EXHIBIT 99.1
AGREEMENT OF MERGER
DATED DECEMBER 31, 0000
XXXXX
XXXXX XXXXXXX XXXXXX COOPERATIVES,
SF ACQUISITION CORP.
AND
SPARTA FOODS, INC.
TABLE OF CONTENTS
Page
SECTION 1--THE MERGER ...................................................................................... 1
1.1 Closing .................................................................................. 1
1.2 Effective Date of Merger ................................................................. 1
1.3 Effects of Merger ........................................................................ 1
SECTION 2--REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................................................... 1
2.1 Capital Stock ............................................................................ 1
2.2 Organization; Good Standing .............................................................. 2
2.3 Authority; Enforceability ................................................................ 3
2.4 No Violation ............................................................................. 3
2.5 Subsidiaries, Other Interests ............................................................ 3
2.6 Financial Statements ..................................................................... 4
2.7 Taxes .................................................................................... 5
2.8 Title to Properties ...................................................................... 7
2.9 Inventories .............................................................................. 7
2.10 Accounts Receivable ...................................................................... 7
2.11 Leases ................................................................................... 8
2.12 Facilities, Equipment .................................................................... 8
2.13 Insurance ................................................................................ 8
2.14 Employment and Benefit Matters ........................................................... 8
2.15 Contracts ................................................................................ 11
2.16 Officers and Directors ................................................................... 11
2.17 Corporate Documents ...................................................................... 11
2.18 Legal Proceedings ........................................................................ 11
2.19 Compliance with Instruments, Orders and Legal Requirements ............................... 12
2.20 Permits .................................................................................. 12
2.21 Intellectual Property .................................................................... 12
2.22 Capital Expenditures ..................................................................... 12
2.23 Environmental Matters .................................................................... 13
2.24 Illegal Payments ......................................................................... 13
2.25 SEC Information .......................................................................... 13
2.26 Board of Directors Approval; Fairness Opinion ............................................ 13
2.27 Representations .......................................................................... 14
2.28 Employment Arrangements .................................................................. 14
SECTION 3--REPRESENTATIONS AND WARRANTIES OF BUYER ......................................................... 14
3.1 Organization, Standing of Buyer and Buyer Subsidiary ..................................... 14
3.2 Authority; Enforceability ................................................................ 14
3.3 Litigation ............................................................................... 15
3.4 Financing ................................................................................ 15
SECTION 4--CONDITIONS TO OBLIGATIONS OF BUYER
AND BUYER SUBSIDIARY AT CLOSING .......................................................... 15
4.1 Representations and Warranties ........................................................... 15
4.2 Proxy Statement .......................................................................... 15
4.3 Closing Certificate ...................................................................... 16
4.4 Performance .............................................................................. 16
4.5 Stockholder Approval, Dissenting Notices ................................................. 16
4.6 Third-Party Action ....................................................................... 16
4.7 Opinion of Counsel ....................................................................... 16
4.8 Transactional Litigation ................................................................. 16
4.9 Interim Events ........................................................................... 16
4.10 Management Changes, Employees ............................................................ 16
4.11 Warrants ................................................................................. 16
4.12 Employment and Noncompetition Agreements ................................................. 17
4.13 Transaction Expenses ..................................................................... 17
4.14 Corporate and Other Proceedings .......................................................... 17
4.15 Material Adverse Change .................................................................. 17
SECTION 5--CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING .................................................. 17
5.1 Representations and Warranties ........................................................... 17
5.2 Closing Certificate ...................................................................... 17
5.3 Performance .............................................................................. 17
5.4 Stockholder Approval ..................................................................... 17
5.5 Transactional Litigation ................................................................. 17
5.6 Corporate and Other Proceedings .......................................................... 18
SECTION 6--COVENANTS OF COMPANY, SUBSIDIARY AND BUYER ...................................................... 18
6.1 Non-Disclosure ........................................................................... 18
6.2 Nonsurvival of Representations and Warranties ............................................ 18
6.3 Termination of this Agreement; Termination Fees .......................................... 18
6.4 Best Efforts, No Inconsistent Action ..................................................... 20
6.5 Access ................................................................................... 20
6.6 No Solicitation or Negotiation ........................................................... 20
6.7 Interim Financial Information ............................................................ 22
6.8 Interim Conduct of Business .............................................................. 22
6.9 Section 338 Election; Tax Status ......................................................... 23
6.10 Option to Purchase ....................................................................... 23
6.11 SEC Reports .............................................................................. 27
6.12 Stock Option Plan; Benefits .............................................................. 27
6.13 Notice of Certain Events ................................................................. 28
6.14 Takeover Statutes ........................................................................ 28
6.15 Pay-Off .................................................................................. 28
6.16 Update ................................................................................... 29
6.17 Directors and Officers ................................................................... 29
SECTION 7--MISCELLANEOUS ................................................................................... 29
7.1 No Brokers, Finders ...................................................................... 29
7.2 Expenses ................................................................................. 30
7.3 Complete Agreement; Waiver and Modification;
No Third Party Beneficiaries .................................................... 30
7.4 Notices .................................................................................. 30
7.5 Law Governing ............................................................................ 31
7.6 Headings; References; "Hereof;" Interpretation ........................................... 31
7.7 Successors and Assigns ................................................................... 32
7.8 Counterparts, Separate Signature Pages ................................................... 32
7.9 Severability ............................................................................. 32
SECTION 8--GLOSSARY ........................................................................................ 32
SIGNATURES ................................................................................................. 37
Exhibits
Exhibit A--Plan of Merger
Exhibit B--Opinion of Company's Counsel
Schedules
AGREEMENT OF MERGER
This AGREEMENT OF MERGER dated December 31, 1999 is entered into by
CENEX HARVEST STATES COOPERATIVES, a Minnesota corporation (the "Buyer"), SF
ACQUISITION CORP., a Minnesota corporation and wholly owned subsidiary of the
Buyer ("Buyer Subsidiary"), and SPARTA FOODS, INC., a Minnesota corporation (the
"Company"). Capitalized terms used herein have the meanings stated in Section 8.
The Buyer and the Company desire that the Buyer acquire the Company
through a merger of Buyer Subsidiary with and into the Company (the "Merger"),
and the Company desires to consummate the Merger, under the terms of this
Agreement.
Therefore, in consideration of the mutual agreements contained herein,
the parties hereby agree as follows:
SECTION 1
THE MERGER
1.1 Closing. The closing (the "Closing") under this Agreement shall
take place at the offices of Xxxxxx & Xxxxxxx LLP within three business days
after the satisfaction (or waiver by the party entitled to waive) of all
conditions stated in Sections 4 and 5, or at such other place or on such other
date as the parties may agree in writing.
1.2 Effective Date of Merger. The Merger shall take effect upon filing
of articles of merger with respect to the Plan of Merger in the form attached as
Exhibit A (the "Plan of Merger") with the Minnesota Secretary of State in
accordance with Minnesota law (the "Effective Time").
1.3 Effects of Merger. The effects of the Merger are set forth in the
Plan of Merger.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Capital Stock.
(a) The authorized and outstanding capital stock of the Company, as of
December 31, 1999, is as follows:
AUTHORIZED OUTSTANDING
DESIGNATION OF CLASS SHARES SHARES
-------------------------------------------------- ------------------ -------------------
Common Stock, par value $.01 per share ........... 15,000,000 10,278,916
Preferred Stock .................................. 2,500 2,500
There is no capital stock of the Company authorized or outstanding except as
stated in this Section 2.1(a). The outstanding Stock Rights of the Company, as
of December 31, 1999, are as follows:
DESIGNATION OF SHARES SUBJECT TO
STOCK RIGHT CLASS OF STOCK STOCK RIGHT
--------------------- ------------------- -------------------
Options Common 80,000
Warrants Common 1,135,580
There are no Stock Rights outstanding with respect to the Company except as set
forth in this Section 2.1(a), and the terms of such Stock Rights are as set
forth in Schedule 2.1. The Board of Directors of the Company has taken all
necessary action to assure that all unvested options immediately prior to the
Effective Time are accelerated. Except as disclosed in Schedule 2.1, the Company
is not a party to any stockholders agreement, registration rights agreement,
repurchase agreement or other Contract with respect to capital stock or Stock
Right issued or to be issued by it.
(b) All of the issued and outstanding capital stock of the Company has
been duly and validly authorized and issued and is fully paid and
non-assessable, and has not been issued in violation of any preemptive or
similar rights of any stockholder or any applicable securities law. Except as
disclosed in Schedule 2.1, no Person has any right to require the Company to
redeem, purchase or otherwise reacquire any capital stock issued by the Company
or any Stock Rights with respect to any capital stock issued by the Company.
There are no preemptive or similar rights in respect of any capital stock of the
Company except as set forth in Schedule 2.1.
(c) The Company has never declared or paid any dividend or made any
distribution in respect of any of its capital stock or any Stock Rights with
respect thereto. Except as set forth in Schedule 2.1, the Company has not
directly or indirectly redeemed, purchased or otherwise acquired any of the
capital stock issued by it or any Stock Rights with respect thereto.
2.2 Organization; Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Minnesota and
has all requisite corporate power and authority to own, lease and operate its
Properties and to conduct its business as currently conducted. Schedule 2.2 sets
forth (i) each jurisdiction in which the Company is qualified to do business as
a foreign corporation, (ii) the jurisdiction of incorporation of each Subsidiary
and (iii) each jurisdiction in which a Subsidiary is qualified to do business as
a foreign corporation. Except as set forth in Schedule 2.2, the Company and each
Subsidiary is in good standing in each jurisdiction shown in Schedule 2.2, and
neither the Company nor any Subsidiary is required to qualify to do business as
a foreign corporation in any other jurisdiction in which the failure to so
qualify would have a Material Adverse Effect. Neither the Company nor any
Subsidiary is a partner in any general or limited partnership or a member in any
limited liability company.
2.3 Authority; Enforceability. The Company has all requisite power and
authority under applicable corporate law to execute and deliver this Agreement
and to perform the transactions contemplated hereby and, subject to approval of
the Plan of Merger by the stockholders of the Company as contemplated hereby
(the "Stockholder Approval"), to consummate the Merger. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of the Company (subject to the Stockholder Approval), and no other approval on
the part of the Company is necessary under applicable corporate law for the
execution, delivery and performance of this Agreement. This Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to general limitations on the availability of
equitable remedies and the effect of bankruptcy, insolvency, reorganization and
other laws of general application affecting the enforcement of creditors'
rights.
2.4 No Violation. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not violate
or conflict with the articles of incorporation or by-laws of the Company or any
Subsidiary, or violate any Legal Requirement or Order applicable to the Company
or any Subsidiary. Except as shown on Schedule 2.4, the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
do not and will not require any Third-Party Action with respect to the Company
or any Subsidiary under, or conflict with or constitute a default under, or
result in the acceleration or right of acceleration of any obligations, or any
termination or right of termination under, as of the date hereof or as of the
Effective Time, any Contract. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby do not and will not
result in the creation or imposition of any material Lien, claim, charge,
restriction, equity or encumbrance of any kind upon or give any Person any
interest or right in or with respect to any of the Properties, assets, business
or Contracts of the Company or any Subsidiary.
2.5 Subsidiaries, Other Interests. Except as set forth in Schedule 2.5,
neither the Company nor any Subsidiary beneficially owns, directly or
indirectly, any Equity Interest in or debt obligation (except as a creditor in
the ordinary course of business and except for debt obligations of the Company
or a Subsidiary as specified in Schedule 2.5) of, any Person. The owner shown in
Schedule 2.5 owns the interest shown free and clear of all Third-Party Rights.
