AGREEMENT AND PLAN OF MERGER
by and among
FINGERHUT COMPANIES, INC.
FEDERATED DEPARTMENT STORES, INC.
and
BENGAL SUBSIDIARY CORP.
Dated as of February 10, 1999
Table of Contents
Page
I. THE TENDER OFFER 2
1.1. The Offer 2
1.2. Offer Documents 4
1.3. Company Actions 5
1.4. Directors 6
II. THE MERGER 8
2.1. The Merger 8
2.2. The Closing 8
2.3. Effective Time. 8
2.4. Articles of Incorporation and Bylaws of Surviving
Corporation 9
2.5. Directors and Officers of Surviving Corporation 9
2.6. Conversion of Securities 9
2.7. Dissenting Shares 10
2.8. Surrender of Shares; Stock Transfer Books 11
2.9. Stock Plans 13
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 14
3.1. Existence; Good Standing; Corporate Authority. 15
3.2. Authorization, Validity and Effect of Agreement. 16
3.3. Capitalization 16
3.4. Subsidiaries 17
3.5. Other Interests. 17
3.6. No Conflict; Required Filings and Consents. 18
3.7. Compliance with Laws. 19
3.8. SEC Documents 19
3.9. Litigation 21
3.10. Absence of Certain Changes 21
3.11. Taxes 22
3.12. Property 24
3.13. Millennium Compliance 26
3.14. Contracts 26
3.15. Environmental Matters 28
3.16. Employee Benefit Plans 29
3.17. State Takeover Statutes 30
3.18. Voting Requirements 30
3.19. No Brokers 30
3.20. Opinion of SSB 30
3.21. Offer Documents; Proxy Statement 31
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER 31
4.1. Existence; Good Standing; Corporate Authority 31
4.2. Authorization, Validity and Effect of Agreement 32
4.3. No Conflict; Required Filings and Consents. 32
4.4. No Brokers 33
4.5. Offer Documents; Proxy Statement 34
4.6. Financing. 34
4.7. Litigation. 34
4.8. Ownership of Shares. 35
V. COVENANTS 35
5.1. Conduct of Business. 35
5.2. No Solicitation 39
5.3. Filings, Reasonable Efforts 41
5.4. Inspection of Records 42
5.5. Publicity 43
5.6. Proxy Statement 43
5.7. Further Actions. 44
5.8. Insurance; Indemnity 44
5.9. Employee Benefits 45
5.10. Conveyance Taxes 46
VI. CONDITIONS PRECEDENT 46
6.1. Conditions to Each Party's Obligation To Effect the
Merger 47
6.2. Conditions to Obligation of Parent and Purchaser to
Effect the Merger 47
VII. TERMINATION 47
7.1. Termination by Mutual Consent 47
7.2. Termination by Either Parent or Company 47
7.3. Termination by Company 48
7.4. Termination by Parent 48
7.5. Effect of Termination and Abandonment; Termination Fee
49
VIII. GENERAL PROVISIONS 52
8.1. Nonsurvival of Representations, Warranties and
Agreements 52
8.2. Notices 52
8.3. Assignment; Binding Effect 53
8.4. Entire Agreement 54
8.5. Amendment 54
8.6. Governing Law 54
8.7. Counterparts 55
8.8. Headings 55
8.10. Waivers 56
8.11. Incorporation of Annex A 56
8.12. Severability 56
8.13. Enforcement of Agreement 57
8.14. Expenses 57
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of February 10, 1999, by and among Fingerhut Companies, Inc., a
Minnesota corporation (the "Company"), Federated Department
Stores, Inc., a Delaware corporation ("Parent"), and Bengal
Subsidiary Corp., a Minnesota corporation and a wholly owned
subsidiary of Parent ("Purchaser") (the Company and Purchaser
being sometimes hereinafter referred to as the "Constituent
Corporations").
RECITALS
A. Each of the Boards of Directors of the Company, Parent
and Purchaser has determined that it is in the best interests of
its respective shareholders for Purchaser to acquire the Company
on the terms and subject to the conditions set forth herein (the
"Acquisition");
B. As a first step in the Acquisition, the Company, Parent
and Purchaser each desire that Parent cause Purchaser to commence
a cash tender offer (the "Offer") to purchase all of the
Company's issued and outstanding shares, par value $0.01 per
share (the "Shares") for $25.00 per Share, or such higher price
as may be paid in the Offer (the "Per Share Amount"), on the
terms and subject to the conditions set forth in this Agreement;
C. To complete the Acquisition, each of the Boards of
Directors of the Company, Parent, on its behalf and as sole
shareholder of Purchaser, and Purchaser have approved this
Agreement and the merger of Purchaser with and into the Company
(the "Merger"), wherein any issued and outstanding Shares not
tendered and purchased by Purchaser pursuant to the Offer (other
than Dissenting Shares and Shares described in Section 2.6(b))
will be converted into the right to receive the Per Share Amount,
on the terms and subject to the conditions of this Agreement and
in accordance with the Minnesota Business Corporation Act (the
"MBCA");
D. The Board of Directors of the Company (the "Company
Board") has unanimously (with one director being absent) resolved
to recommend that holders of Shares ("Shareholders") accept the
Offer and approve this Agreement and the Merger and has
determined that the Offer and the Merger are fair to and in the
best interests of the Company and the Shareholders; and
E. The parties desire to make certain representations,
warranties and covenants in connection with the Offer and the
Merger and also to prescribe various conditions to the Offer and
the Merger.
I. THE TENDER OFFER
1.1. The Offer. (a) Subject to the last sentence of this
Section 1.1(a), as promptly as practicable (but in any event not
later than five business days after the public announcement of
the execution and delivery of this Agreement), Parent will cause
Purchaser to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), the Offer whereby Purchaser will offer to purchase for
cash all of the Shares at the Per Share Amount, net to the seller
in cash (subject to reduction for any stock transfer taxes
payable by the seller, if payment is to be made to a Person other
than the Person in whose name the certificate for such Shares is
registered, or any applicable federal back-up withholding),
provided, however, that Parent may designate another direct or
indirect subsidiary of Parent as the bidder thereunder (within
the meaning of Rule 14d-1(e) under the Exchange Act), in which
event references herein to Purchaser will be deemed to apply to
such subsidiary, as applicable. Notwithstanding the foregoing,
if between the date of this Agreement and the Effective Time the
outstanding Shares shall have been changed into a different
number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Per Share Amount will be
correspondingly adjusted on a per-share basis to reflect such
stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. The obligation of
Parent to cause Purchaser to commence the Offer, to consummate
the Offer and to accept for payment and to pay for Shares validly
tendered in the Offer and not withdrawn in accordance therewith
will be subject to, and only to, those conditions set forth in
Annex A hereto (the "Offer Conditions").
(b) Without the prior written consent of the Company,
Purchaser will not, and Parent will cause Purchaser not to, (i)
decrease or change the form of the Per Share Amount, (ii)
decrease the number of Shares sought in the Offer, (iii) amend or
waive the Minimum Condition (as defined in Annex A hereto) or
impose conditions other than the Offer Conditions on the Offer,
(iv) extend the expiration date of the Offer (the "Expiration
Date") (which will initially be 20 business days following the
commencement of the Offer) except (A) as required by Law, (B)
that, in the event that any condition to the Offer is not
satisfied or waived at the time that the Expiration Date would
otherwise occur, (1) Purchaser must extend the Expiration Date
for an aggregate of 10 additional business days to the extent
necessary to permit such condition to be satisfied and (2)
Purchaser may, in its sole discretion, extend the Expiration Date
for such additional period as it may determine to be appropriate
(but not beyond June 30, 1999) to permit such condition to be
satisfied, and (C) that, in the event that the OCC Condition (as
defined in Annex A hereto) is not satisfied, and all other Offer
Conditions have been satisfied or waived at the time that the
Expiration Date (as extended pursuant to Section 1.1(b)(iv)(A) or
(B)), would have otherwise occurred, Purchaser must either
irrevocably waive the OCC Condition or extend the Expiration Date
(but not beyond the date that is 60 calendar days from the date
of the filing with the Office of the Comptroller of the Currency
(the "OCC") in respect of the OCC Condition) to the extent
necessary to permit the OCC Condition to be satisfied, or (v)
amend any term of the Offer in any manner materially adverse to
Shareholders (including without limitation to result in any
extension which would be inconsistent with the preceding
provisions of this sentence), provided, however, that (1) subject
to applicable legal requirements, Parent may cause Purchaser to
waive any Offer Condition, other than the Minimum Condition, in
Parent's sole discretion and (2) the Offer may be extended in
connection with an increase in the consideration to be paid
pursuant to the Offer so as to comply with applicable rules and
regulations of the Securities and Exchange Commission (the
"SEC"). Except as set forth above and subject to applicable
legal requirements, Purchaser may amend the Offer or waive any
Offer Condition in its sole discretion. Assuming the prior
satisfaction or waiver of the Offer Conditions, Parent will cause
Purchaser to accept for payment, and pay for, in accordance with
the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the
Expiration Date or any extension thereof.
1.2. Offer Documents. (a) As soon as practicable on the
date of commencement of the Offer, Parent and Purchaser will file
or cause to be filed with the SEC a tender offer statement on
Schedule 14D-1 (the "Schedule 14D-1") which will contain an offer
to purchase and related letter of transmittal and other ancillary
Offer documents and instruments pursuant to which the Offer will
be made (collectively with any supplements or amendments thereto,
the "Offer Documents") and which Parent and Purchaser represent,
warrant and covenant will comply in all material respects with
the Exchange Act and other applicable Laws and will contain (or
will be amended in a timely manner so as to contain) all
information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations
thereunder and other applicable Laws, provided, however, that (i)
no representation, warranty or covenant hereby is made or will be
made by Parent or Purchaser with respect to information supplied
by the Company in writing expressly for inclusion in, or
information extracted from the Company's public SEC filings which
is incorporated by reference or included in, the Offer Documents
("Company SEC Information") and (ii) no representation, warranty
or covenant is made or will be made herein by the Company with
respect to information contained in the Offer Documents other
than the Company SEC Information.
(b) Parent, Purchaser and the Company will each promptly
correct any information provided by them for use in the Offer
Documents if and to the extent that it becomes false or
misleading in any material respect and Parent and Purchaser will
jointly and severally take all lawful action necessary to cause
the Offer Documents as so corrected to be filed promptly with the
SEC and to be disseminated to the Shareholders, in each case as
and to the extent required by applicable Law. In conducting the
Offer, Parent and Purchaser will comply in all material respects
with the provisions of the Exchange Act and other applicable
Laws. Parent and Purchaser will afford the Company and its
counsel a reasonable opportunity to review and comment on the
Offer Documents and any amendments thereto prior to the filing
thereof with the SEC and will not mail the Offer Documents to the
Shareholders if the Company reasonably asserts that the Company
SEC Information is inaccurate.
(c) Parent and Purchaser will file with the Commissioner
of Commerce of the State of Minnesota any registration statement
relating to the Offer required to be filed pursuant to Chapter
80B of the Minnesota Statutes.
1.3. Company Actions. The Company hereby consents to the
Offer and represents that (a) the Company Board and a special
committee of the Company Board formed in accordance with Section
302A.673 of the MBCA (the "Special Committee") (each at a meeting
duly called and held) have (i) determined that this Agreement,
the Offer and the Merger are fair to and in the best interests of
the Company and the Shareholders, (ii) approved this Agreement
and the transactions contemplated hereby, including the Offer and
the Merger, and, assuming the accuracy of Parent's and
Purchaser's representation in Section 4.8, such approval is
sufficient to render Sections 302A.671, 302A.673 and 302A.675 of
the MBCA inapplicable to this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and
(iii) resolved to recommend acceptance of the Offer and approval
of this Agreement by the Shareholders and (b) ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. ("SSB") has delivered to the Company Board the
opinion described in Section 3.20. The Company hereby consents
to the inclusion in the Offer Documents of the recommendation
referred to in this Section 1.3, provided, however, that the
Company Board may withdraw, modify or change such recommendation
to the extent, and only to the extent and on the conditions,
specified in Section 5.2(b). The Company will file with the SEC
simultaneously with the filing by Parent and Purchaser of the
Schedule 14D-1, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements
thereto, "Schedule 14D-9") containing such recommendations of the
Company Board in favor of the Offer and the Merger, subject to
the rights of the Company Board set forth in Section 5.2(b). The
Company represents, warrants and covenants that the Schedule 14D-
9 will comply in all material respects with the Exchange Act and
any other applicable Laws and will contain (or will be amended in
a timely manner so as to contain) all information which is
required to be included therein in accordance with the Exchange
Act and the rules and regulations thereunder and other applicable
Laws, provided, however, (i) that no representation, warranty or
covenant is made or will be made herein by the Company with
respect to information supplied by Parent or Purchaser expressly
for inclusion in, or information extracted from Parent's public
SEC filings which is incorporated or included in, the Schedule
14D-9 (the "Parent SEC Information"), and (ii) no representation,
warranty or covenant is made or will be made herein by Parent or
Purchaser with respect to information contained in the Schedule
14D-9 other than the Parent SEC Information (which Parent SEC
Information will include the information furnished by Parent as
contemplated by the next sentence). The Company will include in
the Schedule 14D-9 information furnished by Parent in writing
concerning Parent's Designees as required by Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder and will use its
reasonable best efforts to have the Schedule 14D-9 available for
inclusion in the initial mailing (and any subsequent mailing) of
the Offer Documents to the Shareholders. Each of the Company and
Parent will promptly correct any information provided by them for
use in the Schedule 14D-9 if and to the extent that it becomes
false or misleading in any material respect and the Company will
further take all lawful action necessary to cause the Schedule
14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the Shareholders, in each case as and to the
extent required by applicable Law. Parent and its counsel will
be given a reasonable opportunity to review the Schedule 14D-9
and any amendments thereto prior to the filing thereof with the
SEC. In connection with the Offer, the Company will promptly
furnish Parent with mailing labels, security position listings
and all available listings or computer files containing the names
and addresses of the record Shareholders as of the latest
practicable date and will furnish Parent such information and
assistance (including updated lists of the Shareholders, mailing
labels and lists of security positions) as Parent or its agents
may reasonably request in communicating the Offer to the record
and beneficial Shareholders. Subject to the requirements of
applicable Law, and except for such actions as are necessary to
disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Parent and Purchaser
will, and will instruct each of their respective Affiliates,
associates, partners, employees, agents and advisors to, hold in
confidence the information contained in such labels, lists and
files, will use such information only in connection with the
Offer and the Merger, and, if this Agreement is terminated in
accordance with its terms, will deliver promptly to the Company
all copies of such information (and any copies, compilations or
extracts thereof or based thereon) then in their possession or
under their control.
