Exibit 2.1
ASSET PURCHASE AGREEMENT
Dated as of April 18, 1997
By and Among
JOSTENS, INC.,
GOLD ▇▇▇▇▇, INC.
and
TOWN & COUNTRY CORPORATION
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April 18,
1997, is by and among Jostens, Inc., a Minnesota corporation (the "Purchaser"),
Gold ▇▇▇▇▇, Inc., a Massachusetts corporation (the "Company"), and Town &
Country Corporation, a Massachusetts corporation ("Parent").
A. The parties hereto wish to provide for the terms and conditions upon
which the Purchaser will acquire certain assets of the Company used in the
manufacture and sale of school, mothers, recognition and other specialty rings
to retail jewelers by the Company in accordance with historic practices (the
"Business") and to assume only certain, limited liabilities associated with the
Business.
B. Because the Company is a wholly-owned subsidiary of Parent, Parent
has an interest to induce Purchaser to enter into this Agreement by making to
Purchaser the representations, warranties, covenants and agreements of Parent
contained herein.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
SECTION
1. PURCHASE OF ASSETS
1.1. Assets to be Purchased. Upon the terms and subject to satisfaction of
all conditions to the obligations of the parties contained herein
(other than such conditions as are waived in accordance with the terms
hereof), as of the First Closing Date the Company hereby agrees to
sell, transfer, convey, assign and deliver to the Purchaser, and the
Purchaser hereby agrees to purchase from the Company, certain of the
assets used by the Company in the Business and as listed on Exhibit
1.1(a)(1) hereto (hereinafter sometimes collectively called the
"Transferred Assets"), free and clear of any mortgage, pledge, lien or
security interest of any kind or nature (whether or not of record).
Prior to the execution of this Agreement, the Company has delivered to
Purchaser written confirmation from any and all holders of security
interests and claims in the Transferred Assets that such security
interests and claims will be released on or prior to the First
Closing. It is expressly understood that certain of the Transferred
Assets sold and transferred to Purchaser as of the First Closing Date
may be left in the temporary possession of the Company for its use
during the term of the Transition Agreement, a copy of which is
attached as Exhibit 1.1. The Transferred Assets include, without
limitation, the assets, rights, contracts and claims as of the First
Closing Date and described in the following paragraphs:
(a) to the extent transferable and including, without limitation, as
listed on Exhibit 1.1(a), all rights and interests of the Company
in and to (i) the "Gold ▇▇▇▇▇" name and all other trademarks,
trade names and service marks and registrations and applications
for such trademarks, trade names and service marks; (ii)
copyrights, and registrations and applications for such
copyrights; (iii) trade secrets, know-how, inventions,
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research, development and manufacturing and other technical
information, whether owned by the Company or licensed from third
parties to the Company used, necessary or required for the
Business, and (iv) the patents, patent applications, patent
rights, inventions, know-how, trade secrets, technology,
proprietary processes and formulae used, necessary or required
for the Business (collectively, "Intellectual Property Rights");
(b) to the extent transferable, all customer and vendor lists and
contracts relating to the Business and all files and documents
(including credit information) relating to such customers and
vendors;
(c) all tools, dies and samples (wherever located) used in the
Business;
(d) to the extent transferable, all rights of the Company under or
pursuant to all warranties, representations and guarantees made
by suppliers, manufacturers and contractors affecting the
Transferred Assets;
(e) the machinery and equipment listed on Exhibit 1.1(e); and
(f) all the assets, rights, contracts and claims in existence as of
July 31, 1997 in all accounts receivable and all notes receivable
from third parties (other than inter-company accounts between the
Company and Parent) arising out of the operation of the Business
by the Company through July 31, 1997, together with any unpaid
interest accrued thereon and any security or collateral therefor,
including recoverable deposits (the "Accounts Receivable"), such
Accounts Receivable to be delivered to the Purchaser at the
Second Closing.
1.2. Excluded Assets. Notwithstanding the foregoing, the Company is not
selling, transferring, conveying, assigning or delivering to the
Purchaser, and the Purchaser is not purchasing from the Company any of
the other assets of the Company (the "Excluded Assets"), including
without limitation:
(a) title to, or the Company's leasehold interests in, or any other
interests in any real property;
(b) title to, or the Company's leasehold interests in, any
furnishings, furniture, office supplies, vehicles, spare parts,
machinery and equipment (except as listed on Exhibit 1.1(e));
(c) title to, or the Company's leasehold interests in, any fixed
assets;
(d) any inventory, including without limitation, raw materials,
work-in-process, finished goods and supplies;
(e) computers and any software embodied in such computers and
communication or data network systems and all other equipment
used to provide support or administrative functions;
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(f) any of the Company's cash, marketable or other securities,
commercial paper and cash equivalents or other investments, on
hand or in bank accounts and all of the Company's bank accounts;
and
(g) all corporate, financial, tax and other records and the Company's
corporate franchise, stock record books, corporate record books
containing minutes of meetings of directors and stockholders and
such other records that relate to the Company's corporate
organization and stock capitalization.
1.3. Assumed Liabilities. The Purchaser agrees to assume only such
liabilities of the Company (the "Assumed Liabilities") as of July 31,
1997 as set forth on an Exhibit 1.3(a) hereto (the "Liabilities
Undertaking"). The Assumed Liabilities are specifically identified and
relate only to such matters as customer orders, warranty obligations,
return obligations and rebate obligations. Each of the Company and
Parent expressly understands and agrees that except for the Assumed
Liabilities as set forth on Exhibit 1.3(a), the Purchaser has not
agreed to pay or assume, will not be required to assume and will have
no liability or obligation, direct or indirect, absolute or contingent
with respect to any liabilities of the Company, contingent or
non-contingent, known or unknown, historical or current or future,
which liabilities will remain the sole responsibility of, and will be
satisfied by, the Company (the "Retained Liabilities"). Retained
Liabilities specifically includes, without limitation, all liabilities
with respect to employees of the Company, ERISA matters, and
environmental matters, and all liabilities of the Company created or
incurred during the term of the Transition Agreement (other than
Assumed Liabilities created or incurred during such period); provided,
however that any liabilities created for the Company during the term
of the Transition Agreement arising or relating from the conduct or
activities of the Purchaser will be Assumed Liabilities. The Company
hereby conveys, transfers and assigns, and the Purchaser hereby
accepts and assumes, as part of the Assumed Liabilities, those
contracts, agreements and commitments listed on the Liabilities
Undertaking to be assumed by the Purchaser (the "Assumed Contracts").
