EXHIBIT 10.20
AGREEMENT AND PLAN OF MERGER
AMONG
AMERICAN STANDARD INC.
AMERICAN STANDARD MEDICAL SYSTEMS, INC.
ISTR MERGER CORPORATION
AND
INCSTAR CORPORATION
Dated as of March 10, 1997
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
(Not Part of the Agreement)
Page
RECITALS 1
ARTICLE I THE MERGER 1
1.1 The Merger 1
1.2 Articles of Incorporation 2
1.3 By-Laws 2
1.4 Directors and Officers 2
1.5 Effective Time 2
ARTICLE II CONVERSION OF SHARES 2
2.1 Company Common Stock 2
2.2 Dissenting Shares 3
2.3 Mergeco Common Stock 3
2.4 Exchange of Shares 4
2.5 Employee Stock Options 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 6
3.1 Organization 6
3.2 Capitalization 7
3.3 Authorization of this Agreement; Recommendation
of Merger 8
3.4 Consents and Approvals 8
3.5 No Conflicts 8
3.6 Compliance 9
3.7 SEC Reports; Financial Statements;
No Undisclosed Liabilities 9
3.8 Proxy Statement 10
3.9 Employee Agreements and Plans 11
3.10 Absence of Certain Changes 14
3.11 Litigation 15
3.12 Taxes 15
3.13 Environmental and Occupational Safety and
Health Matters 16
3.14 Opinion of Financial Advisor 18
3.15 Certain Anti-takeover Provisions Not Applicable 18
3.16 Intellectual Property 19
3.17 Licenses and Permits 20
3.18 Insurance 20
3.19 Contracts 21
3.20 Vote Required 21
3.21 Finders and Investment Bankers 21
3.22 Real Property and Leases 21
3.23 No Other Representations and Warranties 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGECO 22
4.1 Organization 22
4.2 Authorization of this Agreement 23
4.3 Consents and Approvals; No Violations 23
4.4 Proxy Statement 24
4.5 Financial Ability to Perform 24
4.6 Finders and Investment Bankers 24
4.7 Litigation 24
4.8 Certain Anti-takeover Provisions Not Applicable 24
4.9 No Other Representations and Warranties 24
ARTICLE V COVENANTS 25
5.1 Conduct of the Business of the Company 25
5.2 Access to Information 26
5.3 Shareholder Approval 27
5.4 All Reasonable Efforts 27
5.5 Consents 27
5.6 Public Announcements 28
5.7 Consent of Holdings 28
5.8 No Solicitation 28
5.9 Indemnification 29
5.10 Transfer Taxes 30
5.11 Anti-takeover Statutes 31
5.12 Notification of Certain Matters 31
5.13 Certain Resignations 31
5.14 Employee Matters 31
5.15 Extinguishment of Credit Line 32
ARTICLE VI CLOSING CONDITIONS 32
6.1 Conditions to the Obligations of Parent, Mergeco
and the Company 32
6.2 Conditions to the Obligations of Parent and Mergeco 33
6.3 Conditions to the Obligations of the Company 33
ARTICLE VII CLOSING 34
7.1 Time and Place 34
7.2 Filing at the Closing 34
ARTICLE VIII TERMINATION AND ABANDONMENT 34
8.1 Termination 34
8.2 Procedure and Effect of Termination 36
8.3 Fees and Expenses 36
ARTICLE IX MISCELLANEOUS 38
9.1 Amendment and Modification 38
9.2 Waiver of Compliance; Consents 38
9.3 Survival of Warranties 38
9.4 Notices 38
9.5 Assignment; Parties in Interest 39
9.6 Specific Performance 40
9.7 Governing Law 40
9.8 Counterparts 40
9.9 Interpretation 40
9.10 Entire Agreement 40
EXHIBIT A Articles of Incorporation of ISTR Merger Corporation A-1
EXHIBIT B Options Under Stock Option Plan B-1
EXHIBIT C Material Contracts C-1
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger, dated as of March 10, 1997 (this
"Agreement"), among American Standard Inc., a Delaware corporation
("Parent"), American Standard Medical Systems, Inc., a Delaware corporation
that is a wholly-owned subsidiary of Parent ("Holdings"), ISTR Merger
Corporation, a Minnesota corporation that is a wholly-owned subsidiary of
Holdings ("Mergeco"), and INCSTAR Corporation, a Minnesota corporation (the
"Company") (the Company and Mergeco being sometimes hereinafter referred to
as the "Constituent Corporations");
Whereas, the Boards of Directors of Parent, Holdings, Mergeco and
the Company deem the merger of the Constituent Corporations advisable and
in the best interests of their respective corporations, and such Boards of
Directors have approved the merger (the "Merger") of Mergeco with and into
the Company, with the Company as the surviving corporation, upon the terms
and subject to the conditions set forth herein;
Whereas, the respective Boards of Directors of Parent, Holdings,
Mergeco and the Company have, by resolutions, approved the execution and
delivery of this Agreement providing for the Merger;
Whereas, the respective Boards of Directors of the Company and
Mergeco have directed that this Agreement be submitted to their respective
shareholders for approval as provided for by the Minnesota Business
Corporation Act (the "MBCA");
Whereas, Holdings, as the sole shareholder of Mergeco, has, by
resolution, approved this Agreement and the Merger as provided for by the
MBCA; and
Whereas, Parent, Mergeco and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
this Agreement;
Now, Therefore, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and for the purpose of prescribing the terms and conditions of the
Merger, the manner and basis of converting certain shares of stock of the
Company and setting forth such other provisions as are deemed necessary and
desirable, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the satisfaction
or waiver, if permissible, of the conditions set forth in ArticleVI hereof,
at the Effective Time, as defined in Section 1.5, the parties hereto shall
cause Mergeco to be merged with and into the Company, and the Company shall
be the surviving corporation in the Merger (hereinafter sometimes called
the "Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Minnesota. At the Effective Time, the
separate existence of Mergeco shall cease.
(b) The Merger shall have the effects set forth in Section
302A.641 of the MBCA. Without limiting the generality of the
foregoing, and subject thereto, the Surviving Corporation shall retain
the name of the Company and shall possess all the rights, privileges,
immunities, powers and franchises of Mergeco and the Company and shall
by operation of law become liable for all the debts, obligations,
liabilities and duties of the Company and Mergeco.
1.2 ARTICLES OF INCORPORATION. At the Effective Time, the
Articles of Incorporation of Mergeco (in the form attached hereto as
Exhibit A) shall become the Articles of Incorporation of the Surviving
Corporation, by virtue of the Merger and this Agreement and without any
further action by the Constituent Corporations, until, subject to Section
5.9(a) hereof, thereafter amended in accordance with the provisions thereof
and as provided by law, provided that effective at the Effective Time,
Article I of such Articles of Incorporation shall be amended, by virtue of
the Merger and this Agreement and without any further action by the
Constituent Corporations, so that the name of the Surviving Corporation
shall be "INCSTAR Corporation."
1.3 BY-LAWS. At the Effective Time, the By-Laws of Mergeco
shall become the By-Laws of the Surviving Corporation until, subject to
Section 5.9(a) hereof, thereafter amended, altered or repealed as provided
therein and by law.
1.4 DIRECTORS AND OFFICERS. The directors of Mergeco and the
officers of the Company immediately prior to the Effective Time shall be
the directors and officers, respectively, of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation and By-
Laws of the Surviving Corporation.
1.5 EFFECTIVE TIME. The Merger shall become effective at the
date and time when properly executed Articles of Merger (the "Articles of
Merger") relating to the Merger shall be filed with the Secretary of State
of the State of Minnesota in accordance with the MBCA or at such other
later date and time, if any, as Mergeco and the Company shall agree and as
shall be specified in the Articles of Merger. The date and time when the
Merger shall become effective is herein referred to as the "Effective
Time."
ARTICLE II
CONVERSION OF SHARES
2.1 COMPANY COMMON STOCK. The manner and basis of converting
the Shares (as hereinafter defined) shall be as follows:
At the Effective Time, each share of Common Stock, par value
$.01 per share, of the Company (a "Share" and, collectively, the "Shares")
issued and outstanding immediately prior to the Effective Time (except for
Shares then owned beneficially or of record by Parent or Mergeco or any
other subsidiary of Parent and except for Dissenting Shares (as defined in
Section 2.2)), shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive $6.32
(the "Merger Consideration") in cash payable to the holder thereof (pro-
rated for fractional Shares, if any), without interest thereon, upon
surrender of the certificate representing such Share.
At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time which is then owned beneficially or
of record by Parent or Mergeco or any other subsidiary of Parent shall, by
virtue of the Merger and without any action on the part of the holder
thereof, be canceled and cease to exist, and no payment shall be made with
respect thereto.
At the Effective Time, the holders of certificates
representing Shares shall cease to have any rights as shareholders of the
Company, except such rights, if any, as they may have pursuant to the MBCA
(including the rights of holders or beneficial owners of Dissenting Shares
pursuant to Sections 302A.471 and 302A.473 of the MBCA), and, except as
aforesaid, their sole right shall be the right to receive the Merger
Consideration for each Share represented by a certificate as aforesaid.
2.2 DISSENTING SHARES. To the extent required by the MBCA,
Shares that are issued and outstanding immediately prior to the Effective
Time and that are held or beneficially owned by holders or beneficial
owners of such Shares who have properly exercised and preserved and
protected dissenters' rights with respect thereto in accordance with
Sections 302A.471 and 302A.473 of the MBCA ("Dissenting Shares") will not
be converted into the right to receive the Merger Consideration, and
holders or beneficial owners of such Dissenting Shares will be entitled to
receive payment of the fair value of such Dissenting Shares in cash in
accordance with the provisions of such Section 302A.473 unless and until
such holders or beneficial owners fail to perfect or effectively withdraw
or lose their rights to payment under Section 302A.473 of the MBCA. If,
after the Effective Time, any such holder or beneficial owner fails to
perfect or effectively withdraws or loses such right, such Dissenting
Shares will thereupon be treated as if they had been converted into, at the
Effective Time, the right to receive the Merger Consideration per Share,
without interest. The Company will give Parent prompt written notice of
any notice of intent to demand payment of the fair value of Shares under
Section 302A.473 of the MBCA received by the Company and of any withdrawal
of any such notice of intent and, prior to the Effective Time, Parent and
Mergeco will have the right to direct all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company will
not, except with the prior written consent of Parent and Mergeco,
negotiate, make any payments with respect to, or settle or offer to settle,
any such demands.
2.3 MERGECO COMMON STOCK. The manner and basis of converting
the shares of Mergeco shall be as follows: At the Effective Time, each
share of common stock, par value $.01 per share ("Mergeco Common Stock"),
of Mergeco issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into one fully paid and non-assessable share
of common stock, par value $.01 per share ("Surviving Corporation Common
Stock"), of the Surviving Corporation, and shall constitute the only issued
and outstanding shares of capital stock of the Surviving Corporation
immediately following the Merger. From and after the Effective Time, each
outstanding certificate theretofore representing shares of Mergeco Common
Stock shall be deemed for all purposes to evidence ownership of and to
represent the same number of shares of Surviving Corporation Common Stock.
2.4 EXCHANGE OF SHARES. Prior to the Effective Time, Parent
shall deposit, or shall cause to be deposited, in trust with The Chase
Manhattan Bank or any other bank or trust company with offices in New York
or Minneapolis designated by Parent and reasonably acceptable to the
Company having capital, surplus and undivided profits of at least
$100,000,000 (the "Exchange Agent"), for the benefit of the holders of
Shares, cash in an aggregate amount equal to the product of (i)the number
of Shares issued and outstanding immediately prior to the Effective Time
(other than any such Shares owned beneficially or of record by Parent or
Mergeco or any other subsidiary of Parent and other than Shares which
continue to be Dissenting Shares immediately prior to the Effective Time),
pro-rated for fractional Shares, if any, and (ii)the Merger Consideration
(such amount being hereinafter referred to as the "Exchange Fund"). The
Exchange Agent shall, pursuant to irrevocable instructions, make the
payments provided for in Section2.1
(a) of this Agreement out of the Exchange Fund, subject to the
requirements of the remainder of this Section 2.4. The Exchange Agent
shall invest the Exchange Fund as Parent directs, in direct obligations of
the United States of America, obligations for which the full faith and
credit of the United States of America is pledged to provide for the
payment of all principal and interest, commercial paper obligations
receiving the highest rating from either Moody's Investors Services, Inc.
or Standard & Poor's Corporation, or certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with
capital exceeding $100,000,000 or in money market funds which are invested
solely in the permitted investments set forth above (collectively, the
"Permitted Investments"); provided, however, that the maturities of
Permitted Investments shall be such as to permit the Exchange Agent to make
prompt payment to former holders of the Shares entitled thereto as
contemplated by this Section 2.4. The Exchange Fund shall not be used for
any other purpose except as provided in this Agreement. Notwithstanding
anything to the contrary set forth in this Agreement, the Exchange Agent
shall be permitted and required, upon the request of Parent, to remit from
time to time to Parent all interest or other income derived from the
investments constituting the Exchange Fund. The Surviving Corporation
shall cause the Exchange Fund to be promptly replenished to the extent of
any losses incurred as a result of the Permitted Investments. If for any
reason (including losses) the Exchange Fund is inadequate to pay the
amounts to which holders of Shares shall be entitled under Section 2.1 and
this Section 2.4, the Surviving Corporation shall in any event be liable
for payment thereof.
