AGREEMENT AND PLAN OF MERGER
BY AND AMONG
VISTA 2000, INC., VISTA ACQUISITION SUBSIDIARY, INC.
AND
THE SPORTSMAN'S GUIDE, INC.
March 8, 1996
Nelson Mullins Riley & Scarborough, L.L.C.
TABLE OF CONTENTS
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . .6
THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . 11
REPRESENTATIONS AND WARRANTIES OF SGI . . . . . . . . . . 11
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . 17
REPRESENTATION AND WARRANTIES OF BUYER
AND ACQUISITION SUB . . . . . . . . . . . . . . . . . . . 17
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . 24
CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . 24
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . 26
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . 28
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 28
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 8, 1996, is made
and entered into by and among VISTA 2000, INC., a Delaware corporation
("VISTA" or "Buyer"), VISTA ACQUISITION SUBSIDIARY, INC., a Delaware
corporation and a wholly-owned subsidiary of VISTA ("Acquisition Sub"), and
THE SPORTSMAN'S GUIDE, INC., a Minnesota corporation ("SGI"). SGI and
Acquisition Sub are hereinafter sometimes referred to as the "Constituent
Corporations" and Acquisition Sub as the "Surviving Corporation".
WHEREAS, VISTA, Acquisition Sub and SGI desire that SGI merge with and
into Acquisition Sub (the "Merger"), upon the terms and conditions set
forth herein and in accordance with the Business Corporation Act of the
State of Minnesota and the General Corporation Law of the State of
Delaware, with the result that Acquisition Sub shall continue as the
surviving corporation, shall change its name to The Sportsman's Guide,
Inc., and the separate existence of SGI (except as it may be continued by
operation of law) shall cease;
WHEREAS, VISTA, Acquisition Sub and SGI desire that, upon the Merger,
at the Effective Time (as hereinafter defined), all outstanding shares of
common and preferred stock of SGI be converted into common stock of VISTA
or cash as provided herein;
WHEREAS, the respective Boards of Directors of VISTA, Acquisition Sub
and SGI have approved the Merger; and
WHEREAS, the parties intend for the Merger to be accomplished as a
forward subsidiary merger under Sections 368(a)(1)(A) and 368(a)(2)(D)
under the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties, covenants, agreements and conditions contained
herein, and in order to set forth the terms and conditions of the Merger
and the mode of carrying the same into effect, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Affiliate" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange Act of 1934, as
amended.
Section 1.2 "Acquisition Sub" means Vista Acquisition Subsidiary,
Inc., a Delaware corporation and a wholly-owned subsidiary of VISTA.
Section 1.3 "Articles of Merger" means the Articles of Merger
respecting the Merger as filed by the Parties with the Secretary of State
of the State of Minnesota.
Section 1.4 "Buyer" means VISTA 2000, INC., a Delaware corporation.
Section 1.5 "Buyer-owned Share" means any SGI Share that VISTA owns
beneficially.
Section 1.6 "Buyer Share" means any share of the Common Stock, $.01
par value per share, of Buyer.
Section 1.7 "Cash Consideration" means the amount of cash paid by
Buyer in exchange for the Cash-for-Stock SGI Shares (as defined below).
Section 1.8 "Cash-for-Stock SGI Share" means any SGI Share
beneficially owned by any SGI Stockholder who or which is not an SGI Major
Stockholder or an SGI Preferred Stockholder to be exchanged pursuant to the
Merger for cash in the amount of the SGI Common Share Value or the SGI
Preferred Share Value, as the case may be.
Section 1.9 "Cash Fund" has the meaning set forth in Section 2.5(b)
below.
Section 1.10 "Certificate of Merger" means the Certificate of Merger
respecting the Merger filed by the Parties with the Secretary of State of
the State of Delaware.
Section 1.11 "Closing" has the meaning set forth in Section 2.2 below.
Section 1.12 "Closing Date" has the meaning set forth in Section 2.2
below.
Section 1.13 "Confidential Information" means any information
concerning the business and affairs of SGI that is not already generally
available to the public.
Section 1.14 "Common Stock Conversion Ratio" has the meaning set forth
in Section 2.4(e) below.
Section 1.15 "Conversion Ratio" means the Common Stock Conversion
Ratio (as defined below) or the Preferred Stock Conversion Ratio (as
defined below).
Section 1.16 "Definitive SGI Information Materials" means the
definitive information statement and other materials relating to the
Special SGI Meeting.
Section 1.17 "Delaware Certificate of Merger" means the Certificate of
Merger approving the Merger issued by the Secretary of State of the State
of Delaware.
Section 1.18 "Delaware General Corporation Law" means the General
Corporation Law of the State of Delaware, as amended.
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Section 1.19 "Disclosure Schedule" has the meaning set forth in
Section 3 below.
Section 1.20 "Dissenting Share" means any SGI Share which any
stockholder who or which has exercised his or its appraisal rights under
the Minnesota Business Corporation Act holds of record.
Section 1.21 "Effective Time" has the meaning set forth in Section 2.3
below.
Section 1.22 "Exchange and Paying Agent" has the meaning set forth in
Section 2.5 below.
Section 1.23 "Fairness Opinion" has the meaning set forth in Section
5.4 below.
Section 1.24 "GAAP" means United States generally accepted accounting
principles as in effect from time to time.
Section 1.25 "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Section 1.26 "Intangible Rights" has the meaning set forth in Section
3.16 below.
Section 1.27 "IRS" means the Internal Revenue Service.
Section 1.28 "Knowledge" means actual knowledge after reasonable
investigation.
Section 1.29 "Material Adverse Effect" means any event which would
have a material adverse effect on the financial condition, business,
earnings, assets, prospects or financial condition of SGI taken as a whole.
Section 1.30 "Merger" has the meaning set forth in the recitals above
and in Section 2.1 below.
Section 1.31 "Minnesota Business Corporation Act" means the Business
Corporation Act of the State of Minnesota, as amended.
Section 1.32 "Minnesota Certificate of Merger" means the Certificate
of Merger approving the Merger issued by the Secretary of State of the
State of Minnesota.
Section 1.33 "Ordinary Course of Business" means the ordinary course
of business consistent with past custom and practice (including with
respect to quantity and frequency).
Section 1.34 "Party" means a party to this Agreement and the Merger.
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Section 1.35 "Permits" has the meaning set forth in Section 3.21(b)
below.
Section 1.36 "Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
Section 1.37 "Preferred Stock Conversion Ratio" has the meaning set
forth in Section 2.4(e) below.
Section 1.38 "Public Report" has the meaning set forth in Section 3.5
below.
Section 1.39 "Requisite SGI Stockholder Approval" means the
affirmative vote of the holders of a majority of the SGI Common Shares in
favor of this Agreement and the Merger.
Section 1.40 "SEC" means the Securities and Exchange Commission.
Section 1.41 "Securities Act" means the Securities Act of 1933, as
amended.
Section 1.42 "Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended.
Section 1.43 "Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for taxes not yet due and
payable or for taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising in
the Ordinary Course of Business and not incurred in connection with the
borrowing of money.
Section 1.44 "SGI" means The Sportsman's Guide, Inc., a Minnesota
corporation.
Section 1.45 "SGI Balance Sheet" has the meaning set forth in Section
3.8 below.
Section 1.46 "SGI Certificate" means the certificate(s) representing
SGI Shares held by an SGI Stockholder.
Section 1.47 "SGI Common Share" means any share of the Common Stock,
$.01 par value per share, of SGI.
Section 1.48 "SGI Common Stockholder" means any Person who or which
holds of record any SGI Common Shares.
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Section 1.49 "SGI Major Stockholder" means any Person who or which
beneficially owns 100,000 or more SGI Common Shares and who or which is an
"accredited investor" as defined in Regulation D as promulgated under the
Securities Act or is otherwise a qualified investor (with or without the
utilization of a purchaser representative) under Section 4(2) of the
Securities Act or Regulation D.
Section 1.50 "SGI Minor Stockholder" means any person who or which
beneficially owns fewer than 100,000 SGI Common Shares.
Section 1.51 "SGI Preferred Share" means any share of Preferred Stock,
$.01 par value per share, of SGI.
Section 1.52 "SGI Preferred Stockholder" means any Person who or which
holds any SGI Preferred Shares and who or which is an "accredited investor"
as defined in Regulation D as promulgated under the Securities Act or is
otherwise a qualified investor (with or without the utilization of a
purchaser representative) under Section 4(2) of the Securities Act or
Regulation D.
Section 1.53 "SGI Share" means any share of Common Stock or Preferred
Stock of SGI.
Section 1.54 "SGI Common Share Value" means $.18079 per share of SGI
Common Shares.
Section 1.55 "SGI Preferred Share Value" means $4.2189 per share of
SGI Preferred Shares.
Section 1.56 "SGI Stockholder" means any Person who or which holds of
record any SGI Shares.
Section 1.57 "Special SGI Meeting" has the meaning set forth in
Section 5.3(b) below.
Section 1.58 "Stock-for-Stock SGI Share" means any SGI Share
beneficially owned by an SGI Major Stockholder to be exchanged pursuant to
the Merger for Buyer Shares in accordance with the Conversion Ratio.
Section 1.59 "Subordinated Debt Holders" has the meaning set forth in
Section 5.12 below.
Section 1.60 "Subsidiary" means any corporation with respect to which
a specified Person (or a Subsidiary thereof) owns a majority of the common
stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
Section 1.61 "Surviving Corporation" has the meaning set forth in
Section 2.1 below.
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Section 1.62 "VISTA" means VISTA 2000, INC., a Delaware corporation
and is used interchangeably herein with "Buyer".
Section 1.63 "VISTA Common Shares" means any share of the Common
Stock, $.01 par value per share, of Buyer and is used interchangeably
herein with "Buyer Share."
Section 1.64 "VISTA Preferred Share" means any share of Preferred
Stock of VISTA.
Section 1.65 "VISTA Share Value" means 80% of the average of (i)
$9.456 and (ii) the average closing sales price of VISTA's Common
Stock as reported by the National Association of Securities Dealers, Inc.
Automated Quotation National Market System for the ten consecutive trading
days prior to two days prior to the Closing Date.
Section 1.66 "VISTA Warrants" means the warrants to purchase VISTA
Common Shares to be issued to the Subordinated Debt Holders in accordance
with Section 5.12 below.
ARTICLE II
THE MERGER
Section 2.1 The Merger. On and subject to the terms and conditions
of this Agreement, the Articles of Merger and the Certificate of Merger,
SGI will merge with and into Acquisition Sub (the "Merger") at the
Effective Time. Acquisition Sub shall be the corporation surviving the
Merger (the "Surviving Corporation"), shall immediately change its name to
The Sportsman's Guide, Inc., and shall continue its corporate existence
under the law of the State of Delaware,and the separate existence of SGI
shall cease.
Section 2.2 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of Chernesky, Heyman & Kress in Dayton, Ohio, commencing at 9:00
a.m. local time on the business day following the satisfaction or waiver of
all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to
actions the respective Parties will take at the Closing itself) or such
other date as the Parties may mutually determine (the "Closing Date").
Section 2.3 Actions at the Closing. At the Closing, (i) SGI will
deliver to Buyer and Acquisition Sub the various certificates, instruments,
and documents referred to in Section 6.1 below, (ii) Buyer and Acquisition
Sub will deliver to SGI the various certificates, instruments, and
documents referred to in Section 6.2 below, (iii) the Parties will file
Articles of Merger with the Secretary of State of the State of Minnesota in
the form attached hereto as Exhibit A and will file the Certificate of
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Merger with the Secretary of State of the State of Delaware in the form
attached hereto as Exhibit B, and (iv) Buyer will deliver to the Exchange
and Paying Agent in the manner provided below in this Section 2 the
certificate evidencing the Buyer Shares issued in the Merger and will
deliver or cause the Surviving Corporation to deliver to the Exchange and
Paying Agent the Cash Fund in the manner provided below in this Section 2.
Section 2.4 Effect of Merger.
(a) General. The Merger shall become effective at the time
(the "Effective Time") of the filing by the Parties of the Certificate
of Merger with the Secretary of State of the State of Delaware and the
Articles of Merger with the Secretary of State of the State of
Minnesota. The Merger shall have the effects set forth in the Section
259 of the Delaware General Corporation Law and Section 302A.641 of
the Minnesota Business Corporation Act. The Surviving Corporation
may, at any time after the Effective Time, take any action (including
executing and delivering any document) in the name and on behalf of
either SGI or Acquisition Sub in order to carry out and effectuate the
transactions contemplated by this Agreement. Further, the Surviving
Corporation shall possess all of the rights, privileges, powers and
franchises, and be subject to all the restrictions, disabilities and
duties, of each of the Constituent Corporations; and the rights,
privileges, powers and franchises of each of the Constituent
Corporations, and all property of and all debts due to any of the
Constituent Corporations on whatever account, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers
and franchises, and all and every other interest shall be thereafter
as effectually the property of the Surviving Corporation as they were
of the Constituent Corporations, and the title to any real estate
vested by deed or otherwise in any of the Constituent Corporations
shall not revert or be in any way impaired by reason of the Merger,
but all rights of creditors and all liens upon any property of any of
the Constituent Corporations shall be preserved unimpaired, and all
debts, liabilities and duties of the Constituent Corporations shall
attach to the Surviving Corporation and may be enforced against it to
the same extent as if said debts, liabilities and duties had been
incurred or contracted by it.
(b) Certificate of Incorporation. The Certificate of
Incorporation of Acquisition Sub in effect at and as of the Effective
Time will remain the Certificate of Incorporation of the Surviving
Corporation without any modification or amendment in the Merger
(except that the name of Acquisition Sub will be changed to "The
Sportsman's Guide, Inc.").
(c) Bylaws. The Bylaws of Acquisition Sub in effect at and
as of the Effective Time will remain the Bylaws of the Surviving
Corporation without any modification or amendment in the Merger
(except that the name of the Surviving Corporation will be changed to
"The Sportsman's Guide, Inc.").
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(d) Directors and Officers. The initial directors of the
Surviving Corporation at and as of the Effective Time shall be
comprised of the current Acquisition Sub directors, and those persons
listed on Exhibit H. The principal officers of the Surviving
Corporation at and as of the Effective Time shall be as set forth in
Exhixbit H.
(e) Conversion of SGI Shares. At and as of the Effective
Time, (i) each Stock-for-Stock SGI Share (other than any Dissenting
Share or Buyer-owned Share) shall be converted into the right to
receive the number of Buyer Shares equal to the quotient of (A) the
SGI Common Share Value divided by (B) the Vista Share Value (the ratio
of Buyer Shares to one SGI Common Share is referred to herein as the
"Common Stock Conversion Ratio"); (ii) each SGI Preferred Share owned
by an SGI Preferred Stockholder shall be converted into the right to
receive the number of Buyer Shares equal to the quotient of (A) the
SGI Preferred Share Value divided by (B) the Vista Share Value (the
ratio of Buyer Shares to the SGI Preferred Shares is referred to
herein as the "Preferred Stock Conversion Ratio"); (iii) each Cash-
for-Stock SGI Share shall be converted into the right to receive an
amount equal to $.18079 in cash (without interest), in the event such
Cash-for-Stock Share is an SGI Common Share and $4.2189 (without
interest) in the event such Cash-for-Stock Share is an SGI Preferred
Share; (iv) each Dissenting Share shall be converted into the right to
receive payment from the Surviving Corporation with respect thereto in
accordance with the provisions of the Minnesota Business Corporation
Act; and (v) each Buyer-owned Share shall be canceled; provided,
however, that the Common Stock Conversion Ratio and Preferred Stock
Conversion Ratio shall be subject to equitable adjustment in the event
of a stock split, stock dividend, reverse stock split, or other change
in the number of SGI Shares or Buyer Shares outstanding. No SGI
Share shall be deemed to be outstanding or to have any rights other
than those set forth above in this Section 2.4(e) after the Effective
Time. No fractional Buyer Shares shall be issued, and, in lieu
thereof, a cash payment shall be made pursuant to Section 2.5(h).
(f) Buyer and Acquisition Sub Shares. Each Buyer Share and
each Acquisition Sub Share issued and outstanding at and as of the
Effective Time will remain issued and outstanding.
Section 2.5 Exchange and Payment Procedure.
(a) Exchange Procedure. Immediately after the Effective
Time, (i) Buyer will deliver to a bank or trust company designated by
Buyer and reasonably acceptable to SGI (the "Exchange and Paying
Agent") a stock certificate (issued in the name of the Exchange and
Paying Agent or its nominee) representing that number of Buyer Shares
equal to the sum of (A) the product of (X) the Common Stock Conversion
Ratio times (Y) the number of outstanding Stock-for-Stock SGI Shares
(other than any Dissenting Shares and Buyer-owned Shares) plus (B) the
product of (X) the Preferred Stock Conversion Ratio times (Y) the
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number of outstanding SGI Preferred Shares, and (ii) Buyer will cause
the Exchange and Paying Agent to mail to each SGI Major Stockholder
and each SGI Preferred Stockholder (A) a letter of transmittal (which
is reasonably agreed to by Buyer and SGI and shall specify that
delivery shall be effected and risk of loss and title to the
certificates (the "SGI Certificates") representing SGI Shares held by
such holder shall pass, only upon proper delivery of the Certificates
to and receipt by the Exchange and Paying Agent and shall be in such
form and have such other provisions as Buyer and Acquisition Sub may
reasonably specify, and (B) instructions for use in effecting the
surrender of his or its SGI Certificates in exchange for certificates
representing the Buyer Shares.