2.6 Financial Statements.
(a) Financial Statements. Except as set forth in Schedule 2.6(a), the
audited consolidated balance sheets and consolidated statements of operations
and retained earnings and of cash flows for the Company at and for each of the
years ended September 30, 1999 (the "Last Fiscal Year-End"), September 30, 1998
and September 30, 1997 (the "Audited Statements") and the unaudited consolidated
balance sheets and consolidated statements of operations and cash flows for the
Company at and for the period ended November 30, 1999 (the "Interim Statements"
and, together with the Audited Statements, the "Financial Statements") fairly
present the consolidated financial condition of the Company at the dates
indicated and the consolidated results of operations and cash flows of the
Company for the periods indicated in accordance with GAAP consistently applied
throughout the periods indicated (except as stated therein and, in the case of
the Interim Statements, the omission of certain footnote disclosures and subject
to normal year-end adjustments).
(b) Certain Indebtedness. Schedule 2.6(b) sets forth all obligations of
the Company and its Subsidiaries with respect to borrowed money, debt
securities, capitalized leases and the deferred payment of the purchase price of
property or services and the Property of the Company, if any, subject to a Lien
to secure any of such obligations.
(c) Absence of Certain Liabilities. Neither the Company nor any
Subsidiary has any liability or obligation of any nature, whether absolute,
accrued, contingent or otherwise, arising out of acts or omissions heretofore
occurring, or circumstances currently or heretofore existing, except: (i) as
accrued in the balance sheet included in the Interim Statements (the "Interim
Balance Sheet"); (ii) for liabilities and obligations incurred since the date of
the Interim Balance Sheet in the ordinary course of business consistent in
nature and amount with past practice; (iii) liabilities and obligations of a
kind not required to be accrued in a balance sheet at the date hereof prepared
in accordance with GAAP which individually (or in the aggregate for related
events, transactions, defects or circumstances) will not subject the Company
or any Subsidiary to obligations in excess of $50,000 or (iv) as shown on
Schedule 2.6(c).
(d) Absence of Certain Changes. Since the date of the Interim Balance
Sheet, except as set forth in Schedule 2.6(d):
(i) The Company and each Subsidiary has operated their
consolidated business in the ordinary course.
(ii) There has been no change or changes which, individually
or in the aggregate, has or have had or is or are reasonably likely to
have a Material Adverse Effect.
(iii) There has not been any damage, destruction or
condemnation known to the Company with respect to Property having an
aggregate net book value on the Company's consolidated books in excess
of $50,000, net of any insurance recoveries.
(iv) There has not been any material change in the accounting
methods, practices or principles of the Company.
(v) Neither the Company nor any Subsidiary has sold,
transferred or otherwise disposed of (or agreed or committed to sell,
transfer or otherwise dispose of) any Property other than the sale of
inventory in the ordinary course, or canceled, compromised, released or
assigned any debt or claim in its favor, where the aggregate amount of
such sales, transfers, dispositions, cancellations, compromises,
releases or assignments exceeds $50,000.
(vi) Neither the Company nor any Subsidiary has instituted,
settled or agreed to settle any litigation, action or proceeding before
any Governmental Agency.
(vii) Neither the Company nor any Subsidiary has assumed,
guaranteed, endorsed or otherwise become responsible (or otherwise
agreed to become responsible) for the obligations of any other Person,
except for the endorsement of negotiable instruments in the ordinary
course of business.
(viii) Neither the Company nor any Subsidiary has granted (or
agreed or committed to grant) any increase in compensation or fringe
benefits other than normal salary increases consistent with prior
periods.
(ix) Neither the Company nor any Subsidiary has entered into
any licensing or other Contract with regard to the acquisition or
disposition of any material Intellectual Property other than
non-exclusive licenses granted in the ordinary course of business
consistent with past practice.
2.7 Taxes.
(a) Except as set forth in Schedule 2.7; the Company and each
Subsidiary has properly completed and filed, within the time and in the manner
prescribed by law, all Tax returns and other documents required to be filed in
respect of all Taxes, and all such returns and other documents are true, correct
and complete. The Company has furnished to the Buyer copies of all income Tax
returns of the Company for the past three years. The Company and each Subsidiary
has, within the time and in the manner prescribed by law, paid all Taxes that
are due and payable. The Company has established reserves on its consolidated
books that are at least equal to those required by GAAP.
(b) Except as set forth in Schedule 2.7,
(i) None of such returns contained a disclosure statement
under Section 6662 of the Code or any similar provision of foreign law;
(ii) The Company has not received written notice from any
federal or foreign taxing authority asserting any deficiency against
the Company or any Subsidiary or claim for additional Taxes in
connection therewith, other than any deficiency or claim which has been
previously settled or for which appropriate reserves are included in
the Interim Statements;
(iii) There is no pending action, audit, proceeding or
investigation with respect to the assessment or collection of federal
or foreign Taxes or a claim for refund made by the Company or any
Subsidiary with respect to federal or foreign Taxes previously paid;
(iv) All amounts that are required to be collected or withheld
by the Company and each Subsidiary with respect to federal or foreign
Taxes have been duly collected or withheld, and all such amounts that
are required to be remitted to any federal or foreign taxing authority
have been duly remitted;
(v) No audit has been conducted of any federal or foreign
income tax return filed by the Company or any Subsidiary. The time
during which such returns remain open for examination has expired in
accordance with applicable statute and regulations, except for those
returns for which the normally applicable statutory/regulatory period
has not yet elapsed;
(vi) Neither the Company nor any Subsidiary has requested nor
been granted any currently effective waiver or extension of any statute
of limitations with respect to the assessment or filing of any federal
or foreign Tax or return with respect thereto;
(vii) No consent has been filed under Section 341(f) of the
Code with respect to the Company or any Subsidiary;
(viii) The Company is not required to include in income any
adjustment pursuant to Section 481(a) of the Code (or similar
provisions of foreign laws or regulations) by reason of a change in
accounting method nor does the Company have any knowledge that the
Internal Revenue Service (or other federal or foreign taxing authority)
has proposed, or is considering, any such change in accounting method;
and
(ix) Neither the Company nor any Subsidiary is a party to or
bound by nor has any continuing obligation under any tax sharing or
similar agreement or arrangement with any Person.
2.8 Title to Properties.
(a) Schedule 2.8(a) is a true and complete list of all terms of real
Property owned by the Company or Subsidiary.
(b) Schedule 2.8(b) is a true and complete summary based on the books
and records of the Company of all items of personal Property owned by the
Company or any Subsidiary.
(c) Except as set forth in Schedule 2.8(c), the Company and each
Subsidiary has good title to all tangible personal Property owned by it, in each
case free and clear of all Third-Party Rights.
(d) The Company and its Subsidiaries, taken together, own all material
items of non-inventory tangible and intangible personal Property that were owned
as of the Last Fiscal Year-End and used in generating the revenue shown in the
audited consolidated statement of operations of the Company for the fiscal year
ending on the Last Fiscal Year-End, subject to any sales or dispositions of
tangible personal Property since the Last Fiscal Year-End in the ordinary course
of business.
2.9 Inventories. Except as set forth in Schedule 2.9, since the Last
Fiscal Year-End, all sales of inventory by the Company and its Subsidiaries have
been made in the ordinary course of business and no inventory has been pledged
as collateral. Except as set forth in Schedule 2.9, all inventories are, subject
to any applicable reserves established in respect thereof on the Interim Balance
Sheet, (A) in good, merchantable and useable condition, (B) of such quality as
to meet the quality control standards of the Company and the quality control
requirements of any applicable Governmental Agency, (C) salable, if they are
finished goods, as current inventories at the current prices thereof in the
ordinary course of business, (D) reflected in the Interim Balance Sheet in
accordance with GAAP and (E) reflected in the books and records of the Company
at the lower of cost or market value on a first-in, first-out basis. None of the
inventories reflected on the Interim Balance Sheet is in a quantity in excess of
amounts that can be used or sold by the Company in the ordinary course of
business. The packaging included in the inventories is adequate in quantity to
enable the Company to continue to package and ship finished goods in accordance
with past practices.
2.10 Accounts Receivable. The consolidated accounts receivable of the
Company and its Subsidiaries (i) are bona fide and arose from valid sales in the
ordinary course of business in material conformity with all applicable Legal
Requirements, (ii) are valid and binding obligations of the debtors requiring no
further performance by the Company or any Subsidiary and (iii) except as shown
on Schedule 2.10, subject to the allowance for doubtful accounts receivable in
the Interim Balance Sheet, are fully collectible and not subject to any offsets
or counterclaims and do not represent guaranteed sale, sell-or-return
transactions or any other similar understanding. Except as shown on Schedule
2.10(b), no accounts receivable have been pledged as collateral to any Person.
The amounts shown for accounts receivable in the Financial Statements reflect an
allowance for doubtful accounts receivable in accordance with GAAP.
2.11 Leases. Schedule 2.11 lists all leases, rental agreements,
conditional sales contracts and other similar Contracts under which the Company
or any Subsidiary leases (as lessor or lessee) any real or personal Property
with rental payments exceeding $50,000 per year (collectively, the "Disclosable
Leases"). All Disclosable Leases are, in all material respects, valid and
enforceable by the Company in accordance with their terms. Neither the Company
nor any Subsidiary nor, to the knowledge of the Company, any other party to any
Disclosable Lease is in material breach thereof. The Company and each Subsidiary
enjoys peaceable possession of all real estate premises subject to Disclosable
Leases to which it is a party and to all personal Property subject to
Disclosable Leases to which it is a party.
2.12 Facilities, Equipment. The Company owns or leases all material
land, buildings and equipment used in the operation of its business. The Company
has not received any notice of any material violation of any Legal Requirement
or Order relating to the Company's facilities which has not been corrected, and
no facility of the Company is in material violation of any Legal Requirement or
Order.
2.13 Insurance. Schedule 2.13 lists and describes briefly all binders
and policies of liability, theft, life, fire and other forms of insurance and
surety bonds, insuring the Company or any Subsidiary or their respective
Properties, assets and business as of the date hereof. Except as noted in
Schedule 2.13, all listed policies and binders insure on an occurrence, rather
than claims-made, basis. All policies and binders listed in Schedule 2.13 are
valid and in good standing and in full force and effect and the premiums have
been paid when due. Except for any claims set forth in Schedule 2.13, there are
no outstanding unpaid claims under such policy or binder, and, except as set
forth in Schedule 2.13, neither the Company nor any Subsidiary has received any
notice of cancellation, general disclaimer of liability or non-renewal of any
such policy or binder.
2.14 Employment and Benefit Matters.
(a) Schedule 2.14(a) lists each of the following for each employee of
the Company and each Subsidiary: name, hire date and current salary. None of the
employees listed on Schedule 2.14(a) has given the Company or such Subsidiary
notice of his or her intention to resign his or her position with the Company or
such Subsidiary and neither the Company nor such Subsidiary has any present
intention to terminate such employees.
(b) Schedule 2.14(b) lists all of the following items which are
applicable to the Company or any Subsidiary: (i) employment Contracts with any
employee, officer or director; and (ii) Contracts or arrangements with any
Person providing for bonuses, profit sharing payments, deferred compensation,
stock options, stock purchase rights, retainer, consulting, incentive, severance
pay or retirement benefits, life, medical or other insurance, payments triggered
by a change in control or any other employee benefits or any other payments,
"fringe benefits" or perquisites which are not terminable at will without
liability to the Company or any Subsidiary or which are subject to ERISA. The
contracts or arrangements referred to in the foregoing clause (ii) are herein
called "Benefit Plans."
