EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
among
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
ACI ACQUISITION CORPORATION
and
ADVANCE CIRCUITS, INC.
Dated as of August 14, 1995
TABLE OF CONTENTS
ARTICLE I
THE TENDER OFFER........................... 2
Section 1.1 The Offer............................................. 2
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Section 1.2 Company Action........................................ 3
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ARTICLE II
THE MERGER.............................. 5
Section 2.1 Effective Time of the Merger.......................... 5
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Section 2.2 Closing............................................... 6
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Section 2.3 Effects of the Merger................................. 6
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Section 2.4 Articles of Incorporation and By-Laws................. 6
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Section 2.5 Directors............................................. 7
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Section 2.6 Officers.............................................. 7
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ARTICLE III
CONVERSION OF SECURITIES; DISSENTING SHARES............. 7
Section 3.1 Conversion of Capital Stock........................... 7
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Section 3.2 Exchange of Certificates.............................. 8
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Section 3.3 No Further Ownership Rights in Company Common Stock... 9
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Section 3.4 Closing of Company Transfer Books..................... 9
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Section 3.5 Withholding........................................... 9
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Section 3.6 Dissenting Company Common Stock....................... 10
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Section 3.7 Lost, Stolen or Destroyed Certificates................ 10
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Section 3.8 Further Assurances.................................... 10
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............ 11
Section 4.1 Organization.......................................... 11
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Section 4.2 Capitalization........................................ 12
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Section 4.3 Authority............................................. 13
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Section 4.4 Consents and Approvals; No Violations................. 13
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Section 4.5 SEC Reports and Financial Statements.................. 15
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Section 4.6 Information in Disclosure Documents................... 16
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Section 4.7 Litigation............................................ 16
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Section 4.8 No Material Adverse Change............................ 16
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Section 4.9 Taxes................................................. 17
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Section 4.10 Benefit Plans......................................... 18
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Section 4.11 Opinion of Financial Advisor.......................... 21
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Section 4.12 Certain Antitakeover Provisions Not Applicable........ 21
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Section 4.13 Intellectual Property................................. 21
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Section 4.14 Government Contracting Matters........................ 22
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Section 4.15 Votes Required........................................ 24
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Section 4.16 Brokers............................................... 24
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Section 4.17 Certain Agreements.................................... 24
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Section 4.18 Environmental Compliance.............................. 25
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Section 4.19 Contracts............................................. 25
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Section 4.20 New Directors......................................... 26
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........... 26
Section 5.1 Organization.......................................... 26
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Section 5.2 Authority............................................. 26
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Section 5.3 Consents and Approvals; No Violations................. 27
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Section 5.4 Operations of Sub..................................... 28
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Section 5.5 Information in Disclosure Documents................... 28
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Section 5.6 Financing............................................. 28
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Section 5.7 Brokers............................................... 28
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ARTICLE VI
COVENANTS.............................. 28
Section 6.1 Conduct of Business of the Company.................... 28
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Section 6.2 Reasonable Best Efforts............................... 31
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Section 6.3 Access to Information................................. 31
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Section 6.4 Company Shareholders Meeting.......................... 32
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Section 6.5 Company Option Plan................................... 33
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Section 6.6 Company Benefit Plans................................. 34
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Section 6.7 No Solicitation....................................... 34
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Section 6.8 Fees and Expenses..................................... 35
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Section 6.9 Notification of Certain Matters....................... 36
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Section 6.10 Company Debt Agreements............................... 37
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Section 6.11 Public Announcements.................................. 37
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Section 6.12 State Takeover Laws................................... 37
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Section 6.13 Indemnification....................................... 38
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Section 6.14 Shareholder Litigation................................ 38
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ARTICLE VII
CONDITIONS.............................. 38
Section 7.1 Conditions to Each Party's Obligation To
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Effect the Merger.................................... 38
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Section 7.2 Conditions to Obligations of Parent and Sub........... 39
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Section 7.3 Conditions to Obligations of the Company.............. 40
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ARTICLE VIII
TERMINATION............................. 40
Section 8.1 Termination........................................... 40
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Section 8.2 Effect of Termination................................. 42
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ARTICLE IX
MISCELLANEOUS............................ 42
Section 9.1 Nonsurvival of Representations and Warranties......... 42
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Section 9.2 Amendment............................................. 42
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Section 9.3 Extension; Waiver..................................... 42
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Section 9.4 Notices............................................... 42
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Section 9.5 Interpretation........................................ 44
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Section 9.6 Counterparts.......................................... 44
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Section 9.7 Entire Agreement; No Third Party Beneficiaries........ 44
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Section 9.8 Governing Law......................................... 45
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Section 9.9 Specific Performance.................................. 45
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Section 9.10 Assignment............................................ 45
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Section 9.11 Validity.............................................. 45
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Section 9.12 Parent Guarantee and No Solicitation Agreement........ 45
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 14, 1995 (this
"Agreement"), among JOHNSON MATTHEY PUBLIC LIMITED COMPANY, an English public
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limited company ("Parent"), ACI ACQUISITION CORPORATION, a Minnesota corporation
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and an indirect, wholly-owned subsidiary of Parent ("Sub"), and ADVANCE
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CIRCUITS, INC., a Minnesota corporation (the "Company"; together with Sub, the
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"Constituent Corporations").
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W I T N E S S E T H:
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WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have determined that the acquisition of the Company by Parent upon the
terms and subject to the conditions of this Agreement would be advantageous and
beneficial to their respective corporations and that such transaction is
consistent with and in furtherance of such entities' respective long-term
business strategies;
WHEREAS, in furtherance thereof, it is proposed that Sub will make a
tender offer (as it may be amended from time to time as permitted hereunder, the
"Offer") to purchase all the outstanding shares of the Company's common stock,
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par value $0.10 per share (the "Company Common Stock"), for $22.50 per share of
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Company Common Stock (such amount, or any greater amount per share offered
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount"),
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net to the seller in cash, in accordance with the terms and subject to the
conditions provided herein and in the Offer Documents (as defined in
Section 1.1(b)); and the Board of Directors of the Company and the Special
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Committee (as defined below) have adopted resolutions approving this Agreement,
the Offer and the Merger (as defined below) and recommending that the Company's
shareholders accept the Offer and approve the Merger; and
WHEREAS it is proposed that, following the consummation of the Offer,
there be a merger (the "Merger") of Sub with and into the Company (the
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"Surviving Corporation") upon the terms and subject to the conditions hereof.
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
THE TENDER OFFER
Section 1.1 The Offer.
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(a) Provided that this Agreement has not been terminated in
accordance with Section 8.1, Sub will, and Parent will cause Sub to, commence
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the Offer as promptly as practicable after the date hereof, but in no event
later than the fifth business day after the date of initial public announcement
of this Agreement and the Offer. The obligation of Sub to, and of Parent to
cause Sub to, commence the Offer and accept for payment, and pay for, any shares
of Company Common Stock tendered pursuant to the Offer will be subject only to
the satisfaction of the conditions set forth in Annex I hereto (any of which may
be waived by Sub in its sole discretion) and to the terms and conditions of this
Agreement. Sub expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company (unless the Company takes any
action permitted to be taken pursuant to the second sentence of Section 6.7(b)),
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Sub shall not (i) reduce the number of shares of Company Common Stock subject to
the Offer, (ii) reduce the Per Share Amount, (iii) modify or add to the
conditions set forth in Annex I (other than to waive any conditions to the
extent permitted by this Agreement), (iv) except as provided in the next
sentence, extend the Offer or (v) change the form of consideration payable in
the Offer. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (i) extend the Offer if at the scheduled expiration date of the Offer
any of the conditions to Sub's obligation to purchase shares of Company Common
Stock shall not be satisfied until such time as such conditions are satisfied or
waived, (ii) extend the Offer for any period required by any order, decree or
ruling of, or any rule, regulation, interpretation or position of, any
Governmental Entity (as defined in Section 4.4(a)) applicable to the Offer and
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(iii) extend the Offer for any reason for a period of not more than five
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence. The Offer will be made by
means of an offer to purchase (the "Offer to Purchase") and related letter of
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transmittal containing the terms set forth in this Agreement and the conditions
set forth in Annex I hereto. Subject to the terms of the Offer and this
Agreement and the satisfaction or waiver of all the conditions of the Offer set
forth in Annex I hereto as of the final expiration date of the Offer, Sub will,
and Parent will cause Sub to, accept for payment and pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer as
soon as practicable after such expiration date.
(b) On the date of commencement of the Offer, Parent and Sub will
file with the Securities and Exchange Commission (the "SEC") a Tender Offer
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Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1
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will contain (including as an exhibit) or will incorporate by reference the
Offer to Purchase (or portions thereof) and
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forms of the related letter of transmittal and summary advertisement (which
Schedule 14D-1, Offer to Purchase, and other documents pursuant to which the
Offer will be made, together with any supplements or amendments thereto, are
referred to herein collectively as the "Offer Documents"). Parent and Sub will
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disseminate the Offer to Purchase, the related letter of transmittal and other
Offer Documents to holders of shares of the Company Common Stock. Each of
Parent, Sub and the Company will promptly correct any information provided by it
for use in the Offer Documents that becomes false or misleading in any material
respect, and each of Parent and Sub will take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of shares of Company
Common Stock, in each case as and to the extent required by applicable law. Sub
will provide the Company and its counsel in writing with any comments Sub or its
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments. Parent, Sub and their
counsel will provide the Company and its counsel with a reasonable opportunity
to participate in all communications with the SEC and its staff, including any
meetings and telephone conferences relating to the Offer Documents, the Offer,
the Merger or this Agreement.
(c) Sub will, and Parent will cause Sub to, designate a bank or trust
company reasonably acceptable to the Company as the paying agent for the Offer
(the "Offer Paying Agent"). Sub agrees to deposit, and Parent agrees to cause
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Sub to deposit, with the Offer Paying Agent simultaneously with the consummation
of the Offer such funds as are necessary to make the cash payments required by
the Offer. In no event shall any shareholder of the Company who has surrendered
certificates representing Company Common Stock be entitled to receive interest
on any of the funds to be received pursuant to the Offer. If a check is to be
sent to a person other than the person in whose name a certificate for Company
Common Stock surrendered in connection with the Offer is registered, it shall be
a condition of the transfer that the person requesting such transfer shall pay
to the Offer Paying Agent any transfer or other taxes required by reason of the
delivery of such check to a person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Offer
Paying Agent that such tax has been paid or is not applicable. Notwithstanding
the foregoing, neither the Offer Paying Agent nor any party hereto shall be
liable to a holder of Company Common Stock for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(d) Sub and Parent will file with the Commissioner of Commerce of the
State of Minnesota any registration statement relating to the Offer required to
be filed pursuant to Chapter 80B of the Minnesota Statutes.
Section 1.2 Company Action.
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(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors of the Company, at a meeting
duly called and held, acting on the unanimous recommendation of the special
committee of all independent directors (the "Special Committee") of the Board of
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Directors of the Company established pursuant to Section 302A.673(d) of the
Minnesota Business Corporation Act (the "MCBA") on August 14, 1995, has
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unanimously and duly adopted resolutions approving this Agreement, the Offer and
the Merger, determining that the Merger is advisable and that the terms of the
Offer and Merger are fair to, and in the best interests of, the Company and its
shareholders and recommending, subject to the terms and conditions set forth
herein, that the Company's shareholders accept the Offer and approve the Merger
and approve and adopt this Agreement. The Company represents and warrants that
its Board of Directors has received the opinion of Alex Brown & Sons
Incorporated ("Alex Brown") that the proposed consideration to be received by
the Company's shareholders pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view, and a complete and correct copy of
such opinion has been delivered by the Company to Parent and Sub. The Company
has been advised by each of its directors and executive officers that each such
person intends to tender all shares of Company Common Stock owned by such person
pursuant to the Offer, except to the extent of any restrictions created by
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
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Act").
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(b) The Company will file with the SEC, on the date of the filing by
Sub of the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to
time, the "Schedule 14D-9") containing the recommendations described in Section
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1.2(a) above and will disseminate the Schedule 14D-9 as required by Rule 14d-9
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promulgated under the Exchange Act. Each of the Company, Parent and Sub will
promptly correct any information provided by it for use in the Schedule 14D-9
that becomes false or misleading in any material respect, and the Company will
further take all steps necessary to cause the Schedule 14D-9 as so corrected to
be filed with the SEC and disseminated to the Company's shareholders, in each
case as and to the extent required by applicable law. The Company will provide
Parent and Sub and their counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments. The Company and its counsel will
provide Parent and Sub and their counsel with a reasonable opportunity to
participate in all communications with the SEC and its staff, including any
meetings and telephone conferences relating to the Schedule 14D-9, the Offer,
the Merger or this Agreement.