(b) Payment Procedure. Immediately after the Effective Time,
(i) Buyer will deliver or cause the Surviving Corporation to deliver
to the Exchange and Paying Agent a cash fund (the "Cash Fund")
sufficient in the aggregate for the Exchange and Paying Agent to make
full payment of the Cash Consideration to all SGI Minor Stockholders
(other than any Dissenting Shares and Buyer-owned Shares), and (ii)
Buyer will cause the Exchange and Paying Agent to mail to each SGI
Minor Stockholder (A) a letter of transmittal (which is reasonably
agreed to by Buyer and SGI and 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 and receipt by the
Exchange and Paying Agent and shall be in such form and have such
other provisions as Buyer and Acquisition Sub may reasonably specify
and (B) instructions for use in effecting the surrender of his or its
SGI Certificates against payment of the Cash Consideration. No
interest will accrue or be paid to the holder of any outstanding
Cash-for-Stock SGI Shares.
(c) No Dividends Until Surrender. Buyer will not pay any
dividend or make any distribution on Buyer Shares (with a record date
at or after the Effective Time) to any record holder of outstanding
Stock-for-Stock SGI Shares or SGI Preferred Shares until such holder
surrenders for exchange his or its SGI Certificates. Buyer instead
will pay any such dividend or make any such distribution to the
Exchange and Paying Agent in trust for the benefit of the SGI Major
Stockholders and SGI Preferred Stockholders pending surrender and
exchange. Buyer may cause the Exchange and Paying Agent to invest any
cash the Exchange and Paying Agent receives from Buyer as a dividend
or distribution in accordance with the instructions of Buyer;
provided, however, that the terms and conditions of the investments
shall be such as to permit the Exchange and Paying Agent to make
prompt payments of cash to the holders of outstanding Stock-for-Stock
SGI Shares and SGI Preferred Shares as necessary. Buyer may cause the
Exchange and Paying Agent to pay over to the Buyer any net earnings
with respect to the investments, and Buyer will replace promptly any
cash which results in a loss to the Exchange and Paying Agent from
such investments. In no event, however, will any holder of
outstanding Stock-for-Stock SGI Shares or SGI Preferred Shares be
9
entitled to any interest or earnings on the dividend or distribution
pending receipt.
(d) Investment of Cash Fund. Buyer may cause the Exchange
and Paying Agent to invest the Cash Fund in accordance with the
instructions of Buyer (as mutually agreed upon between Buyer and SGI);
provided, however, that the terms and conditions of the investments
shall be such as to permit the Exchange and Paying Agent to make
prompt payment of the Cash Consideration as necessary. Buyer may
cause the Exchange and Paying Agent to pay over to the Surviving
Corporation any net earnings with respect to the investments, and
Buyer will cause the Surviving Corporation to replace promptly any
portion of the Cash Fund which results in a loss to the Exchange and
Paying Agent from such investments.
(e) Unclaimed Buyer Shares. Buyer may cause the Exchange and
Paying Agent to return any Buyer Shares and dividends and
distributions thereon remaining unclaimed 180 days after the Effective
Time, and thereafter each remaining record holder of outstanding
Stock-for-Stock SGI Shares or SGI Preferred Shares shall be entitled
to look to Buyer (subject to abandoned property, escheat, and other
similar laws) as a general creditor thereof with respect to Buyer
Shares and dividends and distributions thereon to which he or it is
entitled upon surrender of his or its stock certificates.
(f) Unclaimed Cash. Buyer may cause the Exchange and Paying
Agent to pay over to the Surviving Corporation any portion of the Cash
Fund (including any earnings thereon) remaining 180 days after the
Effective Time; and thereafter all former SGI Minor Stockholders shall
be entitled to look to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) as a general creditor
thereof with respect to the cash payable upon surrender of their stock
certificates.
(g) Expenses of Exchange and Paying Agent. Buyer shall pay
or cause the Surviving Corporation to pay all charges and expenses of
the Exchange and Paying Agent.
(h) No Fractional Buyer Shares. No certificates or scrip
evidencing fractional shares of Buyer Shares shall be issued upon the
surrender for exchange of SGI Certificates by SGI Major Stockholders or
SGI Preferred Stockholders and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of
Buyer. Cash shall be paid in lieu of fractional Buyer Shares, based on
the VISTA Share Value per whole Buyer Share.
(i) Withholding Rights. Buyer shall be entitled to deduct
and withhold, or to cause the Exchange and Paying Agent, to deduct and
withhold, from the Cash Consideration otherwise payable pursuant to this
Agreement to an SGI Minor Stockholder the minimum amounts (if any) that
Buyer is required to deduct and withhold with respect to the making of such
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payment under the Internal Revenue Code of 1986, as amended, or any
provision of state, local or foreign tax law. To the extent, if any,
amounts are so withheld by Buyer, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the SGI
Stockholder in respect of which such deduction and withholding was made
by Buyer.
Section 2.6 Closing of Transfer Records. After the close of business
on the Closing Date, transfers of SGI Shares outstanding prior to the
Effective Time shall not be made on the stock transfer books of the
Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SGI
SGI represents and warrants to Buyer and Acquisition Sub that the
statements contained in this Article III are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted
for the date of this Agreement throughout this Article III), except as set
forth in the disclosure schedule accompanying this Agreement and initialed
by the Parties (the "Disclosure Schedule"). The Disclosure Schedule is
arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article III.
Section 3.1 Organization, Qualification, and Corporate Power. SGI is
a corporation duly organized, validly existing, and in good standing under
the laws of the State of Minnesota. SGI is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where
the failure to be so qualified would have a Material Adverse Effect.
Section 3.1 of the Disclosure Statement sets forth the name of each
jurisdiction in which SGI is licensed or qualified to do business. SGI has
full corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. SGI has
delivered to Buyer a true and correct copy of its Articles of Incorporation
and Bylaws.
Section 3.2 SGI Capitalization; No Subsidiaries. The entire
authorized capital stock of SGI consists of 36,800,000 SGI Common Shares
and 200,000 SGI Preferred Shares and 3,000,000 undesignated shares, of
which 23,335,833 SGI Common Shares are issued and outstanding, and 0 SGI
Common Shares are held in treasury and 200,000 SGI Preferred Shares are
issued and outstanding. All of the issued and outstanding SGI Shares have
been duly authorized and are validly issued, fully paid, and nonassessable.
There are no outstanding or authorized options, warrants, calls, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require SGI to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are
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no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to SGI. SGI does not own any
equity investment or other interest in any Person.
Section 3.3 Authorization of Transaction. SGI has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder; provided,
however, that SGI cannot consummate the Merger unless and until it receives
the Requisite SGI Stockholder Approval. This Agreement constitutes the
valid and legally binding obligation of SGI, enforceable in accordance with
its terms and conditions.
Section 3.4 Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which SGI is subject or
any provision of the Articles of Incorporation or Bylaws of SGI or (ii)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which SGI is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
Other than in connection with the provisions of the Hart-Scott-Rodino Act,
the Delaware General Corporation Law, the Minnesota Business Corporation
Act, the Securities Exchange Act, the Securities Act, and applicable state
securities laws, SGI is not required to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
Section 3.5 Filings with the SEC. During the past three (3) years,
SGI has timely made all filings with the SEC that it has been required to
make under the Securities Act and the Securities Exchange Act (collectively
the "Public Reports"). Each of the Public Reports has complied with the
Securities Act and the Securities Exchange Act in all material respects.
None of the Public Reports, as of their respective dates, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. SGI has
delivered to Buyer a correct and complete copy of each Public Report
(together with all exhibits and schedules thereto and as amended or
supplemented to date).
Section 3.6 Financial Statements. Prior to Closing, SGI will file
with the SEC its Annual Report (the "SGI 1995 Annual Report") on Form 10-K
for its fiscal year ended December 29, 1995. The financial statements
included in or incorporated by reference into the SGI 1995 Annual Report,
including the related notes and schedules, will have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
12
covered thereby, will present fairly the financial condition of SGI as of
the indicated dates and the results of operations of SGI for the indicated
periods, will be correct and complete in all material respects, and will be
consistent with the books and records of SGI. The SGI 1995 Annual Report
will have complied with the Securities Exchange Act in all material
respects and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
Section 3.7 Events Subsequent to December 29, 1995. Since December
29, 1995, there has not been any material adverse change in the business,
financial condition, operations, results of operations, or future prospects
of SGI taken as a whole.
Section 3.8 Undisclosed Liabilities. SGI does not have any liability
(whether known or unknown, whether asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, and whether
due or to become due), which would have a Material Adverse Effect on SGI,
including any liability for taxes, except for (i) liabilities set forth on
the face of SGI's audited Balance Sheet (the "SGI Balance Sheet") dated as
of December 29, 1995 and included in the Financial Statements (or in any
notes thereto) and (ii) liabilities which have arisen after December 29,
1995 in the Ordinary Course of Business (none of which results from, arises
out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law).
Section 3.9 Most Recent Inventory. The inventories of SGI as
reflected on the SGI Balance Sheet consist only of items in good condition
and salable or usable in the Ordinary Course of Business, except to the
extent of the inventory reserve included on the SGI Balance Sheet, which
reserve is adequate for such purpose. Such inventories are valued on the
SGI Balance Sheet at the lower of cost or market in accordance with GAAP.
Section 3.10 No Fees to Brokers or Affiliates. SGI has no liability
or obligation to pay any fees, compensation or commissions to any broker,
finder, agent or Affiliate with respect to the transactions contemplated by
this Agreement.
Section 3.11 Scheduled Debt. Set forth in Section 3.11 of the
Disclosure Schedule is a list of all agreements for incurring indebtedness
for borrowed money to which SGI is a party, which list is true and correct
in all material respects. None of the obligations pursuant to such
agreements are subject to acceleration by reason of the consummation of the
transactions contemplated hereby, nor would the execution of this Agreement
or the consummation of the transactions contemplated hereby result in any
default under such agreements.
Section 3.12 Product and Service Warranties and Reserves. The amount
of any and all product warranty claims relating to sales occurring on or
prior to December 29, 1995 shall not exceed the amount of the product
13
warranty reserve included on the SGI Balance Sheet which reserve was
prepared in accordance with GAAP consistently applied and which SGI
believes is adequate in light of any and all circumstances relating to its
warranties of which it was aware and the amounts actually paid by it for
product warranty claims. The only express warranties with respect to the
products or services sold by SGI are as set forth in Section 3.12 of the
Disclosure Schedule.
Section 3.13 Insurance. Set forth in Section 3.13 of the Disclosure
Schedule is a complete and correct schedule of all currently effective
insurance policies or binders of insurance or programs of self-insurance
which relate to SGI which insurance is with reputable insurance companies,
against such casualties, risks and contingencies, and in such types and
amounts, as are consistent with customary practices and standards of
companies engaged in businesses similar to SGI. The coverage under each
such policy and binder is in full force and effect, and no notice of
cancellation or nonrenewal with respect to, or disallowance of any claim
under, or material increase of premium for, any such policy or binder has
been received by SGI. SGI does not have knowledge of any facts or the
occurrence of any event which (i) reasonably might form the basis of any
claim against SGI relating to the conduct or operations of the business of
SGI or any of the assets or properties covered by any of the policies or
binders set forth in Section 3.13 of the Disclosure Schedule and which will
materially increase the insurance premiums payable under any such policy or
binder, or (ii) otherwise will materially increase the insurance premiums
payable under such policy or binder.
Section 3.14 Real Property Owned or Leased. Section 3.14 of the
Disclosure Schedule sets forth a complete and accurate list or description
of all real property (including a general description of fixtures located
at such property and specific identification of any such fixtures not owned
by SGI) which SGI owns or leases, has agreed (or has an option) to
purchase, sell or lease, or may be obligated to purchase, sell or lease,
and any title insurance or guarantee policies with respect thereto,
specifying in the case of leases, the name of the lessor,licensor or other
grantor, the approximate dollar amounts paid or payable with respect
thereto and a summary of the other terms thereof. True copies of all such
leases for real property with aggregate annual rental payments (excluding
payments to third parties on account of real estate taxes (or increases
therein), insurance, operating costs, or common area expenses),
individually in excess of Two Thousand Five Hundred Dollars ($2,500)
(including all amendments thereof and modifications thereto) have been
delivered to Buyer prior to the date hereof. No consent to the
consummation of the transactions contemplated by this Agreement is required
from the lessor of any such real property.
Section 3.15. Fixed Assets; Leased Assets.
(a) Section 3.15 of the Disclosure Schedule sets forth a
complete and accurate list or description of all equipment, machinery
and other items of tangible personal property which SGI owns or
14
leases, has agreed (or has an option) to purchase, sell or lease, or
may be obligated to purchase, sell or lease having a book value of Two
Thousand Five Hundred Dollars ($2,500) or more or requiring annual
rental payments in excess of Two Thousand Five Hundred Dollars
($2,500), specifying in the case of leases, the name of the lessor,
licensor or other grantor, the description of the property covered
thereby, the basic annual rental and other amounts paid or payable
with respect thereto and a summary of other terms thereof. True
copies of all leases for such assets with aggregate rental payments
individually in excess of Two Thousand Five Hundred Dollars ($2,500)
(including all amendments thereto and modifications thereof) have been
delivered to Buyer prior to the date hereof.
(b) No consent to the consummation of the transaction
contemplated by this Agreement is required from the lessor, licensor
or other grantor of any such tangible personal property.
Section 3.16 Intangible Rights. Section 3.16 of the Disclosure
Schedule lists (i) all patents, trademarks and trade names, trademark and
trade name registrations, logos, service marks registrations, copyrights
and copyright registrations, all applications pending on the date hereof
for patent or for trademark, trade name, service marks or copyright
registrations, and all other proprietary rights (collectively the
"Intangible Rights") owned by SGI or used by SGI in connection with its
business (specifying the nature of its rights therein), and (ii) all
licenses granted by or to SGI and all other agreements to which SGI is a
party which relate, in whole or in part, to any Intangible Rights mentioned
in clause (i) above, whether owned by SGI or otherwise. SGI complied with
all contractual obligations relating to the protection of such of the
Intangible Rights used by SGI pursuant to licenses or other contracts. SGI
has the right to use the Intangible Rights to provide, sell and produce the
services and products provided, sold and produced by it, and to conduct its
business as heretofore conducted, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights. All such
Intangible Rights are valid, enforceable and in good standing and no claims
have been asserted with respect to the use by SGI of any of the Intangible
Rights or otherwise for patent, copyright or trademark infringement, and,
to the Knowledge of SGI, no person is infringing on or violating the
Intangible Rights or know-how used by SGI.
Section 3.17. No Restrictive Covenants. SGI is not a party to any
agreement, contract or covenant limiting the freedom of SGI from competing
in any line of business or with any person or other entity in any
geographic area.
15
Section 3.18. Books and Records.
(a) The books of account and other financial records of SGI
are in all material respects complete and correct, and have been
maintained in accordance with good business practices.
(b) The minute books of SGI, as previously made available to
the Buyer and its counsel, contain accurate records of all meetings
and accurately reflect all other material corporate action of the
stockholders and directors and any committees of the Board of
Directors of SGI.
(c) Buyer has been or will be prior to the Closing Date
afforded access to all such records referred to in subparagraphs (a)
and (b) above.
Section 3.19. Bank Accounts. Section 3.19 of the Disclosure Schedule
contains a true and correct list of the names of each bank, savings and
loan or other financial institution, in which SGI has an account, including
cash contribution accounts, or safe deposit boxes, and the names of all
persons authorized to draw thereon or to have access thereto.
Section 3.20. Litigation. There is no action, suit, proceeding or
investigation pending or, to the knowledge of SGI, threatened, which would
be likely to have a Material Adverse Effect on SGI; there is no reasonable
basis known to SGI for any such action that may result in any such effect
and that is probable of assertion; and SGI is not in default in respect of
any judgment, order, writ, injunction or decree of any court or any
federal, state, local or other governmental department, commission, board,
bureau, agency or instrumentality which would be likely to have a Material
Adverse Effect.
Section 3.21. Compliance with Laws.
(a) SGI complies with, and has made all filings required
pursuant to, all federal, state, municipal or local constitutional
provisions, laws, ordinances, rules, regulations and orders in
connection with the conduct of its business as now conducted.
(b) SGI has all governmental licenses, permits and
authorizations necessary for the conduct of its business as currently
conducted (the "Permits"), and all such Permits are in full force and
effect, and no violations exist in respect of any such Permits, and no
proceeding is pending or, to the Knowledge of SGI, threatened, to
revoke or limit any thereof.
(c) There are no present or past Environmental Conditions in
any way relating to the business of SGI. For purposes of this
Agreement, "Environmental Condition" means (i) the introduction into
the environment of any pollution, including without limitation any
contaminant, irritant, or pollutant or other toxic or hazardous
16
substance (whether or not such pollution constituted at the time
thereof a violation of any federal, state or local law, ordinance or
governmental rule or regulation) as a result of any spill, discharge,
leak, emission, escape, injection, dumping or release of any kind
whatsoever of any substance or exposure of any type in any work places
or to any medium, including without limitation air, land, surface
waters or ground waters, or from any generation, transportation,
treatment, discharge, storage or disposal of waste materials, raw
materials, hazardous materials, toxic materials or products of any
kind or from the storage, use or handling of any hazardous or toxic
materials or other substances, as a result of which SGI has or may
become liable to any Person or by reason of which any of the assets of
SGI may suffer or be subjected to any lien, or (ii) any noncompliance
with any federal, state or local environmental law, rule, regulation
or order as a result of or in connection with any of the foregoing.
Section 3.22 Disclosure. The Definitive SGI Information Materials
will comply with the Securities Exchange Act in all material respects. The
Definitive SGI Information Materials will not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements made therein, in the light of the circumstances under
which they will be made, not misleading; provided, however, that SGI makes
no representation or warranty with respect to any information that Buyer
will supply specifically for use in the Definitive SGI Information
Materials.
ARTICLE IV
REPRESENTATION AND WARRANTIES OF BUYER
AND ACQUISITION SUB
Each of Buyer and Acquisition Sub represents and warrants to SGI that
the statements contained in this Article IV are correct and complete as of
the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV),
except as set forth in the Disclosure Schedule. The Disclosure Schedule
will be arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Article IV.
