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Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
dated as of
March 23, 1998
among
IVEX PACKAGING CORPORATION,
PACKAGE ACQUISITION, INC.
and
ULTRA PAC, INC.
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS.......................................................... 1
ARTICLE 2
THE OFFER AND MERGER................................................ 6
2.1 The Offer......................................... 6
2.2 Company Actions................................... 8
2.3 Directors......................................... 10
2.4 The Merger........................................ 11
2.5 Effective Time; Filing of Articles of Merger...... 11
2.6 Articles of Incorporation......................... 12
2.7 By-Laws........................................... 12
2.8 Directors and Officers............................ 12
2.9 Additional Actions................................ 12
2.10 Time and Place of Closing......................... 12
2.11 Conversion of Company Common Stock................ 13
2.12 Exchange of Shares................................ 13
2.13 No Further Rights or Transfers; Cancellation of
Treasury Shares................................. 16
2.14 Dissenters' Rights................................ 16
2.15 Special Meeting of Shareholders................... 17
2.16 Merger Without Meeting of Shareholders............ 18
2.17 Commercially Reasonable Efforts................... 18
2.18 Existing Options.................................. 18
ARTICLE 3
OTHER AGREEMENTS.................................................... 19
3.1 Access............................................ 19
3.2 Disclosure Letter................................. 19
3.3 Deliveries of Information......................... 20
3.4 Acquisition Proposals............................. 20
3.5 Public Announcements.............................. 21
3.6 Confidentiality Agreement......................... 21
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3.7 Regulatory and Other Approvals.................... 22
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................... 22
4.1 Organization; Business............................ 22
4.2 Capitalization.................................... 23
4.3 Authorization; Enforceability..................... 24
4.4 No Violation or Conflict.......................... 24
4.5 Title to Assets................................... 25
4.6 Litigation........................................ 25
4.7 Books and Records; Company Financial Statements... 26
4.8 Absence of Certain Changes........................ 26
4.9 Buildings and Equipment........................... 28
4.10 Performance of Contracts.......................... 28
4.11 Employee Benefit Plans............................ 28
4.12 Brokers........................................... 30
4.13 Taxes............................................. 30
4.14 Real Estate....................................... 31
4.15 Governmental Approvals............................ 31
4.16 No Pending Acquisitions........................... 31
4.17 Labor Matters..................................... 32
4.18 Existing Permits and Violations of Law............ 32
4.19 Intangible Assets................................. 33
4.20 Customers and Suppliers........................... 33
4.21 Environmental Protection.......................... 33
4.22 Vote Required..................................... 36
4.23 Returns........................................... 36
4.24 SEC Reports....................................... 36
4.25 Content of Proxy Statement........................ 37
4.26 Opinion of Financial Advisor...................... 37
4.27 Certain Agreements................................ 37
4.28 Rights Agreement.................................. 38
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND ACQUISITION................................................ 38
5.1 Due Incorporation and Authority................... 38
5.2 Consents and Approvals............................ 39
5.3 No Broker's, Finder's or Similar Fees............. 39
5.4 No Violation or Conflict.......................... 39
5.5 Litigation........................................ 40
5.6 Sufficient Funds.................................. 40
ARTICLE 6
COVENANTS........................................................... 40
6.1 Conduct of Business by the Company................ 40
6.2 Shareholder Option Agreements..................... 42
ARTICLE 7
CONDITIONS.......................................................... 43
7.1 Conditions to Each Party's Obligation to Effect
the Merger...................................... 43
7.2 Condition to Parent's and Acquisition's Obligation
to Effect the Merger............................ 43
ARTICLE 8
NO SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION......................................... 44
8.1 No Survival of Representations and Warranties..... 44
8.2 Directors' and Officers' Indemnification.......... 44
ARTICLE 9
TERMINATION......................................................... 45
9.1 Termination....................................... 45
9.2 Rights on Termination............................. 47
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9.3 Termination Fee Payable to the Parent............. 47
9.4 Other Remedies.................................... 47
ARTICLE 10
MISCELLANEOUS....................................................... 48
10.1 Expenses.......................................... 48
10.2 Entire Agreement; Amendment....................... 48
10.3 Governing Law..................................... 48
10.4 Assignment........................................ 48
10.5 Notices........................................... 48
10.6 Counterparts; Headings............................ 50
10.7 Interpretation.................................... 50
10.8 Specific Performance.............................. 50
10.9 No Reliance....................................... 50
10.10 Exhibits and Schedules............................ 50
10.11 No Third Party Beneficiary........................ 51
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EXHIBITS
Exhibit 1 Articles of Merger
Exhibit 2 Form of Shareholder Option Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 23, 1998 (the
"Agreement"), among IVEX PACKAGING CORPORATION, a Delaware corporation (the
"Parent"), PACKAGE ACQUISITION, INC., a Minnesota corporation and a wholly owned
indirect subsidiary of Parent ("Acquisition"), and ULTRA PAC, INC., a Minnesota
corporation (the "Company"). The Company and Acquisition are hereinafter
sometimes collectively referred to as the "Constituent Corporations."
WHEREAS, the Boards of Directors of the Parent, Acquisition
and the Company have approved and deem it advisable and in the best interests of
their respective shareholders to consummate the acquisition of the Company by
the Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent's and Acqui
sition's willingness to enter into this Agreement, concurrently with the
execution hereof, certain beneficial and record shareholders of the Company are
entering into tender and option agreements (each, a "Tender and Option
Agreement") obligating such shareholder to tender his shares of Company Common
Stock pursuant to the Offer (each as hereinafter defined) and granting an option
to Parent with respect to their respective shares of Company Common Stock,
substantially in the form attached hereto as Exhibit 2; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the Parent, Acquisition and the Company agree as follows:
ARTICLE 1
DEFINITIONS
When used in this Agreement, and in addition to the other
terms defined herein, the following terms shall have the meanings specified:
1.1 Accounts. "Accounts" shall mean all accounts receivable,
notes and associated rights owned by the Company.
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1.2 Affiliate. "Affiliate" shall mean, in relation to any
party hereto, any entity directly or indirectly controlling, controlled by or
under common control with such party.
1.3 Agreement. "Agreement" shall mean this Agreement and Plan
of Merger, together with the Exhibits attached hereto and the Disclosure Letter,
as the same may be amended from time to time in accordance with the terms
hereof.
1.4 Articles of Merger. "Articles of Merger" shall mean the
Articles of Merger in substantially the form of Exhibit 1 attached to this
Agreement.
1.5 Buildings. "Buildings" shall mean all buildings, fixtures,
structures and improvements leased or owned by the Company.
1.6 Code. "Code" shall mean the Internal Revenue Code of 1986,
as the same may be in effect from time to time.
1.7 Company. "Company" shall mean Ultra Pac, Inc., a
Minnesota corporation.
1.8 Company Common Stock. "Company Common Stock" shall
mean shares of common stock of the Company, no par value.
1.9 Company Financial Statements. "Company Financial
Statements" shall mean the audited Consolidated Balance Sheet, Consolidated
Statement of Operations, Consolidated Statement of Cash Flows and Consolidated
Statement Shareholders Equity of Company and related notes for each of the
fiscal years ended on January 31, 1995, January 31, 1996 and January 31, 1997.
1.10 Contracts. "Contracts" shall mean all of the material
contracts, agreements, and obligations, written or oral, to which the Company is
a party or by which the Company or any of its assets are bound, including,
without limitation, any loan, bond, mortgage, indenture, lease, instrument,
franchise or license.
1.11 Control. "Control" (including the terms "controlling,"
"controlled by," and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or
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cause the direction of the management and policies of such Person, through the
ownership of voting securities or by contract.
1.12 Dissenting Shares. "Dissenting Shares" shall mean shares
of the Company Common Stock which dissent from the Merger in accordance with the
provisions of the MBCA.
1.13 Employees. "Employees" shall mean all of the employees
of the Company.
1.14 Employee Benefit Plans. "Employee Benefit Plans" shall
mean any pension plan, profit sharing plan, bonus plan, incentive compensation
plan, stock purchase plan, stock ownership plan, stock option plan, stock
appreciation plan, employee benefit plan, employee benefit policy, retirement
plan, fringe benefit program, insurance plan, severance plan, disability plan,
health care plan, sick leave plan, death benefit plan, or any other plan,
program or policy to provide retirement income, fringe benefits or other
benefits to former or current employees of the Company (including, without
limitation, any employee pension benefit plan, employee welfare plan or
multi-employer plan as each term is defined in ERISA).
1.15 Equipment. "Equipment" shall mean all machinery,
equipment, boilers, furniture, fixtures, motor vehicles, furnishings, parts,
tools, office equipment, computers and other items of tangible personal property
owned or used by the Company.
1.16 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be in effect from time to time.
1.17 Existing Corporate Jurisdictions. "Existing Corporate
Jurisdictions" shall mean those states, provinces and foreign countries in which
the Company is qualified to do business as a foreign corporation.
1.18 Existing Insurance Policies. "Existing Insurance
Policies" shall mean all of the insurance policies currently in effect and owned
by the Company.
1.19 Existing Liens. "Existing Liens" shall mean those Liens
affecting any of the assets or properties of the Company.
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1.20 Existing Options. "Existing Options" shall mean any of
the following relating to any capital stock or other equity interest of the
Company and as described in the Disclosure Letter (as defined in Section 3.2):
(a) options or warrants (whether vested or not) to purchase or other rights
(including registration rights), agreements, arrangements or commitments of any
character to which the Company is a party relating to the issued or unissued
capital stock or other equity or phantom equity interests of the Company to
grant, issue or sell any shares of the capital stock or other equity or phantom
equity interests of the Company by sale, lease, license or otherwise; (b) rights
to subscribe for or purchase any shares of the capital stock or other equity or
phantom equity interests of the Company; or (c) Contracts with respect to any
right to purchase, put or call.
1.21 Existing Permits. "Existing Permits" shall mean those
permits, licenses, approvals, qualifications, authorizations, and registrations
required by Law which the Company has or holds.
1.22 Existing Plans. "Existing Plans" shall mean all
material Employee Benefit Plans of the Company.
1.23 Indebtedness. "Indebtedness" shall mean all liabilities
or obligations of the Company, whether primary or secondary or absolute or
contingent, in excess of $50,000 as to any single item: (a) for borrowed money;
or (b) evidenced by notes, bonds, debentures or similar instruments; or (c)
secured by Liens on any assets of the Company.
1.24 Intangible Assets. "Intangible Assets" shall mean (a) any
invention, United States and foreign patents, pending patent applications, trade
names, trade dress, logos, corporate names, trademarks, service marks, trademark
registrations, service ▇▇▇▇ registrations, pending trademark applications,
pending service ▇▇▇▇ applications, registered copyrights, and pending copyright
applications, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (b)
proprietary software; and (c) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals).
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1.25 Investment. "Investment" by the Company shall mean (a)
any transfer or delivery of cash, stock or other property or value by the
Company in exchange for equity, debt, preferred stock, partnership interest,
participation or any other security of another Person; (b) any loan or capital
contribution to or in any other Person; (c) any guaranty of any obligation to
pay money to, or perform an obligation, of any other Person; and (d) any
investments in any property or assets other than properties and assets acquired
and used in the ordinary course of the business of the Company.