1.4. Directors. (a) Promptly upon the purchase of Shares
by Purchaser pursuant to the Offer (provided that the Minimum
Condition has been satisfied), and from time to time thereafter,
(i) Parent will be entitled to designate such number of directors
("Parent's Designees"), rounded down to the next whole number, as
will give Parent, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Company Board equal to the
product of (A) the number of directors on the Company Board
(giving effect to any increase in the number of directors
pursuant to this Section 1.4) and (B) the percentage that such
number of Shares so purchased bears to the aggregate number of
Shares outstanding (such number being, the "Board Percentage"),
provided, however, that the Board Percentage will in all events
be a majority of the members of the Company Board, and (ii) the
Company will, upon request by Parent, promptly satisfy the Board
Percentage by (A) increasing the size of the Company Board or (B)
using its reasonable best efforts to secure the resignations of
such number of directors as is necessary to enable Parent's
Designees to be elected to the Company Board or both and will use
its reasonable best efforts to cause Parent's Designees promptly
to be so elected, subject in all instances to compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. At the request of Parent, the Company will take all
lawful action necessary to effect any such election. Parent will
supply to the Company in writing and be solely responsible for
any information with respect to itself, Parent's Designees and
Parent's officers, directors and Affiliates required by Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder
to be included in the Schedule 14D-9. Notwithstanding the
foregoing, at all times prior to the Effective Time, the Company
Board will include at least three Continuing Directors.
(b) Notwithstanding any other provision hereof, of the
articles of incorporation or bylaws of the Company or of
applicable Law to the contrary, following the election or
appointment of Parent's Designees pursuant to this Section 1.4
and prior to the Effective Time or, if the Effective Time has not
then occurred, the Drop-Dead Date, any amendment or termination
of this Agreement or amendment of the articles of incorporation
or bylaws of the Company by the Company, extension by the Company
for the performance or waiver of the obligations or other acts of
Parent or Purchaser hereunder or waiver by the Company of any of
the Company's rights hereunder will require the affirmative vote
of the majority of members of a committee comprised solely of
Continuing Directors. For purposes of this Agreement, the term
the "Continuing Directors" means at any time (i) those directors
of the Company who are Disinterested directors of the Company on
the date hereof and who voted to approve this Agreement and (ii)
such additional directors of the Company who are Disinterested
and who are designated as "Continuing Directors" for purposes of
this Agreement by a majority of the Continuing Directors in
office at the time of such designation, provided, however, that
if there are no such Continuing Directors, the individuals who
are appointed to the Company Board who are both Disinterested and
"independent" within the meaning given such term in the New York
Stock Exchange Listed Company Guide will constitute the
Continuing Directors. For purposes of this Agreement, the term
"Disinterested" has the meaning assigned to it in Section
302A.673, Subd.1(d)of the MBCA.
II. THE MERGER
2.1. The Merger. (1) On the terms and subject to the
conditions of this Agreement, at the Effective Time, Purchaser
will be merged with and into the Company in accordance with the
applicable provisions of the MBCA, and the separate corporate
existence of Purchaser will thereupon cease. The Company will be
the surviving corporation in the Merger (as such, the "Surviving
Corporation") in accordance with the MBCA.
(b) The Merger will have the effects specified in Section
302A.641 of the MBCA.
2.2. The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at
the offices of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., local time, on the second
business day after the date on which the last of the conditions
(excluding conditions that by their terms cannot be satisfied
until the Closing Date) set forth in Article VI is satisfied or
waived in accordance herewith, or at such other place, time or
date as the parties may agree. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
2.3. Effective Time. On the Closing Date or as soon as
practicable following the date on which the last of the
conditions set forth in Article VI is satisfied or waived in
accordance herewith, Purchaser and the Company will cause
articles of merger to be filed with the Secretary of State of the
State of Minnesota as provided in the MBCA. Upon completion of
such filing, the Merger will become effective in accordance with
the MBCA. The time and date on which the Merger becomes
effective is herein referred to as the "Effective Time." Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers,
immunities and franchises of the Company and Purchaser will vest
in the Surviving Corporation, and all debts, liabilities,
obligations and duties of the Company and Purchaser will become
the debts, liabilities, obligations and duties of the Surviving
Corporation.
2.4. Articles of Incorporation and Bylaws of Surviving
Corporation. (a) The articles of incorporation of the Surviving
Corporation to be in effect from and after the Effective Time
until amended in accordance with its terms and the MBCA will be
the articles of incorporation of Purchaser immediately prior to
the Effective Time (in the form attached hereto as Exhibit A),
provided, however that, at the Effective Time, by virtue of the
Merger and this Agreement and without any further action by the
Constituent Corporations, Article 1 of the Articles of
Incorporation will be amended to read as follows: "The name of
the Corporation is Fingerhut Companies, Inc."
(b) The bylaws of the Surviving Corporation to be in
effect from and after the Effective Time until amended in
accordance with their terms, the articles of incorporation of the
Surviving Corporation and the MBCA will be the bylaws of
Purchaser immediately prior to the Effective Time.
2.5. Directors and Officers of Surviving Corporation. (a)
The members of the initial Board of Directors of the Surviving
Corporation will be the members of the Board of Directors of
Purchaser immediately prior to the Effective Time. All of the
members of the Board of Directors of the Surviving Corporation
will serve until their successors are duly elected or appointed
and qualified or until their earlier death, resignation or
removal in accordance with the articles of incorporation and the
bylaws of the Surviving Corporation.
(b) The officers of the Surviving Corporation will consist
of the officers of the Company immediately prior to the Effective
Time. Such Persons will continue as officers of the Surviving
Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation
or removal in accordance with the articles of incorporation and
the bylaws of the Surviving Corporation.
2.6. Conversion of Securities. The manner and basis of
converting the shares of stock of each of the Constituent
Corporations is hereinafter set forth in this Section 2.6. At
the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Purchaser, the Company or the
holder of any of the following securities:
(a) Conversion of Shares. Each Share issued and
outstanding immediately prior to the Effective Time (other than
any Shares to be canceled pursuant to Section 2.6(b) and any
Dissenting Shares) and any Shares issuable upon exercise of any
option, conversion or other right to acquire Shares existing
immediately prior to the Effective Time (collectively, "Rights")
will be converted into the right to receive the Per Share Amount
in cash payable to the holder thereof, without interest (the
"Merger Consideration"), prorated for fractional shares, in
accordance with Section 2.8. All such Shares, when so converted,
will no longer be outstanding and will automatically be canceled
and will cease to exist, and each holder of a certificate
formerly representing any such Share will cease to have any
rights with respect thereto, except the right to receive the
Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.8. Any payment made
pursuant to this Section 2.6(a) and Section 2.8 will be made net
of applicable withholding taxes to the extent such withholding is
required by Law. Notwithstanding the foregoing, if between the
date of this Agreement and the Effective Time the outstanding
Shares shall have been changed into a different number of shares
or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Merger Consideration will
be correspondingly adjusted on a per-share basis to reflect such
stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
(b) Cancellation Parent-Owned Shares. Each Share owned by
Parent, Purchaser or any other direct or indirect wholly owned
subsidiary of Parent immediately before the Effective Time (other
than shares in trust accounts, managed accounts, custodial
accounts and the like that are beneficially owned by third
parties) will be automatically canceled and will cease to exist
and no payment or other consideration will be made with respect
thereto.
(c) Common Stock of Purchaser. Each share of common
stock, no par value, of Purchaser issued and outstanding
immediately before the Effective Time will be converted into and
become one validly issued, fully paid and nonassessable share of
common stock, no par value, of the Surviving Corporation, which,
in accordance with this Agreement, will constitute all of the
issued and outstanding shares of capital stock of the Surviving
Corporation immediately after the Effective Time.
2.7. Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, any Shares held by a
holder who has not voted such Shares in favor of this Agreement
and who has properly exercised dissenters' rights with respect to
such Shares in accordance with the MBCA (including Sections
302A.471 and 302A.473 thereof) and as of the Effective Time has
neither effectively withdrawn nor lost its right to exercise such
dissenters' rights ("Dissenting Shares"), will not be converted
into or represent a right to receive the Merger Consideration
pursuant to Section 2.6(a), but the holder thereof will be
entitled to only such rights as are granted by the MBCA.
(b) Notwithstanding the provisions of Section 2.7(a), if
any Shareholder who demands dissenters' rights with respect to
its Shares under the MBCA effectively withdraws or loses (through
failure to perfect or otherwise) its dissenters' rights, then as
of the Effective Time or the occurrence of such event, whichever
later occurs, such holder's Shares will automatically be
converted into and represent only the right to receive the Merger
Consideration as provided in Section 2.6(a), without interest
thereon, upon surrender of the certificate or certificates
formerly representing such Shares.
(c) The Company will give Parent (i) prompt notice of any
written intent to demand payment of the fair value of any Shares,
withdrawals of such demands and any other instruments served
pursuant to the MBCA received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with
respect to dissenters' rights under the MBCA. The Company may
not voluntarily make any payment with respect to any exercise of
dissenters' rights and may not, except with the prior written
consent of Parent, settle or offer to settle any such dissenters'
rights.
2.8. Surrender of Shares; Stock Transfer Books. (a)
Prior to the Effective Time, Purchaser will designate a bank or
trust company selected by it to act as agent for the Shareholders
in connection with the Merger (the "Exchange Agent") to receive
the funds necessary to make the payments contemplated by Section
2.6 which bank or trust company will be located in the United
States and have capital surplus and undivided profits exceeding
$500,000,000. When and as needed, Parent will make available to
the Exchange Agent for the benefit of the Shareholders the
aggregate consideration to which the Shareholders will be
entitled at the Effective Time pursuant to Section 2.6(a).
(b) Each holder of a certificate or certificates
representing any Shares canceled upon the Merger pursuant to
Section 2.6(a) (the "Certificates") may thereafter surrender such
Certificate or Certificates to the Exchange Agent, as agent for
such holder, to effect the surrender of such Certificate or
Certificates on such holder's behalf for a period ending one year
after the Effective Time. Parent agrees that promptly after the
Effective Time it will cause the distribution to the Shareholders
as of the Effective Time of appropriate materials to facilitate
such surrender. Upon the surrender of Certificates for
cancellation, together with such materials, Parent will cause the
Exchange Agent to promptly pay the holder of such Certificates in
exchange therefor cash in an amount equal to the Merger
Consideration multiplied by the number of Shares represented by
such Certificate. Until so surrendered, each such Certificate
(other than certificates representing Dissenting Shares and
certificates representing Shares to be canceled pursuant to
Section 2.6(b)) will represent solely the right to receive the
aggregate Merger Consideration relating thereto.
(c) If payment of cash in respect of canceled Shares is to
be made to a Person other than the Person in whose name a
surrendered Certificate or instrument is registered, it will be a
condition to such payment that the Certificate or instrument so
surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by
reason of such payment in a name other than that of the
registered holder of the Certificate or instrument surrendered or
shall have established to the satisfaction of the Surviving
Corporation or the Exchange Agent that such tax either has been
paid or is not payable.
(d) At the Effective Time, the stock transfer books of the
Company will be closed and there will not be any further
registration of transfers of Shares outstanding prior to the
Effective Time or otherwise issuable pursuant to Rights on the
records of the Company. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they
will be canceled and exchanged for cash as provided in Section
2.6(a), except as provided in Sections 2.6(b) and 2.7. No
interest will accrue or be paid on any cash payable upon the
surrender of a Certificate or Certificates which represented
Shares outstanding prior to the Effective Time or otherwise
issuable pursuant to Rights.
(e) Promptly following the date which is one year after
the Effective Time, the Exchange Agent will deliver to the
Surviving Corporation all cash, certificates and other documents
in its possession relating to the transactions contemplated
hereby, and the Exchange Agent's duties will terminate.
Thereafter, each holder of a Certificate (other than Certificates
representing Dissenting Shares and Certificates representing
Shares held by Parent, Purchaser or any other direct or indirect
wholly owned subsidiary of Parent) may surrender such Certificate
to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in consideration
thereof, and Parent will and will cause the Surviving Corporation
to promptly pay, the aggregate Merger Consideration relating
thereto without any interest or dividends thereon.
(f) The Merger Consideration will be net to the holder of
Shares in cash, subject to reduction only for any applicable
federal back-up withholding or, as set forth in Section 2.8(c),
stock transfer taxes payable by such holder.
