261932v7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 21, 2000, by and among
Northstar Computer Forms, Inc., a Minnesota corporation ("Northstar"),
Xxxxx Business Forms, Inc., a Texas corporation ("Buyer") and Polaris
Acquisition Corp., a Minnesota corporation and wholly-owned subsidiary of
Buyer ("Buyer Subsidiary"). Northstar and Buyer Subsidiary are sometimes
hereinafter collectively referred to as the "Constituent Corporations."
W I T N E S S E T H
WHEREAS, the authorized capital stock of Northstar consists of 5,000,000
shares (the "Shares") of Common Stock, $.05 par value (the "Northstar
Stock"), and 200,000 shares of non-voting Preferred Stock, without par
value (the "Northstar Preferred Stock"). As of October 31, 1999, 2,744,708
Shares of Northstar Stock were issued and outstanding and an aggregate of
532,500 Shares of Northstar Stock were reserved for issuance pursuant to
options outstanding under various Northstar option plans and grants (the
"Stock Options") and no shares of Northstar Preferred Stock were issued and
outstanding; and
WHEREAS, the authorized capital stock of Buyer Subsidiary consists of 1,000
shares of Common Stock, $.01 par value (the "Buyer Subsidiary Common
Stock"), of which 1,000 shares are issued and outstanding as of the date
hereof, all of which shares are issued to and owned by Buyer; and
WHEREAS, the respective Boards of Directors of Northstar and Buyer
Subsidiary deem a merger of Northstar and Buyer Subsidiary pursuant to the
terms hereof desirable and in the best interest of the their respective
corporations and the respective Boards of Directors of Northstar and Buyer
Subsidiary have, by resolutions duly adopted, approved and authorized the
execution and delivery of this Agreement providing for the merger of Buyer
Subsidiary into Northstar on the terms and conditions set forth herein (the
"Merger"); and
WHEREAS, the respective Boards of Directors of Northstar and Buyer
Subsidiary have directed that this Agreement be submitted to their
respective shareholders for approval as provided for by the Minnesota
Business Corporation Act (the "MBCA") and their respective Bylaws; and
WHEREAS, Buyer, as the sole shareholder of Buyer Subsidiary has, by
resolutions duly adopted, approved and authorized this Agreement and the
Merger as provided for by the Texas Business Corporation Act and its
Bylaws.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, and
for the purpose of prescribing the terms and conditions of the Merger, the
manner and basis of converting Shares of Northstar Stock into cash and
such other provisions as are deemed necessary or desirable, the parties
agree that the Merger shall be effected on the terms and subject to the
conditions set forth below and in accordance with the applicable laws of
the State of Minnesota.
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time, as defined in Section 1.3
herein, and in accordance with the terms of this Agreement and the MBCA,
Buyer Subsidiary shall be merged with and into Northstar, the separate
corporate existence of Buyer Subsidiary shall thereupon cease, and
Northstar shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation"), the name of which
shall continue to be "NORTHSTAR COMPUTER FORMS, INC."
1.2 Surviving Corporation. At the Effective Time, the Surviving
Corporation shall thereupon and thereafter possess all the rights,
privileges, immunities, powers and franchises, of a public as well as of a
private nature, of each of the Constituent Corporations, and be subject to
all the duties, liabilities and obligations of each of the Constituent
Corporations, and all the rights, privileges, immunities powers and
franchises of each of the Constituent Corporations, and all property real,
personal and mixed, and all debts due to either of the Constituent
Corporations on whatever account, including subscriptions to shares, and
all other choses in action and every other interest of or belonging to or
due to each of the Constituent Corporations shall vest in the Surviving
Corporation; and all property rights, privileges, immunities, powers and
franchises and every other interest shall be thereafter the property of the
Surviving Corporation as they were of the respective Constituent
Corporations; and the title to any real estate or any interest therein,
vested by deed or otherwise in either of the Constituent Corporations shall
not revert to or be in any way impaired by reason of the Merger; but all
rights of creditors and all liens upon any property of either of the
Constituent Corporations shall be preserved unimpaired; and all debts,
duties, liabilities and obligations of either of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation and may
be enforced against it to the same extent as if said debts, duties,
liabilities and obligations had been incurred or contracted by it.
1.3 Effective Time of the Merger. The Merger shall become effective
(the "Effective Time") as of the later to occur of (a) the filing of the
Articles of Merger with the Secretary of State of the State of Minnesota,
or (b) such later time as the parties may designate in such filing.
1.4 Articles of Incorporation and Bylaws. The Articles of
Incorporation of Northstar in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation,
until further amended in accordance with the laws of the State of
Minnesota. The Bylaws of Northstar in effect immediately prior to the
Effective Time shall be deemed, by virtue of the Merger and without further
action by the shareholders or directors of the Surviving Corporation, to be
the Bylaws of the Surviving Corporation, until further amended in
accordance with the laws of the State of Minnesota.
1.5 Board of Directors and Officers of the Surviving Corporation.
The directors of Buyer Subsidiary immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the Bylaws of the
Surviving Corporation until the expiration of the term for which such
director was elected and until his successor is elected and has qualified
or as otherwise provided in the Bylaws of the Surviving Corporation. The
officers of Northstar immediately prior to the Effective Time,
specifically, Xxxxxxx Xxxxxxxxxx, Xxxx Xxx Xxxxx, Xxxx Xxxxxxxxxx and Xxx
Xxxxxxxx, shall be the officers of the Surviving Corporation until their
respective successors are chosen and have qualified or as otherwise
provided in the Bylaws of the Surviving Corporation.
1.6 Conversion of Shares. The manner and basis of converting the
shares of each of the Constituent Corporations shall be as follows:
(a) At the Effective Time, each Share of Northstar Stock which is
issued and outstanding immediately prior to the Effective Time (other
than (i) Shares as to which dissenters' rights are exercised under
Section 302A.471 and 302A.473 of the MBCA and Section 1.7 hereof and
(ii) Shares, if any, held of record by Buyer or Buyer Subsidiary
immediately prior to the Effective Time) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted into the right to receive Fourteen Dollars ($14.00) in cash
(the "Merger Consideration"), prorated for fractional shares (if any).
(b) At the Effective Time, each share of Buyer Subsidiary Common
Stock which is issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into and exchanged for
one (1) share of Common Stock of the Surviving Corporation.
(c) At the Effective Time, each Share of Northstar Stock, if any,
held of record by Buyer or Buyer Subsidiary immediately prior to the
Effective Time which is issued and outstanding immediately prior to
the Effective Time shall be canceled and shall cease to exist, and no
payment shall be made with respect thereto.
(d) Immediately prior to the Effective Time, each Stock Option,
except for options to purchase an aggregate of 41,000 shares (the
"Xxxxxxxxxx Options") of Northstar Common Stock held by Xxxxxxx
Xxxxxxxxxx (which shall be converted into options to purchase common
stock of Buyer), shall be exercised pursuant to the Stock Option
Exercise and Sale Agreements (as defined in Section 5.5) and the
Shares underlying each such Stock Option shall be immediately resold
to Northstar in a manner which would cause the disposition to be
treated as a disqualifying disposition pursuant to Section 424(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
payment for such Shares shall be made as described in Section 1.8.
1.7 Dissenters' Rights.
(a) Notwithstanding Section 1.6, outstanding Shares of Northstar
Stock which are held by a shareholder who has properly preserved and
perfected dissenters' rights with respect to such Shares pursuant to
Section 302A.471 and 302A.473 of the MBCA shall not be converted into
the right to receive the Merger Consideration for the Shares and shall
be treated in accordance with those provisions of Minnesota law unless
and until the right of such shareholder to payment for such Shares
under Section 302A.473 of the MBCA shall cease.
(b) If any holder of Shares shall effectively withdraw or lose
(through failure to perfect or otherwise) such holder's right to
payment for any of such holder's Shares under Section 302A.473 of the
MBCA, then as of the later of the Effective Time or the occurrence of
such event, each such Share shall automatically be converted into the
right to receive the Merger Consideration, without interest thereon.
(c) Each holder of Shares who becomes entitled, pursuant to the
provisions of Section 302A.473 of the MBCA, to payment of the fair
value of any of such holder's Shares shall receive payment therefor
from the Surviving Corporation (or from the Disbursing Agent referred
to below on behalf of the Surviving Corporation) pursuant to such
provisions. Northstar shall give Buyer and Buyer Subsidiary prompt
notice upon receipt by Northstar at any time prior to the Effective
Time of any notice of intent to demand payment of the fair value for
Shares under such Section and any withdrawal of any such notice of
intent to demand payment.
1.8 Payment for Shares.
(a) At or before the Effective Time, Buyer or Buyer Subsidiary shall
deposit in immediately available funds with Bank One, Dallas, Texas
("Bank One"), or any other disbursing agent that is selected by Buyer
and reasonably satisfactory to Northstar (the "Disbursing Agent"), an
amount equal to the sum of the following: (i) the product of the
number of Shares of Northstar Stock issued and outstanding immediately
prior to the Effective Time (other than Shares held of record, if any,
by Buyer or Buyer Subsidiary), prorated for fractional shares, times
the Merger Consideration; (ii) for each Stock Option other than the
Xxxxxxxxxx Options, the product of the number of Shares of Northstar
Stock subject to such Stock Option immediately prior to the Effective
Time times the difference between the Merger Consideration and the per
share exercise price of such Stock Option immediately prior to the
Effective Time (the "Stock Option Exercise Price") (the aggregate of
such amounts being hereafter referred to as the "Fund"); and (iii)
33.33% of the Bonus Fund contemplated by Section 5.9 hereof. Out of
the Fund, the Disbursing Agent shall, pursuant to irrevocable
instructions from the holders of Northstar Stock with respect to
payment referred to in Section 1.6(a), pursuant to irrevocable
instructions from the holders of Stock Options with respect to payment
referred to in Section 1.6(d), pursuant to irrevocable instructions
from the Surviving Corporation with respect to payments referred to in
Section 1.7 and pursuant to the provisions of Section 5.9, make the
payments referred to in Sections 1.6(a), 1.6(d), 1.7 and 5.9 hereof,
subject to the requirements of paragraphs (b), (d) and (e) of this
Section 1.8. The Disbursing Agent may invest portions of the Fund as
the Surviving Corporation directs, provided that substantially all
such investments shall be in obligations of or guaranteed by the
United States of America, in commercial paper obligations receiving
the highest rating from either Xxxxx'x Investors Service, Inc. or
Standard & Poor's Corporation, or in certificates of deposit, bank
repurchase agreements or bankers' acceptances of commercial banks with
capital exceeding $100,000,000 (collectively, "Permitted
Investments"), or in money market funds which are invested solely in
Permitted Investments. Any net profit resulting from, or interest or
income produced by, such investments shall be payable to the Surviving
Corporation. Any amount remaining in the Fund one (1) year to the day
after the Effective Time may be refunded to the Surviving Corporation
at its option; provided, however, that the Surviving Corporation shall
be liable for any cash payments required to be made thereafter
pursuant to Sections 1.6(a) and 1.7 hereof, this paragraph (a) of this
Section 1.8 and paragraph (e) of this Section 1.8.