1.4. Purchase Price. The Purchaser hereby agrees to pay, as full payment
for the Transferred Assets, in addition to the Liabilities
Undertaking, the "Purchase Price", which shall consist of the
following:
(a) The One Million Dollars ($1,000,000) previously paid to the
Company on April 3, 1997 as a nonrefundable deposit;
(b) Seven Million Three Hundred Fifteen Thousand Dollars ($7,315,000)
(the "First Closing Date Payment") as of the First Closing Date
to the Company by federal wire transfer in immediately available
funds to a bank account of the Company pursuant to written
instructions of the Company previously given to the Purchaser;
(c) Two Million Dollars ($2,000,000) as of the Second Closing Date
(subject to the adjustments set forth in Section 1.5(a) and (b)
hereto) (the "Second Closing Date Payment") to the Company;
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(d) Five Hundred Thousand Dollars ($500,000) on the Third Closing
Date (subject to the adjustments set forth in Section 1.5(c) and
(d) hereto) (the "Third Closing Date Payment"); and
(e) a contingent payment (the "Contingent Payment") equal to One
Hundred Ten and No/100 Dollars ($110) multiplied by the number
equal to (i) the number of class rings shipped by the Purchaser
to the customers of Gold ▇▇▇▇▇ as of April 18, 1997 and as listed
on Exhibit 1.4(e) during the period from June 1, 1997 through May
31, 1998 minus (ii) 97,500; provided, however, that such number
is a positive number. The Contingent Payment, if any, shall be
payable by federal wire transfer on or before June 30, 1998 in
immediately available funds to a bank account of the Company
pursuant to written instructions of the Company given to the
Purchaser on or before June 25, 1998. The Contingent Payment
shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000). No later than June 10, 1998, the Purchaser shall
calculate the amount of the Contingent Payment pursuant to the
formula in this Section 1.4(e) above and deliver to the Company a
certificate signed by an officer of the Purchaser setting forth
the computation of the Contingent Payment and the information
used in making such computation. The Purchaser agrees to
cooperate with the Company and make available to the Company such
documents, books, records or information relating to the
computation of the Contingent Payment as the Company may
reasonably request. The Purchaser's computation of the Contingent
Payment shall be conclusive and binding upon the parties hereto,
unless, on or prior to June 25, 1998, the Company notifies the
Purchaser in writing (the "Objection Notice") that the Company
disagrees with the Purchaser's computation of the Contingent
Payment. If the parties are unable between themselves to resolve
their differences within ten (10) days of the Purchaser's receipt
of the Objection Notice, the parties shall resolve their
differences pursuant to Section 9.12 hereof.
1.5. The Second Closing Date Payment shall be adjusted based on the
following:
(a) In the event that the aggregate number of class rings shipped to
customers by the Company during March, April May and June 1997 is
less than 29,000, the Second Closing Date Payment shall be
reduced by the amount of One Hundred Ten and No/100 Dollars
($110) multiplied by the difference between 31,000 and the number
of class rings actually shipped to customers by the Company
during that period. The Purchaser agrees that in the event that
the number of class rings shipped to customers by the Company
during March, April, May and June 1997 is greater than 33,000 the
Second Closing Date Payment shall be increased by the amount of
One Hundred Ten and No/100 Dollars ($110) multiplied by the
difference between 31,000 and the number of class rings actually
shipped to customers by the Company during that period.
(b) In the event that prior to June 30, 1997, any customer of the
Business which is listed on Exhibit 1.5(b), advises the Company
that it intends to terminate or reduce its relationship with the
Business due to poor service or quality by the Company, then the
Second Closing Date Payment shall be reduced by the amount of One
Hundred Ten and No/100 Dollars ($110) multiplied (i) by the
number of class rings shipped to such customer during the period
from June 1, 1996 through May 31, 1997 (in the event of the
termination of the relationship) or (ii) by the number of class
rings
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shipped to such customer during the period from June 1, 1996 to
May 31, 1997 multiplied by the percentage by which such customer
has reduced its relationship with the Business (in the event of
a reduction of the relationship).
(c) The Company has budgeted for its fiscal year period ending July
31, 1997 to spend $230,000 during the period of March 1, 1997
through July 31, 1997 on samples and collateral and other
marketing materials related to its post-July 31, 1997 business
needs. The Company agrees not to make any such expenditure
without specific approval by Purchaser. To the extent the Company
generates an operating profit for the period March 1, 1997
through July 31, 1997, the Third Closing Date Payment shall be
reduced by the amount of such operating profits up to but not to
exceed $230,000. Operating profit for purposes of this Section
shall be defined as the Company's earnings before interest and
taxes, but shall not reflect severance costs, bonus payments,
conversion costs with respect to information services, or
consulting cost reimbursements or payments to ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(d) The Company agrees that the Third Closing Date Payment shall be
reduced by up to $300,000 for Purchaser's costs of converting the
Company's order entry and data entry systems, and conversion of
other information services, to the Purchaser's systems. Such
costs shall include the allocable costs of Purchaser's personnel
who work on such conversion, and the costs of any outside
assistance engaged by the Purchaser. The Company agrees to
cooperate with the Purchaser in its conversion efforts, provided,
however, that "Purchaser's costs" as calculated above shall
include any allocable incremental Company costs associated with
Company personnel, which personnel the Company agrees to provide
if available, as reasonably requested by Purchaser, to assist and
facilitate such conversion.
1.6. Allocation of Purchase Price. The Purchase Price shall be allocated
among the Transferred Assets as set forth in Exhibit 1.6 hereto (the
"Allocation Schedule"). In preparing Exhibit 1.6, the parties hereto
have negotiated in good faith the values of the Transferred Assets and
the resulting allocation of the Purchase Price among the various
Transferred Assets; it being understood and agreed that such
determination shall be binding on the Purchaser and the Company only
for the purposes of U.S. Federal, state and local taxation. The
Company and the Purchaser shall file all Tax Returns and tax reports
(including IRS Form 8594) in accordance with and based upon such
allocation and shall take no position in any Tax Return, tax
proceeding or tax audit which is inconsistent with such allocation.
SECTION
2. THE CLOSINGS
2.1. The Closing. The initial closing (the "First Closing") of this
Agreement will take place on April 18, 1997, or such other date as
agreed by the parties hereto (the "First Closing Date"). The First
Closing will be held at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other place as the
parties have agreed, at 2:00 p.m., Massachusetts time or such other
time as the parties have agreed, at which time and place the documents
and instruments necessary or appropriate to effect the transactions
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contemplated herein will be exchanged by the parties. The second
closing (the "Second Closing") shall occur on July 31, 1997 (the
"Second Closing Date"), at which time the Second Closing Date Payment
shall be made, subject to adjustment pursuant to Sections 1.5(a) and
(b). The Third Closing Date Payment shall be made within five (5)
business days after such date that the Company provides financial
statements and information to the Purchaser (the "Third Closing Date")
so they can mutually agree as to any adjustments that must be made
pursuant to Sections 1.5(c) and (d). The Second Closing and the Third
Closing shall be at the same place and time of day as the First
Closing, or at such other place and time as the parties may agree.
2.2. Deliveries of the Company and Parent. The Company and Parent will
deliver the following documents to the Purchaser:
(a) at each Closing, such bills of sale, endorsements, assignments
(together with necessary consents), and other good and sufficient
instruments of conveyance and transfer, in form and substance
reasonably satisfactory to the Purchaser and its counsel, to vest
in the Purchaser valid legal title to the Transferred Assets
being transferred at such Closing, including such releases and
termination statements as may be necessary to transfer (or to
confirm the transfer of) the Transferred Assets free and clear of
all liens;
(b) at the First Closing, duly executed and acknowledged certificates
of amendment to the Company's articles of organization which are
required to change the Company's corporate name so as to make the
Company's present name available for use by the Purchaser;
(c) at the First and Second Closings, the certificates required of
the Company and Parent in accordance with Section 6.8 hereof;
(d) at the First and Second Closings, an opinion of counsel for
Company and Parent in form and substance reasonably satisfactory
to the Purchaser and its counsel in accordance with Section 6.5
hereof;
(e) at each Closing, any other documents reasonably requested by the
Purchaser to confirm the accuracy of the representations and
warranties and the performance of the agreements of the Company
and Parent hereunder;
(f) at the Second Closing, a certificate signed by an officer of the
Company setting forth the adjustments to the Second Closing Date
Payment and the information used in making such computation; and
(g) at the Third Closing, a certificate signed by an officer of the
Company certifying the financial information delivered to the
Purchaser and setting forth the proposed adjustments to the Third
Closing Date Payment and the information used in making such
computation.