(g) In the event any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed,
the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration deliverable in
respect thereof as determined in accordance with Section 2.6,
provided that the Person to whom the Merger Consideration is paid
shall, as a condition precedent to the payment thereof, give the
Surviving Corporation a written indemnity agreement in form and
substance reasonably satisfactory to the Surviving Corporation
and, if reasonably deemed advisable by the Surviving Corporation,
a bond in such sum as the Surviving Corporation may reasonably
direct to indemnify the Surviving Corporation in a manner
reasonably satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
2.9. Stock Plans. (a) Without limiting the generality or
effect of Sections 2.6 or 2.8 and notwithstanding the provisions
hereof applicable to the Rights, the Company will use its
reasonable best efforts (which include satisfying the
requirements of Rule 16b-3(e) promulgated under Section 16 of the
Exchange Act, without incurring any liability in connection
therewith) to provide that, at the Effective Time, each holder of
a then-outstanding option to purchase Shares under the Company's
stock option plans set forth or required to be set forth in
Section 2.9 of the Company Disclosure Letter (collectively, the
"Stock Option Plans") (true and correct copies of which have been
delivered or made available by Company to Parent), whether or not
then exercisable (the "Options"), will, in settlement thereof,
receive from the Company for each Share subject to such Option an
amount (subject to any applicable withholding tax) in cash equal
to the difference between the Merger Consideration and the per
Share exercise price of such Option to the extent such difference
is a positive number (such amount being hereinafter referred to
as, the "Option Consideration"). Notwithstanding anything herein
stated, no Option Consideration will be paid with respect to any
Option unless, at or prior to the time of such payment, such
Option is canceled and the holder of such Option has executed and
delivered a release of any and all rights the holder had or may
have had in respect of such Option.
(b) Without limiting the generality or effect of
Sections 2.6 or 2.8 and notwithstanding the provisions hereof
applicable to the Rights, prior to the Effective Time, Company
will use its reasonable best efforts to obtain all necessary
consents or releases from holders of Options under the Stock
Option Plans and take all such other lawful action as may be
necessary to give effect to the transactions contemplated by this
Section 2.9. Except as otherwise agreed to by the parties, (i)
the Stock Option Plans will terminate as of the Effective Time
and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in
respect of the capital stock of Company or any Subsidiary
thereof, including the Directors' Retainer Stock Deferral Plan,
will be canceled as of the Effective Time and (ii) the Company
will use its reasonable best efforts to assure that following the
Effective Time no participant in the Stock Option Plans or such
other plans, programs or arrangements will have any right
thereunder to acquire any equity securities of the Company, the
Surviving Corporation or any Subsidiary thereof and to terminate
all such plans and any Options or other Rights thereunder.
Notwithstanding the foregoing, as requested by Parent, the
Company will use its reasonable best efforts to assure that
following the date of this Agreement, no participant in the 1994
Employee Stock Purchase Plan will have any right to change any
election or increase his contribution thereunder, and the Company
will take all such actions as may be available to it to cause
such plan to be suspended in respect of equity securities of the
Company or the Surviving Corporation(other than as to Shares
payment for which was deducted from employees' payroll at or
prior to the date hereof).
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of
Parent and Purchaser, except as set forth in the letter, dated
the date hereof, from the Company to Parent initialed by those
parties (the "Company Disclosure Letter"), as follows:
3.1. Existence; Good Standing; Corporate Authority. The
Company is a corporation duly incorporated, validly existing and
in good standing under the laws of Minnesota. The Company is
duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of any other
state of the United States in which the character of the
properties owned or leased by it or in which the transaction of
its business makes such qualification necessary, except where the
failure to be so qualified or to be in good standing could not
reasonably be expected to have a Company Material Adverse Effect.
The Company has all requisite corporate power and authority to
own, operate and lease its properties and carry on its business
as now conducted. Each of the Company's Subsidiaries is a
corporation, partnership or national bank duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation or organization, has the corporate or
partnership power and authority to own its properties and to
carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be
in good standing could not reasonably be expected to have a
Company Material Adverse Effect. The copies of the Company's
articles of incorporation and bylaws previously made available to
Parent are true and correct. As used in this Agreement, (a) the
term "Company Material Adverse Effect" means any change, effect,
event or condition that has had or could reasonably be expected
to (i) have a material adverse effect on the business, results of
operations or financial condition of the Company and its
Subsidiaries, taken as a whole (other than any change, effect,
event or condition generally applicable to the industry in which
the Company and its Subsidiaries operate or changes in general
economic conditions, except to the extent such changes, effects,
events or conditions disproportionately affect the Company and
its Subsidiaries, taken as a whole), or (ii) prevent or
materially delay the Company's ability to consummate the
transactions contemplated hereby and (b) the term "Subsidiary"
when used with respect to any party means any corporation or
other organization, whether incorporated or unincorporated, of
which such party directly or indirectly owns or controls at least
a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions.
3.2. Authorization, Validity and Effect of Agreement. The
Company has the requisite corporate power and authority to
execute and deliver this Agreement and all agreements and
documents contemplated hereby to be executed and delivered by it.
Subject only to the approval of this Agreement, the Merger and
the transactions contemplated hereby by the holders of a majority
of the outstanding Shares, this Agreement, the Offer, the Merger
and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements
and documents contemplated hereby to be executed and delivered by
the Company (when executed and delivered pursuant hereto) will
constitute, the valid and binding obligations of the Company,
enforceable against the Company in accordance with their
respective terms.
3.3. Capitalization. The authorized capital stock of the
Company consists of 100,000,000 shares of common stock, par value
$0.01 per share, and 5,000,000 shares of preferred stock, par
value $0.01 per share. As of the close of business on February
8, 1999 (the "Measurement Date"),(a) 49,644,364 Shares were
issued and outstanding, each of which was duly authorized,
validly issued, fully paid and nonassessable, (b) no shares of
preferred stock of the Company had been designated or issued, (c)
no Shares were held in treasury of the Company, (d) 10,847,549
Shares were reserved for issuance under the Stock Option Plans,
the Directors' Retainer Stock Deferral Plan and the 1994 Employee
Stock Purchase Plan, (e) Options had been granted and remain
outstanding under the Stock Option Plans to purchase 9,622,746
Shares in the aggregate as more particularly described in Section
3.3 of the Company Disclosure Letter at the exercise prices set
forth therein, and (f) except for the Options and rights to the
issuance of 7,391.85 Shares in the aggregate under the Directors'
Retainer Stock Deferral Plan and the 1994 Employee Stock Purchase
Plan, there are no outstanding Rights. Since the Measurement
Date, no additional shares of capital stock of the Company have
been issued, except pursuant to the exercise of options listed in
Section 3.3 of the Company Disclosure Letter, the Directors'
Retainer Stock Deferral Plan and the 1994 Employee Stock Purchase
Plan, and no Rights have been granted. Except as described in
the preceding sentence or as set forth in Section 3.3 of the
Company Disclosure Letter, the Company has no outstanding bonds,
debentures, notes or other securities or obligations the holders
of which have the right to vote or which are convertible into or
exercisable for securities having the right to vote on any matter
on which any Shareholder of the Company has a right to vote. All
issued and outstanding Shares are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
There are not at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities or other
Rights which obligate the Company or any of its Subsidiaries to
issue, exchange, transfer or sell any shares of capital stock of
the Company or any of its Subsidiaries other than Shares issuable
under the Stock Option Plans, the Directors' Retainer Stock
Deferral Plan and the 1994 Employee Stock Purchase Plan, or
awards granted pursuant thereto. As of the Measurement Date,
there were no outstanding contractual obligations of the Company
or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
Subsidiaries. As of the Measurement Date, there were no
outstanding contractual obligations of the Company to vote or to
dispose of any shares of the capital stock of any of its
Subsidiaries.
3.4. Subsidiaries. Section 3.4 of the Company Disclosure
Letter lists all of the Subsidiaries of the Company. The Company
owns, directly or indirectly, all of the outstanding shares of
capital stock (or other ownership interests having by their terms
ordinary voting power to elect a majority of directors or others
performing similar functions with respect to such Subsidiary) of
each of the Company's Subsidiaries free and clear of all liens,
pledges, security interests, claims or other encumbrances
(collectively, "Liens"). Each of the outstanding shares of
capital stock (or such other ownership interests) of each of the
Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable. The following information for each
Subsidiary of the Company has been previously made available to
Parent, if applicable: (i) its jurisdiction of incorporation or
organization; (ii) its authorized capital stock or share capital;
and (iii) the number of issued and outstanding shares of capital
stock, share capital or other equity interests.
3.5. Other Interests. Except for interests in the
Company's Subsidiaries and except as disclosed in Section 3.5 of
the Company Disclosure Letter, neither the Company nor any of the
Company's Subsidiaries owns, directly or indirectly, any interest
or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than
(a) non-controlling investments in the ordinary course of
business and corporate partnering, development, cooperative
marketing and similar undertakings and arrangements entered into
in the ordinary course of business and (b) other investments of
less than $1.0 million in the aggregate).
3.6. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not,
and the consummation by the Company of the transactions
contemplated hereby will not, (i) conflict with or violate the
articles of incorporation or bylaws or equivalent organizational
documents of the Company or any of its Subsidiaries, (ii) subject
to making the filings and obtaining the approvals identified in
Section 3.6(b), conflict with or violate any statute, rule,
regulation or other legal requirement ("Law") or temporary,
preliminary or permanent order, judgment or decree ("Order") or
any memorandum of understanding with any Governmental Entity
("MOU") applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, or (iii) subject to making the
filings, obtaining the approvals and effecting any other matters
identified in Section 3.6 of the Company Disclosure Letter,
result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under,
or give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a Lien on any
property or asset of the Company or any of its Subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries or any
property or asset of the Company or any of its Subsidiaries is
bound or affected, except, in the case of clauses (ii) and (iii)
for any such conflicts, violations, breaches, defaults, events,
losses, rights, payments, cancellations, encumbrances or other
occurrences that could not either (i) result in a default or
event of default or accelerate or require that the Company or any
of its Subsidiaries pay prior to the scheduled maturity date or
repurchase or offer to repurchase indebtedness owed to any Person
that is in excess of $5.0 million or indebtedness in excess of
$20.0 million in the aggregate or (ii) with respect to any other
obligation, document or instrument, individually or in the
aggregate, be reasonably expected to have a Company Material
Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement and the
consummation by the Company of the transactions contemplated
hereby will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign (each a "Governmental
Entity"), except (i) for (A) applicable requirements, if any, of
the Exchange Act, (B) the pre-merger notification requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR
Act"), (C) Chapter 80B of the Minnesota Statutes and similar Laws
of other states, (D) the requirements of the Change in Bank
Control Act, as amended, and the rules and regulations thereunder
(the "CIBC Act"), and (E) the filing of articles of merger
pursuant to the MBCA or (ii) where the failure to obtain any such
consents, approvals, authorizations or permits, or to make such
filings or notifications, could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect.
3.7. Compliance with Laws. Neither the Company nor any of
its Subsidiaries is in conflict with, or in default or violation
of, any Law, Order or MOU applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or
any of its Subsidiaries is bound or affected except for such
conflicts, defaults or violations that could not, individually or
in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The Company and its Subsidiaries have
obtained all licenses, permits and other authorizations and have
taken all actions required by applicable Law or government
regulations in connection with their business as now conducted,
except where the failure to obtain any such item or to take any
such action could not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
3.8. SEC Documents. (a) The Company has filed all forms,
reports and documents required to be filed by it with the SEC
since January 1, 1996 (collectively, the "Company Reports"). As
of their respective dates, the Company Reports and any such
reports, forms and other documents filed by the Company with the
SEC after the date of this Agreement (i) complied, or will
comply, in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act"),
the Exchange Act and the rules and regulations thereunder and
(ii) did not, or will not, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not
misleading. The representation in clause (ii) of the preceding
sentence does not apply to any misstatement or omission in any
Company Report filed prior to the date of this Agreement which
was superseded by a subsequent Company Report filed prior to the
date of this Agreement. Except as disclosed in Section 3.8 of
the Company Disclosure Letter, no Subsidiary of the Company is
required to file any report, form or other document with the SEC.
(2) Each of the financial statements included in or
incorporated by reference into the Company Reports (including the
related notes and schedules) presents fairly, in all material
respects, the consolidated financial position of the Company and
its Subsidiaries as of its date or, if applicable, the
consolidated results of operations, retained earnings or cash
flows, as the case may be, of the Company and its Subsidiaries
for the periods set forth therein, in each case in accordance
with generally accepted accounting principles consistently
applied during the periods involved, except as may be noted
therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments, none of which is material in kind or
amount except as noted therein and except to the extent that
generally accepted accounting principles do not require footnote
disclosure in unaudited financial statements).
(3) Neither the Company nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a consolidated balance
sheet of the Company or described or referred to in the notes
thereto, prepared in accordance with generally accepted
accounting principles consistently applied based upon facts known
to the Company as at the date of this Agreement, except for
(i) liabilities or obligations that were so reserved on, or
reflected in (including the notes to), the consolidated balance
sheet of the Company as of September 25, 1998 or any Company
Filed Report or disclosed in Section 3.8 of the Company
Disclosure Letter, (ii) liabilities or obligations arising in the
ordinary course of business (including trade indebtedness) since
September 25, 1998, and (iii) liabilities or obligations which
could not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(d) Set forth in Section 3.8 of the Company Disclosure
Letter is a listing of all of the Company's indebtedness for
borrowed money outstanding as of the Measurement Date setting
forth in each case the principal amount thereof. No payment
defaults have occurred and are continuing under the agreements
and instruments governing the terms of such indebtedness.
3.9. Litigation. Except as described in Section 3.9 of
the Company Disclosure Letter, there are no actions, suits or
proceedings pending or, to the Knowledge of the Company,
threatened against or affecting the Company or any of its
Subsidiaries and there are no Orders of any Governmental Entity
or arbitrator outstanding against the Company or any of its
Subsidiaries, except actions, suits, proceedings or Orders that,
individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect.
