AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as
of the 6th day of July, 2000, by and between XXXXXXX XXXXX, INC., an Iowa
corporation ("Company"), XXXXXXX BANK, an Iowa banking association ("Bank"), and
XXXXX FARGO & COMPANY, a Delaware corporation ("Xxxxx Fargo").
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Xxxxx Fargo ("Merger Co.") will merge with and into
Company (the "Merger") pursuant to an agreement and plan of merger (the "Merger
Agreement") in substantially the form attached hereto as Exhibit A-1, which
provides, among other things, for the conversion of the shares of Common Stock
of Company of the par value of $2.50 per share ("Company Common Stock")
outstanding immediately prior to the time the Merger becomes effective in
accordance with the provisions of the Merger Agreement into the right to receive
shares of voting Common Stock of Xxxxx Fargo of the par value of $1-2/3 per
share ("Xxxxx Fargo Common Stock"), and
WHEREAS, Xxxxx Fargo desires that, immediately following the Merger,
Xxxxx Fargo will contribute its newly-formed, wholly-owned bank subsidiary
("Interim Bank") to Company and, immediately thereafter, Interim Bank will merge
with and into Bank under the charter of Bank (the "Bank Merger") pursuant to an
agreement of merger (the "Bank Merger Agreement") in substantially the form
attached hereto as Exhibit A-2, which provides, among other things, for the
conversion and exchange of the shares of common stock of the Bank, par value of
$20 per share ("Bank Common Stock"), outstanding immediately prior to the time
the Bank Merger becomes effective in accordance with the provisions of the Bank
Merger Agreement and owned by shareholders other than Company into the right to
receive shares of Xxxxx Fargo Common Stock, and
NOW, THEREFORE, to effect such reorganization and in consideration of
the premises and the mutual covenants and agreements contained herein, the
parties hereto do hereby represent, warrant, covenant and agree as follows:
1. BASIC PLAN OF REORGANIZATION
(a) Reorganization.
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(i) Merger. Subject to the terms and conditions contained
herein, Merger Co. will be merged by statutory merger with and into
Company pursuant to the Merger Agreement, with Company as the surviving
corporation, in which merger each share of Company Common Stock
outstanding immediately prior to the Effective Time of the Merger (as
defined in paragraph 1(e) below) (other than shares as to which
statutory dissenters' appraisal rights have been exercised) will be
converted into the right to receive, and exchanged for certificates
representing the number
of shares of Xxxxx Fargo Common Stock determined by dividing
$255,694,000 by the Xxxxx Fargo Measurement Price, and dividing the
result thereof by the number of shares of Company Common Stock then
outstanding. The "Xxxxx Fargo Measurement Price" is defined as the
average of the closing prices of a share of Xxxxx Fargo Common Stock on
the New York Stock Exchange only, as reported by Bloomberg, for each of
the 15 consecutive trading days ending on the day immediately preceding
the meeting of Company shareholders required by paragraph 4(c)(i) of
this Agreement.
(ii) Bank Merger. Following the Effective Time of the Merger
and on the terms and conditions contained herein, Xxxxx Fargo will
contribute Interim Bank to Company and, immediately thereafter, Interim
Bank will be merged with and into Bank under the charter of Bank
pursuant to the Bank Merger Agreement, in which Bank Merger each share
of Bank Common Stock outstanding immediately prior to the Effective
Time of the Bank Merger (as defined in paragraph 1(e) below) (other
than shares owned by the Company or as to which Iowa statutory
dissenters' appraisal rights have been exercised) will be converted
into and exchanged for a number of shares of Xxxxx Fargo Common Stock
determined by dividing $8,806,000 by the Xxxxx Fargo Measurement Price,
and dividing the result thereof by the number of shares of Bank Common
Stock outstanding immediately prior to the time the Bank Merger becomes
effective in accordance with the provisions of the Bank Merger
Agreement and owned by shareholders other than Company.
(b) Conversion of Company Options. At the Effective Time of the Merger,
each option granted by Company to purchase shares of Company Common Stock under
Company's 1996 Stock Option Plan (the "Company Stock Option Plan") which is
outstanding and unexercised immediately prior to the Effective Date of the
Merger (each, a "Company Stock Option"), shall be converted automatically into
an option to purchase shares of Xxxxx Fargo Common Stock (each, a "Substitute
Option") in an amount and at an exercise price determined as provided below (and
otherwise subject to the terms of the Company Stock Option Plan).
(i) The number of shares of Xxxxx Fargo Common Stock to be
subject to the Substitute Option shall be the product of the number of
shares of Company Common Stock subject to the Company Stock Option and
the number of shares of Xxxxx Fargo Common Stock issuable for each
share of Company Common Stock as determined in accordance with
paragraph 1(a)(i) above (the "Merger Exchange Ratio"), provided that
any fractional shares of Xxxxx Fargo Common Stock resulting from such
multiplication shall be rounded down to the nearest whole share; and
(ii) The exercise price per share of Xxxxx Fargo Common Stock
under the Substitute Option shall be equal to the exercise price per
share of Company Common Stock under the Company Stock Option divided by
the Merger Exchange Ratio, provided that such exercise price shall be
rounded to the nearest cent.
The adjustment provided herein with respect to any options that are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code")) shall be and is intended to be effected in a manner
which is consistent with Section 424(a) of the Code.
(c) Xxxxx Fargo Common Stock Adjustments. If, between the date hereof
and the Effective Time of the Merger as defined below, shares of Xxxxx Fargo
Common Stock shall be changed into a
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different number of shares or a different class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a record
date within such period (a "Common Stock Adjustment"), then the number of shares
of Xxxxx Fargo Common Stock issuable pursuant to subparagraphs (a) and (b)
above, will be appropriately and proportionately adjusted so that the number of
such shares of Xxxxx Fargo Common Stock issuable in the Merger and the Bank
Merger will equal the number of shares of Xxxxx Fargo Common Stock which holders
of shares of Company Common Stock would have received pursuant to such Common
Stock Adjustment had the record date therefor been immediately following the
Effective Time of the Merger.
(d) Fractional Shares. No fractional shares of Xxxxx Fargo Common Stock
and no certificates or scrip certificates therefor shall be issued to represent
any such fractional interest, and any holder thereof shall be paid an amount of
cash equal to the product obtained by multiplying the fractional share interest
to which such holder is entitled by the average of the closing prices of a share
of Xxxxx Fargo Common Stock on the New York Stock Exchange only as reported by
Bloomberg for each of the five (5) consecutive trading days ending on the day
immediately preceding the meeting of Company shareholders required by paragraph
4(c)(i) of this Agreement.
(e) Mechanics of Closing Merger and the Bank Merger. Subject to the
terms and conditions set forth herein, the Merger Agreement shall be executed
and it or Articles of Merger or a Certificate of Merger shall be filed with the
Secretary of State of the State of Iowa within ten (10) business days following
the satisfaction or waiver of all conditions precedent set forth in Sections 6
and 7 of this Agreement or on such other date as may be agreed to by the parties
(the "Closing Date"), provided that the Closing Date shall not occur on the last
business day of a calendar month. Each of the parties agrees to use its best
efforts to cause the Merger to be completed as soon as practicable after the
receipt of final regulatory approval of the Merger and the expiration of all
required waiting periods. The time that the filing referred to in the first
sentence of this paragraph is made is herein referred to as the "Time of
Filing." The day on which such filing is made and accepted is herein referred to
as the "Effective Date of the Merger." The "Effective Time of the Merger" shall
be 11:59 p.m. Des Moines, Iowa time on the Effective Date of the Merger. At the
Effective Time of the Merger on the Effective Date of the Merger, the separate
existence of Merger Co. shall cease and Merger Co. will be merged with and into
Company pursuant to the Merger Agreement. The Bank Merger shall become effective
at 12:01 a.m. (the "Effective Time of the Bank Merger") on the date specified in
the Bank Merger Agreement, which date shall be the first business day after the
Effective Date of the Merger (the "Effective Date of the Bank Merger"). At the
Effective Time of the Bank Merger on the Effective Date of the Bank Merger, the
separate existence of Interim Bank shall cease and Interim Bank will be merged
with and into Bank pursuant to the Bank Merger Agreement.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Xxxxx Fargo, Norwest Center, Sixth and Marquette, Minneapolis,
Minnesota.
(f) Reservation of Right to Revise Structure. At Xxxxx Fargo's
election, the Merger (or the Bank Merger) may alternatively be structured so
that (1) Company is merged with and into (or Bank is merged with) any other
direct or indirect wholly owned subsidiary of Xxxxx Fargo, (2) any direct or
indirect wholly owned subsidiary of Xxxxx Fargo is merged with and into Company
(or merged with Bank), or (3) Company is merged with and into Xxxxx Fargo;
provided, however, that no such change shall (A) alter or change the amount or
kind of consideration to be issued to Company's shareholders in the Merger (or
to
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Bank's shareholders in the Bank Merger) or under such alternative structure (the
"Consideration"), (B) adversely affect the tax treatment of Company's
shareholders as a result of receiving the Consideration or prevent the parties
from obtaining the opinion referred to in paragraph 6(h), or (C) materially
impede or delay consummation of the Merger or the Bank Merger. In the event of
such election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
2. REPRESENTATIONS AND WARRANTIES OF COMPANY AND BANK. Company (and
Bank, but only as to representations and warranties concerning the Bank)
represent and warrant to Xxxxx Fargo as follows:
(a) Organization and Authority. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Iowa, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on Company and the Company Subsidiaries (as
defined in paragraph 2(b) below) taken as a whole and has corporate power and
authority to own its properties and assets and to carry on its business as it is
now being conducted. Company is a bank holding company registered under the Bank
Holding Company Act of 1956, as amended (the "BHC Act") and a savings and loan
holding company under the Savings and Loan Holding Company Act (the "SLHC Act").
Company has furnished Xxxxx Fargo true and correct copies of its articles of
incorporation and by-laws, as amended.
(b) Company's Subsidiaries. Schedule 2(b) sets forth a complete and
correct list of all of Company's subsidiaries as of the date hereof
(individually a "Company Subsidiary" and collectively the "Company
Subsidiaries"), all shares of the outstanding capital stock of each of which,
except as set forth on Schedule 2(b), are owned directly or indirectly by
Company. No equity security of any Company Subsidiary is or may be required to
be issued by reason of any option, warrant, scrip, preemptive right, right to
subscribe to, call or commitment of any character whatsoever relating to, or
security or right convertible into, shares of any capital stock of such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional shares
of its capital stock, or any option, warrant or right to purchase or acquire any
additional shares of its capital stock. Subject to the Iowa Business Corporation
Act and the Iowa Banking Act, all of such shares so owned by Company are fully
paid and nonassessable and are owned by it free and clear of any lien, claim,
charge, option, encumbrance or agreement with respect thereto. Each Company
Subsidiary is a corporation or federal or state banking association duly
organized, validly existing, duly qualified to do business and in good standing
under the laws of its jurisdiction of incorporation, and has corporate power and
authority to own or lease its properties and assets and to carry on its business
as it is now being conducted. Except as set forth on Schedule 2(b), Company does
not own beneficially, directly or indirectly, more than 5% of any class of
equity securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture.