2.3. Deliveries of the Purchaser. The Purchaser will deliver the following
documents to the Company and Parent:
(a) at the First Closing, the First Closing Date Payment;
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(b) at the Second Closing, the Second Closing Date Payment;
(c) at the Third Closing, the Third Closing Date Payment;
(d) at the First and Second Closings, the certificate required of the
Purchaser in accordance with Section 7.4 hereof;
(e) at the First and Second Closings, an opinion of counsel of the
Purchaser in form and substance reasonably satisfactory to the
Company and Parent and their counsel in accordance with Section
7.5 hereof;
(f) at each Closing, any other documents reasonably requested by the
Company and Parent to confirm the accuracy of the representations
and warranties and the performance of the agreements of the
Purchaser hereunder; and
(g) at the Second Closing, an Assumption Agreement with respect to
the Assumed Liabilities.
2.4. Effect of First Closing. The transfer of the Transferred Assets
(except for the Accounts Receivable which will be transferred on the
Second Closing Date) shall be deemed complete on the First Closing,
and regardless of any thing that may happen subsequent thereto through
the Third Closing Date, the Purchaser shall have no right to rescind
or terminate this Agreement and shall have no claim to and shall not
be entitled to any reimbursement with respect to any portion of the
Purchase Price that Purchaser has previously paid to the Company;
provided, however, that this Section 2.4 shall in no way prejudice (i)
the Company's, the Parent's or the Purchaser's respective
indemnification rights under Section 8 of this Agreement, (ii) the
Company's and the Parent's rights to receive the balance of the
Purchaser Price due under Section 1.4 of this Agreement or (iii) the
parties' rights to adjust the Second Closing Date Payment or the Third
Closing Date Payment pursuant to Section 1.5 of this Agreement.
SECTION
3. REPRESENTATIONS OF THE COMPANY AND PARENT
The Company and Parent, jointly and severally, hereby represent and
warrant to the Purchaser as follows (as of the date hereof and as of both the
First Closing and the Second Closing):
3.1. Disclosure Schedule. The disclosure schedule marked as Exhibit 3
hereto (the "Disclosure Schedule") is divided into sections which
correspond to the subsections of this Section 3. The Disclosure
Schedule is accurate and complete and the disclosures in any
subsection thereof shall constitute disclosure for purposes of any
other subsection and any other section or subsection of this Agreement
or any exhibit to or other writing which is designated herein as being
part of this Agreement. Prior to the Second Closing Date, the Company
and Parent shall update the Disclosure Schedule to make it accurate as
of that date.
3.2. Corporate Organization. Each of the Company and Parent is a
corporation duly organized, validly existing and in good standing
under the law of the state of its incorporation, has full
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corporate power and authority to carry on its business as it is now
being conducted and to own, lease and operate its properties and
assets, is duly qualified or licensed to do business as a foreign
corporation in good standing in every other jurisdiction in which the
character or location of the properties and assets owned, leased or
operated by it or the conduct of its business requires such
qualification or licensing, except in such jurisdictions in which the
failure to be so qualified or licensed and in good standing would not,
individually or in the aggregate, have a material adverse effect on
its condition (financial or otherwise), working capital, assets,
properties, liabilities, obligations, reserves, businesses, prospects,
goodwill or going concern value, or its ability to enter into this
Agreement and the Transition Agreement and to carry out the
transactions contemplated herein and therein. The Disclosure Schedule
contains a list of all jurisdictions in which the Company is qualified
or licensed to do business, and all jurisdictions in which the Company
is conducting business.
3.3. Capitalization. All issued and outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid and
nonassessable and owned by Parent, free and clear of any proxy,
limitation on voting, lien, security interest, pledge, charge, claim,
option, right to acquire, restriction on transfer or encumbrance of
any nature whatsoever.
3.4. Authorization. Each of the Company and Parent has full corporate power
and authority to enter into this Agreement and the Transition
Agreement and to carry out the transactions contemplated herein and
therein. The Parent, as sole shareholder of the Company, and the Board
of Directors of each of the Company and Parent, have taken all action
required by law, their articles or certificate of organization and
bylaws and otherwise to authorize the execution, delivery and
performance of this Agreement and the Transition Agreement and the
consummation of the transactions contemplated herein and therein. This
Agreement and the Transition Agreement have been duly and validly
executed and delivered by each of the Company and Parent and no other
corporate action is necessary. This Agreement and the Transition
Agreement are valid and binding legal obligations of the Company and
Parent, enforceable against each of the Company and Parent in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of applicability
relating to or affecting creditors' rights and general principles of
equity.
3.5. Non-Contravention. Except as set forth in the Disclosure Schedule, the
execution, delivery and performance of this Agreement and the
Transition Agreement and the consummation of the transactions
contemplated herein and therein will not: (i) violate or be in
conflict with any provision of the articles or certificate of
organization or bylaws of the Company or Parent; or (ii) except for
such violations, conflicts, defaults, accelerations, terminations,
cancellations, impositions of fees or penalties, mortgages, pledges,
liens, security interests, encumbrances, restrictions and charges
which would not, individually or in the aggregate, have a material
adverse effect on the business of Company or Parent and its
subsidiaries taken as a whole, (A) violate, be in conflict with, or
constitute a default, however defined (or an event which, with the
giving of due notice or lapse of time, or both, would constitute such
a default), under, or cause or permit the acceleration of the maturity
of, or give rise to any right of termination, cancellation, imposition
of fees or penalties under, any debt, note, bond, lease, mortgage,
indenture, license, obligation, contract, commitment, franchise,
permit, instrument or other agreement or obligation to which the
Company or Parent is a party or by which the Company or Parent or any
of their respective properties or assets is or may be bound (unless
with respect to which defaults or other rights, requisite waivers or
consents shall have been obtained at or prior to the Closing) or (B)
result in the creation or imposition
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of any mortgage, pledge, lien, security interest, encumbrance,
restriction, adverse claim or charge of any kind, upon any property or
assets of the Company under any debt, obligation, contract, agreement
or commitment to which the Company or Parent is a party or by which
the Company or Parent or any of the Company's or Parent's assets or
properties is or may be bound; or (iii) to the knowledge of the
Company or Parent violate any statute, treaty, law, judgment, writ,
injunction, decision, decree, order, regulation, ordinance or other
similar authoritative matters of any foreign, federal, state or local
governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau,
instrumentality or other authority (hereinafter sometimes separately
referred to as an "Authority" and sometimes collectively as
"Authorities") (sometimes hereinafter separately referred to as a
"Law" and sometimes collectively as "Laws").
3.6. Consents and Approvals. Except as set forth in the Disclosure
Schedule, with respect to the Company and Parent, no consent,
approval, order or authorization of or from, or registration,
notification, declaration or filing with (hereinafter sometimes
separately referred to as a "Consent" and sometimes collectively as
"Consents") any individual or entity, including without limitation any
Authority, is required in connection with the execution, delivery or
performance of this Agreement and the Transition Agreement by the
Company or Parent, the transfer of the Transferred Assets or the
consummation by the Company or Parent of the transactions contemplated
herein and therein.
