EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED
JANUARY 29, 1996
AMONG
ST. JUDE MEDICAL, INC.
PARTNER ACQUISITION CORP.
AND
DAIG CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..........................................................................1
Section 1.1 The Merger...................................................................1
Section 1.2 Conversion of Merger Subsidiary Capital Stock................................2
Section 1.3 Cancellation or Conversion of Partner Common Stock...........................2
Section 1.4 Exchange of Shares...........................................................3
Section 1.5 Dissenting Shares............................................................4
Section 1.6 Adjustments..................................................................4
Section 1.7 Partner Option...............................................................5
ARTICLE II CLOSING; CLOSING DATE...............................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARTNER...........................................5
Section 3.1 Corporate Existence and Power................................................6
Section 3.2 Corporate Authorization......................................................6
Section 3.3 Subsidiaries ................................................................6
Section 3.4 Governmental Authorization; Consents.........................................7
Section 3.5 Non-Contravention............................................................7
Section 3.6 Binding Effect...............................................................8
Section 3.7 Capitalization...............................................................8
Section 3.8 Financial Statements and SEC Filings.........................................8
Section 3.9 Material Events..............................................................9
Section 3.10 Properties; Liens...........................................................11
Section 3.11 Litigation..................................................................11
Section 3.12 Taxes.......................................................................12
Section 3.13 ERISA.......................................................................12
Section 3.14 Compliance with Laws; Permits...............................................15
Section 3.15 Finders' Fees...............................................................15
Section 3.16 Patents, Trademarks, Trade Names, Service Marks and Copyrights..............15
Section 3.17 Environmental Matters; OSHA.................................................17
Section 3.18 Contracts...................................................................18
Section 3.19 Partner Products; Regulation................................................19
Section 3.20 Inventory...................................................................20
Section 3.21 Accounts and Notes Receivable...............................................20
Section 3.22 Employee Relations..........................................................21
Section 3.23 Insurance...................................................................21
Section 3.24 Potential Conflicts of Interest.............................................21
Section 3.25 Bank Accounts...............................................................22
Section 3.26 Opinion of Financial Advisor................................................22
Section 3.27 Full Disclosure ............................................................22
Section 3.28 Tax Matters.................................................................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY AND MERGER SUBSIDIARY....................23
Section 4.1 Corporate Existence and Power...............................................23
Section 4.2 Corporate Authorization.....................................................23
Section 4.3 Governmental Authorization; Consents........................................23
Section 4.4 Non-Contravention...........................................................24
Section 4.5 Binding Effect..............................................................24
Section 4.6 Capitalization .............................................................24
Section 4.7 Financial Statements and SEC Filings........................................24
Section 4.8 Material Events.............................................................25
Section 4.9 Opinion of Financial Advisor ...............................................25
Section 4.10 Tax Matters ................................................................25
Section 4.11 Full Disclosure.............................................................25
ARTICLE V COVENANTS OF PARTNER...............................................................25
Section 5.1 Conduct of Partner..........................................................25
Section 5.2 Partner Shareholders' Meeting; Proxy Material...............................27
Section 5.3 Access to Information.......................................................28
Section 5.4 Notices of Certain Events...................................................28
Section 5.5 Consents, Approvals and Filings.............................................29
Section 5.6 Reasonable Efforts..........................................................29
Section 5.7 Exclusivity.................................................................29
Section 5.8 Return of Confidential Information..........................................30
ARTICLE VI COVENANTS OF COMPANY...............................................................30
Section 6.1 Conduct of Business by Company..............................................30
Section 6.2 Reasonable Efforts..........................................................30
Section 6.3 Consents, Approvals and Filings.............................................30
Section 6.4 Advice of Changes...........................................................31
Section 6.5 Director and Officer Liability..............................................31
Section 6.6 NASDAQ Listing..............................................................31
Section 6.7 Director....................................................................31
Section 6.8 Employee Benefits...........................................................32
Section 6.9 Obligations of Merger Subsidiary............................................32
Section 6.10 Access to Information.......................................................32
Section 6.11 Notices of Certain Events...................................................33
ARTICLE VII REGISTRATION STATEMENT AND RELATED MATTERS.........................................33
Section 7.1 Preparation of Registration Statement.......................................33
Section 7.2 Accountant Consents.........................................................34
Section 7.3 State Securities Laws.......................................................34
Section 7.4 Proxy Statement; Information Supplied by Partner............................34
Section 7.5 Registration Statement; Information Supplied by Company.....................34
Section 7.6 Efforts to Close Promptly...................................................35
Section 7.7 Mailings to Shareholders....................................................35
Section 7.8 Letters of Partner's Accountants............................................35
Section 7.9 Letters of Company's Accountants............................................35
ARTICLE VIII CONDITIONS TO THE MERGER...........................................................35
Section 8.1 Conditions of Each Party's Obligation to Effect the Merger..................35
Section 8.2 Conditions to the Obligations of Partner....................................36
Section 8.3 Conditions to the Obligations of Company and Merger Subsidiary..............37
ARTICLE IX TERMINATION........................................................................38
Section 9.1 Termination.................................................................38
Section 9.2 Effects of Termination......................................................40
ARTICLE X OTHER AGREEMENTS...................................................................41
Section 10.1 Non-survival of Representations and Warranties..............................41
Section 10.2 Affiliate Letter............................................................41
ARTICLE XI MISCELLANEOUS.......................................................................42
Section 11.1 Notices.....................................................................42
Section 11.2 Amendment and Modification..................................................43
Section 11.3 Waiver of Compliance........................................................43
Section 11.4 No Third Party Rights.......................................................43
Section 11.5 Confidentiality.............................................................43
Section 11.6 Expenses....................................................................43
Section 11.7 Assignment..................................................................43
Section 11.8 Governing Laws..............................................................43
Section 11.9 Counterparts................................................................44
Section 11.10 Headings and References.....................................................44
Section 11.11 Entire Agreement............................................................44
Section 11.12 Publicity...................................................................44
Section 11.13 Interpretation..............................................................44
Section 11.14 Further Assurance...........................................................44
Section 11.15 Severability................................................................44
GLOSSARY OF DEFINED TERMS
Acquisition Proposal................................................Section 5.7
Affected Employees................................................Section 6.8.1
Affiliates.......................................................Section 10.2.1
affiliate........................................................Section 3.13.1
Articles of Merger................................................Section 1.1.2
Benefit Arrangements.............................................Section 3.13.5
Closing..............................................................Article II
Closing Date.........................................................Article II
Code...................................................................Preamble
Company................................................................Preamble
Company Common Stock...................................................Preamble
Company SEC Filings.................................................Section 4.7
Conversion Ratio..................................................Section 1.3.2
Designated Director.................................................Section 6.7
Disclosure Schedule.................................................Article III
Dissenters' Rights................................................Section 1.5.1
Dissenting Shares.................................................Section 1.5.1
Effective Time....................................................Section 1.1.2
Employee Plans...................................................Section 3.13.1
Environmental Laws...............................................Section 3.17.1
ERISA............................................................Section 3.13.1
Exchange Agent....................................................Section 1.4.1
Xxxxxxx Xxxxx......................................................Section 3.15
HSR Act...........................................................Section 3.4.1
Indemnification Agreements........................................Section 6.5.2
Knowledge.........................................................Section 3.9.7
Licenses ........................................................Section 3.19.2
Lien................................................................Section 3.5
Material Adverse Effect...........................................Section 3.1.2
Merger............................................................Section 1.1.1
Merger Consideration..............................................Section 1.3.2
Merger Subsidiary......................................................Preamble
Minnesota Law..........................................................Preamble
Multi-employer Plan..............................................Section 3.13.2
NASDAQ............................................................Section 1.3.3
Non-Scheduled Proprietary Rights.................................Section 3.16.1
1933 Act..........................................................Section 3.4.1
1934 Act..........................................................Section 3.4.1
Partner................................................................Preamble
Partner Common Stock...................................................Preamble
Partner Option......................................................Section 1.7
Partner Product..................................................Section 3.19.1
Partner SEC Filings.................................................Section 3.8
Partner Securities..................................................Section 3.7
Partner Shareholders Meeting........................................Section 5.2
Partner Stock Certificates........................................Section 1.4.1
Partner Subsidiary/Subsidiaries.....................................Section 3.3
Pension Plans....................................................Section 3.13.1
Permits............................................................Section 3.14
Property.........................................................Section 3.17.1
Proprietary Information..........................................Section 3.16.1
Prospectus and Proxy Statement......................................Section 7.1
Proxy Statement.....................................................Section 5.2
Reference Market Value............................................Section 1.3.3
Registration Statement..............................................Section 7.1
Regulated Substances.............................................Section 3.17.1
Scheduled Proprietary Rights.....................................Section 3.16.1
SEC.................................................................Section 3.8
SEC Effective Date...............................................Section 10.2.2
Surviving Corporation.............................................Section 1.1.1
Tax................................................................Section 3.12
Termination Fee...................................................Section 9.2.2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT dated January 29, 1996, among Daig Corporation, a
Minnesota corporation ("Partner"), St. Jude Medical, Inc., a Minnesota
corporation ("Company") and Partner Acquisition Corp., a Minnesota corporation
and a wholly owned subsidiary of Company ("Merger Subsidiary").
WHEREAS, the Boards of Directors of Company, Merger Subsidiary and
Partner have each determined that it is in the best interests of their
respective shareholders for Company to acquire Partner upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
Company, Merger Subsidiary and Partner have each approved the merger of Merger
Subsidiary with and into Partner in accordance with the Minnesota Business
Corporation Act ("Minnesota Law") and upon the terms and subject to the
conditions set forth herein;
WHEREAS, as a result of the Merger, all of the outstanding common
stock, $.01 par value, of Partner ("Partner Common Stock") will be converted
into the right to receive common stock, $.10 par value, of Company ("Company
Common Stock");
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling of interests."
The parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER.
1.1.1 Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.1.2), Merger Subsidiary shall be merged
with and into Partner (the "Merger") in accordance with Minnesota Law, whereupon
the separate existence of Merger Subsidiary shall cease, and Partner shall
continue as the surviving corporation (the "Surviving Corporation") under the
name of Partner as set forth in Section 1.1.3.
1.1.2 As soon as practicable after satisfaction of or, to the extent
permitted hereunder, waiver of, all conditions to the Merger set forth in
Article VIII, the parties hereto shall cause the Merger to be consummated by
filing Articles of Merger (the "Articles of Merger") with the Secretary of State
of the State of Minnesota, in such form as required by, and executed in
accordance with the relevant provisions of, Minnesota Law and the parties hereto
shall make all other filings or recordings required by Minnesota Law in
connection with the Merger and the transactions contemplated by this Agreement.
The Merger shall become effective at such time as the Articles of Merger are
duly filed with the Secretary of State or such later date set forth in the
Articles of Merger (the "Effective Time").
1.1.3 At the Effective Time, (i) the separate existence of Merger
Subsidiary shall cease and Merger Subsidiary shall be merged with and into
Partner, which shall be the Surviving Corporation; (ii) the officers of the
Surviving Corporation shall initially be the officers of Partner immediately
prior to the Merger; (iii) the directors of the Surviving Corporation shall
initially be the directors of Merger Subsidiary immediately prior to the Merger;
(iv) the Articles of Incorporation and Bylaws of the Surviving Corporation shall
initially be the same as the Articles of Incorporation and Bylaws, respectively,
of Merger Subsidiary immediately prior to the Merger, except that Article I of
the Articles of Incorporation of Merger Subsidiary shall, at the Effective Time,
be amended to read that "The name of the Corporation is Daig Corporation;" and
(v) the Merger shall, from and after the Effective Time, have all of the effects
provided by applicable law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of Merger Subsidiary and Partner shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Merger
Subsidiary and Partner shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.2 CONVERSION OF MERGER SUBSIDIARY CAPITAL STOCK. At the
Effective Time, each share of capital stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and non-assessable share of capital stock of the
Surviving Corporation with the same rights and privileges as the shares of
Merger Subsidiary so converted, which share shall be owned by Company.
SECTION 1.3 CANCELLATION OR CONVERSION OF PARTNER COMMON STOCK. As of
the Effective Time of the Merger, by virtue of the Merger and without any action
on the part of any shareholder:
1.3.1 Any shares of Partner Common Stock issued and outstanding
immediately prior to the Effective Time which are owned by Company, Merger
Subsidiary or Partner shall be canceled and retired without any conversion
thereof, and no cash, securities or other consideration shall be paid or
delivered in exchange for such Partner Common Stock.
1.3.2 Except (i) as provided herein with respect to Dissenting Shares
(as defined below in Section 1.5); (ii) fractional shares; and (iii) shares of
Partner Common Stock canceled pursuant to Section 1.3.1 hereof, at the Effective
Time, each share of Partner Common Stock outstanding shall be canceled and
converted into the right to receive a fraction of a share of Company Common
Stock equal to .651733 (the "Conversion Ratio"), such shares of Company Common
Stock, together with the cash in respect of fractional shares to be received
pursuant to Section 1.3.3 (the "Merger Consideration").