(c) Capitalization. The authorized capital stock of Company consists of
(i) 500,000 shares of preferred stock, par value $1.00 per share, of which, as
of the close of business on March 31, 2000, no shares were outstanding, and (ii)
50,000,000 shares of common stock, $2.50 par value, of which, as of the close of
business on March 31, 2000, 20,357,371 shares were outstanding. The authorized
capital stock of Bank consists of 1,000,000 shares of common stock, par value
$20 per share, of which as of the close of business on March 31, 2000, 345,200
shares were outstanding. As of the date hereof, there are outstanding options to
purchase an aggregate of 1,422,221 shares of Company Common Stock under the
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Company Stock Option Plan. The maximum number of shares of Company Common Stock
(assuming for this purpose that phantom shares and other share-equivalents
constitute Company Common Stock) that would be outstanding as of the Effective
Date of the Merger if all options, warrants, conversion rights and other rights
with respect thereto were exercised is 21,783,222. All of the outstanding shares
of capital stock of Company have been duly and validly authorized and issued and
are fully paid and nonassessable. Except as set forth on Schedule 2(c), there
are no outstanding subscriptions, contracts, conversion privileges, options,
warrants, calls, plans, preemptive rights or other rights obligating Company or
any Company Subsidiary to issue, sell or otherwise dispose of, or to purchase,
redeem or otherwise acquire, any shares of capital stock of Company or any
Company Subsidiary. Since March 31, 2000 no shares of Company capital stock have
been purchased, redeemed or otherwise acquired, directly or indirectly, by
Company or any Company Subsidiary and, except as set forth on Schedule 2(c), no
dividends or other distributions have been declared, set aside, made or paid to
the shareholders of Company.
(d) Authorization. Company has the corporate power and authority to
enter into this Agreement and the Merger Agreement and, subject to any required
approvals of its shareholders, to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Merger Agreement by Company and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Company. Subject to such approvals of shareholders and of
government agencies and other governing boards having regulatory authority over
Company as may be required by statute or regulation, this Agreement and the
Merger Agreement are valid and binding obligations of Company enforceable
against Company in accordance with their respective terms.
Bank has the corporate power and authority to enter into this Agreement
and the Bank Merger Agreement and, subject to any required approvals of its
shareholders, to carry out its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Bank Merger
Agreement by Bank and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by the Board of Directors of Bank. Subject
to such approvals of shareholders and of government agencies and other governing
boards having regulatory authority over Bank as may be required by statute or
regulation, this Agreement and the Bank Merger Agreement are valid and binding
obligations of Bank enforceable against Bank in accordance with their respective
terms.
Except as set forth on Schedule 2(d), neither the execution, delivery
and performance by Company and Bank of this Agreement, the Merger Agreement, or
Bank Merger Agreement, as applicable, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by Company or Bank with any of
the provisions hereof or thereof, will (i) violate, conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of, any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Company or any Company Subsidiary under any of the terms, conditions or
provisions of (x) its articles of incorporation or by-laws or (y) any material
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Company or any Company Subsidiary is a
party or by which it may be bound, or to which Company or any Company Subsidiary
or any of the properties or assets of Company or any Company Subsidiary may be
subject, or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, violate any statute, rule or regulation or,
to the best
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knowledge of Company, violate any judgment, ruling, order, writ, injunction or
decree applicable to Company or any Company Subsidiary or any of their
respective properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the "Exchange Act"), the securities or blue
sky laws of the various states or filings, consents, reviews, authorizations,
approvals or exemptions required under the BHC Act, the SLHC Act, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR Act") or
the Bank Merger Act of 1960, as amended (the "Bank Merger Act"), and filings and
approvals required to effect the Merger and the Bank Merger under Iowa law, no
notice to, filing with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Company of the transactions contemplated by this Agreement, the Merger Agreement
and the Bank Merger Agreement.
(e) Company Financial Statements. The consolidated balance sheets of
Company and Company's Subsidiaries as of December 31, 1999 and 1998 and related
consolidated statements of income, changes in shareholders' equity and
comprehensive income and cash flows for the three years ended December 31, 1999,
together with the notes thereto, certified by KPMG LLP and included in Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (the
"Company 10-K") as filed with the Securities and Exchange Commission (the
"SEC"), and the unaudited consolidated balance sheets of Company and Company's
Subsidiaries as of March 31, 2000 and the related unaudited consolidated
statements of income, changes in shareholders' equity and comprehensive income
and cash flows for the three months then ended included in Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2000 as filed with
the SEC (collectively, the "Company Financial Statements"), have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis and present fairly (subject, in the case of financial
statements for interim periods, to normal recurring adjustments) the
consolidated financial position of Company and Company's Subsidiaries at the
dates and the consolidated results of operations and cash flows of Company and
Company's Subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1995, Company and each Company
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file, if any, with (i)
the SEC, including, but not limited to, Forms 10-K, Forms 10-Q and proxy
statements, (ii) the Federal Reserve Board, (iii) the Federal Deposit Insurance
Corporation (the "FDIC"), (iv) the United States Comptroller of the Currency
(the "Comptroller"), (v) the Office of Thrift Supervision (the "OTS"), and (vi)
any applicable state securities or banking or thrift authorities. All such
reports and statements filed with any such regulatory body or authority are
collectively referred to herein as the "Company Reports." As of their respective
dates, the Company Reports complied in all material respects with all the rules
and regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller, the OTS and applicable state securities or banking or thrift
authorities, as the case may be, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Copies of all the Company Reports
have been made available to Xxxxx Fargo by Company.
(g) Properties and Leases. Except as may be reflected in the Company
Financial Statements and except for any lien for current taxes not yet
delinquent, Company and each Company Subsidiary have good title free and clear
of any material liens, claims, charges, options, encumbrances or similar
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restrictions to all the real and personal property reflected in Company's
consolidated balance sheet as of March 31, 2000 included in Company's Quarterly
Report on Form 10-Q for the period then ended, and all real and personal
property acquired since such date, except such real and personal property as has
been disposed of in the ordinary course of business. All leases of real property
and all other leases material to Company or any Company Subsidiary pursuant to
which Company or such Company Subsidiary, as lessee, leases real or personal
property are valid and effective in accordance with their respective terms, and
there is not, under any such lease, any material existing default by Company or
such Company Subsidiary or any event which, with notice or lapse of time or
both, would constitute such a material default. Substantially all Company's and
each Company Subsidiary's buildings and equipment in regular use have been well
maintained and are in good and serviceable condition, reasonable wear and tear
excepted.
(h) Taxes. Each of Company and the Company Subsidiaries has filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and paid all taxes owed by it, including
those with respect to income, withholding, social security, unemployment,
workers compensation, franchise, ad valorem, premium, excise and sales taxes,
and no taxes shown on such returns to be owed by it or assessments received by
it are delinquent. The federal income tax returns of Company and the Company
Subsidiaries for the fiscal year ended December 31, 1995, and for all fiscal
years prior thereto, are for the purposes of routine audit by the Internal
Revenue Service closed because of the statute of limitations, and no claims for
additional taxes for such fiscal years are pending. Except only as set forth on
Schedule 2(h), (i) neither Company nor any Company Subsidiary is a party to any
pending action or proceeding, nor is any such action or proceeding threatened by
any governmental authority, for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies and (ii) no issue has been raised by any
federal, state, local or foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties of Company or any Company
Subsidiary which has not been settled, resolved and fully satisfied. Each of
Company and the Company Subsidiaries has paid all taxes owed or which it is
required to withhold from amounts owing to employees, creditors or other third
parties. The consolidated balance sheet as of March 31, 2000, referred to in
paragraph 2(e) hereof, includes adequate provision for all accrued but unpaid
federal, state, county, local and foreign taxes, interest, penalties,
assessments or deficiencies of Company and the Company Subsidiaries with respect
to all periods through the date thereof.
(i) Absence of Certain Changes. Since December 31, 1999 there has been
no change in the business, financial condition or results of operations of
Company or any Company Subsidiary, which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Company and the Company Subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
neither Company nor any Company Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay, liabilities or fringe benefits) with any present or former
officer, director, employee or consultant (other than those that are
terminable at will by Company or such Company Subsidiary);
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(ii) any plan, contract or understanding providing for any
bonus, pension, option, deferred compensation, retirement payment,
profit sharing or similar arrangement with respect to any present or
former officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
(iv) any contract containing covenants that limit the ability
of Company or any Company Subsidiary to compete in any line of business
or with any person or which involve any restriction of the geographical
area in which, or method by which, Company or any Company Subsidiary
may carry on its business (other than as may be required by law or
applicable regulatory authorities);
(v) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K; or
(vi) any real property lease and any other lease with annual
rental payments aggregating $50,000 or more; or
(vii) any agreement or commitment with respect to the
Community Reinvestment Act with any state or federal bank regulatory
authority or any other party; or
(viii) any current or past agreement, contract or
understanding with any current or former director, officer, employee,
consultant, financial adviser, broker, dealer, or agent providing for
any rights of indemnification in favor of such person or entity.
(k) Litigation and Other Proceedings. Company has furnished Xxxxx Fargo
copies of (i) all attorney responses to the request of the independent auditors
for Company with respect to loss contingencies as of December 31, 1999 in
connection with the Company Financial Statements, and (ii) a written list of
legal and regulatory proceedings filed against Company or any Company Subsidiary
since said date. There is no pending or, to the best knowledge of Company,
threatened, claim, action, suit, investigation or proceeding, against Company or
any Company Subsidiary, nor is Company or any Company Subsidiary subject to any
order, judgment or decree, except for matters which, in the aggregate, will not
have, or cannot reasonably be expected to have, a material adverse effect on the
business, financial condition or results of operations of Company and the
Company Subsidiaries taken as a whole.
(l) Insurance. Company and each Company Subsidiary are presently
insured, and during each of the past five calendar years (or during such lesser
period of time as Company has owned such Company Subsidiary) have been insured,
for reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable law and regulation.
(m) Compliance with Laws. Company and each Company Subsidiary have all
permits, licenses, authorizations, orders and approvals of, and have made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties and assets and to carry on its business as presently
conducted and that are material to the business of Company or such Company
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best knowledge of Company, no
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suspension or cancellation of any of them is threatened; and all such filings,
applications and registrations are current. The conduct by Company and each
Company Subsidiary of its business and the condition and use of its properties
does not violate or infringe, in any respect material to any such business, any
applicable domestic (federal, state or local) or foreign law, statute,
ordinance, license or regulation. Neither Company nor any Company Subsidiary is
in default under any order, license, regulation or demand of any federal, state,
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court. Except for statutory or regulatory
restrictions of general application and except as set forth on Schedule 2(m), no
federal, state, municipal or other governmental authority has placed any
restriction on the business or properties of Company or any Company Subsidiary
which reasonably could be expected to have a material adverse effect on the
business or properties of Company and the Company Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Company or any Company Subsidiary
is pending or, to the best knowledge of Company, threatened. Neither Company nor
any Company Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding that could
materially and adversely affect the business of Company or such Company
Subsidiary. Employees of Company and the Company Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.