(c) Neither the Company nor any of its ERISA Affiliates has any union
contracts, collective bargaining, union or labor agreements or other Contract
with any group of employees, labor union or employee representative(s), nor has
the Company or any ERISA Affiliate ever participated in or contributed to any
single employer defined benefit plan or multi-employer plan within the meaning
of ERISA Section 3(37), nor is the Company currently engaged in any labor
negotiations, excepting minor grievances, nor is the Company the subject of any
union organization effort. The Company and each Subsidiary is in material
compliance with applicable Legal Requirements respecting employment and
employment practices and terms and conditions of employment, including without
limitation health and safety and wages and hours. Except as listed on Schedule
2.14(c), no complaint or other proceeding by or on behalf of any current or
former employee or group of employees is pending against the Company or any
Subsidiary before any Governmental Agency, and no claim by any current or former
employee or group of employees that the Company or any Subsidiary is not in
compliance with any Legal Requirement relating to employees or employment or
that any compensation owing has not been paid is pending against the Company or
any Subsidiary. There is no labor dispute, strike, slowdown or work stoppage
pending or threatened against the Company or any Subsidiary.
(d) True and correct copies of each Benefit Plan listed in Schedule
2.14(b) that is subject to ERISA (a "Company ERISA Plan") and related trust
agreements, insurance contracts, and summary descriptions have been delivered or
made available to the Buyer by the Company. The Company has also delivered or
made available to the Buyer a copy of the most recently filed IRS Form 5500,
with attached financial statements and accountant's opinions, if applicable, for
each Company ERISA Plan. The Company has also delivered or made available to the
Buyer a copy of, in the case of each Company ERISA Plan
intended to qualify under Section 401(a) of the Code, the most recent Internal
Revenue Service letter as to its qualification under Section 401(a) of the Code.
Nothing has occurred prior to or since the issuance of such letters to cause the
loss of qualification under the Code of any of such plans.
(e) With respect to each Company ERISA Plan, (i) there has been no
"prohibited transaction," as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, (ii) each Company ERISA Plan has been administered in
accordance with its terms and in material compliance with all Legal Requirements
(including without limitation ERISA and the Code), (iii) the Company (or, as
appropriate, an ERISA Affiliate) has prepared in good faith and timely filed all
requisite governmental reports in true and correct form and has properly and
timely filed and distributed or posted all notices and reports to participants
and beneficiaries required to be filed, distributed or posted, (iv) no suit,
administrative proceeding, action, litigation or claim has been brought or
asserted, or to the knowledge of the Company is threatened, against any Company
ERISA Plan or against the Company with respect to any Company ERISA Plan,
including without limitation any audit or inquiry by the Internal Revenue
Service or United States Department of Labor, (v) the Company and each ERISA
Affiliate have performed all material obligations required to be performed by
them under, and are not in any material respect in default under or in violation
of, and have no knowledge of any material default or violation of, any Company
ERISA Plan, (vi) neither the Company nor any ERISA Affiliate is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or Title I of
ERISA, (vii) all contributions required to be made by the Company or any ERISA
Affiliate have been made on or before their due dates, (viii) no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the 30-day notice requirement has been waived under the regulations to
Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of
ERISA has occurred, (ix) no Company ERISA Plan is covered by, and neither the
Company nor any ERISA Affiliate has incurred or expects to incur any material
liability under, Title IV of ERISA or Section 412 of the Code, and (x) neither
the Company nor any ERISA Affiliate is a party to, or has made any contribution
to or otherwise incurred any obligation under, any "multi-employer plan" as
defined in Section 3(37) of ERISA.
(f) The Company has complied in all material respects with (i) the
applicable health care continuation and notice provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA") and the proposed regulations
thereunder, (ii) the applicable requirements of the Family and Medical Leave Act
of 1993 and the regulations thereunder and (iii) the applicable requirements of
the Health Insurance Portability and Accountability Act of 1996 and the
temporary regulations thereunder. The Company has no material obligations under
COBRA with respect to any former employees or qualifying beneficiaries
thereunder.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or other ERISA Affiliate
relating to, or change in participation or coverage under, any Benefit Plan
which would materially increase the expense of maintaining such Plan above the
level of expense incurred with respect to that Plan for the most recent fiscal
year included in the Audited Statements.
(h) Schedule 2.14(h) contains a true and correct list of each employee,
former employee, director or consultant who holds any stock option as of
December 31, 1999, together with (i) the number of shares of Company Common
Stock subject thereto, (ii) the date of grant, (iii) the extent to which such
stock option is currently vested and, to the extent such stock option is not
fully vested, the vesting schedule, (iv) the exercise price, (v) whether such
stock option is intended to qualify as an incentive stock
option within the meaning of Section 422(b) of the Code (an "ISO"), and (vi) the
expiration date of such stock option. Schedule 2.14(h) also sets forth the
aggregate number of ISOs and nonqualified stock options outstanding as of the
date hereof.
(i) Except as shown on Schedule 2.14(i), neither the Company nor any
Subsidiary is a party to any Contract or plan, including, without limitation,
any stock option plan, stock appreciation right plan or stock purchase plan, as
to which any benefits will be increased, or the vesting of benefits will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any benefits will be calculated on the basis of any of
the transactions contemplated by this Agreement.
(j) Except as disclosed in Schedule 2.14(j), the Company and its ERISA
Affiliates do not maintain any plans providing benefits within the meaning of
Section 3(1) of ERISA (other than group health plan continuation coverage under
Section 601 of ERISA and 4980B(f) of the Code) to former employees or retirees.
2.15 Contracts. Except as shown on Schedules 2.11 and 2.15, and except
for Contracts fully performed or terminable at will without liability to the
Company, neither the Company nor any Subsidiary is a party to any Contract which
contemplates performance by the Company or such Subsidiary during a remaining
period of more than 90 days or involves remaining commitments for sale or
purchase in excess of $50,000. True and complete copies of each Contract
disclosable on Schedule 2.15 (a "Disclosable Contract") have been delivered to
the Buyer. Each Disclosable Contract is, in all material respects, valid and
enforceable by the Company in accordance with its terms. Neither the Company nor
any Subsidiary nor, to the knowledge of the Company, any other party to any
Disclosable Contract is in material breach thereof.
2.16 Officers and Directors. Schedule 2.16 is a true and complete list
of:
(a) the names and addresses of each of the Company's and each
Subsidiaries' officers and directors;
(b) the name of each bank or other financial institution in
which the Company or any Subsidiary has an account, deposit or safe
deposit box and the names of all persons authorized to draw thereon or
to have access thereto; and
(c) the name of each bank or other financial institution in
which the Company or any Subsidiary has a line of credit or other loan
facility.
2.17 Corporate Documents. The Company has furnished or made available
to the Buyer or its representatives true, correct and complete copies of (i) the
articles of incorporation and by-laws of the Company and each Subsidiary, (ii)
the minute books of the Company and each Subsidiary containing all records
required to be set forth of all proceedings, consents, actions and meetings of
the stockholders and board of directors of the Company or such Subsidiary; and
(iii) all material Permits and Orders with respect to the Company and any
Subsidiary.
2.18 Legal Proceedings. Except as shown on Schedule 2.18, there is no
action, suit, proceeding or investigation pending in any court or before any
arbitrator or before or by any Governmental Agency against the Company or any
Subsidiary or any of their respective Properties or businesses, and to the
knowledge of the Company, there is no such action, suit, proceeding or
investigation threatened.
2.19 Compliance with Instruments, Orders and Legal Requirements.
Neither the Company nor any Subsidiary is in material violation of, or in
default in any material respect with respect to, any term or provision of its
articles of incorporation or bylaws, or, to the knowledge of the Company, any
Order or any Legal Requirement applicable to the Company or such Subsidiary.
2.20 Permits. The Company and each Subsidiary holds all Permits
material to the conduct their consolidated business as and where now conducted.
To the knowledge of the Company, there is not pending nor threatened any
proceedings to terminate, revoke, limit or impair any material Permit.
2.21 Intellectual Property.
(a) Except as shown on Schedule 2.21(a), the Company (a) owns or has
the right to use, free and clear of any rights, liens or claims of others, all
patents, trademarks, service marks, trade names, copyrights, licenses and rights
with respect to the foregoing used in the conduct of its business as now
conducted without infringing upon the right of any person under or with respect
to any of the foregoing, (b) is not obligated or under any liability whatsoever
to make any payments of a material nature by way of royalties, fees or otherwise
to any owner of, licensor of or other claimant to, any patent, trademark, trade
name, copyright or other intangible asset with respect to the use thereof or in
connection with the conduct of its business or otherwise, (c) owns or has the
right to use all trade secrets, including know-how, customer lists, inventions,
designs, processes, computer programs and technical data necessary to the
development, operation and sale of all products and services sold or proposed to
be sold by it, free and clear of any rights, liens or claims of others, and (d)
is not using any confidential information or trade secrets of others.
(b) The Company and each of its Subsidiaries has taken all commercially
reasonable steps to protect and preserve the confidentiality of all confidential
information that is of value to it. All use, disclosure or appropriation of such
confidential information by or to a third party has been pursuant to the terms
of a written confidentiality or nondisclosure agreement between the Company or
any Subsidiary and such third party. Schedule 2.21(b) lists all such agreements
currently in effect.
2.22 Capital Expenditures. Schedule 2.22 sets forth, by nature and
amount, all budgeted capital expenditures of the Company and its Subsidiaries
for which commitments have been or are budgeted to be made, or for which
payments or current liabilities have been made or incurred or are budgeted to be
made or incurred, after the Last Fiscal Year-End in excess of $50,000.
2.23 Environmental Matters. There are no Hazardous Materials used or
present at any location used by the Company or a Subsidiary or any predecessor
of either in the conduct of its business, except for any Hazardous Materials
constituting normal office supplies. To the knowledge of the Company, no
location currently or previously used by the Company or a Subsidiary or any
predecessor of either is contaminated by any Hazardous Material or was
previously used for any purpose other than its current use. There are no
environmental materials or conditions, including on-site or off-site disposal or
releases of Hazardous Materials that could reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Company, no event has occurred
and no activity has been or is being conducted by the Company, a Subsidiary or
any other Person which has resulted or could reasonably result in contamination
of any location currently or previously used by the Company or a Subsidiary or
any predecessor of either by any Hazardous Material. Neither the Company, any
Subsidiary nor any predecessor of either has received any written communication
from any Governmental Entity alleging that the
Company, Subsidiary or predecessor or any premises currently or previously
occupied by any of such Persons is contaminated by any Hazardous Materials or in
violation of any Environmental Requirement. To the knowledge of the Company, no
Government Agency has commenced any investigation or proceeding with respect to
the contamination of any location currently or previously used by the Company or
a Subsidiary or any predecessor of either by any Hazardous Material.
2.24 Illegal Payments. None of the Company, any Subsidiary or any
director, officer, employee, or agent of the Company or any Subsidiary has,
directly or indirectly, paid or delivered any fee, commission, or other sum of
money or item of property however characterized to any broker, finder, agent,
government official, or other person, in the United States or any other country,
in any manner related to the business or operations of the Company or any
Subsidiary, which the Company, any Subsidiary or any such director, officer,
employee, or agent knows or has reason to believe to have been illegal under any
law.
