17,250,000 Shares
JOURNAL COMMUNICATIONS, INC.
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
September 23, 2003
September 23, 2003
Morgan Stanley & Co. Incorporated
Robert W. Baird & Co. Incorporated
Credit Suisse First Boston LLC
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
The Journal Company, a Wisconsin corporation (the "Company"), currently a
wholly owned subsidiary of Journal Communications, Inc., a Wisconsin corporation
("Old Journal"), which will be renamed Journal Communications, Inc. upon
consummation of the Share Exchange (as defined in Section 1 hereunder) pursuant
to which Old Journal will become a wholly owned subsidiary of the Company,
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters"), and the Abert Family Journal Stock Trust (the
"Selling Shareholder") proposes to sell to the several Underwriters, an
aggregate of 17,250,000 shares of the Class A Common Stock, par value $0.01 per
share of the Company (the "Firm Shares"), of which 16,854,000 shares are to be
issued and sold by the Company and 396,000 shares are to be sold by the Selling
Shareholder.
The Company also proposes to issue and sell to the several Underwriters not
more than an additional 2,587,500 shares of its Class A Common Stock, par value
$0.01 per share (the "Additional Shares") if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares." The shares of Class A
Common Stock, par value $0.01 per share, Class B-1 Common Stock, par value $0.01
per share, Class B-2 Common Stock, par value $0.01 per share, and Class C Common
Stock, par value $0.01 per share, of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
"Common Stock." The Company and the Selling Shareholder are hereinafter
sometimes collectively referred to as the "Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
used to confirm sales of Shares is
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hereinafter referred to as the "Prospectus." If the Company has filed an
abbreviated registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement.
1. Representations and Warranties of the Company and Old Journal. Each of
the Company and Old Journal represents and warrants to and agrees with each of
the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the knowledge
of the Company and Old Journal, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iii) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter or its counsel through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation and has filed its most recent required annual report and has
not filed articles of dissolution under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company, Old Journal and their respective subsidiaries, taken
as a whole (the "Journal Enterprise").
(d) Old Journal and each of the Significant Subsidiaries of the
Company and Old Journal (as defined on Schedule 2 attached hereto) each has
been duly incorporated, is validly existing as a corporation in good
standing (which, in the case of a Wisconsin corporation, means that it has
filed its most recent required annual report and has not filed articles of
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dissolution) under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Journal
Enterprise; all of the issued shares of capital stock of each Significant
Subsidiary, and the issued shares of capital stock of the Company as of the
date of this Agreement have been duly and validly authorized and issued,
are fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law), and are owned
directly by the Company or Old Journal, as applicable, free and clear of
all liens, encumbrances, equities or claims.
(e) On the Closing Date (as defined below) and immediately prior to
the sale of the Firm Shares to the Underwriters in accordance with Section
5 hereof: (i) Old Journal will have effected a share exchange with the
Company, substantially as contemplated by the Registration Statement, the
Prospectus and the Company's registration statement on Form S-4 (File No.
333-105209) and the joint proxy statement/prospectus included therein, as
mailed to shareholders of Old Journal on or about July 28, 2003, pursuant
to which Old Journal will become a wholly owned subsidiary of the Company
(the "Share Exchange"); (ii) pursuant to the Shareholders Agreement, dated
May 12, 2003, by and among Matex, Inc. and the Selling Shareholder
(together, the "Grant Family Shareholders"), Old Journal and the Company
(the "Shareholders Agreement"), the Company will have effected an exchange
with the Grant Family Shareholders of 3,588,000 shares of Class B Common
Stock for 3,264,000 shares of Class C Common Stock; and (iii) all of the
issued shares of capital stock of Old Journal will have been duly and
validly authorized and issued, will be fully paid and non-assessable
(except as provided in Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law), and will be owned directly by the Company, free and clear
of all liens, encumbrances, equities or claims.
(f) This Agreement has been duly authorized, executed and delivered by
the Company and Old Journal.
(g) The authorized capital stock of the Company as of the Closing Date
will conform as to legal matters to the description thereof contained in
the Prospectus.
(h) Upon consummation of the Share Exchange and consummation of the
exchange with the Grant Family Shareholders of Class B Common Stock for
Class C Common Stock and prior to the sale of the Shares to the
Underwriters pursuant to Section 2 hereof: (i) the Company will not have
any shares of capital stock outstanding other than the shares issued in the
Share Exchange and pursuant to the Shareholders Agreement; and (ii) all of
the shares of Common Stock issued in the Share Exchange and pursuant to the
Shareholders Agreement have been duly authorized and will have been
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validly issued, fully paid and non-assessable (except as provided in
Section 180.0622(2)(b) of the Wisconsin Business Corporation Law).
(i) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law), and the issuance
of such Shares will not be subject to any preemptive or similar rights.