(o) Material Interests of Certain Persons. Except as set forth on
Schedule 2(o), to the best knowledge of Company, no officer or director of
Company or any Company Subsidiary, or any "associate" (as such term is defined
in Rule l4a-1 under the Exchange Act) of any such officer or director, has any
interest in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Company or any Company
Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from
Company or any Company Subsidiary to any present officer, director, employee or
any associate or related interest of any such person which was required under
Regulation O of the Federal Reserve Board to be approved by or reported to
Company's or such Company Subsidiary's Board of Directors.
(p) Company Benefit Plans.
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(i) Schedule 2(p)(i) sets forth each employee benefit plan
with respect to which Company or any Company Subsidiary contributes,
sponsors or otherwise has any obligation (the "Plans"). For purposes of
this Section 2(p) and Schedule 2(p)(i), "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended, and the term "Plan"
or "Plans" means all employee benefit plans as defined in Section 3(3)
of ERISA, and all other benefit arrangements including, without
limitation, any plan, program, agreement, policy or commitment
providing for insurance coverage of employees, workers' compensation,
disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, severance or termination of employment
benefits, life, health, death, disability or accidental benefits.
(ii) Except as disclosed on Schedule 2(p)(ii), no Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iii) Except as disclosed on Schedule 2(p)(iii), no Plan
promises or provides health or life benefits to retirees or former
employees except as required by federal continuation of coverage laws
or similar state laws.
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(iv) Except as disclosed on Schedule 2(p)(iv), (a) each Plan
is and has been in all material respects operated and administered in
accordance with its provisions and applicable law including, if
applicable, ERISA and the Code; (b) all reports and filings with
governmental agencies (including but not limited to the Department of
Labor, Internal Revenue Service, Pension Benefit Guaranty Corporation
and the SEC) required in connection with each Plan have been timely
made; (c) all disclosures and notices required by law or Plan
provisions to be given to participants and beneficiaries in connection
with each Plan have been properly and timely made; (d) there are no
actions, suits or claims pending, other than routine uncontested claims
for benefits with respect to each Plan; and (e) each Plan intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service stating that the
Plan is tax qualified under Section 401(a) of the Code and Company
knows of no reason that any such Plan is not qualified within the
meaning of Section 401(a) of the Code and knows of no reason that each
related Plan trust is not exempt from taxation under Section 501(a) of
the Code.
(v) Except as disclosed on Schedule 2(p)(v), (a) all
contributions, premium payments and other payments required to be made
in connection with the Plans as of the date of this Agreement have been
made; (b) a proper accrual has been made on the books of Company for
all contributions, premium payments and other payments due in the
current fiscal year but not made as of the date of this Agreement; (c)
no contribution, premium payment or other payment has been made in
support of any Plan that is in excess of the allowable deduction for
federal income tax purposes for the year with respect to which the
contribution was made (whether under Sections 162, 404, 419, 419A of
the Code or otherwise); and (d) with respect to each Plan that is
subject to Section 301 of ERISA or Section 412 of the Code, Company is
not liable for any accumulated funding deficiency as that term is
defined in Section 412 of the Code and the present value of all
benefits vested and all benefits accrued under each Plan do not, in
each case, exceed the assets of the Plan allocable to such vested or
accrued benefits as of the end of the most recent Plan year.
(vi) Except as disclosed on Schedule 2(p)(vi) and to best
knowledge of Company, no Plan or any trust created thereunder, nor any
trustee, fiduciary or administrator thereof, has engaged in a
"prohibited transaction," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA or violated any of the fiduciary
standards under Part 4 of Title 1 of ERISA which could subject such
Plan or trust, or any trustee, fiduciary or administrator thereof, or
any party dealing with any such Plan or trust, to a tax penalty or
prohibited transactions imposed by Section 4975 of the Code or would
result in material liability to Company and the Company Subsidiaries as
a whole.
(vii) No Plan subject to Title IV of ERISA or any trust
created thereunder has been terminated, nor have there been any
"reportable events" as that term is defined in Section 4043 of ERISA,
with respect to any Plan, other than those events which may result from
the transactions contemplated by this Agreement and the Merger
Agreement.
(viii) Except as disclosed on Schedule 2(p)(viii), neither the
execution and delivery of this Agreement and the Merger Agreement nor
the consummation of the transactions contemplated hereby and thereby
will (a) result in any material payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or employee or former employee of Company
under any Plan or otherwise,
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(b) materially increase any benefits otherwise payable under any Plan,
or (c) result in the acceleration of the time of payment or vesting of
any such benefits to any material extent.
(ix) Except as disclosed on Schedule 2(p)(ix), Company has not
made any payments or transfers of property, is not obligated to make
any payments or transfers of property, nor is it a party to any
agreement that under certain circumstances could obligate it to make
any payments or transfers of property that will not be deductible under
section 280G of the Code.
(q) Proxy Statement, etc. None of the information regarding Company and
the Company Subsidiaries supplied or to be supplied by Company for inclusion or
incorporation in (i) a Registration Statement on Form S-4 and the prospectus
included therein to be filed with the SEC by Xxxxx Fargo for the purpose of
registering the shares of Xxxxx Fargo Common Stock to be exchanged for shares of
Company Common Stock and Bank Common Stock pursuant to the provisions of the
Merger Agreement and the Bank Merger Agreement (the "Registration Statement"),
(ii) the proxy statement included in the Registration Statement to be mailed to
Company's shareholders in connection with the meeting to be called to consider
the Merger and to Bank's shareholders in connection with the meeting to be
called to consider the Bank Merger (the "Proxy Statement") and (iii) any other
documents to be filed with the SEC or any regulatory authority in connection
with the transactions contemplated hereby, by the Merger Agreement, or by the
Bank Merger Agreement, will, at the respective times such Registration
Statement, Proxy Statement and other documents are filed with the SEC or any
regulatory authority and, in the case of the Registration Statement, when it
becomes effective and, with respect to the Proxy Statement, when mailed, and, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the meeting of shareholders referred to in paragraph 4(c)(i), and
at the Effective Time of the Merger, 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 contained therein, in light of the
circumstances under which they were made, not misleading. All documents which
Company and the Company Subsidiaries are responsible for filing with the SEC and
any other regulatory authority in connection with the Merger and the Bank Merger
will comply as to form in all material respects with the provisions of
applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r),
neither Company nor any Company Subsidiary is under any obligation, contingent
or otherwise, by reason of any agreement to register any of its securities under
the Securities Act.
(s) Brokers and Finders. Except for Xxxxx, Xxxxxxxx and Xxxxx, Inc.,
neither Company nor any Company Subsidiary nor any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
Company or any Company Subsidiary, in connection with this Agreement and the
Merger Agreement or the transactions contemplated hereby and thereby.
(t) Fiduciary Activities. Company and each Company Subsidiary has
properly administered in all respects material and which could reasonably be
expected to be material, to the financial condition of Company and the Company
Subsidiaries taken as a whole all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable state and
federal law and regulation and common law. Neither Company, any Company
Subsidiary, nor to the best knowledge of either of them, any director, officer
or
-11-
employee of Company or any Company Subsidiary has committed any breach of
trust with respect to any such fiduciary account which is material to, or could
reasonably be expected to be material to, the financial condition of Company and
the Company Subsidiaries taken as a whole, and the accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflect the assets of such fiduciary account.
(u) No Defaults. Neither Company nor any Company Subsidiary is in default, nor
has any event occurred that, with the passage of time or the giving of notice,
or both, would constitute a default, under any material agreement, indenture,
loan agreement or other instrument to which it is a party or by which it or any
of its assets is bound or to which any of its assets is subject, the result of
which has had or could reasonably be expected to have a material adverse effect
upon Company and the Company Subsidiaries, taken as a whole. To the best of
Company's knowledge, all parties with whom Company or any Company Subsidiary has
material leases, agreements or contracts or who owe to Company or any Company
Subsidiary material obligations other than those arising in the ordinary course
of the banking business of the Company Subsidiaries are in compliance therewith
in all material respects.
(v) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could result in the imposition of, on Company or any Company Subsidiary, any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or to the
best of Company's knowledge, threatened against Company or any Company
Subsidiary the result of which has had or could reasonably be expected to have a
material adverse effect upon Company and Company's Subsidiaries taken as a
whole; to the best of Company's knowledge, there is no reasonable basis for any
such proceeding, claim or action; and to the best of Company's knowledge neither
Company nor any Company Subsidiary is subject to any agreement, order, judgment,
or decree by or with any court, governmental authority or third party imposing
any such environmental liability. Company has provided Xxxxx Fargo with copies
of all environmental assessments, reports, studies and other related information
in its possession with respect to each bank facility and each non-residential
OREO property.
3. REPRESENTATIONS AND WARRANTIES OF XXXXX FARGO. Xxxxx Fargo
represents and warrants to Company and Bank as follows:
(a) Organization and Authority. Xxxxx Fargo is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on Xxxxx Fargo and its subsidiaries taken as a
whole and has corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted. Xxxxx Fargo is registered
as a bank holding company and a financial holding company with the Federal
Reserve Board under the BHC Act.
(b) Xxxxx Fargo Subsidiaries. Schedule 3(b) sets forth a complete and
correct list as of December 31, 1999, of Xxxxx Fargo's Significant Subsidiaries
(as defined in Regulation S-X promulgated by the SEC), but excluding Norwest
Venture Partners VI, LP (individually a "Xxxxx Fargo Subsidiary" and
collectively the "Xxxxx Fargo Subsidiaries"), all shares of the outstanding
capital stock of each of which, except as set forth on Schedule 3(b), are owned
directly or indirectly by Xxxxx Fargo. No equity
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security of any Xxxxx Fargo Subsidiary is or may be required to be issued to any
person or entity other than Xxxxx Fargo by reason of any option, warrant, scrip,
preemptive right, right to subscribe to, call or commitment of any character
whatsoever relating to, or security or right convertible into, shares of any
capital stock of such subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Xxxxx Fargo Subsidiary is bound to
issue additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. Subject to 12
U.S.C. ss. 55 (1982), all of such shares so owned by Xxxxx Fargo are fully paid
and nonassessable and are owned by it free and clear of any lien, claim, charge,
option, encumbrance or agreement with respect thereto. Each Xxxxx Fargo
Subsidiary is a corporation or national banking association duly organized,
validly existing, duly qualified to do business and in good standing under the
laws of its jurisdiction of incorporation, and has corporate power and authority
to own or lease its properties and assets and to carry on its business as it is
now being conducted.