1.3.3 No fraction of a share of Company Common Stock will be issued in
the Merger but, in lieu thereof, each holder of shares of Partner Common Stock
who would otherwise be entitled to a fraction of a share of Company Common Stock
(after aggregating all fractional shares of Company Common Stock to be received
by the holder) will be entitled to receive from the Company an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction
multiplied by (ii) the Reference Market Value. For purposes of this Agreement,
"Reference Market Value" of a share of Company Common Stock shall mean the
average of the closing sale prices (in thousandths) on the NASDAQ National
Market System (the "NASDAQ") of Company Common Stock as reported in The Wall
Street Journal for the twenty trading days immediately preceding the fifth
trading day prior to the Effective Time.
SECTION 1.4 EXCHANGE OF SHARES.
1.4.1 After the Effective Time, each holder of an outstanding
certificate or certificates theretofore representing shares of Partner Common
Stock ("Partner Stock Certificates"), upon surrender thereof to American Stock
Transfer & Trust Company, or such other banking institution as shall be
designated by Company, as exchange agent (the "Exchange Agent"), shall be
entitled to receive the Merger Consideration. Until so surrendered, each
outstanding Partner Stock Certificate shall be deemed for all purposes, other
than as provided below with respect to the payments of dividends or other
distributions, if any, in respect of Company Common Stock, to represent a right
to receive the number of whole shares of Company Common Stock into which the
shares of Partner Common Stock theretofore represented thereby shall have been
converted together with payment for fractional shares. Until so surrendered,
Company may, at its option, refuse to pay any dividend or other distribution, if
any, payable to the holders of shares of Company Common Stock to the holders of
Partner Stock Certificates; provided, however, that upon surrender and exchange
of such Partner Stock Certificates, there shall be paid to the record holders of
the stock certificate or certificates issued in exchange therefor the amount,
without interest, of dividends and other distributions, if any, which have
become payable with respect to the number of whole shares of Company Common
Stock into which the shares of Partner Common Stock theretofore represented
thereby shall have been converted and which have not previously been paid,
together with any payment for fractional shares required by Section 1.3.3
hereof. Whether or not a Partner Stock Certificate is surrendered, from and
after the Effective Time such certificate shall under no circumstances evidence,
represent or otherwise constitute any stock or other interest whatsoever in the
Company, the Surviving Corporation or any other person, firm or corporation
other than Company or its successors.
1.4.2 Any shares of Company Common Stock deposited with the Exchange
Agent that remain unclaimed by the holders of shares of Partner Common Stock
twelve months after the Effective Time shall be returned to Company upon demand,
and any such holder who has not exchanged his shares of Partner Common Stock for
the Merger Consideration prior to that time shall thereafter look only to
Company for his claim for Company Common Stock, any cash in lieu of fractional
shares of Company Common Stock and any dividends or distributions with respect
to Company Common Stock. Notwithstanding the foregoing, Company shall not be
liable to any holder of shares of Company Common Stock for any amount paid to a
public official pursuant to applicable abandoned property laws.
SECTION 1.5 DISSENTING SHARES.
1.5.1 Notwithstanding any provision of this Agreement to the contrary,
any shares of capital stock of Partner held by a holder which has demanded and
perfected its right for appraisal of such shares in accordance with Minnesota
Law (the "Dissenters' Rights") and who, as of the Effective Time, has not
effectively withdrawn or lost such right to appraisal ("Dissenting Shares"),
shall not be converted into or represent a right to receive the Merger
Consideration pursuant to Section 1.3, but the holder thereof shall only be
entitled to such rights as are granted by the Dissenters' Rights.
1.5.2 Notwithstanding the provisions of Section 1.5.1, if any holder of
shares of capital stock of Partner who demands appraisal of such shares under
the Dissenters' Rights shall effectively withdraw or lose (through failure to
perfect or otherwise) its right to appraisal, then, as of the later of the
Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration as provided in Section 1.3, without interest thereon, upon
surrender of the certificate or certificates representing such shares.
1.5.3 Partner shall give Company (i) prompt written notice of any
notice of intent to demand fair value for any shares of capital stock of
Partner, withdrawals of such notices, and any other instruments served pursuant
to the Dissenters' Rights and received by Partner; and (ii) the opportunity to
direct and carry on all negotiations and proceedings with respect to demands for
fair value for shares of capital stock of Partner under the Dissenters' Rights.
Partner shall not, except with the prior written consent of Company, voluntarily
make any payment with respect to any demands for fair value for shares of
capital stock of Partner or offer to settle or settle any such demands other
than by operation of law or pursuant to a final order of a court of competent
jurisdiction.
SECTION 1.6 ADJUSTMENTS. In the event that, subsequent to the date of
this Agreement but prior to the Effective Time, the outstanding shares of
Company Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities and such
increase, decrease, change or exchange shall have been effected through a stock
dividend, stock split or reverse stock split, then an appropriate and
proportionate adjustment shall be made to the Conversion Ratio to fully reflect
such increase, decrease, change or exchange.
SECTION 1.7 PARTNER OPTION. The non-qualified stock option to purchase
128,000 shares of Partner Common Stock (the "Partner Option"), outstanding on
the date hereof, shall, pursuant to the terms of the Partner Option (i) become
exercisable in accordance with its terms and (ii) terminate 30 days after the
Effective Time. From and after the Effective Time until the end of such 30-day
period, all references to Partner in the Partner Option and the related stock
option agreement shall be deemed to refer to Company. During such period, the
Partner Option shall be assumed by Company and shall be exercisable upon the
same terms and conditions as under the Partner Option and the related option
agreement, except that (i) such Partner Option shall be exercisable for that
whole number of shares of Company Common Stock (to the nearest whole share) into
which the number of shares of Partner Common Stock subject to such Partner
Option immediately prior to the Effective Time would be converted under Section
1.3, and (ii) the option price per share of Company Common Stock shall be an
amount equal to the option price per share of Partner Common Stock subject to
such Partner Option in effect immediately prior to the Effective Time divided by
the Conversion Ratio (the option price per share, as so determined, being
rounded upward to the nearest full cent).
ARTICLE II
CLOSING; CLOSING DATE
Unless this Agreement shall have been terminated pursuant to a
provision of Section 9.1 below, a closing (the "Closing") with respect to the
Merger and the transactions contemplated by this Agreement will be held on a
date mutually acceptable to Company and Partner, which shall be no later than
the second business day after satisfaction or waiver of the conditions set forth
in Article VIII, at the offices of Partner's legal counsel, commencing at 10:00
a.m. At such time and place, the documents referred to in Articles VII and VIII
hereof shall be exchanged by the parties and, immediately thereafter, the
Articles of Merger shall be filed by Merger Subsidiary and Partner with the
Secretary of State of the State of Minnesota. The date on which the Closing
occurs is hereinafter referred to as the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARTNER
Partner represents and warrants to Company as follows, except as set
forth in the schedule of exceptions to representations and warranties attached
hereto as Schedule 3 (the "Disclosure Schedule"):
SECTION 3.1 CORPORATE EXISTENCE AND POWER.
3.1.1 Partner is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and has all
corporate powers required to carry on its business as now conducted. Partner is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a Material Adverse Effect. Partner has heretofore
delivered to Company true and complete copies of Partner's Articles of
Incorporation and Bylaws, as currently in effect.
3.1.2 For purposes of this Agreement, a "Material Adverse Effect," when
used with respect to any entity, shall mean a material adverse change in the
financial condition, business, assets, liabilities, capitalization, financial
position compared to the financial statements as of September 30, 1995, in the
case of Partner or as of December 31, 1995 in the case of Company, operations or
results of operations of such entity and its subsidiaries taken as a whole or
any event described in Schedule 3.1.2 which could, so far as can reasonably be
foreseen, have such an effect.
SECTION 3.2 CORPORATE AUTHORIZATION. Partner has the corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by Partner's Board of Directors and no other corporate
proceedings on the part of Partner are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions so contemplated
(except the approval of this Agreement and the transactions contemplated hereby
by the shareholders of Partner required in accordance with Minnesota Law and the
Articles of Incorporation and Bylaws of Partner).
SECTION 3.3 SUBSIDIARIES. Schedule 3.3 of the Disclosure Schedule
contains a true and complete list of all of Partner's subsidiaries (each such
subsidiary shall hereinafter separately be called a "Partner Subsidiary" and all
such subsidiaries shall collectively be called the "Partner Subsidiaries") and
their jurisdictions of incorporation. All of the shares of capital stock of each
of the Partner Subsidiaries are owned directly or indirectly by Partner, are
validly issued, fully paid and nonassessable and are owned free and clear of any
Liens. There are no existing options, warrants, calls or commitments of any
character relating to the issued or unissued capital stock of any of the Partner
Subsidiaries. Partner has, and the Partner Subsidiaries have, no material
investment in any subsidiary or any material investment in any partnership,
joint venture or similar entity, all of which investments are owned free and
clear of any Liens. Each of the Partner Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation.
SECTION 3.4 GOVERNMENTAL AUTHORIZATION; CONSENTS.
3.4.1 The execution, delivery and performance by Partner of this
Agreement and the consummation of the Merger by Partner require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority other than (i) the filing of Articles of Merger in accordance with
Minnesota Law; (ii) compliance with any applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"); (iii)
compliance with any applicable requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "1933 Act")
and the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "1934 Act"); (iv) compliance with the
rules and regulations of the NASDAQ National Market System; (v) compliance with
any applicable state securities laws; and (vi) any action or filing, the failure
to obtain or make would not, individually or in the aggregate, have a Material
Adverse Effect.
3.4.2 No consent, approval, waiver or other action by any person under
any material contract, agreement, indenture, lease, instrument or other material
document to which Partner is a party or by which it is bound is required or
necessary for the execution, delivery and performance of this Agreement by
Partner or the consummation of the transactions contemplated hereby.
SECTION 3.5 NON-CONTRAVENTION. The execution, delivery and performance
by Partner of this Agreement do not, and the consummation by Partner of the
transactions contemplated hereby will not (i) contravene or constitute a default
under or give rise to a right of termination, cancellation or acceleration of
any right or obligation of Partner or to a loss of any benefit to which Partner
is entitled under (A) any provision of applicable law or regulation (assuming
compliance with the matters referred to in Section 3.4.1), other than such
contraventions, defaults or rights of termination, cancellation or acceleration
which would not, individually or in the aggregate, have a Material Adverse
Effect; (B) the Articles of Incorporation or Bylaws of Partner; (C) any
agreement, contract, plan, lease, arrangement or commitment, other than such
contraventions, defaults or rights of termination, cancellations or acceleration
which would not, individually or in the aggregate, have a Material Adverse
Effect; or (D) any judgment, injunction, order, decree, administrative
interpretation, award or other instrument binding upon Partner, other than such
contraventions, defaults or rights of termination, cancellations or acceleration
which would not, individually or in the aggregate, have a Material Adverse
Effect, or (ii) result in the creation or imposition of any Lien on any asset of
Partner. For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest, restriction on
transfer or encumbrance of any kind in respect of such asset; provided, however,
"Lien" does not include liens for taxes or statutory liens, not yet delinquent
or the validity of which is being contested in good faith by appropriate
proceedings.
SECTION 3.6 BINDING EFFECT. This Agreement constitutes a valid and
binding agreement of Partner enforceable against Partner in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies.
SECTION 3.7 CAPITALIZATION. The authorized capital stock of Partner
consists of 40,000,000 shares of Partner Common Stock. As of the date hereof (i)
15,236,144 shares of Partner Common Stock were outstanding, and (ii) stock
options to purchase an aggregate of 128,000 shares of Partner Common Stock under
the Partner Option were outstanding. All outstanding shares of capital stock of
Partner have been duly authorized and validly issued and are fully paid and
nonassessable. Except for the Partner Option, there are no plans, agreements or
other arrangements pursuant to which any options, warrants or other rights to
acquire shares of capital stock of Partner are outstanding. An aggregate of
128,000 shares of Partner Common Stock have been reserved for issuance under the
Partner Option. Except as set forth in this Section, there are outstanding (i)
no shares of capital stock or other voting securities of Partner, (ii) no
securities of Partner convertible into or exchangeable for shares of capital
stock or voting securities of Partner, and (iii) no options or other rights to
acquire from Partner, and no obligation of Partner to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Partner (collectively "Partner Securities"). There
are no outstanding obligations of Partner to repurchase, redeem or otherwise
acquire any Partner Securities.
SECTION 3.8 FINANCIAL STATEMENTS AND SEC FILINGS. Partner has delivered
to Company true and complete copies of (i) its annual reports on Form 10-K for
its fiscal years ended September 30, 1993, 1994 and 1995; (ii) its quarterly
reports on Form 10-Q for its fiscal quarters commencing October 1, 1993; (iii)
its proxy or information statements relating to all meetings of, or actions
taken without a meeting by, the shareholders of Partner held since September 30,
1993; and (iv) all of its other reports or registration statements filed with
the Securities and Exchange Commission (the "SEC") since October 1, 1993. The
reports and statements so delivered are referred to collectively in this
Agreement as the "Partner SEC Filings." As of their respective dates, the
Partner SEC Filings (including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading. Partner has delivered to Company's counsel copies of any statements
on Schedule 13D and Schedule 13G known to Partner which had been filed with the
SEC with respect to capital stock of Partner pursuant to the 1934 Act. The
audited financial statements and unaudited interim financial statements of
Partner included or incorporated by reference in the Partner SEC Filings (i)
have been prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
0000 Xxx) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto); (ii) complied as of their respective
dates in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto; and (iii)
fairly present the financial position of Partner as of the dates thereof and the
income and cash flows for the periods then ended (subject, in the case of any
unaudited interim financial statements, to normal year-end adjustments).