(j) The execution and delivery by each of the Company and Old Journal
of, and the performance by each of the Company and Old Journal of their
respective obligations under, this Agreement will not contravene any
provision of applicable law or the articles of incorporation or by-laws of
the Company or Old Journal or any agreement or other instrument binding
upon the Company, Old Journal, or any of their respective subsidiaries that
is material to the Journal Enterprise, or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the
Company, Old Journal or any of their respective subsidiaries, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
or Old Journal of their respective obligations under this Agreement, except
such as may have previously been obtained or may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Journal Enterprise from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement).
(l) There are no legal or governmental proceedings pending or, to the
knowledge of the Company and Old Journal, threatened to which the Company,
Old Journal or any of their respective subsidiaries is a party or to which
any of the properties of the Company, Old Journal or any of their
respective subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
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(n) Neither the Company nor Old Journal is, and, after giving effect
to the offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, neither the Company nor Old Journal
will be, required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(o) The Company, Old Journal and their respective subsidiaries (i) are
in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the Journal
Enterprise.
(p) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Journal Enterprise.
(q) Except for rights that have been described in the Prospectus,
there are no contracts, agreements or understandings between the Company or
Old Journal and any person granting such person the right to require the
Company or Old Journal to file a registration statement under the
Securities Act with respect to any securities of the Company or Old Journal
or to require the Company or Old Journal to include such securities with
the Shares registered pursuant to the Registration Statement.
(r) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) neither the
Company nor Old Journal nor any of their respective subsidiaries has
incurred any material liability or obligation, direct or contingent, or
entered into any material transaction not in the ordinary course of
business; (ii) neither the Company nor Old Journal has purchased any of its
outstanding capital stock, or declared, paid or otherwise made any dividend
or distribution of any kind on its capital stock other than ordinary and
customary dividends; and (iii) there has not been any material change in
the capital stock, short-term debt or long-term debt of either the Company
and its consolidated subsidiaries or Old Journal and its consolidated
subsidiaries, except in each case as described in the Prospectus.
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(s) The Company, Old Journal and their respective subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material
to the business of the Journal Enterprise, in each case free and clear of
all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company, Old Journal and their respective subsidiaries; and
any real property and buildings held under lease by the Company, Old
Journal and their respective subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property and buildings by the Company, Old Journal and their respective
subsidiaries, in each case except as described in the Prospectus.
(t) The Company, Old Journal and their respective subsidiaries own or
possess, or can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade
names currently employed by them in connection with the business now
operated by them, and neither the Company nor Old Journal nor any of their
respective subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the Journal Enterprise.
(u) No material labor dispute with the employees of the Company, Old
Journal or any of their respective subsidiaries exists or, to the knowledge
of the Company or Old Journal, is imminent; and neither the Company nor Old
Journal is aware of any existing, threatened or imminent labor disturbance
by the employees of any of its principal suppliers, manufacturers or
contractors that could have a material adverse effect on the Journal
Enterprise.
(v) The Company, Old Journal and their respective subsidiaries are
insured by the insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor Old Journal
nor any of their respective subsidiaries has been refused any insurance
coverage sought or applied for; and neither the Company nor Old Journal nor
any of their respective subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a
material adverse effect on the Journal Enterprise.
(w) The Company, Old Journal and their respective subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
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federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor Old Journal nor any of
their respective subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a material
adverse effect on the Journal Enterprise.
(x) All licenses (the "FCC Licenses") issued by the Federal
Communications Commission ("FCC") required for the operation of the
businesses of the Company, Old Journal and their respective subsidiaries
are in full force and effect, and there are no proceedings pending or, to
the knowledge of the Company and Old Journal, threatened against the
Company, Old Journal or any of their respective subsidiaries before or by
the FCC or any court having jurisdiction over the matter relating to the
modification, amendment, invalidity or revocation of any FCC
authorizations, approvals, consents, orders, licenses, certificates and
permits which would have a material adverse effect on the Journal
Enterprise. All fees due and payable to governmental authorities pursuant
to the rules governing FCC Licenses have been paid and no event has
occurred with respect to the FCC Licenses held by the Company, Old Journal
and their respective subsidiaries which, with the giving of notice or the
lapse of time or both, would constitute grounds for revocation thereof.
Each of the Company, Old Journal and their respective subsidiaries is in
compliance in all material respects with the terms of the FCC Licenses, as
applicable, and there is no condition, event or occurrence existing, nor is
there any proceeding being conducted of which the Company or Old Journal
has received notice, nor, to the Company's or Old Journal's knowledge, is
there any proceeding threatened, by any governmental authority, which would
cause the termination, suspension, cancellation or nonrenewal of any of the
FCC Licenses, or the imposition of any penalty or fine by any regulatory
authority. No registration, filing, application, notice, transfer, consent,
approval, audit, qualification, waiver or other action of any kind is
required by virtue of the execution and delivery of this Agreement or of
the issuance and sale under this Agreement by the Company of the Shares,
other than as previously obtained from the FCC (a) to avoid the loss of any
such license, permit, consent, concession or other authorization or any
asset, property or right pursuant to the terms thereof, or the violation or
breach of any applicable law thereto or (b) to enable the Company, Old
Journal or any of their respective subsidiaries to hold and enjoy the same
after the Closing Date in the conduct of its businesses as conducted prior
to the Closing Date.