(b) As soon as practical after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each record holder
(other than Parent, Mergeco or any other subsidiary of Parent and other
than with respect to Dissenting Shares unless and until they cease to be
Dissenting Shares) as of the Effective Time of an outstanding certificate
or certificates which immediately prior to the Effective Time represented
Shares (the "Certificates") a form letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent) and instructions for use in effecting the surrender of
the Certificates for payment therefor. Upon, and only upon, surrender to
the Exchange Agent of a Certificate, together with such letter of
transmittal duly executed, and any other items specified in such letter of
transmittal as may be reasonably requested by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange
therefor payment by check or draft in an amount equal to the product of the
number of Shares represented by such Certificate (pro-rated for fractional
Shares, if any) and the Merger Consideration, less any applicable
withholding tax, and such Certificate shall forthwith be canceled. No
interest shall be paid or accrued on the amount payable upon the surrender
of the Certificates. If payment is to be made to a person other than the
person in whose name the Certificate surrendered is registered, it shall be
a condition of payment that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of
the Exchange Agent and the Surviving Corporation that such tax has been
paid or is not applicable. Until surrendered in accordance with the
provisions of this Section2.4, each Certificate (other than Certificates
representing Shares owned beneficially or of record by Parent, Mergeco or
any other subsidiary of Parent and other than Certificates representing
Dissenting Shares in respect of which dissenters' rights are perfected and
have not been lost or withdrawn) shall represent for all purposes only the
right to receive the Merger Consideration in cash multiplied by the number
of Shares evidenced by such Certificate, without any interest thereon.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the holder
claiming such Certificate to have been lost, stolen or destroyed, the
amount to which such holder would have been entitled under Section 2.4(b)
hereof but for failure to deliver such Certificate to the Exchange Agent
shall nevertheless be paid to such holder, provided that the Surviving
Corporation may, in its sole discretion and as a condition precedent to
such payment, require such holder to give the Surviving Corporation a bond
in such sum as it may reasonably direct as indemnity against any claim that
may be had against the Surviving Corporation with respect to the
Certificate alleged to have been lost, stolen or destroyed.
After the Effective Time there shall be no transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation,
they shall be canceled and exchanged for cash as provided in this Article
II, subject to applicable law in the case of Dissenting Shares.
Any portion of the Exchange Fund which remains unclaimed by
the shareholders of the Company after December 31, 1997 (including any
interest received with respect thereto, to the extent not previously
remitted to Parent as contemplated by Section 2.4(a)) shall be repaid to
the Surviving Corporation, upon demand. Any shareholders of the Company
who have not theretofore complied with Section2.4(b) shall thereafter be
entitled to the payment of the Merger Consideration only from the Surviving
Corporation, without any interest thereon, but shall have no greater rights
against the Surviving Corporation than may be accorded to general creditors
of the Surviving Corporation under relevant law.
The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
exchange of cash for Shares.
2.5 EMPLOYEE STOCK OPTIONS. Exhibit B to this Agreement sets
forth a true and complete list of all options to purchase Shares
(collectively, the "Options") issued pursuant to the Company's Restated
1986 Stock Option Plan (as amended, the "Stock Option Plan"), setting forth
(i) the identity of each Option holder, (ii) the number of Options held,
(iii) the exercise price of each Option, and (iv) the aggregate number of
Shares subject to Options. Immediately prior to the Effective Time, each
holder of an outstanding Option to purchase Shares granted under the Stock
Option Plan (including, without limitation, Options granted to non-employee
directors of the Company and members of the Company's Scientific Advisory
Board/Panel), whether or not then exercisable, shall be entitled to receive
for each Share subject to such Option, in cancellation of such Option, an
amount in cash equal to the excess, if any, of the Merger Consideration
over the per Share exercise price of such Option without interest thereon,
subject to all applicable tax withholding requirements, and such Option
shall thereupon be canceled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Mergeco as
follows:
3.1 ORGANIZATION. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and corporate authority to own, lease and operate its
properties and to conduct its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have
such power and authority would not, individually or in the aggregate, have
a material adverse effect on the business or condition (financial or
otherwise), properties or assets of the Company and its subsidiaries taken
as a whole (a "Material Adverse Effect"). Each of the Company and its
subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified or
licensed and in good standing would not, individually or in the aggregate,
have a Material Adverse Effect. Section 3.1 of the Company's disclosure
schedule, dated the date hereof and delivered to Parent (the "Disclosure
Schedule") sets forth a true and complete list of the Company's
subsidiaries, listing, for each subsidiary, (i) its name, (ii) its
jurisdiction of incorporation, (iii) the names and titles of its directors
and executive officers and (iv) the number and percentage of shares of such
subsidiary's capital stock owned of record by the Company or another
subsidiary of the Company, and except as and to the extent set forth in
Section 3.l of the Disclosure Schedule, the Company owns, of record or
beneficially, directly or indirectly, all of the issued and outstanding
capital stock of each of its subsidiaries, free and clear of all liens,
pledges, security interests, claims or other encumbrances. Except for
capital stock of the subsidiaries listed in Section 3.1 of the Disclosure
Schedule, the Company owns no equity securities of any entity. The Company
has heretofore delivered to Parent accurate and complete copies of the
Articles of Incorporation and the Amended By-Laws (or equivalent
organizational documents) of the Company and each of its subsidiaries, as
currently in effect.
3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 30,000,000 shares, (i) 25,000,000 of which are designated as
Common Stock, of which, on the date hereof, there were 16,505,486 Shares
issued and outstanding, 1,200,000 Shares reserved for issuance under the
Stock Option Plan and 730,720 Shares subject to issuance upon exercise of a
like number of warrants evidenced by a Warrant Certificate dated as of
December 13, 1989 (the "Warrants"), and (ii) 5,000,000 of which are
divisible into such classes and series, with such designations, voting
rights and other rights and preferences as the Board of Directors of the
Company (the "Board of Directors") may from time to time determine
(consistent with paragraphs (a) and (b) of Article VII of the Company's
Articles of Incorporation), of which, on the date hereof, there are no
shares issued or outstanding, and no shares have been designated by the
Board of Directors as to classes or series. The Company has not acquired,
redeemed or repurchased any Shares or other shares of capital stock of the
Company that have been pledged by the Company as security for future
payment of all or part of the purchase price for such Shares or other
shares of capital stock. All issued and outstanding Shares are duly
authorized, validly issued, fully paid and nonassessable and have no
preemptive rights (other than preemptive rights created pursuant to the
Purchase Rights Agreement, dated as of December 13, 1989 (the "Purchase
Rights Agreement"), between the Company and Biofin Holding International
B.V. ("Biofin")). Except for (i) the Warrants, (ii) Options granted
pursuant to the Stock Option Plan to acquire not more than 669,640 Shares,
as set forth on Exhibit B hereto, and (iii) preemptive rights created
pursuant to the Purchase Rights Agreement, there are not now, and at the
Effective Time there will not be, any existing options, warrants, calls,
subscriptions, preemptive rights or other rights or other agreements or
commitments whatsoever obligating the Company or any of its subsidiaries to
issue, transfer, deliver or sell or cause to be issued, transferred,
delivered or sold any additional shares of capital stock of the Company
(including, without limitation, the Shares) or any of its subsidiaries, or
to acquire, redeem or repurchase any shares of capital stock of the Company
or any of its subsidiaries, or obligating the Company or any of its
subsidiaries to grant, extend or enter into any such agreement or
commitment. Each holder of Options granted pursuant to the Stock Option
Plan has consented to the cancellation of all of such holder's Options in
the manner provided in Section 2.5 hereof. No holder of an outstanding
Option has the right to exercise said Option in the event the Merger is
consummated. The holder of the Warrants has consented to the cancellation
of the Warrants at the Effective Time without payment of additional
consideration, and the Company and the other party or parties to the
Purchase Rights Agreement have agreed that the Purchase Rights Agreement
will be terminated at the Effective Time (without payment of additional
consideration to such party or parties).
3.3 AUTHORIZATION OF THIS AGREEMENT; RECOMMENDATION OF MERGER.
(a) The Company has all requisite corporate power and corporate authority
to execute and deliver this Agreement and, subject to approval by the
holders of the Shares, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors and, except for the approval of this
Agreement by the shareholders of the Company holding a majority of the
outstanding Shares, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, subject only to approval hereof
by holders of the Shares, and assuming the accuracy of the representations
and warranties set forth in Section 4.2 hereof, this Agreement constitutes
a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms.
(b) The Board of Directors (at a meeting duly called and held at
which a quorum was present), based upon the unanimous recommendation of a
committee (the "Special Committee") comprised solely of all of the
Company's disinterested directors (as such term is defined in Section
302A.673 of the MBCA), has unanimously determined that the Merger is
advisable and in the best interests of the Company and has unanimously
resolved to recommend approval of the Merger and adoption of this Agreement
by the holders of the Shares.
3.4 CONSENTS AND APPROVALS. Except for (i)compliance with any
applicable requirements of the Exchange Act, (ii)compliance with any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (together,
the "HSR Act"), (iii) the filing and recordation of the Articles of Merger
with the Minnesota Secretary of State and, if applicable, filings required
by the laws of other states in which the Company is qualified to do
business, (iv)filings under the securities or blue sky laws or takeover
laws of the various states (other than Minnesota), (v) the listing
requirements of the National Association of Securities Dealers ("NASD") and
the Nasdaq National Market, (vi)filings in connection with any applicable
transfer or other taxes in any applicable jurisdiction, and (vii) the other
filings, permits, authorizations, consents and approvals listed on Section
3.4 of the Disclosure Schedule, no filing with, and no permit,
authorization, consent or approval of, any public body or other
governmental authority is necessary for the consummation by the Company of
the transactions contemplated by this Agreement, the failure of which to
make or obtain would be reasonably likely to have a Material Adverse Effect
or a material adverse effect on the ability of the Company to consummate
the Merger or the other transactions contemplated hereby.
3.5 NO CONFLICTS. (a) Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any violation of any provision of the Articles
of Incorporation or Amended By-Laws of the Company, or the certificate of
incorporation or by-laws (or equivalent instruments) of any of its
subsidiaries, (ii)except as set forth in Section 3.5(a) of the Disclosure
Schedule, result in a violation or breach of, or constitute a default (or
give rise to any right of termination, cancellation or acceleration) under,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets is bound or (iii)assuming the truth of the
representations and warranties of Parent and Mergeco contained herein and
their compliance in all material respects with all agreements contained
herein and assuming the due making or obtaining of all filings, permits,
authorizations, consents and approvals referred to in Sections 3.4 and 4.3
hereof, violate any statute, rule, regulation, order, injunction, writ or
decreeof any public body or other governmental authority by which the
Company or any of its subsidiaries or any of their respective assets or
properties is bound, excluding from the foregoing clauses (ii) and (iii)
violations, breaches or defaults, or rights of termination, cancellation or
acceleration, which, either individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect or a material adverse
effect on the Company's ability to consummate the Merger or the other
transactions contemplated hereby.
(b) None of the written contracts, agreements and other
instruments listed in Schedule 3.5(b) of the Disclosure Schedule
(collectively, the "Main Contracts") contains any "change in control" or
similar provisions that would require consent by (or give rise to any right
of termination, cancellation or acceleration by) any third party to any
Main Contract as a result of the consummation of the Merger or the other
transactions contemplated hereby.
3.6 COMPLIANCE. Except as set forth in Section 3.6 of the
Disclosure Schedule, neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are
bound or subject or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or its or any of their
respective properties are bound or subject, except for any such conflicts,
defaults or violations which would not, individually or in the aggregate,
reasonably be expected to either have a Material Adverse Effect or delay
materially or prevent the consummation of the Merger or the other
transactions contemplated hereby.
3.7 SEC REPORTS; FINANCIAL STATEMENTS; NO UNDISCLOSED
LIABILITIES. ( The Company has timely filed all forms, reports and
documents with the Securities and Exchange Commission ("SEC") required to
be filed by it since January 1, 1994 pursuant to the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities Act") and the Exchange Act and the rules and regulations
promulgated thereunder (collectively, the "SEC Reports"), all of which have
complied, at the time filed, in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, as applicable, and
the rules and regulations promulgated thereunder. None of such SEC
Reports, at the time filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated balance sheets and the related consolidated
statements of operations, consolidated cash flows and consolidated
shareholders' equity (including the notes thereto) of the Company and its
subsidiaries contained or incorporated by reference in the SEC Reports
comply in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto,
and present fairly the consolidated financial position of the Company and
its subsidiaries as of their respective dates, and the consolidated results
of their operations and their cash flows for the periods presented therein,
in conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis, (i) except as otherwise noted
therein, (ii) subject in the case of unaudited financial statements to
normal year-end audit adjustments, (iii) except that the unaudited
financial statements do not contain all of the footnote disclosures
required by GAAP and (iv) except as may otherwise be permitted by Form 10-
Q.