SECTION 3.9 MATERIAL EVENTS. Except as disclosed in the Partner SEC
Filings, and except as expressly contemplated by this Agreement, since the date
of the most recent audited financial statements included in the Partner SEC
Filings there has not been:
3.9.1 Any event, occurrence or development of a state of circumstances
or facts which has had a Material Adverse Effect.
3.9.2 Any discharge or satisfaction of any Lien, other than those then
required to be discharged or satisfied, or any payment of any obligation or
liability, absolute, accrued, contingent or otherwise, whether due or to become
due, other than the payment of current liabilities shown on the financial
statements and included in the Partner SEC Filings and current liabilities
incurred since the date of the most recent audited financial statements included
in the Partner SEC Filings in the ordinary course of business and consistent
with its prior practice and other than payments which, individually and in the
aggregate, would not exceed $50,000.
3.9.3 Any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Partner, or
any repurchase, redemption or other acquisition by Partner of any outstanding
shares of capital stock or other ownership interests in or other securities of
Partner.
3.9.4 Any alteration in any material term of any outstanding security
of Partner.
3.9.5 Any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Partner which, in the
aggregate, has resulted in or might reasonably be expected to result in a loss
in excess of $250,000.
3.9.6 Any change in any method of accounting or accounting practice by
Partner, except for any such change required by reason of a concurrent change in
generally accepted accounting principles.
3.9.7 Any labor dispute, other than routine individual grievances, or,
to Partner's knowledge, any activity or proceeding by a labor union or
representative thereof to organize any employees of Partner or any lockouts,
strikes, slowdowns, or work stoppages. For purposes of this Agreement,
"knowledge" of a party means, unless otherwise specifically qualified in the
Agreement, the actual knowledge of the officers and directors of that party, as
such knowledge has been obtained in the normal conduct of the business, and also
includes such knowledge as a reasonably prudent officer would have obtained upon
the exercise of reasonable diligence under the same or similar circumstances;
"known" or "aware" shall have a correlative meaning.
3.9.8 Any transaction or commitment made by Partner relating to its
assets or business (including the acquisition or disposition of any assets), or
any relinquishment of any contract or other right material to Partner and its
subsidiaries taken as a whole, other than transactions and commitments in the
ordinary course of business, those that would not exceed $100,000, those
contemplated by this Agreement or those constituting an Acquisition Proposal (as
defined in Section 5.7).
3.9.9 Any (i) incurrence, assumption or guarantee by Partner of any
indebtedness other than in the ordinary course of business in amounts and on
terms consistent with past practices, (ii) issuance or sale of any securities
convertible into or exchangeable for debt securities of Partner, or (iii)
issuance or sale of options or other rights to acquire from Partner, directly or
indirectly, debt securities of Partner or any securities convertible into or
exchangeable for any such debt securities.
3.9.10 Any creation or assumption of any Lien by Partner on any asset
of Partner other than in the ordinary course of business.
3.9.11 Any grant, except pursuant to agreements in effect on the date
of this Agreement, of any material severance or termination pay to, any entering
into of any employment, deferred compensation or other similar agreement with,
or any increase in benefits payable under any existing severance or termination
pay policies or employment agreements, or any increase in compensation, bonus or
other benefits payable to any current or former shareholder, officer, director,
salesperson, distributor, agent or employee of Partner, other than any grants or
increases in the ordinary course of business consistent with past practice.
3.9.12 Any sale, transfer, lease to others or other disposition of any
material assets of Partner, except for inventory sold in the ordinary course of
business, or any cancellation or compromise of any material debt or claim, or
any waiver or release of any right, other than sales, transfers, leases,
dispositions, cancellations, compromises, waivers or releases made in the
ordinary course of business and which, individually and in the aggregate, would
not have a Material Adverse Effect.
3.9.13 Any receipt of a notice of termination of any contract
(including without limitation, any material distributorship agreement) or lease
or other agreement required to be disclosed in Section 3.18 below.
3.9.14 Any transfer or grant of any rights under, or any settlement
regarding the breach or infringement of, any United States or foreign license,
patent, copyright, trademark, trade name, invention or similar rights, or
modified any existing rights with respect thereto.
3.9.15 Any material increase or decrease in the quantity of items of
inventory not consistent with Partner's prior practice, or any purchase
commitment in excess of the normal, ordinary and usual requirements of Partner's
business, or any material change in Partner's selling, pricing or advertising
practices inconsistent with its prior practice.
3.9.16 Any written agreement or, to Partner's knowledge, any commitment
to take any of the types of action described in paragraphs 3.9.1 through 3.9.15
above.
SECTION 3.10 PROPERTIES; LIENS. Partner has good title to all of its
assets material to the business, results of operation or financial condition of
Partner, subject, in each case, only to Liens and imperfections of title and
encumbrances, if any, which, individually or in the aggregate, do not have a
Material Adverse Effect. Schedule 3.10 of the Disclosure Schedule sets forth a
summary description of all real property (including warehouses) leased by
Partner, together with any encumbrances on Partner's interest. The leases,
subleases and other agreements disclosed in Schedule 3.10 of the Disclosure
Schedule are in full force and effect. Partner is not in material default under
any such lease, sublease or agreement and has received no notice of default
thereunder and, to the knowledge of Partner, no other party thereto is in
material default thereunder. Partner enjoys a right of quiet possession as
against any Lien on its real property interests. To Partner's knowledge, all
buildings and other structures leased by Partner are (i) in good operating
condition and repair, normal wear and tear excepted; and (ii) in Partner's
judgment, adequate for the uses to which they are being put. Partner has not
received any notice and has no knowledge of any pending, threatened or
contemplated condemnation proceeding affecting the real property leased by
Partner or any part thereof or of any sale or other disposition of such real
property or any part thereof in lieu of condemnation.
SECTION 3.11 LITIGATION. As of the date hereof there is no action,
suit, proceeding, or, to the knowledge of Partner, any investigation pending
against, or, to the knowledge of the Partner, overtly threatened against or
affecting, Partner or any of its properties before any court or arbitrator or
any governmental body, agency or official. There are no actions, suits or claims
or legal, administrative or arbitral proceedings pending or, to the knowledge of
Partner, overtly threatened against or affecting, Partner or any of its
properties (other than any such suit, action or proceeding challenging the
acquisition by Company or Merger Subsidiary of the shares of Partner Common
Stock or any provision of this Agreement or seeking to restrain or prohibit the
consummation of the Merger) before any court or arbitrator or any governmental
body, agency or official that, if determined or resolved adversely to Partner
(in accordance with the plaintiff's demands, if applicable), individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect.
SECTION 3.12 TAXES. The statute of limitations for the assessment of
federal income taxes has expired for all federal income tax returns of Partner
or its predecessor through the fiscal year ended September 30, 1992. Partner is
not currently being audited by any tax authority. Partner has filed all material
returns for Taxes, as defined below, that it is required to file. Each of the
federal, state, and local income tax returns heretofore filed by Partner is true
and correct in all material respects. Partner has timely paid or made provision
for all material Taxes that have been shown as due and payable on the returns
that have been filed. The charges, accruals and reserves for taxes reflected in
the financial statements contained in the most recently filed Partner SEC
Filings are adequate to cover the material Tax liabilities accruing or payable
by Partner in respect of periods covered by such financial statements. Partner
is not delinquent in the payment of any Taxes (other than Taxes, the failure to
pay which would not, individually or in the aggregate, result in amounts owing
(including penalties and interest) in excess of $100,000). Partner has not
requested any extension of time within which to file or send any return, which
return has not since been filed or sent. No deficiency for any Taxes has been
proposed, asserted or assessed in writing against Partner and Partner does not
know of any other unassessed Tax deficiency threatened or proposed against
Partner (other than deficiencies, the liability for which would not,
individually or in the aggregate, result in amounts owing (including penalties
and interest) in excess of $100,000). Partner has not been granted any extension
of the limitation period applicable to any Tax claims. Partner is not, nor has
Partner been, a party to any tax sharing agreement with any corporation. "Tax"
means with respect to any person (i) any net income, gross income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profit tax, custom duty or other tax, governmental fee, or other like
assessment or charge of any kind whatsoever, together with any interest and any
penalty, addition to tax or additional amount imposed by any taxing authority
(domestic or foreign) on such person; and (ii) any liability of Partner for the
payment of any amount of the type described in the immediately preceding clause
(i) as a result of being a member of an affiliated or combined group, or as a
result of any spin off, distribution or other reorganization related to the
disposition of any assets or business of Partner. Partner has not, for the five
year period preceding the Effective Time, been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
SECTION 3.13 ERISA.
3.13.1 Schedule 3.13.1 of the Disclosure Schedule lists each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), which is or was subject to any provision of
ERISA and with respect to which Partner or any affiliate (as defined below) has
any direct or indirect, fixed or contingent liability as of the Effective Time.
Copies of such plans (and, if applicable, related trust agreements or insurance
contracts) and all written amendments thereto, summary plan descriptions thereof
and any material written employee communications with respect to them have been
furnished to Company, together with the three most recent annual reports (Form
5500 including, if applicable, Schedule B thereto) and the most recent annual
accounting, if any, of plan assets prepared in connection with any such plan.
Such plans are hereinafter referred to collectively as the "Employee Plans". For
purposes of this Section, "affiliate" of any person means any other person
which, together with Partner, is treated as a single employer under Section 414
of the Code. The only Employee Plans which, individually or collectively, would
constitute an "employee pension benefit plan" as defined in Section 3(2) of
ERISA (the "Pension Plans") are identified as such in Schedule 3.13 of the
Disclosure Schedule. Neither Partner nor any affiliate has terminated or caused
to be terminated in whole or in part or merged any Employee Plan during the
period since September 30, 1990.
3.13.2 No Employee Plan constitutes a "multi-employer plan," as defined
in Section 3(37) of ERISA (a "Multi-employer Plan"); with respect to insurance
arrangements, there are no reserves, assets, surpluses or prepaid premiums; and
no Employee Plan is subject to Title IV of ERISA. Neither Partner nor, to the
knowledge of Partner, any disqualified person, as defined in Section 4975 of the
Code, has engaged in any "prohibited transaction", as defined in Section 406 of
ERISA or Section 4975 of the Code, with respect to any Employee Plan which is
covered by Title I of ERISA, excluding transactions effected pursuant to a
statutory or administrative exemption.
3.13.3 Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is or was the subject of a favorable Internal Revenue
Service determination with respect to such qualification, and Partner has
furnished to Company copies of the most recent such determination letters, and
nothing has occurred since the date thereof that would have an adverse effect on
such qualification. There are no accrued liabilities under any Employee Plan
which have not been fully provided for by contributions to such Employee Plans
or which are not provided for on the financial statements included in the most
recently filed Partner SEC Filings. Each Employee Plan has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, which are applicable to such Employee Plans, including
without limitation those requirements necessary to maintain its qualification
and the continuation of coverage requirements of Code Section 4980B. Other than
for claims in the ordinary course for benefits under the Employee Plans, there
are no suits, actions, claims or proceedings pending or, to the knowledge of
Partner, threatened which would result in any liability with respect to any such
Employee Plan.
3.13.4 There is no contract, agreement, plan or arrangement covering
any employee or former employee of Partner or any affiliate that, individually
or collectively, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G or Section 162(m) of the Code.
3.13.5 Schedule 3.13.5 of the Disclosure Schedule sets forth a list of
each material employment, severance or other similar contract, arrangement or
policy and each plan or arrangement providing for insurance coverage (including
any self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or
for deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits in effect at the Effective Time which (i) is
not an Employee Plan; (ii) is entered into, maintained or contributed to, as the
case may be, by Partner or any of its subsidiaries; and (iii) covers any
employee or former employee of Partner or any of its affiliates (as defined in
paragraph 3.13.1 above). Such contracts, plans and arrangements as are described
above, copies or descriptions of all of which have been furnished previously or
made available to Company are hereinafter referred to collectively as the
"Benefit Arrangements." Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Benefit Arrangement. Partner has no liability with respect to post-retirement
medical or death benefits for retired employees other than coverage mandated by
law or death benefits under any Pension Plan.
3.13.6 There has been no amendment to, written interpretation or
announcement (whether or not written) by Partner or any of its affiliates
relating to, or change in employee participation or coverage under, any Employee
Plan or Benefit Arrangement which would increase the expense (whether or not
such expense is recognized under generally accepted accounting principles) of
maintaining such Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended on September 30,
1995.
3.13.7 With respect to any Employee Plan or Benefit Arrangement, no
event has occurred, and there exists no condition or set of circumstances, in
connection with which Partner or any such plan, directly or indirectly, could
reasonably be expected to be subject to any liability under ERISA, the Code or
any other law, regulation or governmental order, other than ordinary
contribution and benefit arrangements. With respect to each Employee Plan and
Benefit Arrangement: (i) Partner has made all payments due from it to date or
has established a reasonable reserve therefore and all amounts properly accrued
to date as liabilities of Partner which have not been paid have been properly
recorded on the books of Partner (including without limitation the financial
statements included in the most recently filed Partner SEC Filings); (ii) no
Pension Plan which is subject to ERISA section 302 or Code section 412 has
incurred any "accumulated funding deficiency" (as defined in either such
section), whether or not waived; and (iii) to Partner's knowledge, there are no
unfunded benefit obligations that are not subject to United States law which are
not accounted for by reserves shown on the financial statements included in the
most recently filed Partner SEC Filings and established under generally accepted
accounting principles or otherwise noted on such financial statements.