(c) In connection with the Offer, the Company will (i) promptly
furnish Parent and Sub with mailing labels containing the names and addresses of
all record holders of shares of Company Common Stock as of a recent date and of
those persons
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becoming record holders after such date, together with copies of all security
position listings and computer files and all other information in the Company's
control regarding the beneficial owners of shares of Company Common Stock that
Parent or Sub may reasonably request and (ii) furnish to Parent or Sub such
other information and assistance as Parent or Sub or their agents may reasonably
request in expeditiously communicating the Offer to holders of shares of Company
Common Stock.
(d) Effective upon payment by Sub for all shares of Company Common
Stock accepted for payment pursuant to the Offer (the "Closing of the Offer"),
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Sub will be entitled to designate up to such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as will give Sub
representation on such Board equal to the product of the number of directors on
such Board (giving effect to any increase in the number of directors pursuant to
this Section 1.2) and the ratio that the combined voting power of the shares of
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the Company Common Stock so purchased bears to the total combined voting power
of all outstanding shares of the Company Common Stock, and the Company will use
its best efforts to take all action necessary to cause Sub's designees to be
elected or appointed to the Company's Board of Directors, including, without
limitation, amending the Company's by-laws, increasing the number of directors
or seeking and accepting resignations of incumbent directors. The Company agrees
to comply with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in connection with this Section 1.2(d). Sub will supply to the
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Company in writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by such
Section and Rule. Following the election or appointment of Sub's designees
pursuant to this Section 1.2 and prior to the Effective Time, if there shall be
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any directors of the Company who were directors as of the date hereof, any
amendment of this Agreement, any termination of this Agreement by the Company,
any extensions by the Company of the time for the performance of any of the
obligations or other acts of Sub or Parent or waiver of any of the Company's
rights hereunder, will require the concurrence of a majority of such directors.
ARTICLE II
THE MERGER
Section 2.1 Effective Time of the Merger.
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(a) Upon the terms and subject to the conditions hereof, and in
accordance with the MBCA, Sub shall be merged with and into the Company at the
Effective Time (as hereinafter defined), with the Company continuing as the
Surviving Corporation and succeeding to and assuming all the rights and
obligations of Sub in accordance with the MBCA.
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(b) Upon the terms and subject to the conditions hereof, articles of
merger or other appropriate documents (the "Articles of Merger") will be duly
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prepared and executed by the Company and Sub and thereafter delivered to the
Secretary of State of the State of Minnesota for filing as provided in the MBCA
as soon as practicable on the Closing Date (as defined in Section 2.2). The
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Merger will become effective upon the filing of the Articles of Merger with the
Secretary of State of the State of Minnesota or at such other later date or time
as Sub and the Company shall agree and as specified in the Articles of Merger
(the time the Merger becomes effective being the "Effective Time").
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Section 2.2 Closing. Unless this Agreement is terminated and the
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transactions contemplated herein abandoned pursuant to Section 8.1, the closing
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of the Merger (the "Closing") will take place at 10:00 a.m. on a date to be
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specified by the parties, which will be no later than the second business day
following the satisfaction or, if permissible, waiver of each of the conditions
set forth in Article VII (the "Closing Date"), at the offices of Sidley &
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Austin, 875 Third Avenue, New York, New York 10022, unless another date or place
is agreed to by the parties hereto.
Section 2.3 Effects of the Merger. The Merger will have the effects
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set forth in the MBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the rights, privileges, immunities,
powers and franchises (of a public as well as of a private nature) of the
Company and of Sub and all the property (real, personal and mixed) of the
Company and of Sub and all debts due to either the Company or Sub on any
account, including subscriptions to shares, and all choses in action, and every
other interest of or belonging to or due to either the Company or Sub, will vest
in the Surviving Corporation, and all debts, liabilities, obligations and duties
of the Company and Sub shall become the debts, liabilities, obligations and
duties of the Surviving Corporation and may be enforced against the Surviving
Corporation to the same extent as if such debts, liabilities, obligations and
duties had been incurred or contracted by the Surviving Corporation. The title
to any real estate or any interest therein vested, by deed or otherwise, in the
Company or Sub shall not revert or in any way become impaired by reason of the
Merger, and all rights of creditors and all liens upon any property of the
Company or Sub shall be preserved unimpaired following the Merger.
Section 2.4 Articles of Incorporation and By-Laws.
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(a) The Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, will be amended as of the Effective
Time so that Article V thereof reads in its entirety as follows:
"The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,000 shares of
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Common Stock, par value $1.00 per share."
and, as so amended, such Articles of Incorporation will be the Articles of
Incorporation of the Surviving Corporation, until amended in accordance
therewith and with applicable law.
(b) The By-Laws of Sub, as in effect immediately prior to the
Effective Time, will be the By-Laws of the Surviving Corporation until amended
in accordance therewith and with applicable law.
Section 2.5 Directors. The directors of Sub at the Effective Time
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will be the directors of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Articles of Incorporation and By-Laws of
the Surviving Corporation and until his or her successor is duly elected and
qualified.
Section 2.6 Officers. The officers of Sub at the Effective Time will
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be the officers of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Articles of Incorporation and By-Laws of
the Surviving Corporation and until his or her successor is duly appointed and
qualified.
ARTICLE III
CONVERSION OF SECURITIES; DISSENTING SHARES
Section 3.1 Conversion of Capital Stock. As of the Effective Time, by
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virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company or of Sub:
(a) Each issued and outstanding share of common stock of Sub, $1.00
par value per share, shall be converted into issued and outstanding shares of
Common Stock, par value $1.00 per share, of the Surviving Corporation.
(b) All shares of Company Common Stock that are owned, directly or
indirectly, by any Subsidiary (as hereinafter defined) of the Company, any
shares of Company Common Stock owned by Parent, Sub or any wholly owned
Subsidiary of Parent and any shares of Company Common Stock that have been
acquired by the Company and are subject to an outstanding pledge by the Company
immediately prior to the Effective Time to secure the future payment of the
purchase price therefor will be cancelled and will cease to exist and no shares
of capital stock of Parent or Sub or other consideration will be delivered in
exchange therefor. As used in this Agreement, "Subsidiary" means, with respect
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to any party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary
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of such party is a general partner (excluding any partnership, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership) or
(ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party, by any
one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries. References to a wholly owned Subsidiary of an entity include a
Subsidiary all the common equity of which is owned directly or through wholly
owned Subsidiaries by such entity.
(c) Subject to Section 3.6, each share of Company Common Stock issued
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and outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 3.1(b)) shall be converted into the right
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to receive from the Surviving Corporation in cash, without interest, the Per
Share Amount paid pursuant to the Offer (the "Merger Consideration"). All such
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shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and each holder of a
certificate or certificates (the "Certificates") which immediately prior to the
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Effective Time represented any such shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
Section 3.2 Exchange of Certificates. (a) Paying Agent. Parent shall
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authorize a commercial bank or such other person or persons as shall be
acceptable to Parent and the Company to act as paying agent hereunder (the
"Paying Agent") for the payment of the Merger Consideration upon surrender of
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the Certificates.
(b) Surviving Corporation to Provide Funds. Parent shall deposit or
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cause to be deposited in trust with the Paying Agent at the Effective Time cash
in an aggregate amount necessary to make the payments pursuant to Section 3.1
hereof to holders (other than Parent or Sub or any of their respective
subsidiaries) of shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time (such amounts being hereinafter referred
to as the "Payment Fund"). The Paying Agent shall, pursuant to irrevocable
instructions, make the payments provided for in the preceding sentence out of
the Payment Fund. The Paying Agent shall invest portions of the Payment Fund as
Parent directs, provided that substantially all such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest rating from either Moody's Investors
Services, Inc. or Standard and Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial banks
with capital exceeding $100 million. The Payment Fund shall not be used for any
other purpose, except as provided in this Agreement.
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(c) Exchange Procedures. As soon as practicable after the Effective Time,
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the Paying Agent shall mail to each holder of record of a Certificate, other
than Parent, the Company, any Subsidiary of Parent or the Company and any holder
of Dissenting Company Common Stock (as defined below), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Paying Agent, and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by the Surviving
Corporation, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the amount of
cash into which the shares of Company Common Stock theretofore represented by
such Certificate shall have been converted pursuant to Section 3.1, and the
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Certificates so surrendered shall forthwith be cancelled. No interest will be
paid or will accrue on the cash payable upon the surrender of any Certificate.
If payment is to be made to a person other than the person in whose name the
Certificate so surrendered is registered, it shall be a condition of payment
that such Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 3.2, each Certificate shall be
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deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
shares of Company Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 3.1. Notwithstanding the foregoing,
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neither the Paying Agent nor any party shall be liable to a former shareholder
of the Company for any cash or interest delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws. Any portion of the
Payment Fund (including the proceeds of any investments thereof) that remains
unclaimed by the shareholders of the Company for at least two years after the
Effective Time shall be repaid to the Surviving Corporation. Any holders of
shares of Company Common Stock who have not theretofore complied with Section
3.1 shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration, but will have no greater rights against the Surviving
Corporation (or any of the parties hereto) than may be accorded to general
creditors thereof under applicable law.
Section 3.3 No Further Ownership Rights in Company Common Stock. All cash
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paid upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock theretofore represented by such
Certificates.
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Section 3.4 Closing of Company Transfer Books. At the Effective Time, the
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stock transfer books of the Company shall be closed and no registration of
transfers of shares of Company Common Stock shall thereafter be made on the
stock transfer books of the Surviving Corporation. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged as provided in this Article III.
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Section 3.5 Withholding. The Surviving Corporation or the Paying Agent
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will be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any applicable provision of
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state, local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or the Paying Agent, such withheld amounts will be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or the Paying Agent.
Section 3.6 Dissenting Company Common Stock. If required by the MBCA, but
-------------------------------
only to the extent required thereby, shares of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and that are held
by holders of such shares who have properly exercised dissenters' rights with
respect thereto in accordance with Sections 302A.471 and 302A.473 of the MBCA
(the "Dissenting Company Common Stock") will not be converted into or
-------------------------------
exchangeable for the right to receive the Merger Consideration, and holders of
such shares of Dissenting Company Common Stock will be entitled to receive
payment of the appraised value of such shares of Dissenting Company Common Stock
in accordance with the provisions of such Section 302A.473 unless and until such
holders fail to perfect or effectively withdraw or lose their rights to payment
under Section 302A.473 of the MBCA. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Dissenting Company Common Stock will thereupon be treated as if they
had been converted into and become exchangeable for, at the Effective Time, the
right to receive the Merger Consideration, without interest. The Company will
give Parent prompt written notice of any notice of intent to demand payment of
the fair value of Company Common Stock under Section 302A.473 of the MCBA
received by the Company and, prior to the Effective Time, Parent and Sub will
have the right to direct all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company will not, except with the
prior written consent of Parent and Sub, make any payments with respect to, or
settle or offer to settle, any such demands.
Section 3.7 Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
-10-
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and subject to such other conditions as the Board of
Directors of the Surviving Corporation may impose, the Surviving Corporation
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
herewith. When authorizing such issue of the Merger Consideration in exchange
therefor, the Board of Directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate to give the Surviving
Corporation a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against the Surviving Corporation with respect to the
Certificate alleged to have been lost, stolen or destroyed.
Section 3.8 Further Assurances. If at any time after the Effective Time
------------------
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations in the Merger, all such deeds,
bills of sale, assignments and assurances and do, in the name and on behalf of
such Constituent Corporations, all such other acts and things necessary,
desirable or proper to vest, perfect or confirm its right, title or interest in,
to or under any of the rights, privileges, powers, franchises, properties or
assets of such Constituent Corporation and otherwise to carry out the purposes
of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization.
------------
(a) Each of the Company and each of its Subsidiaries is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate or partnership power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing or in good standing or to have such
power and authority would not, individually or in the
-11-
aggregate, have a material adverse effect on the Company or on the ability of
the Company to perform its obligations under this Agreement. Each of the
Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except as disclosed in Section 4.1 of
the Company Disclosure Letter and except where the failure to be so duly
qualified or licensed and in good standing would not, individually or in the
aggregate, have a material adverse effect on the Company or on the ability of
the Company to perform its obligations under this Agreement.