3.7. Financial Statements. The Company has furnished to the Purchaser the
balance sheets and statements of operations (or income or loss),
changes in shareholders' equity and changes in cash flow (or financial
position) of the Company described on the Disclosure Schedule. The
most recent balance sheet so described is referred to herein as the
"Latest Balance Sheet." Except as disclosed in the Disclosure
Schedule, the aforesaid financial statements (i) are in accordance
with the books and records of the Company and have been prepared in
conformity with generally accepted accounting principles consistently
applied for all periods within the context of the Parent's
consolidated financial statements, which includes the Company as a
division, and (ii) fairly present the financial position of the
Company as of the respective dates thereof, and the results of
operations (or income or loss), changes in shareholders' equity and
changes in cash flow (or financial position) for the periods then
ended, all in accordance with generally accepted accounting principles
consistently applied for all periods within the context of the
Parent's consolidated financial statements, which includes the Company
as a division.
3.8. Absence of Certain Changes. Except as set forth in the Disclosure
Schedule, and except for changes to the Company relating to the First
Closing and as contemplated in the Transition Agreement, since the
date of the Latest Balance Sheet, the Company has owned and operated
its assets, properties and business in the ordinary course of business
and consistent with past practice; without limiting the generality of
the foregoing, the Company has not, to its knowledge, subject to the
aforesaid exceptions:
(a) suffered any adverse change in its condition (financial or
otherwise), working capital, assets, properties,
liabilities, obligations, reserves, businesses, prospects,
goodwill or going concern value or experienced any event
or failed to take any action which reasonably could be
expected to result in such an adverse change;
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(b) suffered any loss, damage, destruction or other casualty
(whether or not covered by insurance) or suffered any loss
of officers, employees, dealers, distributors, independent
contractors, customers, or suppliers or other favorable
business relationships;
(c) acquired or disposed of any assets or properties other than in
the ordinary course of business; and
(d) agreed, whether in writing or otherwise, to take any action
described in this Section 3.8.
3.9. The Transferred Assets. Except as set forth in the Disclosure
Schedule, the Company has good title to all of the Transferred Assets,
free and clear of any mortgage, pledge, lien, security interest,
conditional or installment sales agreement, encumbrance, claim,
easement, right-of-way, tenancy, covenant, encroachment, restriction
or charge of any kind or nature (whether or not of record) (herein
called a "Lien"). The Company has full right and power to, and Parent
is causing the Company to deliver to the Purchaser good title to, or
in the case of any licensed Intellectual Property Rights, the right to
use, all of the Transferred Assets, free and clear of any Lien. The
Company and the Parent will take such action as may be necessary to
assure that no lien attaches to any of the Transferred Assets
temporarily left in the possession of the Company during the
Transition Agreement.
3.10. Accounts Receivables. Except as set forth on the Disclosure Schedule,
(A) the Company has and will have good right, title and interest in
and to all its Accounts Receivable reflected in the Latest Balance
Sheet and those acquired and generated since the date of the Latest
Balance Sheet (except for those paid or otherwise eliminated in the
ordinary course of business since the date of the Latest Balance Sheet
through the Second Closing Date); (B) none of such Accounts Receivable
is or will be subject to any mortgage, pledge, lien or security
interest of any kind or nature (whether or not of record); (C) except
to the extent of applicable reserves shown in the Latest Balance
Sheet, all of the Accounts Receivable owing to the Company constitute
and will constitute valid and enforceable claims arising from bona
fide transactions in the ordinary course of business, and to the
Company's knowledge there are no claims, refusals to pay or other
rights of set-off against any thereof; and (D) the aging schedule of
the Accounts Receivable of the Company delivered to the Purchaser at
the First Closing is complete and accurate and an updated aging
schedule will be delivered at the Second Closing.
3.11. Intellectual Property Rights. The Company owns the Intellectual
Property Rights as described on the Disclosure Schedule, and all such
Intellectual Property Rights are included in the Transferred Assets.
The Intellectual Property Rights used, necessary or required for the
conduct of the Business of the Company as presently conducted do not
and will not infringe or violate or allegedly infringe or violate the
intellectual property rights of any person or entity. Except as
described on the Disclosure Schedule, (i) the Company does not own or
use any Intellectual Property Rights pursuant to any written license
agreement; (ii) the Company has not granted any person or entity any
rights, pursuant to written license agreement or otherwise, to use the
Intellectual Property Rights; and (iii) none of the Intellectual
Property Rights are owned by Parent or any person other than the
Company.
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3.12. Litigation. Except as set forth in the Disclosure Schedule, there is
no legal, administrative, arbitration, or other proceeding, suit,
claim or action of any nature or investigation, review or audit of any
kind (including without limitation a proceeding, suit, claim or
action, or an investigation, review or audit, involving any
environmental Law or matter), judgment, decree, decision, injunction,
writ or order pending, noticed, scheduled or, to the knowledge of the
Company, threatened or contemplated by or against or involving the
Company, its assets, properties or businesses or its directors,
officers, agents or employees (but only in their capacity as such),
whether at law or in equity, before or by any person or entity or
Authority, which would affect the Transferred Assets or the ability of
the Company to fulfill its obligations under the Transition Agreement,
or which questions or challenges the validity of this Agreement and
the Transition Agreement, or any action taken or to be taken by the
parties hereto pursuant to this Agreement, or the Transition Agreement
or in connection with the transactions contemplated herein or therein.
3.13. Assumed Contracts; No Default. True and complete copies (or summaries,
in the case of oral orders) of all Assumed Contracts have been made
available to the Purchaser for review, and as to any Assumed Contracts
which arise between the date hereof and the Second Closing Date will
be made available to Purchaser for review as soon as practicable.
Except as set forth in the Disclosure Schedule, all such items are and
will be valid and enforceable by and against the Company in accordance
with their respective terms; the Company is not and will not be in
material breach, violation or default, however defined, in the
performance of any of its obligations thereunder, and no facts and
circumstances exist which, whether with the giving of due notice,
lapse of time, or both, would constitute such a material breach,
violation or default thereunder or thereof; and, to the Company's
knowledge, no other parties thereto are in a breach, violation or
default, however defined, thereunder or thereof, and no facts or
circumstances exist which, whether with the giving of due notice,
lapse of time, or both, would constitute such a breach, violation or
default thereunder or thereof.
3.14. Orders, Commitments and Returns. Except as set forth in the Disclosure
Schedule, all accepted and unfulfilled orders for the sale of products
and the performance of services entered into by the Company which will
be assumed by the Purchaser as of the Second Closing Date as an
Assumed Liability were or will have been made in bona fide
transactions in the ordinary course of business.
3.15. Dealers , Suppliers and Customers. As of the First Closing, (i) all of
the Company's relationships with those customers set forth on Exhibit
3.15(a) hereto are good commercial working relationships and none of
such customers have given notice to the Company that they are
dissatisfied with the quality of products or service provided by the
Company, and (ii) no customer set forth on Exhibit 3.15(a) hereto has,
to the knowledge of the Company or Parent, a plan or intention to
cancel or otherwise terminate, materially and adversely to the
Business, its relationship with the Company, or materially decrease
its purchase of finished products from the Company. Except as set
forth in the Disclosure Schedule (which, with respect to this Section
3.15, will have no exceptions on the First Closing Date and will be
updated as of June 30, 1997 for the Second Closing), between the First
Closing Date and June 30, 1997, the Company's customers set forth on
Exhibit 3.15(a) hereto have not, and have not notified or advised the
Company that they intend to, due to poor service or quality, (i)
cancel or otherwise terminate their relationship with the Company,
(ii) decrease their purchase of finished products from the Company in
such a manner or to such an extent as to have a material adverse
effect on the Business or (iii) to the knowledge of the Company,
11
indicated that the quality of products or service provided by the
Company has diminished. Except as set forth on the Disclosure
Schedule, if any customer set forth on Exhibit 3.15(a) has terminated
its relationship with the Company or materially decreased its purchase
of finished products from the Company or notified the Company it
intends to do so between the First Closing Date and June 30, 1997 in
such a manner or to such an extent as to have a material adverse
effect on that particular customer account, such termination or
material decrease or notification was not caused by poor quality of
products or service provided by the Company.