(y) The Company, Old Journal and each of their respective subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with
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management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(z) The Shares have been approved for listing on the New York Stock
Exchange, Inc., subject to notice of issuance, and, at the Closing Date and
the Option Closing Date (as defined in Section 3 hereunder), the Shares
listed at or prior to the time of delivery on such closing date will be
listed thereon.
2. Representations and Warranties of the Selling Shareholder. The Selling
Shareholder represents and warrants to and agrees with each of the Underwriters
that:
(a) This Agreement has been duly authorized, executed and delivered by
or on behalf of the Selling Shareholder.
(b) The execution and delivery by the Selling Shareholder of, and the
performance by the Selling Shareholder of its obligations under, this
Agreement, the Custody Agreement signed by the Selling Shareholder and
Morgan Stanley & Co. Incorporated, as Custodian, relating to the deposit of
the Shares to be sold by the Selling Shareholder (the "Custody Agreement")
and the Power of Attorney appointing certain individuals as
attorneys-in-fact to the extent set forth therein, relating to the
transactions contemplated hereby and by the Registration Statement (the
"Power of Attorney") will not contravene any provision of applicable law,
or the trust agreement governing the Selling Shareholder, or any agreement
or other instrument binding upon the Selling Shareholder or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Selling Shareholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Selling Shareholder of its
obligations under this Agreement or the Custody Agreement or Power of
Attorney of the Selling Shareholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares.
(c) The Selling Shareholder has, and on the Closing Date will have,
valid title to, or a valid "security entitlement" within the meaning of
Section 8-501 of the New York Uniform Commercial Code in respect of (x) the
shares of common stock of Old Journal that will, on the Closing Date,
automatically exchange into shares of Class B Common Stock pursuant to the
Plan of Share Exchange and then that will automatically convert into shares
of Class A Common Stock pursuant to the Company's articles of
incorporation, and (y) the Shares, respectively, to be sold by the Selling
Shareholder free and clear of all security interests, claims, liens,
equities or other encumbrances and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement,
the Custody Agreement and the Power of Attorney and to sell, transfer and
deliver the Shares to be sold by the Selling Shareholder or a security
entitlement in respect of such Shares.
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(d) The Custody Agreement and the Power of Attorney have been duly
authorized, executed and delivered by the Selling Shareholder and are valid
and binding agreements of the Selling Shareholder.
(e) Delivery of the Shares to be sold by the Selling Shareholder and
payment thereof pursuant to this Agreement will pass valid title to such
Shares, free and clear of any adverse claim within the meaning of Section
8-102 of the New York Uniform Commercial Code, to each Underwriter who has
purchased such Shares without notice of an adverse claim.
(f) The Selling Shareholder has no reason to believe that the
representations and warranties of the Company contained in Section 1 are
not true and correct and has no knowledge of any material fact, condition
or information not disclosed in the Prospectus that has had, or may have, a
material adverse effect on the Journal Enterprise. The Selling Shareholder
is not prompted by any material information concerning the Company, Old
Journal or their respective subsidiaries which is not set forth in the
Prospectus to sell its Shares pursuant to this Agreement.
(g) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (ii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided that the representations and warranties set
forth in this paragraph 2(g) are limited to statements or omissions made in
reliance upon information relating to the Selling Shareholder furnished to
the Company in writing by the Selling Shareholder expressly for use in the
Registration Statement, the Prospectus or any amendments or supplements
thereto.
3. Agreements to Sell and Purchase. Each Seller, severally and not jointly,
hereby agrees to sell to the several Underwriters, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from such Seller at $13.95 a share (the "Purchase Price") the number of
Firm Shares (subject to such adjustments to eliminate fractional shares as you
may determine) that bears the same proportion to the number of Firm Shares to be
sold by such Seller as the number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have the
right to purchase, severally and not jointly, up to 2,587,500 Additional Shares
at the Purchase Price. You may exercise this right on behalf of the Underwriters
in whole or from
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time to time in part by giving written notice of each election to exercise the
option not later than 30 days after the date of this Agreement. Any exercise
notice shall specify the number of Additional Shares to be purchased by the
Underwriters and the date on which such shares are to be purchased. Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the Closing Date for the Firm Shares nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 5 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. On each
day, if any, that Additional Shares are to be purchased (an "Option Closing
Date"), each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased on such Option Closing Date as the number
of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 180 days after the date of the Prospectus, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, or file any
registration statement with the Commission relating to the offering of, any
shares of Class A Common Stock or any securities convertible into or exercisable
or exchangeable for Class A Common Stock, except for (A) transfers of shares of
Common Stock to the beneficiaries of the Selling Shareholder upon termination of
the Selling Shareholder or to Family Successors (as such term is defined in the
Company's articles of incorporation); provided that the beneficiaries thereof
(or trustees of trusts formed by the beneficiaries thereof) or such Family
Successors, as the case may be, agree to be bound in writing by the restrictions
set forth herein; and (B) registration statements on Form S-8 in connection with
securities to be issued under the Company's 2003 Employee Stock Purchase Plan
and the Company's 2003 Equity Incentive Plan or registration statements covering
the resale of shares of Class B Common Stock held by affiliates of the Company,
or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Class A
Common Stock, whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of Class A Common Stock or such other securities,
in cash or otherwise. Notwithstanding the foregoing, if the 180th day after the
date of the Prospectus occurs within 18 days after an earnings release by the
Company, or if the Company intends to issue an earnings release within 15 days
following the 180th day, the 180-day period will be extended to the 18th day
following such earnings release unless such extension is waived by Morgan
Stanley & Co. Incorporated on behalf of the Underwriters.