Section 4.1 Organization. Each of Buyer and Acquisition Sub is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Each of Buyer and Acquisition Sub has
delivered to SGI a true and correct copy of its respective Certificate of
Incorporation and Bylaws.
17
Section 4.2 Capitalization.
(a) Buyer Capitalization. The entire authorized capital
stock of Buyer consists of 50,000,000 VISTA Common Shares and 500,000
VISTA Preferred Shares, of which, as of February 7, 1996, 14,242,589
VISTA Common Shares are currently issued and outstanding and 8,799
VISTA Preferred Shares are currently issued and outstanding. The
material rights, preferences, and other attributes of the classes of
Preferred Stock of Buyer are described in Section 4.2 of the
Disclosure Schedule. All of the Buyer Shares to be issued in the
Merger have been duly authorized and, upon consummation of the Merger,
will be validly issued, fully paid, and nonassessable. Except as
described in Section 4.2 of the Disclosure Schedule, there are no
outstanding or authorized options, warrants, calls, purchase rights,
subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require Buyer to issue, sell or
otherwise cause to become outstanding any of its capital stock.
(b) Acquisition Sub Capitalization. The entire authorized
capital stock of Acquisition Sub consists of 5,000 shares of Common
Stock, $.01 par value per share and 5,000 shares of Preferred Stock,
$.01 par value per share, of which 2,500 shares of Common Stock are
currently issued and outstanding (all held by VISTA) and no shares of
Preferred Stock are currently issued and outstanding.
Section 4.3 Authorization of Transaction. Each of Buyer and
Acquisition Sub has full power and authority (including full corporate
power and authority) to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each of Buyer and Acquisition Sub,
enforceable in accordance with its terms and conditions.
Section 4.4 Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which either Buyer or
Acquisition Sub is subject or any provision of the charter or bylaws of
either Buyer or Acquisition Sub or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument or
other arrangement to which either Buyer or Acquisition Sub is a party or by
which it is bound or to which any of its assets is subject, except where
the violation, conflict, breach, default, acceleration, termination,
modification, cancellation, or failure to give notice would not have a
material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement. Other than in connection with
the provisions of the Hart-Scott-Rodino Act, the Minnesota Business
Corporation Act, the Delaware General Corporation Law, the Securities
Exchange Act, the Securities Act, and applicable state securities laws,
neither Buyer nor Acquisition Sub is required to give any notice to, make
18
any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement, except where the failure
to give notice, file, or obtain any authorization, consent, or approval
would not have a material adverse effect on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
Section 4.5 No Fees to Brokers or Affiliates. Neither Buyer nor
Acquisition Sub has any liability or obligation to pay any fees,
compensation or commissions to any broker, finder, agent or Affiliate with
respect to the transactions contemplated by this Agreement for which SGI
could become liable or obligated.
Section 4.6 Financial Statements of Buyer. Prior to Closing Buyer
will file an Annual Report (the "VISTA 1995 Annual Report") on Form 10-K
for its fiscal year ended December 31, 1995. The financial statements
included in or incorporated by reference into the VISTA 1995 Annual Report
(including the related notes and schedules) will have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, will present fairly the financial condition of Buyer and
its Subsidiaries as of the indicated dates and the results of operations of
Buyer and its Subsidiaries for the indicated periods, will be correct and
complete in all respects, and will be consistent with the books and records
of Buyer and its Subsidiaries. The Vista 1995 Annual Report will have
complied with the Securities Exchange Act in all material respects and will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
Buyer will have delivered to SGI a correct and complete copy of the Vista
1995 Annual Report (together with all exhibits and schedules thereto) for
inclusion in the Definitive SGI Information Materials.
Section 4.7 Events Subsequent to December 31, 1995. Since December
31, 1995, there has not been any material adverse change in the business,
financial condition, operations, results of operations, or future prospects
of Buyer and its Subsidiaries taken as a whole.
Section 4.8 Filings with the SEC. Since the effective date of its
registration statement on Form SB-2 (Registration No. 33-73118-A) under the
Securities Act, Buyer has made all filings with the SEC that it has been
required to make under the Securities Act and the Securities Exchange Act
(collectively the "Buyer Public Reports"). Each of the Buyer Public
Reports has complied with the Securities Act and the Securities Exchange
Act in all material respects. None of the Buyer Public Reports, as of
their respective dates, contains any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
Section 4.9 Corporate Power. Buyer and Acquisition Sub have full
corporate power and authority to carry on the businesses in which they are
engaged and to own and use the properties owned and used by them.
19
Section 4.10 Undisclosed Liabilities. Buyer and Acquisition Sub do
not have any liability (whether known or unknown, whether asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due), including any liability
for taxes except for (i) liabilities set forth on the face of Buyer's
audited balance sheet (the "Buyer Balance Sheet") dated as of December 31,
1995 and included in the financial statements (or in any notes thereto) and
(ii) liabilities which have arisen after December 31, 1995 in the Ordinary
Course of Business (none of which results from, arises out of, relates to,
is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
Section 4.11 Liquidation. Buyer does not have any present intention
to liquidate Acquisition Sub after the Closing.
ARTICLE V
COVENANTS
The Parties agree as follows with respect to the period from and after
the execution of this Agreement.
Section 5.1 General. Each of the Parties will use its best efforts
to take all action and to do all things necessary, proper, or advisable in
order to consummate and make effective the transactions contemplated by
this Agreement (including satisfaction, but not waiver, of the Closing
Conditions set forth in Article VI below).
Section 5.2 Notices and Consents. SGI will give any notices to third
parties, and will use its best efforts to obtain any third party consents,
that the Buyer may request in connection with the matters referred to in
Section 3.4 above.
Section 5.3 Regulatory Matters and Approvals. Each of the Parties
will give any notices to, make any filings with, and use its best efforts
to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in
Sections 3.4 and 4.4 above. Without limiting the generality of the
foregoing:
(a) Securities Act, Securities Exchange Act, and State
Securities Laws. SGI will prepare and file with the SEC a preliminary
information statement under the Securities Exchange Act relating to
the Special SGI Meeting. SGI will use its best efforts to respond to
any comments of the SEC thereon and will make any further filings
(including amendments and supplements) in connection therewith that
may be necessary, proper, or advisable. Buyer will provide SGI with
whatever information and assistance in connection with the foregoing
filings that SGI may request. Buyer will take all actions that may be
20
necessary, proper, or advisable under applicable federal and state
securities laws in connection with the issuance of the Buyer Shares in
the Merger.
(b) Minnesota Business Corporation Act. SGI will call a
special meeting of its stockholders (the "Special SGI Meeting") as
soon as practicable in order that the stockholders may consider and
vote upon the adoption of this Agreement and the approval of the
Merger in accordance with the Minnesota Business Corporation Act. As
soon as practicable, SGI will mail to its stockholders in accordance
with the requirements of the Securities Exchange Act and the Minnesota
Business Corporation Act, the Definitive SGI Information Materials.
The Definitive SGI Information Materials will contain the affirmative
recommendations of the Board of Directors of SGI in favor of the
adoption of this Agreement and the approval of the Merger; provided,
however, that no director shall be required to violate any fiduciary
duty or other requirement imposed by law in connection therewith.
(c) Hart-Scott-Rodino Act. Each of the Parties will file any
Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the Hart-
Scott-Rodino Act, will use its best efforts to obtain an early
termination of the applicable waiting period, and will make any
further filings pursuant thereto that may be necessary, proper, or
advisable.
(d) Other. Each party will use its best efforts to cause the
issuance of the Delaware Certificate of Merger and the Minnesota
Certificate of Merger as soon as practicable.
Section 5.4 Fairness Opinion. SGI will deliver to Buyer on or before
the date the Proxy Statement is mailed to SGI Stockholders an opinion of
Legg Mason Wood Walker Incorporated as to the fairness of the Merger to the
SGI Stockholders from a financial point of view (the "Fairness Opinion")
provided that the Fairness Opinion is acceptable to SGI, in its sole
discretion, as set forth in Section 6.2(h).
Section 5.5 Registration Rights Agreement. At the Closing, Buyer
will enter into a Registration Rights Agreement with all recipients of
Buyer Shares pursuant to the Merger substantially in the form attached
hereto as Exhibit C.
Section 5.6 Operation of Business. SGI will not engage in any
practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. Without limiting the generality of the
foregoing:
(a) SGI will not authorize or effect any change in its
Articles of Incorporation or Bylaws;
21
(b) SGI will not grant any options, warrants, or other rights
to purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights
currently outstanding);
(c) SGI will not declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in
kind), or redeem, repurchase, or otherwise acquire any of its capital
stock in either case outside the Ordinary Course of Business;
(d) SGI will not issue any note, bond, or other debt security
or create, incur, assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation outside the Ordinary Course of
Business;
(e) SGI will not impose any Security Interest upon any of its
assets outside the Ordinary Course of Business;
(f) SGI will not make any capital investment in, make any
loan to, or acquire the securities or assets of any other Person
outside the Ordinary Course of Business;
(g) SGI will not make any change in employment terms for any
of its directors, officers, and employees outside the Ordinary Course
of Business; and
(h) SGI will not commit to any of the foregoing.
Section 5.7 Full Access. SGI will permit representatives of Buyer to
have full access, at reasonable times, and in a manner so as not to
interfere with the normal business operations of SGI, to all premises,
properties, personnel, books, records (including tax records), contracts,
and documents of or pertaining to SGI. Buyer will treat and hold as such
any Confidential Information it receives from SGI in the course of the
reviews contemplated by this Section 5.7, will not use any of the
Confidential Information except in connection with this Agreement, and, if
this Agreement is terminated for any reason whatsoever, agrees to return to
SGI all tangible embodiments (and all copies) thereof which are in its
possession.
Section 5.8 Notice of Developments. Each Party will give prompt
written notice to the other of any material adverse development causing a
breach of any of its own representations and warranties in Articles III and
IV above. No disclosure by any Party pursuant to this Section 5.8,
however, shall be deemed to amend or supplement the Disclosure Schedule or
to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
Section 5.9 Exclusivity. SGI will not solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating
22
to the acquisition of all or substantially all of the capital stock or
assets of SGI (including any acquisition structured as a merger,
consolidation, or share exchange); provided, however, that SGI and its
directors and officers will remain free to participate in any discussions
or negotiations regarding, furnish any information with respect to, assist
or participate in, or facilitate in any other manner any effort or attempt
by any Person to do or seek any of the foregoing to the extent their
fiduciary duties may require. SGI shall notify Buyer immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any
of the foregoing. Notwithstanding the foregoing, SGI may (1) furnish
information concerning its business, properties or assets to any
corporation, partnership, person or other entity or group pursuant to
appropriate confidentiality agreements (which request is unsolicited after
the date of the Agreement) and (2) negotiate and participate in discussions
and negotiations with any such entity or group concerning an acquisition
proposal (X) if such entity or group has submitted a bona fide written
proposal to the Board of Directors of SGI and (Y) if in the opinion of the
Board of Directors of SGI, after receipt of advice from outside legal
counsel to SGI, the failure to engage in such discussions or negotiations
would cause the board of directors to violate its fiduciary duties to the
SGI Stockholders under applicable law. Subject to the following sentence,
the Board of Directors of SGI shall not (1) withdraw or modify or propose
to withdraw or modify in a manner adverse to Buyer the approval or
recommendation by the Board of Directors of the Merger, (2) solicit,
approve or recommend or propose to solicit, approve or recommend any
acquisition proposal other than the Merger, or (3) approve or authorize SGI
entering into any agreement with respect to any acquisition proposal other
than the Merger. Notwithstanding the foregoing, in the event the Board of
Directors of SGI receives an acquisition proposal that, based on the advice
of outside counsel, the Board of Directors is required to consider in the
exercise of its fiduciary obligations, the Board of Directors may withdraw
or adversely modify its approval or recommendation of the Merger and
approve or recommend any such proposal, approve or authorize SGI entering
into an agreement with respect to such proposal, solicit additional
proposals or terminate this Agreement.
Section 5.10 Insurance and Indemnification. The Surviving Corporation
will observe any indemnification provisions (which provisions shall be
mandatory to the Surviving Corporation to the extent that they are
currently discretionary) now existing in the Articles of Incorporation or
Bylaws of SGI for the benefit of any individual who served as a director or
officer of SGI at any time prior to the Effective Time.
Section 5.11 Continuity of Business Enterprise.
(a) Continuation of Business. Buyer will continue, or cause
Acquisition Sub to continue, a historic business of SGI, or use, or
cause to be used, a significant portion of SGI's historic business
assets in a business, in a manner which satisfies the Continuity of
Business Enterprise requirement of Treas. Reg. Section 1.368-1(d).
23
(b) No Stock of Acquisition Sub. Acquisition Sub will not
issue stock in connection with the Merger and Buyer will not cause
Acquisition Sub to issue stock in connection with the Merger.
Section 5.12 Repayment of Subordinated Debt and Issuance of VISTA
Warrants to Debt Holders. Immediately following the Effective Time, Buyer
will repay or cause the Surviving Corporation to repay in cash in full
(including principal and interest) the subordinated debt of SGI, such
repayment to be made to those holders (the "Subordinated Debt Holders") in
those amounts listed on Exhibit D. Additionally, concurrently with such
repayment, Buyer shall issue and deliver to the Subordinated Debt Holders
(in return for such Subordinated Debt Holders' extending the maturity date
of the debt instruments) VISTA Warrants in the form attached hereto as
Exhibit E, each such Subordinated Debt Holder to receive a Warrant for the
number of VISTA Common Shares listed on Exhibit D.
Section 5.13 Downside Price Protection Agreement. At the Closing,
Buyer will enter into a Downside Price Protection Agreement with respect to
the future value of the Buyer Shares with all recipients of Buyer Shares
pursuant to the Merger in the form attached hereto as Exhibit F.
Section 5.14 Investment Representation and Sophisticated Investor
Letter. SGI will use its best efforts to cause each SGI Stockholder who
receives Buyer Shares pursuant to the Merger to execute an Investment
Representation and Sophisticated Investor Letter in the form attached
hereto as Exhibit G.
Section 5.15 Employment Agreements. Immediately after the Closing,
Buyer will cause the Surviving Corporation to enter into employment
agreements with each of the parties listed on Exhibit H (the "SGI
Executives"), said employment agreements to include the terms set forth in
Exhibit H. The form and substance of such employment agreements and the
related stock option agreements shall be mutually agreed to by Buyer and
each applicable SGI Executive prior to the Closing; provided, however, that
the entering into of such employment agreements and stock option agreements
shall not be a condition precedent of Buyer, Acquisition Sub and/or SGI to
consummate the transactions to be performed by them in connection with the
Closing.
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
Section 6.1 Conditions to Obligation of Buyer and Acquisition Sub.
The obligation of Buyer and Acquisition Sub to consummate the transactions
to be performed by them in connection with the Closing is subject to
satisfaction of the following conditions:
(a) this Agreement and the Merger shall have received the
Requisite SGI Stockholder Approval;
(b) SGI shall have procured all of the third party consents
specified in Section 5.2 above;
24
(c) the representations and warranties set forth in Article
III above shall be true and correct in all material respects at and as
of the Closing Date;
(d) SGI shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(e) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (iii) affect adversely the right of the Surviving
Corporation to own the former assets and operate the former businesses
of SGI;
(f) SGI shall have delivered to Buyer and Acquisition Sub a
certificate to the effect that each of the conditions specified above
in Section 6.1(a)-(e) is satisfied in all respects;
(g) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in Sections 3.4 and 4.4 above;
(h) Buyer and Acquisition Sub shall have received from
counsel to SGI an opinion in form and substance as set forth in
Exhibit I attached hereto, addressed to Buyer, and dated as of the
Closing Date;
(i) Buyer and Acquisition Sub shall have received the
resignations, effective as of the Closing, of each director and
officer of SGI other than those whom Buyer shall have specified in
writing at least five (5) business days prior to the Closing; and
(j) all actions to be taken by SGI in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Buyer and Acquisition Sub.
Buyer may waive any condition specified in this Section 6.1 if it
executes a writing so stating at or prior to the Closing.
Section 6.2 Conditions to Obligation of SGI. The obligation of SGI
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Article
IV above shall be true and correct in all material respects at and as
of the Closing Date;
25
(b) Buyer and Acquisition Sub shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing;
(c) No action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (iii) affect adversely the right of the Surviving
Corporation to own the former assets and operate the former businesses
of SGI;
(d) each of Buyer and Acquisition Sub shall have delivered to
SGI a certificate to the effect that each of the conditions specified
above in Section 6.2(a)-(c) is satisfied in all respects;
(e) this Agreement and the Merger shall have received the
Requisite SGI Stockholder Approval;
(f) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated and the Parties shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in Section 3.4 and 4.4 above;
(g) SGI shall have received from counsel to Buyer an opinion
in form and substance as set forth in Exhibit J attached hereto,
addressed to SGI, and dated as of the Closing Date;
(h) SGI shall have received the Fairness Opinion from Legg
Mason Wood Walker Incorporated, which shall be satisfactory to SGI in
its sole discretion; and
(i) all actions to be taken by Buyer and Acquisition Sub in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
satisfactory in form and substance to SGI.
SGI may waive any condition specified in this Section 6.2 if it
executes a writing so stating at or prior to the Closing.