(b) As soon as practicable after the Effective Time, the Disbursing
Agent shall mail to each holder of record (other than Buyer and Buyer
Subsidiary and those holders who have exercised dissenters' rights
pursuant to Section 302A.473 of the MBCA and have not subsequently
withdrawn or lost such rights) of a certificate or certificates which
immediately prior to the Effective Time represented issued and
outstanding Shares of Northstar Stock, a form letter of transmittal
(the "Letter of Transmittal") for return to the Disbursing Agent, and
instructions for use in effecting the surrender of certificates and to
receive cash for each of such holder's Shares of Northstar Stock
pursuant to Section 1.6(a) hereof. The Letter of Transmittal shall
specify that delivery shall be effected, and risk of loss and title
shall pass, only upon proper delivery of such certificate or
certificates to the Disbursing Agent. The Disbursing Agent, as soon
as practicable following receipt of any such certificate or
certificates, together with the Letter of Transmittal duly executed
and any other items specified by the Letter of Transmittal, shall pay,
by check or draft, to the person entitled thereto, the amount
determined by multiplying (i) the number of Shares of Northstar Stock
represented by the certificate or certificates so surrendered (pro-
rated for fractional shares) by (ii) the Merger Consideration. No
interest will be paid or accrued on the cash payable upon the
surrender of the certificates or certificates.
(c) The Disbursing Agent, as soon as practicable following receipt of
irrevocable instructions from the holders of Stock Options, other than
the Xxxxxxxxxx Options, pursuant to the Stock Option Exercise and Sale
Agreements (as defined in Section 5.5), shall pay, by check or draft
to each holder thereof the amount determined by multiplying the number
of Shares of Northstar Stock subject to such Stock Option immediately
prior to the Effective Time times the difference between the Merger
Consideration and the Stock Option Exercise Price of such Stock Option
immediately prior to the Effective Time.
(d) In the event any such certificate or certificates shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such certificate or certificates to have
been lost, stolen or destroyed, the amount to which such person would
have been entitled under Section 1.8(b) hereof but for failure to
deliver such certificate or certificates to the Disbursing Agent shall
nevertheless be paid to such person, provided that the Surviving
Corporation may, in its sole discretion and as a condition precedent
to such payments require such person to give the Surviving Corporation
a bond in such sum as it may reasonably direct as indemnity against
any claim that may be had against the Surviving Corporation with
respect to the certificate or certificates alleged to have been lost,
stolen or destroyed.
(e) In addition to the foregoing, if any holder of Shares shall
become entitled to receive payment for such Shares pursuant to Section
302A.473 of the MBCA, the Surviving Corporation shall give written
instructions to the Disbursing Agent to pay either to such holder or
to the Surviving Corporation the amount to which such holder is
entitled, but not to exceed the product of (i) the number of Shares
with respect to which such holder has become entitled to receive
payment pursuant to Section 302A.473 of the MBCA (pro-rated for
fractional shares), times (ii) the Merger Consideration (which
instructions shall, if funds are to be released to the Surviving
Corporation, be accompanied, by a certificate of the Surviving
Corporation that any funds released will be remitted to such holder in
accordance with said Section 302A.473), and any remaining payment to
which such holder is entitled shall be made by the Surviving
Corporation.
1.9 No Further Rights or Transfers. At and after the Effective Time,
all Shares issued and outstanding immediately prior to the Effective Time
(including without limitation fractional shares) shall be canceled and
cease to exist, and each holder of a certificate or certificates that
represented Shares shall cease to have any rights as a shareholder of
Northstar with respect to the Shares represented by such certificate or
certificates, except for the right to surrender such holder's certificate
or certificates in exchange for the Merger Consideration for each Share
represented by the certificate or certificates or to perfect such holder's
right to receive payment for such holder's Shares pursuant to Section
302A.473 of the MBCA and Section 1.7 hereof if such holder has validly
exercised and not withdrawn or lost such holder's right to receive payment
for such holder's Shares pursuant to Section 302A.473 of the MBCA, and no
transfer of Shares shall be made on the stock transfer books of the
Surviving Corporation.
ARTICLE II
CLOSING
2.1 Time and Place. Subject to the provisions of Articles VI and VII
hereof, the closing (the "Closing") of the transactions contemplated hereby
shall take place at the offices of Parsinen Xxxxxx Xxxxxxx & Xxxxxxx, P.A.
on the same business day as, and promptly following, the Special Meeting of
the shareholders of Northstar to be called pursuant to Section 5.2 hereof
(the "Shareholder Meeting"), or at such other place or at such other time
as Northstar and Buyer may agree upon for the Closing to take place. The
date on which the Closing occurs is referred to herein as the "Closing
Date."
2.2 Deliveries at Closing.
(a) At the Closing there shall be delivered to Northstar, Buyer and
Buyer Subsidiary the opinions, certificates, and other documents and
instruments the delivery of which is contemplated under Article VI
hereof.
(b) At the Closing, Northstar and Buyer Subsidiary shall cause the
Articles of Merger to be filed and recorded in accordance with the
provisions of Section 302A.615 of the MBCA and shall take any and all
other lawful actions and do any and all other lawful things necessary
to cause the Merger to become effective.
(c) Subject to the right of the Surviving Corporation to receive a
refund of amounts remaining in the Fund one year after the Closing
Date as provided in Section 1.8 hereof, Buyer or Buyer Subsidiary
shall irrevocably deposit with the Disbursing Agent the amount
designated as the Fund and 33% of the Bonus Fund as described in
Section 1.8(a).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NORTHSTAR
Northstar represents and warrants to Buyer, Buyer Subsidiary and their
respective successors and assigns that, except as otherwise disclosed to
Buyer in a disclosure schedule of Northstar dated the date hereof (the
"Disclosure Schedule") or as set forth in the Financial Statements, as
hereafter described:
3.1 Organization, Standing and Qualification. Each of Northstar and
its one operating subsidiary, General Financial Supply, Inc. ("GFS"), is a
corporation duly organized, validly existing and in good standing under the
laws of the States of Minnesota and Iowa, respectively and has the
requisite corporate power and authority to own, lease or operate all
properties and assets owned, leased or operated by it and to carry on its
business as it is now being conducted. Each of Northstar and GFS is duly
qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned, leased or
operated, or the nature of its activities, makes such qualification
necessary, except such jurisdictions where failure to be so qualified would
not have a material adverse effect upon the consolidated business,
operations, properties, assets or the condition, financial or otherwise (a
"Material Adverse Effect"), of Northstar. Northstar has delivered to Buyer
a certified copy of its Articles of Incorporation and its Bylaws and those
of GFS. Each copy is complete and correct as of the date hereof.
3.2 Capitalization. The authorized capital stock of Northstar
consists of 5,000,000 Shares of Northstar Stock, and 200,000 shares of
Northstar Preferred Stock. As of October 31, 1999, 2,744,708 Shares of
Northstar Stock were issued and outstanding and an aggregate of 532,500
Shares of Northstar Stock were reserved for issuance pursuant to
outstanding Stock Options (all of which will be fully vested immediately
prior to the Effective Time) and no shares of Northstar Preferred Stock
were issued and outstanding. Except for the Stock Options and the Stock
Option Exercise and Sale Agreements, there are no outstanding
subscriptions, options, warrants, calls or other agreements or commitments
by which Northstar is bound in respect of the capital stock of Northstar,
whether issued or unissued, and no outstanding securities convertible into
or exchangeable for any such capital stock. Northstar has made available
to Buyer copies of the Stock Options. The identities of all holders of
Stock Options and the number of shares subject to Stock Options are listed
in Section 3.2 of the Disclosure Schedule.
3.3 Authorization and Execution. Northstar has the corporate power
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by Northstar have been duly authorized by the Board of Directors
of Northstar (the "Northstar Board") and, except for the approval of this
Agreement by the shareholders of Northstar required by the MBCA, no further
corporate action is necessary on the part of Northstar to consummate the
transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of Northstar, enforceable against Northstar in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a court of law or equity).