3.13.8 The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of Partner or any
affiliate to severance pay, supplementary unemployment compensation or any
similar payment; (ii) accelerate the time of payment or vesting, or increase the
amount, of any compensation due to any such employee or former employee; or
(iii) constitute or involve a prohibited transaction (as defined in ERISA
section 406 or Code section 4975) that is not otherwise covered by a statutory
or administrative exemption.
SECTION 3.14 COMPLIANCE WITH LAWS; PERMITS. Except for violations which
do not and will not have individually or in the aggregate a Material Adverse
Effect, Partner (i) is not in violation of any applicable provision of any law,
statute, ordinance or regulation; and (ii) would not, to its knowledge, be in
violation of any provision of any law, statute, ordinance or regulation that has
been enacted or adopted but is not yet effective if it were effective at the
date hereof. Partner has all licenses, permits, orders and approvals of any
federal, state, local or foreign governmental or regulatory body (collectively,
"Permits") that are required for the conduct of the business of Partner as now
being conducted, except where the failure to hold any such Permit would not
result in a Material Adverse Effect; such Permits are in full force and effect;
no material violations are or have been recorded in respect of any Permit; and
no proceeding is pending or, to the knowledge of Partner, threatened to revoke
or limit any material Permit.
SECTION 3.15 FINDERS' FEES. No investment banker, broker, finder or
other intermediary, other than Xxxxxxx, Xxxxx & Co. ("Xxxxxxx Sachs"), the fees
and expenses of which will be paid by Partner, has been retained by or is
authorized to act on behalf of, Partner is entitled to any fee or commission
from Partner or Company or any of its affiliates based upon consummation of the
transactions contemplated by this Agreement and based upon arrangements made by
or on behalf of Partner. Partner has provided Company with a true and correct
copy of the fee letter between Partner and Xxxxxxx Xxxxx.
SECTION 3.16 PATENTS, TRADEMARKS, TRADE NAMES, SERVICE MARKS AND
COPYRIGHTS.
3.16.1 Schedule 3.16 of the Disclosure Schedule lists all federally
registered trademarks and U.S. patents (collectively the "Scheduled Proprietary
Rights") owned by Partner, specifying as to each, as applicable (i) the nature
of such Scheduled Proprietary Right; (ii) the owner of such Scheduled
Proprietary Right; and (iii) licenses, sublicenses or other agreements as to
which Partner is a party pursuant to which any person is authorized to use such
Scheduled Proprietary Right, including the identity of all parties thereto.
Partner has previously furnished or made available to Company, copies of all
such licenses, sublicenses or other agreements. Schedule 3.16 of the Disclosure
Schedule sets forth all material licenses held by Partner other than
off-the-shelf software licenses. Subject to the rights of third parties under
contracts listed on Schedule 3.18 or Schedule 3.16 of the Disclosure Schedule,
all material trade secrets (if any) of Partner ("Proprietary Information") have
been developed independently by Partner, or on behalf of Partner by independent
contractors, under circumstances and arrangements which vest in Partner the
exclusive and unencumbered rights to such Proprietary Information (subject only
to such rights as a third party may have due to its independent development of
such information or obtaining such information in a manner which does not
constitute or involve an act of misappropriation). To the knowledge of Partner,
the research, development and manufacture of the current products of Partner do
not constitute or involve the misappropriation of trade secrets of any third
party. Subject to the rights of third parties under contracts listed on Schedule
3.18 or Schedule 3.16 of the Disclosure Schedule, to Partner's knowledge,
Partner's right, title and interest in and to the Scheduled Proprietary Rights,
the Proprietary Information and all trademarks, patents, copyrights, service
marks, applications therefor, logos, trade names and Partner developed computer
software and firmware owned by Partner other than the Scheduled Proprietary
Rights (collectively the "Non-Scheduled Proprietary Rights") are free and clear
of all Liens. To Partner's knowledge, there are no other parties infringing the
Scheduled or Non-Scheduled Proprietary Rights. Subject to the rights of third
parties under contracts listed on Schedule 3.18 or Schedule 3.16 of the
Disclosure Schedule, Partner has not granted, conveyed, licensed or assigned any
rights in the Scheduled or Non-Scheduled Proprietary Rights or Proprietary
Information to any third party.
3.16.2 Partner has no knowledge of any material fact which would result
in any of the Scheduled or Non-Scheduled Proprietary Rights being declared
invalid or unenforceable.
3.16.3 None of the features, components, configurations, uses or
operations (whether developed or under development) of Partner's products or
processes, to the knowledge of Partner, infringe, nor has any claim been made
that they may infringe, the intellectual property rights of any other party.
Partner has not been sued or charged in writing with, or been a defendant in any
claim, suit, action or proceeding relating to Partner's assets or business which
has not been finally determined prior to the date hereof and which involves a
claim of infringement of any patents, trademarks, service marks or copyrights,
or claim of unfair competition.
3.16.4 None of the Scheduled or Non-Scheduled Proprietary Rights or
Proprietary Information are subject to any outstanding order, judgment, decree,
stipulation or, subject to the rights of third parties under contracts listed on
Schedule 3.18 or Schedule 3.16 of the Disclosure Schedule, agreement restricting
the use thereof by Partner or restricting the licensing thereof by Partner to
any person.
3.16.5. Partner has not entered into any agreement to indemnify any
person against any charge of infringement of any patent, trademark, service xxxx
or copyright.
3.16.6. Partner has established safeguards to maintain the secrecy of
all the Proprietary Information. To the knowledge of Partner, Partner has
executed agreements respecting the non-disclosure of Proprietary Information,
and the assignment of inventions with each of its employees, excluding clerical,
janitorial and similar employees. To the knowledge of Partner, the information
which Partner believes is Proprietary Information has not been disclosed by
Partner or any of its employees or affiliates to any person, entity or
governmental agencies other than to employees, representatives or agencies of
Partner and certain governmental agencies except pursuant to confidentiality
agreements, protective orders or non-disclosure rules or policies adopted by
governmental agencies (as appropriate).
SECTION 3.17 ENVIRONMENTAL MATTERS; OSHA.
3.17.1 The following terms used in this Section 3.17 are defined as
follows:
(a) "Environmental Laws" is defined as any and all federal,
state and local laws, regulations, statutes, rules, ordinances, codes,
standards or criteria, orders, decrees, policies or other requirements
of any governmental agency, authority, or jurisdiction where Partner is
located or conducts business relating to the environment or to human
health or safety associated with the environment, all as modified or
amended from time to time.
(b) "Regulated Substances" is defined as any toxic,
radioactive, explosive, corrosive, flammable, infectious, carcinogenic,
mutagenic or otherwise hazardous substance, waste, pollutant or
contaminant, including but not limited to asbestos or
asbestos-containing material, urea-formaldehyde, polychlorinated
biphenyls, petroleum and petroleum products, and any nuclear fuel or
waste, whose generation, storage, handling, release or disposal is
regulated by any Environmental Law.
(c) "Property" is defined as all real estate and property
presently or formerly owned, leased or used by Partner.
3.17.2 Except for violations which do not and will not have,
individually or in the aggregate, a Material Adverse Effect, Partner is and at
all times has been in compliance with any and all applicable Environmental Laws.
Partner has not received written notice of any pending or threatened actions,
litigation, proceedings, investigations, claims or notices by any party against
or relating to Partner, Partner's business, the Property, or Partner's use of
Regulated Substances or compliance with Environmental Laws.
3.17.3 Except for licenses, permits and authorizations, the absence of
which do not and will not have, individually or in the aggregate, a Material
Adverse Effect, Partner has all governmental licenses, permits and other
authorizations required by any and all Environmental Laws and necessary to
conduct and operate the business of Partner as currently conducted or operated.
All such licenses, permits and authorizations are in full force and effect and
Partner is, and, except for violations which do not have, individually or in the
aggregate, a Material Adverse Effect, at all times has been, in full compliance
therewith.
3.17.4 Except in compliance with Environmental Laws, the Property is
not utilized, and has not in the past been utilized, by Partner for the
generation, storage, handling, treatment, transportation or disposal of any
Regulated Substance and, to Partner's knowledge, the Property has not been used
by prior owners, lessees, operators or others for the generation, storage,
handling, treatment, transportation or disposal of any Regulated Substance. No
part of the Property is being or, to Partner's knowledge, was ever used as (i) a
gasoline service station or for the purpose of selling, dispensing, storing, or
handling petroleum or petroleum products; or (ii) as a dry cleaning
establishment.
3.17.5 To Partner's knowledge, the Property has not been subject to any
release or threatened release of any Regulated Substance, except for releases
and conditions which will not have, individually or in the aggregate, a Material
Adverse Effect, and it does not otherwise contain any condition which may result
in a claim, right of action or recovery by any person or entity under any
Environmental Law. To Partner's knowledge, the Property and all improvements
thereon contain no asbestos, urea-formaldehyde, lead paint, radon at levels
above applicable U.S. EPA rules and guidelines, polychlorinated biphenyls, or
pesticides.
3.17.6 Partner has not received any notice that it has generated,
transported for disposal or treatment, arranged for transportation for disposal
or treatment or disposed of any Regulated Substances at any site where there has
been a release or threatened release of a Regulated Substance or in a manner
which could create liability to any party under any Environmental Law. Partner
has not received nor does it have knowledge of any written notice, request for
response action, administrative or other order, judgment, complaint, claim,
investigation, request for information or any other request for relief
whatsoever relating to any site where a Regulated Substance was disposed of,
placed or located, which was generated, transported for disposal or treatment,
or arranged for transportation by Partner.
3.17.7 To Partner's knowledge, there are, and have been, no
above-ground or underground storage tanks located on the Property.
3.17.8 Partner is not operating its business in material violation of
the Occupa tional Safety and Health Act of 1970 or the regulations promulgated
thereunder. Partner is not, nor will it become, liable for any workers'
compensation insurance premiums relating to the period of time prior to the date
of this Agreement in excess of the reserves shown on the financial statements
included in the most recently filed Partner SEC Filings, except for adjustments
to workers' compensation insurance premiums based on annual audits of employee
compensation and classification as contemplated by the terms of Partner's
workers' compensation insurance policy.
SECTION 3.18 CONTRACTS. Schedule 3.18 of the Disclosure Schedule lists
the following contracts and other agreements to which Partner is a party or by
which Partner or its assets or properties are bound or subject: (i) customer
contracts (except for customer pricing letters, a form of which has been
delivered to the Company) and agreements for the sale by Partner of materials or
products which by their terms exceed one year or under which the executory
portion involves dollar amounts in excess of $100,000; (ii) supply contracts,
distributorship agreements and manufacturer's representative agreements which
are material to Partner and its subsidiaries taken as a whole; (iii) research
and development agreements; (iv) employment, consulting, independent contractor,
severance and indemnification agreements, arrangements or understandings, and
any other agreements, arrangements or understandings, between Partner and any
current or former stockholder, officer, director, employee, consultant, agent or
other representative; (v) contracts and other agreements with any labor union or
association representing any employee of Partner; (vi) joint venture agreements;
(vii) contracts or other agreements under which Partner agrees to indemnify any
party or to share tax liability of any party; (viii) contracts and other
agreements relating to the borrowing of money; (ix) any equipment leases
requiring payment by Partner of at least $100,000 within a given year which are
not cancelable without penalty upon 90 days notice; or (x) any other material
contract not required to be disclosed by any other section of this Agreement,
whether or not made in the ordinary course of business. There have been
delivered or made available to Company true and complete copies of all such
contracts and other agreements set forth in Schedule 3.18 of the Disclosure
Schedule. All of such contracts and other agreements are in full force and
effect and Partner is not in default under any of them, and, to the knowledge of
Partner, no other party to any such contract or other agreement is in default
thereunder, and no condition exists that, with notice or lapse of time, or both,
would constitute a default thereunder, except, in each such case, for defaults
that would not, individually or in the aggregate, have a Material Adverse
Effect. No approval or consent of any person is needed in order that any
contracts and other agreements set forth in Schedule 3.18 continue in full force
and effect following the consummation of the transactions contemplated by this
Agreement, except for consents and approvals where the failure of Partner to
obtain such consent or approval would not have, individually or in the
aggregate, a Material Adverse Effect. Other than products provided in connection
with clinical trials, Partner is not a party to any material contract to sell
products or to provide services to third parties which is to be performed at a
price which is less than Partner's full cost. No customer or supplier has
cancelled or otherwise terminated its relationship with Partner during the last
twelve months, except for such cancellations or terminations which would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.19 PARTNER PRODUCTS; REGULATION.
3.19.1 There are no statements, citations, warning letters, FDA Forms
483, or decisions by any governmental or regulatory body that any product
produced, manufactured, marketed or distributed at any time by Partner ("Partner
Product") is defective or fails to meet any applicable standards promulgated by
any such governmental or regulatory body. There have been no recalls ordered by
any such governmental or regulatory body with respect to any Partner Product. To
the knowledge of Partner, there is (i) no fact relating to any Partner Product
that constitutes grounds for a recall of any Partner Product or a duty to warn
of a defect in any Partner Product; and (ii) no latent or overt design,
manufacturing or other defect in any Partner Product which defect would result
in a Product malfunction or recall.