(c) Except to the extent reflected or reserved against on the
Company's audited consolidated balance sheet as of December 31, 1996,
previously delivered to Parent (the "Balance Sheet"), neither the Company
nor any of its subsidiaries had, as of the date of such Balance Sheet, any
liabilities, debt or obligations (whether absolute, accrued, contingent or
otherwise) of any nature that would be required as of such date to have
been included on a balance sheet, or in the notes thereto, prepared in
accordance with GAAP. Except as disclosed in Section 3.7(c) of the
Disclosure Schedule, since the date of the Balance Sheet, neither the
Company nor any of its subsidiaries has incurred any liabilities, debts or
obligations (whether absolute, accrued, contingent or otherwise) of any
nature that would be required to be included on a balance sheet, or in the
notes thereto, prepared in accordance with GAAP, except for liabilities,
debts or obligations incurred in the ordinary course of business.
3.8 PROXY STATEMENT. No proxy materials distributed by the
Company to its shareholders and/or filed with the SEC in connection with
the Merger, including any amendments or supplements thereto (collectively,
the "Proxy Statement") will, at the time the Proxy Statement is mailed,
contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading or, at the time of the meeting of shareholders to
which the Proxy Statement, as then amended or supplemented, relates or at
the Effective Time omit to state any material fact necessary to correct any
statement which has become false or misleading in any earlier communication
with respect to the solicitation of any proxy for such meeting; except that
no representation is made by the Company with respect to statements made or
incorporated by reference into the Proxy Statement based on information
furnished in writing to the Company by Parent, Holdings or Mergeco
specifically for use in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
3.9 EMPLOYEE AGREEMENTS AND PLANS. (a) Except as set forth in
Section 3.9 (a) of the Disclosure Schedule, with respect to any employee or
former employee of the Company, neither the Company nor any ERISA Affiliate
presently maintains, contributes to or has any liability under:
(i) any bonus, incentive compensation, profit sharing,
retirement, pension, group insurance, death benefit, health,
cafeteria, flexible benefit, medical expense reimbursement, dependent
care, stock option, stock purchase, stock appreciation rights,
savings, deferred compensation, consulting, severance pay or
termination pay, vacation pay, life insurance, welfare or other
employee benefit or fringe benefit plan, program or arrangement; or
(ii) any plan, program or arrangement which is an "employee
pension benefit plan" as such term is defined in Section 3(2) of
ERISA, or an "employee welfare benefit plan" as defined in Section
3(1) of ERISA.
Each plan, program and arrangement set forth in Section 3.9 (a) of the
Disclosure Schedule is herein referred to as an "Employee Benefit Plan."
For purposes of this Agreement, the term "ERISA Affiliate" shall mean any
person (as defined in Section 3(9) of ERISA) that together with the Company
(or any person whose liabilities the Company has assumed or is otherwise
subject to) would be treated as a single employer under Section 4001(b) of
ERISA, or would be aggregated with the Company under Sections 414(b), (c),
(m) or (o) of the Code. Within the last twenty-four months neither the
Company nor any ERISA Affiliate has entered into any formal plan or
commitment, or has communicated to any current or former employee any
intention, whether legally binding or not, to create any additional
material Benefit Plan.
(b) A favorable determination letter has been received from the
Internal Revenue Service with respect to each Employee Benefit Plan which
is intended to comply with the provisions of Section 401(a) of the Code.
Each such Employee Benefit Plan complies in form and in operation in all
material respects with the requirements of the Code and meets the
requirements of a "qualified plan" under Section 401(a) of the Code. In
addition, amendments have been made to each such Employee Benefit Plan
evidencing substantial compliance with the Tax Reform Act of 1986, as
amended. Each Employee Benefit Plan subject to Sections 401(k) and 401(m)
of the Code satisfies the average deferral percentage test and the average
contribution percentage test under Sections 401(k) and 401(m) of the Code
for the applicable plan year preceding the plan year in which the Closing
Date occurs. No event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any previously-issued
determination letter or the denial of any determination letter application.
(c) Except as set forth in Section 3.9 (c) of the Disclosure
Schedule, with respect to each Employee Benefit Plan which is subject to
Title I of ERISA, neither the Company nor any ERISA Affiliate has failed to
comply in any material respect with any of the applicable reporting,
disclosure or other requirements of ERISA and the Code and there has been
no "prohibited transaction" as described in Section 4975 of the Code or
Section 406 of ERISA.
(d) Neither the Company nor any ERISA Affiliate, nor any of
their respective directors, officers, employees or any other "fiduciary,"
as such term is defined in Section 3(21) of ERISA, has any material
liability for failure to comply with ERISA or the Code for any action or
failure to act in connection with the administration or investment of any
of the Employee Benefit Plans. No event has occurred with respect to which
the Company or any ERISA Affiliate could be liable for a civil penalty or
other liability under Section 502(c) or Section 502(l) of ERISA, except for
liabilities which would not, individually or in the aggregate, have a
Material Adverse Effect.
(e) No Employee Benefit Plan is subject to Section 412 of the
Code or Section 302 of ERISA. If contributions with respect to each
Employee Benefit Plan are intended to be tax-deductible, all reasonable
actions required to be taken to make such contributions tax-deductible have
been taken. Further, all applicable contributions and premium payments for
all periods ending prior to the Closing Date (including periods from the
first day of the then current plan year to the Closing Date) shall be or
have been made prior to the Closing Date in accordance with past practice,
except for contributions and premium payments not due prior to the Closing
Date (for which appropriate reserves have been taken). No Employee Benefit
Plan is subject to Title IV of ERISA. Neither the Company nor any ERISA
Affiliate has terminated any employee pension benefit plan subject to Title
IV of ERISA within the past eight years. Except as set forth in Section
3.9 (e) of the Disclosure Schedule, no Employee Benefit Plan has any
unfunded liability. The financial records of each Employee Benefit Plan
have been kept in accordance with GAAP.
(f) Neither the Company nor any ERISA Affiliate has any
liability (including current or potential withdrawal liability) with
respect to any "multiemployer plan" as such term is defined in Section
3(37) of ERISA, other than the obligation to make periodic contributions
with respect to those Employees covered by any such plan.
There is no pending or threatened legal action, claim,
proceeding or investigation against or involving any Employee Benefit Plan
and, to the knowledge of Company and each ERISA Affiliate, there is no
basis for, and the Company has no knowledge of any facts which could give
rise to, any such condition, legal action, claim, proceeding or
investigation, other than routine claims for benefits and other claims,
none of which routine and other claims would, individually or in the
aggregate, have a Material Adverse Effect. Any bonding required with
respect to any Employee Benefit Plan in accordance with applicable
provisions of ERISA has been obtained and is in full force and effect.
Except as set forth in Section 3.9 (h) of the Disclosure
Schedule, with respect to any employee or former employee of the Company,
neither the Company nor any ERISA Affiliate presently maintains,
contributes to or has any liability under any funded or unfunded medical,
health or life insurance plan or arrangement for terminated employees or
retirees except as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended. Neither the Company nor any ERISA
Affiliate maintains or contributes to a trust, organization or association
described in any of Sections 501(c)(9), 501(c)(17) or 501(c)(20) of the
Code.
Except as set forth in Section 3.9 (i) of the Disclosure
Schedule,
Neither the Company nor any ERISA
Affiliate is a party to any employment agreement, whether written
or oral, or agreement with change-in-control or similar
provisions, or collective bargaining agreement or contract with
any labor union relating to any employees or former employees;
The consummation of the transactions
contemplated by this Agreement will not entitle any individual to
severance pay or accelerate the time of payment or vesting, or
increase the amount, of compensation or benefits due to any
individual; and
Neither the Company nor any ERISA
Affiliate has currently outstanding any loan or loans to any
current or former employees, nor has the Company nor any ERISA
Affiliate guaranteed such loans.
There has been no act or acts which would result in a
disallowance of a deduction or the imposition of a tax pursuant to Section
4980B of the Code, or any predecessor provision thereof, or any regulations
promulgated thereunder, whether final, temporary or proposed.
With respect to each Employee Benefit Plan, the Company has
delivered to Parent accurate and complete copies of the following (where
applicable): (i)the plan documents, including any related trust agreements,
insurance contracts or other funding arrangements, or a written summary of
the terms and conditions of the plan if there is no written plan document,
and summaries of material modifications; (ii) the most recent determination
letter received from the Internal Revenue Service; (iii) the two most
recent IRS Form 5500 annual reports, including all schedules and
attachments thereto; (iv) the most recent financial statements; (v) all
correspondence with the Internal Revenue Service and the Department of
Labor with respect to the past three plan years (other than IRS Form 5500
filings); and (vi) the most recent summary plan description.
(l) With respect to employees of the Company or its subsidiaries
in Canada: (i) except as set forth in Section 3.9(l) of the Disclosure
Schedule, the Company has no obligation under and does not participate in
any registered pension plan as defined in the Income Tax Act (Canada)
and/or any pension plan registered under applicable federal or provincial
pension legislation, and as of the Closing Date, the Company shall have
paid all amounts due to or to be paid on behalf of the Company's employees
prior to the Closing Date, including, without limitation, all accrued
wages, salaries, commissions, bonuses, vacation pay, termination pay,
severance pay, employment benefit plans, income tax withholdings, Canada
Pension Plan contributions and Employment Insurance premiums; (ii) the
Company is in good standing under each of (A) Canada Pension Plan, (B)
Employment Standards Act (Ontario), (C) Income Tax Act, (D) Labour
Relations Act (Ontario), (E) Occupational Health and Safety Act (Ontario),
(F) Ontario Human Rights Code, (G) Pension Benefits Act (Ontario), (H)
Workers' Compensation Act (Ontario), (I) Employer Health Tax (Ontario), (J)
Unemployment Insurance Act and (K) Pay Equity Act (Ontario), and (iii) the
Company is in compliance with all applicable laws, rules and regulations
relating to pensions and employee benefits; provided, however, that the
Company represents and warrants as to the matters in this Section 3.9(l)
only to the extent that such matters, individually or in the aggregate,
have a Material Adverse Effect.
(m) With respect to employees of the Company or its subsidiaries
in the United Kingdom: (i) no circumstances have arisen under which the
Company is likely to be required to pay damages for wrongful dismissal, to
make any statutory redundancy payment or make or pay any compensation in
respect of unfair dismissal, to make any other payment under any employment
protection legislation or to reinstate or re-engage any former employee;
(ii) no circumstances have arisen under which the Company is likely to be
required to pay damages or compensation, or suffer any penalty or be
required to take corrective action or be subject to any form of discipline
under The Wages Act 1986, The Sex Discrimination Act 1975, The Equal Pay
Act 1970, Article 119 of the Treaty of Rome or The Race Relations Act 1976;
and (iii) all retirement schemes and other employee benefit plans described
in Section 3.9 (m) of the Disclosure Schedule comply with and have at all
times complied with the provisions of relevant legislation and the
requirements of applicable law and the Company has duly complied with its
obligations under such schemes and plans; provided, however, that the
Company represents and warrants as to the matters in this Section 3.9(m)
only to the extent that such matters, individually or in the aggregate,
have a Material Adverse Effect.
3.10 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Section
3.10 of the Disclosure Schedule, from December 31, 1996 until the date of
this Agreement, the Company and its subsidiaries have conducted their
respective businesses and operations consistent with past practice only in
the ordinary course and there have not occurred (i)any events, changes, or
effects (including the incurrence of any liabilities or obligations of any
nature, whether accrued, contingent or otherwise) having, individually or
in the aggregate, a Material Adverse Effect; (ii)any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to the equity interests of the Company or
of any of its subsidiaries; (iii)any change by the Company or any of its
subsidiaries in accounting principles or methods, except insofar as may be
required by a change in GAAP; (iv) any grant of options or stock
appreciation rights under any Benefit Plan; (v)any change in the aggregate
indebtedness for money borrowed of the Company and its subsidiaries, except
for short-term borrowings incurred in the ordinary course of business and
prepayable at any time in accordance with their terms without penalty, (vi)
any loans, advances or capital contributions to, or investments in, any
person other than any subsidiaries of the Company, except for customary
loans or advances to employees or trade credit in the ordinary course of
business, (vii) any sales, transfers, mortgages or other dispositions of,
or the imposition of encumbrances on, any business, subsidiary or assets
that are material to the Company and its subsidiaries taken as a whole, or
fixed assets that have an individual value on the Company's books in excess
of $25,000, (viii) any settlements or compromises of any suit, action or
claim in which the amount involved is greater than $25,000 or which is
material to the Company and its subsidiaries taken as a whole or which
relates to the transactions contemplated hereby, (ix) the making of any tax
election or the cancellation or termination of any insurance policy naming
it as a beneficiary or a loss payable payee, without notice to Parent, (x)
the taking of any of the actions specified in Section 5.1(h), except as
permitted therein, (xi) the acquisition of any business or stock, the
merger or consolidation with any person, or the sale, encumbrance or
transfer of any business or material portion thereof, or (xii) any
agreement to do any of the foregoing.