3.4 Non-Contravention. Except as disclosed in Section 3.4 of the
Disclosure Schedule, neither the execution and delivery of this Agreement
by Northstar, nor the consummation by Northstar of the transactions
contemplated hereby, will (i) conflict with or result in a breach of the
Articles of Incorporation or Bylaws as currently in effect of Northstar,
(ii) except for any applicable requirements under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 (the "Xxxx-Xxxxx-Xxxxxx Act") and the
filing of Articles of Merger with the Secretary of State of the State of
Minnesota, require the consent or approval of any governmental authority
having jurisdiction over any of the business or assets of Northstar, (iii)
violate any statute or regulation applicable to Northstar or GFS, or (iv)
result in a breach of, or constitute a default or an event which, with the
passage of time or the giving of notice, or both, would constitute a
default, give rise to a right of termination, cancellation or acceleration,
create any entitlement to any payment or benefit, require the consent of
any third party or result in the creation of any lien on the assets of
Northstar under, any other instrument, contract or agreement to which
Northstar is a party or by which the properties or assets of Northstar may
be bound (except, in the case of clauses (ii), (iii) and (iv), where such
violation, breach, default, termination, cancellation, acceleration,
payment, benefit or lien, or the failure to make such filing or obtain such
consent or approval, would not impair the ability of Northstar to
consummate the transactions contemplated by this Agreement and would not
have, individually or in the aggregate, a Material Adverse Effect or which
will be waived, cured, terminated or obtained prior to the Effective Time).
3.5 Financial Statements. Except as disclosed in Section 3.22 of the
Disclosure Schedule, Northstar's audited consolidated financial statements
included in its annual reports on Form 10-K for the fiscal years ended
October 31, 1999 and 1998, respectively, and Form 10-KSB for the fiscal
year ended October 31, 1997 (the "Financial Statements") have been prepared
on the basis of Northstar's books and records and in conformity with
generally accepted accounting principles consistently applied (except as
may be indicated in the notes thereto) and present fairly the consolidated
financial position of Northstar as of such dates and the results of its
consolidated operations for the periods then ended.
3.6 Absence of Certain Changes/Events. Except as described in
Section 3.6 and elsewhere in the Disclosure Schedule or as otherwise
contemplated by this Agreement, since October 31, 1999, neither Northstar
nor GFS has (i) split, combined or reclassified any shares of its capital
stock or made any other changes in its equity capital structure; (ii)
purchased, redeemed or otherwise acquired, directly or indirectly, any
shares of its capital stock; (iii) declared, set aside or paid any dividend
or made any other distribution in respect of shares of its capital stock;
(iv) issued any shares of its capital stock (except pursuant to the
exercise of outstanding Stock Options) or any options, rights or warrants
to purchase any such capital stock or any securities convertible into or
exchangeable for any such capital stock, except for and the acceleration of
vesting of the Stock Options; (v) purchased any capital assets or made any
capital expenditures for a price or in an amount which exceeded $1,000,000
in the aggregate; (vi) sold, leased, encumbered, mortgaged or otherwise
disposed of any material assets or properties, other than in the ordinary
course of business or the issuance of Permitted Liens (as defined in
Section 3.10 below); (vii) incurred, assumed or guaranteed any indebtedness
for money borrowed other than in the ordinary course of business and
intercompany indebtedness; (viii) granted any increases in employee
benefits; (ix) granted any increases in employee compensation other than in
the normal course of business; (x) changed or modified in any material
respect any existing accounting method, principle or practice other than as
required by generally accepted accounting principals: (xi) voluntarily
terminated any instrument, contract or agreement which, but for such
termination, would have constituted a Material Contract (other than
terminations of instruments, contracts or agreements which expired in
accordance with their terms); (xii) entered into any commitment to do any
of the foregoing; or (xiii) suffered any business interruption, damage to
or destruction of its properties or other incident, occurrence or event
(other than changes generally applicable to the industry in which Northstar
and GFS are involved or changes in general economic conditions) which has
had or could reasonably be expected to have (after giving effect to
insurance coverage) a Material Adverse Effect.
3.7 [Intentionally blank]
3.8 Tax Matters.
(a) Except as set forth in Section 3.8 of the Disclosure Schedule,
and Northstar's 1999 consolidated tax return, for which an extension
was filed, each of Northstar and GFS (as applicable) has timely filed
all tax returns and reports required to be filed by it, and has paid
in a timely manner all taxes owed with respect to such returns. Such
tax returns to Northstar's knowledge were correct and complete in all
material respects. All taxes known by Northstar or GFS to be owed have
been paid. Northstar and GFS have withheld and paid all taxes required
to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder,
or other third party.
(b) No claim known to Northstar has been made by an authority in a
jurisdiction where Northstar or GFS does not file tax returns that
Northstar or GFS may be subject to taxation by that jurisdiction.
There are no security interests on any of the assets of Northstar or
GFS that arose in connection with any failure (or alleged failure) to
pay any tax.
(c) There are no pending audits or investigations or, to the best
knowledge of Northstar, audits or investigations threatened within the
last three years relating to any taxes for which Northstar or GFS may
become liable. No material deficiencies for any taxes have been
asserted or assessed against Northstar or GFS that have not been
settled. There are no agreements in effect to extend the period of
limitations for the assessment or collection of any taxes for which
Northstar or GFS may become liable, and no requests for any such
agreements are pending.
(d) Neither Northstar nor GFS has (a) waived any statute of
limitations in respect of taxes, (b) filed a consent under Code
341(f) concerning collapsible corporations, or (c) been a United
States real property holding corporation within the meaning of Code
897(c)(2) during the applicable period specified in Code
897(c)(1)(A)(ii). Except for the existing Management Agreements with
its senior executive officers, neither Northstar nor GFS has made any
payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Code 280G.
(e) For purposes of this Agreement, the term "tax" shall include (i)
all federal, state, local and foreign taxes, assessments, levies,
duties, license fees, registration fees, withholdings, or other
similar governmental charges, and (ii) any interest, penalties or
additions to tax imposed on a tax described herein.
(f) Northstar has no tax sharing agreements or similar agreements.
3.9 Real Property and Leasehold Property. Northstar's Form 10-K for
its 1999 fiscal year contains a description of (i) a parcel of real
property owned by Northstar located in Brooklyn Park, Minnesota (the
"Minnesota Fee Property"), and (ii) a parcel of real property owned by GFS
located in Nevada, Iowa (the "Iowa Fee Property"). The Minnesota Fee
Property and the Iowa Fee Property are hereinafter sometimes collectively
referred to as the "Fee Properties" with the legal descriptions of the Fee
Properties included in Section 3.9 of the Disclosure Schedule. Northstar's
Form 10-K for its 1999 fiscal year contains a description of five (5)
properties leased to either Northstar or GFS (the "Leases") with the
parties to the leases and the common address of such premises more
particularly described in Section 3.9 of the Disclosure Schedule
(collectively, the "Leased Properties"). The Fee Properties and the Leased
Properties are hereinafter sometimes collectively referred to as the "Real
Property."
(a) Northstar and/or GFS, as the case may be, owns good and
marketable title to the Fee Properties, and have valid leasehold
interests in the Leased Properties, subject to in both cases liens of
mortgages and other security interests in the Real Property and other
exceptions as listed in Section 3.9 of the Disclosure Schedule and, in
all cases, subject to standard and customary exceptions which do not
materially and adversely affect Northstar's or GFS's, as the case may
be, ownership, use, possession or rights in and to the Real Property;
(b) All of the Leases are in full force and effect and are valid,
binding and enforceable in accordance with their respective terms,
except as may be subject to and limited by the effect of (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereinafter in effect relating
to or affecting creditors' rights, and (ii) general principles of
equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing. There does not exist
under any of the Leases any event which with notice or lapse of time
or both would constitute a default that would have a Material Adverse
Effect;
(c) There are no claims, actions, suits or proceedings against
Northstar or GFS affecting any of the Real Property pending, or to the
knowledge of Northstar, threatened, which would have a Material
Adverse Effect;
(d) None of the Real Property is subject to any liens, claims or
encumbrances except (i) liens, claims, encumbrances disclosed on
Section 3.9 of the Disclosure Schedule, (ii) liens for taxes and
assessments not yet due, or (iii) other recorded use and building
restrictions, and customary and normal easements for utilities and
zoning restrictions, which do not materially adversely affect
Northstar's or GFS's ownership, use, possession or rights in and to
the Real Property; and
(e) All of the Real Property is serviced by all utilities as are
necessary for the current conduct of the business of Northstar and GFS
and, to Northstar's knowledge, there are no threatened curtailment or
reduction of any such utilities.
(f) Neither the execution, delivery or performance of this Agreement
will result in the termination of any of the Leases or create in the
lessors thereunder the right to terminate any of the Leases.
3.10 Personal Property. Northstar and/or GFS (as applicable) has good
and valid title to all material personal property owned by it, free and
clear of all liens, security interests, charges and encumbrances, except
(i) liens for taxes, assessments and other governmental charges which are
not due and payable, (ii) mechanics', materialmens', carriers', workmens',
warehousemens', repairmens', landlords' or other like liens securing
obligations which are not due and payable, (iii) liens, security interests,
charges and encumbrances evidenced by any lease, contract or agreement
which is described in Section 3.10 of the Disclosure Schedule, (iv)
imperfections of title and liens, charges and encumbrances which do not
materially detract from the value or materially interfere with the present
use of the property subject thereto or affected thereby, and (v) other
liens, security interests, charges and encumbrances described in the
Disclosure Schedule (collectively, the "Permitted Liens").