The restrictions contained in the preceding paragraph shall not apply to
(i) the Shares to be sold hereunder, (ii) the issuance of Class B Common Stock
or the grant of options to purchase Class B Common Stock under the Company's
2003 Employee Stock Purchase Plan and/or the Company's 2003 Equity Incentive
Plan, (iii) the purchase and cancellation of shares of Class B Common Stock by
the Company in
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the tender offer described in the Prospectus; (iv) any automatic conversion of
any shares of Class B Common Stock into shares of Class A Common Stock pursuant
to the Company's articles of incorporation and (v) the voluntary share exchange
of shares of Class B Common Stock into shares of Class C Common Stock by the
Grant Family Shareholders pursuant to the Shareholders Agreement.
In addition, the Selling Shareholder agrees that, without the prior written
consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending 180 days after the date of the Prospectus,
make any demand for, or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$15.00 a share (the "Public Offering Price") and to certain dealers selected by
you at a price that represents a concession not in excess of $0.68 a share under
the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on September 29, 2003, or at such other time on the same or such other
date, not later than October 6, 2003, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "Closing
Date."
Payment for any Additional Shares shall be made to the Company in Federal
or other funds immediately available in New York City against delivery of such
Additional Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the corresponding
notice described in Section 3 or at such other time on the same or on such other
date, in any event not later than October 29, 2003, as shall be designated in
writing by you.
The Firm Shares and Additional Shares shall be registered in such names and
in such denominations as you shall request in writing not later than two full
business days prior to the Closing Date or the applicable Option Closing Date,
as the case may be. The Firm Shares and Additional Shares shall be delivered to
you on the Closing Date or an Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Firm Shares and any Additional Shares to the Underwriters
and the several obligations of the Underwriters to purchase and pay for the Firm
Shares and any Additional Shares on the Closing Date are subject to the
condition that the
12
Registration Statement shall have become effective not later than 4:00 p.m. (New
York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's or
Old Journal's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Journal
Enterprise from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate of the Company and Old Journal, dated the Closing Date and
signed by an executive officer of the Company and Old Journal, to the
effect (i) set forth in Section 6(a)(i) above, (ii) that no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before, or to the best of
such officer's knowledge, threatened by, the Commission, (iii) that the
representations and warranties of the Company and Old Journal contained in
this Agreement are true and correct as of the Closing Date and (iv) that
the Company and Old Journal have complied in all material respects with all
of the agreements and satisfied in all material respects all of the
conditions on their respective parts to be performed or satisfied hereunder
on or before the Closing Date. The officer signing and delivering such
certificate may rely upon the best of his or her knowledge as to
proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Foley & Lardner, outside counsel for the Company and Old
Journal, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation and has filed its most recent required annual report
and has not filed articles of dissolution under the laws of the
jurisdiction of incorporation, has the corporate power and authority
to
13
own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Journal
Enterprise;
(ii) Old Journal is validly existing as a corporation and has
filed its most recent required annual report and has not filed
articles of dissolution under the laws of the jurisdiction of
incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Journal
Enterprise;
(iii) each Significant Subsidiary is validly existing as a
corporation in good standing (which, in the case of a Wisconsin
corporation, means that it has filed its most recent required annual
report and has not filed articles of dissolution) under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Journal Enterprise;
(iv) the Company and Old Journal have effected the Share
Exchange;
(v) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(vi) except for the shares of Common Stock issued in the Share
Exchange and to the Grant Family Shareholders pursuant to the
Shareholders Agreement, the Company does not have any shares of
capital stock outstanding; all of the shares of Common Stock issued in
the Share Exchange and to the Grant Family Shareholders pursuant to
the Shareholders Agreement have been duly authorized and are validly
issued, fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law);
(vii) all of the issued shares of capital stock of Old Journal
have been duly and validly authorized and issued, are fully paid and
non-assessable (except as provided in Section 180.0622(2)(b) of the
14
Wisconsin Business Corporation Law), and after the consummation of the
Share Exchange will be owned directly by the Company, free and clear
of all liens, encumbrances, equities or claims;
(viii) all of the issued shares of capital stock of Journal
Sentinel Inc. have been duly and validly authorized and issued, are
fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law) and are
owned directly by the Company or Old Journal, free and clear of any
perfected security interest and, to such counsel's knowledge after due
inquiry, any other liens, encumbrances, equities or claims;
(ix) all of the issued shares of capital stock of Journal
Broadcast Corporation have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly by
the Company or Old Journal, free and clear of any perfected security
interest and, to such counsel's knowledge after due inquiry, any other
liens, encumbrances, equities or claims;
(x) all of the issued shares of capital stock of Add Inc., IPC
Print Services, Inc., and Norlight Telecommunications, Inc. are owned
directly by the Company or Old Journal, free and clear of any
perfected security interest and, to such counsel's knowledge after due