3.19.2 All Partner Products used, marketed or distributed by Partner in
clinical investigations are subject to all applicable licenses, registrations,
approvals, clearances, and authorizations required by local, state, and federal
agencies, foreign or domestic, regulating the safety, effectiveness, and market
clearance of medical devices, which licenses, registrations, approval,
clearances and authorizations ("Licenses") are held by Partner and were obtained
by Partner on or before the date when same were required, except, in those cases
in which Partner has contracted with third parties for distribution of Partner
Products and such third parties were responsible for conducting clinical
investigations. To Partner's knowledge, without inquiry, such third parties had
the necessary Licenses to conduct such clinical investigations. Those licenses,
registrations, approvals, clearances, and authorizations will not be affected or
impaired by the Merger. Schedule 3.19.2 to the Disclosure Schedule lists all
such U.S. licenses, registrations, approvals, clearances and authorizations
obtained or held by Partner in its own name.
3.19.3 There is no proceeding by the FDA or any other governmental
agency, including but not limited to a grand jury investigation, a 405 hearing,
a civil penalty proceeding pending, or to Partner's knowledge overtly
threatened, against Partner, and no such proceedings have been brought at any
time in the past relating to the safety or efficacy of Partner's Products and,
to Partner's knowledge, there is no basis for such a proceeding.
SECTION 3.20 INVENTORY. The inventory (including, without limitation,
finished goods, parts and supplies) of Partner (including the inventory
reflected on the financial statements included in the most recently filed
Partner SEC Filings and the inventory acquired after the date of such financial
statements) is or was, prior to the sale thereof, (i) in good and merchantable
condition, and suitable and usable or salable in the ordinary course of business
for the purposes for which intended; (ii) is not obsolete, damaged or defective;
and (iii) has been reflected on the financial statements included in the most
recently filed Partner SEC Filings and carried on the books of account of
Partner in accordance with generally accepted accounting principles consistently
applied, except, in the case of each of clause (i), (ii) and (iii), where
failure of such inventory to be in such condition or character or to be so
reflected would not, individually or in the aggregate, exceed $100,000.
SECTION 3.21 ACCOUNTS AND NOTES RECEIVABLE. All accounts and notes
receivable reflected on the financial statements included in the most recently
filed Partner SEC Filings, and all accounts and notes receivable arising
subsequent to the date of such financial statements, (i) have arisen in the
ordinary course of business of Partner; (ii) represent valid obligations due to
Partner; and (iii) subject only to a reserve for bad debts computed in a manner
consistent with past practice, have been collected or are collectible in the
ordinary course of business of Partner in the aggregate recorded amounts thereof
in accordance with their terms, except, in the case of each of clause (i), (ii)
and (iii), where failure of such accounts and notes receivable to have so
arisen, to so represent or to have been so collected or to be so collectible
would not, individually or in the aggregate, exceed $200,000. All items that are
required by generally accepted accounting principles to be reflected as accounts
and notes receivable on the financial statements and on the books of account of
Partner are so reflected, except where failure to be so reflected would not,
individually or in the aggregate, exceed $200,000.
SECTION 3.22 EMPLOYEE RELATIONS. Partner has heretofore provided
Company with a complete list of all employees of Partner stating position,
salary and dates of service as of November 30, 1995. None of Partner's employees
are union members. To the knowledge of Partner, no union organizing efforts have
been conducted within the last five years or are now being conducted with
respect to the employees of Partner. Partner is in substantial compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, equal opportunity, civil rights and
payroll taxes, including without limitation, the Immigration and Reform Control
Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Americans with Disabilities Act, the Federal Age Discrimination in
Employment Act, the Family and Medical Leave Act, the Workers Adjustment and
Retraining Notification Act and any state human rights act, except where failure
to be in compliance would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth in Schedule 3.11 of the Disclosure Schedule,
Partner is not in receipt of a complaint, demand letter or charge issued by a
federal, state or local agency which alleges a violation by Partner of any
federal, state or local law or regulation respecting employment and employment
practices, terms and conditions of employment or wages and hours. Except as set
forth in Schedule 3.22 of the Disclosure Schedule, Partner has no knowledge of
any pending or overtly threatened claims by employees or former employees for
any contract claims, intentional infliction of emotional distress, defamation or
any other tort, or any claims arising from any federal, state or local law or
ordinance.
SECTION 3.23 INSURANCE. Schedule 3.23 of the Disclosure Schedule sets
forth a list and brief description of all material policies or binders of fire,
liability, worker's compen sation, vehicular, and other material insurance held
by or on behalf of Partner. Such policies and binders are valid and enforceable
in accordance with their terms and are in full force and effect. Partner is not
in default with respect to any provision contained in any such policy or binder
and has not failed to give any notice or present any claim under any such policy
or binder in due and timely fashion, except for such defaults or failures which
would not, individually or in the aggregate, have a Material Adverse Effect.
Partner has received no notice of cancellation or non-renewal of any such policy
or binder. Partner has no knowledge of any material inaccuracy in any
application for such policies or binders, any failure to pay premiums when due
or any similar state of facts that might form the basis for termination of any
such insurance.
SECTION 3.24 POTENTIAL CONFLICTS OF INTEREST. No officer or director of
Partner, no entity controlled by any such officer or director and no relative or
spouse (or relative of such spouse) of any such officer or director:
(i) owns, directly or indirectly, any interest in (excepting
not more than 1% stock holdings for investment purposes in securities
of publicly held and traded companies), or is an officer, director,
employee or consultant of, any person which is, or is engaged in
business as, a competitor, lessor, lessee, customer or supplier of
Partner, except as disclosed in Schedule 3.24(i) of the Disclosure
Schedule;
(ii) owns, directly or indirectly, in whole or in part, any
tangible or intangible property that Partner uses or the use of which
is necessary or desirable for the conduct of business of Partner;
(iii) has any cause of action or other claim whatsoever
against, or owes any amount to, Partner, except for claims in the
ordinary course of business, such as for accrued vacation pay, accrued
benefits under employee benefit plans, stock options, and similar
matters and agreements existing on the date hereof; or
(iv) has made any payment of or commitment to pay any
commission, fee or other amount to, or purchase or obtain or otherwise
contract to purchase or obtain any goods or services from, any
corporation or other person of which any officer or director of
Partner, or a relative of any of the foregoing, is a partner or
stockholder (except as disclosed in Schedule 3.24(iv) of the Disclosure
Schedule and except for stock holdings solely for investment purposes
in securities of publicly held and traded companies).
SECTION 3.25 BANK ACCOUNTS. Schedule 3.25 of the Disclosure Schedule
sets forth a complete list of all the bank accounts or safe deposit boxes of
Partner, together with the names of the persons authorized to draw thereon or to
have access thereto.
SECTION 3.26 OPINION OF FINANCIAL ADVISOR. Partner has received the
oral opinion of Xxxxxxx Xxxxx, on the date hereof, to the effect that, as of
such date, the exchange ratio to be received in the Merger by the Partner's
shareholders (other than Company and its affiliates) is fair to such
shareholders, a signed confirmation of which opinion will be delivered to
Company as soon as Partner receives same.
SECTION 3.27 FULL DISCLOSURE. The representations and warranties of
Partner contained in this Agreement (as modified by the Disclosure Schedule) and
the Disclosure Statement, contain no untrue statements of any material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, taken as a whole, not false or misleading.
SECTION 3.28 TAX MATTERS. Neither Partner nor, to its knowledge, any of
its affiliates, has taken or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken or agreed to be taken by
Company or any of its affiliates) would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
COMPANY AND MERGER SUBSIDIARY
Company and Merger Subsidiary each represents, warrants and covenants
to Partner that:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. Each of Company and Merger
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers required to carry on its business as now conducted. Each of
Company and Merger Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on the condition, financial or otherwise, business, assets,
liability, capitalization, financial position, operations or results of
operations of Company and its subsidiaries taken as a whole.
SECTION 4.2 CORPORATE AUTHORIZATION. Each of Company and Merger
Subsidiary has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and Merger Subsidiary and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by Company's Board of Directors and Merger Subsidiary's
Board of Directors and no other corporate proceedings on the part of either
Company or Merger Subsidiary are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions so contemplated.
SECTION 4.3 GOVERNMENTAL AUTHORIZATION; CONSENTS.
4.3.1 The execution, delivery and performance by Company and Merger
Subsidiary of this Agreement and the consummation of the Merger by Company and
Merger Subsidiary require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (i) the filing of
Articles of Merger in accordance with Minnesota Law; (ii) compliance with any
applicable requirements of the HSR Act; (iii) compliance with any applicable
requirements of the 1933 Act and the 1934 Act; (iv) compliance with the rules
and regulations of the NASDAQ National Market System; (v) compliance with any
applicable state securities laws; and (vi) any action or filing, the failure to
obtain or make would not, individually or in the aggregate, have a Material
Adverse Effect.
4.3.2 No consent, approval, waiver or other action by any person under
any material contract, agreement, indenture, lease, instrument or other document
to which Company or Merger Subsidiary is a party or by which it is bound is
required or necessary for the execution, delivery and performance of this
Agreement by Company or Merger Subsidiary or the consummation of the
transactions contemplated hereby.
SECTION 4.4 NON-CONTRAVENTION. The execution, delivery and performance
by Company and Merger Subsidiary of this Agreement and the consummation by
Company of the transactions contemplated hereby do not and will not (i)
contravene or constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Company and Merger
Subsidiary or to a loss of any benefit to which Company and Merger Subsidiary is
entitled under (A) any provision of applicable law or regulation (assuming
compliance with the matters referred to in Section 4.3.1); (B) the Articles of
Incorporation or Bylaws of Company or Merger Subsidiary; (C) any agreement,
contract, plan, lease, arrangement or commitment; or (D) any judgment,
injunction, order, decree, administrative interpretation, award or other
instrument binding upon Company or Merger Subsidiary; or (ii) result in the
creation or imposition of any Lien on any asset of Company or Merger Subsidiary.
SECTION 4.5 BINDING EFFECT. This Agreement constitutes a legal, valid
and binding agreement of Company and Merger Subsidiary enforceable against
Company and Merger Subsidiary in accordance with its terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies.
SECTION 4.6 CAPITALIZATION. The capitalization of the Company as set
forth in the financial statements most recently filed with the Company SEC
Filings is true and correct as of the date of such financial statements.
SECTION 4.7 FINANCIAL STATEMENTS AND SEC FILINGS. Company has delivered
to Partner true and complete copies of (i) its annual reports on Form 10-K for
its fiscal years ended December 31, 1993 and 1994; (ii) its quarterly reports on
Form 10-Q for its fiscal quarters ended March 31, June 30 and September 30,
1995; (iii) its proxy or information statements relating to all meetings of, or
actions taken without a meeting by, the shareholders of Company held since
December 31, 1994; and (iv) all of its other 8-K reports filed with the SEC
since December 31, 1994. The reports and statements so delivered are referred to
collectively in this Agreement as the "Company SEC Filings." As of their
respective dates, the Company SEC Filings (including all exhibits and schedules
thereto and documents incorporated by reference therein) did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances under which
they were made, not misleading. The audited financial statements and unaudited
interim financial statements of Company included or incorporated by reference
in the Company SEC Filings (i) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto); (ii) complied as of
their respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto; and (iii) fairly present the financial position of Company as of the
dates thereof and the income and cash flows for the periods then ended (subject,
in the case of any unaudited interim financial statements, to normal year-end
adjustments).
SECTION 4.8 MATERIAL EVENTS. Except as disclosed in the Company SEC
Filings, and except as expressly contemplated by this Agreement, since the date
of the most recent audited financial statements included in the Company SEC
Filings there has not been any event, occurrence or development of a state of
circumstances or facts which has had a Material Adverse Effect.
SECTION 4.9 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Xxxxx Xxxxxxx Inc., dated the date hereof, to the effect that, as of
such date, the consideration to be paid by the Company in the Merger is fair to
the shareholders of the Company from a financial point of view and such opinion
shall not have been withdrawn by the Closing.
SECTION 4.10 TAX MATTERS. Neither the Company nor, to its knowledge,
any of its affiliates, has taken or agreed to take any action, or knows of any
circumstances, that (without regard to any action taken or agreed to be taken by
Partner or any of its affiliates) would prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
SECTION 4.11 FULL DISCLOSURE. The representations and warranties of
Company contained in this Agreement contain no untrue statements of any material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, taken as a whole, not false or misleading.
ARTICLE V
COVENANTS OF PARTNER
Partner agrees that:
SECTION 5.1 CONDUCT OF PARTNER. Except as contemplated by this
Agreement, from the date hereof until the Effective Time, Partner shall conduct
its business in the ordinary course consistent with past practice and will use
reasonable efforts to preserve intact its business organization and
relationships with third parties and to keep available the services of its
present officers and employees. Without limiting the generality of the
foregoing, except as provided in this Agreement, from the date hereof until the
Effective Time:
5.1.1 Partner will not declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of Partner.
5.1.2 Partner will not amend or alter any term of any outstanding
Partner Securities.
5.1.3 Partner will not, without the consent of Company, (i) incur,
assume or guarantee any debt other than in the ordinary course of business
consistent with past practices; (ii) issue or sell any securities convertible
into or exchangeable for debt securities of Partner; or (iii) issue or sell any
options or other rights to acquire from Partner, directly or indirectly, any
debt securities of Partner or any securities convertible into or exchangeable
for any such debt securities.