(b) The Company has heretofore made available to Parent a complete and
correct copy of the charter and by-laws or comparable organization documents,
each as amended to date, of the Company and each of its Subsidiaries. Such
charters, by-laws and comparable organizational documents are in full force and
effect. Neither the Company nor any Subsidiary of the Company is in violation
of any provision of its charter, by-laws or comparable organizational documents.
Section 4.2 Capitalization.
--------------
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of Company Common Stock of which, as
of May 27, 1995, 7,564,895 shares were issued and outstanding, (ii) 75,000
shares of Class A Preferred Stock, of which, as of the date hereof, none were
issued or outstanding, (iii) 125,000 shares of Class B Preferred Stock, of
which, as of the date hereof, none were issued or outstanding and (iv) 125,000
shares of Class C Preferred Stock, of which, as of the date hereof, none were
issued or outstanding. No shares of capital stock of the Company have been
acquired by the Company that are subject to outstanding pledges to secure the
future payment of the purchase price therefor. As of May 27, 1995, the Company
had reserved for issuance (i) 56,000 shares of Company Common Stock upon
exercise of then outstanding options under the Company's now expired 1983
Incentive Stock Option Plan (as amended, the "Company Option Plan"), all of
-------------------
which options are exercisable at $8.38 per share, (ii) 25,954 shares of Company
Common Stock upon exercise of then outstanding options issued under a stock
option plan of Acsist Associates Inc. ("Acsist") prior to the Company's
acquisition thereof (the "Acsist Plan") or warrants issued by Acsist, 5,018 of
which are exercisable at $16.64 per share and 20,936 of which are exercisable at
$24.96 per share, and (iii) 326,000 shares of Company Common Stock in respect of
the Company's 1990 Restricted Stock Plan (the "Company Restricted Stock Plan"),
-----------------------------
with respect to all of which shares the restrictions, conditions and limitations
set forth in Section 7 thereof will lapse, upon the Closing of the Offer. Since
May 27, 1995, the Company has not issued any shares of its capital stock, except
for the issuance of Company Common Stock upon the exercise of options granted
under the Company Option Plan which were outstanding on May 27, 1995, and
pursuant to the Company
-12-
Restricted Stock Plan, and has not repurchased, redeemed or otherwise retired
any shares of its capital stock. All the outstanding shares of the Company's
capital stock are, and all shares which may be issued pursuant to the Company
Option Plan and the Company Restricted Stock Plan will be, when issued and paid
for in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to any preemptive rights of
third parties in respect thereto.
(b) Each of the outstanding shares of capital stock of each of the
Company's Subsidiaries is duly authorized, validly issued, fully paid,
nonassessable and free of any preemptive rights in respect thereto, and all such
shares are owned by the Company or by a Subsidiary of the Company free and clear
of any lien, claim, option, charge, security interest, limitation on voting
rights or encumbrance of any kind (collectively, "Liens"). Except for the
-----
capital stock of its Subsidiaries described in Section 4.2 of the disclosure
letter dated the date hereof from the Company to Parent (the "Company Disclosure
------------------
Letter"), the Company does not own, directly or indirectly, any capital stock or
------
other ownership interest in any corporation, partnership, trust, limited
liability company or other entity.
(c) As of the date of this Agreement, (i) no bonds, debentures, notes or
other indebtedness having the right to vote under ordinary circumstances (or
convertible into securities having such right to vote) ("Voting Debt") of the
-----------
Company or any of its Subsidiaries are issued or outstanding, (ii) except as set
forth above, there are no existing options, warrants, calls, subscriptions or
other rights or other agreements or commitments of any character (collectively,
"Warrants") relating to the issued or unissued capital stock or Voting Debt of
--------
the Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interests
in, the Company or of any of its Subsidiaries or securities convertible into or
exchangeable for such shares, Voting Debt or equity interests or obligating the
Company or any of its Subsidiaries to grant, extend or enter into any such
Warrant, and (iii) there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries or any
Warrants.
Section 4.3 Authority. The Company has the requisite power and authority
---------
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, subject to, with respect to the Merger, the approval and
adoption of this Agreement and the Merger by the affirmative vote of the holders
of Company Common Stock entitled to cast at least 51% of the total number of
votes entitled to be cast by holders of Company Common Stock. The execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the Merger and of the other transactions contemplated hereby
have been duly authorized by all
-13-
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated, other than, with respect to
the Merger, the approval and adoption of this Agreement and the Merger by the
Company's shareholders as described in the preceding sentence. This Agreement
has been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 4.4 Consents and Approvals; No Violations.
-------------------------------------
(a) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, arbitral tribunal, administrative agency
or commission or other governmental or regulatory authority or agency, domestic
or foreign (a "Governmental Entity"), or compliance with any law, statute,
-------------------
ordinance, rule or regulation that conditions, restricts, prohibits or requires
any notification or disclosure, triggered by the transfer, sale, lease or
closure of any property, is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the Merger or the other
transactions contemplated hereby, except for (i) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
-------
with the SEC of the Schedule 14D-9 and if required by applicable law, the
Company Proxy Statement (as defined in Section 4.6), and such reports as may be
-----------
required by Section 13(a) of the Exchange Act in connection with this Agreement
and the transactions contemplated hereby, (iii) the filing of the Articles of
Merger with the Minnesota Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, (iv) the filing required by Chapter 80B of the Minnesota Statutes and
(v) such other consents, approvals, orders, authorization, registrations,
declarations or filings the failure to obtain or make which would not have a
material adverse effect on the Company or on the ability of the Company to
perform its obligations under this Agreement. Neither the execution, delivery
or performance of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with or result in any violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or to loss of a material benefit) under, or result in the creation
of any Lien on any property or asset of the Company or any of its Subsidiaries
pursuant to (any such conflicts, violations, breaches, defaults, rights, or
creations of
-14-
Liens are herein referred to, collectively, as "Violations"), any of the terms,
----------
conditions or provisions of (i) the articles of incorporation or by-laws or
comparable organizational documents of the Company or any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument, permit, concession, franchise
or obligation applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets or (iii) any judgment, order, writ,
injunction, decree, law, statute, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or their respective properties or assets,
except, in the case of clause (ii), for Violations that would not prevent the
consummation of the Offer or the Merger and would not in the aggregate have a
material adverse effect on the Company or on the ability of the Company to
perform its obligations under this Agreement.
(b) Except as disclosed in the Company SEC Documents (as defined in
Section 4.5) filed prior to the date of this Agreement, neither the Company nor
-----------
any of its Subsidiaries is in default under or in violation of (i) any judgment,
order, writ, injunction, decree, law, statute, ordinance, rule or regulation of
any Governmental Entity applicable to the Company or any of its Subsidiaries or
by which any of them or any of their properties or assets may be bound or (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or affected, except in each case for any such
defaults or violations which would not in the aggregate have a material adverse
effect on the Company or on the ability of the Company to perform its
obligations under this Agreement.
Section 4.5 SEC Reports and Financial Statements. Since January 1, 1992,
------------------------------------
the Company has filed with the SEC all forms, reports, schedules, statements and
other documents required to be filed by it under the Exchange Act and the
Securities Act of 1933, as amended (the "Securities Act"), and has heretofore
--------------
made available to Parent true and complete copies of all such forms, reports,
schedules, statements and documents (as they have been amended or supplemented
since the time of their filing and including all such forms, reports, schedules,
statements and documents filed with the SEC after the date of this Agreement,
collectively, the "Company SEC Documents"). The Company SEC Documents,
---------------------
including without limitation any financial statements or schedules included or
incorporated by reference therein, (i) did not at the time they were filed, or
will not at the time they are filed, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) complied or will be prepared in
compliance in all material respects with the applicable requirements of the
Exchange Act or the Securities Act, as the case may be, and the applicable rules
and regulations thereunder, except that no representation
-15-
is made by the Company with respect to information provided by Parent or Sub for
inclusion in Company SEC Documents filed after the date hereof. The financial
statements of the Company included or incorporated by reference in the Company
SEC Documents comply or will be prepared in compliance in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been or will be prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, to normal year-end
audit adjustments) and fairly present or will fairly present (subject, in the
case of the unaudited statements, to normal year-end audit adjustments) the
consolidated financial position of the Company and its Subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended. Except as disclosed in the Company Disclosure
Letter, and except as reflected, reserved against or otherwise disclosed in the
financial statements of the Company included in the Company SEC Documents or as
otherwise disclosed in the Company SEC Documents, in each case filed prior to
the date of this Agreement, neither the Company nor any of its Subsidiaries has
any liabilities or obligations (absolute, accrued, fixed, contingent or
otherwise) material to the Company and its Subsidiaries, other than liabilities
incurred in the ordinary course of business consistent with past practice. The
amounts that would appear on the Company's consolidated balance sheet as of the
date of this Agreement as "Long-term debt", including current portions, does not
exceed $300,000.
Section 4.6 Information in Disclosure Documents.
-----------------------------------
(a) Neither the Schedule 14D-9 nor the information statement to be filed by
the Company in connection with the Offer pursuant to Rule 14f-1 under the
Exchange Act (the "Information Statement") nor any of the information supplied
---------------------
by the Company or any of its Subsidiaries specifically for inclusion in the
Offer Documents will, at the respective times the Schedule 14D-9, the
Information Statement or the Offer Documents are filed with the SEC or are first
published, sent or given to shareholders, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information provided by
Parent or Sub for inclusion therein. The Schedule 14D-9 and the Information
Statement will comply as to form in all material respects with the applicable
requirements of the Exchange Act and the applicable rules and regulations
thereunder.
(b) The proxy or information statement relating to any meeting of the
Company's shareholders that may be required to be held in connection with the
Merger (as it may be amended from time to time, the "Company Proxy Statement")
-----------------------
will not, at
-16-
the date mailed to the Company's shareholders and at the time of the meeting of
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to information provided by
Parent or Sub for inclusion therein. The Company Proxy Statement will, when
filed with the SEC by the Company, comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 4.7 Litigation. Except as described in Section 4.7 of the Company
---------- -----------
Disclosure Letter, there is no suit, claim, action, proceeding or investigation
pending or, to the best knowledge of the Company, threatened, against the
Company or any of its Subsidiaries before any Governmental Entity which,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on the Company or a material adverse effect on the ability of the
Company to perform its obligations under this Agreement. Except as described in
Section 4.7 of the Company Disclosure Letter, neither the Company nor any of its
-----------
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which, individually or in the aggregate, is reasonably likely to have a material
adverse effect on the Company or a material adverse effect on the ability of the
Company to perform its obligations under this Agreement.
Section 4.8 No Material Adverse Change. Except as disclosed in the
--------------------------
Company SEC Documents filed prior to the date of this Agreement and except as
disclosed in Section 4.8 of the Company Disclosure Letter, (i) since August 27,
-----------
1994, there has not been any action which would be prohibited under Section 6.1
-----------
were it to occur after the date of this Agreement or any material adverse change
with respect to the Company and its Subsidiaries and (ii) as of the date of this
Agreement, neither the Company nor any of its Subsidiaries has become a party to
any agreement or amendment to an existing agreement which would be required to
be filed by the Company as an exhibit to its next Annual Report on Form 10-K.
Section 4.9 Taxes.
-----
(a) Except as disclosed in Section 4.9 of the Company Disclosure Letter,
-----------
each of the Company and its Subsidiaries has duly filed all material Tax Returns
(as defined in Section 4.9(b)) required to be filed by it, all such Tax Returns
--------------
are complete and accurate in all material respects and disclose all material
Taxes (as defined in Section 4.9(b)) required to be paid by the Company and its
--------------
Subsidiaries, and the Company or its Subsidiaries has duly paid or caused to be
paid all Taxes shown to be due on such Tax Returns in respect of the periods
covered by such returns and has made provision adequate in all material respects
in the Company's financial statements for payment of all
-17-
Taxes anticipated to be payable in respect of all taxable periods or portions
thereof ending on or before the date hereof. No Tax Returns filed by the
Company or its Subsidiaries have been "examined" by the Internal Revenue Service
(the "IRS") or other appropriate taxing authority. Except as described in
---
Section 4.9 of the Company Disclosure Letter, no issue or claim has been
-----------
asserted in writing for Taxes by any taxing authority for any prior period (and
to the best of the Company's knowledge no basis exists therefor), the adverse
determination of which would result in a deficiency which would have a material
adverse effect on the Company, other than those heretofore paid or provided for
in the Company's financial statements. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
Return of the Company or its Subsidiaries. There are no material liens for
Taxes upon the assets of the Company or any of its Subsidiaries except liens
relating to current Taxes not yet due. No transaction contemplated by this
Agreement is subject to withholding under Section 1445 of the Code and no stock
transfer Taxes, sales Taxes, use Taxes, real estate transfer Taxes, or other
similar Taxes will be imposed on Parent, Sub or the Company as a result of the
transactions contemplated by this Agreement under the laws of any jurisdiction
where the Company or any of its Subsidiaries does business. All Taxes which the
Company or any of its Subsidiaries have been required by law to withhold or to
collect for payment have been duly withheld or collected and paid to the
appropriate taxing authority, except where the failure to so withhold or collect
such Taxes would not have a material adverse effect on the Company. Neither the
Company nor any of its Subsidiaries is a party to any agreement, contract or
arrangement that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
Except as set forth in Section 4.9 of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries (i) has been a member of a group filing
consolidated returns for federal income tax purposes, or (ii) is a party to a
tax sharing or tax indemnity agreement or any other agreement of a similar
nature that remains in effect.