2.25 SEC Information. As of their respective filing dates (except as
thereafter amended) all documents that the Company has filed with the SEC (the
"Company SEC Documents") have complied in all material respects with the
applicable requirements of the Act or the Exchange Act, and none of the Company
SEC Documents has contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading except to the extent corrected by a subsequently filed
Company SEC Document filed prior to the date hereof.
2.26 Board of Directors Approval; Fairness Opinion.
(a) The Board of Directors of the Company (excluding Xxxx X. Xxxxxxx)
has unanimously approved this Agreement and the Plan of Merger and unanimously
recommended this Agreement and the Plan of Merger to the Company's stockholders.
Such approval and recommendation have not been modified or withdrawn and are in
full force and effect on the date hereof. The Company's financial adviser,
Xxxxxx Xxxxxxx & Xxxxxx LLC, has rendered its opinion to the Board of Directors
of the Company that the consideration to be received in the Merger is fair to
the Company's stockholders from a financial point of view. Prior to the
Company's entry into this Agreement, each of the Company's officers, directors
and 5% stockholders designated by Buyer has granted the Buyer an irrevocable
proxy to vote all Shares beneficially owned by such officer, director or
stockholder in favor of the Merger.
(b) The transactions contemplated by this Agreement are not subject to
"fair price," "moratorium," "control share acquisition" or other similar statute
(a "Takeover Statute") of any jurisdiction other than the State of Minnesota.
Section 302A.671 of the Minnesota Business Corporation Act is not applicable to
the transactions contemplated by this Agreement. The restriction contained in
Section 302A.673, Subd. 1(a) of such Act does not apply to the transactions
contemplated by this Agreement.
2.27 Representations. No representation or warranty by the Company in
this Agreement (including without limitation the Schedules and Exhibits attached
hereto), or in any document furnished by the Company at the Closing pursuant
hereto contains or will contain any untrue statement of a material fact or omits
to state a fact necessary to make the statements contained in such
representation or warranty not misleading.
2.28 Employment Arrangements. The Company has entered into agreements
in forms acceptable to Buyer with Messrs. Bachul, Xxxxx and Xxxx.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Company that, on and as
of the date hereof:
3.1 Organization, Standing of Buyer and Buyer Subsidiary. The Buyer is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Minnesota. Buyer Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota. The Buyer and Buyer Subsidiary have full power and authority under
applicable corporate law to own, lease and operate their Properties and to carry
on the business in which they are engaged.
3.2 Authority; Enforceability. The Buyer and Buyer Subsidiary have all
necessary power and authority under applicable corporate law to execute, deliver
and perform their obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Buyer and Buyer Subsidiary has been duly
authorized by all necessary action under applicable corporate law. This
Agreement constitutes a legal, valid and binding obligation of the Buyer and
Buyer Subsidiary, enforceable in accordance with its terms, subject to general
limitations on the availability of equitable remedies and the effect of
bankruptcy, insolvency, reorganization and other laws of general application
affecting the enforcement of creditors' rights. The execution, delivery and
performance of this Agreement by the Buyer and Subsidiary and the consummation
by the Buyer and Buyer Subsidiary of all of the transactions contemplated
hereby, (x) do not require any Third-Party Action relating to the Buyer or
Subsidiary, (y) do not violate any Legal Requirement or Order applicable to the
Buyer or Buyer Subsidiary and (z) do not conflict with or constitute a default
(with or without the giving of notice or the passage of time or both) under, or
result in any acceleration or right of acceleration of any obligations under,
any Contract to which the Buyer or Buyer Subsidiary is a party, where, in each
case, the absence of such Third-Party Action or such violation, conflict,
default or acceleration would in any way adversely affect the transactions
contemplated hereby.
3.3 Litigation. There are no claims, actions, suits or other
proceedings pending, or to the knowledge of the Buyer, threatened, at law or in
equity, by or before any Governmental Agency or any arbitrator against the Buyer
which could reasonably be expected to have an adverse effect on the ability of
the Buyer to perform its obligations under this Agreement.
3.4 Financing. At the Closing Buyer shall have cash available to pay
the Merger Consideration and all fees and expenses associated with the Merger.
SECTION 4
CONDITIONS TO OBLIGATIONS OF BUYER
AND BUYER SUBSIDIARY AT CLOSING
The obligations of the Buyer and Buyer Subsidiary hereunder to be
performed at the Closing are subject to the satisfaction at or prior to the
Closing of the following conditions, except for any condition the Buyer may
waive in writing in accordance with Section 7.3.
4.1 Representations and Warranties. The representations and warranties
contained in Section 2 shall have been true in all material respects on the date
of this Agreement and shall be true in all material respects at and as of
immediately prior to the Closing (provided that those representations or
warranties made as of a particular date need only be true and correct as of such
date) with the same effect as though made at and as of immediately prior to the
Closing.
4.2 Proxy Statement. The Proxy Statement shall comply as to form in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations promulgated thereunder and shall not, at the time of (i)
first mailing thereof or (ii) the stockholders' meeting to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that this condition shall not apply with respect to
information supplied by the Buyer or any affiliates or representatives of the
Buyer for inclusion in the Proxy Statement.
4.3 Closing Certificate. The Company shall have delivered to the Buyer
its certificate dated the date of the Closing that the conditions specified in
Sections 4.1 and 4.2 are satisfied. Such certificate shall be deemed a
representation and warranty of the Company under Section 2 for all purposes of
this Agreement.
4.4 Performance. The Company shall have performed and complied in all
material respects with all covenants required herein to be performed or complied
with by it on or before the Closing.
4.5 Stockholder Approval, Dissenting Notices. The Stockholder Approval
shall have been given, and notices of intent to dissent under Section 302A.473
of the Minnesota Business Corporation Act shall not have been filed with respect
to more than 5% of the outstanding Shares immediately before the Effective Time.
4.6 Third-Party Action. All Third-Party Action required in order to
consummate the Closing on the terms hereof shall have been taken.
4.7 Opinion of Counsel. The Buyer shall have received from Xxxxxxxxxx &
Xxxxx, counsel to the Company, an opinion dated the date of the Closing, in form
and substance substantially as set forth in Exhibit B.
4.8 Transactional Litigation. No action, suit or proceeding before any
Governmental Agency shall have been commenced and not dismissed, and no
investigation by any Governmental Agency shall have been commenced or overtly
threatened, against the Company, the Buyer, Subsidiary, or any of their
respective principals, officers, directors or shareholders seeking to restrain,
prevent or change the transactions contemplated hereby or questioning the
validity or legality of any of such transactions or seeking damages in
connection with any of such transactions.
4.9 Interim Events. None of the events listed in Sections 6.8(a)
through (h) shall have occurred without the Buyer's written consent.
4.10 Management Changes, Employees. The Company's key employees listed
on Schedule 4.10 shall have indicated to the Buyer, in form reasonably
satisfactory to it, their intention to continue their employment with the
Company or the Buyer on their current terms following the Merger.
4.11 Warrants. All issued and outstanding warrants of the Company shall
have been exercised and/or canceled for an amount not to exceed the number of
Shares subject thereto times the excess, if any, of the Merger Consideration (as
defined in the Plan of Merger) over the per-Share exercise price stated therein.
4.12 Employment and Noncompetition Agreements . The agreements referred
to in Section 2.28 shall remain in full force and effect.
4.13 Transaction Expenses. All legal fees and other transaction
expenses incurred by the Company in conjunction with the Merger shall have been
disclosed to the Buyer and the Buyer shall not have reasonably objected thereto.
4.14 Corporate and Other Proceedings. All corporate and other
proceedings on the part of the Company in connection with the transactions to be
consummated at the Closing, and all documents and instruments incident to such
transactions, shall be reasonably satisfactory in substance and form to the
Buyer.
4.15 Material Adverse Change. No Material Adverse Change shall have
occurred after the Last Fiscal Year-End.
SECTION 5
CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company hereunder to be performed at the Closing
are subject to the satisfaction at or prior to the Closing of the following
conditions, except for any condition the Company may waive in accordance with
Section 7.3.
5.1 Representations and Warranties. The representations and warranties
of the Buyer contained in Section 3 shall have been true in all material
respects on the date of this Agreement and shall be true in all material
respects at and as of immediately prior to the Closing with the same effect as
though made at and as of immediately prior to the Closing.
5.2 Closing Certificate. The Buyer shall have delivered to the Company
a certificate dated the date of the Closing that the conditions specified in
Section 5.1 are satisfied. Such certificate shall be deemed a representation and
warranty of the Buyer under Section 3 for all purposes of this Agreement.
5.3 Performance. The Buyer shall have performed and complied in all
material respects with all covenants required herein to be performed or complied
with by the Buyer on or before the Closing.
5.4 Stockholder Approval. The Stockholder Approval shall have been
given.
5.5 Transactional Litigation. No action, suit or proceeding before any
Governmental Agency shall have been commenced, and no investigation by any
Governmental Agency shall have been commenced or overtly threatened, against the
Company, the Buyer, Buyer Subsidiary or any of their respective principals,
officers, directors or stockholders seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
5.6 Corporate and Other Proceedings. All corporate and other
proceedings on the part of the Buyer and Buyer Subsidiary in connection with the
transactions to be consummated at the Closing, and all documents and instruments
incident to such transactions, shall be reasonably satisfactory in substance and
form to the Company.
SECTION 6
COVENANTS OF COMPANY, SUBSIDIARY AND BUYER
6.1 Non-Disclosure . Each party agrees not to divulge or communicate,
or use for any purpose other than evaluating this transaction or exercising
rights as a party hereto, any information or materials concerning this
Agreement, the negotiation between the parties hereto and the transactions
contemplated hereby, except to the extent that such information (v) is or
hereafter becomes lawfully obtainable from other sources, (w) is independently
developed by the party without use of any of such information, (x) is required
to be disclosed to a Governmental Agency having jurisdiction over the party or
its Affiliates, (y) is otherwise required by law to be disclosed or (z) is
disclosed following a waiver in writing from the other parties. Promptly after
the date hereof and after the Effective Time, the Buyer and the Company will
issue a mutually agreeable press release concerning the transactions
contemplated hereby. The parties hereto will consult and cooperate with each
other and agree upon the terms and substance of all press releases,
announcements and public statements with respect to this Agreement and the
Merger; PROVIDED, HOWEVER, that such consultation and cooperation shall not
interfere with any obligation of either party hereto to disclose any information
as required by applicable law. Any press release or other announcement by any
party with respect to the Merger will be subject to the consent and approval of
the other party, which consent or approval will not be unreasonably withheld.
6.2 Nonsurvival of Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement will expire at the
Effective Time, and the Surviving Corporation (as defined in the Plan of Merger)
shall have no liability with respect to any representation or warranty and shall
not be subject to any contribution, indemnity or similar claims with respect
thereto by any Person. However, nothing in this Section 6.2 will relieve any
Person from liability for his, her or its knowing personal fraud.
6.3 Termination of this Agreement; Termination Fees.
(a) If any condition of the Closing stated in Section 4 is not
satisfied on or before June 30, 2000, then, provided the Buyer is not in
material default hereunder, the Buyer may at any time thereafter terminate any
further obligations under this Agreement by giving written notice thereof to the
Company. If any condition of the Closing stated in Section 5 is not satisfied on
or before such date, then, provided the Company is not in material default
hereunder, the Company may at any time thereafter terminate any further
obligations under this Agreement by giving written notice thereof to the Buyer.
This Agreement may be so terminated, or terminated by mutual agreement of the
parties upon the authorization of their respective Boards of Directors,
notwithstanding approval of this Agreement by the stockholders of any or all
parties.