1.26 Law. "Law" shall mean any foreign, federal, state or
local governmental law, rule, regulation or requirement, including any rules,
regulations and orders promulgated thereunder and any orders, decrees, consents
or judgments of any governmental regulatory agencies and courts having the force
of law, other than any Environmental Laws.
1.27 Lien. "Lien" shall mean, with respect to any asset (real,
personal or mixed): (a) any mortgage, pledge, lien, easement, lease, title
defect or imperfection or any other form of security interest, whether imposed
by Law or by Contract; and (b) the interest of a vendor or lessor under any
conditional sale agreement, financing lease or other title retention agreement
relating to such asset.
1.28 Material Adverse Effect. "Material Adverse Effect" shall
mean a material adverse effect on the business, condition (financial or
otherwise), results of operations, assets or liabilities of the Company taken as
a whole.
1.29 MBCA. "MBCA" shall mean the Minnesota Business
Corporation Act.
1.30 Merger. "Merger" shall mean the merger of Acquisition
with and into the Company pursuant to this Agreement.
1.31 Optionholders. "Optionholders" shall mean all Persons
holding the Existing Options.
1.32 Permitted Liens. "Permitted Liens" shall mean those of
the Existing Liens that do not materially detract from the value of the property
or assets of the Company taken as a whole subject thereto and do not materially
impair the business or operations of the Company taken as a whole.
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1.33 Person. "Person" shall mean a natural person,
corporation, limited liability company, association, joint stock company, trust,
partnership, governmental entity, agency or branch or department thereof, or any
other legal entity.
1.34 Real Estate. "Real Estate" shall mean the parcels of
real property owned or leased by the Company.
1.35 Rights. "Rights" shall mean those Preferred Share
Purchase Rights issued pursuant to the Rights Agreement dated February 27, 1998.
1.36 Shareholders. "Shareholders" shall mean all Persons
owning any shares of Company Common Stock.
1.37 Subsidiary. "Subsidiary" shall mean any corporation, at
least a majority of the outstanding capital stock of which (or any class or
classes, however designated, having ordinary voting power for the election of at
least a majority of the board of directors of such corporation) shall at the
time be owned by the relevant Person directly or through one or more
corporations which are themselves Subsidiaries.
ARTICLE 2
THE OFFER AND MERGER
2.1 The Offer.
(a) As promptly as practicable (but in no event
later than five business days after the public announcement of the execution
hereof), Acquisition shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares of Company Common Stock (including
the Rights) at a price of $15.50 per share of Company Common Stock, net to the
seller in cash (such price, or any such higher price per share as may be paid in
the Offer, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of shares of Company Common Stock which represents at least a
majority of the Company Common Stock outstanding on a fully diluted basis (the
"Minimum Condition") and to the other conditions set forth in
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Annex A hereto, and shall consummate the Offer in accordance with its terms
("fully diluted basis" means issued and outstanding Company Common Stock and
Company Common Stock subject to issuance under warrants and outstanding employee
stock options). The obligations of Acquisition to accept for payment and to pay
for any Company Common Stock validly tendered on or prior to the expiration of
the Offer and not withdrawn shall be subject only to the Minimum Condition and
the other conditions set forth in Annex A hereto. The Offer shall be made by
means of an offer to purchase (the "Offer to Purchase") containing the terms set
forth in this Agreement, the Minimum Condition and the other conditions set
forth in Annex A hereto. Acquisition shall not amend or waive the Minimum
Condition and shall not decrease the Offer Price or decrease the number of
shares of Company Common Stock sought, or amend any other condition of the Offer
in any manner adverse to the holders of the Company Common Stock without the
prior written consent of the Company; provided, however, that if on the initial
scheduled expiration date of the Offer which shall be 20 business days after the
date of the Offer is commenced, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act (as defined below) to have
expired or been terminated, Acquisition shall extend the expiration date from
time to time until two business days after the expiration of the waiting period
under the HSR Act. Acquisition shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Company Common Stock tendered as soon as it is legally permitted to do
so under applicable law; provided, however, that if, immediately prior to the
initial expiration date of the Offer (as it may be extended), the Company Common
Stock tendered and not withdrawn pursuant to the Offer equals less than 90% of
the outstanding Company Common Stock, Acquisition may extend the Offer one time
for a period not to exceed twenty business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
(b) As soon as practicable on the date the Offer is
commenced, Parent and Acquisition shall file with the United States Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
with respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1
will include, as exhibits, the Offer to Purchase and a form of letter of
transmittal and summary advertisement (collectively, together with any
amendments and supplements thereto, the "Offer Documents"). The Offer Documents
will comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders, shall not contain any
untrue statement of a material fact or
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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 Parent
or Acquisition with respect to information furnished by the Company to Parent or
Acquisition, in writing, expressly for inclusion in the Offer Documents. The
information supplied by the Company to Parent or Acquisition, in writing,
expressly for inclusion in the Offer Documents and by Parent or Acquisition to
the Company, in writing, expressly for inclusion in the Schedule 14D-9 (as
hereinafter defined) will not 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.
(c) Each of Parent and Acquisition will take all
steps necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of the Company Common Stock, in each case as and to the
extent required by applicable federal securities laws. Each of Parent and
Acquisition, on the one hand, and the Company, on the other hand, will promptly
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material respect
and Parent and Acquisition will take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of the Company Common Stock, in each case as and to the extent required
by applicable federal securities laws. The Company and its counsel shall be
given the opportunity to review the Schedule 14D-1 before it is filed with the
SEC. In addition, Parent and Acquisition will provide the Company and its
counsel in writing with any comments, whether written or oral, Parent,
Acquisition or their counsel may receive from time to time from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments.
2.2 Company Actions.
(a) The Company hereby approves of and consents to
the Offer and represents that its Board of Directors, at a meeting duly called
and held, acting upon the unanimous recommendation of the special committee of
all independent directors (the "Special Committee") of the Board of Directors
established pursuant to Section 302A.673(d) of the MBCA on March 22, 1998 has
(i) unanimously determined that each of the Agreement, the Offer and the Merger
are fair to and in the best interests of the shareholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the
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Merger (collectively, the "Transactions"), and such approval constitutes
approval of the Offer, this Agreement and the Transactions, including the
Merger, for purposes of Section 302A.673 of the MBCA, such that Section 302A.671
of the MBCA will not apply to the Transactions contemplated by this Agreement,
and (iii) resolved to recommend that the shareholders of the Company accept the
Offer, tender their Company Common Stock thereunder to Acquisition and approve
and adopt this Agreement and the Merger; provided, that such recommendation may
be withdrawn, modified or amended if, in the good faith opinion of the Board of
Directors, based upon the receipt of advice from outside independent legal
counsel, failure to withdraw, modify or amend such recommendation would result
in the Board of Directors violating its fiduciary duties to the Company's
shareholders under applicable Law.
(b) Concurrently with the commencement of the Offer,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the proviso of Section 2.2(a), contain the recommendation referred to in clause
(iii) of Section 2.2(a) hereof. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not 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 furnished by Parent or
Acquisition for inclusion in the Schedule 14D-9. The Company further agrees to
take all steps necessary to cause the Schedule 14D-9 to be filed with the SEC
and to be disseminated to holders of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws. Each of the
Company, on the one hand, and Parent and Acquisition, on the other hand, agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false and misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to holders of Company Common Stock, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide Parent, Acquisition and
their counsel with any comments, whether written or oral, that the Company or
its counsel may receive
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from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments or other communications.
(c) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to Acquisition mailing labels,
security position listings and any available listing, or computer file
containing the names and addresses of all recordholders of Company Common Stock
as of a recent date, and shall furnish Acquisition with such additional
information (including, but not limited to, updated lists of holders of Company
Common Stock and their addresses, mailing labels and lists of security
positions) and assistance as the Acquisition or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of the
Company Common Stock. Except for such steps as are necessary to disseminate the
Offer Documents, Parent and Acquisition shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will, upon
request of the Company, deliver or cause to be delivered to the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
2.3 Directors.
(a) Promptly upon the purchase of and payment for
any Company Common Stock by Parent or any of its subsidiaries which represents
at least a majority of the outstanding Company Common Stock (on a fully diluted
basis, as defined in Section 2.1(a)), Parent shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as is equal to the next whole number, on the Board of
Directors of the Company as is equal to the product of the total number of
directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the number of
shares of Company Common Stock so accepted for payment bears to the total number
of shares of then outstanding. In furtherance thereof, the Company shall, upon
request of Acquisition, use its best reasonable efforts promptly either to
increase the size of its Board of Directors or secure the resignation of such
number of its incumbent directors, or both, as is necessary to enable Parents'
designees to be so elected to the Company's Board, and shall take all actions
available to the Company to cause Parent's designees to be so elected. At such
time, the Company shall, if requested by Parent, also cause persons designated
by Parent to constitute at least the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of each committee of
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the Company's Board of Directors. Notwithstanding the foregoing, the Company
shall have at least one independent director until the Effective Time.
(b) The Company shall promptly take all actions
required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under Section 2.3(a),
including mailing to shareholders the information required by such Section 14(f)
and Rule 14f-1 as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or Acquisition will supply the Company and
be solely responsible for any information with respect to either of them and
their nominees, offices, directors and affiliates required by such Section 14(f)
and Rule 14f-1. The provisions of this Section 2.3 are in addition to and shall
not limit any rights which the Acquisition, Parent or any of their affiliates
may have as a holder or beneficial owner of Company Common Stock as a matter of
law with respect to the election of directors or otherwise.
2.4 The Merger. Upon the terms and subject to the conditions
of this Agreement and in accordance with the MBCA, at the Effective Time (as
defined herein), Acquisition shall be merged with and into the Company, and the
Company shall (i) be the surviving corporation in the Merger (in such capacity,
the "Surviving Corporation"), (ii) succeed to and assume all the rights and
obligations of Acquisition in accordance with the MBCA, and (iii) continue its
corporate existence under the laws of the State of Minnesota. The Merger shall
have the effect set forth in Section 302A.641 of the MBCA. At the Effective
Time, the separate existence of Acquisition shall cease. The Merger shall be
pursuant to the provisions of, and shall be with the effect provided in, the
MBCA. In accordance with the MBCA, all of the rights, privileges, powers and
franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all of the debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
2.5 Effective Time; Filing of Articles of Merger. The Merger
shall be effected by the filing at the time of the Closing (as defined herein)
of a properly executed Articles of Merger or other appropriate documents (in the
form attached as Exhibit 1 hereto) with the Secretary of State of the State of
Minnesota in accordance with the provisions of the MBCA. The Merger shall become
effective at the time of such filing of the Articles of Merger with the
Secretary of State of the State of Minnesota or at such later date or time as
Acquisition and the Company shall agree and as specified in the Articles of
Merger (the "Effective Time"). At the Closing, the
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Parent and the Constituent Corporations shall cause a properly executed Articles
of Merger to be filed with the Secretary of State of the State of Minnesota as
provided in the MBCA, and shall take any and all other lawful actions and do any
and all other lawful things to cause the Merger to become effective.
2.6 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Acquisition as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with its terms and the MBCA.
2.7 By-Laws. The By-laws of Acquisition, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended in accordance with its terms and the MBCA.
2.8 Directors and Officers. The directors and officers of
Acquisition immediately prior to the Effective Time shall be the initial
directors and officers of the Surviving Corporation. Each director and officer
of the Surviving Corporation shall hold office in accordance with the Articles
of Incorporation and By-laws of the Surviving Corporation until his or her
successor is duly appointed and qualified.