5.1.4 Partner will not create, assume or incur any Lien on any material
asset of Partner.
5.1.5 Except for the issuance of shares pursuant to the exercise of the
Partner Option, Partner will not (i) issue or sell, or authorize for issuance or
sale, any shares of capital stock of any class or any other securities of
Partner; or (ii) redeem, repurchase or otherwise acquire any Partner securities.
5.1.6 Except in the ordinary course of business, Partner will not
relinquish any material contract or other material right of Partner, make any
payment (direct or indirect) of any material liability of Partner before the
same becomes due in accordance with its terms or make any material change in its
operations.
5.1.7 Partner will not adopt any change in any method of accounting or
accounting practice used by Partner other than by reason of a concurrent change
in generally accepted accounting principles and upon the recommendation of
Partner's independent public accountants.
5.1.8 Partner will not, without the prior written consent of Company
(i) grant or make any severance or termination payments to any officer, director
or employee of Partner, except pursuant to written agreements in effect on the
date hereof and set forth in the Disclosure Schedule except for normal payments
in the ordinary course of business consistent with past practice; (ii) enter
into any employment, deferred compensation or other similar agreement (or enter
into any amendment to any such existing agreement) with any officer, director or
employee of Partner; (iii) increase benefits payable under any existing
severance or termination pay policies or employment agreements, except for
normal increases in the ordinary course of business consistent with past
practice; or (iv) pay or provide for any increase in compensation, bonus, or
other benefits payable to any current or former officer, director, salesperson,
distributor, agent or employee of Partner, other than any grants or increases in
the ordinary course of business consistent with past practice except to the
extent required under existing employment and labor agreements.
5.1.9 Partner will not amend its Articles of Incorporation or Bylaws.
5.1.10 Partner will not merge or consolidate with any person, acquire
any stock or other ownership interest in any person or the assets of any
business as an entity or liquidate, dissolve or otherwise reorganize or seek
protection from creditors.
5.1.11 Except for those transactions which constitute an Acquisition
Proposal, Partner will not take any action, the taking of which, or omit to take
any action, the omission of which, would reasonably be expected to cause any of
the representations and warranties in Article III to be inaccurate in any
respect at or as of any time prior to the Effective Time.
5.1.12 Except for the sale of inventory and the disposition of obsolete
or defective equipment, Partner will not without the prior written consent of
Company sell, transfer, mortgage, or otherwise dispose of, or encumber, or agree
to sell, transfer, mortgage or otherwise dispose of or encumber, any assets or
properties, real, personal or mixed, other than in the ordinary course of
business consistent with past practice.
5.1.13 Partner will not (a) enter into any other agreements,
commitments or contracts (including without limitation joint venture agreements
or material license agreements) which, individually or in the aggregate, are
material to Partner, except agreements, commitments or contracts for the
purchase, sale or lease of goods or services, consistent with past practice; or
(b) otherwise make any material change in any existing material agreement,
commitment or arrangement.
5.1.14 Except with the prior written consent of Company, Partner will
not make any investment of a capital nature with a maturity in excess of 180
days either by purchase of stock or securities, contributions to capital,
property transfers or otherwise, or by the purchase of any property or assets of
any other individual, firm or corporation.
5.1.15 Except with the prior written consent of Company, Partner will
not purchase any capital items which singly have an installed purchase price
greater than $100,000, or in the aggregate have a purchase price in excess of
$600,000.
5.1.16 Partner will not agree or commit to do any of the matters set
forth in Sections 5.1.1 through 5.1.15.
SECTION 5.2 PARTNER SHAREHOLDERS' MEETING; PROXY MATERIAL. Partner
agrees that it shall prepare and file with the SEC under the 1934 Act, and shall
use all reasonable efforts to have cleared by the SEC, and promptly thereafter
shall mail to shareholders of Partner, a proxy statement (the "Proxy
Statement"). The Proxy Statement shall be in form and substance reasonably
satisfactory to Partner and Company and shall contain the recommendation of the
Board of Directors of Partner in favor of the Merger, except to the extent that
the Board of Directors of Partner shall have withdrawn or modified its approval
or recommendation of this Agreement or the Merger as permitted by Section 5.7.
Company shall furnish all information concerning itself to Partner as may be
reasonably requested in connection with any such action and the preparation,
filing and distribution of the Proxy Statement. Partner shall promptly take all
action necessary in accordance with Minnesota Law and its Articles of
Incorporation and Bylaws to convene a meeting of its shareholders (the "Partner
Shareholders Meeting") for the purpose of approving this Agreement and the
Merger. The shareholder vote or consent required for approval of this Agreement
and the Merger shall be no greater than that set forth in the Minnesota Law.
Partner shall use its reasonable efforts to solicit from shareholders of Partner
proxies in favor of the Merger and shall take all other action necessary or, in
the opinion of Company, advisable to secure the vote or consent of shareholders
required by Minnesota Law to effect the Merger, except to the extent that the
Board of Directors of Partner shall have withdrawn or modified its approval or
recommendation of this Agreement or the Merger as permitted by Section 5.7.
SECTION 5.3 ACCESS TO INFORMATION. Partner will give Company, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of Partner, will
promptly furnish to Company, its counsel, financial advisors, auditors and
authorized representatives such financial and operating data and other
information as such persons may reasonably request, other than the information
that, in the opinion of Partner's legal counsel, may not be disclosed under
applicable law. Partner will advise Company of the general nature of any such
withheld document or information and the reasons for withholding same. Partner
will instruct Partner's employees, counsel and financial advisors to cooperate
fully with the other party in its investigation of the business of Partner;
provided that no investigation pursuant to this section shall affect any
representation or warranty made by Partner to Company hereunder. The information
obtained hereunder will be subject to the confidentiality agreement described in
Section 11.5 below.
SECTION 5.4 NOTICES OF CERTAIN EVENTS. Partner shall promptly notify
Company of:
(i) 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) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to Partner's knowledge, overtly threatened
against, relating to or involving or otherwise affecting Partner which
relate to the consummation of the transactions contemplated by this
Agreement; and
(iv) any other event or change of fact or circumstance
subsequent to the date of this Agreement causing any representation
contained in Article III of this Agreement to be, as of the date of
such event or change, materially incorrect or misleading.
SECTION 5.5 CONSENTS, APPROVALS AND FILINGS. Partner will use its
reasonable efforts to obtain as promptly as possible (i) all necessary
approvals, authorizations, consents, licenses, clearances or orders of
governmental and regulatory authorities required in order for Partner to perform
its obligations hereunder; and (ii) all consents or approvals of third parties
required in connection with the contracts identified in Schedule 3.18 of the
Disclosure Schedule.
SECTION 5.6 REASONABLE EFFORTS. Subject to the fiduciary duties of its
Board of Directors, Partner shall use its reasonable efforts (i) to cause to be
fulfilled and satisfied all of the conditions to the Merger to be fulfilled and
satisfied by it; (ii) to cause to be performed all of the matters required of it
at or prior to the Effective Time; and (iii) to comply with applicable law.
SECTION 5.7 EXCLUSIVITY. In order to induce Company to enter into this
Agreement and subject to the fiduciary duties of the Board of Directors of
Partner, until this Agreement is terminated in accordance with its terms,
Partner shall not, and shall direct and use its reasonable efforts to cause its
respective officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it) not to, directly or indirectly, (a) take any further action to
solicit, initiate or encourage any offer or indication of interest from any
person with respect to any Acquisition Proposal (as hereinafter defined),
including without limitation, any such further action through any investment
banker, broker, finder or other intermediary previously engaged or which may be
engaged for the purpose of soliciting, initiating or encouraging such offer or
indication of interest; or (b) engage in negotiations with, or disclose any
non-public information relating to the businesses, assets or operations which
are the subject of this Agreement or afford access to the properties, books or
records of Partner to, any person that has made, or that Partner has good reason
to believe may be considering making, an Acquisition Proposal. Subject to the
fiduciary duties of the Board of Directors of Partner, Partner will promptly
notify Company after receipt of any Acquisition Proposal or indication, in
writing, that any person is considering making an Acquisition Proposal and will
keep Company reasonably informed of any such offer or indication. Subject to the
fiduciary duties of the Board of Directors of Partner, Partner will not enter
into any agreement relating to any such Acquisition Proposal for a period of
seven (7) days following receipt by Company of such notification by Partner.
"Acquisition Proposal" means any proposal to (i) effect a merger or
consolidation or similar transaction involving Partner or any of its
subsidiaries; (ii) purchase, lease, or otherwise acquire ten percent (10%) or
more of the assets of Partner or any of its subsidiaries; (iii) purchase or
otherwise acquire (including by way of merger, consolidation, share exchange or
similar transaction) beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of securities representing ten percent (10%) or
more of the voting power of Partner or any of its subsidiaries; or (iv) the
assignment, transfer, licensing or other disposition of, in whole or in part,
the patents, patent rights, trade secrets or other technology of Partner or any
of its subsidiaries, other than in the ordinary course of business. Where
Partner takes action or fails to take action required by this Section 5.7 due to
a belief that to do otherwise would result in a breach of the fiduciary duties
of the Board of Directors, Partner may do so only after receipt of a written
opinion of its legal counsel or upon advice of its legal counsel confirmed by a
written opinion of such counsel, and a copy of such opinion shall be furnished
to the Company.
SECTION 5.8 RETURN OF CONFIDENTIAL INFORMATION. Promptly following the
execution of this Agreement, Partner shall exercise its right under all
confidentiality or other non-disclosure agreements entered into with parties
approached by Partner or its agents since September 30, 1995 to retrieve any and
all information provided by or on behalf of Partner to such parties.
ARTICLE VI
COVENANTS OF COMPANY
SECTION 6.1 CONDUCT OF BUSINESS BY COMPANY. From the date hereof until
the Effective Time, neither Company nor any of its subsidiaries will, without
the prior written approval of Partner:
(a) intentionally take any action that (without regard to any
action taken or agreed to be taken by Partner) would prevent Company
from accounting for the Merger as a pooling of interests; or
(b) intentionally take any action that (without regard to any
action taken or agreed to be taken by Partner) would prevent the Merger
from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
SECTION 6.2 REASONABLE EFFORTS. Subject to the fiduciary duties of its
Board of Directors, Company shall use its reasonable efforts (a) to cause to be
fulfilled and satisfied all of the conditions to the Merger to be fulfilled and
satisfied by it, (b) to cause to be performed all of the matters required of it
at or prior to the Effective Time and (c) to comply with applicable law.
SECTION 6.3 CONSENTS, APPROVALS AND FILINGS. Company will use its
reasonable efforts to obtain as promptly as possible all necessary approvals,
authorizations, consents, licenses, clearances or orders of governmental and
regulatory authorities required in order for Company to perform its obligations
hereunder.
SECTION 6.4 ADVICE OF CHANGES. Company will promptly advise Partner
orally and in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of Company contained
in this Agreement, if made on or as of the date of such event or the Effective
Time, untrue, inaccurate or incomplete in any material respect; and (ii) any
material adverse change in the working capital, financial condition, assets,
liabilities (whether absolute, accrued, contingent or otherwise), operating
profits, business or prospects of Company.
SECTION 6.5 DIRECTOR AND OFFICER LIABILITY.
6.5.1 For six years after the Effective Time, Company shall guarantee
and cause the Surviving Corporation to indemnify and hold harmless the present
and former officers and directors of Partner in respect of acts or omissions
occurring prior to the Effective Time to the extent provided under Partner's
Articles of Incorporation, Bylaws and indemnification agreements in effect on
the date hereof; provided that in the event any claim or claims are asserted or
made within such six year period, all rights to indemnification in respect of
any such claim or claims shall continue until final disposition of any and all
such claims.
6.5.2 At the Effective Time, Company shall enter into indemnification
agreements (the "Indemnification Agreements") in the form of indemnification
agreements in existence on the date hereof between Company and its executive
officers with each director and employee of Partner who, following the Effective
Time, will hold a position with Company or any of its subsidiaries comparable to
those held by employees of Company and its subsidiaries who are current parties
to such indemnification agreements.
6.5.3 The rights under this Section 6.5 shall be in addition to any
other rights under Minnesota Law or otherwise. This Section 6.5 shall survive
the consummation of the Merger.
SECTION 6.6 NASDAQ LISTING. Company shall promptly prepare and submit
an application covering the shares in accordance with the rules of the NASDAQ
National Market System of Company Common Stock to be issued in connection with
the Merger. Company shall use its reasonable efforts to have such application
approved by the NASDAQ National Market System prior to the Effective Time.
SECTION 6.7 DIRECTOR. Company shall take such action as shall be
necessary so that, at the Effective Time, Xxxxxx X. Xxxxxx (the "Designated
Director") shall be appointed to the Board of Directors of Company to fill the
vacancy created by such newly created directorship to have a term expiring at
the Company's annual meeting of shareholders to be held in 1997.
SECTION 6.8 EMPLOYEE BENEFITS.
6.8.1 From and after the Closing Date, Company shall cause Surviving
Corporation to provide employees of Partner and its subsidiaries ("Affected
Employees") with:
(i) comparable benefits to those such employees had prior to
the Effective Time or comparable to those provided to employees with
similar status and tenure of Company and its subsidiaries; and
(ii) comparable compensation, taken as a whole, to that which
such Affected Employees had prior to the Effective Time. For purposes
of this Section 6.8.1(ii) the term Affected Employees shall not include
those Partner employees referenced in Schedule 6.8.1(ii).