(b) The Board of Directors of the Company may terminate this Agreement
pursuant to Section 6.6(d) in the circumstances there specified if,
simultaneously with such termination, the Company pays the Buyer $1,000,000 by
wire transfer of immediately available funds.
(c) In the event the Merger is not approved by the Company's
stockholders and a Third-Party Transaction is announced within 18 months after
such termination which is thereafter consummated (or is consummated within such
18-month period, irrespective of any announcement), the Company will,
simultaneously with such consummation, pay the Buyer $1,000,000 by wire transfer
of immediately available funds.
(d)(i) If this Agreement is terminated (x) by any party prior to the
Effective Time after the date specified in Section 6.3(a) without the payment of
a termination fee other than a termination after Buyer is in material breach of
this Agreement, or (y) by the Buyer due to a material breach hereof by the
Company, and a Third-Party Transaction is announced
within 12 months after such termination which is thereafter consummated (or is
consummated within such 12-month period, irrespective of any announcement), the
Company will, simultaneously with such consummation, pay the Buyer $1,000,000 by
wire transfer of immediately available funds.
(e) In the event the Merger is not approved by the Company's
stockholders, the Buyer may, at any time thereafter, at its sole option by
notice given to the Company, terminate any obligation on its or Subsidiary's
part to consummate the Merger. Any such termination will not affect the Buyer's
rights under Sections 6.3(c) or (d), or, in the case of breach by the Company,
be in lieu of or adversely affect in any way any right or remedy otherwise
available to the Buyer.
(f) The Buyer may terminate this Agreement if the Company has not
received letter agreements by the close of business on January 14, 2000 (1) from
the holders of all outstanding warrants agreeing that such warrants may be
cashed out for the number of Shares subject thereto times the excess, if any, of
the Merger Consideration (as defined in the Plan of Merger) over the per-Share
exercise price stated therein and (2) from the landlords of real property
consenting to the Merger without the payment of additional consideration.
(g) Any termination pursuant to this Section 6.3 will not, however,
terminate or otherwise affect the obligations of the parties under Sections 6.1,
7.1 or 7.2.
6.4 Best Efforts, No Inconsistent Action. Each party will use its best
efforts to cause the conditions over which it has control to be satisfied on or
before the Closing. No party will take any action which will foreseeably result
in the nonsatisfaction of any condition stated in Section 4 or 5 on or before
the Closing.
6.5 Access. Between the date of this Agreement and the Closing or any
earlier termination of this Agreement in accordance with its terms, the Company
will (i) give the Buyer and its authorized representatives access to its books,
records, Properties, officers, attorneys and accountants and permit the Buyer to
make inspections and copies of such books and records, at Buyer's expense, and
(ii) furnish the Buyer with such financial information and operating data and
other information with respect to its business and Properties, and to discuss
with the Buyer and its authorized representative its affairs, all as the Buyer
may from time to time reasonably request for the purposes of this Agreement,
during normal office hours. Any on-site visit shall be subject to reasonable
advance notice and to being accompanied by an officer or designated employee of
the Company. No information furnished to the Buyer pursuant to this Section 6.5
or otherwise known to the Buyer shall affect any representation, warranty or
condition in this Agreement.
6.6 No Solicitation or Negotiation.
(a) Until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, neither the Company nor any Subsidiary nor any
representative of the Company or any Subsidiary shall, directly or indirectly,
take any action to (i) encourage, solicit or initiate the submission of any
Acquisition Proposal or any inquiries with respect thereto, (ii) enter into any
agreement for or relating to a Third-Party Transaction or (iii) participate in
any way in discussions or negotiations with, or furnish any non-public
information to, any Person in connection with any Acquisition Proposal.
Notwithstanding any other provision of this Section 6.6(a), the Company may,
prior to the Stockholder Approval, in response to an unsolicited BONA FIDE
Superior Proposal provide non-public information to or have discussions or
negotiations with such third party, if and only to the extent
that the Board of Directors has determined in good faith, after receiving the
advice of its outside counsel, that such action is necessary in order for the
Board of Directors to comply with its fiduciary duties to the Company's
stockholders under applicable law. The Company will immediately communicate to
the Buyer the receipt of any third party solicitation, proposal or BONA FIDE
inquiry that the Company, any Subsidiary or any representative of the Company or
any Subsidiary may receive in respect of any such transaction, or of any request
for such information, including in each case a copy thereof and all other
particulars thereof, and keep the Buyer fully apprised of all developments
therein on a current basis, and consider in good faith any counterproposals
which the Buyer, in its sole discretion, elects to make.
(b) "Acquisition Proposal" means any proposed Acquisition Transaction.
"Acquisition Transaction" means any (i) merger, consolidation or similar
transaction involving the Company, (ii) sale, lease or other disposition
directly or indirectly by merger, consolidation, share exchange or otherwise of
any assets of the Company or its subsidiaries representing 15% or more of the
consolidated assets of the Company and its subsidiaries, (iii) issue, sale or
other disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities (or options, rights or warrants to
purchase, or securities convertible into, such securities) representing 15% or
more of the votes attached to the outstanding securities of the Company, (iv)
transaction in which any person shall acquire Beneficial Ownership or the right
to acquire Beneficial Ownership, or any Group shall have been formed which has
Beneficial Ownership or has the right to acquire Beneficial Ownership, of 15% or
more of the outstanding shares of common stock of the Company, (v)
recapitalization, restructuring, liquidation, dissolution or other similar type
of transaction with respect to the Company or any of its subsidiaries or (vi)
transaction which is similar in form, substance or purpose to any of the
foregoing transactions. "Third-Party Transaction" shall mean an Acquisition
Transaction with a party unrelated to the Buyer. "Beneficial Ownership" and
"Group" shall have the meanings stated in Regulation 13D-G under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(c) The Company will take all action necessary in accordance with
applicable law and its articles of incorporation and by-laws to convene a
meeting of its stockholders as promptly as practicable to consider and vote upon
the Merger and to secure the Stockholder Approval, including without limitation
the preparation of a proxy statement (the "Proxy Statement," which term shall
include all amendments and supplements thereto). The Proxy Statement shall
comply as to form in all material respects with the applicable requirements of
the Exchange Act and the rules and regulations promulgated thereunder, and shall
not, at the time of (i) first mailing thereof or (ii) such stockholders'
meeting, 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 the Company shall not be responsible for information
supplied by the Buyer or any affiliates or representatives of the Buyer for
inclusion in the Proxy Statement. The Company (i) shall promptly prepare and
file with the SEC, use its best efforts to have cleared by the SEC and
thereafter mail to its stockholders as promptly as practicable the Proxy
Statement and all other proxy materials for such meeting, (ii) shall notify the
Buyer of the receipt of any comments of the SEC with respect to the Proxy
Statement and of any requests by the SEC for any amendments or supplements
thereto or for additional information and shall promptly provide the Buyer
copies of all correspondence between the Company or any representative of the
Company and the SEC and (iii) shall give the Buyer and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and shall give the Buyer and its counsel the opportunity to review all
amendments and supplements to the Proxy Statement
and all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC.
(d) The Board of Directors of the Company shall recommend and declare
advisable to its stockholders such approval and the Company shall take all
lawful action to solicit, and use all best efforts to obtain, approval of its
stockholders, and neither the Board of Directors of the Company nor any
committee of such Board of Directors shall (i) withdraw or modify the approval
or recommendation by such Board of Directors or such committee of the Merger,
(ii) approve or recommend any Acquisition Proposal other than the Merger or
(iii) cause or allow the Company to enter into any letter of intent, agreement
in principle, acquisition agreement or other similar agreement with respect to
any Acquisition Proposal other than the Merger. Notwithstanding the foregoing,
the Board of Directors of the Company may, prior to the Stockholder Approval,
terminate this Agreement in order to simultaneously enter into a binding
agreement with respect to a Third-Party Transaction that constitutes a Superior
Proposal, but in each case subject to its compliance with Section 6.3(b) if and
only to the extent that both (i) the Buyer has been given at least five days
written notice of the Company's intent to do so and (ii) the Board of Directors
of the Company has determined in good faith, after receiving the advice of its
outside counsel, that such action is necessary in order for the Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law. A "Superior Proposal" means any bona fide written Acquisition Proposal, the
terms of which the Board of Directors of the Company determines in its good
faith judgment, based on the advice of its financial advisor, to be more
favorable to the Company's stockholders than the Merger and to be already
financed or readily financeable.
(e) Nothing in this Section 6.6 shall prohibit the Company from taking
and disclosing to its stockholders a position as contemplated by SEC Rule
14e-2(a), provided that neither the Company nor its Board of Directors nor any
committee of its Board of Directors shall approve or recommend any Third-Party
Proposal.
6.7 Interim Financial Information. The Company will supply to the Buyer
unaudited consolidated monthly financial statements within 21 business days of
the end of each month ending between the date of the Interim Balance Sheet and
the Closing or any earlier termination of this Agreement in accordance with its
terms, prepared on a basis consistent with the unaudited consolidated financial
statements for the preceding months. For purposes of these statements, employee
bonuses and similar expenses may be accrued based on actual results for the year
to date and budgeted results for the balance of the year.
6.8 Interim Conduct of Business. From the date of this Agreement until
the Closing or any earlier termination of this Agreement in accordance with its
terms, unless approved by the Buyer in writing, the Company will operate its
business consistently with past practice and in the ordinary course of business,
and will not:
(a) merge or consolidate with or agree to merge or consolidate
with, or sell or agree to sell all or substantially all of its Property
to, or purchase or agree to purchase all or substantially all of the
Property of, or otherwise acquire, any other Person or a division
thereof, except as provided in this Agreement;
(b) amend its articles of incorporation or by-laws;
(c) make any changes in its accounting methods, principles or
practices, except as required by GAAP;
(d) sell, consume or otherwise dispose of any Property, except
in the ordinary course of business consistent with past practices;
(e) authorize for issuance, issue, sell or deliver any
additional shares of its capital stock of any class or any securities
or obligations convertible into shares of its capital stock or issue or
grant any option, warrant or other right to purchase any shares of its
capital stock of any class, other than, in each case, the issuance of
Shares pursuant to the exercise of the options and warrants listed in
Section 2.1(a);
(f) declare any dividend on, make any distribution with
respect to, or redeem or repurchase, its capital stock;
(g) modify, amend or terminate any Benefit Plans (including
the acceleration of vesting of any stock option), except as required
under Legal Requirements or any Disclosable Contract;
(h) enter into a Disclosable Contract;
(i) authorize or enter into an agreement to do any of the
foregoing; or
(j) settle any litigation.
6.9 Section 338 Election; Tax Status. The parties agree that the Buyer
may make an election under Section 338(a) of the Code with respect to the
Merger. Each party has reviewed the income and other Tax aspects of the
structure of the Merger with its own professional advisers, and no party or
representative of a party shall have any obligation or responsibility to any
other party with respect thereto.
6.10 Option to Purchase.
(a) The Company hereby irrevocably grants the Buyer the right (the
"Option"), at the Buyer's option, to purchase from the Company up to 2,045,504
(subject to adjustment as provided in this Section 6.10) Shares in the aggregate
at the exercise price of $1.41 per share, subject to adjustment as provided in
this Section 6.10 (as so adjusted, the "Exercise Price"), as specified by the
Buyer in its notice or notices of exercise from time to time, but only in
connection with or after a Triggering Event. A "Triggering Event" means the
first to occur of the following events:
(i) the Company terminates this Agreement pursuant to Section
6.6(d), or
(ii) the Merger is not approved by the Company's stockholders
and a Third-Party Transaction is announced within 18 months after such
termination which is thereafter consummated (or is consummated within
such 18-month period, irrespective of any announcement), or
(iii)(A) this Agreement is terminated (x) by any party prior
to the Effective Time after the date specified in Section 6.3(a) other
than a termination after Buyer is in material breach of this Agreement,
or (y) by the Buyer due to a material breach hereof by the Company, and
(B) a Third-Party Transaction is announced within 12 months after such
termination which is thereafter consummated (or is consummated within
such 12-month period, irrespective of any announcement). Such
consummation shall constitute the Triggering Event within the scope of
this Section 6.10(a)(iii).