2.9 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that consistent
with the terms of this Agreement any further assignments or assurances in law or
any other acts are necessary or desirable (i) to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, title to and possession of
any property or right of either Constituent Corporation acquired or to be
acquired by reason of, or as a result of, the Merger, or (ii) otherwise to carry
out the purposes of this Agreement, then, subject to the terms and conditions of
this Agreement, each such Constituent Corporation and its officers and directors
shall be deemed to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement; and the
officers and directors of the Surviving Corporation are fully authorized in the
name of either Constituent Corporation to take any and all such action.
2.10 Time and Place of Closing. The closing of the Merger (the
"Closing") shall take place (a) at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ (Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as
soon
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as practicable and no later than the second business day following satisfaction
or waiver of all of the conditions set forth in Article 7, or (b) at such other
place, at such other time or on such other date as the Parent and the Company
may mutually agree (the date of the Closing is hereinafter sometimes referred to
as the "Closing Date").
2.11 Conversion of Company Common Stock.
(a) Each share of the Company Common Stock issued
and outstanding immediately prior to the Effective Time (except for Dissenting
Shares), shall, by virtue of the Merger and without any action on the part of
the Company, the Parent, Acquisition or the holder thereof, be converted into
the right to receive the Offer Price in cash, payable to the holder thereof,
without any interest thereon, as soon as reasonably practicable after the
surrender of the certificate(s) representing such Company Common Stock as
provided in Section 2.12.
(b) Each share of common stock, par value $0.01 per
share, of Acquisition issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into one share of common stock of the Surviving
Corporation. Each certificate evidencing ownership of any such shares shall,
following the Merger, evidence ownership of the same number of shares of common
stock of the Surviving Corporation.
(c) Payments in respect of the Existing Options are
provided for in Section 2.18 below.
2.12 Exchange of Shares.
(a) Prior to the Effective Time, the Company shall
appoint a Person that is reasonably acceptable to the Parent to act as the
exchange agent hereunder (the "Exchange Agent") to receive in trust the funds
which holders of Company Common Stock shall become entitled upon surrender of
the certificates for exchange in accordance with this Section 2.12.
As soon as reasonably practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a share certificate
which immediately prior to the Effective Time represented outstanding Company
Common Stock (other than Parent, the Company, any Subsidiary of Parent and any
holder of Dissenting Shares): (1) a letter of transmittal (a "Letter of
Transmittal") which shall
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(x) specify that delivery shall be effected, and risk of loss and title to each
such certificate shall pass, only upon delivery of such certificates to the
Exchange Agent, (y) contain a representation in a form reasonably satisfactory
to the Parent as to the good and marketable title to the Company Common Stock
held by such holder free and clear of any Lien, and (z) contain such other
provisions as the Company and the Parent may reasonably specify; and (2)
instructions to effect the surrender of such certificate(s) in exchange for a
check in an amount equal to the Offer Price multiplied by the number of shares
of Company Common Stock represented by such certificate(s).
At the Closing, immediately prior to the Effective Time,
Parent shall cause Acquisition to deposit with the Exchange Agent, on behalf of
the Shareholders, an aggregate amount in cash equal to the Offer Price times the
number of shares of Company Common Stock outstanding as of the Closing (such
aggregate amount being hereinafter referred to as the "Exchange Fund"), and
then, upon surrender to the Exchange Agent of certificate(s) for cancellation
together with a duly executed Letter of Transmittal and such other documents as
the Exchange Agent may reasonably require, make payment of the Offer Price
provided for in Section 2.11(a) to the holder of such certificate(s) out of the
Exchange Fund. The Exchange Agent shall invest portions of the Exchange 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 ▇▇▇▇▇'▇ 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 $250 million. The Exchange Fund shall not be used for any
other purpose, except as provided in this Agreement.
Thereafter (except as otherwise provided for in Section
2.12(c)), each holder of certificate(s) representing Company Common Stock may
surrender such certificate(s) to the Exchange Agent and (subject to applicable
abandoned property, escheat and similar laws) receive from the Exchange Agent in
exchange therefor an amount equal to the product of (x) the Offer Price and (y)
the number of shares of Company Common Stock represented by the certificate(s)
so surrendered, without interest, but such holder shall have no rights
whatsoever against the Surviving Corporation.
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Upon the surrender of any such certificate(s) to the Exchange
Agent, the Exchange Agent shall promptly surrender such certificate(s) to the
Surviving Corporation for cancellation.
(b) If the consideration payable for any Company
Common Stock is to be delivered to a person other than the person in whose name
the certificate(s) representing such Company Common Stock is registered, it
shall be a condition of such delivery that the certificate(s) so surrendered
shall be properly endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name of the record holder appears on such
certificate, and shall otherwise be in proper form for transfer, and that the
person requesting such delivery shall pay to the Exchange Agent or the Surviving
Corporation, as the case may be, any transfer or other taxes required by law as
a result of such delivery to a person other than the record holder of the
certificate(s) surrendered or shall establish to the Exchange Agent's and the
Surviving Corporation's reasonable satisfaction that such tax has been paid or
is not payable.
(c) Any portion of the Exchange Fund delivered upon
the Closing Date to the Exchange Agent pursuant to this Agreement that remains
unclaimed for one (1) year after the Closing Date shall be delivered by the
Exchange Agent to the Surviving Corporation, upon demand, and any Shareholders
who have not theretofore complied with Section 2.12(a) shall thereafter look
only to the Surviving Corporation for delivery of the Offer Price, subject in
all events to all applicable escheat and other similar laws.
(d) Until surrender as contemplated by this Section
2.12 of this Agreement, certificate(s) representing Company Common Stock shall
be deemed at all times after the Effective Time to represent only the right to
receive upon surrender the consideration to be paid therefor as specified in
this Agreement.
(e) No interest shall accrue or be payable with
respect to any amounts which any Shareholder or Optionholder shall be entitled
to receive pursuant to this Agreement. The Exchange Agent shall be authorized to
pay the Offer Price attributable to any certificate(s) representing Company
Common Stock which has been lost or destroyed upon receipt of evidence of
ownership of the Company Common Stock represented thereby and of appropriate
indemnification and/or bond in each case reasonably satisfactory to the Company
or the Surviving Corporation, as the case may be (but no bond shall be required
in cases of 25 shares or less).
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(f) Neither the Exchange Agent nor any party to this
Agreement shall be liable to any Shareholder or Optionholder for any Company
Common Stock, any Existing Options, the Offer Price or cash delivered to a
public official pursuant to any abandoned property, escheat or similar law.
(g) The Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any Shareholder or Optionholder such amounts as the Company reasonably
determines are required to be deducted and withheld with respect to the making
of such payment under the Code, or any provision of state, local or foreign tax
Law. To the extent that amounts are so withheld by the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Shareholder or Optionholder in respect of which such deduction
and withholding was made by the Exchange Agent.
2.13 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the certificate(s) representing the Company
Common Stock in exchange for the right to receive the Offer Price with respect
to each share of Company Common Stock or the perfection of appraisal rights with
respect to the Dissenting Shares, at and after the Effective Time, the holder of
shares of Company Common Stock shall cease to have any rights as a shareholder
of the Company, and no transfer of shares of Company Common Stock shall
thereafter be made on the stock transfer books of the Surviving Corporation.
Each share of Company Common Stock held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Merger, be canceled and
retired and cease to exist without any conversion thereof.
2.14 Dissenters' Rights. Shares of Company Common Stock which
immediately prior to the Effective Time are held by Shareholders who have
properly exercised and perfected appraisal rights under Section 302A.473 of the
MBCA (the "Dissenting Shares") shall, if required by the MBCA, but only to the
extent required thereby, not be converted into the right to receive the Offer
Price, but the holders of Dissenting Shares shall be entitled to receive such
consideration as shall be determined pursuant to Section 302A.473 of the MBCA;
provided, however, that if any such holder shall have failed to perfect or shall
withdraw or lose his right to appraisal and payment under the MBCA, such
holder's shares of Company Common Stock shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Offer Price,
without any interest thereon, and such shares shall no longer be Dissenting
Shares. The Company shall give the Parent, Acquisition and
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the Exchange Agent prompt notice of any claim by a Shareholder for payment of
fair value for Dissenting Shares as provided in Section 302A.473 of the MBCA.
Prior to the Effective Time, the Company will not, except with the prior written
consent of Parent and Acquisition, make any payments with respect to, or settle
or offer to settle, any such demands.
2.15 Special Meeting of Shareholders.
(a) If required by applicable law in order to
consummate the Merger, the Company agrees to take all steps necessary to cause a
special meeting of the Shareholders (the "Special Meeting") to be duly called,
noticed, convened and held as soon as practicable following the acceptance for
payment and purchase of shares of Company Common Stock by the Parent or its
affiliates pursuant to the Offer for the purpose of voting to approve this
Agreement and the Merger. In connection with the Special Meeting, the Board of
Directors of the Company, acting upon the unanimous recommendation of the
Special Committee, shall unanimously recommend to the Shareholders that the
Shareholders vote in favor of the approval of this Agreement and the Merger.
(b) In connection with the Special Meeting, the
Company agrees to promptly prepare and cause to be filed with the SEC and mailed
to the Shareholders a notice of the Special Meeting and a definitive proxy
statement (the "Proxy Statement") and shall cause such notice to be mailed no
later than the time required by applicable law and the certificate of
incorporation and bylaws of the Company. The Parent and Acquisition agree to
provide the Company with any information for inclusion in the Proxy Statement
(or any amendments or supplements thereto) which is required by applicable law
or which is reasonably requested by the Company. The Company shall consult with
the Parent and Acquisition with respect to the Proxy Statement (and any
amendments or supplements thereto) and shall afford the Parent and Acquisition
reasonable opportunity to comment thereon prior to its finalization. If, at any
time prior to the Special Meeting, any event shall occur relating to Company or
the transactions contemplated by this Agreement which should be set forth in an
amendment or a supplement to the Proxy Statement, the Company will promptly
notify in writing the Parent and Acquisition of such event. In such case, the
Company, with the cooperation of the Parent and Acquisition, will promptly
prepare and mail such amendment or supplement and the Company shall consult with
the Parent and Acquisition with respect to such amendment or supplement and
shall afford the Parent and Acquisition reasonable opportunity to comment
thereon prior to such mailing. The Company agrees to notify the Parent
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and Acquisition at least three (3) days prior to the mailing of the Proxy
Statement (or any amendment or supplement thereto) to the Shareholders.
(c) The Parent agrees that if any event with respect
to the Parent, Acquisition or their officers or directors shall occur which is
required to be described in an amendment or supplement to the Proxy Statement or
any other filing with the Securities and Exchange Commission (the "SEC") that
may be required in connection with this Agreement, the Merger and all matters
related thereto, the Parent will promptly inform the Company thereof and the
Company will cause such event to be so described and such amendment or
supplement to be promptly filed with the SEC and, as required by law,
disseminated to the Shareholders; provided, however, that prior to such filing
or mailing the Company shall consult with the Parent and Acquisition with
respect to such amendment, supplement or other filing and shall afford the
Parent and Acquisition a reasonable opportunity to comment thereon.
2.16 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.15 hereof, in the event that Parent, Acquisition and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the class
of capital stock of the Company Common Stock, pursuant to the Offer or
otherwise, the parties hereto shall, at the request of Parent and subject to
Article 7 hereof, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after such acquisition, without a
meeting of shareholders of the Company, in accordance with Section 302A. 621 of
the MBCA.