3.11 LITIGATION. Except as disclosed in Section 3.11 of the
Disclosure Schedule, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of the Company, threatened
against, the Company or any of its subsidiaries (i) that, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect, or (ii) to delay materially or prevent the consummation of the
Merger or the other transactions contemplated hereby.
3.12 TAXES. (a) Except as otherwise disclosed in Section 3.12(a)
of the Disclosure Schedule: (i)the Company and each of its subsidiaries has
filed (or received an appropriate extension of time to file) all federal,
state, local, and foreign Tax Returns required to be filed by them prior to
the date hereof, except for Tax Returns the nonfiling of which would not,
individually or in the aggregate, have a Material Adverse Effect; (ii)since
the taxable year from August 1, 1987 to July 31, 1988, the Company and its
subsidiaries have filed consolidated U.S. federal income tax returns as
members of an affiliated group, the common parent of which is the Company;
(iii) all such Tax Returns were true and correct in all material respects;
(iv) the Company and each of its subsidiaries have paid all Taxes shown to
be due on such Tax Returns, and have made appropriate provisions in the
Company's consolidated financial statements for any Taxes not yet due, or
which are being contested in good faith, except for Taxes the failure to
pay which would not have a Material Adverse Effect; (v)the Company and each
of its subsidiaries have withheld and paid over to the appropriate
governmental authority all Taxes required by law to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party, except for amounts
which would not, individually or in the aggregate, have a Material Adverse
Effect; (vi)the Company and each of its subsidiaries have made all payments
of estimated Taxes required to be made under federal, state, local or
foreign law, except for amounts which would not, individually or in the
aggregate, have a Material Adverse Effect; (vii)all tax deficiencies
asserted or assessed against the Company and each of its subsidiaries have
been paid or finally settled or are being contested in good faith; (viii)no
claims have ever been made by any taxing authority in a jurisdiction where
the Company and each of its subsidiaries do not file Tax Returns that it or
they is or are or may be subject to taxation by that jurisdiction; (ix)no
waiver or comparable consent given by the Company or any of its
subsidiaries regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns is outstanding, nor is any request for
any such waiver or consent pending; (x)neither the Company nor any of its
subsidiaries is (nor has any of them ever been) a party to any written tax
sharing agreement; (xi)there is no pending, or to the knowledge of the
Company, threatened, action, audit, proceeding or investigation for the
assessment or collection of any Taxes; (xii)there are no requests for
rulings, subpoenas or requests for information pending with respect to any
taxing authority; (xiii)any adjustments of Taxes made by any federal taxing
authority in any examination which is required to be reported by the
Company or any of its subsidiaries to a state, local, or foreign taxing
authority have been reported to the appropriate authority, and any
additional Taxes due with respect thereto have been paid, except for
adjustments with respect to which any additional Taxes due would not,
individually or in the aggregate, have a Material Adverse Effect; (xiv)no
power of attorney has been granted by the Company or any of its
subsidiaries, which is currently in force, with respect to any matter
relating to Taxes; and (xv)there are no liens (other than liens for Taxes
that are not yet due or which are being contested in good faith) on any
assets of the Company or any of its subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax, except for liens
which would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) (i)Neither the Company nor any of its subsidiaries has made
an election under Section 341(f) of the Code; (ii)neither the Company nor
any of its subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Section 280G of the Code; (iii)neither the Company nor any of its
subsidiaries has been a United States real property holding company within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii); (iv)neither the Company nor any of
its subsidiaries will be required to include in income on a Tax Return
filed after the Effective Time any adjustment pursuant to Section 481(a) of
the Code (or any similar provision of law or regulations) by reason of a
change in accounting method prior to the Effective Time; (v)to the
knowledge of the Company neither the Company nor any of its subsidiaries
has disposed of any property which has been accounted for tax purposes
under the installment methodthat would require installment gain to be
reflected on a Tax Return filed after the Effective Time; and (vi)neither
the Company nor any of its subsidiaries would be liable for any increase in
Tax under former Section 47 of the Code, were such entity to dispose of all
of its assets at the Effective Time.
(c) For purposes of this Section 3.12, the following terms will
have the following meanings: (i) "Tax" or "Taxes" shall mean any and all
federal, state, local, foreign, and other taxes, levies, fees, imposts,
duties and charges of whatever kind (including any interest, penalties or
additions to the tax imposed in connection therewith or with respect
thereto), whether imposed on the Company or any of its subsidiaries,
including, without limitation, taxes imposed on, or measured by, income,
franchise, profits, or gross receipts, and also ad valorem, value added,
sales, use, service, real or personal property, capital stock, license,
payroll, withholding, employment, social security, workers' compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premium, windfall profits, transfer, and gains taxes and
customs duties, and (ii) "Tax Return" shall mean returns, reports,
information statements, or other documentation (including any additional or
supporting material) filed or maintained, or required to be filed or
maintained in connection with the calculation, determination, assessment or
collection of any Tax.
3.13 ENVIRONMENTAL AND OCCUPATIONAL SAFETY AND HEALTH MATTERS.
(a) Except as disclosed in Section 3.13 (a) of the Disclosure Schedule, the
Company and its subsidiaries do not have any Environmental, Occupational
Safety and Health Liabilities (as defined below) that have a Material
Adverse Effect. Except as disclosed in Section 3.13 (a) of the Disclosure
Schedule, the Company does not know of any Environmental, Occupational
Safety and Health Liabilities of any of the Company's corporate
predecessors that have a Material Adverse Effect.
(b) As used in this Agreement, "Environmental, Occupational
Safety and Health Liabilities" with respect to any person means any and all
liabilities of or relating to such person or any of its subsidiaries
(including any entity which is, in whole or in part, a predecessor of such
person or any of its subsidiaries), whether vested or invested, contingent
or fixed, actual or potential, known or unknown, which (i)arise under or
are otherwise covered by Environmental Laws or Occupational Safety and
Health Laws and (ii)relate to actions occurring or conditions existing on
or prior to the date of this Agreement. "Environmental Laws" means any and
all applicable federal, state, local and foreign, international,
multinational or other administrative statutes, laws, regulations,
ordinances, rules, and, to the extent directed in writing to the Company,
any of its subsidiaries, or any corporate predecessor, judgments, orders,
decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions relating to
the environment or to emissions, discharges or releases of Hazardous
Materials into the environment, including without limitation ambient air,
indoor air, natural resource, surface water, ground water, drinking water
supply, sediments, wetlands, soil or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials or the clean-up or other
remediation thereof. "Hazardous Materials" means any (i) "hazardous
substance," "pollutant," or "contaminant" (as defined in Sections 101(14)
and (33) of the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA") or
the regulations issued pursuant to Section 102 of CERCLA and found at 40
C.F.R. Section 302), including any element, compound, mixture, solution, or
substance that is designated pursuant to Section 102 of CERCLA; (ii)
substance that is designated pursuant to Section 311(b)(2)(A) of the
Federal Water Pollution Control Act, as amended (33 U.S.C. Sections 1251
and 1321(b)(2)(A)) ("FWPCA"); (iii) hazardous waste having the
characteristics identified under or listed pursuant to Section 3001 of the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901
and 6921) ("RCRA"); (iv) substance containing petroleum, as that term is
defined in Section 9001(8) of RCRA; (v) toxic pollutant that is listed
under Section 307(a) of the FWPCA; (vi) hazardous air pollutant that is
listed under Section 112 of the Clean Air Act, as amended (42 U.S.C.
Sections 7401 and 7412); (vii) imminently hazardous chemical substance or
mixture with respect to which action has been taken pursuant to Section 7
of the Toxic Substances Control Act, as amended (15 U.S.C. Sections 2601
and 2606); (viii) source, special nuclear, or by-product material as
defined by the Atomic Energy Act of 1954, as amended (42 U.S.C. Section
2011 et seq.); (ix) asbestos, asbestos-containing material, or urea
formaldehyde or material that contains urea formaldehyde; (x) waste oil and
other petroleum products; and (xi) any toxic materials, contaminants, or
hazardous substances or wastes regulated, listed, defined or classified
under or pursuant to any other Environmental Law. "Occupational Safety and
Health Laws" means any and all applicable federal, state, local and
foreign, international, multinational or other administrative statutes,
laws, regulations, ordinances, rules, and, to the extent directed in
writing to the Company, any of its subsidiaries, or any corporate
predecessor, judgments, orders, decrees, codes, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and
governmental restrictions designed to provide or promote safe and healthful
working conditions and to reduce occupational safety and health hazards in
the workplace.
(c) Except as disclosed in Section 3.13 (c) of the Disclosure
Schedule, neither the Company nor any of its subsidiaries has violated, or
has received any actual or threatened claim, order, notice, inquiry,
inspection request or other written communication from anyone that alleges
that the Company or any of its subsidiaries is not in compliance with or is
otherwise liable under any Environmental Law or any Occupational Safety and
Health Law, except for violations, noncompliance or liability that would
not, individually or in the aggregate, have a Material Adverse Effect.
Except as disclosed in Section 3.13(c) of the Disclosure Schedule, the
Company does not know of any actual or threatened claim, order, notice,
inquiry, inspection request or other written communication from anyone that
alleges that any of the Company's corporate predecessors was not in
compliance with or is otherwise liable for noncompliance under any
Environmental Law or any Occupational Safety and Health Law, except for
noncompliance or liability that would not, individually or in the
aggregate, have a Material Adverse Effect.
(d) Except as disclosed in Section 3.13 (d) of the Disclosure
Schedule, and except as, individually or in the aggregate, would not have a
Material Adverse Effect, the Company and its subsidiaries have all permits,
licenses, consents, approvals, and other authorizations required under
Environmental Laws and Occupational Safety and Health Laws that are
necessary to the existing operations of the Company and its subsidiaries
("Authorizations"). Schedule 3.13 (d) of the Disclosure Schedule contains
a complete and accurate list of each material Authorization, and an
indication that it is valid and in full force and effect, its expiration
date, and any notice, transfer or other obligations triggered by this
proposed transaction.
(e) Notwithstanding any other provisions of this Agreement,
including, but not limited to, Sections 3.11 and 3.17, the sole and
exclusive representations and warranties of the Company with respect to
environmental matters and occupational safety and health matters
(including, without limitation, Environmental, Occupational Safety and
Health Liabilities) are set forth in this Section 3.13.
3.14 OPINION OF FINANCIAL ADVISOR. The Company has received the
written opinion of Cowen & Company, its financial advisor, to the effect
that the consideration to be received in the Merger by the Company's
shareholders is fair to the Company's shareholders, other than Biofin, from
a financial point of view, a copy of which opinion has been delivered to
Parent.
3.15 CERTAIN ANTI-TAKEOVER PROVISIONS NOT APPLICABLE. The Board
of Directors and the Special Committee have each approved the Merger and
this Agreement, such Special Committee has been duly constituted pursuant
to Section 302A.673 of the MBCA and consists only of, and includes all,
disinterested directors as defined therein and such approval by the Special
Committee is sufficient to render inapplicable to this Agreement and the
Merger the restrictions on business combinations (as defined in Section
302A.011 of the MBCA) contained in Section 302A.673 of the MBCA. The
Merger does not constitute a "control share acquisition" subject to the
provisions of Section 302A.671 of the MBCA, by virtue of Section 302A.011,
Subd. 38(d) of the MBCA. Except for any state takeover statutes (of a
state or states other than Minnesota), the purported application of which
would not reasonably be expected to prevent or materially delay the Merger,
no other state takeover statute or similar statute or regulation in any
jurisdiction in which the Company or any of its subsidiaries does business,
applies or purports to apply to the Merger or to this Agreement, or any of
the transactions contemplated hereby. The representations and warranties
contained in this Section 3.15 are based upon the assumption of the
accuracy of the representations contained in Section 4.8 hereof.