6.8.2 Company or its subsidiaries shall give each Affected Employee
full credit for all service with Partner and its affiliates for all purposes
under all employee benefit plans and arrangements (including, but not limited
to, any "employee benefit plan" as defined in Section 3(3) of ERISA) maintained
for such employees' benefit on and after the Closing Date.
6.8.3 For purposes of computing deductible amounts (or like adjustments
or limitations on coverage) under any "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA), expenses and claims previously recognized for
similar purposes under the applicable employee welfare benefit plan of Partner
or its subsidiary for the current plan year shall be credited or recognized
under the comparable plan maintained after the Closing by Company or its
subsidiaries on behalf of Affected Employees. Medical plan coverage shall not be
denied to any Affected Employee with respect to a particular claim under any
plan maintained by Company or its subsidiaries on the basis of the existence of
a pre-existing condition.
6.8.4 Notwithstanding anything to the contrary set forth in this
Section 6.8, Company shall have no obligation to employ an employee of Partner
or to continue the employment of any employee of Partner offered employment or
employed by Company or its subsidiaries.
SECTION 6.9 OBLIGATIONS OF MERGER SUBSIDIARY. Company shall take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and subject to
conditions set forth in this Agreement.
SECTION 6.10 ACCESS TO INFORMATION. The Company will give Partner, its
counsel, financial advisors, auditors and other authorized representatives full
access to the offices, properties, books and records of Company, will promptly
furnish to Partner, its counsel, financial advisors, auditors and authorized
representatives such financial and operating data and other information as such
persons may reasonably request, other than the information that, in the opinion
of Company's legal counsel, may not be disclosed under applicable law, and will
instruct Company's employees, counsel and financial advisors to cooperate fully
with the other party in its investigation of the business of Company; provided
that no investigation pursuant to this section shall affect any representation
or warranty given by Company to Partner hereunder. The information obtained
hereunder will be subject to the confidentiality agreement set forth in Section
11.5 below.
SECTION 6.11 NOTICES OF CERTAIN EVENTS. Company shall promptly notify
Partner of:
(i) 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) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to Company's knowledge, overtly threatened
against, relating to or involving or otherwise affecting Company which
relate to the consummation of the transactions contemplated by this
Agreement; and
(iv) any other event or change of fact or circumstance to the
date of this Agreement causing any representation contained in Article
IV of this Agreement to be, as of the date of such event or change,
materially incorrect or misleading.
ARTICLE VII
REGISTRATION STATEMENT AND RELATED MATTERS
SECTION 7.1 PREPARATION OF REGISTRATION STATEMENT. Promptly after this
Agreement is executed, Company shall prepare and file with the SEC a
registration statement on Form S-4 (the "Registration Statement") for the
purpose of registering the shares of Company Common Stock to be issued in the
Merger under the 1933 Act. Such Registration Statement shall contain a
prospectus and the Proxy Statement (the "Prospectus and Proxy Statement") which
shall include information regarding Company, Partner, the combined entity and
the terms of the Merger, among other things. Neither the Registration Statement
nor any amendments thereto shall be filed with the SEC unless approved by
Company and Partner, provided that such approval shall not be unreasonably
withheld. Each of Company and Partner shall furnish all information concerning
itself to the other as may be reasonably requested in connection with any such
action and the preparation, filing and distribution of the Registration
Statement and the Prospectus and Proxy Statement.
SECTION 7.2 ACCOUNTANT CONSENTS. Partner and Company will each cause
their respective independent accountants to provide such consents as may be
required in connection with the filing of the Registration Statement.
SECTION 7.3 STATE SECURITIES LAWS. Partner shall provide Company with
such documentation as Company shall reasonably request in order to comply with
all applicable state securities laws.
SECTION 7.4 PROXY STATEMENT; INFORMATION SUPPLIED BY PARTNER. Partner
represents and warrants to Company that the Proxy Statement will comply as to
form in all material respects with the requirements of the 1934 Act and the
rules and regulations thereunder, except that no representation is made by
Partner with respect to statements made or incorporated by reference therein
based on information supplied by Company specifically for inclusion or
incorporation by reference in the Proxy Statement. None of the information
supplied or to be supplied by Partner specifically for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement is filed with the SEC, at any time it is amended or
supplemented, and at the time it becomes effective under the 1933 Act; or (ii)
the Proxy Statement, at the date it is first mailed to Partner's shareholders
and at the time of the meeting of Partner's shareholders held to vote on
approval of this Agreement and the Merger, contains any untrue statement of any
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. Partner will
promptly advise Company in writing if at any time prior to the Effective Time of
the Merger it shall obtain knowledge of any facts that might make it necessary
or appropriate to amend or supplement the Proxy Statement or the Registration
Statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable law.
SECTION 7.5 REGISTRATION STATEMENT; INFORMATION SUPPLIED BY COMPANY.
Company represents and warrants to Partner that the Registration Statement will
comply as to form in all material respects with the requirements of the 1933
Act, and the applicable rules and regulations adopted thereunder, except that no
representation is made by Company with respect to statements made or
incorporated by reference therein based on information supplied by Partner
specifically for inclusion or incorporation by reference in the Registration
Statement. None of the information supplied or to be supplied by Company
specifically for inclusion or incorporation by reference in (i) the Registration
Statement will, at the time the Registration Statement is filed with the SEC, at
any time it is amended or supplemented, and at the time it becomes effective
under the 1933 Act; or (ii) the Proxy Statement, at the date it is first mailed
to Partner's shareholders and at the time of the meeting of Partner's
shareholders held to vote on approval of this Agreement and the Merger, contains
any untrue statement of any material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. Company will promptly advise Partner in writing if at any time prior
to the Effective Time of the Merger it shall obtain knowledge of any facts that
might make it necessary or appropriate to amend or supplement the Registration
Statement or the Proxy Statement in order to make the statements contained or
incorporated by reference therein not misleading or to comply with applicable
law.
SECTION 7.6 EFFORTS TO CLOSE PROMPTLY. Company and Partner agree to use
commercially reasonable efforts to take such acts as may be necessary or
desirable in order to promptly complete the transactions contemplated by this
Agreement.
SECTION 7.7 MAILINGS TO SHAREHOLDERS. After the Registration Statement
is declared effective, Partner shall, subject to approval by Company and its
counsel, cause the Prospectus and Proxy Statement to be mailed to its
shareholders at such time as Company shall reasonably request and in accordance
with applicable federal and state law. Partner will not, without giving prior
notice to, and without the prior approval (which shall not be unreasonably
withheld) of, Company, use any proxy material other than the Prospectus and
Proxy Statement and any other proxy material filed with the SEC prior to or
concurrently with the filing of the Prospectus and Proxy Statement.
SECTION 7.8 LETTERS OF PARTNER'S ACCOUNTANTS. Partner has delivered to
Company a letter from Xxxxx Xxxxxxxx LLP, addressed to Company and Partner,
stating that after appropriate review of the Merger Agreement and based on its
familiarity with Partner, Partner is an entity which would qualify as a party to
a pooling of interests transaction under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations, and Partner shall cause a
similar letter dated as of the Closing Date, to be delivered to Company
confirming as of the Closing Date such previously delivered letter.
SECTION 7.9 LETTERS OF COMPANY'S ACCOUNTANTS. Company has delivered to
Partner a letter from Ernst & Young LLP, addressed to Company and Partner,
stating that after appropriate review of the Merger Agreement and based on its
familiarity with Company, the Merger will qualify as a pooling of interests
transaction under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations, and Company shall cause a similar letter dated as of
the Closing Date, to be delivered to Company confirming as of the Closing Date
such previously delivered letter.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 CONDITIONS OF EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of the Partner, Company and Merger Subsidiary to
consummate the Merger are subject to the satisfaction, prior to or upon the
Closing, of the following conditions:
8.1.1 Shareholder Approval. This Agreement and the Merger shall have
been approved by the affirmative vote of the holders of a majority of shares of
outstanding Partner Common Stock in accordance with Minnesota Laws and the
Articles of Incorporation and Bylaws of Partner.
8.1.2 Governmental Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expiration of waiting periods
imposed by, any federal, state or local governmental authorities necessary for
the consummation of the transactions contemplated by this Agreement shall have
been filed, expired or obtained.
8.1.3 Registration Statement; Proxy Statement. The Registration
Statement shall have become effective under the 1933 Act and shall not be the
subject of any stop order or proceedings seeking a stop order and the Proxy
Statement shall not, at the Effective Time of the Merger, be subject to any
proceedings commenced or threatened by the SEC.
8.1.4 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any federal, state
or local governmental authorities of competent jurisdiction nor other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect.
8.1.5 Statutes. No action shall have been taken, and no statute, rule,
regulation or order shall have been enacted, promulgated or issued or deemed
applicable to the Merger by any federal, state or local governmental authorities
which would (i) make the consummation of the Merger illegal; or (ii) render the
Partner, Company or Merger Subsidiary unable to consummate the Merger, except
for any waiting period provisions.
SECTION 8.2 CONDITIONS TO THE OBLIGATIONS OF PARTNER. The obligation of
Partner to consummate the Merger is subject to the satisfaction of the following
further conditions, prior to or upon the Closing, unless waived by Partner in
its discretion:
8.2.1 Company and Merger Subsidiary shall have performed in all
material respects all of their obligations hereunder required to be performed by
them at or prior to the Effective Time.
8.2.2 The representations and warranties of Company and Merger
Subsidiary contained in this Agreement, without regard to any qualification,
materiality threshold or reference to immateriality or "Material Adverse
Effect," shall be true and correct in all respects as of the Closing Date, as
though made on and as of such date (provided that those representations or
warranties made as of a particular date need only be true and correct as of such
date), except for any inaccuracies which, individually or in the aggregate, have
not had, and would not have, a material adverse effect; provided, however, that
there shall be deemed not to be such a material adverse effect to the extent
that such effect is the result of conditions or factors affecting the economy
generally or the industry in which Company operates or the result of the
announcement of the Merger or actions taken in contemplation thereof.
8.2.3 Receipt by Partner of a certificate signed by the President of
Company and Merger Subsidiary to the effect set forth in Sections 8.2.1 and
8.2.2 above.
8.2.4 Partner shall have received, on or prior to the time that the
Registration Statement shall have become effective under the 1933 Act, an
opinion of Xxxxxx & Xxxxxxx P.L.L.P. in form and substance satisfactory to
Partner to the effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code;
(ii) Partner, Company and Merger Subsidiary will each be a party to that
reorganization within the meaning of Section 368(b) of the Code; (iii) no
income, gain or loss will be recognized for federal income tax purposes by
either Partner or Company as a result of the consummation of the Merger; and
(iv) no income, gain or loss will be recognized for federal income tax purposes
by shareholders of Partner upon the exchange in the Merger of shares of Partner
Common Stock solely for shares of Company Common Stock (except to the extent of
any cash received in lieu of fractional shares), and such opinion shall not have
been withdrawn on or prior to the Closing Date. In connection with such opinion,
counsel shall be entitled to rely upon certain representations of Partner,
Company and Merger Subsidiary.
8.2.5 The Shares shall have been approved for listing on the NASDAQ
National Market System.
8.2.6 The Designated Director shall have been elected to the Board of
Directors of the Company.
SECTION 8.3 CONDITIONS TO THE OBLIGATIONS OF COMPANY AND MERGER
SUBSIDIARY. The obligations of Company and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions,
prior to or upon the Closing, unless waived by Company in its discretion:
8.3.1 Partner shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the Closing
Date.
8.3.2 The representations and warranties of Partner contained in this
Agreement, without regard to any qualification or reference to immateriality or
"Material Adverse Effect," shall be true and correct in all respects as of the
Closing Date, as though made on and as of such date (provided that those
representations or warranties made as of a particular date need only be true and
correct as of such date), except for any inaccuracies which, individually or in
the aggregate, have not had, and would not have, a material adverse effect;
provided, however, that there shall be deemed not to be such a material adverse
effect to the extent that such effect is the result of conditions or factors
affecting the economy generally or the industry in which Partner operates or the
result of the announcement of the Merger or actions taken in contemplation
thereof.
8.3.3 Receipt by Company of a certificate signed by both the Chairman
and the President of Partner to the effect set forth in Sections 8.3.1 and 8.3.2
above.
8.3.4 Copies of resolutions of Partner's Board of Directors authorizing
this Agreement, as certified by the Secretary of Partner.
8.3.5 Receipt by Company, without expense to it, of executed originals
(or facsimiles thereof) of any and all consents, approvals, waivers and/or
acknowledgments required under any agreement identified in Schedule 3.18 of the
Disclosure Schedule, in order to permit the consummation of the transactions
provided for herein without causing or resulting in a default, event of default,
acceleration event or termination event under any of such documents and without
entitling any party to any of such documents to exercise any other right or
remedy adverse to the interests of Company thereunder, except for such consents,
approvals, waivers and/or acknowledgments with respect to which the failure to
obtain would not have a Material Adverse Effect. Each such consent, approval
and/or waiver shall be in form reasonably satisfactory to counsel for Company.