3.10. Absence of Certain Changes. Except as described in
the Company Reports or other reports filed by the Company with
the SEC and publicly available prior to the date hereof (the
"Company Filed Reports") or disclosed in Section 3.10 of the
Company Disclosure Letter, from January 1, 1998 to the date of
this Agreement, there has not been (a) any Company Material
Adverse Effect, (b) any declaration, setting aside or payment of
any dividend or other distribution with respect to its capital
stock other than customary quarterly cash dividends paid through
August, 1998, (c) any stock dividend, subdivision,
reclassification, recapitalization, split, combination or
exchange of any of the Company's capital stock or any issuance or
the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for any shares of the
Company's capital stock, (d) any granting of any increase in
compensation by the Company or any of its Subsidiaries to any
director, executive officer or any other key employee of the
Company, other than in the ordinary course of business or in
connection with a promotion, (e) any granting by the Company or
any of its Subsidiaries to any such director, executive officer
or key employee of any increase in severance or termination pay,
except as was required under any employment, severance or
termination agreements in effect as of the date of the most
recent financial statements included in the Company Filed Reports
or referred to in Section 3.10 of the Company Disclosure Letter,
(f) any entry by the Company or any of its Subsidiaries into any
employment, severance or termination agreement with any such
director, executive officer or key employee, or (g) except
insofar as may be required by a change in generally accepted
accounting principles, any change in accounting methods,
principles or practices by the Company. For purposes of this
Agreement, "key employee" means any employee whose current salary
and targeted bonus exceeds $200,000 per annum. Section 3.10 of
the Company Disclosure Letter contains a true and complete list
of all agreements or plans providing for termination or severance
pay to any officer, director or key employee of the Company.
3.11. Taxes. (a) Except as could not, individually or in
the aggregate, reasonably be expected to have a Company Material
Adverse Effect, (i) the Company has timely filed with the
appropriate governmental authorities all Tax Returns required to
be filed by or with respect to the Company, (ii) all Taxes shown
to be due on such Tax Returns, all Taxes required to be paid on
an estimated or installment basis, and all Taxes required to be
withheld with respect to the Company have been timely paid or, if
applicable, withheld and paid, to the appropriate taxing
authority in the manner provided by Law, (iii) the reserve for
Taxes set forth on the consolidated balance sheet of the Company
and its Subsidiaries as of September 25, 1998 is adequate for the
payment of all Taxes through the date thereof and no Taxes have
been incurred after September 25, 1998 which were not incurred in
the ordinary course of business, (iv) no Federal, state, local or
foreign audits, administrative proceedings or court proceedings
are pending with regard to any Taxes or Tax Returns of the
Company and there are no outstanding deficiencies or assessments
asserted or proposed, and (v) there are no outstanding
agreements, consents or waivers extending the statutory period of
limitations applicable to the assessment of any Taxes or
deficiencies against the Company except as disclosed in Section
3.11 of the Company Disclosure Letter, and the Company is not a
party to any agreement providing for the allocation or sharing of
Taxes.
(b) The Company has not filed a consent to the application
of Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code").
(c) The Company is not and has not been a United States
real property holding company (as defined in Section 897(c)(2) of
the Code) during the applicable period specified in Section
897(c)(1)(ii) of the Code.
(d) No indebtedness of the Company is "corporate
acquisition indebtedness" within the meaning of Section 279(b) of
the Code.
(e) Since January 1, 1993, the Company has not been a
member of an affiliated group filing consolidated Tax Returns
other than a federal income tax group the common parent of which
is the Company.
(f) For purposes of this Agreement, "Taxes" means all
taxes, charges, fees, levies or other assessments imposed by any
United States Federal, state, or local taxing authority or by any
non-U.S. taxing authority, including but not limited to, income,
gross receipts, excise, property, sales, use, transfer, payroll,
license, ad valorem, value added, withholding, social security,
national insurance (or other similar contributions or payments),
franchise, estimated, severance, stamp and other taxes (including
any interest, fines, penalties or additions attributable to or
imposed on or with respect to any such taxes, charges, fees,
levies or other assessments).
(g) For purposes of this Agreement, "Tax Return" means any
return, report, information return or other document (including
any related or supporting information and, where applicable,
profit and loss accounts and balance sheets) with respect to
Taxes.
(h) Purchaser and the Company will cooperate in the
preparation, execution and filing of all returns, applications or
other documents regarding any real property, transfer, stamp,
recording, documentary (including any New York State Real Estate
Transfer Tax) and any other similar fees and taxes which become
payable in connection with the Offer or the Merger (collectively,
"Transfer Taxes"). From and after the Effective Time, except as
contemplated by Section 1.1, 2.8(c) and 2.8(f), the Surviving
Corporation will pay or cause to be paid, without deduction or
withholding from any amounts payable to the holders of Shares,
all Transfer Taxes.
(i) The Company received a private letter ruling (the
"Ruling") from the Internal Revenue Service ("IRS"), dated August
17, 1998 (Reference CC:DOM:CORP:2, PLR-119863-97), a copy of
which has been provided to Parent, as to United States federal
income tax consequences of the spinoff of Metris Companies Inc.
("Metris") and the certain transactions related thereto (the
"Spinoff"), and the Ruling has not been modified, supplemented or
revoked. To the Knowledge of the Company, there are no
considerations on the part of the IRS to modify, supplement or
revoke the Ruling. The representations of the Company in (j),
(v) and (x) of the Ruling, were true, correct and complete from
the date submitted through and including the date of the Spinoff.
3.12. Property. (a) Section 3.12(a) of the Company
Disclosure Letter contains a true and complete list of all (i)
patents and patent applications in the name of the Company or any
of its Subsidiaries, (ii) trademark and service ▇▇▇▇
registrations and applications in the name of the Company or any
of its Subsidiaries, and (iii) all material licenses related to
the foregoing.
(b) Except as set forth in Section 3.12(b) of the Company
Disclosure Letter, the Company or one of its Subsidiaries owns or
has the valid right to use all intellectual property used by it
in connection with its business, including without limitation (i)
trademarks and service marks (registered or unregistered) and
trade names, and all goodwill associated therewith, (ii) patents,
patentable inventions, discoveries, improvements, ideas, know-
how, processes and Computer Software, (iii) trade secrets and the
right to limit the use or disclosure thereof, (iv) copyrights in
all works, including software programs and mask works, and (v)
domain names (collectively, "Intellectual Property"), except
where the failure to own or have the valid right to use the
Intellectual Property could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect. For purposes of this Agreement, the term
"Computer Software" means (A) any and all computer programs and
applications consisting of sets of statements and instructions to
be used directly or indirectly in computer software or firmware
whether in source code or object code form, (B) databases and
compilations, including without limitation any and all data and
collections of data, whether machine readable or otherwise, (C)
all versions of the foregoing including, without limitation, all
screen displays and designs thereof, and all component modules of
source code or object code or natural language code therefor, and
whether recorded on papers, magnetic media or other electronic or
non-electronic device, (D) all descriptions, flowcharts and other
work product used to design, plan, organize and develop any of
the foregoing, and (E) all documentation, including without
limitation all technical and user manuals and training materials,
relating to the foregoing. Except as could not, individually or
in the aggregate, be reasonably expected to have a Company
Material Adverse Effect, (1) all grants, registrations and
applications for Intellectual Property that are used in and are
material to the conduct of the businesses of the Company as
currently conducted (x) are valid, subsisting, in proper form and
have been duly maintained, including the submission of all
necessary filings and fees in accordance with the legal and
administrative requirements of the appropriate jurisdictions and
(y) have not lapsed, expired or been abandoned, (2) to the
Knowledge of the Company, (x) there are no conflicts with or
infringements of any Intellectual Property by any third party and
(y) the conduct of the businesses of the Company as currently
conducted does not conflict with or infringe any proprietary
right of any third party, (3) there is no claim, suit, action or
proceeding pending or, to the Knowledge of the Company,
threatened against the Company (x) alleging any such conflict or
infringement with any third party's proprietary rights or (y)
challenging the ownership, use, validity or enforceability of the
Intellectual Property, (4) all consents, filings and
authorizations by or with third parties necessary with respect to
the consummation of the transactions contemplated hereby as they
may affect the Intellectual Property have been obtained, (5) the
Company is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or
other agreement relating to the Intellectual Property, and (6) no
former or present employees, officers or directors of the Company
hold any right, title or interest directly or indirectly, in
whole or in part, in or to any Intellectual Property.
(c) Section 3.12(c) of the Company Disclosure Letter sets
forth all of the real property owned in fee by the Company or any
of its Subsidiaries (the "Owned Real Property"). The Company or
one of its Subsidiaries has good and valid title to each parcel
of Owned Real Property (other than as disclosed in the Company
Filed Reports) free and clear of all Liens except (i) those
specified in Section 3.12(c) of the Company Disclosure Letter or
reflected or reserved against in the latest balance sheet of the
Company included in the Company Filed Reports, (ii) taxes and
general and special assessments not in default and payable
without penalty and interest, (iii) inchoate mechanics',
materialmen's, warehouse and similar Liens securing obligations
that are incurred in the ordinary course and are not delinquent,
and (iv) other Liens that could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect (collectively, "Permitted Liens").
(d) The Company has heretofore made available to Parent
true, correct and complete copies of all leases, subleases and
other agreements (the "Real Property Leases") under which the
Company or any of its Subsidiaries uses or occupies or has the
right to use or occupy, now or in the future, any real property
or facility and base rent exceeds $1.0 million annually (the
"Leased Real Property"), including without limitation all
modifications, amendments and supplements thereto. Except in
each case where the failure could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect, (i) the Company or one of its Subsidiaries has a
valid leasehold interest in each parcel of Leased Real Property
free and clear of all Liens except Permitted Liens and each Real
Property Lease is in full force and effect, (ii) all rent and
other sums and charges due and payable by the Company or its
Subsidiaries as tenants thereunder are current in all material
respects, (iii) no termination event or condition or uncured
default of a material nature on the part of the Company or any
such Subsidiary or, to the Knowledge of the Company, the
landlord, exists under any Real Property Lease, and (iv) the
Company or one of its Subsidiaries is in actual possession of
each Leased Real Property and is entitled to quiet enjoyment
thereof in accordance with the terms of the applicable Real
Property Lease.
3.13. Millennium Compliance. The Company has adopted and
implemented a plan to investigate and correct "year 2000
problems" associated with the operation of the Company's and its
Subsidiaries' businesses. The Company has provided to Parent a
complete and correct copy of such plan, an accurate written
explanation of the costs that the Company and its Subsidiaries
have incurred to investigate and correct the "year 2000 problem,"
as well as a written report of its estimates of the costs to be
incurred in the future to investigate and correct the "year 2000
problem." Neither the Company nor any of its Subsidiaries has
received written notice from the OCC that any Subsidiary of the
Company that is a national bank fails to comply with the
guidelines of the OCC with respect to "year 2000 problems."
3.14. Contracts. (a) There have been made available to
Parent true, correct and complete copies of all of the following
contracts to which Company or any of its Subsidiaries is a party
or by which any of them is bound as of the date of this Agreement
(collectively, the "Material Contracts"): (i) contracts with any
director of the Company, material contracts (other than those
terminable at will without penalty) with any current officer of
the Company or any of its Subsidiaries and employment, severance
or termination agreements with any executive officer of the
Company or any of its Subsidiaries; (ii) contracts (A) for the
sale (other than completed sales) of material assets of the
Company or any of its Subsidiaries, other than contracts entered
into in the ordinary course of business or (B) for the grant to
any person of any preferential rights to purchase any of its
assets; (iii) contracts which restrict the Company or any of its
Subsidiaries from competing in any line of business or with any
person in any geographical area, other than those the performance
or breach of which could not, individually or in the aggregate,
be reasonably likely to have a Company Material Adverse Effect;
and (iv) indentures, credit agreements, security agreements,
mortgages, guarantees, promissory notes and other contracts
relating to the borrowing of money, other than (A) any of the
foregoing with respect to indebtedness to any Person of less than
$5.0 million, (B) intercompany loans or guarantees between the
Company and any of its Subsidiaries or between any such
Subsidiaries or for the benefit of, or guaranteeing or securing
obligations of, the Company or a Subsidiary of the Company and
(C) security agreements covering personal property that are not
individually or in the aggregate material to the Company and its
Subsidiaries, taken as a whole.
(b) Except as specified in Section 3.14 of the Company
Disclosure Letter, all of the Material Contracts are in full
force and effect and are the legal, valid and binding obligations
of the Company and/or its Subsidiaries, enforceable against them
in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at
law or in equity), except where the failure of such Material
Contracts to be in full force and effect or to be legal, valid,
binding or enforceable against the Company and/or its
Subsidiaries has not had and could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect. Except as specified in Section 3.14 of the
Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is in breach or default in any material respect
under any Material Contract nor, to the Knowledge of the Company,
is any other party to any Material Contract in breach or default
thereunder in any material respect, except for such breaches or
defaults that have not had and could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect.
3.15. Environmental Matters. (a) Except as disclosed in
the Company Filed Reports, as specified in Section 3.15 of the
Company Disclosure Letter or as could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect: (i) neither the Company nor any of its
Subsidiaries has violated or is in violation of any Environmental
Law; (ii) none of the Owned Real Property or Leased Real Property
(including without limitation soils and surface and ground
waters) are contaminated with any Hazardous Substance in
quantities which require investigation or remediation under
Environmental Laws; (iii) neither the Company nor any of its
Subsidiaries is liable for any off-site contamination;
(iv) neither the Company nor any of its Subsidiaries has any
liability or remediation obligation under any Environmental Law;
(v) no assets of the Company or any of its Subsidiaries are
subject to pending or, to the Knowledge of the Company,
threatened Liens under any Environmental Law; (vi) the Company
and its Subsidiaries have all Permits required under any
Environmental Law ("Environmental Permits"); and (vii) the
Company and its Subsidiaries are in compliance with their
respective Environmental Permits.