3.11 Material Contracts. Except as disclosed in Section 3.11 of the
Disclosure Schedule, or any other representation in this Agreement, neither
Northstar nor GFS is a party to or bound by any:
(a) employment, consulting, independent contractor or similar service
contract (other than those that are terminable by Northstar or GFS
without cost or penalty upon 60 days' or less notice);
(b) material sales representative or distributorship agreement;
(c) operating lease, whether as lessor or lessee, with respect to any
real property or any tangible personal property (except the Leases or
any lease of tangible personal property calling for payments of less
than $25,000 per year);
(d) material contract, whether as licensor or licensee, for the
license of any patent, know-how, trademark, tradename, servicemark,
copyright or other intangible asset (other than non-negotiated
licenses for commercially available computer software);
(e) material loan agreement, indenture or other instrument, contract
or agreement under which any money has been borrowed or loaned or any
note, bond or other evidence of indebtedness has been issued, except
as specified in the Financial Statements;
(f) mortgage, security agreement, conditional sales contract, capital
lease or similar agreement which effectively creates a lien on any
assets of Northstar or any of its Subsidiaries (other than any
conditional sales contract, capital lease or similar agreement which
creates a lien only on tangible personal property and under which
there exists an aggregate unpaid liability of less than $25,000 per
contract, lease or agreement);
(g) contract for the purchase or sale of capital assets or for the
making of capital expenditures under which there exists an aggregate
unpaid liability of $200,000 or more per contract;
(h) purchase or sale order for merchandise or supplies which (i) was
not entered into in the ordinary course of business, involves payments
of $50,000 or more and is not terminable by Northstar or any of its
Subsidiaries without cost or penalty upon 60 days' or less notice, or
(ii) is a material standing or similar order with a remaining term of
more than one year and is not terminable by Northstar or any of its
Subsidiaries without cost or penalty upon 60 days' or less notice;
(i) contract for advertising or promotional services to be rendered
for Northstar or GFS which involves payment of $25,000 or more per
year (other than those that are terminable by Northstar or any of its
Subsidiaries without cost or penalty upon 60 days' or less notice);
(j) contract restricting Northstar or GFS in any material respect
from engaging in business or from competing with any other parties;
plan of reorganization; partnership or joint venture agreement; or
other contract not made in the ordinary course of business which
involves payment of $50,000 or more per year and is not terminable by
Northstar of any of its Subsidiaries without cost or penalty upon 60
days' or less notice; or
(k) customer contract for the provision by Northstar or GFS of goods
and/or services in excess of $500,000 per year.
All of the foregoing are hereinafter collectively called "Material
Contracts." To the extent Material Contracts are evidenced by documents,
true and complete copies thereof have been made available to Buyer. Each
Material Contract is in full force and effect. Neither Northstar nor GFS
nor, to the knowledge of Northstar, any other party, is in breach of or in
default under any of the Material Contracts, except for breaches or
defaults which have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as
disclosed in Section 3.11 of the Disclosure Schedule, no Material Contract
will terminate as a result of the Merger.
3.12 Intellectual Property. Section 3.12 of the Disclosure Schedule
contains a complete and correct list of all material patents and registered
trademarks, tradenames, servicemarks and copyrights, and all applications
for any of the foregoing (collectively, the "Proprietary Rights"), held by
Northstar or GFS. Neither Northstar nor GFS has received any written
notice that any Proprietary Rights have been declared unenforceable or
otherwise invalid by any court or governmental agency. To the knowledge of
Northstar, there is no material existing infringement, misuse or
misappropriation of any Proprietary Rights by others. Except as disclosed
on the Disclosure Schedule, neither Northstar nor GFS has received any
written notice alleging that the operation of their respective businesses
infringes in any material respect upon the intellectual property rights of
others.
3.13 Litigation. There are no litigation, arbitration or
administrative proceedings, abatement orders or investigations of any kind
pending or, to the knowledge of Northstar, threatened within the last three
years against Northstar, GFS or any of their respective officers, employees
or directors in connection with the business or affairs of Northstar or GFS
(except those in which Northstar or GFS is a plaintiff directly but not
derivatively), which (i) if decided adversely to Northstar or GFS, or such
officer, employee or director, would have, individually or in the
aggregate, a Material Adverse Effect, or (ii) seek to enjoin or otherwise
challenges the consummation of the transactions contemplated by this
Agreement. Neither Northstar nor GFS is identified as a party subject to
any material restrictions or limitations under any judgment, order or
decree of any court, administrative agency or commission or other
governmental authority.
3.14 Permits, Licenses, Authorizations. Except as set forth in
Section 3.14 of the Disclosure Schedule, each of Northstar and GFS has all
licenses, franchises, permits and other governmental authorizations
necessary to conduct its business. Neither Northstar nor GFS is in
violation of any license, franchise, permit or other governmental
authorization the result of which would have a Material Adverse Effect.
3.15 No Brokers or Finders. Except for U.S. Bancorp Xxxxx Xxxxxxx,
Inc. ("Piper"), Northstar has not engaged any investment banker, broker or
finder in connection with the transactions contemplated hereby. The
Surviving Corporation shall be liable for and shall pay the all unpaid
obligations of Northstar under its engagement letter with Piper.
3.16 Retirement and Benefit Plans.
(a) Each employee pension benefit plan ("Pension Plan") as such term
is defined in Section 3 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and each deferred compensation, bonus,
incentive, stock incentive, option, stock purchase or other employee
benefit plan, agreement, commitment or arrangement ("Benefit Plan"),
which is currently maintained by Northstar or GFS or to which
Northstar or GFS currently contributes or is under any current
obligation to contribute (collectively, the "Employee Plans" and
individually, an "Employee Plan") is listed in Section 3.16 of the
Disclosure Schedule and, to the extent an Employee Plan is evidenced
by documents, true and complete copies thereof have been made
available to Buyer.
(b) Each of Northstar and GFS has made on a timely basis all
contributions or payments required to be made by it pursuant to the
terms of the Employee Plans, ERISA, the Code or other applicable laws,
unless such contributions or payment that have not been made are
immaterial in amount and the failure to make such payments or
contributions will not materially and adversely affect the Employee
Plans. No Pension Plan is a "defined benefit plan" within the meaning
of ERISA.
(c) Each Employee Plan (and any related trust or other funding
instrument) is being administered in all material respects in
compliance with its terms and in both form and operation is in
compliance in all material respects with the applicable provisions of
ERISA, the Code and other applicable laws and regulations, and all
material reports required to be filed with any governmental agency
with respect to any Pension Plan have been timely filed.
(d) There are no material litigation, arbitration or administrative
proceedings pending or, to the knowledge of Northstar, threatened
against Northstar or GFS or any plan fiduciary by the Internal Revenue
Service, the U.S. Department of Labor, the Pension Benefit Guaranty
Corporation or any participant or beneficiary with respect to any
Employee Plan. Neither Northstar nor GFS nor, to the knowledge of
Northstar, any plan fiduciary of any Pension Plan has been engaged in
any transaction in violation of Section 460(a) or (b) of ERISA for
which no exemption exists under Section 408 of ERISA or any
"prohibited transaction" as defined in Section 4975(a)(i) of the Code
for which no exemption exists under Section 4975(e)(ii) or 4975(d) of
the Code, or is subject to any excise tax imposed by the Code or ERISA
with respect to any Employee Plan.
(e) Neither Northstar nor GFS has have ever been a sponsor of,
contributed to or been under an obligation to contribute to, any
"multi-employer plan," as such term is defined in Section 3(37) of
ERISA.
3.17 Environmental and Safety Laws. To the knowledge of Northstar,
except as set forth in Section 3.17 to the Disclosure Schedule, neither
Northstar nor GFS is in violation of any applicable federal, state, local
statute, law, common law, or regulation relating to environmental matters.
To the knowledge of Northstar, except as set forth in Section 3.17 to the
Disclosure Schedule, neither Northstar nor GFS, or any other entity or
person has, at any time, with respect to the Real Property (i) "released,"
"discharged," or actively or passively consented to the "release,"
"discharge," or "threatened release" of any Hazardous Substance (as defined
below); (ii) taken any action in "response" to a "release;" or (iii) failed
to give notice of the "discharge" if required by applicable law; or (iv)
otherwise engaged in any activity or omitted to take any action which could
subject it to claims for intentional or negligent torts, strict or absolute
liability, either pursuant to statute or common law, in connection with
Hazardous Substances located in or about their respective properties,
including the generating, transporting, treating, storage or manufacture of
any Hazardous Substance. The terms set within quotation marks above shall
have the meaning given to them in the Comprehensive Environmental Response
and Liability Act, 42 U.S.C. Section 6901, et. seq., as amended by the
Super Fund Amendments and Reauthorization Act of 1986 ("CERCLA"), RECRA (as
defined below), or any other federal, state or local environmental law,
including but not limited to the Minnesota Environmental Response and
Liability Act, Minn. Stat. 115B ("XXXXX") and the Minnesota Petroleum Tank
Release Cleanup Act, Minn. Stat. 115C, (all such laws being referred to
collectively as the "Environmental Laws"). "Hazardous Substances" means
hazardous waste, urea formaldehyde, polychlorinated biphenyls, asbestos,
petroleum, natural gas, radon, synthetic gas used for fuel or mixtures
thereof, any materials related to any of the foregoing, and substances
defined as "hazardous substances," "toxic substances," "hazardous waste,"
"pollutant," "contaminant," "source material," "special nuclear materials"
and "by-product material" in CERCLA, the Resource Conservation Recovery Act
as amended 42 U.S.C. Section 6901, et. seq. ("RECRA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et. seq., the Clean
Water Act, 33 U.S.C. Section 1251, et. seq., XXXXX and all other federal,
state, local and governmental environmental laws or any regulations
promulgated pursuant to any of the foregoing statutes.
3.18 Affiliate Transactions. Except as described in Northstar's
Annual Report on Form 10-K for the fiscal year ended October 31, 1999, no
affiliate of Northstar or GFS (other than the other of Northstar or GFS)
(i) furnishes or sells material services or products that Northstar or GFS
furnishes or sells or currently proposes to furnish or sell, (ii) purchases
from or sells or furnishes to Northstar or GFS any material goods or
services, or (iii) owns or leases any material property, real or personal,
that is used by Northstar or GFS.
3.19 Labor Matters. Neither Northstar nor GFS is suffering an
existing labor dispute or disturbance which has had or could reasonably be
expected to have a Material Adverse Effect. The employees of Northstar and
GFS are not represented by any union and there are no pending or, to the
knowledge of Northstar, threatened representation questions concerning the
employees of Northstar or GFS. Neither Northstar nor GFS is subject to any
collective bargaining agreement with any employee union. There are no EEOC
claims pending against Northstar or GFS nor, to the knowledge of Northstar,
are any such claims threatened.
3.20 Insurance. Section 3.20 of the Disclosure Schedule contains a
list of all insurance policies maintained by Northstar and GFS, together
with a brief description of the coverages afforded thereby. All of such
insurance policies are in full force and effect.