3.16 INTELLECTUAL PROPERTY. (a) Section 3.16(a)-Part I of the
Disclosure Schedule sets forth an accurate list of all patents, patent
applications, registered trademarks, registered trade names, and other
material trademarks, registered service marks, registered trade names, and
registered copyrights which are owned by the Company and/or its
subsidiaries and used in the conduct of their business. Section 3.16(a)-
Part II of the Disclosure Schedule sets forth an accurate list of all
licenses to the Company and/or its subsidiaries licensing rights under
patents, patent applications and/or know-how used by the Company and/or its
subsidiaries in the conduct of their business. There are no patents, patent
applications, registered trademarks, registered service marks or registered
trade names or other material trademarks, registered service marks or
registered trade names used by the Company and/or its subsidiaries in the
conduct of their business which are not listed in Section 3.16(a) of the
Disclosure Schedule. To the knowledge of the Company, all the patents and
registered trademarks listed in Section 3.16(a) of the Disclosure Schedule
are valid. All patents, patent applications and registered trademarks
listed in Section 3.16(a) of the Disclosure Schedule are in good standing.
All fees (including annuity fees) due to applicable patent and trademark
offices in respect to such patents, patent applications, and registered
trademarks and payable by the Closing Date have been paid or will be paid
prior to the Closing Date. All renewals of registered trademarks listed in
Section 3.16(a) of the Disclosure Schedule have been effected in due time.
To the knowledge of the Company, no third party is infringing any patent,
trademark, trade name or service mark set forth in Section 3.16(a) of the
Disclosure Schedule.
(b) No claim has been made by any third party to the Company
and/or its subsidiaries that any patent, trademark, trade name or service
mark set forth in Section 3.16(a) of the Disclosure Schedule is invalid or
that the exercise of the rights thereto constitutes any form of unfair
competition.
(c) None of the Company nor any of its subsidiaries has done or
committed any act that to the knowledge of the Company has impaired or will
impair the validity of the patents, trademarks, service marks and trade
names set forth in Section 3.16(a) of the Disclosure Schedule so as to have
a Material Adverse Effect.
(d) Except as set forth in Section 3.16(d) of the Disclosure
Schedule, the Company and/or its subsidiaries have not granted any
license(s) under any of the patents, patent applications, trade marks,
service marks or trade names set forth in Section 3.16(a) of the Disclosure
Schedule. The Company and/or its subsidiaries own or have acquired a right
from third parties to use all know-how used by the Company and/or its
subsidiaries in the conduct of their business and such rights will not be
impaired by the Merger or the consummation of the other transactions
contemplated hereby.
(e) No claims for infringement of any patents, trademarks, trade
names or service marks are pending or known by the Company and/or its
subsidiaries to be threatened in writing (i) against the Company and/or its
subsidiaries, or (ii) to the knowledge of the Company, with respect to any
of the products of the Company and/or its subsidiaries (other than products
sold pursuant to the agreements listed in Section 3.16(a)-Part II(B)),
against any of their respective customers.
3.17 LICENSES AND PERMITS. (a) The Company and its subsidiaries
have all governmental licenses and permits necessary to conduct their
business as currently conducted and to own and operate their assets, and
such licenses and permits are valid and in full force and effect except
where the failure to have such governmental licenses and permits would not
have a Material Adverse Effect. No defaults or violations exist or have
been recorded in respect of any governmental license or permit of the
Company and its subsidiaries other than defaults or violations which would
not have a Material Adverse Effect. Except to the extent it would not
reasonably be expected to have a Material Adverse Effect, no proceeding is
pending or, to the knowledge of the Company, threatened looking toward the
revocation, limitation or non-renewal of any such governmental license or
permit.
(b) The Company has delivered or made available for inspection
to Parent a true and complete copy of each material governmental license
and permit, and each pending application for any material governmental
license or permit, including all amendments and supplements thereto and
modifications thereof, relating to the Company and its subsidiaries.
Except to the extent that they would not reasonably be expected to have a
Material Adverse Effect, (i) all of such pending applications are, to the
knowledge of the Company, in good standing and without challenge of any
kind; (ii) each statement, application and other document submitted or
filed by the Company or any subsidiary to or with any federal, state or
other governmental agency or authority, or to or with any other person or
entity, for purposes of obtaining a new or renewed lease, license or permit
of any type described in this subsection in connection with the
transactions contemplated hereby is complete and accurate; and (iii)
subject to the receipt of any consents specified in Section 3.4 of the
Disclosure Schedule, none of the rights of the Company or any subsidiary
under any governmental license or permit will be impaired by the
consummation of the Merger or the other transactions contemplated hereby.
3.18 INSURANCE. As of the date hereof, the Company and each of
its subsidiaries are insured by insurers, reasonably believed by the
Company to be of recognized financial responsibility and solvency, against
such losses and risks and in such amounts as are customary in the
businesses in which they are engaged. All material policies of insurance
and fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective business, assets, employees, officers and
directors have previously been made available for inspection by Parent and
are in full force and effect. As of the date hereof, there are no material
claims by the Company or any subsidiary under any such policy or instrument
as to which any insurance company is denying liability or defending under a
reservation of rights clause. All necessary notifications of claims have
been made to insurance carriers other than those which will not have a
Material Adverse Effect.
3.19 CONTRACTS. All contracts, agreements, commitments and other
documents to which the Company or any subsidiary is a party or by which the
Company, any subsidiary, or any of their assets is in any way affected or
subject, including all amendments and supplements thereto and modifications
thereof, of a nature specified in Exhibit C hereto (collectively, the
"Material Contracts"), are legally valid and binding and in full force and
effect except where failure to be legally valid and binding and in full
force and effect would not have a Material Adverse Effect, and there are no
defaults thereunder by the Company or its subsidiaries or, to the Company's
knowledge, by any other party thereto, except those defaults that would not
have a Material Adverse Effect. The Company has previously made available
for inspection by Parent all written Material Contracts (and, to the extent
a Material Contract is oral, a true and complete summary of all material
terms thereof).
3.20 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve the
Merger, this Agreement and the transactions contemplated hereby (assuming
for purposes of this representation, the accuracy of the representations
contained in Section 4.8 hereof).
3.21 FINDERS AND INVESTMENT BANKERS. All negotiations relating
to this Agreement and the transactions contemplated hereby have been
carried on without the intervention of any person acting on behalf of the
Company in such manner as to give rise to any valid claim against Parent,
Holdings, Mergeco or the Company for any broker's or finder's fee or
similar compensation, except for Cowen & Company, whose fees (which have
been described in a writing furnished by the Company to Parent) shall be
paid by the Company.
3.22 REAL PROPERTY AND LEASES. (a) Section 3.22(a) of the
Disclosure Schedule lists and describes briefly all real property owned by
the Company or any of its subsidiaries. With respect to each such parcel
of owned real property and except as noted in Section 3.22(a) of the
Disclosure Schedule: (i) the identified owner has good and valid title to
the parcel of real property, free and clear of any lien, encumbrance,
easement, covenant, or other restriction, except for taxes not yet
delinquent or special assessments and other governmental charges not yet
delinquent or which may thereafter be paid without penalty or which are
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been taken (all of which are listed in Section
3.22(a)of the Disclosure Schedule), recorded easements, covenants, and
other restrictions, and utility easements, building restrictions, zoning
restrictions, inchoate mechanic's and workmen's and other similar liens
arising in the ordinary course of business and other easements,
restrictions, liens and encumbrances (other than purchase money liens and
liens for money borrowed) which do not affect materially and adversely the
current use, occupancy, or value, or the marketability of title, of the
property subject thereto, (ii) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of the parcel of real
property that would materially interfere with the Company's use of such
property, and (iii) there are no outstanding options or rights of first
refusal to purchase, lease or occupy the parcel of real property, or any
portion thereof or interest therein which would materially interfere with
the Company's use of such property.
(b) Section 3.22(b) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the Company or
any of its subsidiaries. With respect to each lease and sublease (i) the
lease or sublease is legal, valid, binding and enforceable by the Company
or such subsidiary, and in full force and effect in all material respects,
(ii) except as set forth in Section 3.22(b) of the Disclosure Schedule
neither the Company nor any of its subsidiaries, and, to the Company's
knowledge, no other party to the lease or sublease is in material breach or
default, and no event has occurred which, with notice or lapse of time,
would constitute a material breach or default or permit termination,
modification, or acceleration thereunder, (iii) neither of the Company nor
any of its subsidiaries and, to the knowledge of the Company, no other
party to the lease or sublease has repudiated any material provision
thereof, (iv) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease, (v) neither the
Company nor any of its subsidiaries has assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold (except encumbrances of a nature described in clause (i) of
Section 3.22(a) hereof), and (vi) to the knowledge of Company, all
facilities leased or subleased thereunder have received all approvals of
governmental authorities (including material licenses and permits) legally
required, except where the failure to obtain such approvals would not have
a Material Adverse Effect.
3.23 NO OTHER REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants that it is not relying upon any representations and
warranties of Parent, Holdings or Mergeco that are not contained in this
Agreement or in the Exhibits hereto and agrees that there shall not be
deemed to be any other express or implied representations or warranties
made by or on behalf of Parent, Holdings or Mergeco in connection with the
Merger or the other transactions contemplated by this Agreement (which
includes the Exhibits hereto).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGECO
Parent and Mergeco each jointly and severally represent and
warrant to the Company as follows:
4.1 ORGANIZATION. Each of Parent, Holdings and Mergeco is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and each has all requisite
corporate power and corporate authority to own, lease and operate its
properties and to conduct its business as now being conducted, except where
the failure to be so organized, existing and in good standing or to have
such power and authority would not, individually or in the aggregate, have
a material adverse effect on the business or financial condition of Parent
and its subsidiaries taken as a whole. Each of Parent, Holdings and
Mergeco is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the properties owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except where 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 the business or financial condition of Parent and its
subsidiaries taken as a whole. Holdings is a wholly owned subsidiary of
Parent, and Mergeco is a wholly-owned subsidiary of Holdings.
4.2 AUTHORIZATION OF THIS AGREEMENT. Each of Parent, Holdings
and Mergeco has all requisite corporate power and corporate authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by the Boards of Directors of Parent,
Holdings and Mergeco and by Holdings as the sole shareholder of Mergeco,
and no other corporate proceedings on the part of Parent, Holdings or
Mergeco are necessary to authorize this Agreement or consummate the
transactions contemplated hereby. No vote of Parent's shareholders is
required to approve this Agreement or the transactions contemplated
thereby. This Agreement has been duly and validly executed and delivered
by each of Parent, Holdings and Mergeco and, assuming the accuracy of the
representations and warranties set forth in Section 3.3, constitutes a
valid and binding agreement of Parent, Holdings and Mergeco enforceable
against each of Parent, Holdings and Mergeco in accordance with its terms.
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for (i)
compliance with any applicable requirements of the Exchange Act, (ii)
compliance with any applicable requirements of the HSR Act, (iii)the filing
and recordation of the Articles of Merger with the Minnesota Secretary of
State, (iv)filings under the securities or blue sky laws or takeover laws
of the various states (other than Minnesota), (v) filings required under
the listing requirements of the NASD and the Nasdaq National Market and
(vi)filings in connection with any applicable transfer or other taxes in
any applicable jurisdiction, no filing with, and no permit, authorization,
consent or approval of, any public body or other governmental authority is
necessary for the consummation by Parent, Holdings and Mergeco of the
transactions contemplated by this Agreement, the failure of which to obtain
is reasonably likely to impair the ability of Parent, Holdings or Mergeco
to perform their respective obligations hereunder or to consummate the
transactions contemplated hereby. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
nor compliance by Parent, Holdings or Mergeco with any of the provisions
hereof will (i)conflict with or result in any violation of any provision of
the Certificate or Articles of Incorporation or By-Laws of Parent, Holdings
or Mergeco, (ii)result in a violation or breach of, or constitute a default
(or give rise to any right of termination, cancellation or acceleration)
under, any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Parent or any of its subsidiaries is a
party, or by which any of them or any of their respective properties or
assets is bound, or (iii)assuming the truth of the representations and
warranties of the Company hereunder and its compliance with all agreements
contained herein and assuming the due making or obtaining of all filings,
permits, authorizations, consents and approvals referred to in the
preceding sentence, violate any statute, rule, regulation, order,
injunction, writ or decree of any public body or authority by which Parent
or any of its subsidiaries or any of their respective properties or assets
is bound, excluding from the foregoing clauses(ii) and (iii) violations,
breaches or defaults which, either individually or in the aggregate, are
not reasonably likely to impair the ability of Parent, Holdings or Mergeco
to perform their respective obligations hereunder or to consummate the
Merger or the other transactions contemplated hereby.
4.4 PROXY STATEMENT. None of the information supplied or to be
supplied in writing by Parent, Holdings or Mergeco specifically for
inclusion in the Proxy Statement will, at the time the Proxy Statement is
mailed, contain any untrue statement of a material fact, or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading or, at the time of the meeting of shareholders to
which such Proxy Statement relates or at the Effective Time, as then
amended or supplemented, omit to state any material fact necessary to
correct any statement which has become false or misleading in any earlier
communication with respect to the solicitation of any proxy for such
meeting. If at any time prior to the Effective Time, any event relating to
Parent or any of its subsidiaries is discovered which should be set forth
in an amendment of, or a supplement to, such Proxy Statement, Parent shall
promptly so inform the Company and will furnish all necessary information
to the Company relating to such event.