(b) For purposes of this Agreement, the term (i)
"Environmental Laws" means any federal, state or local Law
relating to: (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the
manufacture, handling, transport, use, treatment, storage or
disposal of Hazardous Substances or materials containing
Hazardous Substances; or (C) otherwise relating to pollution of
the environment or the protection of human health, and (ii)
"Hazardous Substances" means: (A) those materials, pollutants
and/or substances defined in or regulated under the following
federal statutes and their state counterparts, as each may be
amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Toxic Substance
Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act and the Clean Air Act; (B) petroleum and petroleum products
including crude oil and any fractions thereof; (C) natural gas,
synthetic gas and any mixtures thereof; (D) radon; (E) any other
contaminant; and (F) any materials, pollutants and/or substance
with respect to which any Governmental Entity requires
environmental investigation, monitoring, reporting or
remediation.
3.16. Employee Benefit Plans. Except as described in the
Company Filed Reports (and subsequent financial and actuarial
statements and reports furnished to Parent or its agents prior to
the date hereof), as described in Section 3.16 of the Company
Disclosure Letter or as could not, individually or in the
aggregate, reasonably be expected to have a Company Material
Adverse Effect, (a) all employee benefit plans or programs
maintained for the benefit of the current or former employees or
directors of the Company or any of its Subsidiaries that are
sponsored, maintained or contributed to by the Company or any of
its Subsidiaries, or with respect to which the Company or any of
its Subsidiaries has any liability, including without limitation
any such plan that is an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA")(the "Company Benefit Plans"), are in compliance
with all applicable requirements of Law, including ERISA and the
Code, (b) neither the Company nor any of its Subsidiaries has any
liabilities or obligations with respect to any such employee
benefit plans or programs, whether accrued, contingent or
otherwise, other than the obligations arising in the ordinary
course of the operation or administration of such plans or
routine claims for benefits under such plans, nor to the
Knowledge of the Company are any such liabilities or obligations
expected to be incurred, and (c) neither the Company nor any of
its Subsidiaries is a party to any contract or other arrangement
under which, after giving effect to the Offer or the Merger,
Parent or the Surviving Corporation would be obligated to make
any "parachute" payment within the meaning of the Code. Except
as described in Section 3.16 of the Company Disclosure Letter,
the execution of, and performance of the transactions
contemplated by, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute
an event under any benefit plan, program, policy, arrangement or
agreement or any trust, loan or funding arrangement that will or
may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits
with respect to any employee. The Company has made available to
Parent true, complete and correct copies of the plan documents
for the Company Benefit Plans.
3.17. State Takeover Statutes. The Company Board and the
Special Committee have approved the Offer, the Merger, this
Agreement and the transactions contemplated hereby and, assuming
the accuracy of Parent's and Purchaser's representation in
Section 4.8, such approval is sufficient to render inapplicable
to the Offer, the Merger, this Agreement and the transactions
contemplated hereby, the provisions of Sections 302A.671,
302A.673 and 302A.675 of the MBCA and the super-majority voting
requirements of Article VII of the Company's articles of
incorporation. No other "fair price," "merger moratorium,"
"control share acquisition" or other anti-takeover statute or
similar statute or regulation (other than Chapter 80B of the
Minnesota Statutes) applies or purports to apply to the Merger,
this Agreement, the Offer or any of the transactions contemplated
hereby or thereby.
3.18. Voting Requirements. The affirmative vote of the
holders of a majority of the issued and outstanding Shares,
voting as a single class at the Company Shareholders' Meeting to
adopt this Agreement, is the only vote of the holders of any
class or series of the Company's capital stock necessary to
approve and adopt this Agreement and the transactions
contemplated hereby.
3.19. No Brokers. The Company has not entered into any
contract, arrangement or understanding with any Person or firm
which may result in the obligation of the Company or Parent to
pay any investment banker's or finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that the Company has
retained SSB as its financial advisor and, in addition, has
agreed to make a $500,000 payment, in each case pursuant to
arrangements which have been disclosed to Parent prior to the
date hereof. Other than the foregoing arrangements, to the
Knowledge of the Company, there is no claim for payment by the
Company of any investment banker's or finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby. The Company or, if the
Effective Time occurs, the Surviving Corporation, will pay all
amounts owed pursuant to the foregoing arrangements.
3.20. Opinion of SSB. The Company Board has received the
opinion of SSB to the effect that, as of the date of this
Agreement, the cash consideration to be received by the
Shareholders (other than Parent and its Affiliates) in the Offer
and the Merger is fair to such Shareholders from a financial
point of view.
3.21. Offer Documents; Proxy Statement. (a) The proxy
statement to be sent to the Shareholders in connection with a
meeting of the Shareholders to consider the Merger (the "Company
Shareholders' Meeting") or the information statement to be sent
to Shareholders, as appropriate (such proxy statement or
information statement, as amended or supplemented, is herein
referred to as the "Proxy Statement"), at the date mailed to the
Shareholders and at the time of the Company Shareholders' Meeting
(i) will comply in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations
thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading. Neither the Schedule 14D-9 nor any of the
information relating to the Company or its Affiliates provided by
or on behalf of the Company specifically for inclusion in the
Schedule 14D-1 or the other Offer Documents will, at the
respective times the Schedule 14D-9, the Schedule 14D-1 and the
other Offer Documents or any amendments or supplements thereto
are filed with the SEC and are first published, sent or given to
the Shareholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. No representation or warranty is made by the Company
with respect to any information supplied by Parent or Purchaser
or their counsel or other authorized representatives specifically
for inclusion in the Proxy Statement or the Schedule 14D-9.
IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Each of Parent and Purchaser represents and warrants to the
Company, except as set forth in the letter, dated the date
hereof, from Parent to the Company initialed by those parties
(the "Parent Disclosure Letter"), as follows:
4.1. Existence; Good Standing; Corporate Authority. Each
of Parent and Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware
and Minnesota, respectively. Parent is duly licensed or
qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States
in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified or to be
in good standing could not reasonably be expected to prevent or
materially delay Parent's or Purchaser's ability to consummate
the transactions contemplated hereby (a "Parent Material Adverse
Effect"). Parent has all requisite corporate power and authority
to own, operate and lease its properties and carry on its
business as now conducted. The copies of the certificate of
incorporation and bylaws of Parent and the articles of
incorporation and bylaws of Purchaser previously made available
to the Company are true and correct.
4.2. Authorization, Validity and Effect of Agreement.
Each of Parent and Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement,
and all agreements and documents contemplated hereby to be
executed by it. This Agreement, the Offer, the Merger and the
consummation by Parent and Purchaser of the transactions
contemplated hereby have been duly and validly authorized by the
respective Boards of Directors of Parent and Purchaser and by
Parent as sole shareholder of Purchaser, and no other corporate
action on the part of Parent and Purchaser is necessary to
authorize this Agreement, the Offer and the Merger or to
consummate the transactions contemplated hereby. This Agreement
constitutes, and all agreements and documents contemplated hereby
to be executed and delivered by Parent or Purchaser (when
executed and delivered pursuant hereto) will constitute, the
valid and binding obligations of Parent or Purchaser, as the case
may be, enforceable respectively against them in accordance with
their respective terms.
4.3. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser
do not, and the consummation by Parent and Purchaser of the
transactions contemplated hereby will not, (i) conflict with or
violate the certificate of incorporation, articles of
incorporation or bylaws of Parent or Purchaser, (ii) subject to
making the filings and obtaining the approvals identified in
Section 4.3(b), conflict with or violate any Law, Order or MOU
applicable to Parent or any of its Subsidiaries or by which any
property or asset of Parent or any of its Subsidiaries is bound
or affected, or (iii) subject to making the filings, obtaining
the approvals and effecting any other matters identified in
Section 4.3 of the Parent Disclosure Letter, result in any breach
of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, result in
the loss of a material benefit under, or give to others any right
of termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a Lien on any
property or asset of Parent or any of its Subsidiaries pursuant
to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its Subsidiaries is a party
or by which Parent or any of its Subsidiaries or any property or
asset of Parent or any of its Subsidiaries is bound or affected,
except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults, events, losses,
rights, payments, cancellations, encumbrances or other
occurrences that could not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent
and Purchaser do not, and the performance of this Agreement and
the consummation of the transactions contemplated hereby by
either of them will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any Governmental Entity, except (i) for (A) applicable
requirements, if any, of the Exchange Act, (B) the pre-merger
notification requirements of the HSR Act, (C) under Chapter 80B
of the Minnesota Statutes and similar laws of other states, (D)
the requirements of the CIBC Act, and (E) the filing of articles
of merger pursuant to the MBCA, or (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make
such filings or notifications could not, individually or in the
aggregate, reasonably be expected to have a Parent Material
Adverse Effect.
4.4. No Brokers. Except for arrangements with Credit
Suisse First Boston, neither Parent nor Purchaser has entered
into any contract, arrangement or understanding with any Person
or firm which may result in the obligation of the Company to pay
any investment banker's or finder's fees, brokerage or agent's
commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby. Parent will pay all amounts
owed to Credit Suisse First Boston pursuant to the foregoing
arrangements.
4.5. Offer Documents; Proxy Statement. None of the
information supplied by Parent, Purchaser or their respective
officers, directors, representatives, agents or employees, for
inclusion in the Proxy Statement, or in any amendments thereof or
supplements thereto, will, on the date the Proxy Statement is
first mailed to Shareholders or at the time of the Company
Shareholders' Meeting, contain any statement which, at such time
and in light of the circumstances under which it will be made,
will be false or misleading with respect to any material fact, or
will omit to state any material fact necessary in order to make
the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect
to the solicitation of proxies for the Company Shareholders'
Meeting which has become false or misleading. Neither the Offer
Documents nor any amendments thereof or supplements thereto, nor
any information supplied by Parent or Purchaser specifically for
inclusion in the Schedule 14D-9 nor any amendments thereof or
supplements thereto, will, at any time the Offer Documents or the
Schedule 14D-9 or any such amendments or supplements are filed
with the SEC or first published, sent or given to the
Shareholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, Parent and Purchaser do not make
any representation or warranty with respect to any Company SEC
Information. The Offer Documents and any amendments or
supplements thereto will comply as to form in all material
respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
4.6. Financing. Parent and Purchaser have, or will have,
available all of the funds or have the borrowing capacity
necessary for the acquisition of the outstanding Shares pursuant
to the Offer and the Merger and to perform their respective
obligations under this Agreement.
4.7. Litigation. There are no actions, suits or
proceedings pending or, to the Knowledge of Parent, threatened
against or affecting Parent or any of its Subsidiaries as of the
date of this Agreement and there are no Orders of any
Governmental Entity or arbitrator outstanding against Parent or
any of its Subsidiaries, that could, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse
Effect.
4.8. Ownership of Shares. Except for Shares owned by
employment benefit plans maintained or contributed to by Parent
or any of its Subsidiaries (the "Parent Benefit Plans") or as set
forth in the Parent Disclosure Letter, neither Parent nor, to its
Knowledge, any of its Affiliates or Associates, each as defined
in the Exchange Act (excluding for purposes hereof any outside
director of Parent, provided that such directors do not hold in
the aggregate more than 1% of the Shares), (i) beneficially owns
(as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, shares of capital
stock of the Company.
V. COVENANTS
5.1. Conduct of Business.
(a) Conduct of Business By the Company. During the period
from the date of this Agreement to the Effective Time, except as
expressly provided by this Agreement or Section 5.1 of the
Company Disclosure Letter, the Company will, and will cause its
Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent
therewith, use their reasonable efforts to preserve intact their
current business organizations, use their reasonable efforts to
keep available the services of their current officers and other
key employees and preserve their relationships with those Persons
having business dealings with them to the end that their goodwill
and ongoing businesses will be unimpaired at the Effective Time.
Without limiting the generality or effect of the foregoing,
except as expressly and specifically described in Section 5.1 of
the Company Disclosure Letter or as expressly provided by this
Agreement, during the period from the date of this Agreement to
the Effective Time, the Company will not, and will not permit any
of its Subsidiaries to, without the consent of Parent or
Purchaser:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly
owned Subsidiary of the Company to its parent, or by a
Subsidiary that is partially owned by the Company or any of
its Subsidiaries, provided that the Company or any such
Subsidiary receives or is to receive its proportionate
share thereof, (A) declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of
its capital stock, (B) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or
(C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or
any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities
provided that nothing herein stated will limit the
Company's right to cancel the Options in exchange for the
Option Consideration;
(ii) issue, deliver, sell, pledge or otherwise encumber
any shares of its capital stock, any other voting
securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares,
voting securities or convertible securities except for the
issuance of Shares pursuant to the exercise of Options that
are outstanding on the Measurement Date, or pursuant to the
Directors' Retainer Stock Deferral Plan or the 1994
Employee Stock Purchase Plan (to the extent Shares have
been paid for with payroll deductions at or prior to the
date of this Agreement), provided that nothing herein
stated will limit the Company's right to cancel the Options
in exchange for the Option Consideration;
(iii) amend its articles of incorporation, bylaws or
other comparable organizational documents;
(iv) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, limited
liability company, partnership, joint venture, association
or other business organization or division thereof;
(v) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of any of its
properties or assets, other than (x) in the ordinary course
of business consistent with past practice and (y) sales of
assets which do not individually or in the aggregate exceed
$5.0 million;
(vi) (A) incur any indebtedness for borrowed money
(other than indebtedness of the Company to any Subsidiary
of the Company or of any Subsidiary of the Company to the
Company or to any other Subsidiary of the Company) or
guarantee any such indebtedness of another Person other
than the Company or a Subsidiary of the Company, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of another
Person other than the Company or a Subsidiary of the
Company, enter into any "keep well" or other agreement to
maintain any financial statement condition of another
Person other than the Company or a Subsidiary of the
Company or enter into any arrangement having the economic
effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business
consistent with past practice, or (B) make any loans,
advances or capital contributions to, or investments in,
any other Person, other than to the Company or any
Subsidiary of the Company or to officers and employees of
the Company or any of its Subsidiaries for travel, business
or relocation expenses in the ordinary course of business;
(vii) make or agree to make any capital expenditure or
capital expenditures other than capital expenditures set
forth in the operating budget of the Company previously
furnished to Parent and additional capital expenditures not
to exceed $5.0 million in the aggregate;
(viii) any change to its accounting methods, principles
or practices, except as may be required by generally
accepted accounting principles;
(ix) except as required by Law or contemplated hereby,
enter into, adopt or amend in any material respect or
terminate any Company Stock Plan or any other agreement,
plan or policy involving the Company or any of its
Subsidiaries and one or more of their directors, officers
or employees, or materially change any actuarial or other
assumption used to calculate funding obligations with
respect to any Company pension plans, or change the manner
in which contributions to any Company pension plans are
made or the basis on which such contributions are
determined;
(x) increase the compensation of any director, executive
officer or, except in the ordinary course of business, any
other key employee of the Company or pay any benefit or
amount not required by a plan or arrangement as in effect
on the date of this Agreement to any such Person;
(xi) enter into or amend in any material respect any
Material Contract or enter into any contract or agreement,
written or oral, with any Affiliate, associate or relative
of the Company (other than the Company or any Subsidiary of
the Company) or make any payment to or for the benefit of,
directly or indirectly, any of the foregoing other than
payments to directors and officers in the ordinary course
of business or pursuant to agreements or arrangements in
effect prior to the date of this Agreement that are
disclosed in Section 5.1 of the Company Disclosure Letter;
or
(xii) authorize, or commit or agree to take, any of
the foregoing actions.