(c) Xxxxx Fargo Capitalization. As of December 31, 1999, the authorized
capital stock of Xxxxx Fargo consists of (i) 20,000,000 shares of Preferred
Stock, without par value, of which as of the close of business on December 31,
1999, 3,732 shares of ESOP Cumulative Convertible Preferred Stock, at $1,000
stated value, 11,990 shares of 1995 ESOP Cumulative Convertible Preferred Stock,
at $1,000 stated value, 12,011 shares of 1996 ESOP Cumulative Convertible
Preferred Stock, at $1,000 stated value, 10,839 shares of 1997 ESOP Cumulative
Convertible Preferred Stock, at $1,000 stated value, 8,386 shares of 1998 ESOP
Cumulative Convertible Preferred Stock, $1,000 stated value, 22,263 shares of
1999 ESOP Cumulative Convertible Preferred Stock, $1,000 stated value, 1,500,000
shares of Adjustable-Rate Cumulative Preferred Stock, Series B, $50 stated
value, and 4,000,000 shares of 6.59% Adjustable Rate Noncumulative Preferred
Stock, Series H, $50 stated value, were outstanding; (ii) 4,000,000 shares of
Preference Stock, without par value, of which as of the close of business on
December 31, 1999, no shares were outstanding; and (iii) 4,000,000,000 shares of
Common Stock, $1-2/3 par value, of which as of the close of business on December
31, 1999, 1,626,849,541 shares were outstanding and 39,245,724 shares were held
in the treasury. All of the outstanding shares of capital stock of Xxxxx Fargo
have been duly and validly authorized and issued and are fully paid and
nonassessable.
(d) Authorization. Xxxxx Fargo has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Xxxxx Fargo and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Xxxxx Fargo. No approval or consent by the
stockholders of Xxxxx Fargo is necessary for the execution and delivery of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated hereby and thereby. Subject to such approvals of government
agencies and other governing boards having regulatory authority over Xxxxx Fargo
as may be required by statute or regulation, this Agreement is a valid and
binding obligation of Xxxxx Fargo enforceable against Xxxxx Fargo in accordance
with its terms.
Neither the execution, delivery and performance by Xxxxx Fargo of this
Agreement or the Merger Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by Xxxxx Fargo with any of the
provisions hereof or thereof, will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Xxxxx Fargo or any Xxxxx Fargo Subsidiary under any of the terms, conditions or
provisions of, (x) its certificate of incorporation or
-13-
by-laws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Xxxxx Fargo
or any Xxxxx Fargo Subsidiary is a party or by which it may be bound, or to
which Xxxxx Fargo or any Xxxxx Fargo Subsidiary or any of the properties or
assets of Xxxxx Fargo or any Xxxxx Fargo Subsidiary may be subject, or (ii)
subject to compliance with the statutes and regulations referred to in the next
paragraph, violate any statute, rule or regulation or, to the best knowledge of
Xxxxx Fargo, violate any judgment, ruling, order, writ, injunction or decree
applicable to Xxxxx Fargo or any Xxxxx Fargo Subsidiary or any of their
respective properties or assets.
Other than in connection with or in compliance with the provisions of
the Securities Act, the Exchange Act, the securities or blue sky laws of the
various states or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHC Act, the HSR Act, or the Bank Merger Act, and
filings and approvals required to effect the Merger and the Bank Merger under
Iowa law, no notice to, filing with, exemption or review by, or authorization,
consent or approval of, any public body or authority is necessary for the
consummation by Xxxxx Fargo of the transactions contemplated by this Agreement
and the Merger Agreement.
(e) Xxxxx Fargo Financial Statements. The consolidated balance sheets
of Xxxxx Fargo and Xxxxx Fargo's subsidiaries as of December 31, 1999 and 1998
and related consolidated statements of income, changes in stockholders' equity
and comprehensive income, and cash flows for the three years ended December 31,
1999, together with the notes thereto, audited by KPMG LLP and included in Xxxxx
Fargo's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
(the "Xxxxx Fargo 10-K") as filed with the SEC, and the unaudited consolidated
balance sheets of Xxxxx Fargo and its subsidiaries as of March 31, 2000 and the
related unaudited consolidated statements of income, changes in stockholders'
equity and comprehensive income, and cash flows for the three months then ended
included in Xxxxx Fargo's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2000, as filed with the SEC (collectively, the "Xxxxx Fargo
Financial Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and present fairly (subject,
in the case of financial statements for interim periods, to normal recurring
adjustments) the consolidated financial position of Xxxxx Fargo and its
subsidiaries at the dates and the consolidated results of operations, changes in
financial position and cash flows of Xxxxx Fargo and its subsidiaries for the
periods stated therein.
(f) Reports. Since December 31, 1995, Xxxxx Fargo and each Xxxxx Fargo
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii)
the Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v) any
applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Xxxxx Fargo Reports." As of their respective dates,
the Xxxxx Fargo Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and any applicable state securities or banking authorities, as the
case may be, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(g) Properties and Leases. Except as may be reflected in the Xxxxx
Fargo Financial Statements and except for any lien for current taxes not yet
delinquent, Xxxxx Fargo and each Xxxxx Fargo Subsidiary has good title free and
clear of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Xxxxx Fargo's
consolidated balance
-14-
sheet as of March 31, 2000 included in Xxxxx Fargo's Quarterly Report on Form
10-Q for the period then ended, and all real and personal property acquired
since such date, except such real and personal property that has been disposed
of in the ordinary course of business. All leases of real property and all other
leases material to Xxxxx Fargo or any Xxxxx Fargo Subsidiary pursuant to which
Xxxxx Fargo or such Xxxxx Fargo Subsidiary, as lessee, leases real or personal
property, are valid and effective in accordance with their respective terms, and
there is not, under any such lease, any material existing default by Xxxxx Fargo
or such Xxxxx Fargo Subsidiary or any event which, with notice or lapse of time
or both, would constitute such a material default. Substantially all Xxxxx
Fargo's and each Xxxxx Fargo Subsidiary's buildings and equipment in regular use
have been well maintained and are in good and serviceable condition, reasonable
wear and tear excepted.
(h) Taxes. Each of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries has
filed all material federal, state, county, local and foreign tax returns,
including information returns, required to be filed by it, and paid or made
adequate provision for the payment of all taxes owed by it, including those with
respect to income, withholding, social security, unemployment, workers
compensation, franchise, ad valorem, premium, excise and sales taxes, and no
taxes shown on such returns to be owed by it or assessments received by it are
delinquent. The federal income tax returns of Xxxxx Fargo and the Xxxxx Fargo
Subsidiaries for the fiscal year ended December 31, 1982, and for all fiscal
years prior thereto, are for the purposes of routine audit by the Internal
Revenue Service closed because of the statute of limitations, and no claims for
additional taxes for such fiscal years are pending. Except only as set forth on
Schedule 3(h), (i) neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is a party
to any pending action or proceeding, nor to Xxxxx Fargo's knowledge is any such
action or proceeding threatened by any governmental authority, for the
assessment or collection of taxes, interest, penalties, assessments or
deficiencies that could reasonably be expected to have any material adverse
effect on Xxxxx Fargo and its subsidiaries taken as a whole, and (ii) no issue
has been raised by any federal, state, local or foreign taxing authority in
connection with an audit or examination of the tax returns, business or
properties of Xxxxx Fargo or any Xxxxx Fargo Subsidiary that has not been
settled, resolved and fully satisfied, or adequately reserved for. Each of Xxxxx
Fargo and the Xxxxx Fargo Subsidiaries has paid all taxes owed or which it is
required to withhold from amounts owing to employees, creditors or other third
parties.
(i) Absence of Certain Changes. Since December 31, 1999, there has been
no change in the business, financial condition or results of operations of Xxxxx
Fargo or any Xxxxx Fargo Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Xxxxx Fargo and its subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 3(j), as
of December 31, 1999 neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is a
party or subject to any of the following (whether written or oral, express or
implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of Xxxxx Fargo
or any Xxxxx Fargo Subsidiary to compete in any line of business or
with any person or which involve any material restriction of the
geographical area in which, or method by which, Xxxxx Fargo or any
Xxxxx Fargo Subsidiary may carry on its business (other than as may be
required by law or applicable regulatory authorities);
-15-
(iii) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. There is no pending or, to the
best knowledge of Xxxxx Fargo, threatened, claim, action, suit, investigation or
proceeding, against Xxxxx Fargo or any Xxxxx Fargo Subsidiary nor is Xxxxx Fargo
or any Xxxxx Fargo Subsidiary subject to any order, judgment or decree, except
for matters which, in the aggregate, will not have, or cannot reasonably be
expected to have, a material adverse effect on the business, financial condition
or results of operations of Xxxxx Fargo and its subsidiaries taken as a whole.
(l) Insurance. Xxxxx Fargo and each Xxxxx Fargo Subsidiary is presently
insured or self-insured, and during each of the past five calendar years (or
during such lesser period of time as Xxxxx Fargo has owned such Xxxxx Fargo
Subsidiary) has been insured or self-insured, for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable law and regulation.
(m) Compliance with Laws. Xxxxx Fargo and each Xxxxx Fargo Subsidiary
has all permits, licenses, authorizations, orders and approvals of, and has made
all filings, applications and registrations with, federal, state, local or
foreign governmental or regulatory bodies that are required in order to permit
it to own or lease its properties or assets and to carry on its business as
presently conducted and that are material to the business of Xxxxx Fargo or such
Xxxxx Fargo Subsidiary; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and to the best knowledge of
Xxxxx Fargo, no suspension or cancellation of any of them is threatened; and all
such filings, applications and registrations are current. The conduct by Xxxxx
Fargo and each Xxxxx Fargo Subsidiary of its business and the condition and use
of its properties does not violate or infringe, in any respect material to any
such business, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license or regulation. Neither Xxxxx Fargo nor any Xxxxx
Fargo Subsidiary is in default under any order, license, regulation or demand of
any federal, state, municipal or other governmental agency or with respect to
any order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application, no federal, state, municipal or
other governmental authority has placed any restrictions on the business or
properties of Xxxxx Fargo or any Xxxxx Fargo Subsidiary or issued any
cease-and-desist or similar orders which reasonably could be expected to have a
material adverse effect on the business or properties of Xxxxx Fargo and its
subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Xxxxx Fargo or any Xxxxx Fargo
Subsidiary is pending or, to the best knowledge of Xxxxx Fargo, threatened.
Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is involved in, or threatened
with or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding that could materially and adversely affect the business of Xxxxx
Fargo or such Xxxxx Fargo Subsidiary. Except as set forth on Schedule 3(j),
employees of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries are not represented by
any labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees.
(o) Xxxxx Fargo Benefit Plans.
-------------------------
(i) For purposes of this Section 3(o), the term "Xxxxx Fargo
Plan" or "Xxxxx Fargo Plans" means all employee benefit plans as
defined in Section 3(3) of ERISA, to which Xxxxx Fargo contributes,
sponsors, or otherwise has any obligations.
-16-
(ii) No Xxxxx Fargo Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(iii) Each Xxxxx Fargo Plan is and has been in all material
respects operated and administered in accordance with its provisions
and applicable law, including, if applicable, ERISA and the Code.
(iv) Except as set forth on Schedule 3(o), each Xxxxx Fargo
Plan intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service stating that the Xxxxx Fargo Plan (including all amendments) is
tax qualified under Section 401(a) of the Code and Xxxxx Fargo knows of
no reason that any such Xxxxx Fargo Plan is not qualified within the
meaning of Section 401(a) of the Code and knows of no reason that each
related Xxxxx Fargo Plan trust is not exempt from taxation under
Section 501(a) of the Code.
(v) All contributions, premium payments, and other payments
required to be made in connection with the Xxxxx Fargo Plans as of the
date of this Agreement have been made.