3.21 Proxy Statement. None of the information supplied by or on
behalf of Northstar for inclusion in the Proxy Statement (as hereinafter
defined) will, at the time that the Proxy Statement is mailed to the
shareholders of Northstar, and at the time of the meeting of the
shareholders to which the Proxy Statement relates (the "Shareholder
Meeting") contain any untrue statement of a 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 are
made, not misleading or to correct any statement in any earlier
communication with respect to the solicitation of any proxy or approval for
the Shareholder Meeting (except that no representation is made by Northstar
with respect to statements made in the Proxy Statement based on information
furnished to Northstar by Buyer or Buyer Subsidiary specifically for
inclusion in the Proxy Statement).
3.22 1999 and 1998 Forms 10-K. Except as disclosed in Section 3.22 of
the Disclosure Schedule, none of the information supplied by or on behalf
of Northstar for inclusion in its Annual Reports on Form 10-K for the
fiscal years ended October 31, 1999 and 1998, respectively, contained any
untrue statement of a material fact, or omitted 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, not misleading,
except for information which was subsequently clarified or corrected in
subsequent reports filed pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
BUYER AND BUYER SUBSIDIARY
Buyer and Buyer Subsidiary, jointly and severally, hereby represent
and warrant to Northstar and its successors and assigns that:
4.1 Organization, Standing, Equity Ownership. Each of Buyer and Buyer
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its state of organization. Buyer owns all of
the issued and outstanding stock of Buyer Subsidiary. Buyer has delivered
to Northstar certified copies of both its and Buyer Subsidiary's Articles
or Certificate of Incorporation and Bylaws. Each copy is complete and
correct as of the date hereof.
4.2 Authorization and Execution. Each of Buyer and Buyer Subsidiary
has the corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by Buyer and Buyer Subsidiary have been
duly authorized by their respective Boards of Directors and by Buyer as the
sole shareholder of Buyer Subsidiary, and no further corporate action is
necessary on the part of Buyer or Buyer Subsidiary to consummate the
transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of each of Buyer and Buyer Subsidiary,
enforceable against Buyer and Buyer Subsidiary in accordance with its
terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought
in a court of law or equity).
4.3 Non-Contravention. Neither the execution and delivery of this
Agreement by Buyer or Buyer Subsidiary, nor the consummation by Buyer and
Buyer Subsidiary of the transactions contemplated hereby, will (i) conflict
with or result in a breach of the Articles or Certificate of Incorporation
or Bylaws as currently in effect of Buyer or Buyer Subsidiary,
respectively, (ii) except for any applicable requirements under the Xxxx-
Xxxxx-Xxxxxx Act and the filing of Articles of Merger with the Secretary of
State of the State of Minnesota, require the consent or approval of any
governmental authority having jurisdiction over any of the business or
assets of Buyer or Buyer Subsidiary, (iii) violate any statute or
regulation applicable to Buyer or Buyer Subsidiary, or (iv) result in a
breach of, or constitute a default or an event which, with the passage of
time or the giving of notice, or both, would constitute a default, give
rise to a right of termination, cancellation or acceleration, create any
entitlement to any payment or benefit, require the consent of any third
party or result in the creation of any lien on the assets of Buyer or Buyer
Subsidiary under, any other instrument, contract or agreement to which
Buyer or Buyer Subsidiary is a party or by which the properties or assets
of Buyer or Buyer Subsidiary may be bound (except, in the case of clauses
(ii), (iii) and (iv), where such violation, breach, default, termination,
cancellation, acceleration, payment, benefit or lien, or the failure to
make such filing or obtain such consent or approval, would not impair the
ability of Buyer or Buyer Subsidiary to consummate the transactions
contemplated by this Agreement).
4.4 Litigation. There is no litigation, arbitration, administrative
proceedings, abatement orders or investigations of any kind pending or, to
the knowledge of Buyer or Buyer Subsidiary, threatened against Buyer or
Buyer Subsidiary which seeks to enjoin or otherwise challenges the
consummation of the transactions contemplated by this Agreement.
4.5 No Brokers or Finders. Neither Buyer nor Buyer Subsidiary has
engaged any investment banker, broker or finder in connection with the
transactions contemplated hereby.
4.6 Availability of Funds. Buyer shall obtain and deliver to
Northstar upon execution of this Agreement a loan commitment from Bank One
sufficient to enable it to consummate the transactions contemplated by this
Agreement, and the consummation of such transactions will not render Buyer
insolvent nor cause Buyer, Buyer Subsidiary or Northstar to be in violation
of any corporate statute restricting the ability of any of them to make
distributions on account of its capital stock.
4.7 Proxy Statement. None of the information supplied by or on
behalf of Buyer or Buyer Subsidiary for inclusion in the Proxy Statement
will, at the time the Proxy Statement is mailed to the shareholders of
Northstar, and at the time of the Shareholder Meeting, contain any untrue
statement of a 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 are made, not misleading or to
correct any statement in any earlier communication with respect to the
solicitation of any proxy or approval for the Shareholder Meeting.
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO THE EFFECTIVE TIME
5.1 Operation of Business of Northstar Between the Date of this
Agreement and the Effective Time. During the period from the date hereof
to the Effective Time, except as otherwise consented to in writing by Buyer
or as expressly contemplated by this Agreement:
(a) Northstar will use all reasonable efforts to preserve
substantially intact its business organization, keep available the
services of its present officers and key employees, and preserve its
present relationships with entities and persons having material
business dealings with Northstar.
(b) Northstar shall conduct its business and operations in the
ordinary and usual course in substantially the same manner as
heretofore conducted.
(c) Northstar shall not (i) amend its Articles of Incorporation or
Bylaws, (ii) increase or decrease the number of authorized shares of
its capital stock, as set forth in Section 3.2 hereof, (iii) split,
combine or reclassify any shares of its capital stock or make any
other changes in its equity capital structure, (iv) purchase, redeem
or cancel for value, directly or indirectly, any shares of its capital
stock or any options, rights or warrants to purchase any such capital
stock or any securities convertible into or exchangeable for any such
capital stock, or (v) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property in respect of
shares of its capital stock.
(d) Except as otherwise contemplated by this Agreement, consented to
in writing by Buyer or pursuant to the ongoing exercise of previously
granted Stock Options, Northstar shall not (i) issue, grant, sell or
pledge, or agree to propose to issue, grant, sell or pledge, any
shares of capital stock of Northstar (other than the issuance of
Northstar Stock upon the exercise of Stock Options heretofore granted
by Northstar), or any options, rights or warrants to purchase any such
capital stock or any securities convertible into or exchangeable for
such capital stock, or any stock appreciation rights or performance
shares based upon the value of any such capital stock, and shall not
permit any shares of Northstar Preferred Stock or any options, rights
or warrants to purchase any Northstar Preferred Stock or any
securities convertible into or exchangeable for Northstar Preferred
Stock to be outstanding, (ii) purchase, lease or otherwise acquire
(including without limitation acquisitions by merger, consolidation or
stock or asset purchase) any assets or properties in excess of
$25,000, (iii) sell, lease, encumber, mortgage or otherwise dispose of
any assets or properties which are material to Northstar, other than
dispositions in the ordinary course of business, (iv) waive, release,
grant or transfer any rights of value or modify or change in any
material respect any material existing license, contract or other
document, (v) incur any material indebtedness for money borrowed, (vi)
incur any other liability or obligation, other than in the ordinary
course of business, or assume, guarantee, endorse (other than
endorsements of checks in the ordinary course of business) or
otherwise as an accommodation become responsible for the obligations
of any other individual or entity, (vii) enter into any new material
employee benefit plan, program or arrangement or amend (except as
required by law) any existing employee benefit plan, program or
arrangement or any existing employment, severance or consulting
agreements, or, other than in the ordinary course of business, grant
any increases in compensation or benefits, (viii) adopt any collective
bargaining agreement, (ix) enter into any other transaction, other
than in the ordinary course of business and substantially consistent
with past practices (except for providing a release to its officers
and directors), (x) make any tax election or settle or compromise any
material federal, state, local or foreign income tax liability, (xi)
merge or consolidate with any other corporation, or (xii) enter into
any contract, agreement, commitment or arrangement with respect to any
of the foregoing. Notwithstanding the foregoing, Northstar shall be
permitted to purchase or make arrangements to purchase an extension of
its existing officers' and directors' liability policy for a premium
amount not to exceed $100,000.
(e) Northstar shall promptly advise Buyer of any change in its
consolidated condition (financial or otherwise), properties, assets,
liabilities, business, operations or prospects which is or may
reasonably be expected to be have a Material Adverse Effect.
(f) Northstar shall not, without the consent of Buyer, settle or
compromise any claim with respect to Northstar shareholders who
dissent from the Merger.
5.2 Shareholder Meeting; Proxy Materials.
(a) Northstar shall cause a meeting of its shareholders to be duly
called and held on not less than twenty (20) days' written notice as
soon as reasonably practicable after the execution of this Agreement
for the purpose of voting on the adoption of this Agreement
("Shareholder Meeting") unless the Northstar Board, in the exercise of
its fiduciary duties after consultation with counsel, shall determine
that such a meeting should not be held.
(b) Northstar will promptly prepare a proxy statement, together with a
form of proxy, with respect to the Shareholder Meeting satisfying all
applicable requirements of Minnesota law and of the Exchange Act, and the
rules and regulations of the Securities and Exchange Commission thereunder
(such proxy statement, together with any amendments thereof or supplements
thereto in each case in the form mailed to Northstar's shareholders, being
herein called the "Proxy Statement") and shall file with the Securities and
Exchange Commission a preliminary form of Proxy Statement, together with
all other filings, if any, required under the Exchange Act. As to matters
in the Proxy Statement concerning Buyer and Buyer Subsidiary, Northstar
shall rely on information provided by Buyer and Buyer Subsidiary.