ARTICLE VII
TERMINATION
Section 7.1 Termination of Agreement. Any of the Parties may
terminate this Agreement with the prior authorization of its Board of
Directors (whether before or after stockholder approval) as provided below:
26
(a) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time;
(b) Buyer and Acquisition Sub may terminate this Agreement by
giving written notice to SGI at any time prior to the Effective Time
(i) in the event SGI has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, Buyer has notified SGI of this breach, and the breach has
continued without cure for a period of 30 days after the notice of
breach or (ii) if the Closing shall not have occurred on or before May
31, 1996 by reason of the failure of any condition precedent under
Section 6.1 hereof (unless the failure results primarily from Buyer
and Acquisition Sub breaching any representation, warranty, or
covenant contained in this Agreement);
(c) SGI may terminate this Agreement by giving written notice
to Buyer and Acquisition Sub at any time prior to the Effective Time
(i) in the event Buyer or Acquisition Sub has breached any material
representation, warranty, or covenant contained in this Agreement in
any material respect, SGI has notified Buyer and Acquisition Sub of
the breach, and the breach has continued without cure for a period of
30 days after the notice of breach; (ii) if the Closing shall not have
occurred on or before May 31, 1996, by reason of the failure of any
condition precedent under Section 6.2 hereof (unless the failure
results primarily from SGI breaching any representation, warranty, or
covenant contained in this Agreement); (iii) in the event a third
party, including any group, shall have made a proposal regarding the
acquisition of any of the capital stock of, or any other equity
interest in, SGI, or a merger, consolidation or other business
combination involving SGI, or a sale of all or (other than in the
ordinary course of business) any substantial portion of the assets of
SGI, or commenced a tender or exchange offer to acquire any SGI Shares
(an "Offer"), which, in any such case, SGI's Board of Directors
determines, after consultation with SGI's financial advisor, to be
more favorable to SGI's shareholders than the transactions
contemplated hereby and SGI's Board of Directors determines that it
would be in accordance with their fiduciary duties, based upon the
advice of its outside legal counsel, to accept the third party
proposal; provided, however, that SGI shall not be permitted to
terminate this Merger Agreement pursuant to this Section 7.1(c)(iii),
unless it has provided Buyer and Acquisition Sub with prior written
notice of its intent to so terminate this Agreement together with a
detailed summary of the terms and conditions (including proposed
financing, if any) of such Offer; provided, further, that SGI shall
pay the fees set forth in Section 7.3 by wire transfer in same day
funds prior to any termination pursuant to this Section 7.1(c)(iii).
(d) any Party may terminate this Agreement by giving written
notice to the other Parties at any time prior to the Effective Time in
the event the Fairness Opinion is withdrawn; or
(e) any Party may terminate this Agreement by giving written
notice to the other Parties at any time after the Special SGI Meeting
in the event this Agreement and the Merger fail to receive the
Requisite SGI Stockholder Approval.
27
Section 7.2 Effect of Termination. If any Party terminates this
Agreement pursuant to Section 7.1 above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach including
without limitation the provisions of Section 8.12); provided, however, that
the confidentiality provisions contained in Section 5.7 above shall survive
any such termination and Sections 7.3 shall survive any such termination.
Section 7.3 Termination Fees.
(a) In the event SGI shall have terminated this Merger
Agreement pursuant to Section 7.1(c)(iii), then SGI shall pay Buyer a
termination fee of $310,000 payable in same day funds (which fee is
inclusive of all of Buyer's and Acquisition Sub's out-of-pocket fees and
expenses). If SGI fails to pay promptly the amount due pursuant to this
Section 7.3(a), and, in order to obtain such payment, Buyer or Acquisition
Sub commences a suit which results in a judgment against SGI for the fee
set forth in this paragraph (a), SGI shall pay to Buyer or Acquisition Sub
its reasonable costs and expenses (including attorneys' fees and expenses)
in connection with such suit, together with interest on the amount of the
fee at the prime rate of NationsBank, Atlanta, Georgia from the date such
payment was required to be made.
(b) In the event Buyer and Acquisition Sub terminate this
Agreement or otherwise fail to consummate the Merger other than as a
result of the failure of SGI to satisfy each of the conditions precedent
contained in Section 6.1 hereof, then Buyer and Acquisition Sub, jointly,
shall pay SGI a termination fee of $125,000 payable in same-day funds
(which fee is exclusive of all of SGI's out-of-pocket fees and expenses
described in Section 8.12 hereof). If Buyer and Acquisition Sub fail to
promptly pay the amount due pursuant to this Section 7.3(b), and in order
to obtain such payment, SGI commences a suit which results in a judgment
against Buyer or Acquisition Sub for the fee set forth in this paragraph
(b), Buyer and Acquisition Sub, jointly, shall pay to SGI its reasonable
costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the
fee at the prime rate of NationsBank, Atlanta, Georgia from the date
such payment was required to be made.
Section 7.4 Extension of Closing. Notwithstanding any provision to
the contrary herein, this Agreement may not be terminated and the Closing
will be extended beyond May 31, 1996, if the sole basis for the Closing not
having occurred by that date is the failure to obtain regulatory consents,
approvals or authorizations, provided that each Party hereto is diligently
seeking such consents, approvals and/or authorizations.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Survival. None of the representations, warranties, and
covenants of the Parties (other than the provisions in Article II above
concerning issuance of the Buyer Shares and payment of Cash Consideration,
the provision in Article V above concerning indemnification and the
provisions in Section 5.11 above concerning certain requirements for a
tax-free reorganization) will survive the Effective Time.
28
Section 8.2 Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the
other Parties; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly traded securities (in
which case the disclosing Party will use its reasonable best efforts to
advise the other Party prior to making the disclosure).
Section 8.3 No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns; provided, however, that
(i) the provisions in Article II above concerning issuance of the Buyer
Shares and the provisions in Section 5.11 above concerning certain
requirements for a tax-free reorganization are intended for the benefit of
SGI Major Stockholders, (ii) the provisions in Article II above concerning
payment of the Cash Consideration are intended for the benefit of the SGI
Minor Stockholders and (iii) the provisions in Section 5.10 above
concerning indemnification are intended for the benefit of the individuals
specified therein and their respective legal representatives.
Section 8.4 Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
Parties and supersedes any prior understandings, agreements, or
representations by or among the Parties, written or oral, to the extent
they related in any way to the subject matter hereof.
Section 8.5 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party.
Section 8.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
Section 8.7 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 8.8 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly given
if (and then three business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed to
the intended recipient as set forth below:
If to SGI: Copy to:
Mr. Gary Olen Ralph E. Heyman, Esq.
411 Farwell Avenue Chernesky, Heyman & Kress
South St. Paul, MN 55075 Ten Courthouse Plaza, SW, Suite 1100
Dayton, Ohio 45401
29
If to Acquisition Sub: Copy to:
Mr. Arnold E. Johns Steven A. Cunningham, Esq.
Vista 2000, Inc. Nelson Mullins Riley &
11660 Alpharetta Hwy. Scarborough, L.L.C.
Suite 330 1201 Peachtree St., Suite 2200
Roswell, GA 30076 Atlanta, GA 30361
If to the Buyer: Copy to:
Mr. Arnold E. Johns Steven A. Cunningham, Esq.
Vista 2000, Inc. Nelson Mullins Riley &
11660 Alpharetta Hwy. Scarborough, L.L.C.
Suite 330 1201 Peachtree St., Suite 2200
Roswell, GA 30076 Atlanta, GA 30361
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the
manner herein set forth.
Section 8.9 Governing Law. This Agreement shall be governed by and
construed in accordance with laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
Section 8.10 Amendments and Waivers. The Parties may mutually amend
any provision of this Agreement at any time prior to the Effective Time
with the prior authorization of their respective Boards of Directors;
provided, however, that any amendment effected subsequent to stockholder
approval will be subject to any restrictions contained in the Delaware
General Corporation Law or the Minnesota Business Corporation Act. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the Parties. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
Section 8.11 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction.
Section 8.12 Expenses. Each of the Parties will bear its own costs
and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby; provided,
however, in the event
30
(a) any officer or employee of SGI should participate in an
offer to purchase a majority of the outstanding shares of Common Stock
of SGI or all or substantially all of its assets, which offer is
accepted by the Board of Directors of SGI, Buyer shall be entitled to
receive from SGI reimbursement for all actual reasonable out-of-pocket
expenses incurred by VISTA, not to exceed $35,000.
(b) SGI breaches a material term, representation, warranty,
covenant or condition of this Agreement, Buyer shall be entitled to
receive from SGI reimbursement for all actual reasonable out-of-pocket
expenses incurred by Buyer or Acquisition Sub, including without
limitation attorneys' fees, or
(c) Buyer or Acquisition Sub breaches any material term,
representation, warranty, covenant or condition of this Agreement, SGI
shall be entitled to receive from Buyer and Acquisition Sub, jointly
and severally, reimbursement for all actual reasonable out-of-pocket
expenses incurred by SGI, including without limitation attorneys' fees
and any fees and costs incurred by SGI with regard to the Fairness
Opinion.
Section 8.13 Construction. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the
context otherwise requires. The word "including" shall mean including
without limitation.
Section 8.14 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
VISTA 2000, INC.
By:
Title:
VISTA ACQUISITION SUBSIDIARY, INC.
By:
Title:
31
THE SPORTSMAN'S GUIDE, INC.
By:
Title:
32
EXHIBIT LIST
A. Articles of Merger to be Filed with the Minnesota Secretary of State
B. Certificate of Merger to be Filed with the Delaware Secretary of State
C. Registration Rights Agreement
D. Subordinated Debt
E. VISTA Warrant
F. Downside Price Protection Agreement
G. Investment Representation and Sophisticated Investor Letter
H. Terms of Employment Agreements
I. Form of SGI's Counsel's Legal Opinion
J. Form of Buyer's Counsel's Legal Opinion
Exhibit A
ARTICLES OF MERGER
OF
THE SPORTSMAN'S GUIDE, INC.
(a Minnesota Corporation)
WITH AND INTO
VISTA ACQUISITION SUBSIDIARY, INC.
(a Delaware Corporation)
To the Secretary of State
State of Minnesota
Pursuant to the provisions of the Minnesota Business
Corporation Act governing the merger of a domestic corporation
for profit into a foreign corporation for profit, the
corporations hereinafter named do hereby adopt the following
Articles of Merger:
1. The names of the merging corporations are The
Sportsman's Guide, Inc., which is a corporation for profit
organized under the laws of the State of Minnesota, and which is
subject to the provisions of the Minnesota Business Corporation
Act, and Vista Acquisition Subsidiary, Inc., which is a
corporation for profit organized under the laws of the State of
Delaware.
2. Annexed hereto and made a part hereof is the Agreement
and Plan of Merger for merging The Sportsman's Guide, Inc. with
and into Vista Acquisition Subsidiary, Inc. as set forth in a
resolution approved by the affirmative vote of at least a
majority of the Board of Directors of The Sportsman's Guide, Inc.
3. The Agreement and Plan of Merger has been approved by
The Sportsman's Guide, Inc. pursuant to Chapter 302A of the
Minnesota Business Corporation Act.
4. The laws of the jurisdiction of organization of Vista
Acquisition Subsidiary, Inc. permit the merger of a corporation
for profit of another jurisdiction with and into a corporation
for profit of the jurisdiction of organization of Vista
Acquisition Subsidiary, Inc. and the merger of The Sportsman's
Guide, Inc. with and into Vista Acquisition Subsidiary, Inc. is
in compliance with and has been approved pursuant to the laws of
the jurisdiction of organization of Vista Acquisition Subsidiary,
Inc.
5. Vista Acquisition Subsidiary, Inc. will continue its
existence as the surviving corporation under the name The
Sportsman's Guide, Inc. pursuant to the provisions of the
jurisdiction of its organization.
6. Vista Acquisition Subsidiary, Inc. does hereby agree
that it may be served with process in the State of Minnesota in a
proceeding for the enforcement of an obligation of The
Sportsman's Guide, Inc. and Vista Acquisition Subsidiary, Inc.
and in a proceeding for the enforcement of the rights of a
dissenting shareholder of The Sportsman's Guide, Inc. and Vista
Acquisition Subsidiary, Inc. against Vista Acquisition
Subsidiary, Inc.; does hereby irrevocably appoint the Secretary
of State of the State of Minnesota as its agent to accept service
of process in any proceeding; and does hereby agree that it will
promptly pay to the dissenting shareholders of The Sportsman's
Guide, Inc. and Vista Acquisition Subsidiary, Inc. the amount, if
any, to which they are entitled under the provisions of Section
302A.473 of the Minnesota Business Corporation Act with respect
to the rights of dissenting shareholders.
7. The address to which process may be forwarded is The
Sportsman's Guide, Inc., 411 Farwell Avenue, South St. Paul, MN
55075.
I certify that I am authorized to execute this document and I
further certify that I understand that by signing this document,
I am subject to the penalties of perjury as set forth in Section
609.48 as if I had signed this document under oath.
Executed on ______________, 1996.
THE SPORTSMAN'S GUIDE, INC.
By:
Its:
I certify that I am authorized to execute this document and I
further certify that I understand that by signing this document,
I am subject to the penalties of perjury as set forth in Section
609.48 as if I had signed this document under oath.
Executed on ______________, 1996.
VISTA ACQUISITION SUBSIDIARY, INC.
By:
Its:
2
Exhibit B
CERTIFICATE OF MERGER
OF
THE SPORTSMAN'S GUIDE, INC.
(a Minnesota corporation)
AND
VISTA ACQUISITION SUBSIDIARY, INC.
(a Delaware corporation)
It is hereby certified that:
1. The constituent business corporations participating in
the merger herein certified are:
(i) The Sportsman's Guide, Inc., which is
incorporated under the laws of the State of
Minnesota; and
(ii) Vista Acquisition Subsidiary, Inc., which is
incorporated under the laws of the State of
Delaware.
2. An Agreement and Plan of Merger has been approved,
adopted, certified, executed and acknowledged by each of the
aforesaid constituent corporations in accordance with the
provisions of subsection (c) of Section 252 of the General
Corporation Law of the State of Delaware, to wit, by The
Sportsman's Guide, Inc. in accordance with the laws of the State
of its incorporation and by Vista Acquisition Subsidiary, Inc. in
the same manner as is provided in Section 251 of the General
Corporation Law of the State of Delaware.
3. The name of the surviving corporation in the merger
herein certified is Vista Acquisition Subsidiary, Inc., which
will continue its existence as said surviving corporation under
the name The Sportsman's Guide, Inc. upon the effective date of
said merger pursuant to the provisions of the General Corporation
Law of the State of Delaware.
4. The Certificate of Incorporation of Vista Acquisition
Subsidiary, Inc. is to be amended and changed by reason of the
merger herein certified by striking out Article One thereof
relating to the name of said surviving corporation, and by
substituting in lieu the following article:
"ARTICLE ONE
Name
The name of the corporation is THE SPORTSMAN'S GUIDE,
INC. (the "Corporation")."
and said Certificate of Incorporation as so amended and changed
shall continue to be the Certificate of Incorporation of said
surviving corporation until further amended and changed in
accordance with the provisions of the General Corporation Law of
the State of Delaware.
5. The executed Agreement and Plan of Merger between the
aforesaid constituent corporations is on file at the principal
place of business of the aforesaid surviving corporation, the
address of which is as follows:
The Sportsman's Guide, Inc.
411 Farwell Avenue
South St. Paul, MN 55075
6. A copy of the aforesaid Agreement and Plan of Merger
will be furnished by the aforesaid surviving corporation, on
request, and without cost, to any stockholder of each of the
aforesaid constituent corporations.
7. The authorized capital stock of The Sportsman's Guide,
Inc. consists of 36,800,000 shares of common stock, par value
$.01 per share, 200,000 shares of preferred stock, par value $.01
per share, and 3,000,000 undesignated shares.
Dated: April ____, 1996. THE SPORTSMAN'S GUIDE, INC.
By:___________________________
Title:________________________
Dated: April ____, 1996. VISTA ACQUISITION SUBSIDIARY,
INC.
By:__________________________
Title:_______________________
2
Exhibit C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") dated as of
the ___ day of ____________, 1996, is by and among VISTA 2000,
INC., a Delaware corporation (the "Company"), and the "EXECUTING
STOCKHOLDERS" identified by their execution of this Agreement
(the "Executing Stockholders").
WITNESSETH:
WHEREAS, the Executing Stockholders are acquiring an
aggregate of ________ shares of Common Stock, $.01 par value per
share, of the Company pursuant to the terms of an Agreement and
Plan of Merger by and among The Sportsman's Guide, Inc., the
Company and Vista Acquisition Subsidiary, Inc. dated March 8,
1996 (the "Merger Agreement");
WHEREAS, it is a condition to certain of the obligations of
the Company under the Merger Agreement that this Agreement be
executed by the parties hereto, and the parties hereto are
willing to execute this Agreement and to be bound by the
provisions hereof;
WHEREAS, the Executing Stockholders and the Company desire
to make certain other mutual promises for their mutual benefit
and the benefit of the Company, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements
and promises herein contained and other valuable consideration,
the sufficiency of which is hereby acknowledged, the Executing
Stockholders and the Company, each with the other, do hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have
the following respective meanings:
"Common Stock" means the Common Stock, $0.01 par value per
share, of the Company, which is authorized by the Company's
Certificate of Incorporation, as amended, on the date hereof.
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act.
"Person" means any natural person or any corporation,
partnership, trust or other legal entity.
"Public Offering" means a public offering of Common Stock
for cash which is offered and sold in a registered transaction on
an underwritten basis through one or more underwriters, all
pursuant to an underwriting agreement between the Company and
such underwriters.
The terms "register," "registered," and "registration" refer
to a registration effected by preparing and the filing of a
registration statement in compliance with the Securities Act, and
the declaration or order by the Commission of the effectiveness
of such registration statement.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Stockholders" means the Executing Stockholders as of the
date of this Agreement and their direct and successive
transferees.
ARTICLE II
PIGGYBACK REGISTRATION
2.1 Piggyback. If at any time or from time to time after
the date hereof, the Company decides to register any of its
Common Stock in any Public Offering for its own account (but not
including an offering that is registered on Commission Forms S-4
or S-8 or another form not available for registering the Common
Stock for sale by the Company), then the Company will:
(a) promptly give to each Stockholder written notice
thereof (which shall include, to the extent available, a list of
the jurisdictions in which the Company intends to attempt to
qualify the offer and sale of such securities under the
applicable blue sky or other state securities laws); and
(b) use its commercially reasonable best efforts to include
in such registration (and any related qualification under blue
sky laws or other compliance), and in any Public Offering
involved therein, all the Common Stock specified in any written
request or requests by any Stockholder or Stockholders received
by the Company within thirty (30) days after such written notice
is given.