(vi) With respect to each Xxxxx Fargo Plan that is subject to
Section 301 of ERISA or Section 412 of the Code, neither Xxxxx Fargo
nor any Xxxxx Fargo Subsidiary is liable for any accumulated funding
deficiency as that term is defined in Section 412 of the Code.
(vii) The present value of all benefits vested and all
benefits accrued under each Xxxxx Fargo Plan that is subject to Title
IV of ERISA does not, in each case, exceed the value of the assets of
the Xxxxx Fargo Plans allocable to such vested or accrued benefits as
of the end of the most recent Plan Year.
(p) Registration Statement, etc. None of the information regarding
Xxxxx Fargo and its subsidiaries supplied or to be supplied by Xxxxx Fargo for
inclusion in (i) the Registration Statement, (ii) the Proxy Statement, or (iii)
any other documents to be filed with the SEC or any regulatory authority in
connection with the transactions contemplated hereby or by the Merger Agreement
will, at the respective times such Registration Statement, Proxy Statement and
other documents are filed with the SEC or any regulatory authority and, in the
case of the Registration Statement, when it becomes effective and, with respect
to the Proxy Statement, when mailed, and, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the meeting of
shareholders referred to in paragraph 4(c)(i), and at the Effective Time of the
Merger 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
contained therein, in light of the circumstances under which they were made, not
misleading. All documents which Xxxxx Fargo and the Xxxxx Fargo Subsidiaries are
responsible for filing with the SEC and any other regulatory authority in
connection with the Merger will comply as to form in all material respects with
the provisions of applicable law.
(q) Brokers and Finders. Neither Xxxxx Fargo nor any Xxxxx Fargo
Subsidiary nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for Xxxxx Fargo or any Xxxxx Fargo
Subsidiary in connection with this Agreement and the Merger Agreement or the
transactions contemplated hereby and thereby.
-17-
(r) No Defaults. Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is
in default, nor has any event occurred that, with the passage of time or the
giving of notice, or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Xxxxx Fargo and its subsidiaries taken as a whole.
To the best of Xxxxx Fargo's knowledge, all parties with whom Xxxxx Fargo or any
Xxxxx Fargo Subsidiary has material leases, agreements or contracts or who owe
to Xxxxx Fargo or any Xxxxx Fargo Subsidiary material obligations, other than
those arising in the ordinary course of the banking business of the Xxxxx Fargo
Subsidiaries are in compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could result in the imposition, on Xxxxx Fargo or any Xxxxx Fargo Subsidiary of
any liability relating to the release of hazardous substances as defined under
any local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or to the best of Xxxxx Fargo's
knowledge, threatened against Xxxxx Fargo or any Xxxxx Fargo Subsidiary, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Xxxxx Fargo and its subsidiaries taken as a whole; to the
best of Xxxxx Fargo's knowledge, there is no reasonable basis for any such
proceeding, claim or action; and to the best of Xxxxx Fargo's knowledge, neither
Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is subject to any agreement,
order, judgment, or decree by or with any court, governmental authority or third
party imposing any such environmental liability.
(t) Merger Co. As of the Closing Date, Merger Co. will be a corporation
duly organized, validly existing, duly qualified to do business and in good
standing under the laws of its jurisdiction of incorporation, and will have
corporate power and authority to own or lease its properties and assets and to
carry on its business. As of the Closing Date, the execution, delivery and
performance by Merger Co. of the Merger Agreement will have been duly authorized
by Merger Co.'s Board of Directors and shareholders, and the Merger Agreement
will be a valid and binding obligation of Merger Co., enforceable against Merger
Co. in accordance with its terms.
(u) Interim Bank. As of the Closing Date, Interim Bank will be a
corporation duly organized, validly existing, duly qualified to do business and
in good standing under the laws of its jurisdiction of incorporation, and will
have corporate power and authority to own or lease its properties and assets and
to carry on its business. As of the Closing Date, the execution, delivery and
performance by Interim Bank of the Bank Merger Agreement will have been duly
authorized by Interim Bank's Board of Directors and shareholders, and the Bank
Merger Agreement will be a valid and binding obligation of Interim Bank,
enforceable against Interim Bank in accordance with its terms.
4. COVENANTS OF COMPANY. Company covenants and agrees with Xxxxx Fargo
as follows:
(a) Affirmative Covenants. Except as otherwise permitted or required by
this Agreement, from the date hereof until the Effective Time of the Merger,
Company, and each Company Subsidiary will: maintain its corporate existence in
good standing; maintain the general character of its business and conduct its
business in its ordinary and usual manner; extend credit in accordance with
existing lending policies, except that it shall not, without the prior written
consent of Xxxxx Fargo (which shall be deemed to be waived if Xxxxx Fargo has
made no response by the end of the second complete business day following the
receipt, as evidenced by confirmed facsimile, of the request by the
representative
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designated in writing by Xxxxx Fargo), (A) make any new loan or modify,
restructure or renew any existing loan (except pursuant to commitments made
prior to the date of this Agreement) to any borrower if the amount of the
resulting loan, when aggregated with all other loans or extensions of credit to
such person (other than consumer-purpose loans and loans which are for less than
$100,000), would be in excess of $1,500,000, or (B) make any extensions of
credit aggregating in excess of $750,000 to a person or entity that is not a
borrower as of the date hereof or that has not been a borrower within twelve
months prior to the date hereof; maintain proper business and accounting records
in accordance with generally accepted principles; maintain its properties in
good repair and condition, ordinary wear and tear excepted; maintain in all
material respects presently existing insurance coverage; use its best efforts to
preserve its business organization intact, to keep the services of its present
principal employees and to preserve its good will and the good will of its
suppliers, customers and others having business relationships with it; use its
best efforts to obtain any approvals or consents required to maintain existing
leases and other contracts in effect following the Merger; comply in all
material respects with all laws, regulations, ordinances, codes, orders,
licenses and permits applicable to the properties and operations of Company and
each Company Subsidiary the non-compliance with which reasonably could be
expected to have a material adverse effect on Company and the Company
Subsidiaries taken as a whole; and permit Xxxxx Fargo and its representatives
(including KPMG LLP) to examine its and its subsidiaries books, records and
properties and to interview officers, employees and agents at all reasonable
times when it is open for business. No such examination by Xxxxx Fargo or its
representatives either before or after the date of this Agreement shall in any
way affect, diminish or terminate any of the representations, warranties or
covenants of Company herein expressed.
(b) Negative Covenants. Except as otherwise contemplated or required by
this Agreement, from the date hereof until the Effective Time of the Merger,
Company and each Company Subsidiary will not (without the prior written consent
of Xxxxx Fargo): amend or otherwise change its articles of incorporation or
association or by-laws; issue or sell or authorize for issuance or sale, or
grant any options or make other agreements with respect to the issuance or sale
or conversion of, any shares of its capital stock, phantom shares or other
share-equivalents, or any other of its securities (except as required under
existing Plans and outstanding Company Stock Options); authorize or incur any
long-term debt (other than deposit liabilities); mortgage, pledge or subject to
lien or other encumbrance any of its properties, except in the ordinary course
of business; enter into any material agreement, contract or commitment in excess
of $50,000 except banking transactions in the ordinary course of business and in
accordance with policies and procedures in effect on the date hereof; make any
investments except investments made by bank subsidiaries in the ordinary course
of business of Treasury securities only for terms of up to two years and in
amounts of $1,000,000 or less; amend or terminate any Plan except as required by
law or by paragraph 4(j) hereof; make any contributions to any Plan except as
required by the terms of such Plan in effect as of the date hereof; declare, set
aside, make or pay any dividend or other distribution with respect to its
capital stock except (A) Company may declare and pay dividends on Company Common
Stock, in accordance with applicable law and regulation and consistent with past
practice, out of the net earnings of Company between the date hereof and the
Effective Date of the Merger, determined in accordance with generally accepted
accounting principles, in an amount not to exceed an annualized rate of $0.35
provided, however, that the stockholders of Company shall be entitled to a
dividend as determined by Company after consultation with Xxxxx Fargo on Company
Common Stock or Xxxxx Fargo Common Stock, but not both, in the calendar quarter
in which the Closing shall occur, and (B) any dividend declared by a Company
Subsidiary's Board of Directors in accordance with applicable law and
regulation; redeem, purchase or otherwise acquire, directly or indirectly, any
of the capital stock of Company; increase the compensation of any officers,
directors or executive employees, except pursuant to existing compensation plans
and practices; sell or otherwise dispose of any shares of
-19-
the capital stock of any Company Subsidiary; or sell or otherwise dispose of any
of its assets or properties other than in the ordinary course of business.
(c) Shareholder Meetings.
--------------------
(i) The Board of Directors of Company will duly call, and will
cause to be held not later than twenty-five (25) business days
following the effective date of the Registration Statement, a meeting
of its shareholders and will direct that this Agreement and the Merger
Agreement be submitted to a vote at such meeting. The Board of
Directors of Company will (i) cause proper notice of such meeting to be
given to its shareholders in compliance with the Iowa Business
Corporation Act and other applicable law and regulation, (ii) except to
the extent that the Board of Directors of Company shall conclude in
good faith, after taking into account the advice of its outside
counsel, that to do so would violate its fiduciary obligations under
applicable law, (A) recommend by the affirmative vote of the Board of
Directors a vote in favor of approval of this Agreement and the Merger
Agreement, and (B) use its best efforts to solicit from its
shareholders proxies in favor thereof.
(ii) The Board of Directors of Bank will duly call, and will
cause to be held not later than twenty-five (25) business days
following the effective date of the Registration Statement, a meeting
of its shareholders and will direct that this Agreement and the Bank
Merger Agreement be submitted to a vote at such meeting. The Board of
Directors of Bank will (i) cause proper notice of such meeting to be
given to its shareholders in compliance with all applicable law and
regulation, (ii) recommend by the affirmative vote of the Board of
Directors a vote in favor of approval of this Agreement and Bank Merger
Agreement, and (iii) use its best efforts to solicit from its
shareholders proxies in favor thereof.
(d) Information Furnished by Company. Company will furnish or cause to
be furnished to Xxxxx Fargo all the information concerning Company and the
Company Subsidiaries required for inclusion in the Registration Statement, or
any statement or application made by Xxxxx Fargo to any governmental body in
connection with the transactions contemplated by this Agreement. Any financial
statement for any fiscal year provided under this paragraph must include the
audit opinion and the consent of KPMG LLP to use such opinion in such
Registration Statement.
(e) Approvals. Company will take all necessary corporate and other
action and use its best efforts to obtain all approvals of regulatory
authorities, consents and other approvals required of Company to carry out the
transactions contemplated by this Agreement and will cooperate with Xxxxx Fargo
to obtain all such approvals and consents required of Xxxxx Fargo.
(f) Delivery of Closing Documents. Company will use its best efforts to
deliver to the Closing all opinions, certificates and other documents required
to be delivered by it at the Closing.