(b) For purposes of this Agreement, the term "Taxes" means all taxes,
-----
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, property, sales, use, transfer, license,
payroll, employment, withholding, environmental, capital stock, ad valorem,
alternate or add-on minimum and franchise taxes, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof,
including any interest, penalties or additions thereto. For purposes of this
Agreement, the term "Tax Return" means any report, return or other information
----------
or document required to be supplied to a taxing authority in connection with
Taxes.
Section 4.10 Benefit Plans. (a) With respect to any "employee benefit
------------- ----------------
plan" (as defined in Section 3(3) of the Employee Retirement Income Security Act
----
of 1974, as amended ("ERISA")), maintained or contributed to by the Company or
any
-18-
entity treated as a single employer under Section 414 of the Code ("ERISA
Affiliates") with the Company or with respect to which the Company or any of its
ERISA Affiliates is required to make any payment and any deferred compensation,
stock option, bonus, vacation or other such compensation arrangement to which
the Company is required to make any payment (collectively referred to as the
"Company Benefit Plans"), the Company has made available to Sub a true and
correct copy of (i) the most recent annual report (Form 5500) filed with the
IRS, (ii) such Company Benefit Plan, (iii) each trust agreement and group
annuity contract, if any, relating to such Company Benefit Plan and (iv) the
most recent actuarial report or valuation relating to a Company Benefit Plan
subject to Title IV of ERISA. Each Company Benefit Plan (i) has been
administered in accordance with its terms in all material respects and (ii)
complies in form and has been administered in accordance with any and all
applicable state and federal laws, including ERISA and the Code, so as not to
give rise to any liability that would have a material adverse effect on the
Company and its Subsidiaries. Each Company Benefit Plan and each trust that is
intended to qualify under Section 401(a) and 501(a) of the Code is so qualified
or, if not so qualified, the failure to be so qualified would not have a
material adverse effect on the Company. Section 4.10 of the Company Disclosure
Letter sets forth a true and complete list of each material Company Benefit
Plan.
(b) All contributions and premiums required by law or by the terms of such
employee benefit plan or any agreement relating thereto have been timely made
(without regard to any waiver granted with respect thereto), except where the
failure to make such contributions and premiums would not have a material
adverse effect on the Company.
(c) With respect to the Company Benefit Plans, individually and in the
aggregate, no event has occurred, and neither the Company nor any of its ERISA
Affiliates has knowledge of any condition or set of circumstances in connection
with which the Company or any of its ERISA Affiliates is reasonably likely to be
subject to any liability that would have a material adverse effect on the
Company under ERISA, the Code or any other applicable law, including of any
"reportable event" (as defined in Section 4043(b) of ERISA) or any "prohibited
transaction" (as defined in Section 406 of ERISA and Section 4975(c) of the
Code).
(d) With respect to the Company Benefit Plans, individually and in the
aggregate, there has not occurred any "accumulated funding deficiency" (within
the meaning of Section 412 of the Code), neither the Company nor any of its
ERISA Affiliates has failed to make a payment required under Section 412 of the
Code before the applicable due date, and there are no unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
footnoted in accordance with generally accepted accounting principles, on the
financial statements of the Company or any of its ERISA Affiliates, which would
have a material adverse effect on the Company.
-19-
(e) There have been no violations of ERISA with respect to the filing of
applicable returns, reports, documents or notices regarding any of the Company
Benefit Plans with the Secretary of Labor or the Secretary of Treasury or the
furnishing of such notices or documents to the participants or beneficiaries of
the Company Benefit Plans which have not subsequently been resolved or corrected
which would have a material adverse effect on the Company and its Subsidiaries.
(f) To the Company's knowledge, there are no pending legal proceedings
which have been asserted or instituted against any Company Benefit Plan, the
assets of any such plan or the Company, or the plan administrator or fiduciary
of any Company Benefit Plan with respect to the operation of any such plan
(other than routine, uncontested benefit claims), and there are no facts or
circumstances which could form the basis for any such legal proceedings. To the
Company's knowledge, neither the Company nor any fiduciary of any plan which is
not a multiemployer plan has engaged in a nonexempt prohibited transaction
described in Section 406 of ERISA or 4975 of the Code.
(g) Each Company Benefit Plan complies in all material respects with all
applicable requirements of (i) the Age Discrimination in Employment Act of 1967,
as amended, and the regulations thereunder and (ii) Title VII of the Civil
Rights Act of 1964, as amended, and the regulations thereunder. Each group
medical plan sponsored by the Company materially complies with the health care
continuation provisions of COBRA and (ii) the Medicare Secondary Payor
Provisions of Section 1826(b) of the Social Security Act, and the regulations
promulgated thereunder.
(h) With respect to each Company Benefit Plan which is a multi-employer
plan (as described in Section 3(37) of ERISA), to the Company's knowledge, no
proceeding has been initiated to terminate any such plan with respect to which
the Company or any of its ERISA Affiliates has or has had an obligation to
contribute which would have a material adverse effect on the Company. Neither
the Company or any of its ERISA Affiliates has any material liability
outstanding on account of a "partial withdrawal" (within the meaning of Sections
4205 and 4203, respectively, of ERISA) from any Company Benefit Plan which is a
multi-employer plan and, to the Company's knowledge, no such liability has been
asserted and there are no events or circumstances which would have a material
adverse effect on the Company and its Subsidiaries. In the event that the
Company incurred a complete withdrawal under Section 4203 of ERISA, the
withdrawal liability arising under Section 4201 of ERISA with respect to each
Company Benefit Plan which is a multi-employer plan as a result thereof would
not have a material adverse effect on the Company.
(i) The Company has no liability under Sections 4063, 4064, 4069 or 4212(c)
of ERISA.
-20-
(j) The Company has no obligations under any of the Company Benefit
Plans to provide health or life insurance benefits to its prior employees (or
their beneficiaries or dependents) for periods after termination of employment,
except as specifically required by Part 6 of Title I of ERISA.
(k) Except as described in Section 4.10 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or bound
by any written, or to the Company's knowledge, oral:
(i) employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by the Company or
any of its Subsidiaries without premium or penalty on notice of 30 days or
less under which the only monetary obligation of the Company or any of its
Subsidiaries is to make current wage or salary payments and provide current
fringe benefits), consulting, advisory or service agreement, deferred
compensation agreement, confidentiality agreement or covenant not to
compete;
(ii) contract or agreement with any officer, director or
employee (other than employment agreements disclosed in response to clause
(i) or excluded from the scope of clause (i)), agent, or attorney-in-fact
of the Company or any of its Subsidiaries; or
(iii) stock option, stock purchase, bonus or similar incentive
plan or agreement.
(l) Except as set forth in Section 4.10 of the Company Disclosure
Letter, the Company and each of its Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations which relate to prices,
wages, hours, discrimination in employment and collective bargaining and to its
operations and each is liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing. The Company believes that its
and its Subsidiaries' relations with their employees are satisfactory. Neither
the Company nor any of its Subsidiaries are a party to, and none of such parties
are materially affected by or threatened with, any dispute or controversy with a
union or with respect to unionization or collective bargaining involving its
employees. Neither the Company nor any of its Subsidiaries are materially
affected by any dispute or controversy with a union or with respect to
unionization or collective bargaining involving any supplier or customer.
Section 4.10 of the Company Disclosure Letter sets forth a description of any
union organizing or election activities involving any non-union employees of the
Company and its Subsidiaries which have occurred since August 27, 1994 or, to
the knowledge of the Company, are threatened as of the date hereof.
-21-
(m) None of the Offer, the Merger or any other transaction
contemplated by this Agreement will, whether by itself or as a result of any
subsequent termination of employment, result in the acceleration of entitlement
to, or the payment of, any benefit or compensation.
Section 4.11 Opinion of Financial Advisor. The Company has received
----------------------------
the opinion of Alex Brown, its financial advisor, to the effect that, as of
August 14, 1995, the consideration to be received in the Offer and the Merger,
taken as a whole, by the Company's shareholders is fair to the Company's
shareholders from a financial point of view, a copy of which opinion has been
delivered to Parent.
Section 4.12 Certain Antitakeover Provisions Not Applicable. The
----------------------------------------------
Board of Directors of the Company and the Special Committee have each approved
the Offer, the Merger and this Agreement, such Special Committee has been duly
constituted pursuant to Section 302A.673 of the MBCA and consists only of
disinterested directors as defined therein and such approval by the Special
Committee is sufficient to render inapplicable to this Agreement, the Merger and
to the other transactions contemplated by this Agreement the restrictions on
business combinations (as defined in Section 302A.011 of the MBCA) contained in
Section 302A.673 of the MBCA. Pursuant to Article 13 of the Company's Articles
of Incorporation, Section 302A.671 of the MBCA is not applicable to the Offer,
the Merger or the other transactions contemplated by this Agreement. Other than
Chapter 80B of the Minnesota Statutes, no other state takeover statute or
similar statute or regulation in any jurisdiction in which the Company or any of
its Subsidiaries does business, applies or purports to apply to the Offer, the
Merger or to this Agreement, or any of the transactions contemplated hereby or
thereby.
Section 4.13 Intellectual Property. Section 4.13 of the Company
--------------------- ------------
Disclosure Letter contains a correct and complete list of all patents,
trademarks, trade names, copyright registrations, mask work registrations and
applications therefor now or heretofore used or presently proposed to be used in
the conduct of the businesses of the Company and its Subsidiaries, excluding
computer software which is widely available. Except as set forth in
Section 4.13 of the Company Disclosure Letter, (i) the Company and its
------------
Subsidiaries own or possess adequate licenses or other valid rights to use
(without the making of any payment to others or the obligation to grant rights
to others in exchange) all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyright registrations, know-how and other
proprietary information ("Rights") necessary to the conduct of their business as
presently being conducted, except where the failure to have such licenses or
rights would not have a material adverse effect on the Company; (ii) neither the
Company nor any of its Subsidiaries has licensed any Rights to any third party;
(iii) the validity of such items and the title thereto of the Company and its
Subsidiaries has not been questioned in any litigation to which the Company or
any of its Subsidiaries is a party, nor is any such litigation threatened; nor
-22-
have any claims to such effect been made to the Company or any of its
Subsidiaries; (iv) the conduct of the business of the Company and its
Subsidiaries as now conducted does not and will not conflict with Rights of
others in any way which has a material adverse effect on the Company and (v) no
proceedings are pending against the Company or any of its Subsidiaries nor, to
the Company's knowledge, are any proceedings threatened against the Company or
any of its Subsidiaries alleging any violation of Rights of any third party.
The Company does not know of (x) any use that has heretofore been or is now
being made of any Rights owned by the Company or any of its Subsidiaries, except
by the Company or any of its Subsidiaries or by an entity duly licensed by it to
use the same under an agreement described in Section 4.13 of the Company
------------
Disclosure Letter or (y) any material infringement of any Right owned by or
licensed by or to the Company. All Rights heretofore owned or held by any
employee or officer of the Company or any of its Subsidiaries and used in the
business of the Company or any of its Subsidiaries in any manner have been duly
and effectively transferred to the Company or such Subsidiary. The consummation
of the Merger and the transactions contemplated hereby will not alter or impair
the rights and interests of the Company in any of the items listed in
Section 4.13 of the Company Disclosure Letter, and the Surviving Corporation
------------
will have the same rights and interests in such items as the Company will have
immediately prior to the Effective Time.
Section 4.14 Government Contracting Matters.