2.17 Commercially Reasonable Efforts. So long as this
Agreement has not been terminated, the Company, the Parent and Acquisition
shall: (i) promptly make their respective filings and thereafter make any other
submissions required under all applicable laws with respect to this Agreement,
the Offer, the Merger and the other transactions contemplated hereby and (ii)
use their respective commercially reasonable efforts to promptly take, or cause
to be taken, all other actions and do, or cause to be done, all other things
necessary proper or appropriate to consummate and make effective the Merger as
provided for in this Agreement.
2.18 Existing Options.
(a) As of the Effective Time, each Existing Option
which is outstanding at the Effective Time will be exchanged for, and the
holders of each such Existing Option will be entitled to receive at the Closing
(or thereafter, if necessary)
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upon surrender of such Existing Option for cancellation, cash equal to (i) the
product of (a) the difference between the Offer Price and the exercise price of
each such Existing Option, times (b) the number of shares of Company Common
Stock covered by such Existing Option. It is presently anticipated by the
Company that the payment to be made at the Closing to the Optionholders in
respect of the Existing Options will be approximately $6.6 million (before any
income taxes and other required withholdings).
(b) The Company shall take all actions necessary to
ensure that from and after the Effective Time the Surviving Corporation will not
be bound by any options, warrants, rights or agreements which would entitle any
person, other than Parent or Acquisition, to beneficially own shares of
Surviving Corporation or Parent or receive any payments (other than as set forth
in (a)) in respect of such options, warrants, rights or agreements. The Company
shall take all actions necessary to terminate each plan with respect to Existing
Options as of the Effective Time.
ARTICLE 3
OTHER AGREEMENTS
3.1 Access. Subject to the provisions of the Confidentiality
Agreement referred to in Section 3.6 below, and so long as this Agreement has
not been terminated as herein provided, upon reasonable request, the Company
shall grant to the Parent, Acquisition and their agents, accountants, attorneys
and other advisers reasonable access during normal business hours to all of the
properties, facilities, books, records, financial statements and other documents
and materials relating to its financial condition, assets, liabilities and
business, including, without limitation, permitting the Parent (at its expense
and subject to the prior approval of the Company, which approval shall not be
unreasonably withheld) to: (a) conduct appraisals of the Equipment, Buildings,
Real Estate and other properties of the Company; and (b) conduct an
environmental and occupational safety inspection of the properties of the
Company. In addition, the Company shall confer and consult with representatives
of the Parent, as the Parent may reasonably request, to report on operational
matters, financial matters and the general status of ongoing business operations
of the Company.
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3.2 Disclosure Letter. The Company has delivered to the Parent
a disclosure letter (the "Disclosure Letter") which shall be signed by the
President and the Secretary of the Company stating that the Disclosure Letter
was delivered pursuant to this Agreement and is the Disclosure Letter referred
to in this Agreement. The Disclosure Letter is deemed to constitute an integral
part of this Agreement and to modify, as specified, the representations,
warranties, covenants or agreements of the Company contained in this Agreement.
3.3 Deliveries of Information. From time to time after the
date of this Agreement and prior to the Closing Date (unless this Agreement is
terminated), the Company shall furnish promptly to the Parent:
(a) a copy of each report, schedule and other
document filed by the Company or received by the Company after the date of this
Agreement pursuant to the requirements of federal or state securities Laws
promptly after such documents are available; and
(b) the monthly financial statements of the Company
(as prepared by the Company in accordance with its normal accounting procedures)
promptly after such financial statements are available.
3.4 Acquisition Proposals.
(a) Prior to the Effective Time, the Company agrees
that neither it, any of its Affiliates, nor any of the respective directors,
officers, employees, agents or representatives of the foregoing, will, directly
or indirectly, (i) solicit, initiate, facilitate or encourage (including by way
of furnishing or disclosing non-public information) any inquiries or the making
of any proposal with respect to any merger, consolidation or other business
combination involving the Company or the acquisition of all or any significant
part of the assets or capital stock of the Company (an "Acquisition
Transaction") or (ii) negotiate, explore or otherwise engage in discussions with
any Person (other than the Parent and its representatives) with respect to any
Acquisition Transaction, or which may reasonably be expected to lead to a
proposal for an Acquisition Transaction or enter into any agreement, arrangement
or understanding with respect to any such Acquisition Transaction or which would
require it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement; provided, however, that the Company
may, in response to an unsolicited written proposal from a third party regarding
a Superior Proposal (as hereinafter defined), furnish information to and
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engage in discussions and negotiations with such third party, but only if the
Board of Directors of the Company determines in good faith, after consultation
with its financial advisors and based upon the advice of outside independent
counsel, that failing to take such action would result in a breach of the
fiduciary duties of such Board of Directors under applicable Law. It is
understood and agreed, without limitation of the Company's obligations, that any
violation of this Section 3.4 by any director, officer, Affiliate, investment
banker, financial advisor, attorney or other advisor or representative of the
Company, 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 Section 3.4 by the
Company.
(b) The Company agrees that, as of the date hereof,
it, its Affiliates, and the respective directors, officers, employees, agents
and representatives of the foregoing, shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any Person
(other than the Parent and its representatives) conducted heretofore with
respect to any Acquisition Transaction. The Company agrees to promptly advise
the Parent in writing of the existence of (x) any inquiries or proposals (or
desire to make a proposal) received by (or indicated to) after the date hereof,
any such information requested from, or any negotiations or discussions sought
to be initiated or continued with, the Company, its Affiliates, or any of the
respective directors, officers, employees, agents or representatives of the
foregoing, in each case from a Person (other than the Parent and its
representatives) with respect to an Acquisition Transaction, and (y) the terms
thereof, including the identity of such third party and the terms of any
financing arrangement or commitment in connection with such Acquisition
Transaction, and to update on an ongoing basis or upon the Parent's reasonable
request, the status thereof. As used herein, "Superior Proposal" means a bona
fide, written and unsolicited proposal or offer made by any Person (or group)
(other than the Parent or any of its Subsidiaries) with respect to an
Acquisition Transaction on terms which, as determined by the Board of Directors
of the Company in good faith and in the exercise of reasonable judgment (based
on the advice of independent financial advisors and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ or
outside independent Minnesota counsel), would reasonably be likely to be more
favorable to the Company and its Shareholders than the transactions contemplated
hereby.
3.5 Public Announcements. Any public announcement made by or
on behalf of either the Parent or the Company prior to the termination of this
Agreement pursuant to Article 9 hereof concerning this Agreement, the
transactions described herein or any other aspect of the dealings heretofore had
or hereafter to be
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had between the Company and the Parent and their respective Affiliates must
first be approved by the other party (any such approval not to be unreasonably
withheld), subject to either party's obligations under applicable Law (but such
party shall use its best efforts to consult with the other party as to all such
public announcements).
3.6 Confidentiality Agreement. The Company and the Parent
agree that the Confidentiality Agreement entered into between the Company and
the Parent, dated March 2, 1998, remains in effect, but shall at the Effective
Time be deemed to have terminated without further action by the parties.
3.7 Regulatory and Other Approvals.
(a) Subject to the terms and conditions herein
provided, the Company will (i) take all reasonable steps necessary or desirable,
and proceed diligently and in good faith and use all reasonable efforts to
obtain all approvals required by any Contract to consummate the transactions
contemplated hereby, (ii) take all reasonable steps necessary or desirable, and
proceed diligently and in good faith and use all reasonable efforts to obtain
all approvals, authorizations, and clearances of governmental and regulatory
authorities required of the Company to permit the Company to consummate the
transactions contemplated hereby, (iii) provide such other information and
communications to such governmental and regulatory authorities as such
authorities may reasonably request, and (iv) cooperate with Parent in obtaining
all approvals, authorizations, and clearances of governmental or regulatory
authorities and others required of Parent to consummate the transactions
contemplated hereby.
(b) The Company and Parent will (i) take all
reasonable actions necessary to file as soon as practicable, notifications under
the HSR Act, (ii) comply at the earliest practicable date with any request for
additional information received from the Federal Trade Commission or Antitrust
Division of the Department of Justice pursuant to the HSR Act, and (iii) request
early termination of the applicable waiting period.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to the Parent and
Acquisition on the date of this Agreement that:
4.1 Organization; Business.
(a) Organization. The Company is a corporation duly
and validly organized and existing under the Laws of the State of Minnesota, is
qualified to do business as a foreign corporation, is in good standing in the
Existing Corporate Jurisdictions. The Existing Corporate Jurisdictions (as
applicable) constitute all jurisdictions where the ownership or leasing of
property or the conduct of its business requires qualification as a foreign
corporation by the Company and where the failure to so qualify would have a
Material Adverse Effect. The Company is not in violation of any provision of its
Articles of Incorporation, By-laws or equivalent organizational documents.
(b) Powers. The Company has all requisite corporate
power and authority to carry on its business as it is now conducted and to own,
lease and operate its assets and properties unless the absence of same would not
have a Material Adverse Effect.
4.2 Capitalization.
(a) Capital Stock. The entire authorized capital
stock of the Company consists of 10,000,000 shares of common stock, no par
value, of which 3,893,791 shares are issued and outstanding as of the date
hereof. No shares are held by the Company as treasury shares and no shares of
the Company Common Stock have been acquired by the Company that are subject to
outstanding pledges to secure the future payment of the purchase price therefor.
(b) Issuance; Ownership. All of the outstanding
capital stock of the Company is duly authorized, validly issued, fully paid and
nonassessable and was not issued in violation of any preemptive rights. Other
than as disclosed in the Company SEC Documents, 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. The
Company has no Subsidiaries. Except for the Existing Options, there are no
options, warrants, conversion rights or other rights to subscribe for or
purchase, or other contracts with respect to, any capital stock of the Company
and there are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Company. Except as
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set forth in this Agreement, to the knowledge of the Company, there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company.
(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 are issued or outstanding, and (ii) there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any rights.
4.3 Authorization; Enforceability.
(a) The execution, delivery and performance of this
Agreement are within the corporate power and authority of the Company and,
subject to the provisions hereof, have been duly authorized by the Board of
Directors of the Company. Except for the approval of the Shareholders as
required by Law, the Charter Documents and described in Section 4.22 hereof, no
other corporate proceeding or action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement is,
and the other documents and instruments required by this Agreement to be
executed and delivered by the Company will be, when executed and delivered by
the Company, the valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws generally affecting the rights of
creditors and subject to general equity principles.
(b) Prior to execution and delivery of this
Agreement, the Board of Directors of the Company and the Special Committee have
each (at a meeting duly called and held) unanimously (i) approved the
Transactions contemplated hereby, and such approval is sufficient to render the
provisions of Section 302.671 of the MBCA inapplicable to the Merger, (ii)
determined that the Transactions contemplated hereby are fair to and in the
best interests of the holders of the Company Common Stock and (iii) resolved to
recommend that the shareholders of the Company accept the Offer, tender their
Company Common Stock thereunder to Acquisition and approve and adopt this
Agreement.
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(c) No other state takeover statute or similar
statute or regulation in any jurisdiction in which the Company does business
applies or purports to apply to the Merger or to this Agreement, or any of the
transactions contemplated hereby or thereby.