inquiry, any other liens, encumbrances, equities or claims;
(xi) all of the issued shares of capital stock of NorthStar Print
Group, Inc. are owned directly by the Company or Old Journal, free and
clear of any perfected security interest and, to such counsel's
knowledge after due inquiry, any other liens, encumbrances, equities
or claims;
(xii) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable (except as provided in
Section 180.0622(2)(b) of the Wisconsin Business Corporation Law), and
the issuance of such Shares will not be subject to any preemptive or
similar rights;
(xiii) this Agreement has been duly authorized, executed and
delivered by the Company and Old Journal;
(xiv) the execution and delivery by each of the Company and Old
Journal of, and the performance by each of the Company and Old Journal
of their respective obligations under, this Agreement will not
contravene any provision of federal or Wisconsin law or of the
articles of incorporation or by-laws of the Company or Old Journal or
any agreement or other instrument filed or incorporated by reference
as an exhibit to the Registration Statement, or, to the best of such
counsel's knowledge, any judgment, order or decree of any
15
governmental body, agency or court having jurisdiction over the
Company, Old Journal or any of their respective subsidiaries, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company or Old Journal of their respective obligations under this
Agreement, except such as may have previously been obtained or may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares;
(xv) the statements relating to legal matters, documents or
proceedings included in the Prospectus under the captions
"Business-Legal Proceedings," "JESTA and Employee Ownership," "The
Share Exchange and the Tender Offer," "Certain Relationships and
Related Transactions," "Description of Capital Stock," "Description of
Indebtedness," and "Shares Eligible for Future Sale" and the
Registration Statement in Items 14 and 15, in each case fairly
summarize in all material respects such matters, documents or
proceedings;
(xvi) the statements made in the Prospectus under the caption
"U.S. Federal Tax Consequences," insofar as they purport to constitute
summaries of matters of United States federal tax law and regulations
or legal conclusions with respect thereto, constitute accurate
summaries of the matters described therein in all material respects;
(xvii) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the
Company, Old Journal or any of their respective subsidiaries is a
party or to which any of the properties of the Company, Old Journal or
any of their respective subsidiaries is subject that are required to
be described in the Registration Statement or the Prospectus and are
not so described or of any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
(xviii) neither the Company nor Old Journal is, and, after giving
effect to the offering and sale of the Shares and the application of
the proceeds thereof as described in the Prospectus, neither the
Company nor Old Journal will be, required to register as an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended; and
(xix) nothing has come to the attention of such counsel that
causes such counsel to believe that the Registration Statement or the
Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included therein,
as to which such counsel need not express any belief) do not comply as
16
to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the
Commission thereunder, the Registration Statement or the prospectus
included therein (except for the financial statements and financial
schedules and other financial and statistical data included therein,
as to which such counsel need not express any belief) at the time the
Registration Statement became effective contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or the Prospectus (except for the financial statements and
financial schedules and other financial and statistical data included
therein, as to which such counsel need not express any belief) as of
its date or as of the Closing Date contained or contains an untrue
statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Hogan & Hartson L.L.P., special counsel for the Company and Old
Journal, dated the Closing Date, to the effect that:
(i) the statements relating to legal matters, documents or
proceedings included in the Prospectus under the captions
"Business-Regulation", in each case fairly summarize in all material
respects such matters, documents or proceedings;
(e) The Underwriters shall have received on the Closing Date an
opinion of Meissner Tierney Fisher & Nichols S.C., counsel for the Selling
Shareholder, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Shareholder;
(ii) the execution and delivery by the Selling Shareholder of,
and the performance by the Selling Shareholder of its obligations
under, this Agreement and the Custody Agreement and Power of Attorney
of the Selling Shareholder will not violate any provision of
applicable statutory law or regulations (provided that the
enforceability of Section 9 hereof may be limited by considerations of
public policy), or the trust agreement governing the Selling
Shareholder, or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Selling Shareholder or,
to the best of such counsel's knowledge, any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required
for the performance by the Selling Shareholder of its obligations
under this Agreement or the Custody Agreement or Power of Attorney of
the Selling Shareholder, except such as may be
17
required by the Securities Act or the securities or Blue Sky laws of
the various states in connection with offer and sale of the Shares;
(iii) the Selling Shareholder has valid title to, or a valid
security entitlement in respect of, the Shares to be sold by the
Selling Shareholder and, to such counsel's knowledge, such Shares are
free and clear of all security interests, claims, liens, equities and
other encumbrances, and the Selling Shareholder has the legal right
and power (except as limited by Section 701.19(1) of the Wisconsin
Statutes; however, there is no provision in the creating instrument,
in the court order appointing the trustee or a subsequent order
limiting the power of the trustee of the Selling Shareholder to sell
the Shares as contemplated by this Agreement), and all authorization
and approval required by law, to enter into this Agreement and the
Custody Agreement and Power of Attorney of the Selling Shareholder and
to sell, transfer and deliver the Shares to be sold by the Selling
Shareholder or a security entitlement in respect of such Shares;