(iv) any Person other than an Affiliate of the Buyer commences
a tender offer (within the meaning of SEC Rule 14d-2) for 15% of more
of the Company's outstanding Shares.
(b) The Company will give the Buyer notice of any proposed Triggering
Event under Section 6.10(a)(ii), (iii) or (iv) to which it is a party at least
20 days prior to the proposed consummation thereof, and will give the Buyer
notice of any other such Triggering Event immediately upon receiving knowledge
thereof. The Option may be exercised, at any time and from time to time,
commencing immediately prior to the Triggering Event and continuing thereafter
until 5:00 p.m., Central time, on the 5th anniversary of the date of this
Agreement, if a business day, or on the next succeeding business day if it is
not. To exercise the Option, the Buyer shall deliver written notice to the
Company at its address listed in Section 7.4 specifying the number of Shares as
to which the Option is being exercised, accompanied by the Buyer's check or wire
transfer in payment of the aggregate Exercise Price. Alternatively, the Buyer
may pay the Exercise Price by surrender of this Option with respect to a number
of shares whose aggregate Spread Value equals the aggregate Exercise Price.
"Spread Value" means (i) the excess, if any, of the market value of a Share over
the Exercise Price times (ii) the number of Shares so to be surrendered. For
this purpose, "market value" shall mean the average closing price of Shares for
the three most recent trading days ending with the trading day prior to any such
cashless exercise, if Shares are then traded on a national securities exchange
or the Nasdaq National Market, and will mean the per-Share value of the
transaction associated with the Triggering Event in all other cases.
(c) Upon any exercise of the Option as set forth above, the Buyer shall
immediately be the record owner of all Shares subject to such exercise for all
purposes, without any other action being necessary. Within three trading days
after each exercise of the Option, the Company shall deliver certificates for
the Shares so purchased to the Buyer, but the delivery of such certificates
shall not be required in order for the Buyer to exercise any rights as a holder
of the Shares to be represented thereby. Until its exercise, the Option does not
confer on the Buyer any rights of a stockholder of the Company.
(d) The Company need not issue any fractional shares in connection with
any exercise of the Option. Instead, the Buyer may purchase a whole Share from
the Company at the Exercise Price.
(e) During the term of the Option, the Company shall reserve sufficient
authorized but unissued shares of Common Stock or other securities for the full
exercise of the rights represented by the Option. To the extent required for the
lawful exercise of the Option, the Company will promptly make all filings with
Governmental Agencies, including without limitation a premerger notification
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
requested by the Buyer in connection with an intended exercise of the option.
(f) The Exercise Price and the number of Shares that the Company must
issue upon exercise of the Option are subject to adjustment from time to time as
follows:
(1) If the Company at any time or from time to time after the
date hereof: (1) declares or pays, without consideration, any dividend
on Shares payable in Shares; (2) creates any right to acquire Shares
for no consideration; or (3) subdivides the outstanding Shares (by
stock split, reclassification or otherwise), the Company shall increase
the number of Shares that the Buyer may purchase upon exercising the
Option
and decrease the Exercise Price in proportion to the increase in the
number of outstanding Shares that results from any such action.
(2) If the Company combines or consolidates the outstanding
Shares, by reclassification or otherwise, into a lesser number of
Shares, the Company shall decrease the number of Shares that the Buyer
may purchase upon exercising the Option and increase the Exercise Price
in proportion to the decrease in the number of outstanding Shares that
results from any such combination or consolidation.
(3) If Shares change into shares of any other class or classes
of security or into any other Property for any reason other than a
subdivision or combination of Shares provided for in Section 6.10(f)(1)
or (2), including without limitation any reorganization,
reclassification, merger or consolidation and any sale of substantially
all of the Company's properties and assets, the Company shall make
lawful provision for giving the Buyer the right, by exercising the
Option, to purchase the kind and amount of securities or other Property
receivable upon any such change by the owner of the number of Shares
subject to this Option immediately before the change.
(4) If the Company spins off any Subsidiary by distributing to
the Company's shareholders as a dividend or otherwise any stock or
other securities of the Subsidiary, the Company shall reserve until the
end of the term of the Option enough such shares or other securities
for delivery to the Buyer upon any exercise of the rights represented
by the Option to the same extent as if the Buyer owned of record all
Common Stock or other securities subject to the Option on the record
date for the distribution of the Subsidiary's shares or other
securities.
Upon each adjustment or readjustment required by this Section 6.10(f), the
Company shall promptly compute such adjustment or readjustment and furnish to
the Buyer a certificate setting forth such adjustment or readjustment and
showing in detail the facts giving rise to the adjustment or readjustment. Upon
the Buyer's written request, the Company also shall furnish to the Buyer a
similar certificate setting forth (1) such adjustments and readjustments, (2)
the Option Price in effect on the date of the certificate, and (3) the number of
Shares and the amount of any other property that the Buyer would receive upon
exercising the Option.
(g) The Buyer may not transfer, sell or make any other disposition of
the Option (other than in connection with a succession to or transfer of its
business as a whole), or grant any Lien respecting any of its rights under the
Option, without the Company's prior consent.
(h) By accepting the Option, the Buyer agrees that the Option and the
Shares or other securities issuable upon exercise of the Option may be offered
or sold, only in compliance with the Act and all applicable state and securities
laws. The Buyer hereby agrees to comply with this Section 6.10(h) with respect
to any resale or other disposition of such securities. The Buyer may offer or
sell any such securities only in accordance with (1) an effective registration
statement under the Act; (2) SEC Rule 144; or (3) another exemption from the
registration requirements of the Act and all applicable state securities laws
demonstrated, to the Company's reasonable satisfaction, by an opinion of
securities counsel reasonably acceptable to the Company. The Company may make a
notation on its records, and on the certificates for any Shares or other
securities issued upon the exercise of the Option, to implement the restrictions
set forth in this Section 6.10(h). The Buyer represents and warrants that it is
acquiring the Option, and will acquire the Shares subject thereto, for its own
account and not on behalf of any other Person, and that it is an "accredited
investor," as that term is defined in
SEC Regulation D. By accepting the Option, the Buyer acknowledges that the
Company is granting the Option to the Buyer in reliance on the Buyer's foregoing
representations and warranties and the terms of this Section 6.10(h). Before
allowing any transferee of any of the Buyer's rights under the Option to
exercise this Option, the Company may, in its sole discretion, require the
transferee to execute and deliver representations, warranties and
acknowledgments to the Company substantially similar to those set forth in this
Section 6.10(h).
(i) Notwithstanding anything in this Section 6.10, if an exercise of
the Option would otherwise produce a gain (as measured by the difference between
the Exercise Price and the market value, determined in accordance with Section
6.10(b), multiplied by the number of Shares as to which the Option is exercised)
in excess of (i) $1,000,000 minus (ii) the termination fee, if any, timely paid
by the Company pursuant to Section 6.3 in connection with the Triggering Event
in question, then the exercise of the Option will be effective only as to the
number of Shares which produce a gain (as so measured) equal to such difference
between (i) and (ii).
(j) In the event the Company proposes to consummate a transaction
(however structured, including without limitation a sale of stock or a merger)
to which it is a party and which involves an acquisition of shares or equity
interest in the Company by a third Person, and immediately following such
transaction such Person together with its parents and subsidiaries
(collectively, the "Acquiring Person") owns a majority of both the voting power
and economic interest represented by the outstanding stock of the Company on a
fully diluted basis, then the Company (x) shall give the Buyer at least 20 days
written notice of the proposed consummation, including a summary of the
transaction and a copy of all transaction documents (which summary and documents
shall be kept current by further notices to the Buyer) and (y) if it has
complied with clause (x), may at its option, exercised by notice to the Buyer
not later than five days prior to such consummation, redeem the Option (in whole
and not in part) simultaneously with such consummation for an amount per share,
paid by wire transfer of same-day funds to the account designated by the Buyer,
equal to the excess, if any, of the Redemption Price over the Exercise Price
then in effect. The "Redemption Price" is:
(i) if the equity interest the Acquiring Person is acquiring
in such consummation, together with any equity interest acquired by
such Acquiring Person within 180 days prior to such consummation
constitutes a majority of both the voting power and economic interest
represented by the outstanding stock of the Company on a fully-diluted
basis, the highest price per share paid (or to be paid upon such
consummation) by the Acquiring Person in the course of acquiring such
majority ownership, and
(ii) otherwise, the fair market value of a Share (or the other
Property then subject to the Option) as agreed to by the Company and
the Buyer or, in the absence of such agreement, as determined by an
investment bank of national reputation selected by the Company from a
list of three such banks proposed by the Buyer (on its own initiative
or within 15 days after written request by the Company), which bank
shall not have engaged in a transaction with, or advised with respect
to a transaction, either the Company or the Buyer within the prior
three years. If this clause (ii) is applicable, the Company will not
consummate such transaction unless and until the fair market value has
been agreed or determined pursuant to this clause (ii).
6.11 SEC Reports. From and after the date of this Agreement until the
earlier of the termination of this Agreement pursuant to its terms or the
Effective Time, the Company will timely file all reports required to be filed by
it under the Exchange Act.
6.12 Stock Option Plan; Benefits. Prior to the Effective Time, the
Company will take all actions necessary to give effect to Section 3 of the Plan
of Merger and to terminate the Company's stock option plans, effective
immediately after the Effective Time. If requested by the Buyer, immediately
prior to the Effective Time, the Company will terminate any or all of its
welfare and benefit plans.
6.13 Notice of Certain Events . The Company shall notify the Buyer, and
the Buyer shall promptly notify the Company, of:
(i) receipt of any notice or other communication from any
Person alleging that the consent of such Person is or may be required
in connection with the transactions contemplated by this Agreement;
(ii) receipt of any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by
this Agreement;
(iii) receipt of notice that any action, suit, claim,
investigation or proceeding has been commenced or, to the knowledge of
the Company, threatened, against or involving the Company, any
Subsidiary or the Buyer, as applicable, which, if pending on the date
of this Agreement, would have been required to have been disclosed
pursuant to Section 2.18 or which relates to the transactions
contemplated by this Agreement;
(iv) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely to cause any
representation or warranty of it (and, in the case of the Buyer, of
Buyer Subsidiary) contained in this Agreement to be untrue or
inaccurate; and
(v) any failure of the Company, the Buyer or Buyer Subsidiary,
as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder.
The delivery of any notice pursuant to this Section 6.13 shall not limit or
otherwise affect the remedies available to the party receiving such notice.
6.14 Takeover Statutes. If any Takeover Statute is, becomes or may
become applicable to the Merger or any of the transactions contemplated hereby,
each of the Buyer, Buyer Subsidiary and the Company, and their respective Boards
of Directors, shall grant such approvals and take such lawful actions as are
necessary to ensure that the Merger and such transactions may be consummated as
promptly as practicable on the terms contemplated hereby, and to the extent
permitted by law otherwise act to eliminate the effects of such statute and any
regulations promulgated thereunder on the Merger and such transactions or, if
they cannot be eliminated, to minimize them.