------------------------------
(a) Except as set forth in Section 4.14 of the Company Disclosure
Letter, the Company has complied with all material terms and conditions of all
Government Contracts, including all clauses, provisions and requirements
incorporated by reference or by operation of law therein. For the purposes of
this Agreement, "Government Contract" means any bid, quotation, proposal,
-------------------
contract, agreement, work authorization, lease, commitment or sale or purchase
order of the Company or any of its Subsidiaries that is with the United States
Government or any agency or instrumentality of the United States Government,
including all contracts and work authorizations to supply goods and services to
the United States Government and including contracts that are first-tier
subcontracts on United States Government prime contracts.
(b) Except as set forth in Section 4.14 of the Company Disclosure
Letter, the Company has complied with all applicable requirements of all laws,
regulations or agreements pertaining to Government Contracts. Neither the
United States Government, nor any United States Government agency or
instrumentality, nor any prime contractor, subcontractor or other person has
notified the Company or any of its Subsidiaries that the Company or any of its
Subsidiaries has breached or violated any law, regulation, certification,
representation, clause, provision or requirement pertaining to a Government
Contract.
-23-
(c) Except for the investigation of the Company by the Defense
Criminal Investigation Service of the United States Department of Defense that
the Company first received notice of in June 1995, including the related search
warrant and subpoena received by the Company prior to the date hereof (the "DCIS
----
Investigation"), there is no action, suit, proceeding or, to the Company's
-------------
knowledge, investigation relating to any proposed suspension or debarment of the
Company or any of its Subsidiaries or any of their respective directors,
officers, employees or agents from doing business with the United States (or any
agency or instrumentality thereof). Neither the Company nor any of its
Subsidiaries, nor any of their respective directors, officers, or employees is
(or during the last five years has been) suspended, proposed for debarment, or
debarred from doing business with the United States (or any agency or
instrumentality thereof) or is (or during such period was) the subject of a
finding of nonresponsibility or ineligibility for United States Government
contracting.
(d) Except in connection with the DCIS Investigation, (i) to the best
of the Company's knowledge, after diligent inquiry, none of the Company's or any
of its Subsidiaries' respective directors, officers, employees, consultants or
agents is (or during the last five years has been) under administrative, civil,
or criminal investigation, indictment or information by any governmental
authority with respect to any material alleged irregularity, misstatement or
omission arising under or relating to any Government Contract. Neither the
Company nor any of its Subsidiaries has any knowledge or, other than the
existence of the DCIS Investigation, any reason to know of any material
irregularity, misstatement or omission arising under or relating to any
Government Contract that has led or could reasonably lead, either before or
after the Closing Date, to any of the consequences set forth in Section 4.14(c)
---------------
or to any other material damage, penalty, assessment, recoupment of payment or
disallowance of cost.
(e) Except as set forth in Section 4.14 of the Company Disclosure
Letter, there exist (i) no outstanding material claims against the Company or
any of its Subsidiaries, either by the United States Government or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract; and (ii) no material disputes between the
Company and the United States Government, or any prime contractor,
subcontractor, vendor or other third party, arising under or relating to any
Government Contract.
(f) Neither the Company nor any of its Subsidiaries has, nor are any
of them in the conduct of their respective businesses required to have, any
facility security clearance or personnel security clearance or other security
clearance from the United States Government, and none of them have any access to
United States Government classified information in connection with any
Government Contract or otherwise.
(g) The Company has furnished Parent or Parent's attorneys with copies
-24-
of all material correspondence or written communication between the Company or
any of its Subsidiaries (or, to the knowledge of the Company, any of their
respective directors, officers or employees), on the one hand, and any agency or
instrumentality of the United States Government, including the Department of
Defense and the Office of the United States Attorney for the District of
Minnesota, on the other hand, concerning the DCIS Investigation.
Section 4.15 Votes Required. The affirmative vote of the holders of
--------------
at least 51% of the outstanding shares of Company Common Stock entitled to vote
with respect to the Merger, is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
Section 4.16 Brokers. No broker, investment banker or other person,
-------
other than Alex Brown, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. A true, correct
and complete copy of the engagement letter or other agreement between the
Company and Alex Brown has been delivered to Sub.
Section 4.17 Certain Agreements. Except as set forth in Section 4.17
------------------
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan, including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as described in Section 4.17 of the
Company Disclosure Letter, the transactions contemplated by this Agreement will
not constitute a "change of control" under, require the consent from or the
giving of notice to any third party pursuant to, or accelerate the vesting or
repurchase rights under, the terms, conditions or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, license, lease, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound. There are no amounts payable by the Company to any officers
of the Company (in their capacity as officers) as a result of the transactions
contemplated by this Agreement and/or any subsequent employment termination.
-25-
Section 4.18 Environmental Compliance.
------------------------
(a) Except as set forth in the Company SEC Documents or otherwise
disclosed in Section 4.18 of the Company Disclosure Letter, to the knowledge of
the Company, there are no Environmental Liabilities (as defined below) of the
Company that have had or are likely to have a material adverse effect on the
Company.
(b) As used in this Agreement, "Environmental Laws" means any and all
federal, state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements and
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes in the indoor or outdoor environment, including without limitation
ambient air, surface water, ground water, land or interior of structures, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof,
"Environmental Liabilities" means any and all liabilities, losses, costs,
obligations, awards, fines, penalties, damages or expenses of or relating to the
Company or any of its Subsidiaries (including any entity which is, in whole or
in part, a predecessor of the Company or any of its Subsidiaries), whether
vested or unvested, contingent or fixed, actual or potential, known or unknown,
which arise under or relate to matters covered by Environmental Laws.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics, including, without limitation, any substance
regulated under Environmental Laws.
Section 4.19 Contracts. Except as set forth in Section 4.19 of the
---------
Company Disclosure Letter or as filed as an exhibit to the Company SEC
Documents, neither the Company nor any of its Subsidiaries is a party to or
bound by:
(i) any contract for the purchase or sale of real property;
(ii) any contract (excluding individual purchase orders) for the
purchase of raw materials which involved the payment of more than $500,000
in 1994, which the Company reasonably anticipates will involve the payment
of more than $500,000 in 1995, or which extends beyond August 27, 1997;
(iii) any contract (excluding individual purchase orders) for the
sale of goods or services which involved the payment of more than $500,000
in 1994, which the Company reasonably anticipates will involve the payment
of more than
-26-
$500,000 in 1995 or which extends beyond August 27, 1997;
(iv) any contract for the purchase, licensing or development of
software to be used by the Company or any of its Subsidiaries (excluding
paid-up software licenses to widely available computer software programs);
(v) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract;
(vi) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, affiliates or others;
(vii) any agreement which provides for, or relates to, the incurrence
by the Company or any of its Subsidiaries of debt for borrowed money in
excess of $300,000 (including, without limitation, any interest rate or
foreign currency swap, cap, collar, hedge or insurance agreements, or
options or forwards on such agreements, or other similar agreements for the
purpose of managing the interest rate and/or foreign exchange risk
associated with its financing); or
(viii) any other contract, agreement, commitment, understanding or
instrument which is material to the Company or any of its Subsidiaries.
Section 4.20 New Directors. Each of the following directors of the
-------------
Company has submitted to the Company his written resignation, conditioned on and
effective as of the Closing of the Offer: Thomas F. Leahy; David C. Malmberg;
Stephen G. Shank; and William J. Cadogan. The Board of Directors of the Company
has appointed Geoff Wild, Donald J. Miller and D. McL. Miller, as directors of
the Company, conditioned on and effective as of the Closing of the Offer.
Copies of such resignations and such appointment have been furnished to Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 5.1 Organization. Each of Parent and Sub is a corporation
------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing or
in good standing or to have such power and authority would not, individually or
in the aggregate, have a material adverse effect on
-27-
Parent and its Subsidiaries.
Section 5.2 Authority. Each of Parent and Sub has the requisite
---------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by each of Parent (as a party hereto and as the
sole shareholder of Sub) and Sub and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of each of Parent and Sub. This
Agreement has been duly executed and delivered by each of Parent and Sub and
constitutes a valid and binding obligation of Parent and Sub, enforceable
against Parent and Sub in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
Section 5.3 Consents and Approvals; No Violations. No consent,
-------------------------------------
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by Parent and Sub or the consummation by Parent and Sub of the Merger or the
other transactions contemplated hereby, except for (i) the filing of a premerger
notification and report form by Parent under the HSR Act, (ii) the filing with
the SEC by Parent and Sub of the Offer Documents and of such reports under
Sections 13 and 16(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby, (iii) the filing of the
Articles of Merger with the Minnesota Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) such filings, approvals, orders, notices,
registrations, declarations and consents as may be required under any applicable
state takeover or similar laws, including Chapter 80B of the Minnesota Statutes,
and any applicable state environmental laws or laws with respect to the
ownership by a foreign entity of real property, (v) the filing of a notice as
required or deemed advisable pursuant to Section 721 of Title VII of the Defense
Production Act of 1950, as amended by the Omnibus Trade and Competitiveness Act
of 1988 (the "Exon-Florio Amendment") and (vi) such other consents, approvals,
---------------------
orders, authorizations, registrations, declarations or filings the failure to
obtain or make which would not have a material adverse effect on Parent or on
Parent's ability to perform its obligations under this Agreement. Neither the
execution, delivery or performance of this Agreement nor the consummation of the
transactions contemplated hereby will result in any Violation of any of the
terms, conditions or provisions of (i) the respective certificates of
incorporation or by-laws or comparable organizational documents of Parent or
Sub, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument, permit
-28-
concession, franchise or obligation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets or (iii) any
judgment, order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent or any of its Subsidiaries or their respective properties
or assets except, in the case of clause (ii), for Violations that would not
prevent or impair the consummation of the Merger in any respect and would not,
individually or in the aggregate, have a material adverse effect on Parent and
its Subsidiaries or on the ability of Parent and Sub to perform their
obligations under this Agreement.
Section 5.4 Operations of Sub. Sub was organized solely for the
-----------------
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 5.5 Information in Disclosure Documents.
-----------------------------------
(a) None of the Offer Documents or the information supplied by Parent
or Sub specifically for inclusion in the Schedule 14D-9 will, at the respective
times the Offer Documents (including any amendments or supplements thereto) or
the Schedule 14D-9 are filed with the SEC or are first published, sent or given
to shareholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) None of the information supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Company Proxy Statement will, at
the date mailed to the Company's shareholders and at the time of the meeting of
shareholders, if required by applicable law to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
Section 5.6 Financing. Parent and Sub collectively have (through
---------
existing credit facilities or otherwise) all the funds necessary to consummate
the Offer and the Merger and to pay all related fees and expenses.
Section 5.7 Brokers. No broker, investment banker or other person,
-------
other than Dillon Read & Co. and Baring Brothers Limited, the fees and expenses
of which will be paid by Parent and Sub, is entitled to any broker's, finder's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent and Sub.