(b) Other Actions. Except as required by Law, neither the
Company, on the one hand, nor Parent or Purchaser, on the other
hand, will, and will not permit any of their respective
Subsidiaries to, voluntarily take any action that would, or that
could reasonably be expected to, result in (i) any of the
conditions to the Merger set forth in Article VI not being
satisfied or (ii) prior to the completion of the Offer, the
condition set forth in subparagraph (iii) of Annex A not being
satisfied.
(c) Advice of Changes. Each of the Company and Parent will
use reasonable efforts to promptly advise the other party orally
and in writing if it obtains Knowledge and, to its Knowledge, the
other party does not also have Knowledge of (i) any
representation or warranty set forth in this Agreement becoming
untrue or inaccurate in any respect that could reasonably be
expected to have a Company Material Adverse Effect or a Parent
Material Adverse Effect, as the case may be, or (ii) a failure by
it to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement which
failure to comply or satisfy could reasonably be expected to have
a Company Material Adverse Effect or a Parent Material Adverse
Effect, as the case may be.
(d) Meeting of Shareholders. (i) The Company will take
all action necessary in accordance with applicable Law and its
articles of incorporation and bylaws to convene a meeting of the
Shareholders as promptly as practicable after the Offer
Completion Date to consider and vote upon the approval of this
Agreement. The Company Board will recommend such approval and
the Company will take all lawful action to solicit such approval,
including without limitation timely mailing any Proxy Statement,
provided, however, that such recommendation or solicitation (but
not such actions to convene the Company Shareholders' Meeting) is
subject to any action, including any withdrawal or change of its
recommendation, taken by, or upon authority of, the Company
Board, as the case may be, in the exercise of its good faith
judgment and in conformity with the advice of outside counsel
(notice of which will be promptly given to Parent and Purchaser)
that such action is required in order to satisfy the fiduciary
duties of the members of the Company Board to Shareholders
imposed by Law. Without limiting the generality or effect of any
other provision hereof, the Company's obligations pursuant to the
first sentence of this Section 5.1(d) will not be affected by the
commencement, public proposal, public disclosure or communication
to the Company of any Company Takeover Proposal.
(ii) Notwithstanding Section 5.1(d)(i) hereof, in the
event that Parent, Purchaser or any other Subsidiary of Parent
acquires at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, the parties hereto will take all necessary
and appropriate action to cause the Merger to become effective in
accordance with Section 302A.621 of the MBCA without a meeting of
the Shareholders as soon as practicable after the acceptance for
payment and purchase of Shares by Purchaser pursuant to the
Offer.
5.2. No Solicitation. (a) The Company, its affiliates
and their respective officers, directors, employees,
representatives and agents will immediately cease any existing
discussions or negotiations, if any, with any parties conducted
heretofore with respect to any Company Takeover Proposal. The
Company will not, nor will it permit any of its Subsidiaries to,
nor will it authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly, (i) solicit or initiate
(including without limitation by way of furnishing information),
or take any other action (other than as required by Law) designed
or reasonably likely to facilitate, any inquiries or the making
of any proposal which constitutes or reasonably may give rise to
any Company Takeover Proposal or (ii) participate in any
discussions or negotiations regarding any Company Takeover
Proposal, provided, however, that if, at any time prior to the
date on which Purchaser purchases Shares in the Offer (the "Offer
Completion Date"), the Company Board determines in good faith and
in conformity with the advice of outside counsel, that failure to
do so would result in a breach of its fiduciary duties to the
Shareholders under applicable Law, the Company may, in response
to a Company Takeover Proposal which was not solicited by it and
did not otherwise result from a breach of any provision of this
Agreement, (A) furnish information with respect to the Company
and each of its Subsidiaries and access to the Company and its
Subsidiaries and their personnel to any Person pursuant to a
customary confidentiality agreement not more favorable to the
recipient of such information than the Confidentiality Agreement
and (B) participate in discussions and negotiations regarding
such Company Takeover Proposal. For purposes of this Agreement,
"Company Takeover Proposal" means any inquiry, proposal or offer
from any Person relating to any direct or indirect acquisition or
purchase of 20% or more of the assets of the Company and its
Subsidiaries, taken as a whole, or 20% or more of any class of
equity securities of the Company or any of its Subsidiaries, any
tender offer or exchange offer for Shares of any class of equity
securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement, or any other transaction that is
intended or could reasonably be expected to prevent the
completion of the transactions contemplated hereby.
(b) Except as expressly permitted by this Section 5.2(b),
neither the Company Board nor any committee thereof may
(i) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Parent or Purchaser, the approval
or recommendation by the Company Board or such committee of the
Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any Company Takeover
Proposal, or (iii) cause or authorize the Company to enter into
any letter of intent, agreement in principle, acquisition
agreement or other similar agreement related to any Company
Takeover Proposal (each, a "Company Acquisition Agreement").
Notwithstanding the foregoing, in the event that prior to the
Offer Completion Date, the Company Board determines in good
faith, after the Company has received a Superior Proposal and in
conformity with the advice of outside counsel, that failure to do
so would result in a breach of its fiduciary duties to the
Shareholders under applicable Law, the Company Board may upon not
less than three business days notice to Parent of its intention
to do so withdraw or modify or propose publicly to withdraw or
modify its approval or recommendation of the Offer, the Merger or
this Agreement, or approve or recommend, or propose publicly to
approve or recommend a Superior Proposal or, subject to Section
7.5, enter into a Company Acquisition Agreement, provided,
however, that in connection therewith, the Company simultaneously
terminates this Agreement pursuant to Section 7.3(c). For
purposes of this Agreement, "Superior Proposal" means a Company
Takeover Proposal that (x) involves the direct or indirect
acquisition or purchase of 50% or more of the assets of the
Company and its Subsidiaries or 50% or more of any class of
equity securities of the Company or any of its Subsidiaries, (y)
involves payment of consideration to the Shareholders and other
terms and conditions that, taken as a whole, are superior to the
Offer and the Merger, and (z) is made by a Person reasonably
capable of completing such Company Takeover Proposal, taking into
account the legal, financial, regulatory and other aspects of
such Company Takeover Proposal and the Person making such Company
Takeover Proposal.
(c) In addition to the obligations of the Company set
forth in Section 5.2(a) and (b), the Company will (i) immediately
advise Parent orally and in writing of any request for
information or of any Company Takeover Proposal and the material
terms and conditions of such request or Company Takeover Proposal
and (ii) keep Parent reasonably informed of the status and
details (including amendments or proposed amendments) of any such
request or Company Takeover Proposal.
(d) Nothing contained in this Section 5.2 will prohibit
the Company from taking and disclosing to the Shareholders a
position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Shareholders if
the Company Board determines in good faith in conformity with the
advice of outside counsel that failure to do so would result in a
breach of its fiduciary duties to Shareholders under applicable
Law, provided, however, that neither the Company nor the Company
Board nor any committee thereof may, except as expressly
permitted by Section 5.2 or required by Rule 14e-2(a) promulgated
under the Exchange Act, withdraw or modify, or propose publicly
to withdraw or modify, its position with respect to the Offer,
this Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, a Company Takeover Proposal.
5.3. Filings, Reasonable Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of
the parties will use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things,
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, including all
reasonable efforts to (i) obtain all necessary actions or
nonactions, waivers, consents and approvals from Governmental
Entities and make all necessary registrations and filings
(including filings with Governmental Entities) and take all
reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) obtain all necessary material consents,
approvals or waivers from third parties, (iii) defend any
lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have
any adverse Order entered by any court or other Governmental
Entity vacated or reversed, and (iv) execute and deliver any
additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this
Agreement. Nothing set forth in this Section 5.3 will limit or
affect actions permitted to be taken pursuant to Section 5.2.
(b) In connection with, and without limiting the
foregoing, the Company and Parent will, and Parent will cause
Purchaser to, (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation (other
than Chapter 80B of the Minnesota Statutes) is or becomes
applicable to the Offer, the Merger or any of the other
transactions contemplated hereby and (ii) if any state takeover
statute or similar statute or regulation becomes applicable
thereto, take all action necessary to ensure that the Offer and
the Merger and such other transactions may be consummated as
promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or regulation
thereon.
(c) Notwithstanding any other provision hereof, in no
event will Parent be required to agree to any divestiture, hold-
separate or other requirement in connection with this Agreement
or any of the transactions contemplated thereby.
5.4. Inspection of Records. (a) From the date hereof to
the Effective Time, upon reasonable notice, the Company will (i)
allow all designated officers, attorneys, accountants and other
representatives of Parent reasonable access at all reasonable
times to the offices, records and files, correspondence, audits
and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or
otherwise pertaining to the business and affairs, of the parties
and their respective Subsidiaries, as the case may be and (ii)
furnish to Parent and its counsel, financial advisors, auditors
and other authorized representatives such financial and operating
data and other information as such Persons may reasonably
request. Parent and Purchaser will make all reasonable efforts
to minimize any disruption to the business of the Company and its
Subsidiaries that may result from such access and from the
requests for data and information hereunder.
(b) Subject to the requirements of applicable Law, and
except for such actions as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the
Offer and the Merger, the parties will, and will instruct each of
their respective Affiliates, associates, partners, employees,
agents and advisors to, hold in confidence all such information
as is confidential or proprietary, will use such information only
in connection with the Offer and the Merger and, if this
Agreement is terminated in accordance with its terms, will
deliver promptly to the other all copies of such information (and
any copies, compilations or extracts thereof or based thereon)
then in their possession or under their control.
5.5. Publicity. The initial press release relating to
this Agreement will be a joint press release and thereafter the
Company and Parent will, subject to their respective legal
obligations (including requirements of stock exchanges and other
similar regulatory bodies), consult with each other, and use
reasonable efforts to agree upon the text of any press release,
before issuing any such press release or otherwise making public
statements with respect to the transactions contemplated hereby
and in making any filings with any Governmental Entity or with
any national securities exchange with respect thereto.
5.6. Proxy Statement. If required by applicable Law,
Parent and the Company will cooperate and promptly prepare, and
Parent will file with the SEC as soon as practicable after the
Offer Completion Date, the Proxy Statement, and as promptly as
practicable thereafter as permitted by applicable Law, will mail
the Proxy Statement to the Shareholders. The Proxy Statement
will contain the recommendation of the Company Board that the
Shareholders approve and adopt this Agreement and approve the
Merger and the other transactions contemplated hereby. The
Company agrees not to mail the Proxy Statement to the
Shareholders until Parent confirms that the information provided
by Parent and Purchaser continues to be accurate. If at any time
prior to the Company Shareholders' Meeting any event or
circumstance relating to the Company or any of its Subsidiaries
or Affiliates, or its or their respective officers or directors,
should be discovered by the Company that is required to be set
forth in a supplement to any Proxy Statement, the Company will
promptly inform Parent and Purchaser to supplement such Proxy
Statement and mail such supplement to the Shareholders.
5.7. Further Actions. (a) Each party hereto will,
subject to the fulfillment at or before the Effective Time of
each of the conditions of performance set forth herein or the
waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger.
(b) If, at any time after the Effective Time, the
Surviving Corporation considers or is advised that any deeds,
bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title
or interest in, to or under any of the rights, properties or
assets of Purchaser or the Company or otherwise to carry out this
Agreement, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the
name and on behalf of Purchaser or the Company, all such deeds,
bills of sale, assignments and assurances and to take and do, in
the name and on behalf of Purchaser or the Company, all such
other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
5.8. Insurance; Indemnity. (10 All rights to
indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time existing in
favor of the current or former directors or officers of the
Company or each of its Subsidiaries as provided in their
respective articles of incorporation or bylaws (or comparable
organizational documents) will be assumed by Parent and Parent
will be directly responsible for such indemnification, without
further action, as of the Effective Time and will continue in
full force and effect in accordance with their respective terms.
In addition, from and after the Effective Time, directors and
officers of the Company who become or remain directors or
officers of Parent or the Surviving Corporation will be entitled
to the same indemnity rights and protections (including those
provided by directors' and officers' liability insurance) of
Parent. Notwithstanding any other provision hereof, the
provisions of this Section 5.8 (i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party,
his or her heirs and his or her representatives and (ii) are in
addition to, and not in substitution for, any other rights to
indemnification or contribution that any such Person may have by
contract or otherwise.