4.4 No Violation or Conflict. Subject to the receipt of the
approvals and consents, if any, described in Section 7.1(a) of this Agreement,
the execution and delivery of this Agreement and all documents and instruments
required by this Agreement to be executed and delivered by the Company do not,
and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, (i) except as disclosed in the Disclosure
Letter, result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any Contract or to the loss of a material benefit under any
Contract, or result in the creation of any Lien upon any of the properties or
assets of the Company, (ii) conflict or result in any violation of any provision
of the Certificate of Incorporation or By-Laws or other equivalent
organizational document, in each case as amended, of the Company, (iii) violate
any Existing Permits or any Law applicable to the Company or any of their
respective properties or assets, other than, in the case of clauses (i) and
(iii), any such violations, defaults, rights, losses or Liens that, individually
or in the aggregate, would not have a Material Adverse Effect or would not
affect adversely the ability of the Company to consummate the Merger and the
other transactions contemplated by this Agreement.
4.5 Title to Assets. The Company owns fee simple or valid
leasehold (as the case may be) title to the Real Estate and has valid title to
its other tangible assets and properties which it owns, free and clear of any
and all Liens, except for the Permitted Liens.
4.6 Litigation. (a) There are no actions, suits, claims,
worker's compensation claims, litigation or other governmental or judicial
proceedings or investigations, arbitrations and product warranty claims against
the Company or any of its properties, assets or business, or, to the knowledge
of the Company and if and to the extent the Company is, through indemnity or
otherwise, liable therefor, any of the Company's current or former directors or
officers or any other Person whom the Company has agreed to indemnify, as such,
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; (b) as of the date hereof, there are no such actions,
suits or proceedings pending or, to the knowledge of the Company, threatened,
against the Company by any Person which question the
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legality or validity of the transactions contemplated by this Agreement; and (c)
there are no outstanding orders, judgments, injunctions, awards or decrees of
any Governmental Entity against the Company, any of its or its properties,
assets or business, or, to the knowledge of the Company, any of the Company's
current or former directors or officers or any other person whom the Company has
agreed to indemnify, as such, that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
4.7 Books and Records; Company Financial Statements.
(a) Audited Company Financial Statements. The
Company Financial Statements comply in all material respects with the applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis by the Company during the
periods involved (except as may be indicated therein or in the notes thereto
(which are subject to completion)). The Company Financial Statements fairly
present the financial position of the Company as of the date set forth on each
of such Company Financial Statements and the results of operations of the
Company for the periods indicated on each of the Company Financial Statements.
The draft financial statements for the year ended January 31, 1998, which have
been provided to Parent, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis by the Company
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present the financial position of the Company as of January
31, 1998.
(b) Unaudited Company Financial Statements. Those
financial statements which are unaudited and contained in the Company SEC
Documents fairly present in all material respects the financial position of the
Company as of the date set forth on each of such financial statements and the
results of operations and cash flows of the Company for the periods indicated on
each of such financial statements in accordance with generally accepted
accounting principles consistently applied by the Company except that such
financial statements do not reflect normal year-end adjustments and do not
contain footnotes.
(c) Accounting Records. The accounting books and
records of the Company: (i) are in all material respects correct and complete;
(ii) are current in a manner consistent with past practice; and (iii) to the
knowledge of the Company, have recorded therein all the properties, assets and
liabilities of the Company (except
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where the failure to so record would not violate generally accepted accounting
principles as consistently applied by the Company).
4.8 Absence of Certain Changes.
(a) To the knowledge of the Company, since January
31, 1998 there has not been any:
(i) Material Adverse Effect;
(ii) transactions by the Company outside the
ordinary course of business of the Company, except for the transactions
contemplated by this Agreement;
(iii) declaration or payment of any dividend
or any distribution in respect of the capital stock of the Company or
any direct or indirect redemption, purchase or other acquisition of any
such stock by the Company; or
(iv) payments or distributions, other than
normal salaries, to the Shareholders as such or, except for
transactions in the ordinary course of business upon commercially
reasonable terms of the Company, any Affiliate of the Company.
(b) Except as disclosed in the Disclosure Letter,
without limiting the generality of the foregoing, since January 31, 1998:
(i) the Company has not sold, leased,
transferred, or assigned any of its material assets, tangible or
intangible, other than for a fair consideration in the ordinary course
of business and other than the disposition of obsolete or unusable
property;
(ii) the Company has not made any capital
expenditure (or series of related capital expenditures) either
involving more than $50,000 (unless such expenditure is identified in
the current business plan of the Company as disclosed to Parent) or
outside the ordinary course of business;
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(iii) the Company has not experienced any material
damage, destruction, or loss (whether or not covered by insurance) from
fire or other casualty to its tangible property;
(iv) the Company has not materially increased
the base salary of any officer or employee of the Company, or adopted,
amended, modified, or terminated any bonus, profit-sharing,
incentive, severance, or other similar plan for the benefit of any of
its directors, officers or employees; and
(v) the Company has not entered into a binding
commitment to any of the foregoing.
4.9 Buildings and Equipment. The Company has not received any
written notice from any governmental authority that any of the Buildings or
Equipment fail to comply with any applicable building and zoning or other
similar Laws in effect at the date hereof which notice is still outstanding; and
the continuation of the Company Business as currently conducted will not result
in the enforcement or the threat of enforcement of any such Laws, except where
such enforcement or threat of enforcement would not result in a Material Adverse
Effect.
4.10 Performance of Contracts. Each of the Contracts is in
full force and effect and constitutes the legal and binding obligation of the
Company and, to the knowledge of the Company, constitutes the legal and binding
obligation of the other parties thereto. Except as disclosed in the Disclosure
Letter, there are no existing breaches or defaults by the Company or, to the
knowledge of the Company, any other party to a Contract under any Contract the
effect of which would constitute a Material Adverse Effect and, to the knowledge
of the Company, no event has occurred which, with the passage of time or the
giving of notice or both, could reasonably be expected to constitute such a
breach or default.
To the knowledge of the Company, the Existing Insurance
Policies are in full force and effect and the Company has not received notice of
any cancellation or threat of cancellation of such insurance.
4.11 Employee Benefit Plans.
(a) Existing Plans. Except as previously delivered
to Parent, neither the Company nor any Company ERISA Affiliate (defined below)
maintains
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or contributes to, nor is it bound by, nor has it maintained or contributed to
at any time during the six (6) years prior to the date hereof any Employee
Benefit Plan. All of the Existing Plans that are subject to ERISA or the Code
are in compliance in all material respects with ERISA and the Code. All of the
Existing Plans which are intended to meet the requirements of Section 401(a) of
the Code have been determined by the Internal Revenue Service to be "qualified"
within the meaning of the Code or have been filed with the Internal Revenue
Service with a request for a determination letter on or prior to the end of the
applicable remedial amendment period and, to the knowledge of the Company, there
are no facts which would adversely affect the tax qualified status of any of the
Existing Plans. "Company ERISA Affiliate" shall mean any Person which together
with the Company would be deemed a "single employer" within the meaning of
Section 4001 of ERISA.
(b) ERISA; Code. There is no accumulated funding
deficiency, within the meaning of Section 302 of ERISA or Section 412 of the
Code, in connection with the Existing Plans. No reportable event, as defined in
ERISA (other than reportable events for which the 30-day notice requirement has
been waived), has occurred in connection with the Existing Plans since January
1, 1995. The Existing Plans have not, nor has any trustee or administrator with
respect to the Existing Plans, engaged in any non-exempt prohibited transaction
as defined in ERISA or the Code. Neither the Company nor a Company ERISA
Affiliate is contributing to, and nor has it any material liability with respect
to, any multi-employer plan, as defined in ERISA.
(c) Compliance. Neither the Company nor any Company
ERISA Affiliate has incurred, directly or indirectly, any material liability to
or on account of an Existing Plan pursuant to Title IV of ERISA; no proceedings
have been instituted to terminate any Existing Plan that is subject to Title IV
of ERISA; and, to the knowledge of the Company, no condition exists that
presents a material risk to the Company or any Company ERISA Affiliate of
incurring a liability to or on account of a Existing Plan pursuant to Title IV
of ERISA.
(d) Funding. The current value of the assets of each
of the Existing Plans that is subject to Title IV of ERISA exceeds the present
value of the accrued benefits under each such Existing Plan, based upon the
actuarial assumptions (to the extent reasonable) presently used for funding
purposes in the most recent actuarial report prepared by such Existing Plan's
actuary with respect to such Existing Plan; and all contributions or other
amounts payable by the Company as of the Effective Time with respect to each
Existing Plan in respect of current or prior
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plan years have been either paid or accrued on the balance sheet of the Company.
There are no material pending or, to the knowledge of the Company, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Existing Plans or any trusts related thereto.
(e) Other Plan Obligations. To the knowledge of the
Company, neither the Company nor any Company ERISA Affiliate, nor any Existing
Plan, nor any trust created thereunder, nor any trustee or administrator thereof
has engaged in a transaction in connection with which the Company or any Company
ERISA Affiliate, any Existing Plan, any such trust, or any trustee or
administrator thereof, or any party dealing with any Existing Plan or any such
trust could be subject to either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the
Code. No Existing Plan provides death or medical benefits (whether or not
insured), with respect to current or former employees of the Company or any
Company ERISA Affiliate beyond their retirement or other termination of service
other than (i) coverage mandated by applicable Law or (ii) death benefits under
any "employee pension plan," as that term is defined in Section 3(2) of ERISA.
4.12 Brokers. Except for ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc., the
Company has not incurred any brokers', finders' or any similar fee in connection
with the transactions contemplated by this Agreement. A true, correct and
complete copy of the engagement letter or other agreement between the Company
and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. has been made available to Acquisition.
4.13 Taxes.
(a) Tax Returns. For all years for which the
applicable statutory period of limitation has not expired, the Company has
timely and properly filed, and will through the Closing Date timely and properly
file, all material federal, state, local and foreign tax returns (including but
not limited to income, franchise, sales, payroll, employee withholding and
social security and unemployment) which were or will be required to be filed.
The Company has paid all taxes (including interest and penalties) and
withholding amounts owed by the Company except where the failure to do so would
not cause a Material Adverse Effect. No tax deficiencies have been proposed or
assessed against the Company. To the knowledge of the Company, no issue has been
raised in any prior tax audit of the Company which, by application of the same
or similar principles, could reasonably be expected upon a future tax audit of
the Company to result in a proposed deficiency for any period and
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which deficiency would have a Material Adverse Effect. The Company is not liable
for any taxes attributable to any other Person, whether by reason of being a
member of another affiliated group, being a party to a tax sharing agreement, as
a transferee or successor, or otherwise.
(b) Audits. The Company has not consented to any
extension of the statute of limitation with respect to any open federal, state
or local tax returns.
(c) Liens. There are no tax Liens upon any property
or assets of the Company except for Liens for current taxes not yet due and
payable.
(d) Deliveries. The Company has delivered to the
Parent correct and complete copies of all tax returns and reports of the Company
filed for all periods not barred by the applicable statute of limitations
through the Effective Time. No examination or audit of any tax return or report
for any period not barred by the applicable statute of limitations has occurred,
no such examination is in progress and, to the knowledge of the Company, no such
examination or audit is planned.
(e) Withholding Taxes. The Company has properly
withheld and timely paid substantially all withholding and employment taxes
which it was required to withhold and pay relating to salaries, compensation and
other amounts heretofore paid to its employees or other Persons. All Forms W-2
and 1099 required to be filed with respect thereto have been timely and properly
filed except where the failure to file would not have a Material Adverse Effect.