-29-
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company. Except as contemplated
----------------------------------
by this Agreement or with the prior written consent of Sub, during the period
from the date of this Agreement to the Effective Time, the Company will, and
will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will use
its best efforts, and will cause each of its Subsidiaries to use its best
efforts, to preserve intact its present business organization, keep available
the services of its present officers and employees and preserve its
relationships with licensors, licensees, customers, suppliers, employees and any
others having business dealings with it to the end that its goodwill and ongoing
business shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, the Company will not, and will not permit any of its Subsidiaries to,
prior to the Effective Time, without the prior written consent of Sub:
(a) adopt any amendment to its certificate of incorporation or by-laws
or comparable organizational documents;
(b) issue, reissue, sell or pledge or authorize or propose the
issuance, reissuance, sale or pledge of any of its capital stock of any class,
or securities convertible or exchangeable into capital stock of any class, or
any rights, warrants or options to acquire any convertible or exchangeable
securities or capital stock, other than the issuance of shares of Company Common
Stock upon the exercise of stock options outstanding on the date of this
Agreement under the Company Option Plan in accordance with their present terms;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock or otherwise make any payments to
its shareholders in their capacity as such, except that any wholly owned
Subsidiary of the Company may pay dividends and make distributions to the
Company or any of the Company's wholly owned Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock;
(e) incur or assume any long-term debt or any short-term debt or
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any person, except
in the ordinary course
-30-
of business consistent with past practice and in an aggregate amount not to
exceed $500,000;
(f) make any loans, advances (excluding the sale of products to
customers in the ordinary course) or capital contributions to, or investments
in, any person except in the ordinary course of business consistent with past
practice and in an aggregate amount not to exceed $500,000 for any single
borrower;
(g) settle or compromise any suit, proceeding or claim or threatened
suit, proceeding or claim;
(h) except for increases in salary, wages and benefits of employees of
the Company or its Subsidiaries (other than executive officers of the Company)
in accordance with past practice, increase the compensation or fringe benefits
payable or to become payable to its directors, officers or employees (whether
from the Company or any of its Subsidiaries), or pay any benefit not required by
any existing plan or arrangement (including the granting of, or waiver of
performance or other vesting criteria under, stock options, stock appreciation
rights, shares of restricted stock or deferred stock or performance units) or
grant any severance or termination pay to (except pursuant to existing
agreements or policies), or enter into any employment or severance agreement
with, any director, officer or employee of the Company or any of its
Subsidiaries or establish, adopt, enter into, terminate or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
trust, fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except to the extent such termination
or amendment is required by applicable law;
(i) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets, other than transactions that are in the ordinary course of
business and not material to the Company or any of its Subsidiaries;
(j) sell, lease, mortgage or otherwise encumber or dispose of or agree
to sell, lease, mortgage or otherwise encumber or dispose of, any of its assets,
other than transactions that are in the ordinary course of business and not
material to the Company or any of its Subsidiaries;
(k) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any Subsidiary;
-31-
(l) knowingly violate or fail to perform any obligation or duty
imposed upon it or any Subsidiary by any applicable federal, state or local law,
rule, regulation, guideline or ordinance;
(m) (i) modify, amend or terminate any contract, (ii) waive, release,
relinquish or assign any contract (including any insurance policy) or other
right or claim, (iii) prepay any indebtedness of the Company or any of its
Subsidiaries or (iv) cancel or forgive any indebtedness owed to the Company or
its Subsidiaries, other than in each case in a manner in the ordinary course of
business consistent with past practice and which is not material to the business
of the Company and its Subsidiaries;
(n) make any tax election not required by law or settle or compromise
any tax liability;
(o) change any of the accounting principles or practices used by it
except as required by the SEC or the Financial Accounting Standards Board; or
(p) authorize, recommend, announce, propose or agree to take any of
the foregoing actions or any action which would make any representation or
warranty in this Agreement that is qualified as to materiality untrue or
incorrect or which would make any representation or warranty in this Agreement
that is not so qualified untrue or incorrect in any material respect.
Section 6.2 Reasonable Best Efforts. Upon the terms and subject to
-----------------------
the conditions of this Agreement, unless, to the extent permitted by
Section 6.7(b), the Board of Directors of the Company approves or recommends a
--------------
superior proposal, each of the parties hereto will use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or non-actions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by any Governmental Entity
(including those in connection with the HSR Act and the Exon-Florio Amendment),
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any claims, investigations, actions, lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (iv) the execution and
delivery of any additional instruments (including any required supplemental
indentures) necessary to
-32-
consummate the transactions contemplated by this Agreement. Each party will
promptly consult with the other with respect to, provide any necessary
information with respect to and provide the other (or its counsel) copies of,
all filings made by such party with any Governmental Entity in connection with
this Agreement and the transactions contemplated hereby. In addition, if at any
time prior to the Effective Time any event or circumstance relating to any of
the Company, Parent or Sub or any of their respective Subsidiaries, or any of
their respective officers or directors, should be discovered by the Company,
Parent or Sub, as the case may be, and which should be set forth in an amendment
or supplement to the Offer Documents, the discovering party will promptly inform
the other party of such event or circumstance.
Section 6.3 Access to Information. Upon reasonable notice, the
---------------------
Company will afford to the officers, employees, accountants, counsel and other
representatives of Parent and Sub, access, during normal business hours during
the period prior to the Effective Time, to all its properties, facilities,
books, contracts, commitments and records and other information as reasonably
requested by such party and, during such period, the Company will (and will
cause each of its Subsidiaries to) furnish promptly to Parent and Sub (a) a copy
of each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of United States
federal securities laws or regulations and (b) all other information concerning
its business, properties and personnel as Parent or Sub may reasonably request.
The parties will hold any such information which is nonpublic in confidence in
accordance with the terms of the Confidentiality Agreement, dated as of
August 1, 1994, as amended on June 28, 1995, between Johnson Matthey Inc. and
the Company (the "Confidentiality Agreement"), and in the event of termination
-------------------------
of this Agreement for any reason each party will promptly comply with the terms
of the Confidentiality Agreement. The Company shall use its best efforts to keep
Parent fully informed with respect to the DCIS Investigation and shall consult
with Parent prior to taking any material action in connection with the DCIS
Investigation.
Section 6.4 Company Shareholders Meeting. (a) Subject to Section 6.4(d),
---------------------------- --------------
the Company will, at Parent's request, duly call a meeting of its shareholders
(the "Shareholders' Meeting") for the purpose of voting upon this Agreement
---------------------
(insofar as it relates to the Merger), the Merger and related matters and use
its best efforts duly to give notice of, convene and hold such Shareholders'
Meeting as soon as practicable following consummation of the Offer. The Company
will, through its Board of Directors, recommend to its shareholders approval and
adoption of this Agreement and approval of the Merger, except to the extent that
the Board of Directors of the Company shall have withdrawn its approval or
recommendation of this Agreement or the Merger as permitted by Section 6.7(b).
--------------
(b) Subject to Section 6.4(d), the Company will, at Parent's request,
--------------
as
-33-
soon as practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement with the SEC and will use its best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company's shareholders. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the approval of this Agreement
by the Company's shareholders there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company will
promptly notify Parent thereof and prepare and mail to its shareholders such an
amendment or supplement. The Company will not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects.
(c) At the Shareholder's Meeting, Parent, Sub and their affiliates
will vote all shares of Company Common Stock owned by them in favor of approval
and adoption of this Agreement and approval of the Merger.
(d) If at any time after the satisfaction or waiver of the conditions
set forth in Article VII (other than Section 7.1(b)), Parent and Sub own 90% or
--------------
more of the outstanding shares of Company Common Stock, then the provisions of
Sections 6.4 (a), (b) and (c) shall not apply and, as soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VII (other
than Section 7.1(b)), the parties hereto will cause the Merger to be consummated
--------------
by filing the Articles of Merger with the Secretary of State of the State of
Minnesota in accordance with Sections 302A.621 and 302A.641 of the MBCA, and
make all other filings or recordings required by the MBCA in connection with the
Merger, including filing the notice to shareholders required by the MBCA in
connection with the Merger.
Section 6.5 Company Option Plan. (a) Subject to the next sentence,
-------------------
the Company shall use its best efforts to cause each holder of an outstanding
option (collectively, the "Employee Options") to purchase shares of Company
----------------
Common Stock granted under the Company Option Plan or under the Acsist Plan,
whether or not then exercisable, to agree in writing prior to the Effective Time
that (i) such holder shall be entitled to receive from the Company on the date
of the Closing of the Offer, in lieu of such Employee Option, an amount in cash
in respect of each share of Company Common Stock subject to such Employee Option
equal to the excess, if any, of the Merger Consideration over the per share
exercise price of such Employee Option (it being understood that if there is no
such excess with respect to any such Employee Option, such holder will not be
entitled to receive any cash, securities or other consideration with respect
thereto) and (ii) such Employee Option shall be cancelled concurrently
therewith.
-34-
Notwithstanding the foregoing, the Company shall use its best efforts to cause
each person subject to Section 16(b) of the Exchange Act to whom an Employee
Option was granted six months or less before the date of the Closing of the
Offer, whether or not then exercisable, to agree in writing prior to the date of
the Closing of the Offer (but effective as of and upon the date of the Closing
of the Offer) that (i) each such Employee Option shall be cancelled as of the
date of such agreement; (ii) no shares of Company Common Stock shall be issued
in respect thereof; and (iii) such person shall be entitled to receive from the
Company on the date (the "Option Payment Date") that is six months and one day
-------------------
following the date of grant of such option (but in no event earlier than the
Closing Date), in lieu of such Employee Option, a payment equal to the aggregate
amount of cash, if any, determined under the preceding sentence; provided that
--------
such person shall not be entitled to receive any such amount if prior to the
Option Payment Date such person (x) terminates his employment by the Surviving
Corporation or any of its Subsidiaries, otherwise than as a result of death or
disability or (y) is terminated by the Surviving Corporation or any of its
Subsidiaries for cause. All amounts payable pursuant to this Section 6.5(a)
--------------
shall be subject to any applicable withholding taxes and shall be paid without
interest.
(b) The Company shall use its best efforts to ensure that from and
after the Effective Time neither the Surviving Corporation nor any of its
Subsidiaries is or will be bound by any options, warrants, rights or agreements
which would entitle any person, other than Parent, Sub or their wholly owned
Subsidiaries, to beneficially own, or receive any payments (other than as
otherwise contemplated by Sections 3.1 and 3.6 and this Section 6.5) in respect
------------ --- -----------
of, any capital stock of the Company or the Surviving Corporation.
(c) The Company shall take all actions necessary, if any, to terminate
the Company Option Plan and the Acsist Plan effective as of the Effective Time.
Section 6.6 Company Benefit Plans. Parent presently intends that,
---------------------
for a period of one year following the Effective Time, the employees of the
Company will continue to be provided with employee benefits that are in the
aggregate not materially less favorable to such employees than those presently
provided under the Company's current benefit plans; provided that the right is
--------
reserved to review all employee benefit plans after the Effective Time and to
make such changes as are deemed appropriate in the judgment of Parent.
Section 6.7 No Solicitation. (a) The Company shall not, nor shall
---------------
it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney or other
advisor or representative of the Company or any of its Subsidiaries to, (i)
solicit, initiate, or encourage the submission of, any takeover proposal, (ii)
enter into any agreement with respect to any takeover proposal
-35-
or (iii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal; provided, however,
-------- -------
that prior to the acceptance for payment of shares of Company Common Stock
pursuant to the Offer, to the extent required by the fiduciary obligations of
the Board of Directors of the Company, as determined in good faith by a majority
of the disinterested members thereof based on the written advice of outside
counsel (a copy of which written advice shall be promptly furnished to Parent),
the Company may, in response to unsolicited requests therefor, participate in
discussions or negotiations with, or furnish information pursuant to an
appropriate confidentiality agreement to, any person. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any officer, director or other management employee of
the Company or any of its Subsidiaries or any investment banker, attorney or
other advisor or representative of the Company or any of its Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or
otherwise, shall be deemed to be a breach of this paragraph by the Company. For
purposes of this Agreement, "takeover proposal" means any proposal, other than a
-----------------
proposal by Parent or any of its affiliates, for a merger, consolidation, share
exchange, business combination or other similar transaction involving the
Company or any of its Subsidiaries or any proposal or offer (including, without
limitation, any proposal or offer to shareholders of the Company), other than a
proposal or offer by Parent or any of its affiliates, to acquire in any manner,
directly or indirectly, an equity interest in the Company or any of its
Subsidiaries, any voting securities of the Company or any of its Subsidiaries or
a substantial portion of the assets of the Company or any of its Subsidiaries.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Sub, the approval or recommendation by the Board of
Directors of the Company or any such committee of the Offer, this Agreement or
the Merger or (ii) approve or recommend, or propose to approve or recommend, any
takeover proposal. Notwithstanding the foregoing, the Board of Directors of the
Company, to the extent required by the fiduciary obligations thereof, as
determined in good faith by a majority of the disinterested members thereof
based on the written advice of outside counsel (a copy of which written advice
shall be promptly furnished to Parent), may approve or recommend (and, in
connection therewith, withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger) a superior proposal and the Company may
take such actions as are contemplated by Rule 14e-2(a) and Rule 14d-9
promulgated under the Exchange Act. For purposes of this Agreement, "superior
proposal" means a bona fide proposal made by a third party to acquire the
Company pursuant to a tender or exchange offer, a merger, a statutory share
exchange, a sale of all or substantially all its assets or otherwise on terms
which a majority of the disinterested
-36-
members of the Board of Directors of the Company determines in its good faith
reasonable judgment (based on the advice of independent financial advisors) to
be more favorable to the Company and its shareholders than the Offer and the
Merger and for which financing, to the extent required, is then fully committed
or (based on the advice of independent financial advisors) is likely to be
obtained in a timely manner.
(c) The Company promptly shall advise Parent orally and in writing of
any takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal and the identity of the person making any such takeover
proposal or inquiry. The Company will keep Parent fully informed of the status
and details of any such takeover proposal or inquiry.