(g) Confidential Information. Company will hold in confidence all
documents and information concerning Xxxxx Fargo and its subsidiaries furnished
to Company and its representatives in connection with the transactions
contemplated by this Agreement and will not release or disclose such information
to any other person, except as required by law and except to Company's outside
professional advisers in connection with this Agreement, with the same
undertaking from such professional advisers. If the transactions contemplated by
this Agreement shall not be consummated, such confidence shall be maintained and
such information shall not be used in competition with Xxxxx Fargo (except to
the extent
-20-
that such information was previously known to Company, in the public domain, or
later acquired by Company from other sources not known to Company to be subject
to a confidentiality obligation to Xxxxx Fargo) and, upon request, all such
documents and any copies thereof and all documents prepared by Company that
include such confidential information shall be destroyed, excluding documents
such as minutes of meetings and regulatory filings that Company is required to
retain.
(h) Competing Transactions. Neither Company, nor any Company
Subsidiary, nor any director, officer, representative or agent thereof, will,
directly or indirectly, solicit, authorize the solicitation of or except to the
extent that the Board of Directors of Company shall conclude in good faith,
after taking into account the written advice of its outside counsel, that to
fail to do so could reasonably be determined to violate its fiduciary
obligations under applicable law, enter into any discussions with any
corporation, partnership, person or other entity or group (other than Xxxxx
Fargo) concerning any offer or possible offer (i) to purchase any shares of
common stock, any option or warrant to purchase any shares of common stock, any
securities convertible into any shares of such common stock, or any other equity
security of Company or any Company Subsidiary, (ii) to make a tender or exchange
offer for any shares of such common stock or other equity security, (iii) to
purchase, lease or otherwise acquire the assets of Company or any Company
Subsidiary except in the ordinary course of business, or (iv) to merge,
consolidate or otherwise combine with Company or any Company Subsidiary. If any
corporation, partnership, person or other entity or group makes an offer or
inquiry to Company or any Company Subsidiary concerning any of the foregoing,
Company or such Company Subsidiary will promptly disclose such offer or inquiry
to Xxxxx Fargo.
(i) Public Disclosure. Company shall consult with Xxxxx Fargo as to the
form and substance of any proposed press release or other proposed public
disclosure of matters related to this Agreement or any of the transactions
contemplated hereby.
(j) Benefit Plans. Company and each Company Subsidiary will take all
action necessary or required (i) to amend as of the Effective Date of the
Merger, if requested by Xxxxx Fargo, all qualified retirement and welfare
benefit plans and all non-qualified benefit plans and compensation arrangements
(except severance plans and individual severance and employment agreements) to
facilitate the merger of such plans with Xxxxx Fargo plans without gaps in
coverage for participants in the plans and without duplication of costs caused
by the continuation of such plans after coverage is available under Xxxxx Fargo
plans, and (ii) to submit an application to the Internal Revenue Service for a
favorable determination letter for each of the Plans that is subject to the
qualification requirements of Section 401(a) of the Code prior to the Effective
Date of the Merger.
(k) Affiliate Letters. Company shall use its best efforts to obtain and
deliver prior to the Effective Date of the Merger signed representations
substantially in the form attached hereto as Exhibit B to Xxxxx Fargo by each
executive officer, director or shareholder of Company who may reasonably be
deemed an "affiliate" of Company within the meaning of such term as used in Rule
145 under the Securities Act.
(l) Accruals and Reserves. Company shall establish, immediately prior
to the Effective Time of the Merger, such additional accruals and reserves as
may be necessary (i) to conform Company's accounting and credit loss reserve
practices and methods to those of Xxxxx Fargo, consistent with Xxxxx Fargo's
plans with respect to the conduct of Company's business following the Merger and
(ii) to the extent permitted by generally accepted accounting principles, to
provide for the costs and expenses
-21-
relating to the consummation by Company of the Merger and the other transactions
contemplated by this Agreement.
(m) Environmental Assessments. Company shall obtain, at its sole
expense, Phase I environmental assessments for each owned bank facility and each
non-residential OREO property. Company shall use its reasonable best efforts to
deliver oral reports of such environmental assessments to Xxxxx Fargo no later
than four (4) weeks and written reports no later than eight (8) weeks from the
date of this Agreement. Company shall obtain, at its sole expense, Phase II
environmental assessments for properties identified by Xxxxx Fargo on the basis
of the results of such Phase I environmental assessments. Company shall obtain a
survey and assessment of all potential asbestos containing material in owned or
leased real properties (other than OREO property) and shall use its reasonable
best efforts to deliver a written report of the results to Xxxxx Fargo within
four (4) weeks of execution of this Agreement.
(n) Title Commitments and Boundary Surveys. Company shall obtain, at
its sole expense, commitments for title insurance and boundary surveys for each
owned bank facility which Company shall use its reasonable best efforts to
deliver to Xxxxx Fargo no later than four (4) weeks from the date of this
Agreement.
(o) Company Stock Option Plan. Company shall collect in cash (and
timely pay) all applicable withholding and payroll taxes with respect to any
options, awards and stock appreciation rights exercised under the Company Stock
Option Plan prior to the Effective Time of the Merger, and shall comply with all
payroll reporting requirements with respect thereto. All outstanding Company
Stock Options that remain unexercised at the Effective Time of the Merger shall
be converted into Substitute Options pursuant to paragraph 1(b) hereof as of the
Effective Time of the Merger.
(p) Section 16 Reporting Requirements. The Board of Directors of
Company shall, prior to the Effective Time of the Merger, take all such actions
as may be necessary or appropriate pursuant to Exchange Act Rule 16b-3(e) to
exempt (i) the conversion of Company Common Stock and Company Stock Options into
Xxxxx Fargo Common Stock and options to purchase Xxxxx Fargo Common Stock, as
the case may be, and (ii) the acquisition of Xxxxx Fargo Common Stock or options
to purchase Xxxxx Fargo Common Stock, as the case may be, pursuant to the terms
of this Agreement by officers and directors of Company subject to the reporting
requirements of Section 16(a) of the Exchange Act. Company shall provide to
counsel for Xxxxx Fargo copies of the resolutions to be adopted by the Board of
Directors of Company to implement the foregoing.
5. COVENANTS OF XXXXX FARGO. Xxxxx Fargo covenants and agrees with
Company as follows:
(a) Affirmative Covenants. From the date hereof until the Effective
Time of the Merger, Xxxxx Fargo will maintain its corporate existence in good
standing; conduct, and cause the Xxxxx Fargo Subsidiaries to conduct, their
respective businesses in compliance with all material obligations and duties
imposed on them by all laws, governmental regulations, rules and ordinances, and
judicial orders, judgments and decrees applicable to Xxxxx Fargo or the Xxxxx
Fargo Subsidiaries, their businesses or their properties; maintain all books and
records of it and the Xxxxx Fargo Subsidiaries, including all financial
statements, in accordance with the accounting principles and practices
consistent with those used for the Xxxxx Fargo Financial Statements, except for
changes in such principles and practices required under generally accepted
accounting principles.
-22-
(b) Information Provided by Xxxxx Fargo. Xxxxx Fargo will furnish to
Company all the information concerning Xxxxx Fargo required for inclusion in a
proxy statement or statements to be sent to the shareholders of Company, or in
any statement or application made by Company to any governmental body in
connection with the transactions contemplated by this Agreement.
(c) Registration Statement. As promptly as practicable after the
execution of this Agreement, Xxxxx Fargo will file with the SEC the Registration
Statement and any other applicable documents, relating to the shares of Xxxxx
Fargo Common Stock to be delivered to the shareholders of Company pursuant to
the Merger Agreement and to the minority shareholders of Bank pursuant to the
Bank Merger Agreement, and will use its best efforts to cause the Registration
Statement to become effective. At the time the Registration Statement becomes
effective, the Registration Statement will comply in all material respects with
the provisions of the Securities Act and the published rules and regulations
thereunder, and 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 therein not false or misleading, and at the time of mailing thereof
to the Company and Bank shareholders, at the time of the Company and Bank
shareholders' meetings referred to in paragraph 4(c) hereof and at the Effective
Time of the Merger the prospectus included as part of the Registration
Statement, as amended or supplemented by any amendment or supplement filed by
Xxxxx Fargo (hereinafter the "Prospectus"), will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not false or misleading; provided, however, that
none of the provisions of this subparagraph shall apply to statements in or
omissions from the Registration Statement or the Prospectus made in reliance
upon and in conformity with information furnished by Company or any Company
Subsidiary for use in the Registration Statement or the Prospectus. In advance
of filing the Registration Statement and other SEC filings relating to the
transactions contemplated by this Agreement, Xxxxx Fargo will provide the
Company and its counsel with a copy of the Registration Statement and present an
opportunity to comment thereon.
(d) Stock Exchange Listings. Xxxxx Fargo will file all documents
required to be filed to list the Xxxxx Fargo Common Stock to be issued pursuant
to the Merger Agreement and the Bank Merger Agreement on the New York Stock
Exchange and the Chicago Stock Exchange and use its best efforts to effect said
listings.
(e) Xxxxx Fargo Shares. The shares of Xxxxx Fargo Common Stock to be
issued by Xxxxx Fargo to the shareholders of Company pursuant to this Agreement
and the Merger Agreement and to the minority shareholders of Bank pursuant to
this Agreement and the Bank Merger Agreement will, upon such issuance and
delivery to said shareholders pursuant to the Merger Agreement or the Bank
Merger Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Xxxxx Fargo Common Stock to be delivered to the
shareholders of Company pursuant to the Merger Agreement and to the minority
shareholders of Bank pursuant to the Bank Merger Agreement are and will be free
of any preemptive rights of the stockholders of Xxxxx Fargo.
(f) Blue Sky Approvals. Xxxxx Fargo will file all documents required to
obtain, prior to the Effective Time of the Merger, all necessary Blue Sky
permits and approvals, if any, required to carry out the transactions
contemplated by this Agreement, will pay all expenses incident thereto and will
use its best efforts to obtain such permits and approvals.
(g) Approvals. Xxxxx Fargo will take all necessary corporate and other
action and file all documents required to obtain and will use its best efforts
to obtain all approvals of regulatory authorities,
-23-
consents and approvals required of it to carry out the transactions contemplated
by this Agreement and will cooperate with Company to obtain all such approvals
and consents required by Company.
(h) Confidential Information. Xxxxx Fargo will hold in confidence all
documents and information concerning Company and Company's Subsidiaries
furnished to it and its representatives in connection with the transactions
contemplated by this Agreement and will not release or disclose such information
to any other person, except as required by law and except to its outside
professional advisers in connection with this Agreement, with the same
undertaking from such professional advisers. If the transactions contemplated by
this Agreement shall not be consummated, such confidence shall be maintained and
such information shall not be used in competition with Company (except to the
extent that such information was previously known to Xxxxx Fargo, in the public
domain, or later acquired by Xxxxx Fargo from other sources not known to Xxxxx
Fargo to be subject to a confidentiality obligation to Company) and, upon
request, all such documents and any copies thereof Company and all documents
prepared by Xxxxx Fargo that include such confidential information shall be
destroyed, excluding documents such as minutes of meetings and regulatory
filings that Xxxxx Fargo is required to retain.
(i) Merger Filings. Xxxxx Fargo will file any documents or agreements
required to be filed in connection with the Merger and the Bank Merger under the
Iowa Business Corporation Act.
(j) Delivery of Closing Documents. Xxxxx Fargo will use its best
efforts to deliver to the Closing all opinions, certificates and other documents
required to be delivered by it at the Closing.