(iv) the Custody Agreement and the Power of Attorney of the
Selling Shareholder have been duly authorized, executed and delivered
by the Selling Shareholder and are valid and binding agreements of the
Selling Shareholder;
(v) delivery of stock certificates representing the Shares to be
sold by the Selling Shareholder endorsed to the Underwriters and
payment therefor pursuant to this Agreement will pass valid title to
such Shares, and to such counsel's knowledge, such Shares will be free
and clear of any adverse claim within the meaning of Section 8-102 of
the New York Uniform Commercial Code, to each Underwriter who has
purchased such Shares without notice of an adverse claim; and
(vi) nothing has come to the attention of such counsel that
causes such counsel to believe that the Registration Statement (except
for the financial statements and financial schedules and other
financial and statistical data included therein, as to which such
counsel need not express any belief) at the time the Registration
Statement became effective contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or the
Prospectus (except for the financial statements and financial
schedules and other financial and statistical data included therein,
as to which such counsel need not express any belief) as of its date
or as of the Closing Date contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided
that the foregoing relates only to statements or omissions in the
Registration Statement or the Prospectus which are based upon
information
18
relating to the Selling Shareholder furnished in writing by or on
behalf of the Selling Shareholder expressly for use in the
Registration Statement, the Prospectus or any amendments or
supplements thereto.
(f) The Underwriters shall have received on the Closing Date an
opinion and statement of Simpson Thacher & Bartlett LLP, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
Sections 6(c)(xii), 6(c)(xiii), 6(c)(xv) (but only as to the statements in
the Prospectus under "Description of Capital Stock") and 6(c)(xix) above.
With respect to Section 6(c)(xix) above, Foley & Lardner and Simpson
Thacher & Bartlett LLP, and with respect to Section 6(e)(vi) above,
Meissner Tierney Fisher & Nichols S.C. may state that their beliefs are
based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
The opinions of Foley & Lardner, Hogan & Hartson L.L.P. and Meissner
Tierney Fisher & Nichols S.C. described in Sections 6(c), 6(d) and 6(e)
above shall be rendered to the Underwriters at the request of the Company
or the Selling Shareholder, as the case may be, and shall so state therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Ernst & Young LLP, independent auditors, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(h) Old Journal shall have effected the Share Exchange with the
Company.
(i) The Company and Old Journal shall have obtained all consents,
authorizations or approvals under any agreement, contract or other
instrument binding upon Old Journal requiring a consent, authorization or
approval as a result of the Share Exchange, except such consents,
authorizations or approvals the failure to obtain which would not, singly
or in the aggregate, have a material adverse effect on the Journal
Enterprise.
(j) Prior to the date hereof, the Underwriters shall have received
from each of the beneficiaries of the Selling Shareholder (or trustees of
trusts formed by the beneficiaries thereof) an executed Lock-Up Agreement
in substantially in the form of Exhibit A.
19
The several obligations of the Underwriters to purchase and pay for
Additional Shares hereunder on an Option Closing Date are subject to the
delivery to you on the applicable Option Closing Date of such documents as you
may reasonably request with respect to the good standing of the Company and its
subsidiaries, the due authorization and issuance of the Additional Shares to be
sold on such Option Closing Date and other matters related to the issuance of
such Additional Shares.
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, one signed copy of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m., New York City time, on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 7(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the
Prospectus is required by law to be delivered in connection with sales by
an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
20
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending September 26, 2004 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) To take all necessary action to effect the Share Exchange on the
Closing Date and prior to the sale of the Shares to the Underwriters
pursuant to Section 2 hereof.
8. Expenses. Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, the Company agrees to pay or
cause to be paid all expenses incident to the performance of the Sellers'
obligations under this Agreement (except for the fees, disbursements and
expenses of the counsel for the Selling Shareholder in connection with the
registration and delivery of the Shares under the Securities Act, which shall be
paid by the Selling Shareholder), including: (i) the fees, disbursements and
expenses of the counsel for the Company and Old Journal and the Company's
accountants in connection with the registration and delivery of the Shares under
the Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating to the
Common Stock and all costs and expenses incident to listing the Shares on the
New York Stock Exchange, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, (ix) the
document production charges and expenses associated with printing this
Agreement, (x) all expenses in connection with any offer and sale of the Shares
outside of the United States, including filing fees and the reasonable fees and
disbursements of counsel for
21
the Underwriters in connection with offers and sales outside of the United
States and (xi) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise made
in this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution," and the last paragraph
of Section 11 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Indemnity and Contribution. (a) (i) The Company and Old Journal, jointly
and severally, agree to indemnify and hold harmless each Underwriter, each
person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and each affiliate of any Underwriter
within the meaning of Rule 405 under the Securities Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company or Old Journal shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company or Old Journal in writing
by such Underwriter through you expressly for use therein.