Northstar will mail the Proxy Statement not less than twenty (20) days
prior to the Shareholder Meeting referred to in Section 5.2(a) hereof to
all shareholders of record of Northstar entitled to vote on the Merger at
their addresses of record on the transfer record of Northstar unless the
Northstar Board, in the exercise of its fiduciary duties after consultation
with counsel, shall determine to withdraw its approval or recommendation of
the Merger and that therefore such mailing should not be made. If
necessary, in light of developments occurring subsequent to the mailing of
the Proxy Statement, Northstar will send to its shareholders such
supplemental proxy materials as may be necessary to make the Proxy
Statement, as so supplemented, not false or misleading with respect to any
material fact on the date of the Shareholder Meeting, and omitting no
material fact necessary to prevent the Proxy Statement from being
misleading.
5.3 Access to Information. From the date hereof until the Effective
Time, Northstar will give Buyer and its counsel, financial advisors,
auditors and other authorized representatives as well as those of Buyer
Subsidiary (collectively, the "Buyer Representatives") reasonable access to
the offices, properties, books and records of Northstar and GFS at all
reasonable times and upon reasonable notice, will have instructed the
employees, counsel, financial advisors and auditors of Northstar and GFS to
cooperate with Buyer and each such representative in all reasonable
respects in its investigation of the business of Northstar and GFS. Buyer
and each of the Buyer Representatives will conduct such investigation in a
manner as to not unreasonably interfere with the operations of Northstar
and GFS. Buyer shall, and shall cause each of the Buyer Representatives to
hold confidential all information obtained hereunder or otherwise with
respect to Northstar and all analyses, compilations, data, studies or other
documents based in whole or in part on any such information prepared by or
on behalf of Buyer or the Buyer Representatives, not use any information
obtained hereunder or otherwise from Northstar for any purpose other than
evaluating the transactions contemplated by this Agreement and, at
Northstar's request in the event of termination of this Agreement pursuant
to Section 7.1 hereof, return to Northstar all copies of information
obtained hereunder or otherwise from Northstar.
5.4 Xxxx-Xxxxx-Xxxxxx Act. Each of Northstar, Buyer and Buyer
Subsidiary will file, as soon as practicable, any Notification and Report
Forms and related material that they may be required to file with the
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the Xxxx-Xxxxx-Xxxxxx Act, will exercise all
reasonable efforts to obtain an early termination of the applicable waiting
period, and will make any further filings pursuant thereto that may be
necessary or advisable.
5.5 Stock Options. Northstar shall obtain from all holders of Stock
Options (except the Xxxxxxxxxx Options) duly executed Stock Option Exercise
and Sale Agreements which will provide that the holders thereof will
exercise their Stock Options immediately prior to the Effective Time of the
Merger and sell the Shares thereunder to Northstar in exchange for payment
from Buyer in accordance with Section 1.8(a) and such shares of Northstar
Stock underlying such Stock Options shall be deemed cancelled (the "Stock
Option Exercise and Sale Agreements"). The Stock Option Exercise and Sale
Agreements shall be in a form reasonably satisfactory to Northstar and
Buyer. Payment for each Stock Option other than the Xxxxxxxxxx Options
shall be made in cash and be equal to the product of the number of Shares
subject to such Stock Option immediately prior to the Effective Time times
the difference between the Merger Consideration and the Stock Option
Exercise Price immediately prior to the Effective Time.
5.6 [Intentionally Blank].
5.7 Voting Agreement. Upon execution of the Merger Agreement,
holders of not less than 39% of the outstanding Northstar Common Stock
shall execute a Voting Agreement with Buyer to vote, subject to the
provisions thereof, all of their respective shares of Northstar Common
Stock in favor of the Merger.
5.8 Tax Matters. Buyer shall prepare or cause to be prepared and
file or cause to be filed all tax returns for Northstar and GFS for all
periods ending on or prior to the Effective Time which are filed after the
Effective Time (other than income tax returns with respect to periods for
which a consolidated, unitary or combined income tax return of Northstar
will include the operations of Northstar and GFS). Such tax returns will
report the disqualifying disposition of the Stock Options. Buyer shall
permit Northstar to review and comment on each such tax return described in
the preceding sentence prior to filing. Buyer and Northstar further agree,
upon request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other person as may be
necessary to mitigate, reduce or eliminate any tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby).
5.9 Bonus Fund. Buyer or Buyer Subsidiary shall (a) establish a
transaction completion bonus fund equal to 1% of the Fund (but aggregating
not more than $450,000, the "Bonus Fund") and, as provided in Section 1.8,
deposit 33.33% of the Bonus Fund with the Disbursing Agent, (b) pay to
Northstar's four executive officers other than Xxxxx Xxxxxxxx (the
"Executive Officers"), at Closing an aggregate of 33.33% of the Bonus Fund,
and (c) pay to the Executive Officers (on a proportionate basis as
described below) 33.33% of the Bonus Fund on the first anniversary of the
Closing Date and the remaining 33.33% of the Bonus Fund on the second
anniversary of the Closing Date, provided in each case that such Executive
Officer either (i) is still employed with the Surviving Corporation or its
successor on such dates, or (ii) is not employed on such dates as a result
of death, total disability, retirement, termination without cause or a
change of control, all as provided in said executives' employment
agreements with Buyer. Each Executive Officer's proportionate share of the
Bonus Fund payable at the Closing and on the anniversary dates of the
Closing is calculated as the percentage by which each person's 1999 base
salary bears to the collective 1999 base salaries of such executives. This
Section 5.9 and the obligations of Buyer hereunder shall survive the
closing of the transactions contemplated hereby, are intended to benefit
Executive Officers (each of whom shall be entitled to enforce this Section
against Buyer) and shall be binding on all successors and assigns of Buyer.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to the Obligations of Buyer and Buyer Subsidiary. The
obligations of Buyer and Buyer Subsidiary to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the
following conditions, any one or more of which (except for the condition
set forth in Section 6.1(b)) may be waived by Buyer.
(a) The representations and warranties of Northstar contained in
Article III of this Agreement shall be true and correct in all
material respects immediately prior to the Effective Time with the
same effect as if such representations and warranties had been made
immediately prior to the Effective Time; Northstar shall have
performed and complied in all material respects with the agreements
and obligations contained in this Agreement required to be performed
and complied with by it at or prior to the Effective Time; and Buyer
shall have received a certificate signed by an appropriate executive
officer of Northstar to the effects set forth in this Section 6.1(a).
Notwithstanding the above, the failure of Northstar to comply with any
particular representation, warranty, covenant or agreement contained
in this Agreement will not automatically entitle Buyer and Buyer
Subsidiary to terminate this Agreement unless such failure meets the
standards specified in Section 7.1(c)(iii) hereof.
(b) This Agreement and the Merger shall have been approved at the
Shareholder Meeting by the votes required by the MBCA and Northstar's
Articles of Incorporation.
(c) All other corporate action on the part of Northstar necessary to
authorize the execution, delivery and consummation of this Agreement
or any agreement or instrument contemplated hereby to which Northstar
is or is to be a party or the transactions contemplated hereby or
thereby shall have been duly and validly taken.
(d) There shall not be instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any court or
governmental or other regulatory or administrative agency or
commission requesting or looking toward an order, judgment or decree
(except those in which Buyer is a plaintiff directly or derivatively)
which would, if issued (i) restrain or prohibit the consummation of
the transactions contemplated hereby, or (ii) require rescission of
this Agreement or the transactions contemplated hereby, or (iii)
result in a material claim for indemnification by an officer or
director related to the transactions contemplated hereby, or (iv)
result in material damages to Buyer, Buyer Subsidiary or the Surviving
Corporation if the transactions contemplated hereby are consummated,
nor shall there be in effect any injunction, writ, preliminary
restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated
as so provided.
(e) Subsequent to the date of this Agreement, there shall not have
been any damage to, or destruction or loss of, any property or assets
of Northstar or any Subsidiary, which, after giving effect to any
insurance coverage, would have a Material Adverse Effect.
(f) Buyer shall have received from Parsinen Xxxxxx Xxxxxxx & Xxxxxxx
P.A., counsel to Northstar, its opinion, dated the Closing Date and
reasonably satisfactory in form and substance to Buyer and its
counsel, as to the matters set forth in Exhibit A hereto.
(g) All applicable waiting periods (and any extensions thereof) under
the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated.
(h) Holders of no more than 5% of the outstanding Common Stock of
Northstar shall have exercised dissenters' rights with respect to the
Merger.
(i) Estoppel letters substantially in the form of Exhibit C annexed
hereto shall have been received from each of the landlords with
respect to the Leases to the effect that the Leases are currently in
effect and not in default (or other evidence to the same effect).
(j) Except as otherwise agreed in writing, waivers or consents with
respect to change in control shall have been received from the parties
to any Material Contracts which grants such parties the right to
terminate in the event of a change in control.
(k) Waivers or consents shall have been received from the issuer of
the Brooklyn Park revenue bonds and the collateralized letter of
credit, for the benefit of Northstar, and appropriate supplemental
indentures shall have been entered into by the parties thereto.
(l) Northstar's Management Agreements with its four executive
officers and any employment agreement (but not deferred compensation
arrangements contained therein) between Northstar and any person shall
have been terminated and Buyer shall have entered into employment
agreements with such four executive officers in form and substance
satisfactory to Buyer.
(m) The resignation of Xxxxx Xxxxxxxx as a Trustee of the Incentive
Compensation Plan of Northstar shall have been received.
(n) The Revolving Credit and Term Loan Agreement dated July 22, 1996 with
First Bank National Association (now known as US Bancorp) shall have been
terminated and any mortgages and liens encumbering Northstar's assets and
securing the indebtedness evidenced thereby shall be released and UCC
termination statements encumbering Northstar's personal property shall have
been delivered.
(o) The 1% transaction completion bonus fund created in Northstar's 1997
Board minutes shall have been formally terminated so it is not deemed
duplicative of the bonus payment required by Section 5.9 above.