The Purchaser acknowledges that (A) in the ordinary course of
business in the Company's industry customers from time to time
entertain or solicit and (B) as a result of the transactions
contemplated by this Agreement or of changes that may be introduced
by the Purchaser in the relationships acquired from the Company or
of the manner in which the Purchaser intends to conduct the
Business acquired from the Company, customers may entertain or
solicit proposals from competing suppliers with respect to the
products presently supplied by the Company. The Company and Parent
shall confirm that the representations in this Section 3.15 are
true and correct as of June 30, 1997 with respect to the
immediately preceding twelve (12) months.
3.16. Permits and Other Operating Rights. Except as set forth in the
Disclosure Schedule, no Consent of any Authority is required to permit
the operation of the Business in the manner in which it presently is
being operated, and all permits and other authorizations from all
Authorities presently required necessary to permit the operation of
the Business in the manner in which it is presently being conducted as
identified on the Disclosure Schedule.
3.17. Assets of Business. The Transferred Assets, together with the Excluded
Assets, constitute all of the assets held for use or used primarily in
connection with the Business and are adequate to carry on the Business
as presently conducted and as contemplated to be conducted by the
Company under the Transition Agreement.
3.18. Accuracy of Information. The representations and warranties of the
Company and Parent in this Agreement and the Disclosure Schedule, when
taken together, do not contain any untrue statement of known material
facts or, to the knowledge of the Company or Parent, any omission of a
material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
It is understood and acknowledged that the Purchaser (i) is a large
established commercial enterprise operating in the same general
industry (though not the same industry segment) as the Company and is
advised by experienced counsel, and (ii) either alone or with its
external advisors has such knowledge and experience in business and
financial matters that it is capable to evaluate the merits and risks
of an acquisition of the Business from the Company.
3.19. Brokers. Except as set forth in the Disclosure Schedule, neither the
Company, Parent nor any of their directors, officers or key employees
have employed any broker, finder or financial advisor, or incurred any
liability for any brokerage fee or commission, finder's fee or
financial advisory fee, in connection with the transactions
contemplated hereby, nor is there any basis known to the Company or
Parent for any such fee or commission to be claimed by any person or
entity.
12
SECTION
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company and Parent as of
the date hereof, and as of the First Closing Date and the Second Closing Date,
as follows:
4.1. Corporate Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the law of the State of
Minnesota.
4.2. Authorization. The Purchaser has full corporate power and authority to
enter into this Agreement and the Transition Agreement and to carry
out the transactions contemplated herein and therein. The Board of
Directors of the Purchaser has taken all action required by law, its
articles of incorporation and bylaws or otherwise to authorize the
execution, delivery and performance of this Agreement and the
Transition Agreement and the consummation of the transactions
contemplated herein and therein. This Agreement and the Transition
Agreement have been duly and validly executed and delivered by the
Purchaser and no other corporate action is necessary. This Agreement
is, and upon execution and delivery, the Transition Agreement will be,
valid and binding legal obligations of the Purchaser enforceable
against it in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of
applicability relating to or affecting creditors' rights and general
principles of equity.
4.3. Non-Contravention. The execution, delivery and performance of this
Agreement and the Transition Agreement and the consummation of the
transactions contemplated herein and therein will not: (i) violate or
be in conflict with any provision of the articles of incorporation or
bylaws of the Purchaser; or (ii) except for such violations,
conflicts, defaults, accelerations, terminations, cancellations,
impositions of fees or penalties, mortgages, pledges, liens, security
interests, encumbrances, restrictions and charges which would not,
individually or in the aggregate, have a material adverse effect on
the business of the Purchaser and its subsidiaries taken as a whole,
(A) violate, be in conflict with, or constitute a default, however
defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to, any right
of termination, cancellation, imposition of fees or penalties under,
any debt, note, bond, lease, mortgage, indenture, license, obligation,
contract, commitment, franchise, permit, instrument or other agreement
or obligation to which the Purchaser or any subsidiary of the
Purchaser is a party or by which they or any of their properties or
assets is or may be bound (unless with respect to which defaults or
other rights, requisite waivers or consents shall have been obtained
at or prior to the Closing) or (B) result in the creation or
imposition of any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind, upon any property or
assets of the Purchaser or any subsidiary of the Purchaser under any
debt, obligation, contract, agreement or commitment to which the
Purchaser or any subsidiary of the Purchaser is a party or by which
the Purchaser or any subsidiary of the Purchaser or any of their
assets or properties is or may be bound; or (iii) to the knowledge of
the Purchaser violate any Law.
4.4. Consents and Approvals. Except for the Consents identified on Exhibit
4.4 hereto, no Consent is required by any person or entity, including
without limitation any Authority, in connection with the execution,
delivery and performance by the Purchaser of this Agreement
13
or the Transition Agreement or the consummation of the transactions
contemplated herein or therein, other than any Consent which, if not
made or obtained, will not, individually or in the aggregate, have a
material adverse effect on the business of the Purchaser and its
subsidiaries taken as a whole.
4.5. Accuracy of Information. No representation or warranty by the
Purchaser in this Agreement contains or will contain any untrue
statement of material fact or omits or will omit to state any material
fact necessary in order to make the statements herein or therein, in
light of the circumstances under which made, not misleading as of the
date of the representation or warranty.
4.6. Brokers. Neither the Purchaser nor any of its directors, officers or
key employees have employed any broker, finder or financial advisor,
or incurred any liability for any brokerage fee or commission,
finder's fee or financial advisory fee, in connection with the
transactions contemplated hereby, nor is there any basis known to the
Purchaser for any such fee or commission to be claimed by any person
or entity.
4.7. Available Financing. Purchaser has available sufficient funds and/or
credit availability to deliver the Purchase Price.
SECTION
5. COVENANTS
5.1. Confidentiality; Non-Compete. Each of the parties hereto agrees that
the existing Confidentiality and Non-Compete Agreements, as attached
hereto as Exhibit 5.1, shall continue in full force and effect. In
addition, the Company and Parent agree that from the Second Closing
Date until July 31, 2002, neither the Company nor Parent will,
directly or indirectly, within the United States, either for their own
benefit or for the benefit of any other person, firm or corporation
whatsoever, (i) directly engage in any commercial activity related to
the sale of class rings, (ii) in any way interfere or attempt to
interfere with the Purchaser's relationships with any of its current
or potential customers with respect to the sale of class rings, or
(iii) employ or attempt to employ any of the Purchaser's then
employees on behalf of any other entity competing with the Purchaser.
The Company and Parent acknowledge that if either one of them breaches
this covenant, the Purchaser will be irreparably and immeasurably
injured. Therefore, the Company and Parent agree that in addition to
any other remedies available to the Purchaser, the Purchaser may apply
to a court of competent jurisdiction for a temporary and/or permanent
injunction and that such court may grant such injunction to restrain
and prohibit such breach by the Company and Parent.