(ii) The Company and Old Journal, jointly and severally, agree to indemnify
and hold harmless the Selling Shareholder, each person, if any, who controls the
Selling Shareholder within the meaning of either Section 15 of the Securities
Act, or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Selling
Shareholder furnished to the Company in writing by the Selling Shareholder
expressly for use therein.
22
(b) The Selling Shareholder agrees to indemnify and hold harmless the
Company, the directors of the Company and the officers of the Company who
sign the Registration Statement, Old Journal, the directors of Old Journal
and the officers of Old Journal who sign the Registration Statement, each
person, if any, who controls the Company or Old Journal within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange
Act and each affiliate of any Underwriter within the meaning of Rule 405
under the Securities Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended
or supplemented if the Company or Old Journal shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the indemnity provided by this Section 9(b) shall only apply to
information relating to the Selling Shareholder furnished in writing to the
Company or Old Journal by or on behalf of the Selling Shareholder expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto. The liability of the
Selling Shareholder under the indemnity agreement contained in this
paragraph shall be limited to an amount equal to the aggregate Public
Offering Price of the Shares sold by the Selling Shareholder under this
Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, Old Journal, the Selling Shareholder, the
directors of the Company, the directors of Old Journal, the officers of the
Company who sign the Registration Statement, the officers of Old Journal
who sign the Registration Statement and each person, if any, who controls
the Company, Old Journal or the Selling Shareholder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company or Old Journal shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to information relating to such Underwriter furnished to the
Company or Old Journal in writing by such Underwriter through you or your
counsel expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
23
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to Section 9(a), 9(b) or 9(c), such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the reasonable fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for (i) the fees and expenses of more
than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act or who are affiliates of any Underwriter within the meaning of
Rule 405 under the Securities Act, (ii) the fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, Old
Journal, the directors of the Company, the directors of Old Journal, the
officers of the Company who sign the Registration Statement, the officers
of Old Journal who sign the Registration Statement and each person, if any,
who controls the Company or Old Journal within the meaning of either such
Section and (iii) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Selling Shareholder and all persons,
if any, who control the Selling Shareholder within the meaning of either
such Section, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the
Underwriters and such control persons and affiliates of any Underwriters,
such firm shall be designated in writing by Morgan Stanley & Co.
Incorporated. In the case of any such separate firm for the Company or Old
Journal, and such directors, officers and control persons of the Company or
Old Journal, such firm shall be designated in writing by the Company or Old
Journal, respectively. In the case of any such separate firm for the
Selling Shareholder and such control persons of the Selling Shareholder,
such firm shall be designated in writing by the persons named as
attorney-in-fact for the Selling Shareholder under the Power of Attorney.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party
24
shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause 9(e)(i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
9(e)(i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers and
Old Journal on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by each Seller (or which would
be received by Old Journal and the Selling Shareholder) and the total
underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate Public Offering Price of the Shares. The relative fault of
the Sellers and Old Journal on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information
supplied by the Sellers and Old Journal or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Underwriters'
respective obligations to contribute pursuant to this Section 9 are several
in proportion to the respective number of Shares they have purchased
hereunder, and not joint.
25
(f) The Sellers, Old Journal and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section
9(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of
any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 9 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company, the Selling Shareholder and Old Journal contained in this
Agreement shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter, any person controlling any Underwriter or any
affiliate of any Underwriter, the Selling Shareholder or any person
controlling the Selling Shareholder, the Company, the officers or directors
of the Company, any person controlling the Company, Old Journal, the
officers or directors of Old Journal or any person controlling Old Journal
and (iii) acceptance of and payment for any of the Shares.
10. Termination. Morgan Stanley & Co. Incorporated and Robert W. Baird &
Co. Incorporated may terminate this Agreement by notice given to the Company and
Old Journal, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on, or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market, (ii) trading of any
securities of the Company or Old Journal shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
26
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Shareholder for the purchase of such Firm Shares are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Shareholder. In any such case either you or the relevant Sellers shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
an Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased on such Option Closing Date, the
non-defaulting Underwriters shall have the option to (i) terminate their
obligation hereunder to purchase the Additional Shares to be sold on such Option
Closing Date or (ii) purchase not less than the number of Additional Shares that
such non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller or Old Journal to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason any Seller or Old Journal shall be unable to perform its
obligations under this Agreement, the Company and Old Journal will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
reasonable fees and
27
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
THE JOURNAL COMPANY
By: /s/ Steven J. Smith
--------------------------------
Steven J. Smith
Chairman and CEO
JOURNAL COMMUNICATIONS, INC.