2.2 Underwriting.
(a) The right of any Stockholder to registration pursuant
to Section 2.1 shall be conditioned upon such Stockholder's
participation in the Public Offering and the inclusion of such
Stockholder's Common Stock in the Public Offering to the extent
provided herein. All Stockholders proposing to distribute their
2
securities through such Public Offering (together with the
Company and the other Stockholders distributing their securities
through such underwriting) shall enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such Public Offering by the Company (such
underwriters to be reasonably acceptable to Stockholders holding
a majority of the shares of Common Stock to be included in such
registration).
(b) Notwithstanding any other provisions of this Article
II, if the managing underwriter or underwriters determine that
marketing factors require a limitation of the number of shares to
be underwritten, the underwriter and the Company may limit the
Common Stock to be included in any registration and Public
Offering. In such event, the Company shall so advise all
Stockholders who requested sale of their securities through such
Public Offering, and the number of shares of Common Stock that
may be included in the registration and Public Offering shall be
allocated among all Stockholders in proportion, as nearly as
practicable, to the respective amounts of Common Stock that were
proposed to be sold by such Stockholders. No Common Stock
excluded from the Public Offering by reason of the managing
underwriter or underwriters' marketing limitation shall be
included in such registration. If any Stockholder disapproves of
the terms of the Public Offering, such Stockholder may elect to
withdraw therefrom by written notice to the Company and the
managing underwriter. The Common Stock so withdrawn also shall
be withdrawn from registration; provided, however, that, if by
the withdrawal of such Common Stock a greater number of shares of
Common Stock held by other Stockholders may, in the opinion of
the managing underwriter or underwriters, be included in such
registration (subject to any limitation imposed by the
underwriters), then the Company shall offer to all Stockholders
who have included Common Stock in the registration the right to
include additional shares in the same proportion used in
effecting the limitation referred to above in this Section 2.2.
2.3 Termination of Registration by the Company.
Notwithstanding any other provision of this Agreement, at any
time before or after the filing of a registration statement that
is subject to this Article II, the Company may, in its sole
discretion, abandon or terminate such registration without the
consent of any Stockholder.
2.4 Limitations on Rights. The Company shall not be
required to include Common Stock in securities covered by a
registration statement on any Commission form which limits the
amount of securities which may be registered by the issuer and/or
selling security holders if and to the extent that such inclusion
would make the use of such form unavailable, so long as no other
shares are to be included in such securities for the account of
any Person other than the Company.
3
2.5 Prohibition on Selling Stock During Public Offering.
In the event that there is a firm commitment underwritten
offering of securities of the Company pursuant to a registration
statement covering Common Stock and a Stockholder does not elect
to sell his or its Common Stock to the underwriters of the
Company's securities in connection with such offering, such
holder shall refrain from selling such Common Stock so registered
during the period of distribution of the Company's securities by
such underwriters and the period in which the underwriting
syndicate participates in the after market; provided, however,
that unless the managing underwriter or underwriters shall
determine that to do so would be detrimental to such offering,
such holder shall, in any event, be entitled to sell his or its
Common Stock commencing on the 90th day after the effective date
of such registration statement.
ARTICLE III
GENERAL REGISTRATION PROCEDURES AND PROVISIONS
3.1 Registration Expenses. All expenses of any
registrations permitted pursuant to this Agreement and of all
other offerings by the Company (including, but not limited to,
any qualifications under blue sky or other state securities laws,
compliance with governmental requirements of preparing and filing
any post-effective amendments required for the lawful
distribution of any securities to the public in connection with
registration, of supplying prospectuses, offering circulars or
other documents and the reasonable fees and disbursements of one
special counsel retained by a majority in interest of the
Stockholders, but excluding underwriting discounts and selling
commissions applicable to the sale of the Common Stock) will be
paid by the Company except that, after the Company shall have
satisfied or be deemed to have satisfied its obligations to
register Common Stock pursuant to Section 2.1 hereof as to one
(1) Public Offering provided that any shares of Common Stock
which any Stockholder requests to be registered pursuant to
Section 2.1 is not and has not been limited pursuant to Section
2.4, all registration expenses incurred in connection with any
additional registration statement filed pursuant to this
Agreement shall be paid by the sellers (including the Company if
it shall be a seller) in proportion to the number of shares of
Common Stock being sold by each.
3.2 Registration Procedures. In the case of such
registration, qualification or compliance effected by the Company
pursuant to this Agreement in which any Stockholder's Common
Stock is included, the Company will:
(a) prepare and file with the Commission a registration
statement with respect to the Common Stock, and use its
commercially reasonable best efforts to cause such registration
4
statement to become and remain effective for such period as may
be reasonably necessary to effect the sale of the Common Stock,
not to exceed nine (9) months;
(b) prepare and file with the Commission such amendments to
such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective for such period as may be reasonably
necessary to effect the sale of such Common Stock, not to exceed
nine (9) months;
(c) furnish to the Stockholders participating in such
registration and to the underwriters of Common Stock being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in
order to facilitate the public offering of such Common Stock;
(d) use its commercially reasonable best efforts to
register or qualify the Common Stock covered by such registration
statement under such state securities or blue sky laws of such
jurisdictions as such participating Stockholders may reasonably
request in writing within twenty (20) days following the original
filing of such registration statement; provided, however, that in
the case of a Public Offering, the managing underwriter or
underwriters shall advise the Company with respect to blue sky
qualification and related matters;
(e) notify counsel for the Stockholders participating in
such registration, promptly after it shall receive notice
thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
(f) notify counsel for such Stockholders promptly of any
request by the Commission for the amending or supplementing of
such registration statement or prospectus or for additional
information;
(g) prepare and file with the Commission, promptly upon the
request of any Stockholders, any amendments or supplements to
such registration statement or prospectus which, in the opinion
of counsel for such Stockholders (and concurred in by counsel for
the Company), is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of
the Common Stock other than an amendment or supplement required
solely as a result of a change by such Stockholder in the method
of distribution of the Common Stock;
(h) prepare and promptly file with the Commission and
promptly notify counsel for such Stockholders of the filing of
such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or
5
omissions if, at the time when a prospectus relating to such
Common Stock is required to be delivered under the Securities
Act, any event other than a change in the method of distribution
of the Common Stock selected by a Stockholder shall have occurred
as the result of which any such prospectus or any other
prospectus as then in effect would include any untrue statement
of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances
in which they were made, not misleading;
(i) not file any amendment or supplement to such
registration statement or prospectus if, in the opinion of
counsel for such Stockholders, such amendment or supplement does
not comply in all material respects with the requirements of the
Securities Act or the rules and regulations thereunder, after
having been furnished with a copy substantially in the form
thereof at least two business days prior to the filing thereof;
provided, however, that if in the opinion of counsel for the
Company, the filing of such amendment or supplement is reasonably
necessary to protect the Company from any liabilities under any
applicable federal or state law and such filing will not violate
applicable law, the Company may make such filing.
3.3 Related Registration Matters. The Company will use its
commercially reasonable best efforts to enter into an
underwriting agreement in connection with any registration
subject to the provisions of this Agreement in which any
Stockholder's Common Stock is included, which agreement shall
contain such terms, provisions and agreements which are customary
and appropriate for such registration. In connection with any
Public Offering in which any Stockholder's Common Stock is
included, to the extent not provided in the underwriting
agreement related to such offering, the Company shall use its
commercially reasonable best efforts to:
(a) List the shares of Common Stock included in such
offering on any national securities exchange on which the Common
Stock is approved for listing;
(b) Engage a bank or other company to act as transfer agent
and registrar for the Common Stock, unless the Company has
already engaged a transfer agent and registrar;
(c) Cause customary opinions of counsel, comfort letters of
accountants and other appropriate documents to be delivered by
representatives of the Company; and
(d) As soon as practicable after the effective date of the
registration statement, and, in any event, within sixteen (16)
months thereafter, make "generally available to its securities
holders" (within the meaning of Rule 158 under the Securities
Act) an earnings statement (which need not be audited) complying
with Section 11(a) of the Securities Act and covering a period of
6
at least twelve (12) consecutive months beginning after the
effective date of the registration statement.
3.4 Indemnification and Contribution.
(a) In the case of each registration effected by the
Company pursuant to this Agreement in which any Stockholder's
Common Stock is included, the Company agrees to indemnify and
hold harmless such Stockholder each underwriter of the shares of
Common Stock so registered and each Person who controls any such
underwriter within the meaning of Section 15 of the Securities
Act, against any and all losses, claims, damages or liabilities
to which they or any of them may become subject under the
Securities Act or any other statute or common law, including any
amount paid in settlement of any litigation, commenced or
threatened, if such settlement is effected with the written
consent of the Company, and to reimburse them for any reasonable
legal or other reasonable expenses incurred by them in connection
with the investigation of any claims and defense of any actions
(subject to subsection (c) of this Section 3.4), insofar as any
such losses, claims, damages, liabilities or actions arise out of
or are based upon: any untrue statement or alleged untrue
statement of a material fact contained in the registration
statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or in
any blue sky application, or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that, notwithstanding the foregoing, the
Company may agree to indemnify each such underwriter and person
who so controls such underwriter to such other extent as the
Company and such underwriter shall agree; and provided further,
however, that the indemnification agreement contained in this
subsection (a) shall not (i) apply to such losses, claims,
damages, liabilities or actions arising out of, or based upon,
any such untrue statement or alleged untrue statement, or any
such omission or alleged omission, if such statement or omission
was made in reliance upon and in conformity with information
furnished to the Company in writing by a Stockholder or such
underwriter claiming rights of indemnification pursuant to this
Section 3.4 for use in connection with the preparation of the
registration statement or any preliminary prospectus or
prospectus contained in the registration statement or any such
amendment thereof or supplement thereto; (ii) inure to the
benefit of any underwriter (or to the benefit of any person
controlling such underwriter) from whom the person asserting any
such losses, claims, damages, expenses or liabilities purchased
the securities which are the subject thereof, if such underwriter
failed to send or give a copy of the final prospectus, as then
amended or supplemented, to such person and if the untrue
statement or omission alleged had been corrected in such final
prospectus; or (iii) inure to the benefit of any person to the
extent such person's claim for indemnification hereunder arises
out of or is based on any violation of such person of applicable
law.
7
(b) In the case of each registration effected by the
Company pursuant to this Agreement in which any Stockholder's
Common Stock is included, such Stockholder shall be obligated,
and shall cause each underwriter of the shares of Common Stock to
be registered on behalf of such person (each Stockholder and such
underwriters being referred to severally in this subsection (b)
as the "indemnifying person") to be obligated, in the same manner
and to the same extent as set forth in subsection (a) of this
Section 3.4, to indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, its directors and officers,
with respect to any statement or alleged untrue statement in, or
omission or alleged omission from, such registration statement or
any post-effective amendment thereof or any preliminary
prospectus or final prospectus (as amended or supplemented, if
amended or supplemented as aforesaid) contained in such
registration statement, if such statement or omission was made in
reliance upon and in conformity with information furnished in
writing to the Company by such indemnifying person for use in
connection with the preparation of such registration statement or
any preliminary prospectus or final prospectus contained in such
registration statement or any such amendment thereof or
supplement thereto; provided, however, that the liability of each
Stockholder hereunder shall be limited to the proceeds received
by each Stockholder from the sale of Common Stock covered by such
registration statement, amendment, supplement, prospectus or blue
sky application, as the case may be.
(c) Each person to be indemnified pursuant to this Section
3.4 will, promptly after its receipt of written notice of the
commencement of any action against such indemnified person in
respect of which indemnity may be sought from an indemnifying
person under this Section 3.4, notify the indemnifying person in
writing of the commencement thereof. The omission of any
indemnified person so to notify an indemnifying person of the
commencement of any such action shall relieve the indemnifying
person from any liability in respect of such action which it may
have to such indemnified person on account of the indemnity
agreement contained in this Section 3.4 to the extent the
indemnifying person is prejudiced thereby, but shall not relieve
the indemnifying person from any other liability which it may
have to such indemnified person. If any such action shall be
brought against any indemnified person and it shall notify an
indemnifying person of the commencement thereof, the indemnifying
person shall be entitled to participate therein and, to the
extent it may desire, jointly with any other indemnifying persons
similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified person, and after
notice from the indemnifying person to such indemnified person of
its election so to assume the defense thereof, the indemnifying
person will not be liable to such indemnified person under this
Section 3.4 for any legal or other expenses subsequently incurred
by such indemnified person in connection with the defense thereof
other than reasonable costs of investigation unless (i) the
8
indemnified party shall have employed counsel in an action in
which the indemnified party and indemnifying party are both
defendants and there is a conflict of interest between such
parties that would prevent counsel from adequately representing
both parties, (ii) the indemnifying party shall not have employed
counsel satisfactory within the exercise of reasonable judgment
of the indemnified party to represent the indemnified party
within reasonable time after the notice of the commencement of
the action, or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of
the indemnifying party.
The undertaking contained in this Section 3.4 shall be in
addition to any liabilities which the indemnifying person may
have pursuant to law.
3.5 Information by Stockholders. Each Stockholder
requesting to be included in any registration shall furnish to
the Company such information regarding such Stockholder and the
distribution proposed by such Stockholder as the Company may
request and as shall be reasonably required in connection with
any registration, qualification or compliance referred to in this
Agreement.
3.6 Rule 144 Reporting. With a view to making available to
the Stockholders the benefits of certain rules and regulations of
the Commission which may permit the sale of the Common Stock to
the public without registration, the Company agrees to:
(a) Commission Reports. File with the Commission in a
timely manner all reports and other documents required of the
Company so long as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act); and
(b) Other Information. Furnish to each Stockholder
forthwith upon its request (i) a written statement by the Company
as to the Company's compliance with the public information
requirements of Commission Rule 144 (at any time after 90 days
after the Company becomes subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act), (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii)
such other reports and documents as may be reasonably requested
in availing any Stockholder of any rule or regulation of the
Commission permitting the sale of any such securities without
registration.
3.7 Notice Requirements. Any notice from a holder of
Common Stock requesting registration of some or all of such
Common Stock pursuant to Article II hereof shall (i) specify the
number of shares of Common Stock intended to be included in such
registration; (ii) describe the nature and method of the proposed
offering and sale; (iii) include an undertaking to provide all
information and materials concerning such holder and the method
9
of distribution and to take any other actions reasonably
requested by the Company to enable the Company to comply with the
Securities Act, any state securities law and/or the applicable
requirements of the Commission or any state securities
commissioner or similar agency or official; and (iv) if such
holder is not a party to this Agreement, include such holder's
agreement to be bound by the provisions of this Agreement
applicable to holders of Common Stock.
ARTICLE IV
MISCELLANEOUS
4.1 Remedies. Each party hereto acknowledges that a remedy
at law for any breach or attempted breach of this Agreement shall
be inadequate, agrees that each other party hereto shall be
entitled to specific performance and injunctive and other
equitable relief in case of any such breach or attempted breach,
and further agrees to waive any requirement for the securing or
posting of any bond in connection with the obtaining of any such
injunctive or any other equitable relief.
4.2 Effect of Sale. Any Stockholder who sells all of his
Common Stock pursuant to the terms of this Agreement shall cease
to be a party to this Agreement and shall have no further rights
or obligations hereunder.
4.3 Amendment. This Agreement may be amended from time to
time by an instrument in writing signed by all Persons who are
parties to this Agreement.
4.4 Notices. Any notice, request, reply instruction or
other communication (herein severally and collectively called
"notice") in this Agreement provided or permitted to be given to
the Company or to any Stockholder must be given in writing and
may be given or served by depositing the same in the United
States mail, in certified or registered form postage fully
prepaid, addressed to the party or parties to be notified, with
return postage fully requested, or by delivering the same in
person to such party or parties. Notice deposited in the United
States mail, mailed in the manner hereinabove described, shall be
effective upon deposit. Notice given in any other manner shall
be effective only if and when received by the party to be
notified. For purpose of notice hereunder, until notice is given
of a change of address, the address of the Company shall be 11660
Alpharetta Highway, Suite 330, Roswell, Georgia 30076, and the
respective addresses of the Executing Stockholders shall be the
addresses hereinafter set forth in Schedule A hereto.
4.5 Governing Law. This Agreement shall be subject to and
governed by the laws of the State of Delaware.
10
4.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the parties contained in this Agreement
and their respective heirs, executors, distributees, successors
(including successors by merger) and permitted assigns.
4.7 Invalid Provisions. Should any portion of this
Agreement be adjudged or held to be invalid, unenforceable or
void, such holding shall not have the effect of invalidating or
voiding the remainder of this Agreement and the parties hereby
agree that the portion so held invalid, unenforceable or void
shall, if possible, be deemed amended or reduced in scope, or to
otherwise be stricken from this Agreement to the extent required
for the purposes of validity and enforcement thereof.
4.8 Section Headings. The section and paragraph headings
contained herein are for reference purposes only and shall not in
any way affect the meaning and interpretation of this Agreement.
4.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and such
counterparts together shall constitute only one instrument.
4.10 Adjustments. In the event the Company shall declare a
stock split, stock dividend or other distribution of capital
stock in respect of, or issue capital stock in replacement of or
exchange for, shares of Common Stock such shares shall be subject
to this Agreement and the provisions of this Agreement providing
for calculations based on the number of shares of Common Stock
shall include the shares issued in respect of the Common Stock.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed on its behalf and its corporate seal to be hereunto
affixed by its duly authorized officers and the Executing
Stockholders have caused this Agreement to be executed by the
appropriate authorized person, as of the day and year first above
written.
VISTA 2000, INC.