5.2. Filings; Consents; Removal of Objections. Subject to the terms and
conditions herein provided, the parties hereto shall use their best
efforts to take or cause to be taken all actions and do or cause to be
done all things necessary, proper or advisable under applicable Laws
to consummate and make effective, as soon as reasonably practicable,
the transactions contemplated hereby, including without limitation
obtaining all Consents of any person or entity, whether private or
governmental, required in connection with the consummation of the
transactions contemplated herein. In furtherance, and not in
limitation of the foregoing, it is the intent of the parties to
consummate the transactions contemplated herein, and they
14
respectively agree to exert their best efforts to that end, including
without limitation: (i) the removal or satisfaction, if possible, of
any objections to the validity or legality of the transactions
contemplated herein; and (ii) the satisfaction of the conditions to
consummation of the transactions contemplated hereby.
5.3. HSR Act. The Company, the Parent and the Purchaser have each made a
good faith determination that (i) the total purchase price that is
being paid to the Company and Parent in connection with this Agreement
and the transactions contemplated hereby and thereby is less than
$15,000,000 and (ii) the aggregate fair market value of the
transactions contemplated by this Agreement is less than $15,000,000
to the Company and the Parent.. Accordingly, Purchaser has made a good
faith determination that it is not necessary to file any documents
and/or notifications in connection with the transactions contemplated
hereby pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder
(the "HSR Act") with the Federal Trade Commission ("FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust
Division"). It is expressly agreed by the parties hereto that in the
event that the FTC or the Antitrust Division questions, investigates
or challenges the transaction, the Purchaser shall respond as promptly
as practicable to all inquiries from the FTC or the Antitrust Division
in connection therewith, and the Company and Parent shall cooperate
fully with the Purchaser in connection therewith. It is further
expressly agreed by the parties hereto that the obligation to
indemnify the Company and Parent under Section 8.2 of this Agreement
includes any costs, expenses or claims by the FTC and the Antitrust
Division against the Company and Parent arising, directly or
indirectly, in connection with any such questioning, investigation or
challenge to the transaction or the failure to file any documents
and/or notifications under the HSR Act; provided, however, that such
indemnity by the Purchaser shall not apply as to any questioning,
investigation, challenge or claim against the Company or Parent or
Purchaser with respect to any existing order of or agreement with the
FTC or the Antitrust Division, and the Company and Parent shall
indemnify the Purchaser under Section 8.3 of this Agreement for any
costs, expenses or claims against Purchaser for any such questioning,
investigation, challenge or claim.
5.4. Further Assurances; Cooperation; Notification.
(a) Each party hereto shall, before, at and after each Closing,
execute and deliver such instruments and take such other actions
as the other party or parties, as the case may be, may reasonably
require in order to carry out the intent of this Agreement.
(b) At all times from the date hereof until the Second Closing, each
party shall promptly notify the other in writing of the
occurrence of any event which it reasonably believes will or may
result in a failure by such party to satisfy the conditions
specified in Sections 6 and 7 hereof.
5.5. Public Announcements. Prior to the First Closing, none of the parties
hereto shall make any public announcement with respect to the
transactions contemplated herein and no party shall disclose the
existence of this Agreement or the transactions contemplated hereby to
any person except on a "need to know" basis or as required by law.
After the First Closing, each of the parties may make a public
announcement with respect to this Agreement and the transactions
contemplated hereby, and each agrees to discuss with the other parties
in good faith the proposed wording of any such announcement.
15
5.6. Transactional Tax Undertakings.
(a) The parties hereto shall cooperate to make any necessary filings
with state and local taxing authorities and to furnish any
required supplemental information to any state and local tax
liabilities resulting from the consummation of the transactions
contemplated herein.
(b) In the event that any sales or use tax, or any tax in the nature
of a sales or use tax, or any transactional tax is payable or
assessed relative to the acquisition of Acquired Assets, the
Purchaser shall pay all such taxes.
(c) Any and all income, property and other taxes incurred or arising
out of the operation of the Business by the Company under the
Transition Agreement shall be the responsibility of the Company.
5.7. Bulk Transfers. The Company and Parent have requested that the
Purchaser waive, and the Purchaser hereby agrees to waive, the
requirements of the Uniform Commercial Code concerning bulk transfers,
as in effect in the various states in which the Company has assets,
including without limitation the requirement of notice to creditors of
the Company. It is expressly agreed by the parties hereto that the
obligation to indemnify the Purchaser under Section 8.3 includes any
claims by creditors of the Company or Parent or by others against the
Purchaser arising, directly or indirectly, in connection with such
request and waiver.
5.8. Change of Name. Prior to the First Closing, or promptly thereafter as
feasible, the Company shall take such action and make such filings as
are necessary to change its name to a name not similar, in any way, to
"Gold ▇▇▇▇▇." From and after the First Closing, the Company shall not
use in any way the ▇▇▇▇ or name "Gold ▇▇▇▇▇," or any other marks or
names which constitute Intellectual Property Rights, except as
permitted by Section 7 under the Transition Agreement.
SECTION
6. CONDITIONS TO OBLIGATIONS OF THE PURCHASER
Notwithstanding any other provision of this Agreement to the contrary,
the obligation of the Purchaser to effect the transactions contemplated at a
particular Closing shall be subject to the satisfaction at or prior to such
Closing (or waiver by the Purchaser) of each of the following conditions:
6.1. Representations and Warranties True. The representations and
warranties of the Company and Parent contained in this Agreement,
including without limitation in the Disclosure Schedule (and as of the
Second Closing Date, as updated at the Second Closing), shall be in
all material respects true, complete and accurate as of the date when
made and at and as of such Closing as though such representations and
warranties were made at and as of such time, except for changes
specifically permitted or contemplated by this Agreement, and except
insofar as the representations and warranties relate expressly and
solely to a particular date or period, in which case they shall be
true and correct in all material respects at such Closing with respect
to such date or period.
16
6.2. Performance. The Company and Parent shall have performed and complied
in all material respects with all agreements, covenants, obligations
and conditions required by this Agreement and the Transition Agreement
to be performed or complied with by the Company and Parent on or prior
to such Closing.
6.3. Required Approvals and Consents.
(a) All action required by law and otherwise to be taken by
Parent, as the sole shareholder of the Company, and the
Board of Directors of the Company and Parent to authorize
the execution, delivery and performance of this Agreement
and the Transition Agreement and the consummation of the
transactions contemplated hereby and thereby shall have
been duly and validly taken.
(b) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein, and
all Consents of from all persons and entities other than
Authorities that are identified in the Disclosure Schedule
shall have been delivered, made or obtained, and the
Purchaser shall have received copies thereof.
6.4. No Proceeding or Litigation. No suit, action, investigation, inquiry
or other proceeding by any Authority or other person or entity shall
have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby or which, if
successfully asserted, would individually or in the aggregate,
otherwise have a material adverse effect on the Transferred Assets,
the Business, or the conduct of the Business by the Purchaser.
6.5. Opinion of Counsel. The Purchaser shall have received an opinion of
counsel for the Company and Parent of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP,
dated the First or Second Closing Date, as appropriate, in form and
substance reasonably satisfactory to the Purchaser and its counsel.
6.6. Legislation. No Law shall have been enacted which prohibits, restricts
or delays the consummation of the transactions contemplated hereby or
any of the conditions to the consummation of such transaction.
6.7. Acceptance by Counsel to the Purchaser. The form and substance of all
legal matters contemplated hereby and of all papers delivered
hereunder shall be reasonably acceptable to counsel to the Purchaser.