4.5 FINANCIAL ABILITY TO PERFORM. Parent and Mergeco have cash
funds available sufficient to make all cash payments required to be made
hereby for Shares in the Merger and to pay all related fees and expenses.
4.6 FINDERS AND INVESTMENT BANKERS. All negotiations relating
to this Agreement and the transactions contemplated hereby have been
carried on without the intervention of any person acting on behalf of
Parent, Holdings or Mergeco in such manner as to give rise to any valid
claim against Parent, Holdings, Mergeco or the Company for any broker's or
finder's fee or similar compensation, except for Goldman, Sachs & Co.,
whose fees shall be paid by Parent.
4.7 LITIGATION. There are no suits, claims, actions,
proceedings or investigations pending or, to the knowledge of Parent,
threatened against, Parent, Holdings or Mergeco that, individually or in
the aggregate, would reasonably be expected to delay materially or prevent
the consummation of the Merger or the other transactions contemplated
hereby.
4.8 CERTAIN ANTI-TAKEOVER PROVISIONS NOT APPLICABLE. Neither
Parent, Holdings nor Mergeco nor any affiliate or associate of any of the
foregoing persons was an "interested shareholder" of the Company as defined
in Section 302A.011, Subd. 49(a) of the MBCA immediately prior to Parent's,
Holdings' and Mergeco's execution and delivery of this Agreement.
4.9 NO OTHER REPRESENTATIONS AND WARRANTIES. Parent, Holdings
and Mergeco represent and warrant that they are not relying upon any
representations and warranties of the Company that are not contained in
this Agreement or in the Exhibits hereto or in the Disclosure Schedule and
agree that there shall not be deemed to be any other express or implied
representations or warranties made or on behalf of the Company in
connection with the Merger or the other transactions contemplated by this
Agreement (which includes the Exhibits hereto and the Disclosure Schedule).
ARTICLE V
COVENANTS
5.1 CONDUCT OF THE BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Company and its subsidiaries will each
conduct its operations in all material respects according to its ordinary
course of business, and will use all reasonable efforts to preserve intact
its business organization and to maintain its relationships with suppliers,
distributors, customers and others having business relationships with it.
The Company will confer at Parent's request on a regular and frequent basis
with representatives of Parent to report upon the status of operations.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement, prior to the Effective Time,
neither the Company nor any of its subsidiaries will, without the prior
written consent of Parent:
(a) amend its Articles of Incorporation or Amended By-Laws (or
equivalent instruments);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting
of additional options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any shares of capital stock of any class (including,
without limitation, the Shares) or any securities convertible into shares
of capital stock of any class, or designate any class or series of shares
of capital stock of the Company from the undesignated shares of capital
stock of the Company;
(c) split, combine or reclassify any shares of its capital stock
(including, without limitation, the Shares), declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem or
otherwise acquire any shares of its capital stock; provided, however, that
any of the Company's wholly-owned subsidiaries may declare, set aside or
pay any dividend or other distribution with respect to their capital stock;
(d) (i) create, incur or assume any indebtedness for money
borrowed (including obligations in respect of capital leases), except for
short-term borrowings incurred in the ordinary course of business and
prepayable at any time in accordance with their terms without penalty; (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
person other than any subsidiary of the Company; or (iii)make any loans,
advances or capital contributions to, or investments in, any person other
than any of the subsidiaries of the Company, except for customary loans or
advances to employees or trade credit in the ordinary course of business;
(e) except in the ordinary course of business, sell, transfer,
mortgage or otherwise dispose of or encumber, any business, subsidiary,
assets that are material to the Company and its subsidiaries taken as a
whole, or fixed assets that individually have a value on the Company's
books in excess of $25,000;
(f) settle or compromise any pending or threatened suit, action
or claim in which the amount involved is greater than $25,000 or which is
material to the Company and its subsidiaries taken as a whole or which
relates to the transactions contemplated hereby or modify, amend or
terminate any of its Material Contracts in any material respects or waive,
release or assign any material rights or claims;
(g) make any material tax election or any material accounting
charge or permit any insurance policy naming it as a beneficiary or a loss
payable payee to be canceled or terminated without notice to Parent;
(h) except for (A) increases in salaries, bonuses and severance
benefits as contemplated in Section 5.1(h) of the Disclosure Schedule, (B)
salary and wage increases and bonuses in the ordinary course of business
and (C) salary and wage increases that may be required by law, grant any
material increase in the compensation payable or to become payable to any
of its officers or employees or establish, adopt, enter into, make any new
grants or awards under, be obligated to grant any awards under, or amend,
any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option or other equity, pension, retirement, incentive or deferred
compensation, employment, retention, termination, severance, health, life
or other welfare, fringe or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, or grant or pay any benefit not required by any existing plan or
arrangement;
(i) change any of the accounting principles used by it, unless
required by GAAP;
(j) acquire any business or stock, merge or consolidate with any
other person or sell, encumber or otherwise transfer any business or
material portion thereof;
(k) other than in the ordinary course of business, enter into
any Material Contracts; or
agree to do any of the foregoing.
5.2 ACCESS TO INFORMATION. From the date hereof to the
Effective Time, the Company shall, and shall cause its subsidiaries,
officers, directors, employees, auditors and other agents to, afford the
officers, employees, auditors and other agents of Parent, and to
representatives of and advisors to financing sources, complete access at
all reasonable times to its officers, employees, agents, properties,
offices, plants and other facilities and to all books, records and
contracts, and shall furnish Parent and such financing sources with all
financial, operating and other data and information as Parent, through its
officers, employees or agents, or such financing sources may from time to
time request. The Company will promptly furnish to Parent a copy of each
document filed or received by it pursuant to the Federal securities laws or
Federal or state tax laws or any Environmental Laws, and of such other
documents as Parent may reasonably request. All information obtained by
Parent pursuant to this Section 5.2 shall be kept confidential in
accordance with the confidentiality agreement dated as of November 1, 1996
(the "Confidentiality Agreement"), between Parent and the Company.
5.3 SHAREHOLDER APPROVAL. (a) As soon as practicable following
the execution of this Agreement, the Company, acting through its Board of
Directors, shall in accordance with applicable law, and subject to the
fiduciary duties of the Board of Directors under applicable law as advised
by outside counsel, take all steps necessary duly to call, set a record
date for, give notice of, convene and hold a meeting of its shareholders
for the purpose of voting upon the adoption and approval of this Agreement
and the Merger and the other transactions contemplated hereby.
(b) The Company will, as promptly as practicable, prepare and
file a Proxy Statement with the SEC, and shall use all reasonable efforts
to obtain and furnish the information required to be included by it in the
Proxy Statement and, after consultation with Parent, to respond promptly to
any comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof and cause the Proxy Statement to be mailed to
its shareholders in accordance with the provisions of the MBCA. Subject to
their fiduciary duties under applicable law as advised by outside counsel,
the Board of Directors and the Special Committee will (i) recommend to
shareholders of the Company the adoption and approval of this Agreement and
the transactions contemplated hereby and the other matters to be submitted
to such shareholders in connection therewith and (ii)solicit proxies for
the necessary approvals by such shareholders of this Agreement and the
Merger and the other transactions contemplated hereby.
5.4 ALL REASONABLE EFFORTS. Subject to the terms and conditions
herein provided and the fiduciary duties of the Board of Directors under
applicable law, as advised by outside counsel, each of the parties hereto
agrees to use all reasonable efforts consistent with applicable legal
requirements to take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary or proper and advisable under applicable
laws and regulations to ensure that the conditions set forth in Article VI
hereof are satisfied and to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement.
5.5 CONSENTS. Parent and the Company each shall use all
reasonable efforts to obtain all material consents of third parties and
governmental authorities, and to make all governmental filings, necessary
to the consummation of the transactions contemplated by this Agreement.
The Company, Parent and Mergeco shall as soon as practicable file Pre-
Merger Notification and Report Forms under the HSR Act with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department
of Justice (the "Antitrust Division") and shall use all reasonable efforts
to respond as promptly as practicable to all inquiries received from the
FTC or the Antitrust Division for additional information or documentation.
5.6 PUBLIC ANNOUNCEMENTS. Parent and the Company will consult
with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange or automated interdealer
quotation system.
5.7 CONSENT OF HOLDINGS. Holdings, as the sole shareholder of
Mergeco, by executing this Agreement consents to the execution and delivery
of this Agreement by Mergeco and the consummation of the Merger and the
other transactions contemplated hereby and such consent shall be treated
for all purposes as a vote duly cast at a meeting of the shareholders of
Mergeco held for such purpose.
5.8 NO SOLICITATION. From and after the date hereof until the
earlier of the Effective Time or the termination of this Agreement, neither
the Company nor any of its subsidiaries nor any of their respective
officers, directors, employees, agents or representatives (including,
without limitation, investment bankers, attorneys and accountants) shall,
directly or indirectly, (i)solicit, initiate or encourage or (ii)enter into
any discussions or negotiations with, in any way continue any discussions
or negotiations commenced before the date of this Agreement with, or
disclose directly or indirectly any information not customarily disclosed
concerning its business and properties to, or afford any access to its
properties, books and records to, any corporation, partnership or other
person or group in connection with any possible proposal (an "Acquisition
Proposal") regarding a sale of all or any part of the Company's capital
stock or a merger, consolidation or statutory share exchange involving the
Company or any subsidiary of the Company or sale or spin-off of all or a
substantial portion of the assets of the Company or any subsidiary of the
Company which is material to the Company and its subsidiaries taken as a
whole, or a liquidation or a recapitalization of the Company, or any
similar transaction; provided that (x)in response to an Acquisition
Proposal made without such solicitation, initiation or encouragement, the
Company may (if the Board of Directors shall have concluded in good faith,
based on the advice of outside counsel that any action is required for the
Board of Directors to comply with its fiduciary duties under applicable
law) (i)furnish information with respect to the Company to any person
pursuant to a confidentiality agreement no more favorable to such person
than the Confidentiality Agreement is to Parent and (ii)participate in
negotiations regarding such Acquisition Proposal and (y)the Board of
Directors shall be free to take and disclose any position with respect to a
third party offer pursuant to Rules l4d-9 and l4e-2 under the Exchange Act
and make such disclosures to the Company's shareholders, which, upon the
advice of outside counsel, is required by applicable law. The Company will
notify Parent immediately, orally and in writing, if any discussions or
negotiations are sought to be initiated, any inquiry or proposal is made,
or any such information is requested, with respect to an Acquisition
Proposal or potential Acquisition Proposal or if any Acquisition Proposal
is received or indicated to be forthcoming, and will include in such
notification the identity of the other party or parties and the material
terms and conditions of any such request, inquiry or Acquisition Proposal.
The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request, inquiry
or Acquisition Proposal.
(b) If the Board of Directors, after consultation with and based
upon the advice of outside counsel, determines in good faith that it is
necessary to do so in order to comply with its fiduciary duties under
applicable law, the Board of Directors, (i) may modify or amend its
approval or recommendation of this Agreement or Merger, (ii) approve or
recommend any Superior Proposal (as hereinafter defined) or (iii) following
the termination of this Agreement in accordance with its terms, enter into
an agreement with respect to a Superior Proposal; provided, however, in
case of clauses (ii) and (iii) only at a time after the second business day
after Parent's receipt of written notice from the Company advising Parent
of the Company's receipt of a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and identifying the person
making such Superior Proposal. For purposes of this Agreement, a "Superior
Proposal" means a proposal to acquire, directly or indirectly, more than
50% of the Shares or all or any substantial portion of the consolidated
assets of the Company and its subsidiaries and otherwise on terms that the
Board of Directors determines in its good faith judgment (based on the
advice of a financial advisor of nationally recognized reputation) to be
more favorable to the Company's shareholders than the Merger.