Section 6.8 Fees and Expenses. (a) Except as provided in
-----------------
paragraphs (b) and (c) of this Section 6.8, all fees and expenses incurred in
-----------
connection with the Offer, the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
(b) The Company shall pay to Parent upon demand a fee of $2 million
(the "Termination Fee"), payable in same day funds, plus all Expenses (as
---------------
defined below), if:
(i) this Agreement is terminated pursuant to Section 8.1(b)(ii) as a
------------------
result of the failure of any condition set forth in paragraph (f)(ii), (g)
(but only if any member of the senior management of the Company was
personally involved in material misconduct discovered as a result of or in
connection with the DCIS Investigation), (h) (but only if the condition set
forth in such paragraph (h) was not satisfied on the date of this
Agreement) or (i) of Annex I; or
(ii) this Agreement is terminated pursuant to Section 8.1(c).
--------------
(c) If this Agreement is terminated pursuant to Section 8.1(b)(ii) as
------------------
a result of the failure of any condition set forth in paragraph (g) (but only
if, as a result of or in connection with the DCIS Investigation, there are
discovered any defects in the Company's products that are in excess of
historical levels and, in the aggregate (and after consideration of remedies
reasonably available to the United States in connection therewith), are
reasonably likely to have a material adverse effect on the Company) or (h) (but
only if the condition set forth in such paragraph (h) was satisfied on the date
of this Agreement) of Annex I (it being understood that in the event payment is
required under both paragraph (b)(i) and paragraph (c) of this Section 6.8,
-----------
payment shall be made pursuant to said paragraph (b)(i)), the Company shall,
whether or not the Termination Fee shall have been paid or shall be payable,
reimburse each of Parent and its affiliates
-37-
upon demand for all out-of-pocket fees and expenses incurred or paid by or on
behalf of Parent or any of its affiliates in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all fees and expenses of counsel, investment banking firms,
accountants, experts and consultants to Parent or any of its affiliates and all
fees and expenses payable of banks, investment banking firms and other financial
institutions and their respective counsel, accountants or agents in connection
with arranging or providing financing (including underwriting fees in connection
with Parent's contemplated rights offering); provided that all such out-of-
pocket fees and expenses shall not exceed $3 million (collectively, the
"Expenses").
--------
(d) The Company acknowledges that the agreements contained in
paragraphs (b) and (c) of this Section 6.8 are an integral part of the
-----------
transactions contemplated by this Agreement, and that, without these agreements,
Parent and Sub would not enter into this Agreement; accordingly, if the Company
fails to pay promptly any amount due pursuant to this Section 6.8 and, in order
-----------
to obtain such payment, Parent or Sub commences a suit that results in a
judgment against the Company for any such amount, the Company shall pay to
Parent or Sub its costs and expenses (including attorneys' fees) in connection
with such suit, together with interest on the amount of the fee at the prime or
base rate of Bank of America NT&SA from the date such payment was due under this
Agreement.
Section 6.9 Notification of Certain Matters. Upon obtaining
-------------------------------
knowledge of any of the following, the Company will give prompt notice to Parent
and Sub, and Parent (or Sub, as the case may be) will give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be reasonably likely to cause (i) any
representation or warranty contained in this Agreement that is qualified as to
materiality to be untrue or incorrect or any representation or warranty that is
not so qualified to be untrue or incorrect in any material respect or (ii) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in any material respect, (b) any failure of the Company,
Parent or Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder in any
material respect and (c) any change or event which has or is reasonably likely
to have a material adverse effect on the Company and its Subsidiaries or Parent
and its Subsidiaries, as the case may be; provided, however, that the delivery
-------- -------
of any notice pursuant to this Section 6.9 will not limit or otherwise affect
-----------
the remedies available hereunder to the party receiving such notice.
Section 6.10 Company Debt Agreements. The Company will (a) promptly
-----------------------
seek agreement, on terms reasonably acceptable to Sub, of the banks party to the
credit agreements of the Company or any of its Subsidiaries and the holders of
debt instruments
-38-
of the Company or any of its Subsidiaries (collectively, the "Company Debt") to
------------
amend such agreements and instruments to permit the execution by the Company of
this Agreement, and the purchase of shares of Company Common Stock pursuant to
the Offer, and the consummation of the Merger, and to provide that such actions
do not constitute an event permitting the banks or lenders which are parties
thereto to accelerate the amounts outstanding under such agreements and
instruments, and (b) in the event that such acceleration occurs prior to the
Merger, cooperate with Parent and Sub in arranging financing on terms reasonably
acceptable to Parent and Sub to finance any required repurchase or prepayment of
Company Debt.
Section 6.11 Public Announcements. The Company, Parent and Sub will
--------------------
consult with each other before issuing any press releases or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press releases or make any such public
statements prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any national
securities exchange or the NASDAQ National Market.
Section 6.12 State Takeover Laws. If any "fair price", "control
-------------------
share acquisition" or "business combination" statute or other takeover or tender
offer statute or regulation shall become applicable to the transactions
contemplated by this Agreement, Parent, Sub and the Company and their respective
Boards of Directors shall use their best efforts to grant such approvals and
take such actions as are necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 6.13 Indemnification.
---------------
(a) For six years from and after the Effective Time, Parent agrees,
to the extent permitted by law, to cause the Surviving Corporation to indemnify
and hold harmless all current officers and directors of the Company and of its
Subsidiaries to the same extent such persons are currently indemnified by the
Company pursuant to the Company's Articles of Incorporation and By-Laws for acts
or omissions occurring at or prior to the Effective Time.
(b) Parent shall cause the Surviving Corporation to maintain in effect
for not less than three years from the Effective Time the policies of the
directors and officers' liability and fiduciary insurance most recently
maintained by the Company; provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous to the beneficiaries thereof so long
as such substitution does not result in gaps or lapses in
-39-
coverage with respect to matters occurring prior to the Effective Time to the
extent available; provided further that Parent shall have no obligation under
this Section 6.13(b) to the extent that the cost of maintaining said policies
---------------
would be substantially higher than the current cost to the Company.
Section 6.14 Shareholder Litigation. Each of Parent and the Company
----------------------
shall use their best efforts to settle, and the Company shall give Parent the
opportunity to direct the defense, any shareholder litigation against the
Company and its directors relating to the transactions contemplated by this
Agreement; provided, however, that no such settlement shall be agreed to without
-------- -------
Parent's consent, which shall not be unreasonably withheld; and provided further
-------- -------
that no settlement requiring a payment by a director shall be agreed to without
such director's consent.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligations of the parties to effect the Merger are
------
subject to the satisfaction, on or prior to the Closing Date, of the following
condition:
(a) Offer. Sub shall have accepted for purchase and paid for shares
-----
of Company Common Stock pursuant to the Offer.
(b) Shareholder Approval. If required by applicable law, this
--------------------
Agreement (insofar as it relates to the Merger) and the Merger shall have been
approved and adopted by the requisite affirmative vote or consent of the holders
of the Company Common Stock in accordance with applicable law and the Company's
Articles of Incorporation.
(c) Other Approvals. All authorizations, consents, orders or
---------------
approvals of, or declarations or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, shall have occurred or shall have been obtained.
(d) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing or
impairing the consummation of the Merger in any material respect shall be in
effect on the Closing Date.
(e) No Action. No action, suit or proceeding (other than the DCIS
---------
-40-
Investigation) by any Governmental Entity before any court or governmental or
regulatory authority shall be pending or threatened on the Closing Date against
the Company, Parent or Sub or any of their Subsidiaries challenging the validity
or legality of the transactions contemplated by this Agreement.
Section 7.2 Conditions to Obligations of Parent and Sub. The
-------------------------------------------
respective obligations of Parent and Sub to effect the Merger are subject to the
satisfaction, on or prior to the Closing Date, of the following condition:
(a) Performance of Obligations; Representations and Warranties. The
----------------------------------------------------------
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, and each of the representations and warranties of the Company
contained in this Agreement that are qualified by materiality shall be true and
correct and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects, in each case, on and as of
the Effective Time as if made on and as of such date, and Parent and Sub shall
have received a certificate of the Company, signed by the President of the
Company, to that effect.
(b) Third Party Consents. All required authorizations, consents or
--------------------
approvals of any third party, the failure to obtain which would have a material
adverse effect on Parent, Sub and their Subsidiaries or the Company and its
Subsidiaries (assuming the Merger had taken place) shall have been obtained.
(c) Tax Statement. The Company shall have delivered to Parent a duly
-------------
executed and valid statement in the form prescribed by Treasury Regulation
(S) 1.897-2(h) to the effect that the Company Common Stock does not constitute a
"United States real property interest" within the meaning of Section 897(c)(1)
of the Code.
(d) Stock Option Plan. All Employee Options shall have been exercised
-----------------
or cancelled prior to the Effective Time as contemplated by Section 6.5.
-----------
(e) DCIS Investigation. After August 14, 1995, there shall have been,
------------------
in the reasonable judgment of Parent, no change or development or prospective
change or development in the DCIS Investigation or the circumstances surrounding
the DCIS Investigation that could reasonably be expected to have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. For
greater certainty, such a change or development shall be deemed to include the
following: (i) any proceeding commenced by any Governmental Entity for the
suspension or debarment of the Company or any of its Subsidiaries from doing
business with the United States (or any agency or instrumentality thereof); (ii)
any withdrawal of any governmental approval of the quality control or quality
assurance systems of the Company or any of its Subsidiaries or any removal of
-41-
the Company or any of its Subsidiaries from any governmental "qualified products
list"; (iii) any notification of the Company or any of its Subsidiaries that any
of them is a target or subject of a criminal investigation; (iv) any indictment
of the Company or any of its Subsidiaries or of any of their respective
directors or officers; (v) the discovery of substantial evidence that any member
of the senior management of the Company was involved personally in material
misconduct or that there exists defects in the products of the Company or of any
of its Subsidiaries, which defects are in excess of historical levels and, in
the aggregate (and after consideration of remedies reasonably available to the
United States in connection therewith), are reasonably likely to have a material
adverse effect on the Company; or (vi) any civil action, suit or proceeding
commenced by any Governmental Entity seeking legal or equitable relief.
Section 7.3 Conditions to Obligations of the Company. The
----------------------------------------
obligation of the Company to effect the Merger is subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
(a) Performance of Obligations; Representations and Warranties. Each
----------------------------------------------------------
of Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Effective Time, and each of the representations and warranties of Parent and
Sub contained in this Agreement that is qualified by materiality shall be true
and correct and each of the representations and warranties that is not so
qualified shall be true and correct in all material respects, in each case, on
and as of the Effective Time as if made on and as of such date, and the Company
shall have received a certificate of Sub, signed by the President of Sub, to
that effect.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after approval of any
matters presented in connection with the Merger by the shareholders of the
Company:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company if:
(i) any required approval of the Merger by the shareholders of the
Company shall not have been obtained by reason of the failure to obtain the
required vote upon a vote held at a duly held meeting of such shareholders
or at any adjournment thereof;
-42-
(ii) (x) as the result of the failure of any of the conditions set
forth in Annex I hereto, (A) Sub shall have failed to commence the Offer
within 30 days following the date hereof or (B) the Offer shall have
terminated or expired in accordance with its terms without Sub having
purchased any shares of Company Common Stock pursuant to the Offer or (y)
Sub shall not have purchased any shares of Company Common Stock pursuant to
the Offer within 90 days following the date hereof; provided, however, that
-------- -------
the passage of the period referred to in clause (y) shall be tolled for any
part thereof during which any party shall be subject to a nonfinal order,
decree or ruling or action restraining, enjoining or otherwise prohibiting
the purchase of shares of Company Common Stock pursuant to the Offer or the
consummation of the Merger; and provided further that the right to
-------- -------
terminate this Agreement pursuant to this Section 8.1(b)(ii) shall not be
------------------
available to (i) the Company in connection with the failure of the
condition set forth in paragraph (f) of Annex I or (ii) any party whose
failure to fulfill any of its obligations under this Agreement results in
the failure of any such condition;
(iii) the Merger shall not have been consummated on or before the
date nine months following the date hereof, unless the failure to
consummate the Merger is the result of a material breach of this Agreement
by the party seeking to terminate this Agreement; provided, however, that
-------- -------
the passage of such period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order, decree or ruling or
action restraining, enjoining or otherwise prohibiting the Merger or the
calling or holding of a meeting of the shareholders of the Company called
to approve, inter alia, the Merger; or
----- ----
(iv) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the purchase of shares of Company
Common Stock pursuant to the Offer or the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
(c) by the Company if (i) to the extent permitted by Section 6.7(b),
--------------
the Board of Directors of the Company approves or recommends a superior
proposal and (ii) the Company has paid to Parent an amount in cash equal to the
sum of the Termination Fee plus all Expenses as provided by Section 6.8(b); or
--------------
(d) by Parent if Parent or Sub shall have received notice under (x)
the Exon-Florio Amendment that the Committee on Foreign Investment in the United
States ("CFIUS") has determined to investigate the Merger, any related
-----
transaction or Parent or Sub or (y) the HSR Act that the Federal Trade
Commission or the Antitrust Division of the Department of Justice has requested
additional information concerning the Offer, the
-43-
Merger, any related transaction or Parent or Sub, extending the applicable
waiting period under the HSR Act.