6.8. Certificates. The Purchaser shall have received such certificates of
the Company's and Parent's officers, in a form and substance
reasonably satisfactory to the Purchaser, dated the First or Second
Closing Date, as appropriate, to evidence compliance with the
conditions set forth in this Section 6 and such other matters as may
be reasonably requested by the Purchaser.
6.9. Transition Agreement. The Purchaser shall have received at the First
Closing, from the Company and Parent, an executed Transition Agreement
in the form of Exhibit 1.1 hereto (with only such changes as agreed to
in writing by Purchaser).
6.10. Deliveries of the Company and Parent. The Company and Parent will have
made or caused to be made to the Purchaser delivery of the items set
forth in Section 2.2 hereof.
17
SECTION
7. CONDITIONS TO OBLIGATIONS OF THE COMPANY AND PARENT
Notwithstanding anything in this Agreement to the contrary, the
obligations of the Company and Parent to effect the transactions contemplated
herein shall be subject to the satisfaction at or prior to each Closing (or
waiver by the Company or Parent) of each of the following conditions:
7.1. Representations and Warranties True. The representations and
warranties of the Purchaser contained in this Agreement shall be in
all material respects true, complete and accurate as of the date when
made and at and as of such Closing, as though such representations and
warranties were made at and as of such time, except for changes
permitted or contemplated in this Agreement, and except insofar as the
representations and warranties relate expressly and solely to a
particular date or period, in which case they shall be true and
correct in all material respects at such Closing with respect to such
date or period.
7.2. Performance. The Purchaser shall have performed and complied in all
material respects with all agreements, covenants, obligations and
conditions required by this Agreement and the Transition Agreement to
be performed or complied with by the Purchaser at or prior to such
Closing.
7.3. No Proceeding or Litigation. No suit, action, investigation, inquiry
or other proceeding by any Authority or other person or entity shall
have been instituted or threatened which questions the validity or
legality of the transactions contemplated hereby.
7.4. Certificates. The Purchaser shall have furnished the Company and
Parent with such certificates of the Purchaser's officers, in a form
and substance reasonably acceptable to the Company and Parent, dated
as of the First or Second Closing Date, as appropriate, to evidence
compliance with the conditions set forth in this Section 7 and such
other matters as may be reasonably requested by the Company or Parent.
7.5. Opinion of Counsel. The Purchaser shall have delivered to the Company
an opinion of counsel to the Purchaser, dated the First or Second
Closing Date, as appropriate, in form and substance reasonably
satisfactory to the Company and Parent and their counsel.
7.6. Deliveries of the Purchaser. The Purchaser will have made or caused to
be made to the Company and Parent delivery of the items set forth in
Section 2.3 hereof.
7.7. Acceptance by Counsel. The form and substance of all legal matters
contemplated hereby and of all papers delivered hereunder shall be
reasonably acceptable to ▇▇▇▇▇▇▇, Procter & ▇▇▇▇, LLP, counsel to the
Company and Parent.
18
SECTION
8. SURVIVAL AND INDEMNIFICATION
8.1. Survival. All representations and warranties of the parties contained
in this Agreement will survive the Second Closing Date for a period of
one year, except that the representations and warranties set forth in
Sections 3.4 and 4.2 shall survive without limitation as to time. The
covenants and agreements contained herein and in the exhibits hereto
will survive the Second Closing without limitation as to time unless
the covenant or agreement specifies the term, in which case such
covenant or agreement will survive until the expiration of such
specified term and will thereupon expire. The respective expiration
dates for the survival of the representations and warranties and the
covenants shall be referred to herein as the relevant "Expiration
Date."
8.2. Indemnification by the Purchaser. The Purchaser agrees to promptly
indemnify, defend and hold the Company and Parent and their respective
agents, representatives, employees, officers, directors, shareholders,
controlling persons and affiliates harmless from and against:
(a) any and all loss, liability or damage suffered or incurred by it
arising out of or resulting from (i) any untrue representation
of, or breach of warranty by the Purchaser in any part of this
Agreement or the Transition Agreement or any exhibit hereto,
notice of which is given to the Purchaser prior to the relevant
Expiration Date; (ii) any nonfulfillment of any covenant,
agreement or undertaking of the Purchaser in any part of this
Agreement or the Transition Agreement, notice of which is given
to the Purchaser prior to the relevant Expiration Date; (iii) any
failure to pay and perform Assumed Liabilities; or (iv) any
proceedings, claims, investigations or actions arising under any
or all federal and/or state antitrust laws arising out of or
relating to or based upon the entering into or performance of
this Agreement or any of the transactions contemplated hereby;
provided, however, that Purchaser shall not indemnify the Company
or Parent with respect to any proceedings, claims, investigations
or actions arising from or relating to any existing order of or
agreement with the FTC or the Antitrust Division; and
(b) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal and economic fees and expenses, incident to any
of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof, or in
enforcing the indemnification rights of the Company or Parent
pursuant this Section 8.2.
8.3. Indemnification by the Company and Parent. The Company and Parent,
jointly and severally, agree to promptly indemnify, defend and hold
the Purchaser and its respective agents, representatives,
employees, officers, directors, shareholders, controlling persons
and affiliates harmless from and against:
(a) any and all loss, liability or damage suffered or incurred by the
Purchaser, whether or not involving a third-party claim, arising
out of or resulting from (i) any untrue representation of, or
breach of warranty by the Company or Parent in any part of this
Agreement or any exhibit hereto, notice of which is given to the
Company or Parent prior to the relevant Expiration Date; (ii) any
nonfulfillment of any covenant,
19
agreement or undertaking of the Company or Parent in any part of
this Agreement or the Transition Agreement, notice of which is
given to the Company or Parent prior to the relevant Expiration
Date; (iii) the failure to (A) comply with the requirements of
the Uniform Commercial Code concerning bulk transfers, as in
effect in the various states in which the Company has assets,
including, without limitation, the requirement of notice to
creditors, except that any liability arising out of the
Purchaser's failure to pay and perform the Assumed Liabilities
will not give rise to any liability of the Company and Parent
pursuant hereto; or (B) obtain any clearance certificate or
similar document required by any taxing Authority in order to
relieve the Purchaser of any obligation to withhold any portion
of the Purchase Price or in order to avoid any successor
liability for any taxes; or (iv) any proceedings, claims,
investigations or actions arising from or relating to any
existing order of or agreement with the FTC or the Antitrust
Division or (v) any Retained Liabilities; provided, that the
damages for any claim for a breach of Section 3.15 shall be
calculated pursuant to the formula set forth in Section 1.5(b);
and
(b) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal and economic fees and expenses, incident to any
of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof, or in
enforcing the indemnification rights of the Purchaser pursuant to
this Section 8.3.
It is the intention of the parties that, to the extent the
Purchaser has received the benefit of an adjustment to the
Purchase Price, that there not be indemnification for the matter
causing such Purchase Price adjustment.
8.4. Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the party seeking indemnification (the
"Indemnified Party") shall promptly notify the party from whom
indemnification is sought (the "Indemnifying Party") of the claim
and, when known, the facts constituting the basis for such claim.