(f) Other Representations. The Company has not and
will not make any elections under Section 341(f) of the Code and, except as
shown in the Disclosure Letter, has and will not be subject to Section 280G of
the Code.
4.14 Real Estate. The Real Estate: (a) constitutes all
real property and improvements leased or owned by the Company; and (b) is not
subject to any leases, tenancies, encumbrances or encroachments of any kind
except for Permitted Liens.
4.15 Governmental Approvals. No permission, approval,
determination, consent or waiver by, or any declaration, filing or registration
with, any federal, state, local or foreign court, arbitral tribunal,
administrative agency or commission or other governmental or regulatory
authority or administrative agency (a "Governmental Entity") is required by the
Company in connection with the
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execution and delivery of this Agreement by the Company or the consummation by
the Company of the Merger, except for: (a) the approvals described in Section
7.1(a) of this Agreement; and (b) the filing of the Articles of Merger as
described in this Agreement.
4.16 No Pending Acquisitions. Except for this Agreement and
previously executed confidentiality agreements, the Company is not a party to or
bound by any agreement, undertaking or commitment with respect to an Acquisition
Transaction.
4.17 Labor Matters.
(a) Employment Claims. To the knowledge of the
Company, there is no present or former employee of the Company who has any
material claim against the Company (whether under Law, under any employee
agreement or otherwise) on account of or for: (i) overtime pay, other than
overtime pay for the current payroll period; (ii) wages or salaries, other than
wages or salaries for the current payroll period; or (iii) vacations, sick
leave, time off or pay in lieu of vacation or time off, other than vacation,
sick leave or time off (or pay in lieu thereof) earned in the period immediately
preceding the date of this Agreement or incurred in the ordinary course of
business and appearing as a liability on the most recent Company Financial
Statements.
(b) Labor Disputes. (i) There are no pending and
unresolved material claims by any Person against the Company arising out of any
statute, ordinance or regulation relating to unfair labor practices,
discrimination or to employees or employee practices or occupational or safety
and health standards; (ii) there is no pending, nor has the Company experienced
since January 31, 1995 any, material labor dispute, strike or organized work
stoppage; and (iii) to the knowledge of the Company, there is no threatened
material labor dispute, strike or organized work stoppage against the Company.
(c) Union Matters. (i) To the knowledge of the
Company, no union organizing activities are in process or have been proposed or
threatened involving any employees of the Company; and (ii) no petitions have
been filed or, to the knowledge of the Company, have been threatened or proposed
to be filed, for union organization or representation of employees of the
Company not presently organized.
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4.18 Existing Permits and Violations of Law. The Existing
Permits constitute all licenses, permits, approvals, exemptions, orders,
approvals, franchises, qualifications, permissions, agreements and governmental
authorizations required by Law which the Company currently has and is required
to have for the conduct of the business of the Company as currently conducted,
except where the failure to have the same would not have a Material Adverse
Effect. No action or proceeding is pending or, to the knowledge of the Company,
threatened that is reasonably likely to result in a revocation, non-renewal,
termination, suspension or other material impairment of any material Existing
Permits. The business of the Company is not being conducted in violation of any
applicable Law, except for such violations which would not have a Material
Adverse Effect. No Governmental Entity has indicated to the Company an intention
to conduct an investigation or review with respect to the Company other than, in
each case, those which would not have a Material Adverse Effect.
4.19 Intangible Assets.
(a) Claims. (i) There are no material claims,
demands or proceedings instituted, pending or, to the knowledge of the Company,
threatened by any Person contesting or challenging the right of the Company to
use any of its Intangible Assets; (ii) each trademark registration, service ▇▇▇▇
registration, copyright registration and patent which is owned by or licensed to
the Company and, with respect to those owned by the Company, has been maintained
in good standing and, with respect to those licensed to the Company, to the
Company's knowledge, has been maintained in good standing except where the
failure to so maintain would not have a Material Adverse Effect; (iii) there are
no Intangible Assets owned by a Person which the Company is using without
license to do so, except where the failure to possess such license could not
reasonably be expected to have a Material Adverse Effect; (iv) the Company owns
or possesses adequate licenses or other rights to use all Intangible Assets
necessary to conduct its business as now conducted, except where the failure to
possess such licenses could not reasonably be expected to have a Material
Adverse Effect; and (v) the consummation of the Merger and the transactions
contemplated by this Agreement will not impair the validity, enforceability,
ownership or right of the Company to use its Intangible Assets except, in each
case, where the impairment would not have a Material Adverse Effect.
4.20 Customers and Suppliers. Since January 31, 1997, there
has been no termination, cancellation or material curtailment of the business
relationship of the Company with any customer or supplier or group of affiliated
customers or
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suppliers which would result in a Material Adverse Effect nor, to the knowledge
of the Company, any notice of intent to so terminate, cancel or materially
curtail.
4.21 Environmental Protection.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" shall mean any and all
administrative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, Liens investigations, proceedings
or notices of noncompliance or violation (written or oral) by any
Person alleging liability (including, without limitation, liability for
enforcement, investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of,
based on or resulting from: (A) the presence or environmental release
of any Hazardous Materials at any parcel of real property; or (B)
circumstances forming the basis of any violation or alleged violation,
of any Environmental Law; or (C) any and all claims by any Person
seeking damages, contribution, indemnification, cost, recovery,
compensation or injunctive relief resulting from the presence or
Environmental Release of any Hazardous Materials.
(ii) "Hazardous Materials" shall mean: (A) any
petroleum or petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam
insulation, and transformers or other equipment that contain dielectric
fluid containing polychlorinated biphenyls ("PCBs") above regulated
levels and radon gas; and (B) any chemicals, materials or substances
which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import, under any Environmental
Law; and (C) any other chemical, material, substance or waste, exposure
to which is now prohibited, limited or regulated by any governmental
authority.
(iii) "Environmental Laws" shall mean any federal,
state, local or foreign statute, Law, rule, ordinance, code,
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policy, rule of common law and regulations relating to pollution or
protection of human health (excluding OSHA) or the environment
(including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without
limitation, Laws and regulations relating to Environmental Releases or
threatened Environmental Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(iv) "Environmental Release" shall mean any release,
spill, emission, leaking, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the atmosphere, soil, surface
water or groundwater.
Except for violations of Sections (b), (c), (d) and (e) which would not cause a
Material Adverse Effect:
(b) Environmental Laws. The Company: (i) is in
compliance with all applicable Environmental Laws; and (ii) has not received any
communication (written or oral), from a governmental authority or third party
that alleges that the Company or any current or former Affiliate of the Company
is not in compliance with applicable Environmental Laws.
(c) Environmental Permits. The Company has obtained
all environmental, health and safety permits and governmental authorizations
(collectively, the "Environmental Permits") required for its operations, and all
such permits are in good standing and the Company is in substantial compliance
with all terms and conditions of the Environmental Permits.
(d) Claims. There is no Environmental Claim pending
or, to the knowledge of the Company, threatened against the Company or any
current or former Affiliate of the Company (to the extent such Environmental
Claim relates to the Company) or against any Person whose liability for any
Environmental Claim the Company has retained or assumed either contractually or
by operation of Law, or against any real or personal property or operations
which the Company owns, operates, leases, manages or controls or, to the
knowledge of the Company, which the Company owned, operated, leased, managed or
controlled.
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(e) Environmental Releases. There have been no
Environmental Releases of any Hazardous Material by the Company or any current
or former Affiliate of the Company on any parcel of real property or, to the
knowledge of the Company, by any Person on, beneath or adjacent to any parcel of
real property which the Company or any current or former Affiliate of the
Company owned, leased, operated, managed or controlled.
(f) CERCLA. The Company has not received any
written notice of potential liability from any Person under or relating to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), or any similar state or local Law.
(g) Reports. The Company will make available for
inspection to Parent true, complete and correct copies and results of any
reports, studies, analyses, tests or monitoring possessed by the Company
pertaining to Hazardous Materials in, on, beneath or adjacent to any property
currently or formerly owned, operated or leased by the Company or any current or
former Affiliate of the Company, or regarding the Company's compliance with
applicable Environmental Laws.
(h) Tanks. The Real Estate does not contain any
underground storage tanks which contained or contain any Hazardous Material.
4.22 Vote Required. The affirmative vote of the holders of at
least a majority 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.
4.23 Returns. As of the date of this Agreement, to the
knowledge of the Company, there are no known claims against the Company to
return in excess of $50,000 (after giving effect to and exhausting any
applicable reserves and/or accruals therefor contained in the Company Financial
Statements) of merchandise by reason of alleged overshipments, defective
merchandise or otherwise, or of merchandise in the hands of customers under an
understanding that such merchandise would be returnable for credit. To the
knowledge of the Company, there is no reasonable basis for claims against the
Company to return in excess of $50,000 (after giving effect to and exhausting
any applicable reserves and/or accruals therefor contained in the
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Company Financial Statements) if the Company's finished good inventories were
sold to the intended customer therefor.
4.24 SEC Reports. The Company has filed with the SEC, and has
heretofore made available to the Parent true and complete copies of, all forms,
reports, schedules, statements and other documents required to be filed by it
since January 31, 1995 under the Exchange Act or the Securities Act of 1933, as
amended, and the rules and regulations thereunder (collectively, the "Securities
Act") (as such documents have been amended since the time of their filing,
collectively, the "Company SEC Documents"). As of their respective dates or, if
amended, as of the date of the last such amendment, the Company SEC Documents,
including, without limitation, any financial statements or schedules included
therein (a) did not 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 (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder at such
time of filing.
4.25 Content of Proxy Statement. The Proxy Statement, if any
(or any amendment thereof or supplement thereto), will, at the date mailed to
Company shareholders and at the time of the meeting of Company shareholders to
be held in connection with the Merger, not 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 statements made therein
based on information supplied by Parent or Acquisition for inclusion in the
Proxy Statement. The Proxy Statement will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder.
4.26 Opinion of Financial Advisor. The Company has received
the opinion of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc., its financial advisor, to the
effect that, as of March 22, 1998, the cash consideration to be received in the
Offer and the Merger, based upon and subject to the assumptions and limitations
set forth in such opinion, by the Company 's shareholders is fair to such
shareholders from a financial point of view, a copy of which opinion has been
delivered to Parent.
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4.27 Certain Agreements. Except as set forth in the Disclosure
Letter, the Company is not 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 the
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 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.
4.28 Rights Agreement. The Company has taken all action which
may be necessary under the Rights Agreement, dated February 27, 1998, between
the Company and Norwest Bank Minnesota, N.A., as agent (the "Rights Agreement"),
so that the execution of this Agreement and any amendments thereto by the
parties hereto and the execution of one or both of the Tender and Option
Agreements and the consummation of the transactions contemplated hereby and
thereby shall not cause (i) Parent and/or Acquisition or their respective
Affiliates or Associates to become an Acquiring Person (as such terms are
defined in the Rights Agreement) unless this Agreement or one or both of the
Tender and Option Agreements have been terminated in accordance with their
respective terms or (ii) a Distribution Date, a Shares Acquisition Date or a
Triggering Event (as such terms are defined in the Rights Agreement) to occur,
irrespective of the number of shares of Company Common Stock acquired pursuant
to the Offer, the Merger or other transactions contemplated by the Merger
Agreement or either of the Tender and Option Agreements.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND ACQUISITION
The Parent and Acquisition represent and warrant to the
Company as follows:
5.1 Due Incorporation and Authority. Each of the Parent and
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to own, lease and operate its assets and
business and to carry on its business as now being and as heretofore conducted.
