the other parties thereto (other than the Investor) shallhave executed and delivered the Stockholders’ Agreement, and such agreementshall be in full force and effect upon the Closing.

 

 (d)                              Material Adverse Effect. Since the date of this Agreement, there shall have been no event,condition or occurrence that has had a Material Adverse Effect or would bereasonably expected to have, a Material Adverse Effect.

 

 (e)                               Financial Statements.  TheInvestor shall have received copies of the Deal Financial Statements inaccordance with Section 5.04.

 

 (f)                                 Registration Rights Agreement.  TheCompany and each of the other parties thereto (other than the Investor) shallhave executed and delivered the Registration Rights Agreement, and suchagreement shall be in full force and effect upon the Closing.

 

 (g)                              Amendment to Certificate of Incorporation.  TheCompany’s Amended and Restated Certificate of Incorporation shall have beenamended in the form set forth as Exhibit B.

 

SECTION 6.03.                 Conditions to Obligations of the Company.  Theobligation of the Company to effect the Closing is further subject to thesatisfaction or waiver on or prior to the Closing Date of the followingconditions:

 

 (a)                               Representations and Warranties.  Therepresentations and warranties of the Investor contained in this Agreement thatare qualified as to materiality shall be true and correct, and therepresentations and warranties of the Investor contained in this Agreement thatare not so qualified shall be true and correct in all material respects, ineach case as of the Closing Date as though made on the Closing Date, except tothe extent such representations and warranties expressly relate to an earlierdate, in which case as of such earlier date.

 

 (b)                              Performance of Obligations of the Investor.  TheInvestor shall have performed in all material respects all obligations requiredto be performed by it under this Agreement at or prior to the Closing Date.

 

 (c)                               Stockholders’ Agreement.  TheInvestor shall have executed and delivered the Stockholders’ Agreement, andsuch agreement shall be in full force and effect upon the Closing.

 

 (d)                              Registration Rights Agreement.  TheInvestor shall have executed and delivered the Registration Rights Agreement,and such agreement shall be in full force and effect upon the Closing.

 

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SECTION 6.04.                 Frustration of Closing Conditions. Neither the Company nor the Investor may rely on the failure of anycondition set forth in Section 6.01, 6.02 or 6.03, as thecase may be, to be satisfied if such failure was caused by such party’s failureto use its commercially reasonable efforts to consummate the transactionscontemplated by this Agreement, as required by and subject to Section 5.03.

 

SECTION 6.05.                 Documents to be Delivered by the Company.  Atthe Closing, the Company shall deliver to the Investor the following:

 

 (a)                               certificates evidencing the Company Shares, if any, and the FinancingShortfall Shares, if any, free and clear of any Liens (except Liens arising asa result of an act on the part of the Investor), registered in the name of theInvestor or one or more of its nominees, in form satisfactory to the Investor;

 

 (b)                              a copy of the resolutions or other action adopted by the Companyauthorizing the execution, delivery and performance of this Agreement asappropriate, and a certificate of the Company, dated the Closing Date, statingthat such resolutions or other action were duly adopted and are in full forceand effect at such date, and setting forth the incumbency of each personexecuting this Agreement, or any document required by this Agreement on behalfof the Company;

 

 (c)                               a certificate executed by an officer of the Company setting forth thetruth and accuracy of the matters set forth in Sections 6.02(a) and (b)hereof with respect to matters pertaining to the Company; and

 

 (d)                              a receipt for the aggregate portion of the purchase price for theCompany Shares, if any, and the Financing Shortfall Shares, if any, deliveredto the Company.

 

SECTION 6.06.                 Documents to be Delivered by the Investors.  Atthe Closing, the Investor shall deliver to the Company the following:

 

 (a)                               a certificate executed by an officer of the Investor setting forth thetruth and accuracy of the matters set forth in Section 6.03 (a) and (b) hereof;

 

 (b)                              an executed assignmentagreement with respect to the Contributed Stock in form and substancereasonably satisfactory to the Company; and

 

 (c)                               a receipt for the aggregate number of shares of Class A Common Stockand Class C Common Stock delivered by the Company.

 

ARTICLE7

 

TERMINATION, AMENDMENT AND WAIVER

 

SECTION 7.01.                 Termination.  This Agreement may beterminated at any time prior to the Closing:

 

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 (a)                               by mutual written consent of the Investor and the Company;

 

 (b)                              by either the Investor or the Company:

 

(i)                                     if the Closing shall not have beenconsummated on or before October 31, 2004, upon delivery of written notice tothe other party; provided, however, that the right to terminatethis Agreement under this Section 7.01(b)(i) shall not be available toany party whose action or failure to act has been a principal cause of orresulted in the failure of the Closing to be consummated on or before suchdate; or

 

(ii)                                  if any Restraint having the effect set forthin Section 6.01(b) shall be in effect and shall have become final andnonappealable; and

 

 (c)                               by the Investor pursuantto the right set forth in Schedule 7.01(c).