8.3.6 Company shall have received each of the letters described in
Sections 7.8 and 7.9 from Xxxxx Xxxxxxxx LLP and Ernst & Young LLP,
respectively.
8.3.7 Each Affiliate of Partner shall have entered into an Affiliate
Agreement in the form heretofore approved by Company as provided in Section 10.2
below.
8.3.8 Company shall have received the opinion, addressed to it,
described in Section 8.2.4.
8.3.9 Company shall have received the executed Shareholder Agreement of
even date herewith and there shall have been no breach thereunder by any
shareholder signatory thereof, which breach would have a material adverse effect
on the consummation of the Merger.
ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated by this Agreement may be abandoned at any time prior to the
Effective Time (notwithstanding the approval of this Agreement and the Merger by
the shareholders of Partner):
9.1.1 By mutual written consent of each of Company, Merger Subsidiary
and Partner duly authorized by the Board of Directors of Company and by the
Board of Directors of Partner.
9.1.2 By either Partner or Company if the Merger has not been
consummated by September 30, 1996.
9.1.3 By either Partner or Company if a court of competent jurisdiction
or an administrative, governmental or regulatory authority has issued a final
non-appealable order, decree or ruling, or taken any other action, having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger; provided that the party seeking to terminate this Agreement pursuant to
this Section 9.1.3 shall have complied with its obligations under Section 5.5 or
Section 6.3 of this Agreement.
9.1.4 By either Company or Partner if, at the Partner Shareholders
Meeting, (including any adjournment or postponement thereof), the requisite vote
of the shareholders of Partner is not obtained; provided, however, that if the
requisite vote of the shareholders of Partner is not obtained and, prior to the
Partner's Shareholders Meeting, any of the circumstances described in Section
9.1.6 have occurred, then termination of this Agreement will be deemed to have
occurred pursuant to Section 9.1.5 or 9.1.6 and not this Section 9.1.4.
9.1.5 By Company if (i) it is not in material breach of its obligations
under this Agreement; and (ii) either (A) Partner has breached its obligations
under Section 5.7 in any material respect, (B) the Board of Directors of Partner
has recommended, approved, accepted or entered into a definitive agreement
regarding an Acquisition Proposal, as defined in Section 5.7, or (C) an
Acquisition Proposal has been made and the Board of Directors of Partner has
withdrawn or modified(in a manner adverse to Company) its recommendation of the
Merger.
9.1.6 By Partner if (i) it is not in material breach of its obligations
under this Agreement; and (ii) either (A) the Board of Directors of Partner has
recommended, approved, accepted or entered into a definitive agreement regarding
or resolved to recommend, an Acquisition Proposal as defined in Section 5.7, or
(B) an Acquisition Proposal has been made and the Board of Directors of Partner
has withdrawn or modified (in a manner adverse to Company) its recommendation of
the Merger.
9.1.7 By Company if (i) Company is not in material breach of its
obligations under this Agreement; and (ii) there has been (A) a material breach
by Partner of any of its representations and warranties under this Agreement
such that the conditions in Section 8.3.2 will not be satisfied, or (B) a
material failure by Partner to perform any of its obligations under this
Agreement such that the conditions in Section 8.3.1 will not be satisfied, and,
in both case (A) and (B), the breach or failure has not been cured or is not
curable by September 30, 1996.
9.1.8 By Partner if (i) Partner is not in material breach of its
obligations under this Agreement; and (ii) there has been (A) a material breach
by Company of any of its representations and warranties under this Agreement
such that the conditions in Section 8.2.2 will not be satisfied, or (B) a
material failure by Company to perform any of its obligations under this
Agreement such that the conditions in Section 8.2.1 will not be satisfied, and,
in both case (A) and (B), the breach or failure has not been cured or is not
curable by September 30, 1996.
9.1.9 By Partner, if the Reference Market Value of a share of Company
Common Stock is less than $34; provided, however, that in the event that
subsequent to the date of this Agreement but prior to the Effective Time, the
outstanding shares of Company Common Stock have been changed into a different
number of shares or a different class solely as a result of a stock split,
reverse stock split, stock dividend, subdivision, reclassification, split,
combination, exchange recapitalization or other similar transaction, such price
shall be appropriately adjusted.
9.1.10 By Partner, if Company has entered into a written agreement
under which Company will be acquired by or merge with any other entity and,
after such transaction, the persons who were members of the Board of Directors
of Company prior to such transaction would not constitute a majority of the
Board of Directors of the acquiring or surviving corporation.
SECTION 9.2 EFFECTS OF TERMINATION.
9.2.1 In the event of the termination of this Agreement, the following
shall occur:
(a) The obligation of the parties to consummate the Merger
will expire.
(b) The provisions of Section 11.5 of this Agreement (and of
the confidentiality agreement referred to therein) shall survive for a
period of three years.
(c) Each party will bear its own expenses incurred in
connection with this Agreement.
9.2.2 In addition to the provisions of Section 9.2.1, in recognition of
the efforts and expenses expended and incurred by Company with respect to
Partner, the opportunity Partner presents to the Company, and the potential
intangible damage to the Company if (i) this Agreement is terminated pursuant to
Section 9.1.5 or 9.1.6; (ii) the individual shareholder parties to the
Shareholder Agreement referenced in Section 8.3.9 above shall have (A) voted any
of his or her Partner Common Stock (whether held directly or indirectly) against
this Agreement and the Merger, (B) demanded and perfected his or her Dissenters'
Rights, or (C) failed or otherwise abstained from voting his or her Partner
Common Stock at the Partner Shareholder Meeting, and the requisite vote of the
shareholders of Partner to approve this Agreement and the Merger is not
obtained; or (iii) (A) any third party makes an Acquisition Proposal or acquires
10% or more of the outstanding Partner Common Stock prior to the Partner
Shareholders Meeting, (B) the requisite vote of the shareholders of Partner is
not obtained, (C) this Agreement is terminated, and (D) within six months after
the execution of this Agreement, (x) Partner enters into an agreement relating
to an Acquisition Proposal or (y) an Acquisition Proposal is consummated, then,
in the case of each of clause (i), (ii) and (iii), Partner will pay to Company,
within five business days after demand by Company, which may be made upon the
earlier of the events specified in such clauses (by wire transfer of immediately
available funds to an account designated by Company for such purpose), a
termination fee (the "Termination Fee") equal to $10,000,000. In the event that
Partner fails to make timely payment of the Termination Fee to the Company when
due pursuant to this Section 9.2.2, Partner shall reimburse the Company for its
legal and other expenses (including interest on the Termination Fee from the
date of demand at the rate of 8.5% per annum) incurred in connection with the
efforts to obtain said payment.
ARTICLE X
OTHER AGREEMENTS
SECTION 10.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time; provided,
however, that this Section 10.1 shall not limit any agreement or covenant of the
parties which, by its terms, contemplates performance after the Effective Time.
SECTION 10.2 AFFILIATE LETTER.
10.2.1 Prior to the date hereof, Partner delivered to Company a list
identifying all persons who, in Partner's reasonable judgment, were at such time
"affiliates" of Partner within the meaning of Rule 145 of the rules and
regulations promulgated under the 1933 Act or otherwise applicable SEC
accounting releases with respect to pooling of interests accounting treatment
(the "Affiliates"). Partner shall update such list from time to time as
necessary.
10.2.2 Partner shall use its reasonable efforts to cause each person
who is identified as an Affiliate in the list referred to above to deliver to
Company prior to the date hereof a written agreement in the form attached as
Exhibit 10.2 hereto, that (A) the Affiliates will not offer to sell, sell or
otherwise dispose of any Company Common Stock issued pursuant to the Merger,
except pursuant to an effective registration statement or in compliance with
Rule 145 or another exemption from the registration requirements of the 1933
Act, (B) the Affiliate will not sell or in any other way reduce the Affiliate's
risk relative to any shares of Partner Common Stock (within the meaning of the
SEC's rules relating to pooling of interest accounting) from the date hereof
through the Effective Time, and (C) the Affiliate will not sell or in any other
way reduce the Affiliate's risk relative to any shares of Company Common Stock
received in the Merger (within the meaning of the rules and regulations
promulgated under the 1933 Act or otherwise applicable SEC accounting releases
relating to pooling of interest accounting), until such time as financial
results (including combined sales and net income) covering at least 30 days of
post-merger operations have been published in accordance with such rules. Should
other Affiliates be added to the list Partner shall use its reasonable efforts
to promptly cause such new Affiliates to deliver the Exhibit 10.2 written
agreement to the Company.
10.2.3 For so long as resales of shares of Company Common Stock issued
pursuant to the Merger are subject to the resale restrictions set forth in Rule
145 under the 1933 Act, Company will use its reasonable efforts to comply with
Rule 144(c)(1) under the 1933 Act.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing and shall be given,
if to Company or Merger Subsidiary, to:
St. Jude Medical, Inc.
Xxx Xxxxxxxx Xxxxx
Xx. Xxxx, XX 00000
Attn: Xxxxx X. X'Xxxxxx
Vice President and
General Counsel
if to Partner, to:
Daig Corporation
00000 XxXxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxxxx
Chairman and Chief
Executive Officer
or such other address as such party may hereafter specify for the purpose by
notice to the other parties hereto. Each such notice, request or other
communication shall be effective if given by any other means, when delivered at
the address specified in this section.
SECTION 11.2 AMENDMENT AND MODIFICATION. To the fullest extent
permitted by applicable law, this Agreement may be amended, modified and
supplemented with respect to any of the terms contained herein by mutual consent
of the respective Boards of Directors of Partner, Company and Merger Subsidiary,
or by their respective officers duly authorized by such Boards of Directors, by
an appropriate written instrument executed at any time prior to the Effective
Time of the Merger.
SECTION 11.3 WAIVER OF COMPLIANCE. To the fullest extent permitted by
law, each of Company, Merger Subsidiary and Partner may, pursuant to action by
its respective Board of Directors, or its respective officers duly authorized by
its Board of Directors, by an instrument in writing extend the time for or waive
the performance of any of the obligations of the other or waive compliance by
the other with any of the covenants, or waive any of the conditions of its
obligations, contained herein; provided, however, that the obtaining of the
approval of the shareholders referred to in Section 8.1.1 hereof shall not be
waivable. No such extension of time or waiver shall operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
SECTION 11.4 NO THIRD PARTY RIGHTS. Except as otherwise provided in
this Agreement, nothing herein expressed or implied is intended, nor shall be
construed, to confer upon or give any person, firm or corporation, other than
Company, Merger Subsidiary and Partner and their respective security holders,
any rights or remedies under or by reason of this Agreement, other than Section
6.5 (which is intended to be for the benefit of the persons covered by the
indemnification provisions contained therein and may be enforced by such
persons).
SECTION 11.5 CONFIDENTIALITY. The confidentiality obligations of the
parties set forth in the confidentiality agreement between the parties dated as
of November 1, 1995 are incorporated herein by reference, and the parties agree
to honor and perform all obligations set forth therein.
SECTION 11.6 EXPENSES. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
SECTION 11.7 ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties.
SECTION 11.8 GOVERNING LAWS. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of Minnesota.
SECTION 11.9 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts and by the different parties hereto
on separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 11.10 HEADINGS AND REFERENCES. The headings of the Sections and
Articles of this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof. All references herein to Sections and
Articles are to sections and articles of this Agreement, unless otherwise
indicated.
SECTION 11.11 ENTIRE AGREEMENT. This Agreement (including the exhibits
and schedules hereto, the Disclosure Schedules and the documents referred to
herein, all of which form a part hereof) and the confidentiality agreement
referenced in Section 11.5 contain the entire understanding of the parties
hereto in respect of the subject matter contained herein and supersede all prior
agreements and understandings between the parties with respect to such subject
matter. There are no restrictions, promises, representations, warranties,
covenants, or undertakings, other than those expressly set forth or referred to
herein or therein.
SECTION 11.12 PUBLICITY. Upon execution of this Agreement by Company,
Merger Subsidiary and Partner, the parties shall jointly issue a press release,
as agreed upon by them. Neither party shall, without the prior written consent
of the other, issue any statement or communication to the public or to the press
regarding this Agreement, or any of the terms, conditions or other facts with
respect to the Agreement, except as required by law or the rules of NASDAQ and
then, only (a) upon receipt of a written opinion from such party's legal
counsel; (b) to the extent required by law or the rules of NASDAQ; and (c) upon
prior notice to the other party, which notice shall include a copy of the
issuing party's opinion of legal counsel, together with a copy of the proposed
statement or communication to be issued to the press or public.
SECTION 11.13 INTERPRETATION. This Agreement has been fully negotiated
by the parties through their legal counsel. Accordingly, in interpreting this
Agreement, the rule of interpretation requiring that documents be construed
against the draftsman shall be inapplicable.
SECTION 11.14 FURTHER ASSURANCE. The parties hereto agree that each
will execute and deliver to the other any and all documents in addition to those
expressly provided for herein that may be necessary to carry out the provisions
of this Agreement, whether before, at or after the Closing.
SECTION 11.15 SEVERABILITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
any other provision.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ST. JUDE MEDICAL, INC.
By: /s/ Xxxxxx X. Matricaria
Its: President and Chief Executive Officer
PARTNER ACQUISITION CORP.
By: /s/ Xxxxx X. X'Xxxxxx
Its: Vice President
DAIG CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxxxxx
Its: Chief Executive Officer