(k) Public Disclosure. Xxxxx Fargo shall consult with Company as to the
form and substance of any proposed press release or other proposed public
disclosure of matters related to this Agreement or any of the transactions
contemplated hereby.
(l) Notice of Regulatory Approvals. Xxxxx Fargo shall give Company
notice of receipt of the regulatory approvals referred to in paragraph 7(e).
(m) Indemnification; Directors and Officers Insurance. With respect to
the indemnification of directors and officers, Xxxxx Fargo agrees as follows:
(i) Following the Effective Date of the Merger, Xxxxx Fargo
shall indemnify, defend and hold harmless any person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time of the Merger, a director or officer of Company or any
Company Subsidiary (an "Indemnified Party" and, collectively, the
"Indemnified Parties"), to the same extent as Company is obligated to
indemnify, defend and hold harmless the Indemnified Parties in
Company's articles of incorporation or bylaws or similar governing
documents of any Company Subsidiary, as applicable in the particular
case and as in effect on the date hereof, with respect to claims
arising from (A) facts or events that occurred before the Effective
Time of the Merger, or (B) this Agreement or any of the transactions
contemplated by this Agreement, whether in any case asserted or arising
before or after the Effective Time of the Merger. Nothing contained in
this paragraph 5(m)(i) shall be deemed to preclude the liquidation,
consolidation, or merger of Company or any Company Subsidiary, in which
case all of such rights to indemnification and limitations on liability
shall be deemed to survive and continue as contractual rights
notwithstanding any such liquidation or consolidation or merger;
provided, however, that in the event of liquidation or sale of
substantially all of the assets of Company, Xxxxx Fargo shall
guarantee, to the extent of the net asset value of Company or any
Company
-24-
Subsidiary as of the Effective Date of the Merger, the indemnification
obligations of Company or any Company Subsidiary to the extent of
indemnification obligations of Company and the Company Subsidiaries
described above. Notwithstanding anything to the contrary contained in
this paragraph 5(m)(i), nothing contained herein shall require Xxxxx
Fargo to indemnify any person who was a director or officer of Company
or any Company Subsidiary to a greater extent than Company or any
Company Subsidiary is, as of the date of this Agreement, required to
indemnify any such person;
(ii) any Indemnified Party wishing to claim indemnification
under paragraph 5(m)(i), upon learning of any such claim, action, suit,
proceeding, or investigation, shall promptly notify Xxxxx Fargo
thereof, but the failure to so notify shall not relieve Xxxxx Fargo of
any liability it may have to such Indemnified Party. In the event of
any such claim, action, suit, proceeding, or investigation (whether
arising before or after the Effective Time of the Merger) (A) Xxxxx
Fargo shall have the right to assume the defense thereof and Xxxxx
Fargo shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof,
except that if Xxxxx Fargo elects not to assume such defense or counsel
for the Indemnified Party advises that there are issues which raise
conflicts of interest between Xxxxx Fargo and the Indemnified Party,
the Indemnified Party may retain counsel satisfactory to them, and
Xxxxx Fargo shall pay the reasonable fees and expenses of such counsel
for the Indemnified Party promptly as statements therefor are received,
provided, however, that Xxxxx Fargo shall be obligated pursuant to this
subparagraph (ii) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction unless the use of one counsel
for such Indemnified Parties would present such counsel with a conflict
of interest, and (B) such Indemnified Party shall cooperate in the
defense of any such matter;
(iii) for a period of six years after the Effective Time of
the Merger, Xxxxx Fargo shall use its best efforts to cause to be
maintained in effect the current policies of directors' and officers'
liability insurance maintained by Company (provided that Xxxxx Fargo
may substitute therefor policies of at least the same coverage and
amount containing terms and conditions which are substantially no less
advantageous) with respect to claims arising from facts or events which
occurred before the Effective Time of the Merger; provided, however,
that in no event shall Xxxxx Fargo be obligated to expend, in order to
maintain or provide insurance coverage pursuant to this paragraph
5(m)(iii), any amount per annum in excess of 150% of the amount of the
annual premiums paid as of the date hereof by Company for such
insurance (the "Maximum Amount") and provided further that, prior to
the Effective Time of the Merger, Company shall notify the appropriate
directors' and officers' liability insurers of the Merger and of all
pending or threatened claims, actions, suits, proceedings or
investigations asserted or claimed against any Indemnified Party, or
circumstances likely to give rise thereto to the extent known to the
Company, in accordance with terms and conditions of the applicable
policies. If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Xxxxx Fargo
shall use reasonable efforts to maintain the most advantageous policies
of directors' and officers' insurance obtainable for an annual premium
equal to the Maximum Amount;
(iv) if Xxxxx Fargo or any of its successors or assigns (A)
shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (B) shall transfer all or substantially
all
-25-
of its properties and assets to any individual, corporation or
other entity, then and in each such case, proper provision shall be
made so that the successors and assigns of Xxxxx Fargo shall assume the
obligations set forth in this paragraph 5(m); and
(v) the provisions of this paragraph 5(m) are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
6. CONDITIONS PRECEDENT TO OBLIGATION OF COMPANY. The obligation of
Company to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following further conditions, which may be waived in
writing by Company:
(a) Representations and Warranties. Except as they may be affected by
transactions contemplated hereby and except to the extent such representations
and warranties are by their express provisions made as of a specified date and
except for activities or transactions after the date of this Agreement made in
the ordinary course of business and not expressly prohibited by this Agreement,
the representations and warranties contained in paragraph 3 hereof shall be true
and correct in all respects material to Xxxxx Fargo and its subsidiaries taken
as a whole as if made at the Time of Filing.
(b) Performance of Xxxxx Fargo Obligations. Xxxxx Fargo shall have, or
shall have caused to be, performed and observed in all material respects all
covenants, agreements and conditions hereof to be performed or observed by it
and Merger Co. at or before the Time of Filing.
(c) Xxxxx Fargo Compliance Certificate. Company shall have received a
favorable certificate, dated as of the Effective Date of the Merger, signed by
the Chairman, the President or any Executive Vice President or Senior Vice
President and by the Secretary or Assistant Secretary of Xxxxx Fargo, as to the
matters set forth in subparagraphs (a) and (b) of this paragraph 6.
(d) Shareholder Approvals. This Agreement, the Merger Agreement and the
Bank Merger Agreement shall have been approved by the affirmative vote of the
holders of the percentage of the outstanding shares of Company and the Bank,
respectively, required for approval of a plan of merger in accordance with the
provisions of Company's Articles of Incorporation and Bank's Articles of
Association, respectively, and the Iowa Business Corporation Act.
(e) Governmental Approvals. Xxxxx Fargo shall have received approval by
the Federal Reserve Board and by such other governmental agencies as may be
required by law of the transactions contemplated by this Agreement, the Merger
Agreement and the Bank Merger Agreement and all waiting and appeal periods
prescribed by applicable law or regulation shall have expired.
(f) No Restraining Order, Etc. No court or governmental authority of
competent jurisdiction shall have issued an order restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement.
(g) Shares Authorized for Listing. The shares of Xxxxx Fargo Common
Stock to be delivered to the stockholders of Company pursuant to this Agreement,
the Merger Agreement and the Bank Merger Agreement shall have been authorized
for listing on the New York Stock Exchange and the Chicago Stock Exchange.
-26-
(h) Tax Opinion. Company shall have received an opinion, dated the
Closing Date, of Xxxxxxxx & Xxxxxxxx, special counsel to Company, substantially
to the effect that, for federal income tax purposes: (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code;
(ii) no gain or loss will be recognized by the holders of Company Common Stock
upon receipt of Xxxxx Fargo Common Stock except for cash received in lieu of
fractional shares; (iii) the basis of the Xxxxx Fargo Common Stock received by
the shareholders of Company will be the same as the basis of Company Common
Stock exchanged therefor; and (iv) the holding period of the shares of Xxxxx
Fargo Common Stock received by the shareholders of Company will include the
holding period of the Company Common Stock, provided such shares of Company
Common Stock were held as a capital asset as of the Effective Time of the
Merger. For purposes of such opinion, Xxxxxxxx & Xxxxxxxx may request and rely
upon representations of Xxxxx Fargo, the Company and the Bank, and may in
addition rely on certain assumptions.
(i) Registration Statement Effective; No Stop Order, Etc.; Blue Sky
Authorizations Received. The Registration Statement (as amended or supplemented)
shall have become effective under the Securities Act and shall not be subject to
any stop order, and no action, suit, proceeding or investigation by the SEC to
suspend the effectiveness of the Registration Statement shall have been
initiated and be continuing, or have been threatened and be unresolved. Xxxxx
Fargo shall have received all state securities law or blue sky authorizations
necessary to carry out the transactions contemplated by this Agreement.
(j) Fairness Opinion. Prior to the mailing of the Proxy Statement,
Company and the Board of Directors of Company shall have received an opinion of
The Xxxxx, Xxxxxxxx and Xxxxx, Inc. addressed to Company and the Board of
Directors of Company, and for their exclusive benefit, for inclusion in said
Proxy Statement and dated effective as of the date of mailing of such Proxy
Statement, based on such matters as of Xxxxx, Xxxxxxxx and Xxxxx, Inc. deems
appropriate or necessary, to the effect that the consideration to be received by
stockholders of Company pursuant to the Merger is fair from a financial point of
view. Company shall promptly provide a copy of such opinion to Xxxxx Fargo upon
receipt.
(k) No Material Adverse Change. Since March 31, 2000, no change shall
have occurred and no circumstances shall exist which has had or might reasonably
be expected to have a material adverse effect on the financial condition,
results of operations, business or prospects of Xxxxx Fargo and the Xxxxx Fargo
subsidiaries taken as a whole (other than changes in banking laws or
regulations, or interpretations thereof, that affect the banking industry
generally or changes in the general level of interest rates).
7. CONDITIONS PRECEDENT TO OBLIGATION OF XXXXX FARGO. The obligation of
Xxxxx Fargo to effect the Merger and the Bank Merger shall be subject to the
satisfaction at or before the Time of Filing of the following conditions, which
may be waived in writing by Xxxxx Fargo:
(a) Representations and Warranties. Except as they may be affected by
transactions contemplated hereby and except to the extent such representations
and warranties are by their express provisions made as of a specified date and
except for activities or transactions or events occurring after the date of this
Agreement made in the ordinary course of business and not expressly prohibited
by this Agreement, the representations and warranties contained in paragraph 2
hereof shall be true and correct in all respects material to Company and the
Company Subsidiaries taken as a whole as if made at the Time of Filing.
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(b) Performance of Company Obligations. Company shall have, or shall
have caused to be, performed and observed in all material respects all
covenants, agreements and conditions hereof to be performed or observed by it at
or before the Time of Filing.
(c) Shareholder Approvals. This Agreement, the Merger Agreement and the
Bank Merger Agreement shall have been approved by the affirmative vote of the
holders of the percentage of the outstanding shares of Company and the Bank,
respectively, required for approval of a plan of merger in accordance with the
provisions of Company's Articles of Incorporation and Bank's Articles of
Association, respectively, and the Iowa Business Corporation Act.