(p) Buyer shall be satisfied with its due diligence investigations of
the Real Property and Northstar's and /or GFS's personal property (the
"Personal Property") in all material respects. In the event Buyer
elects to enforce this condition, it shall provide Northstar with a
detailed statement (the "Real Property/Personal Property Objection")
as to the circumstances surrounding the problem(s) uncovered with
respect to the Real Property and Personal Property. Northstar shall
have the right, for a period of 30 days, to cure any such problem(s);
provided, however, that if Northstar is undertaking diligent efforts
to cure and the cure cannot be completed within such 30 day period,
Northstar shall be granted an extension of time to complete the cure
but not beyond an additional 30 days. Buyer shall have a period of 30
days from the execution date of this Agreement to complete its due
diligence on the Real Property and Personal Property and provide the
Real Property/Personal Property Objection (if any), after which time
this provision shall become null and void and shall no longer be
deemed a condition to Buyer's obligations.
(q) Northstar will provide evidence confirming that the indebtedness
under the Industrial Development Revenue Bonds (General Financial
Supply, Inc. Project) Series 1985 issued by the City of Nevada, Story
County, Iowa, has been paid off, and that all mortgages and security
interests securing such obligations and/or encumbering GFS' Real
Estate or Northstar's personal property related thereto have been
released or terminated.
6.2 Conditions to the Obligations of Northstar. The obligations of
Northstar to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the following conditions, any one or more of
which (except for the condition set forth in Section 6.2(b)) may be waived
by Northstar.
(a) The representations and warranties of Buyer and Buyer Subsidiary
contained in Article IV of this Agreement shall be true and correct in
all material respects immediately prior to the Effective Time with the
same effect as if such representations and warranties had been made
immediately prior to the Effective Time; each of Buyer and Buyer
Subsidiary shall have performed and complied in all material respects
with the agreements and obligations contained in this Agreement
required to be performed and complied with by it at or prior to the
Effective Time; and Northstar shall have received a certificate signed
by an appropriate executive officer of each of Buyer and Buyer
Subsidiary to the effects set forth in this Section 6.2(a).
Notwithstanding the above, the failure of Buyer or Buyer Subsidiary to
comply with any particular representation, warranty, covenant or
agreement contained in this Agreement will not automatically entitle
Northstar to terminate this Agreement unless such failure meets the
standards specified in Section 7.1(d)(iii) hereof.
(b) This Agreement and the Merger shall have been approved at the
Shareholder Meeting by the votes required by the MBCA and Northstar's
Articles of Incorporation.
(c) All corporate action on the part of Buyer and Buyer Subsidiary
necessary to authorize the execution, delivery and consummation of this
Agreement or any agreement or instrument contemplated hereby to which
Buyer or Buyer Subsidiary is or is to be party or the transactions
contemplated hereby or thereby shall have been duly and validly taken.
(d) There shall not be instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any court or
governmental or other regulatory or administrative agency or commission
requesting or looking toward an order, judgment or decree (except those
in which Northstar is a plaintiff directly but not derivatively) which,
in the reasonable judgment of Northstar, would, if issued, restrain or
prohibit the consummation of the transactions contemplated hereby or
require rescission of this Agreement or such transactions or result in
material damages to Northstar or the Surviving Corporation if the
transactions contemplated hereby are consummated, nor shall there be in
effect any injunction, writ, preliminary restraining order or any order
of any nature issued by a court or governmental agency of competent
jurisdiction directing that the transactions provided for herein, or
any of them, not be consummated as so provided.
(e) Northstar shall have received from Xxxxx, Xxxxxx & Xxxxxx LLP,
counsel to Buyer and Buyer Subsidiary, its opinion, dated the Closing
Date and reasonably satisfactory in form and substance to Northstar and
its counsel as to the matters set forth in Exhibit B hereto.
(f) On the Closing Date, financing in the full amount designated as
the Fund in Section 1.8 hereof shall have been deposited pursuant to
Section 1.8 with the only condition to the disbursement of the proceeds
in the manner provided in Section 1.8 being presentation to the
Disbursing Agent of a copy of the Articles of Merger certified by the
Secretary of State of the State of Minnesota as having been duly filed.
(g) As of the date of the Proxy Statement, Northstar shall have
received the opinion of Piper satisfactory in form and substance to the
Northstar Board, that the Merger Consideration is fair, from a
financial point of view, to the shareholders of Northstar, and on the
date of the Shareholder Meeting and at the Effective Time, such opinion
shall not have been withdrawn or modified in any manner unsatisfactory
to the Northstar Board. Nothing contained herein shall be deemed to
obligate the Northstar Board to obtain a formal or informal update of
such opinion as of either of such dates.
(h) Northstar shall have entered into the Indemnification Agreements with
each of its officers and directors in form and substance satisfactory to
the Northstar Board and its counsel.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 Termination. This Agreement may be terminated as follows whether
before or after the approval of the Merger by the shareholders of
Northstar:
(a) By mutual consent of the Northstar Board and the Board of
Directors of Buyer at any time prior to the Effective Time;
(b) By the Northstar Board, if Northstar has substantially satisfied
all of the conditions to the obligation of Buyer and Buyer Subsidiary
specified in Section 6.1 hereof, and the Merger has not been
consummated on or before June 30, 2000, and by the Board of Directors
of Buyer, if Buyer and Buyer Subsidiary have substantially satisfied
all of the conditions to the obligations of Northstar specified in
Section 6.2 hereof and the Merger has not been consummated on or before
June 30, 2000, which date, in both cases, may be extended by mutual
agreement of the Northstar Board and the Board of Directors of Buyer;
(c) By the Board of Directors of Buyer, if (i) any of the conditions
set forth in Section 6.1 hereof shall become impossible to fulfill
other than for reasons within the control of Buyer or Buyer Subsidiary,
and shall not have been waived by Buyer pursuant to Section 8.2 hereof,
(ii) the shareholders of Northstar shall fail to adopt this Agreement
and the Merger by the vote required by the MBCA and Northstar's
Articles of Incorporation at the Shareholder Meeting or any adjournment
thereof, or (iii) Northstar has breached any representation, warranty,
covenant or agreement contained in this Agreement, which breach has a
Material Adverse Effect and cannot be or is not cured by July 15, 2000;
(d) By the Northstar Board, if (i) any of the conditions set forth in
Section 6.2 hereof shall become impossible to fulfill other than for
reasons within the control of Northstar, and shall not have been waived
by the Northstar Board pursuant to Section 8.2 hereof, (ii) the
shareholders of Northstar shall fail to adopt this Agreement and the
Merger by the vote required by the MBCA and Northstar's Articles of
Incorporation at the Shareholder Meeting or any adjournment thereof,
(iii) Buyer or Buyer Subsidiary has breached any representation,
warranty, covenant or agreement contained in this Agreement, which
breach has a Material Adverse Effect and cannot be or is not cured by
July 15, 2000;
(e) By either the Northstar Board or the Board of Directors of Buyer,
if any court of competent jurisdiction in the United States or other
United States governmental body, including the Federal Trade
Commission, shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have become final
and nonappealable;
(f) By the Northstar Board if it, in the exercise of its fiduciary
duties after consultation with counsel, shall have withdrawn its
approval or recommendation of the Merger; or
(g) By the Northstar Board, in the event a Superior Proposal (as
defined in Section 8.5 below) is received by Northstar or the
shareholders of Northstar and the Northstar Board determines, in the
exercise of its fiduciary duties after consultation with counsel, to
accept, approve or recommend the Superior Proposal.
7.2 Procedure and Effect of Termination. In the event of termination
and abandonment of the Merger pursuant to Section 7.1, written notice
thereof shall forthwith be given to the other parties hereto and this
Agreement shall terminate and the Merger shall be abandoned without further
action by the other party hereto without any liability on the part of
either party hereto (except the liability of either party for any
intentional and material breach of any representation, warranty or covenant
contained in this Agreement).
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by action by the Northstar Board and the
Board of Directors of Buyer and Buyer Subsidiary set forth in a written
agreement of both Constituent Corporations at any time prior to the
Effective Time with respect to any of the terms contained herein, except
that after the Shareholder Meeting contemplated by Section 5.2 hereof, the
price per Share to be paid pursuant to this Agreement to the holders of
Shares shall in no event be decreased and the form of consideration to be
received by the holders of Shares in the Merger shall in no event be
altered without the approval of such holders.
8.2 Waiver of Compliance; Consents. Any failure of Buyer or Buyer
Subsidiary, on the one hand, or Northstar, on the other hand, to comply
with any obligation, covenant, agreement or condition herein may be waived
by Buyer and Buyer Subsidiary or Northstar, respectively, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall be valid only if set forth in writing by the
appropriate Constituent Corporation and shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever
this Agreement requires or permits consent by or on behalf of either party
hereto, such consent shall be given in writing in a manner consistent with
the requirements for a waiver of compliance as set forth in this Section
8.2.
8.3 Expenses. Except as otherwise provided in this Section 8.3 and
the Break-Up Fee specified in Section 8.5, all expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expense.
Upon the consummation of the Merger, all expenses incurred in connection
with this Agreement and the consummation of the transactions contemplated
hereby shall be paid by the Surviving Corporation.
8.4 Additional Agreements. Subject to the terms and conditions
herein provided, each party hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things, necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each corporation which is a
party to this Agreement shall take all such necessary action. Nothing
herein stated shall require Northstar to take any action or to do anything
which the Northstar Board, in the exercise of its fiduciary duties after
consultation with counsel, determines not to take or do.