(b) Parent will, and will cause the Surviving Corporation
to, maintain in effect for not less than six years after the
Effective Time policies of directors' and officers' liability
insurance equivalent in all material respects to those maintained
by or on behalf of the Company and its Subsidiaries on the date
hereof (and having at least the same coverage and containing
terms and conditions which are no less advantageous to the
Persons currently covered by such policies as insured) with
respect to matters existing or occurring at or prior to the
Effective Time, provided, however, that if the aggregate annual
premiums for such insurance at any time during such period exceed
200% of the per annum rate of premium currently paid by the
Company and its Subsidiaries for such insurance on the date of
this Agreement, then Parent will cause the Surviving Corporation
to, and the Surviving Corporation will, provide the maximum
coverage that is then available at an annual premium equal to
200% of such rate.
5.9. Employee Benefits. Notwithstanding anything to the
contrary contained herein, from and after the Effective Time, the
Surviving Corporation will have sole discretion over the hiring,
promotion, retention, firing and (except for employee benefit
plans to the extent set forth below) other terms and conditions
of the employment of employees of the Surviving Corporation.
Subject to the immediately preceding sentence, Parent will
provide, or will cause the Surviving Corporation or its
Subsidiaries to provide, for the benefit of employees of the
Surviving Corporation or its Subsidiaries, as the case may be,
who were employees of the Company or its Subsidiaries immediately
prior to the Effective Time, recognizing all prior service for
eligibility and vesting purposes (including for purposes of
determining entitlement to vacation, severance and other
benefits) of the officers, directors or employees with the
Company and any of its Subsidiaries as service thereunder, the
existing qualified pension plans of the Company or its
Subsidiaries listed in Section 5.9 of the Company Disclosure
Letter until the expiration of two years after the Effective
Time, and, in addition, will provide for such two-year period
other "employee benefit plans," within the meaning of Section
3(3) of ERISA, that, together with such existing qualified
pension plans, are in the aggregate at least substantially
comparable to the "employee benefit plans," within the meaning of
Section 3(3) of ERISA, provided to such individuals by the
Company or its Subsidiaries on the date of this Agreement,
provided, however, that notwithstanding the foregoing (i) nothing
herein will be deemed to require Parent to modify the benefit
formulas under any pension plan of the Company or any of its
Subsidiaries in a manner that increases the aggregate expenses
thereof as of the date hereof in order to comply with the
requirements of ERISA, the Code or the Tax Reform Act of 1986,
(ii) employee stock ownership, stock option and similar equity-
based plans, programs and arrangements of the Company or any of
its Subsidiaries are not encompassed within the meaning of the
term "employee benefit plans" hereunder, (iii) nothing herein
will obligate Parent or the Surviving Corporation to continue any
particular employee benefit plan, other than the existing
qualified pension plans, for any period after the Effective Time,
and (iv) without limiting the generality or effect of
Section 8.3, no employee of the Company or any Subsidiary of the
Company will have any claim or right by reason of this
Section 5.9. Parent will cause the Surviving Corporation to
honor (subject to any withholdings under applicable Law) all
employment, consulting and severance agreements or arrangements
to which the Company or any of its Subsidiaries is presently a
party, which are specifically disclosed in the Company Disclosure
Letter except to the extent such agreement or arrangement is
superseded or amended by any subsequent arrangements or
agreements agreed to by the parties thereto in writing.
5.10. Conveyance Taxes. The Company and Parent will
cooperate in the preparation, execution and filing of all
returns, questionnaires, applications or other documents
regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any
transfer, recording or registration and other fees and any
similar taxes which become payable in connection with the
transactions contemplated by this Agreement that are required or
permitted to be filed on or before the Effective Time and each
party will pay any such tax or fee which becomes payable by it on
or before the Effective Time.
VI. CONDITIONS PRECEDENT
6.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to effect the
Merger will be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) Purchaser shall have made, or caused to be made, the
Offer and shall have purchased, or caused to be purchased, the
Shares validly tendered and not withdrawn pursuant to the Offer,
provided, that this condition shall be deemed to have been
satisfied with respect to the obligation of Parent and Purchaser
to effect the Merger if Purchaser fails to accept for payment or
pay for Shares pursuant to the Offer in violation of the terms of
the Offer or of this Agreement;
(b) If so required by Law, this Agreement and the
transactions contemplated hereby shall have been approved in the
manner required by applicable Law by the holders of the issued
and outstanding shares of capital stock of the Company; and
(c) No Order or Law enacted, entered, promulgated,
enforced or issued by any court of competent jurisdiction or
other Governmental Entity or other legal restraint or prohibition
(collectively, "Restraints") preventing the consummation of the
Merger shall be in effect.
6.2. Conditions to Obligation of Parent and Purchaser to
Effect the Merger. The obligation of Parent and Purchaser to
effect the Merger will be subject to the fulfillment at or prior
to the Closing Date (or such other date as may be specified
below) of the additional condition that the Company shall have
performed in all material respects its covenants contained in
Section 1.4(a) of this Agreement required to be performed on or
prior to the Closing Date.
VII. TERMINATION
7.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger and other transactions contemplated by
this Agreement may be abandoned at any time prior to the
Effective Time, before or after the approval of this Agreement by
the Shareholders, by mutual consent of Parent and the Company.
7.2. Termination by Either Parent or Company. This
Agreement may be terminated and the Merger and other transactions
contemplated by this Agreement may be abandoned, by action of the
Board of Directors of either Parent or the Company, if (a) the
Offer Completion Date shall not have occurred by June 30, 1999
(the "Outside Date") or if the Offer Completion Date occurs but
the Effective Time shall not have occurred by February 10, 2000
(the "Drop-Dead Date"), provided, that no party may terminate
this Agreement pursuant to this Section 7.2(a) if such party's
failure to fulfill any of its obligations under this Agreement
shall have been the reason that the Offer Completion Date or the
Effective Time, as the case may be, shall not have occurred on or
before the applicable date, (b) any Governmental Entity shall
have issued a Restraint or taken any other action permanently
enjoining, restraining or otherwise prohibiting the consummation
of the Offer, the Merger or any of the other transactions
contemplated by this Agreement and such Restraint or other action
shall have become final and nonappealable, or (c) the Offer
expires or is terminated or withdrawn pursuant to its terms
without any Shares being purchased thereunder by Purchaser as a
result of the failure of any of the Offer Conditions to be
satisfied or waived prior to the Expiration Date or any extension
thereof.
7.3. Termination by Company. This Agreement may be
terminated and the Merger and other transactions contemplated by
this Agreement may be abandoned at any time prior to the Offer
Completion Date, by action of the Company Board, if (a) there has
been a material breach by Parent or Purchaser of any
representation or warranty contained in this Agreement which is
not curable or, if curable, is not cured by the Outside Date and
such breach had or could reasonably be likely to have a Parent
Material Adverse Effect, (b) there has been a material breach of
any of the covenants set forth in this Agreement on the part of
Parent or Purchaser, which breach is not curable or, if curable,
is not cured within 15 calendar days after written notice of such
breach is given by the Company to Parent, or (c) in accordance
with the proviso to the penultimate sentence of Section 5.2(b).
7.4. Termination by Parent. This Agreement may be
terminated and the Merger and other transactions contemplated by
this Agreement may be abandoned at any time prior to the Offer
Completion Date, by Parent, if (a) the Company Board shall have
(i) withdrawn or modified in a manner adverse to Parent or
Purchaser its approval or recommendation of this Agreement, the
Offer or the Merger, (ii) approved or recommended, or proposed
publicly to approve or recommend, a third-party Company Takeover
Proposal, (iii) caused or authorized the Company or any of its
Subsidiaries to enter into a Company Acquisition Agreement, (iv)
approved the breach of the Company's obligation under Section
5.2(b), or (v) resolved or publicly disclosed any intention to
take any of the foregoing actions, (b) there has been a material
breach by the Company of any representation or warranty contained
in this Agreement which is not curable or, if curable, is not
cured by the Outside Date and such breach had or could reasonably
be likely to have a Company Material Adverse Effect, or (c) there
has been a material breach of any of the covenants set forth in
this Agreement on the part of the Company, which breach is not
curable or, if curable, is not cured within 15 days after written
notice of such breach is given by Parent to the Company.
7.5. Effect of Termination and Abandonment; Termination
Fee. (a) In the event of termination of this Agreement and the
abandonment of the Merger and the other transactions contemplated
by this Agreement pursuant to this Article VII, all obligations
of the parties hereto will terminate, except the obligations of
the parties pursuant to this Section 7.5, the last sentence of
Section 1.3, and Sections 5.4(b), 8.4 and 8.14. Notwithstanding
the foregoing or any other provision of this Agreement, in the
event of termination of this Agreement pursuant to this Article
VII, nothing herein will prejudice the ability of the non-
breaching party to seek damages from any other party for any
prior willful and material breach of this Agreement, including
without limitation attorneys' fees and the right to pursue any
remedy at law or in equity, and such termination will not affect
the parties' rights and obligations under the Confidentiality
Agreement, as amended.
(b) (i) The Company will pay to Purchaser an amount equal
to $40.0 million (the "Termination Fee") in any of the following
circumstances:
(A) This Agreement is terminated at such time that
this Agreement is terminable pursuant to Sections 7.3(c) or
7.4(a);
(B) This Agreement is terminated by either Parent or
the Company pursuant to Section 7.2(a), and
(1) at the time of such termination the Minimum
Condition shall not have been satisfied,
(2) at the time of such termination the Company
shall not have the right to terminate this Agreement
pursuant to Sections 7.3(a) or 7.3(b),
(3) prior to such termination, a Company Takeover
Proposal involving at least 50% of the assets of the
Company and its Subsidiaries, taken as a whole, or 50% of
any class of equity securities of the Company (any such
Company Takeover Proposal, a "Competing Proposal"), is
(x) publicly disclosed or has been made directly to
Shareholders generally or (y) any Person (including
without limitation the Company or any of its
Subsidiaries) publicly announces an intention (whether or
not conditional) to make such a Competing Proposal, and
(4) prior to the termination of this Agreement
or within 12 months after the termination of this
Agreement, the Company or a Subsidiary thereof enters
into a Company Acquisition Agreement providing for a
Competing Proposal (any such agreement, a "Competing
Proposal Agreement");
(C) This Agreement is terminated by either Parent or
the Company pursuant to Section 7.2(c), and
(1) at the time of such termination the Minimum
Condition shall not have been satisfied,
(2) at the time of such termination the Company
shall not have the right to terminate this Agreement
pursuant to Sections 7.3(a) or 7.3(b),
(3) prior to such termination an event referred
to in Section 7.5(b)(i)(B)(3)(a "Takeover Proposal
Event") shall have occurred, and
(4) prior to the termination of this Agreement
or within 12 months after the termination of this
Agreement, the Company or a Subsidiary thereof enters
into a Competing Proposal Agreement; or
(D) This Agreement is terminated by Parent pursuant
to Sections 7.4(b) or 7.4(c), and
(1) prior to such termination a Takeover
Proposal Event shall have occurred, and
(2) prior to the termination of this Agreement
or within 12 months after the termination of this
Agreement, the Company or a Subsidiary thereof enters
into a Competing Proposal Agreement.
(ii) If this Agreement is terminated in circumstances
where a Termination Fee is then payable, then in any such case
the Company will promptly, but in no event later than two
business days after submission of a request therefor, pay Parent
up to $4.0 million of Parent's documented Expenses.
(iii) If a Termination Fee is payable pursuant to Section
7.5(b)(i)(B), 7.5(b)(i)(C) or 7.5(b)(i)(D), then the Company will
pay the Termination Fee to Parent upon the signing of a Competing
Proposal Agreement or, if no Competing Proposal Agreement is
signed, then at the closing (and as a condition to the closing)
of a Competing Proposal. Notwithstanding any other provision
hereof, (A) in no event may the Company enter into a Competing
Proposal Agreement unless, prior thereto, the Company has paid
any amount due under Section 7.5(b) or which will become due
under Section 7.5(b), (B) the Company may not terminate this
Agreement under Sections 5.2(b) or 7.3(c) unless prior thereto it
has paid all amounts due under Section 7.5(b) to Parent, (C) all
amounts due in the event that this Agreement is terminated under
Section 7.3(c) or 7.4(a) and in circumstances in which the
Company has not entered into a Competing Proposal Agreement will
be payable promptly, but in no event more than two business days
after request therefor is made, and (D) all amounts due under
this Section 7.5(b) will be paid on the date due in immediately
available funds wire transferred to the account designated by the
Person entitled to such payment.
(iv) This Section 7.5 will survive any termination of this
Agreement. For purposes of this Agreement, the term "Expenses"
means all actual out-of-pocket fees, costs and other expenses
incurred or assumed by Parent or Purchaser or incurred on their
behalf in connection with this Agreement or any of the
transactions contemplated hereby, including but not limited to in
connection with the negotiation, preparation, execution and
performance of this Agreement, the structuring and financing of
the Merger and the other transactions contemplated hereby, or any
commitments or agreements relating to such financing, including
without limitation fees and expenses payable to all banks,
investment banking firms, other financial institutions and other
Persons and their respective agents and counsel for arranging,
committing to provide or providing any financing for the Merger
and any other transactions contemplated hereby or structuring,
negotiating or advising with respect to such transactions or
financing, and all fees and expenses of counsel, accountants,
experts and computer, environmental, actuarial, insurance and
other consultants to Parent or Purchaser.
(v) The Company acknowledges that the agreements contained
in this Section 7.5(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, Parent and Purchaser would not enter into this
Agreement; accordingly, if the Company fails promptly to pay the
amount due pursuant to this Section 7.5(b), and, in order to
obtain such payment, Parent or Purchaser commences a suit which
results in a judgment against the Company for a fee set forth in
this Section 7.5(b), the Company will pay to Parent and Purchaser
their documented Expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on
the amount of the fee at the prime rate of Citibank N.A. in
effect on the date such payment was required to be made.