Each of the Parent and Acquisition has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Merger. The execution, delivery and performance
by each of the Parent and Acquisition of this Agreement and, subject to the
provisions hereof, all of the documents and instruments required by this
Agreement to be executed and delivered by the Parent and/or Acquisition, and the
consummation by Acquisition of the Merger, have been duly authorized by all the
shareholders of Acquisition and the Board of Directors of the Parent and
Acquisition as required by Law and the organizational documents of each such
entity, and no other corporate proceedings on the part of the Parent or
Acquisition will be necessary to authorize the execution, delivery and
performance by each of the Parent and Acquisition of this Agreement, or the
consummation by Acquisition and Parent of the transactions contemplated hereby.
This Agreement is (and each of the documents and instruments required by this
Agreement to be executed and delivered by the Parent and/or Acquisition will be,
when executed and delivered by the Parent and/or Acquisition) the valid and
binding obligations of the Parent and Acquisition, as the case may be,
enforceable against the Parent and Acquisition, as the case may be, in
accordance with their respective terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
Laws generally affecting the rights of creditors and subject to general equity
principles.
5.2 Consents and Approvals. The execution and delivery by each
of the Parent and Acquisition of this Agreement and all documents and
instruments required by this Agreement to be executed and delivered by the
Parent and/or Acquisition, and the performance by each of the Parent and
Acquisition of its obligations hereunder and thereunder do not require the
Parent or Acquisition to
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obtain any consent, approval or action of, or make any filing with or give any
notice to, any person or any governmental or regulatory body, except (i)
compliance with applicable requirements of the HSR Act and (ii) the filing and
recordation of appropriate merger documents as required by the MBCA.
5.3 No Broker's, Finder's or Similar Fees. There are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Parent and/or Acquisition, or any action
taken by the Parent and/or Acquisition.
5.4 No Violation or Conflict. Subject to the receipt of the
approvals and consents, if any, described in Section 7.1(a) of this Agreement
and except for the Amended and Restated Credit Agreement, dated as of October 2,
1997, by and among IPC, Inc., Parent, NationsBank, N.A. and Bankers Trust, as
agents, and other parties thereto, the execution, delivery and performance by
the Parent and Acquisition of this Agreement and all documents and instruments
required by this Agreement to be executed and delivered by the Parent and/or
Acquisition do not and will not conflict with or violate any Law, the
Certificate of Incorporation or Articles of Incorporation, as the case may be,
or By-laws of the Parent or Acquisition or any material contract or agreement to
which the Parent or Acquisition is a party or by which it is bound.
5.5 Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Parent, threatened against the Parent or
Acquisition or any shareholder of the Parent, by any Person which question the
validity, legality or propriety of the transactions contemplated by this
Agreement.
5.6 Sufficient Funds. Parent has, or will have at the time of
consummation of the Offer, sufficient funds available to purchase, or to cause
Acquisition to purchase, on a fully diluted basis, all the outstanding Shares
pursuant to the Offer and the Merger and pay all fees and expenses related to
the transactions contemplated by this Agreement.
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ARTICLE 6
COVENANTS
6.1 Conduct of Business by the Company. From and after the
date of this Agreement and until the termination of this Agreement or the
Closing Date (whichever first occurs), the Company shall:
(a) carry on its business in the usual, regular and
ordinary course substantially in the same manner as heretofore carried on;
(b) not (i) make payments or distributions (other
than normal salaries) to any Affiliate of the Company except for transactions in
the ordinary course of business upon commercially reasonable terms; (ii) sell,
lease, transfer or assign any of its assets, tangible or intangible, other than
for a fair consideration in the ordinary course of business and other than the
disposition of obsolete or unusable property; (iii) enter into any Contract
(other than purchase and sales orders in the ordinary course of business in
accordance with past practice) involving either more than $50,000 or outside the
ordinary course of business without the consent of the Parent (which consent
shall not be unreasonably withheld); (iv) accelerate, terminate, modify in any
material respect, or cancel any Contract (other than purchase and sales orders
in the ordinary course of business in accordance with past practice) involving
more than $50,000 to which the Company is a party or by which any of them is
bound without the consent of the Parent (which consent shall not be unreasonably
withheld); (v) make any capital expenditure (or series of related capital
expenditures) involving either more than $50,000 (unless such expenditure is
identified in the current business plan of the Company as disclosed to Parent)
or outside the ordinary course of business; (vi) delay or postpone the payment
of accounts payable and other liabilities outside the ordinary course of
business; (vii) cancel, compromise, waive or release any right or claim (or
series of related rights and claims) not covered by the reserves or accruals
relating to such claim in the Company Financial Statements either involving more
than $50,000 or outside the ordinary course of business without the consent of
the Parent (which consent shall not be unreasonably withheld); (viii) grant any
license or sublicense of any rights under or with respect to any Intangible
Assets; or (ix) make any loan to, or enter into any other transaction with, any
of its Affiliates, directors, officers and employees outside the ordinary course
of business;
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(c) use, operate, maintain and repair all of its
assets and properties in a normal business manner consistent with its past
practices;
(d) use commercially reasonable efforts to preserve
in all material respects its business organization intact, to retain the
services of the Employees and to conduct business with suppliers, customers,
creditors and others having business relationships with the Company in the best
interests of the Company;
(e) not knowingly do any act or knowingly omit to
do any act or, to the extent within the Company's reasonable control, knowingly
permit any act or omission to act, which will cause a breach of any of the
Contracts that would have a Material Adverse Effect;
(f) use reasonable efforts to maintain all of the
Existing Insurance Policies (or policies substantially equivalent thereto) in
full force and effect;
(g) (i) except as required by any Contract or in a
manner consistent with past practice, grant any increase in the rate of pay of
any of the Employees; (ii) institute or amend any Employee Benefit Plan unless
required by Law; (iii) enter into or modify any written employment agreement
with any Person; or (iv) pay or accrue any bonus or incentive compensation to
any Person;
(h) other than in the ordinary course of business,
not create, incur or assume any Indebtedness or make any Investment;
(i) not amend the Company Charter Documents;
(j) not (i) issue any additional shares of stock of
any class (except pursuant to the Existing Options) or grant any warrants,
options or rights to subscribe for or acquire any additional shares of stock of
any class; (ii) declare or pay any dividend or make any capital, surplus or
other distributions (other than normal salaries) of any nature to the
Shareholders; or (iii) directly or indirectly redeem, purchase or otherwise
acquire, recapitalize or reclassify any of its capital stock or liquidate in
whole or in part;
(k) timely and properly file, or timely and properly
file requests for extensions to file, all federal, state, local and foreign tax
returns which
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are required to be filed, and pay or make provision for the payment of all taxes
owed by it;
(l) not knowingly do any act or omit to do any act
that would result in a breach of any representation by the Company set forth in
this Agreement; and
6.2 Shareholder Option Agreements. On or before the date
hereof, the Company will use its reasonable best efforts to obtain and deliver
to Parent a Shareholder Option Agreement, in the form attached as Exhibit 2
hereto, executed by each of ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to consummate the Merger shall
be subject to the satisfaction prior to or at the Closing as hereinafter
provided of the following express conditions precedent, each of which may be
waived in whole or in part by the Company, Parent or Acquisition, as the case
may be, to the extent permitted by law:
(a) Regulatory Approvals. Clearance from the
appropriate agencies, pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act, as amended (the "HSR Act"), shall have been obtained by the Company and the
Parent or the waiting period thereby required shall have expired or been
terminated.
(b) Approval of Shareholders. This Agreement, the
Merger and the transactions contemplated by this Agreement shall (if necessary)
have received the requisite approval and authorization of the Shareholders.
(c) Statutes, Court Orders. No statute, rule or
regulation shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the Merger; and there shall be no order or
injunction of a court of competent jurisdiction in effect precluding
consummation of the Merger.
(d) Purchase of Company Common Stock in Offer.
Parent, Acquisition or their affiliates shall have purchased Company Common
Stock
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pursuant to the Offer, except that this condition shall not apply if Parent,
Acquisition or their affiliates shall have failed to purchase Company Common
Stock pursuant to the Offer in breach of their obligations under this Agreement.
7.2 Condition to Parent's and Acquisition's Obligation to
Effect the Merger. The obligations of Parent and Acquisition to consummate the
Merger are further subject to the fulfillment of the condition that all actions
contemplated by Section 2.18(b) hereto shall have been taken, which may be
waived in whole or part by Parent or Acquisition.
ARTICLE 8
NO SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
8.1 No Survival of Representations and Warranties. None of the
representations, warranties, covenants, agreements and certifications of the
Company and/or any officer of the Company contained herein shall survive the
Effective Time.
8.2 Directors' and Officers' Indemnification.
(a) Subsequent to the Effective Time, Acquisition
shall cause the Surviving Corporation to, and the Surviving Corporation and
Parent, jointly and severally, shall, indemnify and hold harmless each present
and former director and officer of the Company (collectively, the "Indemnified
Parties") against all losses in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as director or officer occurring before the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, for a period of
six years after the Closing Date, in each case to the fullest extent permitted
under applicable Law (and shall pay any expenses in advance of the final
disposition of such action or proceeding to each Indemnified Party to the
fullest extent permitted under applicable Law, upon receipt from the Indemnified
Party to whom expenses are advanced of an undertaking to repay such advances as
required under applicable Law); provided, however, that, if any claim for
indemnification is asserted or made within such six year period, all rights to
indemnification in respect of such claim
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shall continue until the disposition of such claim. Until the Effective Time,
the Company shall keep in effect Article 7 of its certificate and Article 5 of
its bylaws, and thereafter for a period of six years the Surviving Corporation
shall keep in effect in its certificate and bylaws provisions which provide for
indemnification exculpation to the extent provided for in Article 7 and Article
5 of the certificate and bylaws, respectively.
(b) In the event the Surviving Corporation or any of
its respective successors or assigns (i) consolidates with or merges into any
other Person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any Person, then, and in each such case, provision
shall be made by the Surviving Corporation so that the successors and assigns of
the Surviving Corporation shall assume the obligations set forth in this Section
8.2.
(c) Parent and Acquisition shall cause to be
maintained in effect for not less than four years after the Effective Time the
current policies, or substantially similar policies, of directors' and officers'
liability insurance maintained by the Company with respect to matters existing
or occurring at or prior to the Effective Time; provided, however, the Parent
and Acquisition shall not be required to expend an amount greater than 150% of
the annual premium of the current policy.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing (whether before or after the approval of this Agreement by the
Shareholders), as follows:
(a) by mutual written agreement of the Parent and
the Company;
(b) by either of the Company or Parent:
(i) if (x) the Offer shall have expired without
any Company Common Stock being purchased therein or (y) Acquisition shall not
have accepted for payment all Company Common Stock tendered pursuant to the
Offer by
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September 30, 1998; provided, however, that the right to terminate this
Agreement under this Section 9.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of Parent or Acquisition, as the case may be, to
purchase the Company Common Stock pursuant to the Offer on or prior to such
date; or
(ii) if any Governmental Entity shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their reasonable
efforts to lift), which permanently restrains, enjoins or otherwise prohibits
the acceptance for payment of, or payment for, Company Common Stock pursuant to
the Offer or the Merger and such order, decree, ruling or other action shall
have become final and non- appealable.