6.15 Pay-Off. The Company will, upon the request of the Buyer,
cooperate with the Buyer in arranging the pay-off or refinancing of any
indebtedness of the Company set forth in Schedule 6.15 which the Buyer, in its
business discretion, desires to pay off or refinance in connection with the
consummation of the transactions contemplated hereby.
6.16 Update. The Company, at least one full business day before the
Effective Time, shall prepare and deliver to Buyer updated schedules as of the
Effective Time for its review in determining whether conditions to the Closing
have been satisfied. Such updated schedules shall not be considered substituted
for the schedules referred to in this Agreement.
6.17 Directors and Officers. For six years from and after the Effective
Time, the Buyer agrees, in the alternative, either to (i) indemnify and hold
harmless all past and present officers and directors of the Company at the
Effective Time to the same extent such persons are indemnified as of the date of
this Agreement by the Company pursuant to the Minnesota Business Corporation Act
for acts or omissions occurring at or prior to the Effective Time, (ii) provide
the past and present directors and officers of the Company at the Effective Time
an insurance and indemnification policy that provides coverage for events
occurring prior to the Effective Time that is substantially similar (with
respect to limits and deductibles) to the Buyer's existing policy or, if
substantially equivalent insurance coverage is unavailable, the best available
coverage; provided, however, that the annual premiums for such coverage will not
exceed 200% of the annual premiums currently paid by the Company for such
coverage or (iii) provide the past and present directors and officers of the
Company at the Effective Time coverage under the Buyer's indemnification policy
that provides coverage for events occurring prior to the Effective Time.
SECTION 7
MISCELLANEOUS
7.1 No Brokers, Finders.
(a) Company. The Company has not engaged any agent, broker, finder or
investment or commercial banker in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated hereby, other
than Xxxxxx Xxxxxxx & Xxxxxx Investment Banking LLC, for whose fees and expenses
the Company will be solely responsible and whose fees and expenses will not
exceed $555,772 if the Merger is consummated. The Company shall indemnify,
defend and hold the Buyer harmless against and in respect of any claim for
brokerage fees or other commissions incurred or owing due to any such engagement
or alleged engagement, including without limitation, any fees and expenses of
counsel incurred by the Buyer in connection with enforcing this Section 7.1(a).
(b) Buyer. The Buyer has not engaged any agent, broker, finder or
investment or commercial banker in connection with the negotiation, execution or
performance of this Agreement or the transactions contemplated hereby, other
than Lingate Financial, for those fees and expenses the Buyer will be solely
responsible. The Buyer shall indemnify, defend and hold the Company and its
stockholders harmless against and in respect of any claim for brokerage fees or
other commissions incurred or owing due to any such engagement or alleged
engagement, including without limitation, any fees and expenses of counsel
incurred by the Company or its stockholders in connection with enforcing this
Section 7.1(b).
7.2 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, the Company and the Buyer shall each pay their own
fees and expenses incident to the negotiation, preparation, execution, delivery
and performance hereof, including, without limitation, the fees and expenses of
their respective counsel, accountants and other experts.
7.3 Complete Agreement; Waiver and Modification; No Third Party
Beneficiaries. This Agreement constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of the parties other than the
Stock Purchase Agreement dated February 23, 1998 between the Buyer and the
Company, which shall continue in effect. There are no representations or
warranties by any party except those expressly stated or provided for herein,
any implied warranties being hereby expressly disclaimed. There are no covenants
or conditions except those expressly stated herein. No amendment, supplement or
termination of or to this Agreement, and no waiver of any of the provisions
hereof, shall be binding on a party unless made in a writing signed by such
party. This Agreement may be modified by mutual agreement of the parties as
authorized by their respective boards of directors, notwithstanding approval
hereof and thereof by the stockholders of the parties. Nothing in this Agreement
shall be construed to give any Person other than the express parties hereto any
rights or remedies.
7.4 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be given by delivery (by
mail or otherwise) or transmitted to the address or facsimile number listed
below, and will be effective (in all cases) upon receipt. Without limiting the
generality of the foregoing, a mail, express, messenger or other receipt signed
by any Person at such address shall conclusively evidence delivery to and
receipt at such address, and any printout showing successful facsimile
transmission of the correct total pages to the correct facsimile number shall
conclusively evidence transmission to and receipt at such facsimile number.
(a) If to the Buyer or Subsidiary:
Cenex Harvest States Cooperatives
0000 Xxxxx Xxxxx
XX 000
Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxx 00000
Attention:Xxxxx X. Xxxxxxxx
Facsimile:(000) 000-0000
with copies to:
Cenex Harvest States Cooperatives
0000 Xxxxx Xxxxx
XX 000
Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxx 00000
Attention:Xxxxx X. Xxxxxxxx
Facsimile:(000) 000-0000
Xxxxxx & Whitney LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention:Xxxxxxx X. Xxxxx
Facsimile:(000) 000-0000
(b) If to the Company:
Sparta Foods, Inc.
0000 Xxxxx Xxxxxx XX
Xxx Xxxxxxxx, Xxxxxxxxx 00000
Attention:Xxxx X. Xxxxxx
Facsimile:(000) 000-0000
with copies to:
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention:Xxxxxx X. Xxxx
Facsimile:(000) 000-0000
Any party may change its address or facsimile number for purposes of this
Section 7.4 by giving the other party written notice of the new address or
facsimile number in accordance with this Section 7.4, PROVIDED it is a normal
street address, or normal operating facsimile number, in the continental United
States.
7.5 Law Governing. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of Minnesota.
7.6 Headings; References; "Hereof;" Interpretation. The Section
headings in this Agreement are provided for convenience only, and shall not be
considered in the interpretation hereof. References herein to Sections, Exhibits
or Schedules refer, unless otherwise specified, to the designated Section of or
Exhibit or Schedule to this Agreement. Terms such as "herein," "hereto" and
"hereof" refer to this Agreement as a whole. This Agreement has been negotiated
at arm's length between parties sophisticated and knowledgeable in the matters
addressed in this Agreement. Each of the parties has been represented by
experienced and knowledgeable legal counsel. Accordingly, any rule of law or
legal decision that would require interpretation of any ambiguities in this
Agreement against the party that has drafted it is not applicable and is waived.
The provisions of this Agreement shall be interpreted in a reasonable manner to
effect the purpose of the parties and this Agreement.
7.7 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the heirs, executors, administrators and successors of
the parties hereto, but no right or liability or obligation arising hereunder
may be assigned by any party hereto.
7.8 Counterparts, Separate Signature Pages. This Agreement may be
executed in any number of counterparts, or using separate signature pages. Each
such executed counterpart and each counterpart to which such signature pages are
attached shall be deemed to be an original instrument, but all such counterparts
together shall constitute one and the same instrument.
7.9 Severability. In the event any of the provisions of this Agreement
shall be declared by a court or arbitrator to be void or unenforceable, then
such provision shall be severed from this Agreement without affecting the
validity and enforceability of any of the other provisions hereof, and the
parties shall negotiate in good faith to replace such unenforceable or void
provisions with a similar clause to achieve, to the extent permitted under law,
the purpose and intent of the provisions declared void and unenforceable.
SECTION 8
GLOSSARY
Acquiring Person--Section 6.10(j).
Acquisition Proposal--Section 6.6(b).
Acquisition Transaction--Section 6.6(b).
Act--the Securities Act of 1933, as amended.
Affiliate--a Person who controls, is controlled by or is under common
control with another Person, or who directly or indirectly owns 10% or more of
the voting power in such other Person, or of whose voting power such other
Person (or a Person holding 10% or more of the voting power in such other
Person) owns 10% or more. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Agreement--this Agreement of Merger, including the Exhibits and
Schedules hereto.
Audited Statements--Section 2.6(a).
Beneficial Ownership--Section 6.6(b).
Benefit Plans--Section 2.14(b).
Buyer--introductory paragraphs.
Buyer Subsidiary--introductory paragraphs.
Closing--Section 1.1.
COBRA--Section 2.14(f).
Code--the Internal Revenue Code of 1986, as amended.
Company--introductory paragraphs.
Company ERISA Plan--Section 2.14(d).
Company SEC Documents--Section 2.25.
Contract--any agreement, written or oral, any license or authorization
by another Person of a contractual nature or any promissory note or other
instrument of a contractual nature, which is intended to be enforceable against
the Person in question or against any Property of such Person. Any Person which
is, or any of whose Property is, subject to enforcement of a Contract shall, for
purposes of this Agreement, be deemed a party to it.
Disclosable Contract--Section 2.15.
Disclosable Leases--Section 2.11.
Effective Time--Section 1.2.
Environmental Requirement--any Legal Requirement relating to pollution,
waste, disposal, industrial hygiene, land use or the protection of human health,
safety or welfare, plant life or animal life, natural resources, wetlands,
endangered or threatened species or habitat, the environment or property,
including without limitation those pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of Hazardous Materials, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, or relating to the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Material,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature.
Equity Interest--any common stock, preferred stock, partnership
interest, limited liability company interest or ownership interest in any
Person, and any right to acquire any of the foregoing, whether by exercise of an
option, warrant or other right, by conversion, exchange or subscription or
otherwise.
ERISA--the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute.
ERISA Affiliate--any company which, as of the relevant measuring date
under ERISA, is or was a member of a controlled group of corporations or trades
or businesses (as defined in Sections 414(b), (c), (m) or (o) of the Code) of
which the Company or any Subsidiary or any predecessor of either is or was a
member.
Exchange Act--Section 6.6(b).
Exercise Price--Section 6.10(a).
Financial Statements--Section 2.6(a).
GAAP--generally accepted accounting principles applied on a consistent
basis, as set forth in authoritative pronouncements which are applicable to the
circumstances as of the date in question. The requirement that such principles
be applied on a "consistent basis" means that accounting principles observed in
the period in question are comparable in all material respects to those applied
in the preceding periods, except as change is permitted or required under or
pursuant to such accounting principles.
Governmental Agency--any agency, department, board, commission,
district or other public organ, whether federal, state, local or foreign.
Group--Section 6.6(b).
Hazardous Material--all or any of the following: (i) any substance the
presence of which requires investigation or remediation under any applicable law
or regulation; (ii) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic substances," or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity;" (iii) any petroleum
products, explosives or radioactive materials; and (iv) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.
Interim Balance Sheet--Section 2.6(c).
Interim Statements--Section 2.6(a).
ISO--Section 2.14(h).
Last Fiscal Year-End--Section 2.6(a).
Legal Requirement--a statute, regulation, ordinance or similar legal
requirement, whether federal, state, local or foreign, or any requirement of a
Permit or other authorization issued by a Governmental Agency.
Lien--any lien, security interest, mortgage, deed of trust, pledge,
hypothecation, capitalized lease or interest or right for security purposes.
Material Adverse Change--a Material Adverse change in the business,
condition, assets, liabilities, operations, financial performance or prospects
of the Company and its subsidiaries taken as a whole.
Material Adverse Effect - a matter will be deemed to have a "Material
Adverse Effect" if such matter would have a material adverse effect on the
business, condition, assets, liabilities, operations, financial performance or
prospects of the Company and its Subsidiaries taken as a whole.
Merger--introductory paragraphs.
Option--Section 6.10(a).
Order--any judgment, injunction, order or similar mandatory direction
of, or stipulation or agreement filed with, a Governmental Agency, court,
judicial body, arbitrator or arbitral body.