In the case of any such claim for indemnification hereunder
resulting from or in connection with any claim or legal
proceedings of a third party, the notice to the Indemnifying
Party shall specify, if known, the amount or an estimate of the
amount of the liability arising therefrom. The Indemnified Party
shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the
prior written consent of the Indemnifying Party, which shall not
be unreasonably withheld. If the Indemnifying Party is of the
opinion that the Indemnified Party is not entitled to
indemnification, or is not entitled to indemnification in the
amount claimed in such notice, it shall deliver, within twenty
(20) days after the receipt of such notice, a written objection
to such claim and written specifications in reasonable detail of
the aspects or details objected to, and the grounds for such
objection. If the Indemnifying Party shall file timely written
notice of objection to any claim for indemnification, the
validity and amount of such claim shall be determined by
arbitration pursuant to Section 9.12 hereof. If timely notice of
a claim is given by the Indemnified Party or if objection is not
delivered or if a claim by an Indemnified Party is admitted in
writing by an Indemnifying Party or if an arbitration award is
made in favor of an Indemnified Party, the Indemnified Party, as
a non-exclusive remedy, shall have the right to set-off the
amount of such claim or award against any amount yet owed,
whether due or to become due, by the Indemnified Party or any
subsidiary thereof under this Agreement or any agreement or
arrangement or contract
20
to be entered into in connection herewith, including without
limitation, any payments under the Escrow Agreement.
SECTION
9. MISCELLANEOUS PROVISIONS
9.1. Expenses. Each of the parties hereto shall bear its own costs, fees
and expenses in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the
Transition Agreement and the consummation of the transactions
contemplated hereby, and thereby, including without limitation fees,
commissions and expenses payable to brokers, finders, investment
bankers, consultants, exchange or transfer agents, attorneys,
accountants and other professionals, whether or not the transactions
contemplated herein are consummated.
9.2. Amendment and Modification. Subject to applicable Law, this Agreement
may be amended or modified by the parties hereto with respect to any
of the terms contained herein; provided, however, that all such
amendments and modifications must be in writing duly executed by all
of the parties hereto.
9.3. Waiver of Compliance; Consents. Any failure of a party to comply with
any obligation, covenant, agreement or condition herein may be
expressly waived in writing by the party entitled hereby to such
compliance, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. No single or partial exercise of a right
or remedy shall preclude any other or further exercise thereof or of
any other right or remedy hereunder. Whenever this Agreement requires
or permits the consent by or on behalf of a party, such consent shall
be given in writing in the same manner as for waivers of compliance.
9.4. No Third Party Beneficiaries. Nothing in this Agreement shall entitle
any person or entity (other than a party hereto and his, her or its
respective successors and assigns permitted hereby) to any claim,
cause of action, remedy or right of any kind.
9.5. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be made in writing and shall be
deemed to have been duly given and effective: (i) on the date of
delivery, if delivered personally; (ii) on the earlier of the third
(3rd) day after mailing or the date of the return receipt
acknowledgment, if mailed, postage prepaid, by certified or registered
mail, return receipt requested; (iii) on the date of transmission, if
sent by facsimile, telecopy, telegraph, telex or other similar
telegraphic communications equipment; or (iv) on the date of delivery
if sent by overnight delivery service:
21
If to the Company or Parent:
To: Gold ▇▇▇▇▇, Inc.
c/o Town & Country Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Co-Chairman and
Acting Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as the Company or Parent shall
furnish to the other parties hereto in writing in accordance with this
subsection.
If to the Purchaser:
To: Jostens, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Jostens, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as the Purchaser shall furnish to
the other parties hereto in writing in accordance with this subsection.
9.6. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned (whether voluntarily, involuntarily, by operation of
law or otherwise) by any of the parties hereto without the prior
written consent of the other parties, provided, however, that the
Purchaser may assign this Agreement, in whole or in any part, and from
time to time, to a wholly-owned, direct or indirect, subsidiary of the
Purchaser, if the Purchaser remains bound hereby.
22
9.7. Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with
the internal substantive laws of the State of Minnesota (without
regard to the laws of conflict that might otherwise apply) as to all
matters, including without limitation matters of validity,
construction, effect, performance and remedies.
9.8. Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
9.9. Headings. The table of contents and the headings of the sections and
subsections of this Agreement are inserted for convenience only and
shall not constitute a part hereof.
9.10. Entire Agreement. The Disclosure Schedule and the exhibits and other
writings referred to in this Agreement or in the Disclosure Schedule
or any such exhibit or other writing are part of this Agreement,
together they embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this
Agreement and together they are referred to as "this Agreement" or
"the Agreement." There are no restrictions, promises, warranties,
agreements, covenants or undertakings, other than those expressly set
forth or referred to in this Agreement. This Agreement supersedes all
prior agreements and understandings between the parties with respect
to the transaction or transactions contemplated by this Agreement.
Provisions of this Agreement shall be interpreted to be valid and
enforceable under applicable Law to the extent that such
interpretation does not materially alter this Agreement; provided,
however, that if any such provision shall become invalid or
unenforceable under applicable Law such provision shall be stricken to
the extent necessary and the remainder of such provisions and the
remainder of this Agreement shall continue in full force and effect.
9.11. Injunctive Relief. It is expressly agreed among the parties hereto
that monetary damages would be inadequate to compensate a party hereto
for any breach by any other party of its covenants and agreements in
Sections 5.1 and 5.2 hereof. Accordingly, the parties agree and
acknowledge that any such violation or threatened violation will cause
irreparable injury to the other and that, in addition to any other
remedies which may be available, such party shall be entitled to
injunctive relief against the threatened breach of Sections 5.1 and
5.2 hereof or the continuation of any such breach without the
necessity or proving actual damages and may seek to specifically
enforce the terms thereof.
9.12. Arbitration. With the sole exception of the injunctive relief
contemplated by Section 9.11 above, any controversy or claim arising
out of or relating to this Agreement, or the making, performance or
interpretation thereof, including without limitation alleged
fraudulent inducement thereof, shall be settled by binding arbitration
in Minneapolis, Minnesota by a panel of three arbitrators in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Judgment upon any arbitration award may be
entered in any court having jurisdiction thereof and the parties
consent to the jurisdiction of the courts of the State of Minnesota
for this purpose.
9.13. List of Defined Terms. Reference is made to Exhibit 9.13 for a listing
and location of terms defined in this Agreement.
23
ACCORDINGLY, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
JOSTENS, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
By: __________________________________
Senior Vice President
Its: __________________________________
GOLD ▇▇▇▇▇, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
By: __________________________________
President
Its: __________________________________
TOWN & COUNTRY CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: __________________________________
Senior Vice President
Its: __________________________________
24
Exhibit 9.13
LIST OF DEFINED TERMS
Term Page
---------
Accounts Receivable.......................................................2
Agreement.................................................................1
Allocation Schedule.......................................................5
Antitrust Division.......................................................15
Assumed Contracts.........................................................3
Assumed Liabilities.......................................................3
Authorities...............................................................9
Authority.................................................................9
Business..................................................................1
Company...................................................................1
Consent...................................................................9
Consents..................................................................9
Contingent Payment........................................................4
Disclosure Schedule.......................................................7
Excluded Assets...........................................................2
Expiration Date..........................................................19
First Closing.............................................................5
First Closing Date........................................................5
First Closing Date Payment................................................3
FTC......................................................................15
HSR Act..................................................................15
Indemnified Party........................................................20
Indemnifying Party.......................................................20
Intellectual Property Rights..............................................2
Latest Balance Sheet......................................................9
Law.......................................................................9
Laws......................................................................9
Liabilities Undertaking...................................................3
Lien.....................................................................10
Objection Notice..........................................................4
Parent....................................................................1
Purchase Price............................................................3
Purchaser.................................................................1
Retained Liabilities......................................................3
Second Closing............................................................6
1
Second Closing Date.......................................................6
Second Closing Date Payment...............................................3
Third Closing Date........................................................6
Third Closing Date Payment................................................4
Transferred Assets........................................................1
2