By: /s/ Steven J. Smith
--------------------------------
Steven J. Smith
Chairman and CEO
ABERT FAMILY JOURNAL STOCK TRUST
By: /s/ Paul F. Meissner
--------------------------------
Paul F. Meissner
Trustee
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Robert W. Baird & Co. Incorporated
Credit Suisse First Boston LLC
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto.
By: Morgan Stanley & Co.
Incorporated
By: /s/ William L. Blais
--------------------------
William L. Blais
Executive Director
SCHEDULE I
Number of Firm
Shares To
Underwriter Be Purchased
- --------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated...................... 5,378,750
Robert W. Baird & Co. Incorporated..................... 4,965,000
Credit Suisse First Boston LLC......................... 2,068,750
Goldman, Sachs & Co.................................... 2,068,750
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................ 2,068,750
William Blair & Company, L.L.C......................... 100,000
Cmg Institutional Trading Llc.......................... 100,000
A.G. Edwards & Sons, Inc............................... 100,000
Edward D. Jones & Co., L.P............................. 100,000
Loop Capital Markets................................... 100,000
SunTrust Capital Markets, Inc.......................... 100,000
U.S. Bancorp Piper Jaffray Inc......................... 100,000
Total:............................................... 17,250,000
SCHEDULE II
The term "Significant Subsidiaries of the Company and Old Journal" shall mean
the following six subsidiaries of the Company or Old Journal (each, a
"Significant Subsidiary"):
Subsidiary Jurisdiction of Incorporation
- ---------- -----------------------------
Add Inc. Wisconsin
IPC Print Services, Inc. Michigan
Journal Broadcast Corporation Nevada
Journal Sentinel Inc. Wisconsin
Norlight Telecommunications, Inc. Wisconsin
NorthStar Print Group, Inc. Wisconsin
EXHIBIT A
---------
September 29, 2003
Morgan Stanley & Co. Incorporated
Robert W. Baird & Co. Incorporated
Credit Suisse First Boston LLC
Goldman, Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that you propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") with The Journal Company, a Wisconsin
corporation (the "Company"), Journal Communications, Inc., a Wisconsin
corporation ("Old Journal"), and the Abert Family Journal Stock Trust (the
"Selling Shareholder") providing for the public offering (the "Public Offering")
by the several Underwriters, including Morgan Stanley & Co. Incorporated
("Morgan Stanley") (the "Underwriters"), of 17,250,000 shares (the "Shares") of
the Class A Common Stock, par value $0.01 per share of the Company. The Company
is currently a wholly owned subsidiary of Old Journal and will be renamed
Journal Communications, Inc. upon the consummation of the Share Exchange, which
consummation shall occur prior to the closing of the Public Offering, and
pursuant to which Old Journal will become a wholly owned subsidiary of the
Company. The undersigned is a beneficiary of the Selling Shareholder (or a
trustee of a trust formed by a beneficiary of the Selling Shareholder), which
will be, pursuant to the declaration of trust of the Selling Shareholder,
terminated upon the termination of the Journal Employees' Stock Trust, which
termination shall occur immediately after the consummation of the Share
Exchange.
As a condition to the Underwriters' obligations to purchase and pay for the
Shares, the undersigned hereby agrees that, without the prior written consent of
Morgan Stanley on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the final prospectus relating to the Public
Offering (the "Prospectus"), (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, or file or cause to be filed any registration
statement with the Securities and Exchange Commission (including making any
demand for, or exercising any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable for
Common Stock) relating to the
A-1
offering of, any shares of Class A Common Stock or any securities convertible
into or exercisable or exchangeable for Class A Common Stock, except for
transfers of shares of Common Stock to a Family Successor (as such term is
defined in the Company's articles of incorporation); provided that such Family
Successor agrees to be bound in writing by the restrictions set forth herein;
provided, further, that no filing by any party under Section 16(a) of the
Securities Exchange Act of 1934 shall be required or shall be made voluntarily
in connection with such transfer, or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Class A Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Class A Common Stock or such other securities, in cash or otherwise.
Notwithstanding the foregoing, if the 180th day after the date of the Prospectus
occurs within 18 days after an earnings release by the Company, or if the
Company intends to issue an earnings release within 15 days following the 180th
day, the 180-day period will be extended to the 18th day following such earnings
release unless such extension is waived by Morgan Stanley on behalf of the
Underwriters. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of the undersigned's shares of Common Stock except in compliance
with the foregoing restrictions.
The restrictions contained in the preceding paragraph shall not apply to
(i) the sale of the Shares pursuant to the Underwriting Agreement and (ii) the
voluntary share exchange of shares of Class B Common Stock into shares of Class
C Common Stock by the Grant Family Shareholders pursuant to the Shareholders
Agreement.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Terms used herein but not defined herein are as defined in the Underwriting
Agreement.
Very truly yours,
_______________________
(Name)
_______________________
(Address)
A-2