 

SECTION 7.02.                 Effect of Termination.  Inthe event of termination of this Agreement by either the Company or the Investoras provided in Section 7.01, this Agreement shall forthwith become voidand have no further force or effect, without any liability or obligation on thepart of the Investor or the Company, other than this Section 7.02 and ARTICLE8, which provisions shall survive such termination, and except to theextent that such termination results from the willful breach by a party of anyof its representations, warranties, covenants or agreements set forth in thisAgreement.

 

SECTION 7.03.                 Amendment.  This Agreement may not beamended except by an instrument in writing executed on behalf of each of theparties hereto.

 

SECTION 7.04.                 Extension; Waiver.  Atany time prior to the Closing, the parties may (a) extend the time for theperformance of any of the obligations or other acts of the other parties, (b)waive any inaccuracies in the representations and warranties contained hereinor in any document delivered pursuant hereto or (c) waive compliance with anyof the agreements or conditions contained herein.  Any agreement on the part of a party to anysuch extension or waiver shall be valid only if set forth in an instrument inwriting signed on behalf of such party. Any such waiver shall not operate as a waiver of, or estoppel withrespect to, any subsequent inaccuracy or noncompliance.  The failure or delay of any party to thisAgreement to assert any of its rights under this Agreement or otherwise shallnot constitute a waiver of such rights.

 

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ARTICLE8

 

GENERAL PROVISIONS

 

SECTION 8.01.                 Survival of Representations and Warranties.

 

 (a)                               Other than the representations and warranties contained in Sections 3.01,3.02, 3.03, 3.04, 3.09(b) and 3.10(collectively, the “***CompanySurviving Representations***”) and the representations andwarranties contained in Section 4.01, 4.02 and 4.05(collectively, the “***InvestorSurviving Representations***”), which representations andwarranties shall survive the Closing for a period of one year (or until theresolution of any claim brought within such period), none of therepresentations, warranties, covenants or agreements in this Agreement or inany instrument delivered pursuant to this Agreement shall survive the Closing.

 

 (b)                              From and after the Closing Date, the Company shall defend, indemnifyand hold harmless the Investor and its Affiliates (including Kohlberg KravisRoberts & Co. L.P.) and each director, officer, member, partner, employeeand agent of such persons (the “***Investor Indemnitees***”) against any loss, damage, claim,liability, judgment or settlement of any nature or kind, including all costsand expenses relating thereto, including interest, penalties and reasonableattorneys’ fees and disbursements (“***Losses***”), arising out of, relating to orresulting from the breach of any of the Company Surviving Representations.

 

 (c)                               From and after the Closing Date, the Investor shall defend, indemnifyand hold harmless the Company and its Affiliates and each director, officer,member, partner, employee and agent thereof against any Losses arising out of,relating to or resulting from the breach of any of the Investor SurvivingRepresentations (except to the extent of a breach of Section 4.02(c)arising out of a breach by VHH or AHC under the VHH Merger Agreement or the AHCMerger Agreement, respectively).

 

 (d)                              Notwithstanding anything to the contrary in this Agreement, no partyhereto shall have any remedies at law or equity, directly or indirectly,against any officer, director, partner, employee, representative or affiliateof any other party on account of any misrepresentation or breach, nor shall anyofficer, director, partner, employee, representative or affiliate of any partyhave any liabilities on account of any such misrepresentation or breach.

 

SECTION 8.02.                 Remedies; Specific Enforcement. Subject to Section 8.01, the parties agree that each party’s soleand exclusive remedy in the event of any breach of any representation,warranty, covenant or agreement of any of the other parties shall be toterminate this Agreement pursuant to Section 7.01 or not close.  Except as set forth herein, no party to thisagreement shall be liable for any money damages in connection with such party’sbreach of a representation, warranty, covenant or agreement of this Agreement.  The parties agree that irreparable damagewould occur and that the parties would not have any adequate remedy at law inthe event that any of the provisions of this Agreement were not performed inaccordance with their specific terms or were otherwise breached.  It is accordingly agreed that the partiesshall be entitled to an injunction or injunctions to prevent breaches of thisAgreement, without the posting of a bond or similar instrument, and to enforcespecifically the terms and provisions of this Agreement in any Federal courtlocated in the State of New York or in any state court in

 

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the State of New York, this being in addition to any other remedy towhich they are entitled at law or in equity.