By:________________________________
Name: ____________________________
Title: ____________________________
EXECUTING SHAREHOLDERS:
__________________________________
__________________________________
__________________________________
__________________________________
11
SCHEDULE A
Exhibit D
SUBORDINATED DEBT
Principal $12 $14
Holder Amount* Warrant Warrant
Leonard M. Paletz 180,094.76 7,914 7,914
Frederick J. Kroger 723,333.50 31,786 31,786
Mark F. Kroger 31,666.50 1,393 1,393
Susan M. Mills 78,400.00 3,446 3,446
Christopher S. Mills 1,600.00 70 70
Frederic Mayerson 78,334.00 3,442 3,442
Philip H. Steiner 55,833.00 2,454 2,454
Richard Steiner 55,833.00 2,454 2,454
Vincent W. Shiel,
Trustee, Amended
Trust dated 1/18/89 752,740.00 33,079 33,079
Ralph E. Heyman,
Trustee, V.W. Shiel
Trust dated 4/8/88
f/b/o Sarah Louise
Patterson 7,270.00 319 319
Helen M. Shiel,
Trustee, Amended
Trust dated 1/23/89 233,333.50 10,253 10,253
Ralph E. Heyman,
Trustee, Helen M.
Shiel Retained
Income Trust
dated 1/23/89 175,000.00 7,690 7,690
Lowell E. Mills 25,000.00 1,099 1,099
V.P. Serodino 100,000.00 4,394 4,394
John P. Flege, Jr. 100,000.00 4,394 4,394
Ruth J. Conway 300,000.00 13,183 13,183
Ralph E. Heyman,
Trustee, Cap Toy
Trust dated 9/1/92 125,000.00 5,493 5,493
Ralph E. Heyman,
Trustee, V.W. Shiel
Trust dated 9/1/92 200,000.00 8,789 8,789
Ralph E. Heyman,
Trustee, V.W. Shiel
Trust #3 dated
12/1/92 f/b/o
Wm. Buford, III 20,000.00 879 879
Ralph E. Heyman,
Trustee, V.W. Shiel
Trust dated
4/8/88 f/b/o
Andrew V. Shiel 19,990.00 878 878
Ralph E. Heyman,
Trustee, Mr. Shiel
Trust dated
4/8/88 f/b/o
Hunter G. Patterson 20,000.00 879 879
Ralph E. Heyman,
Trustee, H.M. Shiel
Trust dated
4/8/88 f/b/o
Austin D. Patterson 10,000.00 439 439
Ralph E. Heyman,
Trustee, V.W. Shiel
Trust dated
12/1/92 f/b/o
Deryl L. Patterson 20,000.00 879 879
S. Andrew Shiel 100,000.00 4,394 4,394
------------- ------- -------
TOTAL $3,413,428.26 150,000 150,000
[FN]
*Accumulated interest will be determined and paid as of the date
determined as set forth in Section 5.12.
2
Exhibit E
WARRANT AGREEMENT
This Agreement (the "Agreement") dated __________, 1996, by
Vista 2000, Inc., a Delaware corporation (the "Company"), for the
benefit of those persons who are subordinated debt holders listed
on Schedule I hereto (the "Holders") of The Sportsman's Guide,
Inc., a Minnesota corporation ("SGI").
WITNESSETH:
WHEREAS, the Company, Vista Acquisition Subsidiary, Inc. and
SGI have entered into an Agreement and Plan of Merger (the
"Merger") dated March 8, 1996 which requires all of the
outstanding common and preferred stock of SGI to be exchanged for
common stock of the Company and cash; and
WHEREAS, as a condition to the Merger, the Company has
agreed to retire the outstanding subordinated debt to the Holders
and to grant to the Holders warrants to purchase common stock of
the Company (the "Warrants") in consideration of the Holders'
agreement with SGI to extend the maturity date of the debt
instrument until the consummation of the Merger; and
WHEREAS, the Company desires to provide for the issuance of
certificates representing the Warrants; and
WHEREAS, the Company desires to act as the Warrant Agent in
connection with the issuance, registration, transfer and exchange
of certificates and the exercise of the Warrants;
NOW, THEREFORE, in consideration of the above and foregoing
premises and the mutual promises and agreements hereinafter set
forth, it is agreed that:
1. Warrant Certificates. Each Warrant shall entitle the
holder (the "Registered Holder" or, in the aggregate, the
"Registered Holders") in whose name the certificate shall be
registered on the books maintained by the Company to purchase one
(1) share, or such other number of shares as may be designated in
such Warrant, of Common Stock of the Company, $.01 par value
("Common Stock") on exercise thereof. The Company shall issue to
the Registered Holders Warrants to purchase 300,000 shares of
Common Stock, which shall be allocated pursuant to Schedule 1
hereto. Warrant certificates shall be executed by the Company's
President and attested to by its Secretary. The Warrant
certificates shall be distributed to the Registered Holder
thereof within 30 days following the effective date of the
Merger. Subject to the provisions of Sections 3, 5 and 9 hereof,
the Company shall deliver Warrant certificates in required whole
number denominations to Registered Holders in connection with any
transfer or exchange permitted under this Agreement. Except as
provided in Section 7 hereof, no Warrant certificates shall be
issued except (i) certificates initially issued hereunder, (ii)
certificates issued on or after the initial issuance date upon
the exercise of any Warrant to evidence the unexercised Warrants
held by the exercising Registered Holder and (iii) certificates
issued after the initial issuance date upon any permitted
transfer or exchange of certificates.
2. Form and Execution of Certificates. The Warrant
certificates shall be dated as of the date of their issuance,
whether on initial issuance, transfer or exchange or in lieu of
mutilated, lost, stolen or destroyed certificates. The form of
the Warrant certificate is attached hereto as Exhibit A. Each
Warrant certificate shall be numbered serially. The Warrant
certificates shall be manually signed on behalf of the Company by
proper officers thereof and shall not be valid for any purpose
unless so signed. In the event any officer of the Company who
executed Warrant certificates shall cease to be an officer of the
Company such certificates may be issued and delivered by the
Company or transferred by Registered Holders with the same force
and effect as though the person who signed such certificate had
not ceased to be an officer of the Company, and any certificate
signed on behalf of the Company by any person who at the actual
date of the execution of such certificate was a proper officer of
the Company shall be proper.
3. Exercise. Subject to the provisions of Sections 5 and
9 hereof, the Warrants to be issued hereunder shall be
exercisable at a price of $12.00 per share for 150,000 shares and
$14.00 per share for the remaining 150,000 shares (the "Exercise
Price") subject to adjustment as set forth herein, in whole or in
part at any time during the period (the "Warrant Exercise
Period") commencing on the effective date of the Merger (the
"Warrant Exercise Date") and ending on the fifth anniversary date
of the Merger (the "Warrant Expiration Date"). Warrants shall be
deemed to have been exercised immediately prior to the close of
business on the date (the "Exercise Date") of the surrender for
exercise of the certificate evidencing the Warrants being
exercised. The exercise form shall be executed by the Registered
Holder thereof or his attorney duly authorized in writing and
shall be delivered together with payment to the Company at its
corporate offices located at 11660 Alpharetta Hwy., Suite 330,
Roswell, Georgia 30076, or at any such other office or agency as
the Company may designate, in cash or by official bank or
certified check, in an amount equal to the aggregated Exercise
Price and in lawful money of the United States of America.
The person entitled to receive the number of shares of
Common Stock deliverable on exercise of the Warrant (the "Warrant
Shares") shall be treated for all purposes as the holder of such
Warrant Shares as of the close of business on the Exercise Date.
The Company shall not be obligated to issue any fractional share
interest in Warrant Shares issuable or deliverable on the
exercise of any Warrant or scrip therefor. Within ten days after
the Exercise Date and in any event prior to the Warrant
Expiration Date (the "Issuance Date"), the Company at its sole
2
expense shall cause to be issued and delivered to the person or
persons entitled to receive the same, a certificate or
certificates in the name requested by the Registered Holder for
the number of Warrant Shares deliverable on such exercise. No
adjustment shall be made in respect of cash dividends on Warrant
Shares delivered on exercise of any Warrant. All shares of
Common Stock or other securities delivered upon the exercise of
the Warrants shall be validly issued, fully paid and
nonassessable. The Company may deem and treat the Registered
Holder of the Warrants at any time as the absolute owner thereof
for all purposes, and the Company shall not be affected by any
notice to the contrary. The Warrants shall not entitle the
holder thereof to any of the rights of shareholders of the
Company or to any dividend declared on the Common Stock unless
the holder shall have exercised the Warrants prior to the record
date fixed by the Board of Directors for the determination of
holders of Common Stock entitled to such dividends or other
rights.
4. Registration Rights.
(a) (1) If the Company at any time elects or proposes
to register any of its shares of Common Stock (the "Registration
Shares") under the Securities Act of 1933, as amended, (the
"Securities Act") on Forms S-1, S-2, S-3, or any other Form for
the registration of securities to be sold solely for cash in
effect at such time (a "Registration Statement") with the
Securities and Exchange Commission (the "SEC") pursuant to which
shares of Common Stock owned by any shareholder of the Company
may be registered, the Company shall give prompt written notice
(the "Registration Notice") to each of the Registered Holders of
its intention to register the Registration Shares.
(2) Within thirty (30) days after the Registration
Notice shall have been given to a Registered Holder, the
Registered Holder may give written notice to the Company (the
"Holder Notice"), accompanied by the Warrant Certificate together
with a duly executed purchase form and payment of the Exercise
Price for the Shares in accordance with Section 3 hereof stating
the number of shares to be registered and any states in which the
Registered Holder wishes to register the Shares.
(3) The Company shall use its commercially
reasonable best efforts to register the shares under the
Securities Act and the securities laws of the states ( the "State
Acts") designated by the Registered Holder in the Holder Notice.
The Company shall have the right to withdraw and discontinue
registration of the Shares at any time prior to the effective
date of such Registration Statement if the registration of the
Registration Shares is withdrawn or discontinued.
(b) If the offering of the Registration Shares by the
Company is, in whole or in part, an underwritten public offering,
and if the managing underwriter determines and advises the
3
Company in writing that the inclusion in such Registration
Statement of all of the shares, together with the shares of the
other persons who have exercised their right to include their
shares in the Registration Statement (collectively referred to as
the "Aggregate Shares"), would adversely affect the marketability
of the offering of the Registration Shares, then the Registered
Holder and such other holders shall be entitled to register the
portion of such number of Aggregate Shares as the managing
underwriter determines may be included without such adverse
effects (collectively, "Aggregate Underwriter Shares"). The
number of shares which the Registered Holder shall be entitled to
register shall be equal to the number of Aggregate Underwriter
Shares multiplied by a fraction, the numerator of which is the
number of Shares and the denominator of which is the number of
Aggregate Shares.
(c) The Company shall bear all costs and expenses of
registration of the Registration Shares.
(d) It shall be a condition precedent to the Company's
obligation to register any Shares pursuant to this Section 4 that
the Registered Holder shall provide the Company with all
information and documents, and shall execute, acknowledge, seal
and deliver all documents reasonably necessary, to enable the
Company to comply with the Securities Act, the State Acts, and
all applicable laws, rules and regulations of the SEC or of any
state securities law authorities.
(e) The Registered Holder shall indemnify and hold harmless
the Company, each of its directors and officers who has signed
the Registration Statement, each person, if any, who is a
controlling person of the Company and any underwriter and its
controlling persons, if any, from and against any and all losses,
claims, damages, expenses or liabilities (including amounts paid
in settlement and reasonable attorneys' fees) (the
"Liabilities"), joint or several, to which they or any of them
may become subject under the Securities Act, under any State Act
or at common law or otherwise insofar as the Liabilities arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement or prospectus (as from time to time amended or
supplemented) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading, which statement or omission was made in
reliance upon and in conformity with information furnished to the
Company in writing by the Registered Holder in connection
therewith; provided, however, that the liability of each Holder
hereunder shall be limited to proceeds received by each
Registered Holder from the sale of Shares covered by such
Registration Statement or prospectus.
(f) The Company shall indemnify and hold harmless each
Registered Holder and any underwriter and its controlling
4
persons, if any, from and against any and all Liabilities, joint
or several, to which they or any of them may become subject under
the Securities Act, under any State Act or at common law or
otherwise insofar as the Liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or
prospectus (as from time to time amended or supplemented) or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading,
unless such statement or omission was made in reliance upon and
in conformity with information furnished to the Company in
writing by such Registered Holder or underwriter (as applicable)
in connection therewith.
5. Reservation of Shares and Payment of Taxes. The
Company covenants that it shall at all times reserve and have
available from its authorized and unissued Common Stock such
number of shares as shall then be issuable on the exercise of all
outstanding Warrants. The Company covenants that all Warrant
Shares shall be duly and validly issued, fully paid and
nonassessable, and shall be free from all taxes, liens and
charges with respect to the issuance thereof. No Warrants may be
exercised, nor may Warrant Shares be issued or delivered by the
Company, unless on the Exercise Date (i) there is an effective
registration statement covering the issuance of the securities
being acquired under the Securities Act and applicable "Blue Sky"
statutes or (ii) an exemption is available from registration
thereunder. The Company shall pay all documentary, stamp or
similar taxes and other government charges that may be imposed
with respect of the issuance of the Warrants, or the issuance,
transfer or delivery of any Warrant Shares on exercise of the
Warrants. In the event Warrant Shares are to be delivered in a
name other than the name of the Registered Holder of the Warrant
certificate, no such delivery shall be made unless the person
requesting the same has paid to the Company the amount of any
such taxes, charges, or transfer fees incident thereto.
6. Registration of Transfer. Warrant certificates may be
transferred in whole or in part. Certificates to be exchanged
shall be surrendered to the Company at the office of the Company.
The Company shall execute, issue and deliver in exchange therefor
the Warrant certificate or certificates which the holder making
the transfer shall be entitled to receive. The Warrant Agent
shall keep the transfer books of the Company which shall register
certificates and the transfer thereof. On due presentment for
registration of transfer of any certificate at the office of the
Company as Warrant Agent, the Company shall execute, issue and
deliver to the transferee or transferees a new certificate or
certificates representing an equal aggregate number of
securities. All certificates presented for registration of
transfer or exercise shall be duly endorsed or be accompanied by
a written instrument or instruments of transfer in form
reasonably satisfactory to the Company. The established transfer
5
fee for any registration of transfer of certificates shall be
paid by the Registered Holder or the person presenting the
certificate for transfer. Prior to due presentment for
registration or transfer thereof, the Company may treat the
Registered Holder of any certificate as the absolute owner
thereof (notwithstanding any notations of ownership or writing
thereon made by anyone and the parties hereto shall not be
affected by any notice to the contrary).
7. Loss or Mutilation. On receipt by the Company of
evidence satisfactory as to the ownership of and the loss, theft,
destruction or mutilation of any Warrant certificate, the Company
shall execute and deliver in lieu thereof a new certificate
representing an equal number of Warrants. In the case of loss,
theft or destruction of any certificate, the individual
requesting reissuance of a new certificate shall be required to
indemnify the Company and also to post an open-penalty insurance
or indemnity bond. In the event a certificate is mutilated, such
certificate shall be surrendered and canceled by the Company
prior to delivery of a new certificate. Applicants for a new
certificate shall also comply with such other regulations and pay
such other reasonable charges as the Company may prescribe.
8. Redemption of Warrants.
(a) At any time after the first anniversary date of the
Merger, on not less than thirty (30) days notice, the Warrants
may be redeemed, at the option of the Company, at a redemption
price of $.05 per Warrant, provided the closing bid price for the
Common Stock for any 20 consecutive trading days ending within 15
days of the date on which notice of redemption is given equals or
exceeds $15.00 for the 150,000 Warrants with an Exercise Price of
$12.00 per share and $17.00 for the 150,000 Warrants with an
Exercise Price of $14.00 per share (the "Target Price"), subject
to adjustment as set forth in Section 8(f) below. All Warrants
having the same Exercise Price must be redeemed if any such
Warrants are redeemed.
(b) In case the Company shall desire to exercise its right
to redeem the Warrants, it shall request the Warrant Agent to
mail a notice of redemption to each of the Registered Holders of
the Warrants to be redeemed, first class, postage prepaid, not
later than the thirtieth day before the date fixed for
redemption, at their last address as shall appear on the records
of the Warrant Agent. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given
whether or not the Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the
redemption price, (ii) the date fixed for redemption, (iii) the
place where the Warrant Certificates shall be delivered and the
redemption price paid, and (iv) that the right to exercise the
Warrant shall terminate at 5:00 P.M. (Eastern time) on the
business day immediately preceding the date fixed for redemption.
6
The date fixed for the redemption of the Warrants shall be the
Redemption Date. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity of
the proceedings for such redemption except as to a holder (1) to
whom notice was not mailed or (2) whose notice was defective. An
affidavit of the Warrant Agent or the Secretary or an Assistant
Secretary of the Company that notice of redemption has been
mailed shall, in the absence of fraud, be prima facie evidence of
the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00
P.M. (Eastern time) on the business day immediately preceding the
Redemption Date. On and after the Redemption Date, Registered
Holders of the Warrants shall have no further rights except to
receive, upon surrender of the Warrant, the Redemption Price.
(e) From and after the date specified for redemption, the
Company shall, at the place specified in the notice of
redemption, upon presentation and surrender to the Company by or
on behalf of the Registered Holder thereof of one or more
Warrants to be redeemed, deliver or cause to be delivered to or
upon the written order of such Holder a sum in cash equal to the
Redemption Price of each Warrant. From and after the date fixed
for redemption and upon the deposit or setting aside by the
Company of a sum sufficient to redeem all the Warrants called for
redemption, such Warrants shall expire and become void and all
rights hereunder and under the Warrant Certificates, except the
right to receive payment of the Redemption Price, shall cease.
(f) If the shares of the Company's Common Stock are
subdivided or combined into a greater or smaller number of shares
of Common Stock, the Target Price shall be proportionately
adjusted by the ratio which the total number of shares of Common
Stock outstanding immediately prior to such event bears to the
total number of shares of Common Stock to be outstanding
immediately after such event.