VIII. GENERAL PROVISIONS
8.1. Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and agreements in
this Agreement or in any instrument delivered pursuant to this
Agreement will terminate at the Effective Time or the termination
of this Agreement pursuant to Article VII, as the case may be,
except that the covenants set forth in Article II and Sections
5.3, 5.8, 5.9 and 5.10 will survive the Effective Time
indefinitely or, if applicable, for the period therein specified
and those set forth in the last sentence of Section 1.3 and in
Sections 5.4(b), 7.5 and 8.14 will survive termination
indefinitely or, if applicable, for the period therein specified.
8.2. Notices. Any notice or other communication required
to be given hereunder will be sufficient if in writing, and sent
by facsimile transmission and by courier service (with proof of
service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as
follows:
If to Parent or Purchaser:
Federated Department Stores, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Company:
Fingerhut Companies, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
Faegre & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as any party will specify by written
notice so given, and such notice will be deemed to have been
delivered as of the date so telecommunicated, personally
delivered or mailed.
8.3. Assignment; Binding Effect. Neither this Agreement
nor any of the rights, interests or obligations hereunder will be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will
be binding upon and will inure to the benefit of the parties
hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the
contrary, except for the provisions of Section 5.8, nothing in
this Agreement, expressed or implied, is intended to confer on
any Person other than the parties hereto or their respective
heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason
of this Agreement.
8.4.Entire Agreement. This Agreement, Annex A, the Company
Disclosure Letter and the Parent Disclosure Letter, together with
the Confidentiality Agreement, dated November 11, 1998, among
Parent, Purchaser and the Company (the "Confidentiality
Agreement"), which will survive the execution and delivery of
this Agreement, constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of this
Agreement will be binding upon any party hereto unless made in
writing and signed by all parties hereto. Notwithstanding the
foregoing, the eighth paragraph of the Confidentiality Agreement
is hereby amended so as to permit Parent, Purchaser or any of the
respective Affiliates or Representatives (as defined thereby) to
(a) effect any transaction permitted hereby or (b) to take any
action otherwise prohibited thereby involving a transaction
pursuant to which Parent offers to acquire all of the Shares at
not less than the Per Share Amount, in the event that (i) the
Company terminates this Agreement pursuant to Section 7.3(c) or
takes any action referred to in Section 5.2(b) that would have
constituted a breach of Section 5.2(b) but for the exceptions
therein in respect of fiduciary duties of the Company Board, (ii)
except following a termination of this Agreement by the Company
pursuant to Section 7.3(a) or 7.3(b), the Company enters into a
Competing Proposal Agreement, or (iii) following any termination
of this Agreement, if prior to or after such termination (other
than a termination of this Agreement by the Company pursuant to
Section 7.3(a) or 7.3(b)) another Person publicly announces a
Company Takeover Proposal or Takeover Proposal Event.
8.5. Amendment. This Agreement may be amended by the
parties hereto, by action taken by their respective Boards of
Directors, at any time before or after approval of matters
presented in connection with the Merger by Shareholders but after
any such Shareholder approval, no amendment will be made which by
Law requires the further approval of Shareholders without
obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto.
8.6. Governing Law. Except to the extent that the laws of
Minnesota are mandatorily applicable to the Merger, this
Agreement will be governed by and construed in accordance with
the laws of the State of Delaware without regard to its conflict
of laws principles.
8.7. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered will be an original, but all such
counterparts will together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all
of the parties hereto.
8.8. Headings. Headings of the Articles and Sections of
this Agreement are for the convenience of the parties only, and
will be given no substantive or interpretive effect whatsoever.
8.9. Certain Definitions/Interpretations. (a) For
purposes of this Agreement:
(i) An "Affiliate" of any Person means another Person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first Person;
(ii) "Person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other
entity; and
(iii) "Knowledge" of any Person which is not an
individual means the actual knowledge of any of such
Person's executive officers.
(b) When a reference is made in this Agreement to an
Article, Section or Annex, such reference will be to an Article
or Section of, or Annex to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and will not affect in
any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used
in this Agreement, they will be deemed to be followed by the
words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms used herein
with initial capital letters have the meanings ascribed to them
herein and all terms defined in this Agreement will have such
defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a Person are
also to its permitted successors and assigns. Matters reflected
in the Company Disclosure Letter are not necessarily limited to
matters required by this Agreement to be reflected in the Company
Disclosure Letter. Such additional matters are set forth for
informational purposes and do not necessarily include other
matters of a similar nature. Except for Sections 2.9, 5.1 and
5.9 of the Company Disclosure Letter, which relate only to the
corresponding Sections of this Agreement, matters disclosed by
the Company pursuant to any Section of this Agreement or the
Company Disclosure Letter will be deemed to be disclosed with
respect to all Sections of this Agreement and the Company
Disclosure Letter to the extent this Agreement requires such
disclosure provided that the relevance of such matters to other
Sections in the Company Disclosure Letter is reasonably apparent
on the face thereof.
8.10. Waivers. Except as provided in this Agreement, no
action taken pursuant to this Agreement, including without
limitation any investigation by or on behalf of any party, will
be deemed to constitute a waiver by the party taking such action
of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder will not operate or
be construed as a waiver of any prior or subsequent breach of the
same or any other provision hereunder.
8.11. Incorporation of Annex A. Annex A attached hereto
is hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
8.12. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
will, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision will be interpreted to be only
so broad as is enforceable.
8.13. Enforcement of Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement was not performed in accordance with
its specific terms or was otherwise breached. It is accordingly
agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in
addition to any other remedy to which they are entitled at law or
in equity.
8.14. Expenses. Except as set forth in Section 7.5, all
fees and expenses (including SEC filing fees) incurred in
connection with the Offer, the Merger, this Agreement and the
transactions contemplated thereby will be paid by the party
incurring such fees or expenses, whether or not the Merger is
consummated, except that each of Parent and the Company will bear
and pay one-half of the costs and expenses incurred in connection
with the printing and mailing of the Offer Documents, the
Schedule 14D-9 and Proxy Statement.
IN WITNESS WHEREOF, the parties have executed this
Agreement and caused the same to be duly delivered on their
behalf on the day and year first written above.
FINGERHUT COMPANIES, INC.
By:/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Executive Officer
FEDERATED DEPARTMENT STORES, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice Chairman, Finance and
Real Estate
BENGAL SUBSIDIARY CORP.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
ANNEX A
CONDITIONS TO COMPLETION OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser will
not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after expiration or termination of the
Offer), to pay for any Shares, and (subject to any such rules or
regulations) may postpone the acceptance for payment or payment for
any Shares tendered, and may amend or terminate (if, when and as
permitted by this Agreement) the Offer (whether or not any Shares have
theretofore been purchased or paid for pursuant to the Offer), (a)
unless the following conditions have been satisfied: (1) there have
been validly tendered and not withdrawn prior to the Expiration Date a
number of Shares which represents at least a majority of the total
voting power of the outstanding securities of the Company entitled to
vote in the election of directors or in a merger ("Voting
Securities"), calculated on a fully diluted basis, on the date of
purchase (the "Minimum Condition") ("on a fully diluted basis" having
the following meaning, as of any date: the number of Shares
outstanding, together with the number of Shares the Company is then
required to issue pursuant to obligations outstanding at that date
under employee stock option or other benefit plans or otherwise), (2)
any applicable waiting periods under the HSR Act shall have expired or
been terminated prior to the expiration of the Offer, and (3) the OCC
shall have consented in writing to, or stated in writing that it would
not disapprove of, the Offer and the Merger or all applicable filing,
approval or waiting periods or extensions thereof under the CIBC Act
shall have expired without the OCC providing notice of objection to
the Offer or the Merger (the "OCC Condition") or (b) if at any time on
or after the date of this Agreement and before the Expiration Date
(whether or not any Shares have theretofore been accepted for payment
or paid for pursuant to the Offer), any of the following shall have
occurred:
(i) any governmental entity or authority or any court shall
have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, temporary or
preliminary injunction that shall not have been lifted prior to
the Expiration Date or permanent injunction or other order which
is in effect and which (a) restricts, prevents or prohibits
consummation of the transactions contemplated by this Agreement,
including the Offer or the Merger, (b) prohibits, limits or
otherwise adversely affects the ownership or operation by Parent
or any of its Subsidiaries of all or any material portion of the
business or assets of the Company and its Subsidiaries or
compels the Company, Parent or any of their Subsidiaries to
dispose of or hold separate all or any portion of the business
or assets of the Company and its Subsidiaries as a result of the
completion of the Offer or the Merger, or (c) imposes
limitations on the ability of Parent, Purchaser or any other
subsidiary of Parent to exercise effectively full rights of
ownership of any Shares, including without limitation the right
to vote any Shares acquired by Purchaser pursuant to the Offer
or otherwise on all matters properly presented to the
Shareholders, including without limitation the approval and
adoption of this Agreement and the transactions contemplated
thereby;
(ii) there shall be instituted or pending any action or
proceeding before any United States or foreign court or
governmental entity or authority by any United States or foreign
governmental entity or authority seeking any order, decree or
injunction having any effect set forth in paragraph (i) above;
(iii) the representations and warranties of the Company
contained in this Agreement (without giving effect to the
materiality, material adverse effect or knowledge limitations
contained therein) shall not be true and correct as of the
Expiration Date (as the same may be extended from time to time)
as though made anew on and as of such date (except for
representations and warranties made as of a specified date,
unless they shall not be true and correct as of the specified
date), except for any breach or breaches of any representations
or warranties in Section 3.1 (except the first sentence) and
Sections 3.4 through 3.20 of this Agreement which, individually
or in the aggregate, could not be reasonably expected to have a
Company Material Adverse Effect;
(iv) the Company shall not have performed or complied in all
material respects with its covenants under this Agreement to
which it is a party and such failure continues until the later
of (a) 15 calendar days after actual receipt by it of written
notice from Parent setting forth in reasonable detail the nature
of such failure or (b) the Expiration Date;
(v) there shall have occurred any material adverse change, or
any development that is reasonably likely to result in a
material adverse change, in the business, financial condition or
results of operations of the Company and its Subsidiaries, taken
as a whole;
(vi) this Agreement shall have been terminated in accordance
with its terms;
(vii) the Company Board shall have (a) withdrawn or
materially modified or changed (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger or
this Agreement in a manner adverse to Purchaser or Parent, (b)
taken a position inconsistent with its recommendation of the
Offer, the Merger of this Agreement in a manner adverse to
Purchaser or Parent, (c) approved or recommended any Company
Takeover Proposal, (d) taken any action referred to in Section
5.2(b) of this Agreement that is prohibited thereby or would be
so prohibited but for the exceptions thereto, or (e) resolved or
publicly disclosed any intention to do any of the foregoing; or
(viii) the U.S. Federal Reserve Board or any other federal
governmental authority shall have declared a general banking
moratorium or general suspension or material limitation on the
extension of credit or in respect of payments in respect of
credit by banks or other lending institutions in the United
States.
The foregoing conditions are for the sole benefit of Purchaser
and its affiliates and may be asserted by Purchaser, or Parent on
behalf of Purchaser, regardless of the circumstances (including
without limitation any action or inaction by Purchaser or any of its
affiliates other than a material breach by Purchaser or Parent of the
Agreement) giving rise to any such condition or may be waived by
Purchaser, in whole or in part, from time to time in its sole
discretion, except as otherwise provided in the Agreement. The
failure by Purchaser at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right and each such
right will be deemed an ongoing right and may be asserted at any time
and from time to time.
Table of Defined Terms
Page
Acquisition 1
Affiliate 46
Agreement 1
Board Percentage 5
Certificates 10
CIBC Act 16
Closing 7
Closing Date 7
Code 19
Company 1
Company Acquisition Agreement 34
Company Benefit Plans 24
Company Board 1
Company Disclosure Letter 12
Company Filed Reports 18
Company Material Adverse Effect 13
Company Reports 16
Company SEC Information 3
Company Shareholders' Meeting 26
Company Takeover Proposal 33
Competing Proposal 41
Competing Proposal Agreement 42
Computer Software 20
Confidentiality Agreement 45
Constituent Corporations 1
Continuing Directors 6
Disinterested 6
Dissenting Shares 9
Drop-Dead Date 40
Effective Time 7
Environmental Laws 23
Environmental Permits 23
ERISA 24
Exchange Act 2
Exchange Agent 10
Expenses 43
Expiration Date 2
Governmental Entity 16
Hazardous Substances 24
HSR Act 16
Intellectual Property 20
IRS 20
Key Employee 18
Knowledge 46
Law 15
Leased Real Property 21
Liens 14
Material Contracts 22
MBCA 1
Measurement Date 14
Merger 1
Merger Consideration 8
Metris 20
Minimum Condition 50
MOU 15
OCC 3
OCC Condition 50
Offer 1
Offer Completion Date 33
Offer Conditions 2
Offer Documents 3
Option Consideration 12
Options 11
Order 15
Outside Date 40
Owned Real Property 21
Parent 1
Parent Benefit Plans 29
Parent Disclosure Letter 26
Parent Material Adverse Effect 26
Parent SEC Information 4
Parent's Designees 5
Per Share Amount 1
Permitted Liens 21
Person 46
Proxy Statement 26
Purchaser 1
Real Property Leases 21
Restraints 39
Rights 8
Ruling 20
Schedule 14D-1 3
Schedule 14D-9 4
SEC 3
Securities Act 16
Shareholders 1
Shares 1
Special Committee 4
Spinoff 20
SSB 4
Stock Option Plans 11
Subsidiary 13
Superior Proposal 34
Surviving Corporation 7
Takeover Proposal Event 42
Tax Return 19
Taxes 19
Termination Fee 41
Transfer Taxes 19
Voting Securities 50