 

SECTION 8.03.                 Notices.  Except for notices that arespecifically required by the terms of this Agreement to be delivered orally,all notices, requests, claims, demands and other communications hereunder shallbe in writing and shall be deemed given if delivered personally, facsimiled(which is confirmed) or sent by overnight courier (providing proof of delivery)to the parties at the following addresses (or at such other address for a partyas shall be specified by like notice):

 
| If  to the Company, to:  |
|--------------------------|
|                     |
|                     | 5501 American Boulevard West |
|                     | Minneapolis, MN  55437 |
|                     | Attention:  General Counsel |
|                     | Facsimile:  (952) 830-8492 |
|                     |
| with  a copy to:         |
|                     |
|                     | DLJ Merchant Banking III,  Inc. |
|                     | Eleven Madison Avenue,  16th Floor |
|                     | New York, New York 10010 |
|                     | Attention:  Thompson Dean and David Burgstahler |
|                     | Facsimile:  (212) 538-0415 |
|                     |
| and  with a copy to:     |
|                     |
|                     | Weil, Gotshal & Manges  LLP |
|                     | 767 Fifth Avenue |
|                     | New York, New York 10153 |
|                     | Attention:  Douglas P. Warner |
|                     | Facsimile:  (212) 310-8007 |
|                     |
| If  to the Investor, to: |
|                     |
|                     | c/o Kohlberg Kravis  Roberts & Co. |
|                     | 9 West 57th  Street |
|                     | New York, New York 10019 |
|                     | Attn: Alexander Navab |
|                     | Facsimile:  (212) 750-0003 |

 

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| with  a copy to: |
|------------------|
|             |
|             | Simpson Thacher &  Bartlett LLP |
|             | 425 Lexington Avenue |
|             | New York, New York 10017 |
|             | Attn:  Gary Horowitz |
|             | Facsimile:  (212) 455-2502 |

 

SECTION 8.04.                 Counterparts.  ThisAgreement may be executed in one or more counterparts, all of which shall beconsidered one and the same agreement and shall become effective when one ormore counterparts have been signed by each of the parties and delivered to theother parties.

 

SECTION 8.05.                 Entire Agreement; No Third-PartyBeneficiaries.  This Agreement and the ConfidentialityAgreement constitute the entire agreement, and supersede all prior agreementsand understandings, both written and oral, among the parties with respect tothe subject matter of this Agreement and are not intended to confer upon anyperson other than the parties any rights or remedies.

 

SECTION 8.06.                 Governing Law.  ThisAgreement shall be governed by, and construed in accordance with, the Laws ofthe State of New York as applied to contracts made and performed entirelywithin such state.

 

SECTION 8.07.                 Assignment.  Neither this Agreement nor anyof the rights, interests or obligations hereunder shall be assigned, in wholeor in part, by operation of Law or otherwise by any of the parties without theprior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon,inure to the benefit of, and be enforceable by, the parties and theirrespective successors and assigns.

 

SECTION 8.08.                 Consent to Jurisdiction.  Eachof the parties hereto (a) consents to submit itself to the personaljurisdiction of any Federal court located in the State of New York or of anystate court located in the State of New York in the event any dispute arisesout of this Agreement or the transactions contemplated by this Agreement, (b)agrees that it will not attempt to deny or defeat such personal jurisdiction bymotion or other request for leave from any such court and (c) agrees that itwill not bring any action relating to this Agreement or the transactionscontemplated by this Agreement in any court other than a Federal court locatedin the State of New York or a state court located in the State of New York.

 

SECTION 8.09.                 Waiver of Jury Trial.  EACHOF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BYJURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THETRANSACTIONS CONTEMPLATED HEREBY.

 

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SECTION 8.10.                 No Recourse.  No past, present or futuredirector, officer, employee, incorporator, member, partner, stockholder,Affiliate, agent, attorney or representative of the Company or the Investor orany of their respective Affiliates shall have any liability for any obligationsor liabilities of the Company or the Investor under this Agreement of or forany claim based on, in respect of, or by reason of, the transactionscontemplated hereby and thereby.

 

SECTION 8.11.                 Severability.  Ifany term or other provision of this Agreement is invalid, illegal or incapableof being enforced by any rule of law or public policy, all other conditions andprovisions of this Agreement shall nevertheless remain in full force andeffect.  Upon such determination that anyterm or other provision is invalid, illegal or incapable of being enforced, theparties hereto shall negotiate in good faith to modify this Agreement so as toeffect the original intent of the parties as closely as possible to the fullestextent permitted by applicable Law in an acceptable manner to the end that thetransactions contemplated hereby are fulfilled to the extent possible.

 

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IN WITNESS WHEREOF, theparties hereto have caused this Agreement to be duly executed by theirrespective authorized officers as of the day and year first above written. 

 
|   | JOSTENS HOLDING CORP.  |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    |   |   |
|   |                   | Name: |
|   |                   | Title: |
|   |                   |
|   |                   |
|   | FUSION ACQUISITION LLC |
|   |                   |
|   |                   |
|   | By:                    |   |   |
|   | Name:                  |
|   | Title:                 |
|        |                        |  |  |  |  |

 

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