Permit--a permit, license, franchise, certificate of authority or
similar instrument issued by a Governmental Agency.
Person-- an individual, or a corporation, partnership, limited
liability company, trust, association or other entity of any nature, or a
Governmental Agency.
Plan of Merger--Section 1.2.
Property--any interest in any real, personal or mixed property, whether
tangible or intangible.
Proxy Statement--Section 6.6(c).
Rights--Section 2.1(a).
SEC--the Securities and Exchange Commission.
Shares--shares of the Common Stock, $.01 par value, of the Company.
Spread Value--Section 6.10(b).
Stock Right--any right (including without limitation any option or
warrant or subscription right) to acquire any capital stock or any other Stock
Right or any instrument convertible into or exchangeable for any capital stock
or any other Stock Right.
Stockholder Approval--Section 2.3.
Subsidiary--any Person which would be included in consolidated
financial statements of the Company prepared in accordance with GAAP, and any
Person in which the Company holds 50% or more of the voting power or 50% or more
of the equity interests, and any former Subsidiary with respect to any of whose
obligations the Company or any current Subsidiary is liable. In the case of any
representation or warranty relating to events or circumstances in the past, the
term "Subsidiary" also includes any Person that at the relevant time was a
Subsidiary, irrespective of such Person's current status as a Subsidiary.
Superior Proposal--Section 6.6(e).
Takeover Statute--Section 2.26.
Tax--any federal, state, local or foreign tax, assessment, duty, fee
and other governmental charge or imposition of any kind, whether measured by
properties, assets, wages, payroll, purchases, value added, payments, sales,
use, business, capital stock, surplus or income, and any addition, interest,
penalty, deficiency imposed with respect to any Tax.
Third-Party Action--any consent, waiver, approval, license or other
authorization of, or notice to, or filing with, any other Person, whether or not
a Governmental Agency, and the expiration of any associated mandatory waiting
period.
Third-Party Right--any Lien on any Property of the Person in question,
or any right (other than the rights of the Buyer hereunder) (i) to acquire,
lease, use, dispose of, vote or exercise any right or power conferred by any
Property of such Person, or (ii) restricting the Person's right to lease, use,
dispose of, vote or exercise any right or power conferred by any Property of
such Person.
Third-Party Transaction--Section 6.6(b)
Triggering Event--Section 2.10(a).
IN WITNESS WHEREOF, the parties have executed this Agreement of Merger.
CENEX HARVEST STATES COOPERATIVES
By: /s/Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
SF ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
SPARTA FOODS, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive
Officer
EXHIBIT A
PLAN OF MERGER
This PLAN OF MERGER (this "Plan of Merger") sets forth the terms of the
merger (the "Merger") of SPARTA FOODS, INC., a Minnesota corporation (the
"Company"), with and into SF ACQUISITION CORP., a Minnesota corporation ("Buyer
Subsidiary"), on the terms and conditions set forth herein and in the Agreement
of Merger (the "Merger Agreement") dated the date hereof among the Company,
Buyer Subsidiary and CENEX HARVEST STATES COOPERATIVES, a Minnesota corporation
(the "Buyer"). Buyer Subsidiary is a wholly owned subsidiary of Buyer.
SECTION 1
MERGER
1.1 Merger. Upon the filing of articles of merger with respect to this
Plan of Merger with the Minnesota Secretary of State in accordance with
Minnesota law (the "Effective Time"), Buyer Subsidiary shall be merged with and
into the Company and the separate corporate existence of Buyer Subsidiary shall
cease. The Company shall be the surviving corporation in the Merger (the
"Surviving Corporation") and the separate corporate existence of the Company,
with all its purposes, objects, rights, privileges, powers, immunities and
franchises, shall continue unaffected and unimpaired by the Merger.
1.2 Articles of Incorporation. At the Effective Time, the articles of
incorporation of the Company shall be the articles of incorporation of the
Surviving Corporation, subject always to the right of the Surviving Corporation
to amend its certificate of incorporation after the Effective Time in accordance
with the laws of the State of Minnesota, and shall not be amended by virtue of
the Merger.
1.3 By-Laws. At the Effective Time, the by-laws of Buyer Subsidiary
shall be the by-laws of the Surviving Corporation and shall not be amended by
the Merger.
1.4 Directors and Officers. At the Effective Time, the directors of
Buyer Subsidiary immediately prior to the Effective Time shall be the directors
of the Surviving Corporation, and the officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, in
each case until their successors have been elected and qualified or until
otherwise provided by law.
SECTION 2
EFFECTS ON CAPITAL STOCK
2.1 Capital Stock Owned by Company. At the Effective Time, all of the
shares of capital stock of the Company that are owned directly or indirectly by
the Company or any subsidiary of the Company shall be canceled and no
consideration shall be delivered therefor.
2.2 Shares. At the Effective Time, all of the shares of Common Stock,
$.01 par value per share, of the Company ("Shares"), other than any Shares as to
which dissenters' rights under Section 302A.473 of the Minnesota Business
Corporation Act are perfected ("Dissenters' Shares") and other than those
referred to in Section 2.1 or 2.3, shall be converted into the right to receive,
in accordance with this Plan of Merger, $1.41 in cash, without interest (the
"Merger Consideration").
2.3 Capital Stock Owned by the Buyer. At the Effective Time (i) all of
the Shares that are owned directly or indirectly by the Buyer or any subsidiary
of the Buyer shall be canceled and no consideration shall be delivered
thereafter and (ii) all of the shares of Preferred Stock shall remain issued and
outstanding.
2.4 Common Stock of Buyer Subsidiary. At the Effective Time, all of the
outstanding shares of Common Stock of Buyer Subsidiary shall be converted into
an equal number of shares of Common Stock of the Surviving Corporation.
SECTION 3
COMPANY STOCK OPTIONS AND WARRANTS
3.1 Stock Options. At the Effective Time, each option outstanding under
the Company's stock option plans (i) will be converted into the right to receive
the Spread Amount or (ii) for which the exercise price exceeds the merger
consideration will be canceled without the payment of any consideration. The
"Spread Amount" is (i) the excess, if any, of the Merger Consideration over the
exercise price of such option times (ii) the number of Shares then subject to
such option (determined, with respect to option holders who are employees of the
Company at the Effective Time, without regard to any vesting or deferred
exercisability provisions), net of applicable withholdings.
3.2 Warrants. At the Effective Time, each warrant for the purchase of
Shares will be converted into the right to receive (i) the excess, if any, of
the Merger Consideration over the exercise price of such warrant times (ii) the
number of Shares then subject to such warrant.
SECTION 4
SURRENDER OF CERTIFICATES
4.1 Paying Agent. Prior to the Effective Time, the Buyer shall
designate a bank or trust company to act as agent for the holders of the Shares
in connection with the Merger (the "Paying Agent") to receive the funds to which
the holders of the Shares shall become entitled pursuant to Section 2.2. The
Buyer shall, from time to time, make available to the Paying Agent funds in
amounts and at times necessary for the payment of the Merger Consideration in
the amounts and at the times provided herein. All interest earned on such funds
shall be paid to the Surviving Corporation.
4.2 Surrender Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose shares were converted
pursuant to Section 2.2 into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as the Buyer and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may by
appointed by the Buyer, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be canceled. If payment of
the Merger Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be
otherwise in proper form for transfer and that the person requested in such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Section 4.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration as contemplated by this
Section 4.2. The right of any holder of Shares to receive the Merger
Consideration shall be subject to and reduced by any applicable withholding
obligation.
4.3 Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the Shares on
the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law.
4.4 Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. In no event shall the Buyer,
the Surviving Corporation or the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
4.5 Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the registered holder thereof or such holder's duly
authorized attorney-in-fact, the Surviving Corporation may pay, or authorize the
Paying Agent to pay, the Merger Consideration with respect thereto, subject to
Section 4.4 if applicable, PROVIDED that the Board of Directors of the Surviving
Corporation may, it its discretion and as a condition precedent to the payment
thereof, require the registered holder(s) and/or beneficial owner(s) of such
Certificate to give the Surviving Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Surviving
Corporation, the Company, the Buyer Subsidiary with respect to the Certificate
alleged to have been lost, stolen or destroyed.
Section 5. Dissenter's Rights.
If any Dissenting Shares shall be entitled to be paid the "fair value"
of such Shares, as provided in Section 302A.473 of the Minnesota Business
Corporation Act, the Company shall give the Buyer and Buyer Subsidiary notice
thereof and the Buyer and Buyer Subsidiary shall have the right to participate
in all negotiations and proceedings with respect to any such demands. The
Surviving Corporation shall not, except with the prior written consent of the
Buyer or Buyer Subsidiary, voluntarily make any payment with respect to, or
settle or offer to settle, any such demand for payment. If any Dissenting Shares
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, such Dissenting Shares shall thereupon be treated as though such
Dissenting Shares had been converted into the right to receive the Merger
Consideration pursuant to Section 2.2.
EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of Minnesota and has all requisite corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Company's Form 10-K Annual Report for the year
ended September 30, 1999.
2. The Company has all requisite power and authority under applicable
corporate law to execute and deliver the Agreement of Merger and the Plan of
Merger and to perform the transactions contemplated thereby and to consummate
the Merger. The execution and delivery of the Agreement of Merger and the Plan
of Merger by the Company and the consummation of the transactions contemplated
thereby have been duly authorized by all requisite corporate action on the part
of the Company, including without limitation all necessary action by the
stockholders of the Company. The Agreement of Merger and the Plan of Merger has
each been duly executed and delivered by the Company and (assuming each has been
duly authorized, executed and delivered by the Buyer and the Buyer Subsidiary,
as applicable) is each a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
3. The authorized capital stock of the Company consists of 15,000,000
shares of Common Stock, par value $.01 per share ("Common Stock"), and 1,000,000
shares of Preferred Stock, of which 2,500 have been designated Series 1998. The
Company has _______________ shares of Common Stock outstanding, all of which
have been duly and validly authorized and issued and are fully paid and
nonassessable. To our knowledge, there are no outstanding Stock Rights with
respect to the Company except as stated in Section 2.1(a) of the Agreement of
Merger.
4. Except as disclosed in the Agreement (including without limitation
the schedules thereto), the execution and delivery of the Agreement of Merger
and the Plan of Merger and the consummation by the Company of the transactions
contemplated thereby does not (a) violate or conflict with the articles of
incorporation or bylaws of the Company or any Subsidiary, (b) violate any Legal
Requirement or Order applicable to the Company or any Subsidiary, (c) require
any Third-Party Action with respect to the Company or any Subsidiary under, or
conflict with or constitute a default under, or result in the acceleration or
right of acceleration of any obligations, or any termination or right of
termination under any Disclosed Contract, and (d) result in the creation or
imposition of any material Lien, claim, charge, restriction, equity or
encumbrance of any kind upon or give any Person any interest or right in or with
respect to any of the Properties, assets, business or Contracts of the Company
or any Subsidiary.
5. The Proxy Statement was duly filed in preliminary and final forms
with the SEC in accordance with the requirements of the Exchange Act.
6. Upon the filing of Articles of Merger with respect to the Plan of
Merger with the Secretary of State of the State of Minnesota in accordance with
the Minnesota Business Corporation Act, the Merger shall be effective under the
Minnesota Business Corporation Act.
7. To our knowledge, except as disclosed in the Agreement (including
without limitation the schedules thereto), there is no action, suit, proceeding
or investigation pending or threatened in any court or before any arbitrator or
before or by any Governmental Agency against the Company or any Subsidiary.
[Customary exceptions to be included]