9. Protection Against Dilution.
(a) Adjustment for Subdivisions, Combinations or Dividends.
In the event the Company shall at any time or from time to time
after the Issuance Date subdivide or combine the outstanding
shares of Common Stock or declare a dividend payable in Common
Stock, the exercise price of the Warrants in effect immediately
prior to the subdivision, combination or record date for such
dividend payable in Common Stock shall forthwith be
proportionately increased, in the case of combination, or
decreased, in the case of subdivision or dividend payable in
Common Stock, and each share of Common Stock purchasable upon
exercise of each Warrant shall be changed to the number
determined by dividing the then current exercise price by the
exercise price as adjusted after the subdivision, combination or
dividend payable in Common Stock.
7
(b) Adjustment for Certain Dividends and Distributions. In
the event the Company at any time or from time to time after the
Issuance Date makes, or fixes a record date for the determination
of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Company other
than shares of Common Stock, then and in each such event
provisions shall be made so that each Warrant holder shall
receive upon exercise of the Warrant, in addition to the number
of shares of Common Stock receivable thereupon, the amount of
securities of the Company which the Holder would have received
had its Warrant been exercised into Common Stock on the date of
such event and had it thereafter, during the period from the date
of such event to and including the date of exercise, retained
such securities receivable by it as aforesaid during such period,
subject to all other adjustments called for during such period
under this Section 9 with respect to the rights of the Holder of
the Warrant.
(c) Adjustment for Reclassification, Exchange and
Substitution. If the Common Stock issuable upon the exercise of
the Warrants is changed into the same or a different number of
shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets, provided
for elsewhere in this Section 9), then and in any such event the
holder shall have the right thereafter, upon exercise of the
Warrant, to receive the kind and amount of stock and other
securities and property receivable upon such recapitalization,
reclassification or other change, in an amount equal to the
amount that the Holder would have been entitled to had the Holder
exercised the Warrant immediately prior to such recapitalization,
reclassification or other change, but only to the extent the
Warrant is actually exercised, all subject to further adjustment
as provided herein.
(d) Reorganization, Mergers, Consolidations or Sales of
Assets. If at any time or from time to time there is a capital
reorganization of the Common Stock (other than a
recapitalization, subdivision, combination, reclassification or
exchange of the Common Stock provided for elsewhere in this
Section 9) or merger or consolidation of the Company with or into
another corporation, or the sale of all or substantially all of
the Company's properties and assets to any other person then, as
part of such reorganization, merger, consolidation or sale,
provision shall be made so that the holder of each Warrant shall
thereafter be entitled to receive, upon exercise of each Warrant
(and only to the extent such Warrant is exercised), the number of
shares of stock or other securities or property of the Company,
or of the successor corporation resulting from such merger or
consolidation or sale, to which a holder of Common Stock, or
other securities, deliverable upon the exercise of the Warrant
would otherwise have been entitled on such capital
reorganization, merger, consolidation, or sale.
8
10. Fractional Shares. The Company shall not be required
to issue any fraction of a Share upon the exercise of this
Warrant or any portion hereof. If more than one Warrant
certificate (each such Warrant certificate representing a portion
of this Warrant) shall be surrendered for exercise at one time by
the same Holder, the number of full Warrant Shares which shall be
issuable upon exercise thereof shall be computed on the basis of
the aggregate number of Warrant Shares represented by the Warrant
certificates surrendered. If any fractional interest in a share
shall be deliverable upon the exercise of this Warrant, the
Company shall make an adjustment therefor in cash equal to such
fraction multiplied by the current market price of the shares on
the business day next preceding the day of exercise.
11. Notices. All notices, demands, elections, opinions or
requests (however characterized or described) which are required
or authorized hereunder shall be deemed given sufficiently if in
writing and sent by registered or certified mail, return receipt
requested and postage prepaid, or by telex, telegram, facsimile
or cable to, in the case of the Company:
Vista 2000, Inc.
11660 Alpharetta Hwy., Suite 330
Roswell, Georgia 30076
Attention: Mr. Richard Smyth
and if to any Registered Holder at the address of such holder as
set forth on the books maintained by or on behalf of the Company.
12. Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the Company and the Registered
Holders. Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or
claim or to impose on any other person any duty, liability or
obligation.
13. Further Instruments. The parties hereto shall execute
and deliver any and all such other instruments and take any and
all such other actions as may be reasonably necessary to carry
out the intention of this Agreement.
14. Severability. If any provision of this Agreement shall
be held, declared or pronounced void, voidable, invalid,
unenforceable, or inoperative for any reason by any court of
competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise
remain in full force and effect and be enforced in accordance
with its terms, and the effect of such holding, declaration or
pronouncement shall be limited to the territory or jurisdiction
in which made.
15. Waiver. No delay or failure on the part of any party
in the exercise of any right or remedy arising from a breach of
9
this Agreement shall operate as a waiver of any subsequent right
or remedy arising from a subsequent breach of this Agreement.
16. Relevant Markets. For purposes of this Agreement, it
is assumed that the Common Stock will be quoted on the National
Association of Securities Dealers, Inc.'s Automated Quotation
System, National Market System ("NASDAQ"); however, in the event
the Common Stock is:
(a) listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange, the price of the
Common Stock to be determined during any applicable 20 day
trading period shall be the last reported sales price of the
Common Stock on such exchange, or
(b) not quoted on NASDAQ or listed on any national
securities exchange or admitted to unlisted trading privileges on
either of the foregoing, the price of the Common Stock to be
determined during any applicable 20 day trading period shall be
the average of the high bid and the low asked prices as reported
on the Bulletin Board maintained by the National Association of
Securities Dealers, Inc., and if not quoted there, by reference
to said prices as are reported on the "pink sheets" maintained by
the National Daily Quotation Bureau, Inc.
17. General Provisions. This Agreement shall be construed
and enforced in accordance with, and governed by, the laws of the
State of Delaware. This Agreement may not be modified or amended
or any term or provisions hereof waived or discharged except in
writing by the party against whom such amendment, modification,
waiver or discharge is sought to be enforced. The headings of
this Agreement are for convenience in reference only and shall
not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first set forth
above.
VISTA 2000, INC.
By:____________________________
President
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) THE CORPORATION SHALL HAVE
RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION AND
ITS COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION
WITH SUCH OFFER, SALE OR TRANSFER.
Warrant Certificate to Purchase Common Stock
of VISTA 2000, INC.
Warrant No. W-_____________ No. of Warrants:______________
This certifies that, for value received and subject to the
terms and conditions set forth herein, _______________________ or
his registered assign (the "Warrant Holder") is the registered
holder of ______ warrants.
1. Exercise. Each warrant evidenced hereby
("Warrant(s)"), as it may be adjusted from time to time, may be
exercised at a price of $__.00 to acquire one (1) share of the
$.01 par value per share common stock (the "Common Stock") of
Vista 2000, Inc. (the "Company"). (The Common Stock acquirable
upon exercise hereof is referred to herein as the "Warrant
Stock"). No fractional shares may be acquired upon exercise
hereof.
2. Term of Warrant. This Warrant may be exercised at any
time and from time to time in whole or in part commencing on
____________ and ending on _______________ (the "Exercise
Period").
3. Adjustment of Exercise Price. The number of shares of
Common Stock purchasable upon exercise of this Warrant is subject
to adjustment if the Company shall, prior to exercise of any
Warrants, effect one or more stock splits, stock dividends or
other increases or reductions in the number of shares of Common
Stock outstanding in certain circumstances. No such anti-dilution
provisions shall apply in the event of a merger, acquisition or
consolidation should any of these events occur prior to the
exercise of the Warrants, except as otherwise provided in the
Warrant Agreement.
4. Reservation of Common Stock. The Company agrees that
the number of shares of Common Stock sufficient to provide for
the exercise of the Warrants upon the basis set forth herein
shall at all times during the term of this Warrant be reserved
for the exercise hereof.
5. Manner of Exercise. Exercise may be made of all or any
part of the Warrants by surrendering this certificate, with the
purchase form to be provided by the Company, duly executed by the
Warrant Holder or by the Warrant Holder's duly authorized
attorney, plus payment of the exercise price therefor in cash at
the office of the Company or its designated assign.
6. Issuance of Common Stock upon Exercise. The Company,
at its own expense, shall cause to be issued, within ten (10)
days after exercise of this Warrant, a certificate or
certificates in the name requested by the Warrant Holder of the
number of shares of Common Stock to which the Warrant Holder is
entitled upon such exercise. All shares of Common Stock or other
securities delivered upon the exercise of this Warrant shall be
validly issued, fully paid and nonassessable. Irrespective of
the date of issuance and delivery of any shares of Common Stock
upon the exercise of this Warrant, each person in whose name any
such certificate is to be issued shall for all purposes be deemed
to have become the holder of record of the Common Stock acquired
on the date on which a duly executed notice of exercise of this
Warrant and payment for the number of shares exercised are
received to the Company.
7. Registration Rights. The Warrant Stock may be
registered as described in the Warrant Agreement which governs
the issuance and registration of the Warrant Stock.
8. Redemption of Warrants. The Company has the right to
redeem all (and not less than all) of the Warrants at any time
during the Warrant Exercise Period by giving thirty (30) days'
written notice to the Warrant Holder. The terms and provisions
of such redemption shall be as defined in the Warrant Agreement.
9. No Right as Stockholder. The Warrant Holder is not, by
virtue of his ownership of this Warrant, entitled to any rights
whatsoever as a stockholder of the Company.
10. Assignment. This Warrant may not be assigned without
providing the Company an opinion reasonably satisfactory to its
counsel that an exemption from registration for the transfer
exists.
11. Warrant Agreement. The actual terms, conditions and
provisions of this Warrant are contained in a Warrant Agreement
entered into by the Company for the benefit of the Warrant Holder
and the Warrant Holder, dated ____________________, 1996 (the
"Warrant Agreement"), the terms, conditions and provisions of
which are incorporated herein by this reference as if fully set
forth herein and made a part hereof. To the extent of any
conflict herewith, the terms and conditions of the Warrant
Agreement shall apply. Any capitalized terms not defined herein
shall have the meaning ascribed to them in the Warrant Agreement.
2
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be signed on its behalf by its President, his
signature to be attested to by its Secretary, and its corporate
seal to be hereunto affixed this _____ day of ____________, 1996.
VISTA 2000, INC.
By:
Name:
Its:
Attest:________________________ (SEAL)
, Secretary
3
Exhibit F
DOWNSIDE PRICE PROTECTION AGREEMENT
THIS DOWNSIDE PRICE PROTECTION AGREEMENT (the "Agreement")
is made and entered into effective the ______ day of ___________,
1996, by and among the undersigned stockholders (the
"Stockholders"), and VISTA 2000, INC, a Delaware corporation
("VISTA").
W I T N E S S E T H:
WHEREAS, the Stockholders have received shares of Common
Stock, $.01 par value per share (the "Shares") of VISTA pursuant
to that Agreement and Plan of Merger (the "Merger Agreement") by
and among VISTA, Vista Acquisition Subsidiary, Inc., and The
Sportsman's Guide, Inc. dated February _____, 1996;
WHEREAS, as part of the consideration for their agreeing to
the terms and conditions of the Merger Agreement, the
Stockholders are to receive certain protective provisions
regarding the future value of the Shares on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby covenant and agree as follows:
1. Price Protection. In the event a Stockholder should
sell any of the Shares in a regular market (i.e., non-private)
transaction prior to 18 months from the earlier of (i) the second
anniversary of the date of issuance of the Shares to such selling
Stockholder or (ii) the date the Securities and Exchange
Commission shall declare effective a registration statement
covering the Shares pursuant to which the Shares may be sold by
the Stockholders to the public and the sales price of the Shares
so sold shall be less than $______ per Share, then VISTA shall
issue to such selling Stockholder, within thirty (30) days after
receipt of a written sale confirmation from a broker-dealer or
other documentation evidencing the sale satisfactory to VISTA
(which satisfaction shall not unreasonably be withheld),
additional shares of VISTA Common Stock, $.01 par value per share
(the "Additional Shares") with an aggregate "fair market value"
(as defined below) equal to twenty percent (20%) of the product
of number of Shares sold by such selling Stockholder multiplied
by $________. For purposes of this Agreement, "fair market
value" (on a per share basis) shall mean the average closing
sales price for VISTA Common Stock as reported by the National
Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") National Market System ("NMS") or, if VISTA Common
Stock is not quoted on NASDAQ's NMS, such other exchange on which
VISTA Common Stock sales prices are regularly quoted, for the ten
(10) trading days immediately prior to the date of issuance of
such Additional Shares.
2. Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein
and their respective successors and permitted assigns. No
Stockholder may assign either this Agreement or any of his or its
rights, interests or obligations hereunder without the prior
written approval of VISTA. VISTA may not assign either this
Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the Stockholders.
3. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
4. Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
5. Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then three business days after) it is
sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set
forth below:
If to VISTA: Copy to:
Mr. Arnold Johns Steven A. Cunningham, Esq.
Vista 2000, Inc. Nelson Mullins Riley &
11660 Alpharetta Hwy. Scarborough, L.L.P.
Suite 330 1201 Peachtree Street, N.E.
Roswell, Georgia 30076 Suite 2200
Atlanta, Georgia 30361
If to a Stockholder:
To the address set forth on the signature page hereof.
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address
set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
2
6. Governing Law. This Agreement shall be governed by and
construed in accordance with laws of the State of Delaware
without giving effect to any choice or conflict of law provision
or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
7. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
8. Expenses. Each party will bear his or its expenses
incurred in connection with this Agreement and the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
"VISTA"
VISTA 2000, INC.
By:_______________________________
Title:____________________________
"STOCKHOLDERS"
[Each Stockholder Has Executed the
Following Signature Page]
3
STOCKHOLDER SIGNATURE PAGE
Name of Stockholder (Please Print or Type):
____________________________________________
Address of Stockholder (Please Print or Type)
___________________________________________
___________________________________________
___________________________________________
Signature of Stockholder:
For Individuals:
___________________________________________
For Entities:
___________________________________________
Title:
__________________________________________
4
Exhibit G
INVESTMENT LETTER AGREEMENT
Board of Directors
Vista 2000, Inc.
11660 Alpharetta Hwy., Suite 330
Roswell, Georgia 30076
Dear Sirs:
In connection with the merger of The Sportsman's Guide,
Inc., a Minnesota corporation with and into Vista Acquisition
Subsidiary, Inc., a Delaware corporation, the undersigned, in
exchange for its __________ shares of [common][preferred] stock
in The Sportsman's Guide, Inc., will be issued _____________
shares of the [preferred] [common] stock (the "Securities") of
Vista 2000, Inc., a Delaware corporation (the "Corporation"),
which is the parent company of Vista Acquisition Subsidiary, Inc.
The undersigned represents and warrants to the Corporation
as follows:
(1) My commitment to investments that are not readily
marketable is not disproportionate to my net worth, and my
acquisition of the Securities will not cause such overall
commitment to become excessive.
(2) I have the financial ability to bear the economic risks
of my investment, have adequate means of providing for my current
needs and personal contingencies, and have no need for liquidity
in this investment.
(3) I have evaluated the risks of investing in the
Corporation and, either alone or together with my purchaser
representative, have such knowledge and experience in financial
and business matters in general and in particular with respect to
this type of investment that I am capable of evaluating the
merits and risks of my acquisition of the Securities.
(4) I have carefully read the Information Statement for the
Special Meeting of Shareholders of The Sportsman's Guide, Inc. to
be held on April ____, 1996 and the accompanying 1995 Annual
Reports on Form 10-K for The Sportsman's Guide, Inc. and the
Corporation and I have been given the opportunity to ask
questions of and receive answers from the Corporation concerning
the terms and conditions of this investment, and to obtain
additional information necessary to verify the accuracy of the
information I desired in order to evaluate my investment, and in
evaluating the suitability of this investment I have not relied
upon any representations or other information (whether oral or
written), other than that furnished to me by the Corporation or
its representatives.
(5) I have had the opportunity to discuss with my
professional, legal, tax and financial advisors the suitability
of the acquisition of the Securities for my particular tax and
financial situation and all information that I have provided to
the Corporation concerning myself and my financial position is
correct and complete as of the date set forth below, and if there
should be any material change in such information prior to my
admission as a shareholder of the Corporation, I will immediately
provide such information to the Corporation.
(6) The residence set forth below is my true and correct
residence, and I have no present intention of becoming a resident
or domiciliary of any other state or jurisdiction.
(7) In making the decision to acquire the Securities, I
have relied solely upon independent investigations made by me or
on my behalf.
(8) I am acquiring the Securities for my own personal
account, for investment purposes only, and am not acquiring with
a view to, or for, the resale, distribution, subdivision or
fractionalization thereof.
(9) I am aware that the Securities being acquired have not
been registered under either federal law and rules or the
applicable law of any state or other jurisdiction, and that sale
or resale of the Securities will not be permitted under federal
or state law unless such Securities are first registered, or the
sale is a transaction that is exempt from registration under both
federal and state laws. Furthermore, I agree to refrain from any
sale of the Securities except pursuant to registration or
exemption from registration.
(10) If, contrary to its foregoing intentions, I should
later desire to dispose of or transfer any of the foregoing
Securities in any manner, I will not do so without first
obtaining (a) an opinion of independent counsel satisfactory to
the Corporation to the effect that the proposed disposition or
transfer may lawfully be made without registration of the
Securities pursuant to the Securities Act of 1933 as then in
effect (the "Act"), including but not limited to Rule 144
promulgated under the Securities Act, and applicable state
securities laws, or (b) registration of the Securities pursuant
to the Act.
In this connection, I hereby consent to the placement of the
following restrictive legend on the Securities delivered to me:
"The securities represented by this Certificate have
not been registered under the Securities Act of 1933,
as amended, or the securities laws of any state. The
securities have been acquired for investment and may
not be sold, offered for sale or transferred in the
absence of an effective registration under the
Securities Act of 1933, as amended, and any applicable
state securities laws or an opinion of counsel
satisfactory in form and substance to counsel for the
Corporation that the transaction will not result in a
violation of federal or state securities laws."