5.9 INDEMNIFICATION. (a) For a period of six years after the
Effective Time, the Surviving Corporation shall indemnify, defend and hold
harmless the present and former officers, directors, employees and
committee members of the Company and its subsidiaries (collectively, the
"Indemnified Parties") from and against, and pay or reimburse the
Indemnified Parties for judgments, penalties, fines, settlements and
expenses, including attorneys fees and disbursements resulting from or
arising out of actions or omissions occurring at or prior to the Effective
Time (including, without limitation, the transactions contemplated by this
Agreement) by such persons in their capacities as officers, directors,
employees or committee members of the Company or any of its subsidiaries to
the full extent permitted or required under applicable law and to the
extent permitted under the provisions of the Articles of Incorporation and
the Amended By-Laws of the Company in effect at the date hereof (which
provisions shall not be amended in any manner which adversely affects any
Indemnified Party, for a period of six years), including provisions
relating to advances of expenses incurred in the defense of any proceeding;
provided that in the event any claim or claims are asserted or made within
such six-year period, all rights to indemnification in respect of each such
claim shall continue until final disposition of such claim.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.9(a) shall provide notice to the Surviving Corporation promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and the Indemnified Party shall permit the
Surviving Corporation (at the Surviving Corporation's expense) to assume
the defense of any claim or any litigation resulting therefrom; provided
that (i)counsel for the Surviving Corporation who shall conduct the defense
of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, and the Indemnified Party may participate in such
defense at such Indemnified Party's expense, and (ii)the omission by any
Indemnified Party to give notice as provided herein shall not relieve the
Surviving Corporation of its indemnification obligation under this
Agreement except to the extent that such omission results in a failure of
actual notice to the Surviving Corporation and the Surviving Corporation is
materially damaged as a result of such failure to give notice. The
Surviving Corporation shall not, in the defense of any such claim or
litigation, except with the consent of the Indemnified Party, consent to
entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation. In the event that the
Surviving Corporation does not accept the defense of any matter as above
provided, or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided that the Surviving
Corporation shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld,
provided that such settlement does not in any way require the Surviving
Corporation to make any admission of liability with respect to such claim
or litigation). In any event, the Surviving Corporation and the
Indemnified Parties shall cooperate in the defense of any action or claim
subject to this Section5.9 and the records of each shall be available to
the other with respect to such defense.
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect either (i) the
current policy of directors' and officers' liability insurance maintained
by the Company (provided that Parent or the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous in any
material respects to the Indemnified Parties) with respect to claims
arising from facts or events which occurred before the Effective Time;
provided, however, that in no event shall the Surviving Corporation be
required to expend pursuant to this Section 5.9(c)(i) more than an amount
per year equal to 150% of the current annual premium (which current annual
premium for the policy year ending September 1, 1997 the Company represents
and warrants to be approximately $47,355 in the aggregate) paid by the
Company for such existing insurance coverage (the "Cap"); and provided,
further, that if equivalent coverage cannot be obtained, or can be obtained
only by paying an annual premium in excess of the Cap, the Surviving
Corporation shall only be required to obtain as much coverage as can be
obtained by paying an annual premium equal to the Cap, or (ii) a run-off
(i.e., "tail") policy or endorsement with respect to the current policy of
directors' and officers' liability insurance covering claims asserted
within six years after the Effective Time arising from facts or events
which occurred before the Effective Time.
(d) The provisions of this Section 5.9 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her personal representatives and shall be binding on
all successors and assigns of the Surviving Corporation.
5.10 TRANSFER TAXES. The Surviving Corporation shall pay any
transfer Taxes payable in connection with the Merger and shall be
responsible for the preparation and filing of any required Tax Returns with
respect to such Taxes.
5.11 ANTI-TAKEOVER STATUTES. If any "fair price", "moratorium",
"control share acquisition" or other form of anti-takeover statute is or
shall become applicable to the Merger or the other transactions
contemplated hereby, the Company and the members of the Board of Directors
and the Special Committee shall, subject to their fiduciary duties under
applicable law as advised by outside counsel, grant such approvals and take
such actions as are necessary so that the Merger and the other transactions
contemplated hereby may be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to eliminate or minimize the
effects of any such anti-takeover statute on the transactions contemplated
hereby.
5.12 NOTIFICATION OF CERTAIN MATTERS. The Company will give
prompt notice to Parent and Mergeco, and Parent and Mergeco will give
prompt notice to the Company, of the occurrence or non-occurrence of any
event (i) which has had a Material Adverse Effect, (ii) which has caused
any representation or warranty contained in this Agreement to be untrue or
inaccurate or (iii) which has caused any failure of the Company, or of
Parent or Mergeco, as the case may be, to in all material respects comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied under this Agreement; provided, however, that the delivery of any
notice pursuant to this Section 5.12 will not limit or otherwise affect the
remedies available under this Agreement to the party receiving such notice.
5.13 CERTAIN RESIGNATIONS. The Company will use all reasonable
efforts to assist Parent in procuring the resignation of all of the members
of the Board of Directors and the directors of all of the Company's
subsidiaries effective as of the Effective Time.
5.14 EMPLOYEE MATTERS. (a) For a period of two years after the
Effective Time, Parent shall cause the Surviving Corporation (i) to
continue to maintain the Company's individual base salaries (as in effect
immediately prior to the Effective Time) for each employee residing in the
United States and actively employed full-time by the Company immediately
prior to the Effective Time as long as that employee continues to be
actively employed full-time by the Surviving Corporation in the same
capacity as such employee was actively employed full-time by the Company
immediately prior to the Effective Time and (ii) to maintain welfare and
pension benefit plans, programs and arrangements (other than stock based
plans, programs and arrangements) which, in the aggregate, for the
employees as a whole who were active full-time employees of the Company
immediately prior to the Effective Time and continue to be active full-time
employees of the Surviving Corporation, are no less favorable than those
provided by the Company immediately prior to the Effective Time, provided
that nothing herein shall obligate Parent or the Surviving Corporation to
provide such employees with any stock based compensation (including,
without limitation, stock options or stock appreciation rights).
(b) From and after the Effective Time, for purposes of
determining eligibility and vesting (but not benefit accrual) for employees
residing in the United States and actively employed full-time by the
Company immediately prior to the Effective Time, under any compensation,
severance, welfare, pension, benefit or savings plan of Parent or any of
its affiliates, in effect on the Effective Time or established within two
years after the Effective Time, in which active full-time employees of the
Company and its subsidiaries become eligible to participate (to the extent
required by clause (ii) of Section 5.14(a) above), service with the Company
or any of its subsidiaries (whether before or after the Effective Time)
shall be credited as if such services had been rendered to Parent or any of
its affiliates.
(c) No provision of this Section 5.14 shall create any third
party beneficiary rights in any employee of the Company or its subsidiaries
(including any beneficiary thereof).
5.15 EXTINGUISHMENT OF CREDIT LINE. Prior to the Effective Time,
the Company shall terminate its existing line or lines of credit with an
affiliate of Biofin, and there shall not have been any borrowings
thereunder by the Company or any of its subsidiaries from the date hereof
through and including the Effective Time.
ARTICLE VI
CLOSING CONDITIONS
6.1 CONDITIONS TO THE OBLIGATIONS OF PARENT, MERGECO AND THE
COMPANY. The respective obligations of each party hereto to effect the
Merger shall be subject to the fulfillment at or prior to the Effective
Time of the following conditions:
(a) There shall not be in effect any statute, rule or regulation
enacted, promulgated or deemed applicable by any governmental authority of
competent jurisdiction that makes consummation of the Merger illegal and no
temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be
in effect; provided, however, that each of the parties shall use all
reasonable efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as possible any injunction or other order
that may be entered.
(b) This Agreement shall have been approved and adopted by the
affirmative vote of the holders of a majority of the outstanding Shares in
accordance with the Articles of Incorporation and Amended By-Laws of the
Company and the MBCA.
(c) Each of Parent, the Company and any other person (as defined
in the HSR Act and the rules and regulations thereunder) required in
connection with the Merger to file a Pre-Merger Notification and Report
Form under the HSR Act with the FTC and the Antitrust Division shall have
made such filing and the applicable waiting period with respect to each
such filing (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
(d) This Agreement shall not have been terminated in accordance
with its terms.
(e) All of the conditions set forth in that certain agreement,
dated as of the date hereof (the "European Agreement"), between Parent,
certain of its affiliates and Sorin Biomedica S.p.A. ("Sorin"), pertaining
to the acquisition of Sorin's European Diagnostics Division shall have been
satisfied or waived, and the Closing (as such term is defined in the
European Agreement) shall have occurred simultaneously with the Effective
Time.
6.2 CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGECO. The
obligations of Parent and Mergeco pursuant to this Agreement to consummate
the Merger is also subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) The representations and warranties of the Company contained
herein shall be true and correct in all material aspects as of the Closing
with the same effect as though all such representations and warranties had
been made as of the Closing, except for any such representations and
warranties made as of a specified date, which shall be true and correct as
of such date, and Parent shall have received from the Company's Chief
Executive Officer and its Chief Financial Officer an officers' certificate
to this effect.
(b) Each and all of the covenants and agreements of the Company
to be performed and complied with pursuant to this Agreement prior to the
Closing shall have been duly performed and complied with in all material
respects, and Parent shall have received from the Company's Chief Executive
Officer and its Chief Financial Officer an officers' certificate to this
effect.
(c) There shall not have occurred any event having, a Material
Adverse Effect (provided, however, that the items set forth in the
Disclosure Schedule shall not be deemed to have a Material Adverse Effect
for purposes of this Section 6.2(c)).
(d) Dissenting Shares shall constitute not more than 10% of the
Shares issued and outstanding immediately prior to the Effective Time.
(e) There shall have been received all governmental
authorizations listed in Section 6.2(e) of the Disclosure Schedule which
are required in connection with the consummation of the Merger and the
other transactions contemplated hereby and are required for the operation
of the Surviving Corporation following the Merger.
6.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company pursuant to this Agreement to consummate the
Merger is also subject to the fulfillment at or prior to the Effective Time
of the following additional conditions:
(a) The representations and warranties of Parent and Mergeco
contained herein shall be true and correct in all material respects as of
the Closing with the same effect as though all such representations and
warranties had been made as of the Closing, except for any such
representations and warranties made as of a specified date, which shall be
true and correct as of such date, and the Company shall have received from
Parent and Mergeco officers' certificates to this effect.
(b) Each and all of the covenants and agreements of Parent and
Mergeco to be performed and complied with pursuant to this Agreement prior
to the Closing shall have been duly performed and complied with in all
material respects, and the Company shall have received from Parent and
Mergeco officers' certificates to this effect.
ARTICLE VII
CLOSING
7.1 TIME AND PLACE. The closing of the Merger (the "Closing")
shall take place at the offices of Baker & McKenzie, 805Third Avenue, New
York, New York 10022, or at such other place as the parties may mutually
agree, as soon as practicable following satisfaction or waiver, if
permissible, of the conditions set forth in ArticleVI. The date on which
the Closing actually occurs is herein referred to as the "Closing Date."
7.2 FILING AT THE CLOSING. At the Closing, Parent, Mergeco and
the Company shall cause the Articles of Merger to be filed with the
Secretary of State of the State of Minnesota in accordance with the MBCA,
and shall take any and all other lawful actions and do any and all other
lawful things necessary to cause the Merger to become effective.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of the Company by action taken or authorized by the Board of
Directors of the terminating party:
(a) by mutual written consent of Parent and the Company;
(b) without action needing to be taken by either Parent or the
Company, upon termination of the European Agreement;
(c) by either Parent or the Company:
if the Merger shall not have been consummated on or
before August 1, 1997, provided, however, that the right to terminate
this Agreement shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or before
the aforesaid date;
if, at the meeting of the holders of the Shares duly
convened to vote to approve the Merger and adopt this Agreement or at
any adjournment or postponement thereof, said approval shall not have
been obtained from the holders of at least a majority of the Shares;
or
if any court or other governmental agency of competent
jurisdiction in the United States or elsewhere shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining, or otherwise prohibiting the Merger, and such
order, decree, ruling or other action shall have become final and non-
appealable; provided, however that the party seeking to terminate this
Agreement pursuant to this clause (c)(iii) shall have used all
reasonable efforts to prevent the entry of and to remove such
restraint or other action;
(d) by Parent, if the Company shall have breached in any
material respect or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in
this Agreement, including, without limitation, those set forth in Section
5.8, which breach or failure to perform (A) would give rise to the failure
of the conditions set forth in Section 6.2 (a) or (b), and (B) cannot be or
has not been cured within 30 days of the giving of written notice to the
Company of such breach;
(e) by Parent, if (i) the Board of Directors (or any independent
committee thereof including, without limitation, the Special Committee)
shall have withdrawn or modified in a manner adverse to Parent, Mergeco or
Holdings its approval or recommendation of the Merger or this Agreement, or
shall have approved or recommended any Acquisition Proposal (other than the
Merger), or (ii) the Board of Directors or any independent committee
thereof (including, without limitation, the Special Committee) shall have
resolved to take any of the foregoing actions;
(f) by the Company, if Parent, Mergeco or Holdings shall have
breached in any material respect or failed to perform in any material
respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of the conditions set forth in Sections
6.3(a) or (b), and (B) cannot be or has not been cured within 30 days of
the giving of written notice to Parent of such breach; or
(g) by the Company if prior to the Effective Time, and after the
Company's receipt of a Superior Proposal the Board of Directors or any
independent committee thereof (including, without limitation, the Special
Committee) in a manner consistent with Section 5.8 (b), (A) shall have
withdrawn or modified, in a manner adverse to Parent, Mergeco or Holdings,
its approval or recommendation of the Merger or this Agreement, (B) shall
have approved or recommended a Superior Proposal or (C) shall have resolved
to do any of the foregoing; provided, however, that such termination under
this paragraph (g) shall not be effective until the Company has made
payment to Parent of the Fee (as defined in Section 8.3(a)) required to be
paid pursuant to Section 8.3(a).