8.5 No Solicitation; Other Offers.
(a) From the date hereof until termination of this Agreement or the
Effective Time, whichever occurs first, Northstar will not, and will
use its best efforts to cause its officers, directors, employees,
representatives and agents (including, without limitation, attorneys,
investment bankers and accountants) not to, directly or indirectly,
solicit, initiate or encourage any inquiry, proposal, offer or
indication of interest from any person that constitutes or would
reasonably be expected to lead to any Acquisition Proposal (as
hereinafter defined) or agree to or endorse, approve or recommend any
Acquisition Proposal, or enter into discussions or negotiate with or
provide any information to any person in furtherance of any such
inquiries or to obtain or approve any Acquisition Proposal, and
Northstar shall immediately notify Buyer of all relevant terms of any
such inquiries or proposals received by Northstar or by any such
officer, director, employee, representatives or agents, related to any
of such matters, any material change in the details (including any
amendments or proposed amendments) of any such inquiries or proposals,
the identity of each of the persons making such inquiries or proposals,
and, if such inquiry or proposal is in writing, Northstar shall
immediately deliver or cause to be delivered to Buyer a copy of such
inquiry or proposal; provided, however, that if, prior to the Effective
Time, Northstar shall receive an unsolicited Acquisition Proposal that
the Northstar Board, after consultation with its legal counsel,
reasonably believes that it has a fiduciary duty to consider, then
Northstar, without violating this Agreement, may thereafter furnish
information to and enter into discussions or negotiations with such
third party. Nothing contained in this Section 8.5(a) or any other
provision of this Agreement shall prevent the Northstar Board, after
receiving an opinion of outside counsel to the effect that it is
required to do so in order to discharge properly its fiduciary duties,
from considering, negotiating, approving and recommending to the
shareholders of Northstar an unsolicited, bona fide written Acquisition
Proposal which the Northstar Board determines in good faith (i) would
result in a transaction more favorable to Northstar's shareholders than
the transaction contemplated by this Agreement and (ii) is made by a
person financially capable of consummating such Acquisition Proposal
(any such Acquisition Proposal being referred to herein as a "Superior
Proposal"). If the Northstar Board shall have resolved to accept or
accepted a Superior Proposal then, upon written notice to Buyer,
Northstar may pursuant to Section 7.1(g), terminate this Agreement and
the transactions contemplated hereby. For purposes hereof, "Acquisition
Proposal" means any proposal or offer to acquire all or a substantial
part of the business and properties of Northstar or any capital stock
of Northstar, whether by merger, tender offer, exchange offer, sale of
assets or similar transactions involving Northstar.
(b) Upon any termination by Northstar of this Agreement permitted by
(i) Section 7.1(f) or (ii) Section 7.1(g) and Section 5.2(a), Northstar
shall pay to Buyer the sum of $1,000,000 (the "Break-Up Fee") upon the
occurrence of such event. In such circumstances, the Break-Up Fee
shall be deemed to include all costs and expenses of Buyer.
8.6 Indemnification.
(a) Prior to and until the Effective Time, Northstar shall indemnify
and hold harmless, and after the Effective Time the Surviving
Corporation shall indemnify and hold harmless, to the fullest extent
permitted by applicable law, each present and former director and
officer of Northstar and his or her heirs executors, administrators and
legal representatives (individually an "Indemnified Party" and
collectively the "Indemnified Parties") against any amounts incurred by
such Indemnified Parties, including without limitation, losses, claims,
damages, liabilities, costs, expenses (including attorneys' fees),
judgments and amounts paid in settlement, in connection with any
threatened, pending or completed claim, action, suit, proceeding or
investigation, arising out of or relating to any action, alleged
action, omission or alleged omission occurring on or prior to the
Effective Time (including without limitation any claim or action, suit,
proceeding or investigation arising out of or relating to the Merger
and the transactions contemplated by this Agreement and any which arise
out of or relate to an Indemnified Party's having served as a committee
member, director, officer, employee or agent of Northstar or as a
trustee or fiduciary of any Employee Plan or otherwise on behalf of
Northstar), whether asserted or commenced prior to or after the
Effective Time and any expenses incurred by an Indemnified Party in
enforcing any of the rights set forth in this Section (all such amounts
and expenses being collectively referred to as "Losses" and
individually referred to as a "Loss"). To the fullest extent permitted
by applicable law, Northstar or the Surviving Corporation, as the case
may be, will advance all expenses to each Indemnified Party in
connection with any such Losses. Northstar's and, after the Effective
Time, the Surviving Corporation's Articles or Certificate of
Incorporation and Bylaws shall not be amended in a manner which
adversely affects the rights of any party to indemnification thereunder
or hereunder.
(b) Each of the parties hereto agrees to vigorously defend against any
actions, suits or proceedings in which such party is named as a
defendant. No such actions, suits or proceedings involving any Loss
for which the Indemnified Party is indemnified hereunder shall be
settled without the consent of Northstar or Surviving Corporation
and/or Buyer, as the case may be, which such consent shall not be
unreasonably withheld.
(c) The Indemnified Parties may retain counsel of their own choice,
which counsel shall be reasonably acceptable to Buyer, to represent
them with respect to any matter provided for under this Section 8.6
which, in addition to any local counsel, shall be a single counsel for
all Indemnified Parties with respect to any matter unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified
Parties.
(d) Buyer agrees that it intends to maintain the Surviving Corporation
as a separate going concern for at least six years from the Effective
Time. The Surviving Corporation will (a) until the six year
anniversary date of the Effective Time, cause its Articles of
Incorporation and Bylaws to continue to provide indemnification
provisions for the benefit of those individuals who have served as
directors or officers of Northstar or GFS at any time prior to the
Effective Time which are comparable to such provisions as are currently
contained in Northstar's Articles of Incorporation and Bylaws and (b)
in the event the Surviving Corporation is unable to meet its
indemnification obligations set forth in clause (a) above, Buyer hereby
agrees that it shall assume full payment and performance of such
indemnification obligations. In the event that, within six years of
the Effective Time, the Surviving Corporation or any of its successors
or assigns (i) becomes insolvent, or fails to meet its obligations
under this Section 8.6, (ii) consolidates with or merges into any other
person and the Surviving Corporation shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or
(iii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, Buyer hereby agrees it
shall assume and fully pay the obligations set forth in this Section
8.6.
(e) If it is ultimately determined by a court of competent
jurisdiction in connection with any Loss that the criteria for
indemnification under applicable law has not been satisfied, then any
expenses advanced to an Indemnified Party in connection with such Loss
shall be reimbursed by such Indemnified Party to Northstar, the
Surviving Corporation or Buyer, as the case may be.
(f) This Section 8.6 shall survive the closing of the transactions
contemplated hereby, is intended to benefit Northstar, the Surviving
Corporation and each of the Indemnified Parties (each of whom shall be
entitled to enforce this Section against Northstar, the Surviving
Corporation or Buyer, as the case may be) and shall be binding on all
successors and assigns of Northstar, the Surviving Corporation and
Buyer.
8.7 Officers' and Directors' Insurance. Buyer hereby consents to the
purchase by Northstar of an extension of its current directors' and
officers' liability insurance policy for a period extending until the sixth
anniversary of the Effective Time at a cost of not more than $100,000 with
respect to all matters, including the transactions contemplated by this
Agreement occurring prior to, and including the Effective Time.
8.8 Press Releases and Public Announcements. No party to this
Agreement shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without prior written
approval of the other party; provided, however, that each of Northstar and
Buyer may make any public disclosure it believes in good faith is required
by applicable law (in which case the disclosing party will advise the other
parties to this Agreement prior to making a disclosure).
8.9 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice).
(a) If to Buyer or
Buyer Subsidiary: Xxxxx Business Forms, Inc.
0000 Xxxxx Xxxxxxx
Xxxxx 000
XxXxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Chairman,
CEO and President
with a copy to: Xxxxx, Xxxxxx & Xxxxxx LLP
3100 Bank One Center
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx
(b) If to Northstar: 0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, President
with a copy to: Parsinen Xxxxxx Xxxxxxx & Xxxxxxx P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Attention: Xxxx X. Xxxx
8.10 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and shall 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 either party hereto without the prior written consent of the
other party, nor is this Agreement intended to confer upon any other
person, except the parties and any Indemnified Parties, any rights or
remedies hereunder.
8.11 No Survival of Representations and Warranties. The
representations and warranties contained in this Agreement or in any
schedule or certificate delivered pursuant hereto shall not survive the
effectiveness of the Merger or the termination of this Agreement.
8.12 Interpretation. As used in this Agreement, unless otherwise
expressly defined herein, (i) the term "including" shall mean "including
without limitation;" (ii) the term "person" shall mean and include an
individual, partnership, limited liability company, a joint venture,
corporation, trust, an unincorporated organization and a government or any
department or agency thereof; (iii) the term "affiliate" shall have the
meaning set forth in Rule 12b-2 of the General Rules and Regulations
promulgated under the Securities Exchange Act of 1934, as amended; (iv) all
dollar amounts are expressed in United States funds; and (v) the phrase "to
the knowledge of Northstar" or any similar phrase shall mean the actual
knowledge or one or more of the executive officers of Northstar.
8.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.14 Headings. The Article and Section headings contained in this
Agreement are solely for the purpose of reference, and are not part of the
agreement of the parties and shall not affect in any way the meaning or
interpretations of this Agreement.
8.15 Entire Agreement. This Agreement, including the exhibits hereto,
the Disclosure Schedule and the other documents and instruments referred to
herein, embodies the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
8.16 Severability. If any term, provision, covenant, agreement or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants, agreements and restrictions of this Agreement will
continue in full force and effect and will not be affected, impaired or
invalidated.
8.17 Governing Law. The Agreement shall be governed by the laws of
the State of Minnesota.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
signed by their respective duly authorized officer on the date first above
written.
Northstar Computer Forms, Inc.,
a Minnesota corporation
By /s/Xxxxx X. Xxxxxxxx
----------------------------
Its Chairman
---------------------------
Xxxxx Business Forms, Inc.,
a Texas corporation
By /s/Xxxxx X. Xxxxxxx
----------------------------
Its Chairman, CEO & President
---------------------------
Polaris Acquisition Corp.,
a Minnesota corporation
By /s/Xxxxx X. Xxxxxxx
----------------------------
Its Chairman, CEO & President
---------------------------