I also consent to the placing of a stop transfer
notification on the Corporation's securities records with respect
to the Securities being acquired.
(11) I have been fully appraised of, and am totally aware
of, the investment being made and the financial risks of the
investment. In addition, I have been offered access to all of
the Corporation's books, records, information, agreements, and
documents that I have deemed necessary and appropriate under the
circumstances.
(12) I am accepting these Securities on my own behalf and
for no one else.
(13) I am an accredited investor: Yes____ No____
If your answer to this representation was yes,
please check one or more of the following, if applicable:
(a) I am an institutional investor within the
meaning of Rule 501(a)(1) of Regulation D. ____
(b) I am a private business development company
as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940. ____
(c) I am a non-profit organization within Section
501(c)(3) of the Internal Revenue Code, corporation,
business trust or partnership with total assets in
excess of $5,000,000. ____
(d) I am an Employee Benefit Plan subject to
ERISA and have a plan fiduciary which is a bank,
insurance company or registered investment advisor or I
have total assets in excess of $5,000,000. ____
(e) I am an executive officer, director or
general partner of the Corporation.
(f) I am an individual whose present net worth
(or whose joint net worth with my spouse) exceeds
$1,000,000. ____
(g) I am an individual who had income in excess
of $200,000 (or joint income with my spouse in excess
of $300,000) in each of the last two years and
reasonably expect to have income in excess of those
levels in the current year.
(h) I am an entity all of whose equity owners are
accredited investors under paragraphs (a) through (g)
above. ____
If your answer to this representation was no, please state the
name, address and occupation of any purchaser representative you
utilized with regard to this transaction:
Name _______________________________________
Address _______________________________________
Occupation _______________________________________
The foregoing representations, warranties, agreements,
undertakings and acknowledgments are made by me with the intent
that they be relied upon in determining my suitability as a
purchaser of the Securities. In addition, I agree to notify the
Corporation immediately of any change in any representation,
warranty or other information.
Very truly yours,
____________________________
Address:
____________________________
____________________________
Exhibit H
TERMS OF EMPLOYMENT AGREEMENTS
1 Year Perform-
Base Bonus Insur- Basic ance
Name/Title Salary Guarantee Car(2) ance Term S.O.(4) S.O.(5)
Gary Olen,
President
& CEO(1) $150,000 $50,000 Yes 1M 3 yrs 100,000 100,000
Greg Binkley,
Sr. VP
Operations
& COO(1) 120,000 30,000 Yes 500K 3 yrs(3) 100,000 50,000
Bill Luth,
VP Marketing 100,000 30,000 Yes 500K 3 yrs(3) 75,000 50,000
Chuck Lingen,
VP Finance
& CFO(1) 100,000 Yes 3 yrs(3) 75,000
John Casler,
Sr. Director
Merchandising 75,000 3 yrs(3) 50,000 25,000
Larry Popps,
P I.S.&T. 100,000 Yes 3 yrs(3) 75,000
Chuck Lackey,
Director of
Human Res. 70,000 3 yrs(3) 50,000
[FN]
(1) Director of Surviving Corporation.
(2) Lease payment for Mr. Olen not to exceed $600 per month.
All other automobile allowances not to exceed $400 per month
exclusive of operating expenses and cellular telephone.
(3) Employment Agreement shall provide a six-month notice
provision for termination without cause provided employee
receives a minimum of one year's compensation over the term
of the Agreement.
(4) 50% vested at closing, 50% in twelve months.
(5) Terms to be agreed upon prior to closing.
Exhibit I
__________, 1996
Vista 2000, Inc.
11660 Alpharetta Highway
Suite 330
Roswell, GA 30076
Gentlemen:
We have acted as counsel to The Sportsman's Guide, Inc., a
Minnesota corporation (the "Company"), in connection with the
Agreement and Plan of Merger dated as of February __, 1996 (the
"Merger Agreement") among the Company, Vista Acquisition
Subsidiary, Inc., a Delaware corporation, and you.
At the request of the Company, we are rendering this opinion
to you pursuant to Section ____ of the Merger Agreement. Unless
otherwise defined herein, terms defined in the Merger Agreement
are used herein as therein defined.
In connection with this opinion, we have examined: (i) the
Merger Agreement (and the exhibits and schedules thereto,
including the written agreements and instruments referred to in
such schedules); (ii) the agreements, documents, certificates and
instruments executed and delivered by the Company in connection
with the consummation of the transactions contemplated by the
Merger Agreement, (iii) the Articles of Incorporation, as
amended, of the Company, as certified by the Secretary of State
of Minnesota; (iv) a certificate of good standing with respect to
the Company issued by the Secretary of State of Minnesota; (v)
the Code of Regulations of the Company, as certified by the
Secretary of the Company; (vi) the corporate minute books of the
Company in the form presented to us by the Company; and (vii)
such other certificates of officers of the Company and
Governmental Authorities as we have considered necessary under
the circumstances, copies of which have been provided to you.
In rendering this opinion, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to the original of all
documents submitted to us as certified or photostatic copies.
Moreover, we have assumed:
A. each certificate issued by any Governmental
Authority is accurate, complete and authentic;
B. the accuracy, completeness and authenticity
of the corporate minute books of the Company furnished
to us for review;
C. all natural persons are legally competent and
have sufficient legal capacity;
D. the Merger Agreement has been duly
authorized, executed and delivered by you and Vista
Acquisition Subsidiary, Inc. and constitutes your and
its legal, valid and binding obligation, enforceable
against you and it in accordance with the terms of the
Merger Agreement;
E. any required consent, approval or
authorization of, notice or declaration to, or filing
or registration with, any Governmental Authority which
you or Vista Acquisition Subsidiary, Inc. are required
to obtain, give or make has been duly obtained, given
or made, as appropriate, and any applicable notice or
appeal period has passed;
F. except as set forth in the Merger Agreement,
there is no agreement or understanding (written or
oral) between or among any of the parties to the Merger
Agreement, and there is no usage of trade or course of
prior dealing between or among such parties, which
would, in either case, define, supplement, modify or
qualify the terms of the Merger Agreement;
G. the conduct of the parties to the Merger
Agreement has complied with any requirement of good
faith, fair dealing and conscionability; and
H. there has not been any mutual mistake of
fact, fraud, duress or undue influence in connection
with the execution and delivery of the Merger
Agreement.
In addition, we have assumed the accuracy and correctness of
all statements of fact contained in certificates of, and
discussions with, officers of the Company and certificates of
Governmental Authorities and of all statements of fact and
factual representations and warranties contained in the Merger
Agreement. We have not reviewed the dockets or records of any
Governmental Authority. Nothing contrary to the facts contained
in such certificates, discussions, statements or representations
and warranties, however, has come to the attention of the current
partners or associates of Chernesky, Heyman & Kress who have
devoted substantive attention to the transactions contemplated by
the Merger Agreement. Whenever our opinion with respect to the
existence or absence of facts is stated to be based upon our
knowledge or awareness, it is intended to signify that during the
course of our representation of the Company, no information has
come to our attention that would give us actual knowledge of the
existence or absence of such facts. However, we have not
undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our
knowledge of the existence or absence of such facts should be
drawn from our representation of the Company or from our
participation in the transactions contemplated by the Merger
Agreement.
Our opinion is limited solely to matters governed by the
laws of the State of Ohio, the Business Corporation Law of the
State of Minnesota and the federal laws of the United States as
applicable in the State of Ohio.
Based upon, and subject to, the foregoing, it is our opinion
that:
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Minnesota with the requisite corporate power and
authority to own or lease its properties and to conduct its
business as presently conducted and to enter into and
perform its obligations under the Merger Agreement. The
Company is qualified or licensed to do business as a foreign
corporation in the jurisdictions listed on Annex A hereto.
(b) The Merger Agreement has been duly authorized,
executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforce-
able against the Company in accordance with its terms.
(c) Neither the execution and delivery of the Merger
Agreement by the Company, nor the performance by the Company
of its obligations set forth therein, nor the consummation
of the transactions contemplated thereby will (with or
without the giving of notice or lapse of time or both)
violate or conflict with in any material manner, result in a
material breach of, constitute a material default under, or
result in the creation or imposition of any material lien
pursuant to, the terms of (i) the Articles of Incorporation
or By-Laws of the Company; (ii) any law, rule or regulation
to which the Company is subject; (iii) any order, writ,
judgment, injunction, decree or award of any court or other
Governmental Authority of which we have knowledge and which
is applicable to the Company; or (iv) any agreement or
instrument of which we have knowledge and to which the
Company is a party or by which any of its assets are bound
or affected, other than as disclosed on Schedule 3.4 of the
Disclosure Schedule to the Merger Agreement.
(d) The authorized capital stock of the Company
consists of 36,800,000 shares of Common Stock, of which
23,335,833 shares are validly issued and outstanding, fully
paid and nonassessable, 200,000 shares of Preferred Stock,
of which 200,000 shares are validly issued and outstanding,
fully paid and nonassessable and 3,000,000 undesignated
shares, none of which is issued and outstanding. None of
the outstanding shares of SGI Common Stock or SGI Preferred
Stock is subject to, nor were any of such shares issued in
violation of, any preemptive rights of shareholders of the
Company or to any right of first refusal or other similar
right in favor of any persons. Except as contemplated by
the Merger Agreement and other than as set forth in Schedule
____ thereto, to the best of our knowledge (i) no
subscription, warrant, option, convertible security or other
right (contingent or other) to purchase or acquire any
shares of any class of capital stock of the Company is
authorized or outstanding, (ii) there is not any commitment
on the part of the Company to issue any shares, warrants,
options or other such rights or to distribute to holders of
any class of its capital stock any evidence of indebtedness
or assets and (iii) the Company has no obligation
(contingent or other) to purchase, redeem or otherwise
acquire any shares of the capital stock of the Company or to
pay any dividend or make any other distribution in respect
thereof.
(e) Except as set forth in Schedule ___ to the Merger
Agreement and other than filings with the Antitrust Division
of the Department of Justice pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, the filing of a
Certificate of Merger with the Secretary of State of
Delaware and the Articles of Merger with the Secretary of
State of Minnesota, no approval, authorization, consent or
order or action of or filing with any court, administrative
agency or other governmental authority is required for the
execution and delivery by the Company of the Merger
Agreement or the consummation by the Company of the
transactions contemplated thereby, except for such
approvals, authorizations or consents, which if not
obtained, or order or filings which if not made, would not
materially adversely affect the ability of the Company to
consummate the transactions contemplated by such Agreements.
(f) To our knowledge, except as set forth in Schedule
_____ to the Merger Agreement, no suit, proceeding or claim
is pending or has been overtly threatened in writing against
the Company which, if adversely determined to the Company,
would have a Material Adverse Effect on the Company. In
this connection, we point out that we do not regularly
advise the Company with respect to all litigation matters.
This opinion is subject to the following qualifications and
limitations:
(1) The enforceability of the Merger Agreement may be
limited by applicable bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium,
rearrangement, liquidation, conservatorship or other laws
affecting creditors' rights generally.
(2) The enforceability of the Merger Agreement and the
availability of specific performance, injunctive relief and
other forms of equitable relief are subject to general
principles of equity (regardless of whether considered in a
proceeding in equity or at law), commercial reasonableness,
public policy and conscionability.
(3) No opinion is expressed with respect to the
enforceability under the laws of the State of Ohio or the
State of Minnesota of any provision of the Merger Agreement
which purports to require payment or reimbursement of
attorneys' fees or litigation expenses of another party.
(4) No opinion is expressed with respect to the title
to any property or the absence of any lien thereon.
(5) No opinion is expressed with respect to any
provision of the Merger Agreement that purports to:
(i) release, exculpate, hold harmless or
exempt a party from, require indemnification or
prohibit future business activity to the extent
such release, exculpation, hold harmless,
exemption, indemnity or prohibition is, with
respect to any activity, contrary to public
policy;
(ii) defined, waive or set standards for good
faith, reasonableness, commercial reasonableness,
fair dealing or diligence; or
(iii) require the payment or reimbursement of
any fee, cost or expense that may be deemed to be
unreasonable in nature or amount.
(6) No opinion is expressed with respect to:
(i) compliance with any registration,
filing, notification, anti-fraud or other
provision of any federal or state securities law,
rule or regulation;
(ii) federal or state antitrust or unfair
competition laws and regulations;
(iii) the enforceability of: (x) self-help
provisions (including provisions granting a power
of attorney), (y) provisions which purport to
establish evidentiary standards or (z) provisions
relating to waiver of remedies (or the delay or
omission of enforcement thereof), disclaimers,
liability limitations, releases of legal or
equitable rights (including the right to a jury
trial), submission to the jurisdiction and venue
of any court, liquidated damages or the creation
of rights and remedies not available under
applicable law or contrary to public policy; or
(vi) matters relating to employee benefit
laws and regulations (including the Employee
Retirement Income Security Act of 1974, as
amended) or federal, state or local tax laws and
regulations.
No opinion may be inferred or implied beyond the matters
expressly stated herein. The opinions that are expressed herein
are solely for your benefit and the benefit of your counsel in
connection with the transactions contemplated by the Merger
Agreement and may not be relied upon in any manner for any
purpose by any other person. This opinion is as of its date and
we disclaim any undertaking or obligation to advise you of
changes that hereafter may be brought to our attention.
Very truly yours,
CHERNESKY, HEYMAN & KRESS
ANNEX A
None.
Exhibit J
1. Each of Buyer and Acquisition Sub is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware. Each of Buyer and Acquisition Sub
has all necessary corporate power and authority to own its
properties and assets, to conduct its business as presently
conducted and to execute and deliver the Transaction Documents to
which it is a party and to perform its obligations, as the case
may be, thereunder.
2. The Transaction Documents have been duly authorized by
all necessary corporate action on the part of each of the Buyer
and Acquisition Sub, have been duly executed and delivered by,
and constitute the legal, valid and binding obligations of each
of the Buyer and Acquisition Sub enforceable in accordance with
their terms.
3. The authorized capital stock of Buyer consists of
_________ shares of Common Stock, par value $.01 per share, and
_________ shares of Preferred Stock, par value $.01 per share, of
which there are currently _____ issued and outstanding shares
of Common Stock and _____ issued and outstanding shares of
Preferred Stock. All such issued and outstanding shares have
been duly authorized and are validly issued and outstanding,
fully paid and nonassessable. To our knowledge, except as
provided in or described or disclosed in the Transaction
Documents or Buyer's Certificate of Incorporation, there are no
outstanding rights, preferences, privileges, options, warrants,
conversion rights or agreements for the purchase or acquisition
from Buyer of any shares of its capital stock.
4. The authorized capital stock of Acquisition Sub
consists of _________ shares of Common Stock, par value $.01 per
share, and ________ shares of Preferred Stock, par value $.01 per
share, of which there are currently _______ issued and
outstanding shares of Common Stock and _____ issued and
outstanding shares of Preferred Stock. All such issued and
outstanding shares have been duly authorized and are validly
issued and outstanding, fully paid and nonassessable.
5. The Vista Common Shares and the Warrants to be issued
to you in accordance with the Transaction Documents
(collectively, the "Securities") when issued in compliance with
the provisions of the Transaction Documents will be duly
authorized, validly issued, fully paid and nonassessable. Except
as provided in or described or disclosed in the Transaction
Documents or in Buyer's Certificate of Incorporation, the
issuance of the Securities is not subject to any preemptive
rights or, rights of first refusal created by Buyer, and, the
Vista Common Shares issuable upon exercise of the Warrants have
been duly and validly reserved for issuance and are not subject
to any preemptive rights or, rights of first refusal created by
Buyer and such Vista Common Shares when issued, upon exercise of
the Warrants in accordance therewith, will be duly authorized,
validly issued, fully paid and nonassessable.
6. The execution and delivery by each of Buyer and
Acquisition Sub of the Transaction Documents to which it is a
party, the offering, sale and issuance of the Securities by Buyer
to the SGI Major Stockholders and the SGI Preferred Stockholders,
the issuance of Vista Common Shares by Buyer upon exercise of the
Warrants and the fulfillment of and the compliance with the
Transaction Documents by each of Buyer and Acquisition Sub and
the consummation of the Merger do not (a) conflict with or result
in a breach of, (b) constitute a default under, (c) result in the
creation of any lien upon Buyer's or Acquisition Sub's capital
stock or assets pursuant to, (d) give any third party the right
to accelerate any obligation under, (e) result in a violation of,
or (f) require any authorization, consent, approval, exemption or
other action by, or notice to, any court or other governmental
authority pursuant to (i) Buyer's or Acquisition Sub's
Certificate of Incorporation, (ii) Buyer's or Acquisition Sub's
Bylaws, (iii) any applicable law, statute, rule or regulation
which are typically applicable to transactions similar to the
transactions contemplated by the Merger Agreement or (iv) except
as set forth in the Disclosure Schedule to the Merger Agreement,
any material agreement, instrument, order, judgment or decree to
which the Buyer or Acquisition Sub is subject.
7. The offering, sale and issuance of Vista Common Shares
and the Warrants by Buyer to the SGI Major Stockholders, the SGI
Preferred Stockholders and the Subordinated Debt Holders under
the Merger Agreement and the issuance of Vista Common Shares,
upon exercise of the Warrants, to the Subordinated Debt Holders
are exempt from the registration requirements of the Securities
Act of 1933, as amended, and the qualification or registration
requirements of applicable state securities laws.
8. The certificate(s) representing the Vista Common Shares
and the Warrants being issued to the SGI Major Stockholders, the
SGI Preferred Stockholders and the Subordinated Debt Holders
pursuant to the Merger Agreement on the date hereof are in due
and proper form and have been duly and validly executed by the
officers of Buyer named thereon.