8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination and abandonment of the Merger by Parent or the Company pursuant
to Section8.1, written notice thereof shall forthwith be given to the
others, and this Agreement shall terminate and the Merger shall be
abandoned, without further action by any of the parties hereto. Each of
Holdings and Mergeco agrees that any termination by Parent shall be
conclusively binding upon it, whether given expressly on its behalf or not,
and the Company shall have no further obligation with respect to it. If
this Agreement is terminated as provided herein, no party hereto shall have
any liability or further obligation to any other party to this Agreement,
provided that any termination shall be without prejudice to the rights of
any party hereto arising out of the willful and material breach by any
other party of any covenant or agreement contained in this Agreement, and
provided, further, that provisions set forth in Sections 3.21, 4.6, 8.3 and
9.7 and the Confidentiality Agreement shall in any event survive any
termination (subject, in the case of the Confidentiality Agreement, to
Section 9.10 hereof) and that no party shall be liable to any other party
for consequential or special damages or loss of profits.
8.3 FEES AND EXPENSES. In the event that this Agreement is
terminated pursuant to Section 8.1(e) or as a precondition to a termination
by the Company pursuant to section 8.1(g), then in either event, the
Company shall pay Parent promptly (but in no event later than five business
days after the date of such termination) a fee of $2.5million (the "Fee"),
which amount shall be payable in immediately available funds. In the event
of a termination of this Agreement pursuant to Section 8.1 (other than a
termination pursuant to Section 8.1(f)), then, if a Third Party Acquisition
(as defined in Section 8.3(c)) shall have occurred within twelve (12)
months following the date of termination, within five business days of the
date such Third Party Acquisition is concluded, the Company shall pay
Parent the Fee (to the extent not previously paid), plus all Expenses (as
defined in Section 8.3(b)).
(b) "EXPENSES" means all documented out-of-pocket expenses and
fees up to $1.5million in the aggregate (including, without limitation,
fees and expenses payable to all banks, investment banking firms, other
financial institutions, consulting firms and other persons and their
respective agents and counsel for arranging, committing to provide or
providing any financing for the Merger and any transactions contemplated
thereby or structuring the transactions and all fees of counsel,
accountants, experts and consultants to Parent, Holdings and Mergeco, and
all printing and advertising expenses) actually incurred by any of them or
on their behalf in connection with the transactions, including, without
limitation, litigation related thereto and the financing thereof, and
actually incurred by banks, investment banking firms, other financial
institutions and other persons and assumed by Parent, Holdings or Mergeco
in connection with the negotiation, preparation, execution and performance
of this Agreement, the structuring and financing of the Merger and any
transactions contemplated thereby and any litigation and any financing
commitments or agreements relating thereto.
(c) "THIRD PARTY ACQUISITION" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger,
consolidation, statutory share exchange or other business combination
transaction by any person other than Parent, Mergeco or any affiliate
thereof (a "Third Party"), in which transaction the holders of Shares are
to receive a per Share consideration equal to, or in excess of, the Merger
Consideration, (ii) the acquisition by any Third Party of 50% or more (in
book value or market value) of the total assets of the Company and its
subsidiaries, taken as a whole, in a transaction or series of transactions
that indicates an enterprise value for the Company equal to or greater than
the product of the number of Shares outstanding at the Effective Time
multiplied by the Merger Consideration, (iii) the acquisition by a Third
Party of 50% or more of the outstanding Shares, whether by tender offer,
exchange offer or otherwise, for a per Share price equal to, or in excess
of, the Merger Consideration; (iv) the adoption by the Company of a plan of
liquidation or dissolution, or the declaration or payment of an
extraordinary dividend, the amount of which indicates an enterprise value
for the Company equal to or greater than the product of the number of
shares outstanding at the Effective Time multiplied by the Merger
Consideration; or (v) the repurchase by the Company or any of its
subsidiaries of 50% or more of the outstanding Shares for a per Share
consideration in excess of the Merger Consideration. In each case,
appropriate adjustments shall be made for any stock splits, reverse stock
splits, stock dividends or similar events affecting the number of Shares
outstanding, effected after the date hereof. For purposes of clauses (iii)
and (v) hereof, such Third Party Acquisition shall have been deemed to have
been concluded upon the acceptance of Shares for payment, exchange or
repurchase, for purposes of clause (i), such Third Party Acquisition shall
be deemed to have concluded at the effective time of such merger,
consolidation or other transaction, for purposes of clause (ii), such
acquisition shall have been deemed to have been concluded on its closing
date, and for purposes of clause (iv), such event shall have been deemed to
have been concluded on the date such plan of liquidation or dissolution is
adopted, or the record date for payment of such extraordinary dividend.
(d) Except as set forth in this Section 8.3, all costs and
expenses incurred in connection with this Agreement and the Merger and any
transactions contemplated thereby shall be paid by the party incurring such
expenses, whether or not any transaction is consummated.
(e) In the event that the Company shall fail to pay the Fee or
any expenses when due, the term "Expenses" shall be deemed to include the
costs and expenses actually incurred or accrued by Parent, Holdings and
Mergeco (including, without limitation, fees and expenses of counsel) in
connection with the collection under and enforcement of this Section 8.3,
together with interest on such unpaid Fee and Expenses, commencing on the
date that the Fee or such Expenses became due, at a rate equal to the rate
of interest publicly announced by The Chase Manhattan Bank, from time to
time, in the City of New York, as such bank's Prime Rate plus 1.00%.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written
agreement of Parent, Holdings, Mergeco and the Company at any time prior to
the Effective Time with respect to any of the terms contained herein,
provided, that after this Agreement is adopted by the Company's
shareholders pursuant to Section5.3, no such amendment or modification
shall be made that reduces the amount or changes the form of the Merger
Consideration or otherwise materially and adversely affects the rights of
the Company's shareholders hereunder, without the further approval of such
shareholders.
9.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Parent,
Holdings or Mergeco, on the one hand, or the Company, on the other hand, to
comply with any obligation, covenant, agreement or condition herein may be
waived by the Company or Parent, respectively, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver
of compliance as set forth in this Section9.2. Each of Holdings and
Mergeco hereby agrees that any consent or waiver of compliance given by
Parent hereunder shall be conclusively binding upon it, whether given
expressly on its behalf or not.
9.3 SURVIVAL OF WARRANTIES. Each and every representation and
warranty made in this Agreement (including the Exhibits hereto and the
Disclosure Schedule) shall survive until the Effective Time of the Merger.
This Section9.3 shall have no effect upon any other obligation of the
parties hereto.
9.4 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (a)delivered personally or
by overnight courier, (b)mailed by registered or certified mail, return
receipt requested, postage prepaid, or (c)transmitted by telecopy, and in
each case, addressed to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice; provided
that notices of a change of address shall be effective only upon receipt
thereof):
(a) if to Parent, Holdings or Mergeco, to:
American Standard Inc.
One Centennial Avenue
P.O. Box 6820
Piscataway, NJ 08855-6820
Telecopy: (908) 980-6118
Attention: Richard A. Kalaher, Esq.
Vice President and General Counsel
with copies to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Telecopy: (212) 759-9133
Attention: Richard L. Nevins, Esq.
Faegre & Benson
2200 Norwest Center, 90 South Seventh Street
Minneapolis, Minnesota 55402-3901
Telecopy: (612) 336-3026
Attention: Philip S. Garon, Esq.
(b) if to the Company, to
INCSTAR Corporation
1951 Northwestern Avenue
Stillwater, Minnesota 55082
Telecopy: (612) 773-1552
Attention: John Booth
with a copy to
Dorsey & Whitney LLP
220 South 6th Street
Minneapolis, Minnesota 55402
Telecopy: (612) 340-8738
Attention: Jonathan B. Abram, Esq.
Any notice so addressed shall be deemed to be given (x)three business days
after being mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid and (y)upon delivery, if transmitted by
hand delivery, overnight courier or telecopy.
9.5 ASSIGNMENT; PARTIES IN INTEREST. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties (except that Mergeco may assign to
Parent or any other direct or indirect wholly-owned subsidiary of Parent
any and all rights and obligations of Mergeco under this Agreement,
provided that any such assignment will not relieve Parent from any of its
obligations under this Agreement). Except for Section 5.9, which is
intended for the benefit of the Company's directors, officers, employees
and committee members, this Agreement is not intended to confer upon any
other person except the parties any rights or remedies under or by reason
of this Agreement.
9.6 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof
in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or
in equity.
9.7 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Minnesota (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.
9.8 COUNTERPARTS. This Agreement may be executed in two 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 INTERPRETATION. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of
the agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i)the term
"person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof; (ii)the terms "affiliate"
and "associate" shall have the meanings set forth in Rule l2b-2 of the
General Rules and Regulations promulgated under the Exchange Act;(iii)the
term "subsidiary" of any specified corporation shall mean any corporation
of which the outstanding securities having ordinary voting power to elect a
majority of the board of directors are directly or indirectly owned by such
specified corporation; and (iv) the term "knowledge" or any similar term
shall mean the actual knowledge of all of the directors and executive
officers of the Company and each of its subsidiaries.
9.10 ENTIRE AGREEMENT. This Agreement, including the exhibits
and schedules to this Agreement, and the Confidentiality Agreement, embody
the entire agreement and understanding of the parties hereto in respect of
the subject matter contained herein and supersede all prior agreements and
the understandings between the parties with respect to such subject matter.
The Confidentiality Agreement shall terminate and cease to have any effect
from and after the Effective Time.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
IN WITNESS WHEREOF, Parent, Holdings, Mergeco and the Company
have caused this Agreement to be signed by their respective duly authorized
officers as of the date first above written.
AMERICAN STANDARD INC.
By_____________________________
Name:
Title:
AMERICAN STANDARD MEDICAL
SYSTEMS, INC.
By:_____________________________
Name:
Title:
ISTR MERGER CORPORATION
By_____________________________
Name:
Title:
INCSTAR CORPORATION
By_____________________________
Name:
Title:
Merger Agreement
Signature Page
EXHIBIT A
ARTICLES OF INCORPORATION
OF
ISTR MERGER CORPORATION
The undersigned incorporator, being a natural person 18 years of
age or older, in order to form a corporate entity under Minnesota Statutes,
Chapter 302A, hereby adopts the following Articles of Incorporation
ARTICLE I
The name of the Corporation is ISTR Merger Corporation.
ARTICLE II
The registered office of this Corporation is located at 1990
Industrial Boulevard, Stillwater, Minnesota 55082.
ARTICLE III
This Corporation is authorized to issue an aggregate total of
1,000,000 shares, all of which shall be designated Common Stock, having a
par value of $.01 per share.
ARTICLE IV
The name and address of the incorporator of this Corporation is
as follows:
Keith P. Radtke
Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
ARTICLE V
No shareholder of this Corporation shall have any cumulative
voting rights.
ARTICLE VI
No shareholder of this Corporation shall have any preemptive
rights to subscribe for, purchase or acquire any shares of the Corporation
of any class, whether unissued or now or hereafter authorized, or any
obligations or other securities convertible into or exchangeable for any
such shares.
ARTICLE VII
The name of the first directors of this Corporation is Frederick
C. Paine.
ARTICLE VIII
Any action required or permitted to be taken at a meeting of the
Board of Directors of this Corporation not needing approval by the
shareholders under Minnesota Statutes, Chapter 302A, may be taken by
written action signed by the number of directors that would be required to
take such action at a meeting of the Board of Directors at which all
directors are present.
ARTICLE IX
No director of this Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for breach of
fiduciary duty by such director as a director; provided, however. that this
Article shall not eliminate or limit the liability of a director to the
extent provided by applicable law (i) for any breach of the director's duty
of loyalty to the Corporation or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section 302A.599 or 80A.23 of the
Minnesota Statutes, (iv) for any transaction from which the director
derived an improper personal benefit or (v) for any act or omission
occurring prior to the effective date of this Article. No amendment to or
repeal of this Article shall apply to or have any effect on the liability
or alleged liability of any director of the Corporation for or with respect
to any acts or omissions of such director occurring prior to such amendment
or repeal.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
March, 1997.
___________________________
Keith P. Radtke, Incorporator
EXHIBIT C
Employment and consulting agreements
Pension, bonus, incentive, severance, income continuation or
retirement plans
Distribution and agency agreements
Contracts for the purchase of materials and supplies, the amount of
which exceeds $25,000
Sales agreements, the amount of which exceeds $25,000
Any contract providing for the rendering of services to or by the
Company or its subsidiaries, the amount of which exceeds $25,000
Subcontractor agreements, requiring payments in excess of $25,000
Contracts or agreements with any individual, firm or corporation,
requiring payments in excess of $25,000
Operating and product licenses
Lease or rental agreements, requiring payments in excess of $25,000