(c) by the Company:
(i) if Parent, Acquisition or any of their
affiliates shall have failed to commence the Offer on or prior to five business
days following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to this
Section 9.1(c)(i) if the Company is at such time in breach of its obligations
under this Agreement;
(ii) in connection with entering into a
definitive agreement in connection with an Acquisition Transaction, provided it
has complied with all provisions of Section 3.4, including the notice provisions
therein, and that it makes simultaneous payment of the $2,500,000 payment
referred to in Section 9.3 hereof, plus any amounts then due as a reimbursement
of expenses; or
(iii) if Parent or Acquisition shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement, which
breach cannot be or has not been cured, in all material respects, within 30 days
after the giving of written notice to Parent or Acquisition, as applicable.
(d) by Parent:
(i) if, due to an occurrence, not involving a
breach by Parent or Acquisition of their obligations hereunder, which makes it
impossible to satisfy any of the conditions set forth in Annex A hereto, Parent,
Acquisition, or any
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of their affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of the
Offer;
(ii) if prior to the purchase of Company Common
Stock pursuant to the Offer, the Company shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement which (A)
would give rise to the failure of a condition set forth in paragraph (f) or (g)
of Annex A hereto and (B) cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to the Company; or
(iii) if either Parent or Acquisition is
entitled to terminate the Offer as a result of the occurrence of any event set
forth in paragraph (e) of Annex A hereto.
9.2 Rights on Termination. In the event of termination and
abandonment of the Merger by any party pursuant to Section 9.1, written notice
thereof shall forthwith be given to the other parties and this Agreement shall
terminate and the Merger and the other transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated and the transactions contemplated hereby are not
consummated pursuant to Section 9.1 of this Agreement, this Agreement shall
become void and of no further force and effect, except for (a) the provisions of
Section 3.1 relating to the obligation of the Parent and Acquisition to keep
confidential and not to use certain information obtained from the Company and
(b) the provisions of Section 9.3 relating to the Company's obligations to make
certain payments to the Parent.
9.3 Termination Fee Payable to the Parent. Notwithstanding any
provision to the contrary contained herein, the Company shall immediately pay to
the Parent (x) the amount of $2,500,000 and (y) all reasonably documented
out-of-pocket expenses reasonably incurred by the Parent and Acquisition in
connection with this Agreement and the Merger in an amount not to exceed
$600,000 if this Agreement is terminated: (1) by the Company pursuant to Section
9.1(c)(ii), (2) by the Parent pursuant to Section 9.1(d)(iii) hereof, (3) by
Parent pursuant to Section 9.1(d)(ii) if the breach thereof is due to the
Company's intentional or bad faith acts, or (4) by either the Company or Parent
pursuant to Section 9.1(b)(i) and (a) prior thereto there shall have been
publicly announced another Acquisition Proposal or an event set forth in
paragraph (h) of Annex A shall have occurred and (b) an Acquisition Proposal
shall be consummated on or prior to March 31, 1999. The amount in (x) above
shall be paid concurrently with any such termination and the
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amount in (y) above shall be paid within five (5) business days after receipt by
the Company of reasonably detailed evidence of the same. Upon receipt of such
payments, the Parent shall not be entitled to and shall waive the right to seek
damages or other amounts or remedies from the Company for breach of, or
otherwise in connection with, this Agreement.
9.4 Other Remedies. Notwithstanding any provision to the
contrary contained herein, if this Agreement is terminated pursuant to Article 9
or otherwise by the Company, on the one hand, or the Parent or Acquisition, on
the other hand, and the non-terminating party is not entitled to receive the
payments described in Section 9.3 (as the case may be), then the non-terminating
party shall be entitled to pursue any available legal rights to recover actual
damages, including, without limitation, its reasonable costs and expenses
incurred in pursuing such recovery (including, without limitation, reasonable
attorneys' fees).
ARTICLE 10
MISCELLANEOUS
10.1 Expenses. If this Agreement is not consummated, the
Parent and Acquisition, on the one hand, and the Company, on the other hand,
shall bear their respective legal fees and expenses.
10.2 Entire Agreement; Amendment. This Agreement and the
documents referred to in this Agreement and required to be delivered pursuant to
this Agreement constitute the entire agreement among the parties pertaining to
the subject matter of this Agreement, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
parties, whether oral or written, and there are no warranties, representations
or other agreements between the parties in connection with the subject matter of
this Agreement, except as specifically set forth in this Agreement. No
amendment, supplement, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether or not
similar, nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
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10.3 Governing Law. This Agreement shall be governed and
construed (i) with respect to the Merger, in accordance with the laws of the
State of Minnesota and (ii) with respect to all other transactions contemplated
hereunder, in accordance with the laws of the State of Illinois, applicable to
agreements made and to be performed entirely within such States.
10.4 Assignment. Prior to the Closing, this Agreement may not
be assigned by any party hereto, except with the prior written consent of the
other parties hereto.
10.5 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date personally delivered or sent by telephonic
facsimile transmission (with a copy via regular mail) or one day after sending
via nationally recognized overnight courier or five days after deposit in the
United States mail, certified or registered mail, postage prepaid, return
receipt requested, and addressed as follows, unless and until any of such
parties notifies the others in accordance with this Section of a change of
address:
If to the Parent: Ivex Packaging Corporation
▇▇▇ ▇▇▇-▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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If to the Company: ULTRA PAC, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & Lindren
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Zavis
▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
10.6 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The
Article and Section headings in this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
10.7 Interpretation. Unless the context requires otherwise,
all words used in this Agreement in the singular number shall extend to and
include the plural, all words in
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the plural number shall extend to and include the singular, and all words in any
gender shall extend to and include all genders.
10.8 Specific Performance. The parties agree that the assets
and business of the Company as a going concern constitute unique property and,
accordingly, each party shall be entitled, at its option and in addition to any
other remedies available as herein provided, to the remedy of specific
performance to effect the Merger as provided in this Agreement.
10.9 No Reliance. Except for the parties to this Agreement:
(a) no Person is entitled to rely on any of the representations, warranties and
agreements of the parties contained in this Agreement; and (b) the parties
assume no liability to any Person because of any reliance on the
representations, warranties and agreements of the parties contained in this
Agreement.
10.10 Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
10.11 No Third Party Beneficiary. Except as provided pursuant
to Section 8.2 hereof, the terms and provisions of this Agreement are intended
solely for the benefit of the parties hereto and their respective successors and
assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person.
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IN WITNESS WHEREOF, the parties have caused this Agreement and
Plan of Merger to be duly executed as of the day and year first above written.
IVEX PACKAGING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board,
Chief Executive Officer and
President
PACKAGE ACQUISITION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
ULTRA PAC, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman, Chief Executive
Officer and President
59
ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, and in
addition to (and not in limitation of) Acquisition's right to extend and amend
the Offer at any time in its sole discretion (subject to the provisions of the
Merger Agreement), Acquisition shall 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 Acquisition's obligation to pay for
or return tendered Company Common Stock promptly after termination or withdrawal
of the Offer), and may terminate or amend the Offer as to any Company Common
Stock not then paid for, if (i) any applicable waiting period under the HSR Act
has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, or (iii) at any time on or after the date of the Merger Agreement and
before the time of acceptance for payment for any such Company Common Stock, any
of the following events shall have occurred:
(a) there shall be threatened or pending any suit,
action or proceeding by an Governmental Entity against Acquisition, Parent or
the Company (i) seeking to prohibit or impose any material limitations on
Parent's or Acquisition's ownership or operation (or that of Parent's
Subsidiaries or affiliates) of all or a material portion of their or the
Company's businesses or assets, or to compel Parent or Acquisition or Parent's
Subsidiaries and affiliates to dispose of or hold separate any material portion
of the business or assets of the Company or Parent and Parent's Subsidiaries, in
each case taken as a whole, (ii) challenging the acquisition by Parent or
Acquisition of any Company Common Stock under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Agreement, or
seeking to obtain from the Company, Parent or Acquisition any damages that are
material in relation to the Company, (iii) seeking to impose material
limitations on the ability of Acquisition, or render Acquisition unable, to
accept for payment, pay for or purchase some or all of the Company Common Stock
pursuant to the Offer and the Merger, (iv) seeking to impose material
limitations on the ability of Acquisition or Parent effectively to exercise full
rights of ownership of the Company Common Stock, including, without limitation,
the right to vote the Company Common Stock purchased by it on all matters
properly presented to the Company's shareholders, or (v) which otherwise is
reasonably likely to have a Material Adverse Effect;
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(b) there shall be any statute, rule regulation,
judgment, order or injunction enacted, entered, enforced or promulgated on
behalf of a Government Entity, to the Offer or the Merger, or any other action
shall be taken by any Governmental Entity, other than the application to the
offer or the Merger of applicable waiting periods under HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange for a period in excess of 24 hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (iii) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States; (iv) any limitation (whether or not mandatory) by
any United States governmental authority on the extension of credit generally by
banks or other financial institutions, or (v) a change in general financial,
bank or capital market conditions which materially and adversely affects the
ability of financial institutions in the United States to extend credit or
syndicate loans or (vi) in the case of any of the foregoing existing at the time
of the commencement of the Offer, a material acceleration or worsening thereof;
(d) there shall have occurred any events after the
date of the Agreement which, either individually or in the aggregate, would have
a Material Adverse Effect; provided, however, that no event, change or effect
that materially results from the Transactions or the announcement thereof shall
be deemed to cause either individually or in the aggregate, a Material Adverse
Effect;
(e) (i) the Board of Directors of the Company shall
have withdrawn or modified in a manner adverse to Parent or Acquisition its
approval or recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Acquisition Proposal or (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with Section 3.4 of the Agreement;
(f) the representations and warranties of the
Company set forth in the Agreement shall not be true and correct, in each case
(i) as of the date referred to in any representation or warranty which addresses
matters as of a particular date, or (ii) as to all other representations and
warranties, as of the date of the Agreement and as of the scheduled expiration
of the Offer, unless the inaccuracies (without giving effect to any
61
materiality or material adverse effect qualifications or materiality exceptions
contained therein) under such representations and warranties, taking all the
inaccuracies under all such representations and warranties together in their
entirety, do not, individually or in the aggregate, result in a Material Adverse
Effect;
(g) the Company shall have failed to perform any
obligation or to comply with any agreement or covenant to be performed or
complied with by it under the Agreement other than any failure which would not
have, either individually or in the aggregate, a Material Adverse Effect;
(h) any person acquires beneficial ownership (as
defined in Rule 13d-3 promulgated under the Exchange Act) of at least 15% of the
outstanding Company Common Stock (other than any person not required to file a
Schedule 13D under the rules promulgated under the Exchange Act); or
(i) the Agreement shall have been terminated in
accordance with its terms.
The foregoing conditions are for the sole benefit of Parent
and Acquisition, may be asserted by Parent or Acquisition regardless of the
circumstances giving rise to such condition (including any action or inaction by
Parent or Acquisition not in violation of the Agreement) and may be waived by
Parent or Acquisition in whole or in part at any time and from time to time in
the sole discretion of Parent or Acquisition, subject in each case to the terms
of the Merger Agreement. The failure by Parent or Acquisition at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time from time to time.