Section 8.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either the Company or Parent as provided in Section 8.1, this
-----------
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 4.16, Section 5.7, the penultimate sentence of Section
------------ ----------- -------
6.3, Section 6.8, this Section 8.2 and Article IX, and except to the extent that
--- ----------- ----------- ----------
such termination results from the material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations and Warranties. None of
---------------------------------------------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement will survive the Effective Time.
Section 9.2 Amendment. This Agreement may be amended by the
---------
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company, but, after any
such approval, no amendment will be made which by law requires further approval
by such shareholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.3 Extension; Waiver. At any time prior to the Effective
-----------------
Time, the parties hereto, by action taken or authorized by the respective Boards
of Directors, may to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver will be valid only if set
forth in a written instrument signed on behalf of such party.
Section 9.4 Notices. All notices and other communications
-------
hereunder will be in writing and will be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as is specified by like notice):
-44-
(a) if to Sub to:
ACI Acquisition Corporation
In care of Johnson Matthey public limited company
460 East Swedesford Road
Wayne, Pennsylvania 19087-1880
Attention: D. McL. Miller
Vice President & General Counsel
Telecopy No.: (610) 971-3022
with copies to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: James G. Archer
Telecopy No.: (212) 906-2021
(b) if to Parent to:
Johnson Matthey public limited company
460 East Swedesford Road
Wayne, Pennsylvania 19087-1880
Attention: D. McL. Miller
Vice President & General Counsel
Telecopy No.: (610) 971-3022
with copies to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: James G. Archer
Telecopy No.: (212) 906-2021
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(c) if to the Company, to:
Advance Circuits, Inc.
5929 Baker Road (Suite 470)
Minnetonka, Minnesota 55345
Attention: Chief Executive Officer
Telecopy No.: (612) 988-8727
with copies to:
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Timothy M. Heaney
Telecopy No.: (612) 347-7077
Section 9.5 Interpretation. When a reference is made in this Agreement
--------------
to a Section, such reference will be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement they will be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, will be deemed
to refer to August 14, 1995. As used in this Agreement, any reference to any
event, change or effect being "material" or having a "material adverse effect"
on or with respect to an entity means such event, change or effect which is or
is reasonably likely to be materially adverse to the business, properties,
results of operations or financial condition of such entity and its Subsidiaries
taken as a whole. As used in this Agreement, any reference to the "knowledge" of
the Company shall refer to the actual knowledge of any of the executive officers
or directors of the Company (or, with respect to each plant or facility of the
Company and its Subsidiaries, the person primarily responsible for environmental
matters at such plant or facility), after reasonable investigation.
Section 9.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which will be considered one and the same agreement and
will become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.7 Entire Agreement; No Third Party Beneficiaries. This
----------------------------------------------
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Agreement (including the documents and the instruments referred to herein) and
the Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof, and (b) other
than Section 6.13, are not intended to confer upon any person other than the
------------
parties hereto and thereto any rights or remedies hereunder or thereunder.
Section 9.8 Governing Law. This Agreement will be governed and
-------------
construed in accordance with the laws of the State of Minnesota applicable to
contracts made, executed, delivered and performed wholly within the State of
Minnesota, without regard to any applicable conflicts of law.
Section 9.9 Specific Performance. The parties hereto agree that if
--------------------
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties will be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
Section 9.10 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 9.11 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement will not affect the validity or enforceability of
any other provisions hereof, which will remain in full force and effect.
Section 9.12 Parent Guarantee and No Solicitation Agreement.
----------------------------------------------
(a) Parent hereby irrevocably and unconditionally guarantees to the
Company the prompt and complete performance by Sub of each and every obligation
Sub may have under this Agreement. At the Company's discretion, Parent may be
joined in any action, suit or proceeding brought by the Company against Sub in
connection with this Agreement and Parent shall conclusively be bound by the
judgment in any action, suit or proceeding brought by the Company against Sub as
if Parent were a party thereto.
(b) For a period of one year from the date hereof, neither Parent nor
any of its affiliates shall, without the Company's consent, solicit the
employment of any person who, as of the date hereof, is a director, officer,
employee, independent sales agent or independent representative of the Company
or of any of its Subsidiaries;
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provided that the provisions of this Section 9.12(b) shall terminate upon the
Closing of the Offer.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
JOHNSON MATTHEY PUBLIC LIMITED
COMPANY
By:/s/ David W. Morgan
--------------------------------
Name: David W. Morgan
Title: Finance Director, Materials Technology
Division
ACI ACQUISITION CORPORATION
By:/s/ D. McL. Miller
--------------------------------
Name: D. McL. Miller
Title: Secretary
ADVANCE CIRCUITS, INC.
By:/s/ Robert W. Heller
--------------------------------
Name: Robert W. Heller
Title: President and Chief Executive Officer
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Annex I
Conditions to the Offer
-----------------------
Notwithstanding any other term or provision of the Offer or this
Agreement, Sub will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to a bidder's obligation to pay for or return tendered
securities promptly after the termination or withdrawal of such bidder's offer),
to pay for any Company Common Stock tendered pursuant to the Offer and not
theretofore accepted for payment or paid for unless (1) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of shares of Company Common Stock that would represent at least 51% of
the Fully Diluted Shares (the "Minimum Tender Condition"), (2) CFIUS shall have
------------------------
determined not to investigate the transactions contemplated by the Offer and the
Merger under the Exon-Florio Amendment, (3) any waiting period under the HSR Act
applicable to the purchase of Company Common Stock pursuant to the Offer shall
have expired or been terminated and (4) the Offer shall be effective under
Sections 80B.01 to 80B.13 of the Minnesota Statutes and no Governmental Entity
shall have claimed or ruled the provisions of Sections 302.671 and 302.673 of
the MBCA to be applicable to this Agreement, the Offer or the Merger. "Fully
Diluted Shares" means all outstanding securities entitled generally to vote in
the election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities. Furthermore,
notwithstanding any other term or provision of the Offer or this Agreement, Sub
will not be required to accept for payment or, subject as aforesaid, to pay for
any Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer if, at any time on or after the date of this
Agreement, and before the acceptance of such Company Common Stock for payment or
the payment therefor, any of the following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding or application by any Governmental Entity, or by any other
person, domestic or foreign, before any court or Governmental Entity
(which, if brought by such other person, has a reasonable likelihood of
success), (i)(A) challenging or seeking to, or which is reasonably likely
to, make illegal, delay or otherwise directly or indirectly restrain or
prohibit, or seeking to, or which is reasonably likely to, impose voting,
procedural, price or other requirements, in addition to those required by
Federal securities laws and the MBCA each as in effect on the date of the
Offer, in connection with the making of the Offer, the acceptance for
-1-
payment of, or payment for, some of or all the shares of Company Common
Stock by Parent, Sub or any other affiliate of Parent or the consummation
by Parent, Sub or any other affiliate of Parent of the Merger, (B) seeking
to obtain material damages or otherwise directly or indirectly relating to
the transactions contemplated by the Offer or the Merger, (ii) seeking to
prohibit the ownership or operation by Parent, Sub or any other affiliate
of Parent of all or any portion of the business or assets of the Company
and its Subsidiaries or of Parent, Sub or any other affiliate of Parent or
to compel Parent, Sub or any other affiliate of Parent to dispose of or
hold separate all or any portion of the business or assets of the Company
or any of its Subsidiaries or of Parent, Sub or any other affiliate of
Parent or seeking to impose any limitation on the ability of Parent, Sub or
any other affiliate of Parent to conduct such business or own such assets,
(iii) seeking to impose or confirm limitations on the ability of Parent,
Sub or any other affiliate of Parent effectively to exercise full rights of
ownership of the Company Common Stock, including, without limitation, the
right to vote any Company Common Stock acquired or owned by Parent, Sub or
any other affiliate of Parent on all matters properly presented to the
Company's shareholders, (iv) seeking to require divestiture by Parent, Sub
or any other affiliate of Parent of any Company Common Stock, or (v)
otherwise directly or indirectly relating to the Offer or the Offer
Documents or which otherwise, in the sole good faith judgment of Sub, is
reasonably likely to materially adversely affect the Company or any of its
Subsidiaries or Parent, Sub or any other affiliate of Parent or the value
of the Company Common Stock;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, (i) Parent, Sub or any other affiliate of Parent
or the Company or any of its Subsidiaries or (ii) the Offer or the Merger
by any government, legislative body or court, domestic, foreign or
supranational, or Governmental Entity, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (vi) of paragraph (a) above;
(c) there shall have occurred any change, condition, event or
development that is reasonably likely to result in a material adverse
effect on the Company;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or on The International Stock Exchange of the United Kingdom
and the Republic of Ireland Limited, (ii) any extraordinary or material
adverse change in the financial
-2-
markets or major stock exchange indices in the United States or abroad,
(iii) any change in the general political, market, economic or financial
conditions in the United States or United Kingdom that is reasonably likely
to have a material adverse effect upon the Company or Parent or the trading
in, or value of, the Company Common Stock, (iv) any material change in
United States or the United Kingdom currency exchange rates or a suspension
of, or limitation on, the markets therefor, (v) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or in the United Kingdom, (vi) any limitation (whether or not
mandatory) by any government, domestic, foreign or supranational, or
Governmental Entity on, or other event that is reasonably likely to affect
the extension of credit by banks or other lending institutions in the
United States or the United Kingdom, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or the United Kingdom or (viii) in
the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
(e) any material approval, permit, authorization, favorable review or
consent of any Governmental Entity required in connection with the Offer
shall not have been obtained on terms satisfactory to Sub;
(f) (i) it shall have been publicly disclosed or Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25% of the outstanding shares of Company Common Stock has
been acquired by another person, entity or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) or (ii) (x) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Sub its approval or recommendation of the
Offer, the Merger or this Agreement, or approved or recommended any
takeover proposal, (y) the Company shall have entered into any agreement
with respect to any takeover proposal or (z) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing;
(g) there shall have been, in the reasonable judgment of Parent, any
change or development or prospective change or development in the DCIS
Investigation or the circumstances surrounding the DCIS Investigation that
could reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. For greater certainty, such
a change or development shall be deemed to include the following: (i) any
proceeding commenced by any Governmental Entity for the suspension or
debarment of the Company or any of its Subsidiaries from doing business
with the United States (or
-3-
any agency or instrumentality thereof); (ii) any withdrawal of any
governmental approval of the quality control or quality assurance systems
of the Company or any of its Subsidiaries or any removal of the Company or
any of its Subsidiaries from any governmental "qualified products list";
(iii) any notification of the Company or any of its Subsidiaries that any
of them is a target or subject of a criminal investigation; (iv) any
indictment of the Company or any of its Subsidiaries or of any of their
respective directors or officers; (v) the discovery of substantial evidence
that any member of the senior management of the Company was involved
personally in material misconduct or that there exist defects in the
products of the Company or of any of its Subsidiaries, which defects are in
excess of historical levels and, in the aggregate (and after consideration
of remedies reasonably available to the United States in connection
therewith), are reasonably likely to have a material adverse effect on the
Company; or (vi) any civil action, suit or proceeding commenced by any
Governmental Entity seeking legal or equitable relief;
(h) any of the representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality shall not be true
and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time;
(i) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement; or
(j) this Agreement shall have been terminated in accordance with its
terms or the Offer shall have been amended or terminated with the consent
of the Company;
which, in the good faith judgment of Sub, in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent
and may be asserted by Sub regardless of the circumstances giving rise to any
such condition or may be waived by Sub in whole or in part at any time and from
time to time in its sole discretion. The failure by Sub at any time to exercise
any of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances and
each such right will be deemed an ongoing right that may be
-4-
asserted at any time and from time to time. Any good faith determination by Sub
concerning the events described in this Annex I will be final and binding upon
all parties.
-5-