(d) Company's Compliance Certificate. Xxxxx Fargo shall have received a
favorable certificate dated as of the Effective Date of the Merger signed by the
Chairman or President and by the Secretary or Assistant Secretary of Company, as
to the matters set forth in subparagraphs (a) through (c) of this paragraph 7.
(e) Governmental Approvals. Xxxxx Fargo shall have received approval by
all governmental agencies as may be required by law of the transactions
contemplated by this Agreement, the Merger Agreement and the Bank Merger
Agreement and all waiting and appeal periods prescribed by applicable law or
regulation shall have expired. No approvals, licenses or consents granted by any
regulatory authority shall contain any condition or requirement relating to
Company or any Company Subsidiary that, in the good faith judgment of Xxxxx
Fargo, is unreasonably burdensome to Xxxxx Fargo. For purposes of this paragraph
7(e), a divestiture required as a condition to approval by the Federal Reserve
Board of the transactions contemplated by this Agreement shall not be deemed to
be unreasonably burdensome if such divestiture is consistent with Department of
Justice and Federal Reserve Board guidelines, policies, and practices regarding
the merger of bank holding companies that have been used in transactions that
have been reviewed within two years prior to the date of this Agreement.
(f) Consents, Authorizations, Etc. Obtained. Company and each Company
Subsidiary shall have obtained any and all material consents or waivers from
other parties to loan agreements, leases or other contracts material to
Company's or such Company Subsidiary's business required for the consummation
of the Merger and Bank Merger, and Company and each Company Subsidiary shall
have obtained any and all material permits, authorizations, consents, waivers
and approvals required for the lawful consummation by it of the Merger and Bank
Merger.
(g) No Restraining Order, etc. No court or governmental authority of
competent jurisdiction shall have issued an order restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement.
(h) Number of Outstanding Shares. At any time since the date hereof the
total number of shares of Company Common Stock outstanding and subject to
issuance upon exercise (assuming for this purpose that phantom shares and other
share-equivalents constitute Company Common Stock) of all warrants, options,
conversion rights, phantom shares or other share-equivalents, other than any
option held by Xxxxx Fargo, shall not have exceeded 23,000,000.
(i) Registration Statement Effective; No Stop Order, etc.; Blue Sky
Authorizations Received. The Registration Statement (as amended or supplemented)
shall have become effective under the Securities Act and shall not be subject to
any stop order, and no action, suit, proceeding or investigation by the SEC to
suspend the effectiveness of the Registration Statement shall have been
initiated and be
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continuing, or have been threatened or be unresolved. Xxxxx Fargo shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(j) Comfort Certificate. Xxxxx Fargo shall have received from the Chief
Executive Officer and Chief Financial Officer of Company a letter, dated as of
the effective date of the Registration Statement and updated through the date of
Closing, in form and substance satisfactory to Xxxxx Fargo, to the effect that:
(i) the interim quarterly financial statements of Company
included or incorporated by reference in the Registration Statement are
prepared in accordance with generally accepted accounting principles
applied on a basis consistent with the audited financial statements of
Company;
(ii) the amounts reported in the interim quarterly financial
statements of Company agree with the general ledger of Company;
(iii) the annual and quarterly financial statements of Company
and the Company Subsidiaries included in, or incorporated by reference
in, the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act and the published rules and regulations thereunder;
(iv) from the date of the most recent unaudited consolidated
financial statements of Company and the Company Subsidiaries as may be
included in the Registration Statement to a date 5 days prior to the
effective date of the Registration Statement or 5 days prior to the
Closing, there are no increases in long-term debt, changes in the
capital stock or decreases in stockholders' equity of Company and the
Company Subsidiaries, except in each case for changes, increases or
decreases which the Registration Statement discloses have occurred or
may occur or which are described in such letters. For the same period,
there have been no decreases in consolidated net interest income,
consolidated net interest income after provision for credit losses,
consolidated income before income taxes, consolidated net income and
net income per share amounts of Company and the Company Subsidiaries,
or in income before equity in undistributed income of subsidiaries, in
each case as compared with the comparable period of the preceding year,
except in each case for changes, increases or decreases which the
Registration Statement discloses have occurred or may occur or which
are described in such letters;
(v) they have reviewed certain amounts, percentages, numbers
of shares and financial information which are derived from the general
accounting records of Company and the Company Subsidiaries, which
appear in the Registration Statement under the certain captions to be
specified by Xxxxx Fargo, and have compared certain of such amounts,
percentages, numbers and financial information with the accounting
records of Company and the Company Subsidiaries and have found them to
be in agreement with financial records and analyses prepared by Company
included in the annual and quarterly financial statements, except as
disclosed in such letters.
(k) No Casualty Losses, Etc. Company and the Company Subsidiaries
considered as a whole shall not have sustained since December 31, 1999 any
material loss or interference with their business from any civil disturbance or
any fire, explosion, flood or other calamity, whether or not covered by
insurance.
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(l) No Environmental Liability. There shall be no reasonable basis for
any proceeding, claim or action of any nature seeking to impose, or that could
result in the imposition on Company or any Company Subsidiary of, any liability
relating to the release of hazardous substances as defined under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended, which has had or could reasonably be expected
to have a material adverse effect upon Company and its subsidiaries taken as a
whole.
(m) No Material Adverse Change. Since March 31, 2000, no change shall
have occurred and no circumstances shall exist which has had or might reasonably
be expected to have a material adverse effect on the financial condition,
results of operations, business or prospects of Company and the Company
Subsidiaries taken as a whole (other than changes in banking laws or
regulations, or interpretations thereof, that affect the banking industry
generally or changes in the general level of interest rates).
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of Company or
any Company Subsidiary as of the Effective Date of the Merger ("Company
Employees") shall be eligible for participation in the employee welfare and
retirement plans of Xxxxx Fargo, as in effect from time to time, as follows:
(a) Employee Welfare Benefit Plans. Each Company Employee shall be
eligible for participation in the employee welfare benefit plans of Xxxxx Fargo
listed below subject to any eligibility requirements applicable to such plans
(and not subject to pre-existing condition exclusions, except with respect to
the Xxxxx Fargo Long Term Care Plan and Xxxxx Fargo Long Term Disability Plan)
and shall enter each plan not later than the first day of the calendar quarter
which begins at least 32 days after the Effective Date of the Merger (the
"Benefits Conversion Date"), unless such date would occur on or after October 1,
2000 and on or before December 31, 2000, in which case the Benefits Conversion
Date would be January 1, 2001:
Medical Plan
Dental Plan
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan Basic
Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Salary Continuation Pay Plan
Paid Time Off Program
It is intended that the transition from Company's Plans to the Xxxxx Fargo Plans
will be facilitated without gaps in coverage to the participants and without
duplication of costs to Xxxxx Fargo. Company Employees shall receive credit for
years of service to Company, the Company Subsidiaries and any
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predecessors of Company or the Company Subsidiaries (to the extent credited
under the vacation and short-term disability programs of Company) for the
purpose of determining benefits under the Xxxxx Fargo Paid Time Off Program,
Salary Continuation Pay Plan and Short Term Disability Plan. Company Employees
shall be eligible for participation in the Xxxxx Fargo Salary Continuation Pay
Plan subject to any eligibility requirements applicable to such plans
immediately following the Effective Time of the Merger; provided, however, that
no Company Employee who is a participant in any Company severance or salary
continuation plan that would provide such Company Employee with benefits after
the Effective Time of the Merger or who has an employment agreement with Company
or any Company Subsidiary at the Effective Time of the Merger shall be eligible
to participate in the Xxxxx Fargo Salary Continuation Pay Plan until such
Company Employee is no longer covered by such Company severance or salary
continuation plan or employment agreement.
(b) Employee Retirement Benefit Plans.
---------------------------------
Each Company Employee shall be eligible to participate in the Xxxxx Fargo 401(k)
Plan (the "401(k) Plan"), subject to any eligibility requirements applicable to
the 401(k) Plan (with full credit for years of past service to Company and the
Company Subsidiaries, or to any predecessor-in-interest of Company or the
Company Subsidiaries to the extent such service is currently given credit under
the existing Company 401(k) plan) for the purpose of satisfying any eligibility
and vesting periods applicable to the 401(k) Plan, and shall enter the 401(k)
Plan no later than the Benefits Conversion Date.
Each Company Employee shall be eligible to participate in the Xxxxx Fargo Cash
Balance Plan (the "Cash Balance Plan") under the terms thereof, subject to any
eligibility requirements applicable to the Cash Balance Plan (with full credit
for years of past service to Company and the Company Subsidiaries, to the extent
credited under the Company's defined contribution plan, for the purpose of
satisfying any eligibility and vesting periods applicable to the Cash Balance
Plan but not with respect to calculating compensation credits under the Cash
Balance Plan), and shall enter the Cash Balance Plan as of the Benefits
Conversion Date.
Each Company Employee shall be eligible for access to Xxxxx Fargo's retiree
medical benefit, subject to any eligibility requirements applicable to such
benefit. Xxxxx Fargo shall recognize years of past service with Company and the
Company Subsidiaries for the purpose of eligibility to access Xxxxx Fargo's
retiree medical benefit.
9. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to
the other party if the Merger shall not have been consummated by March
31, 2001 unless such failure of consummation shall be due to the
failure of the party seeking to terminate to perform or observe in all
material respects the covenants and agreements hereof to be performed
or observed by such party; or
(iii) by Company or Xxxxx Fargo upon written notice to the
other party if any court or governmental authority of competent
jurisdiction shall have issued a final order restraining,
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enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement; or
(iv) by either Xxxxx Fargo or Company upon written notice to
the other party if the Board of Directors of Company shall in good
faith determine that a Takeover Proposal constitutes a Superior
Proposal; provided, however, that Company shall not be permitted to
terminate this Agreement pursuant to this paragraph 9(a)(iv) unless (i)
it has not breached any covenant contained in paragraph 4(h) and (ii)
it delivers to Xxxxx Fargo simultaneously with such notice of
termination the fee referred to in paragraph 9(c) below. As used in
this Agreement; (i) "Takeover Proposal" means a bona fide proposal or
offer by a person to make a tender or exchange offer, or to engage in a
merger, consolidation or other business combination involving Company
or to acquire in any manner a substantial equity interest in, or all or
substantially all of the assets of, Company, and (ii) "Superior
Proposal" means a bona fide proposal or offer made by a person to
acquire Company pursuant to a tender or exchange offer, a merger,
consolidation or other business combination or an acquisition of all or
substantially all of the assets of Company and the Company Subsidiaries
on terms which the Board of Directors of Company shall determine in
good faith, after taking into account the advice of counsel, to be more
favorable to Company and its shareholders than the transactions
contemplated hereby; or
(v) by Xxxxx Fargo upon written notice to Company if (A) the
Board of Directors of Company fails to recommend, withdraws, or
modifies in a manner materially adverse to Xxxxx Fargo, its approval or
recommendation of this Agreement, or the transactions contemplated
hereby, (B) after an agreement to engage in or the occurrence of an
Acquisition Event (as defined below) or after a third party shall have
made a proposal to Company or Company's shareholders to engage in an
Acquisition Event, the transactions contemplated hereby are not
approved at the meeting of Company shareholders contemplated by
paragraph 4(c)(i), or (C) the meeting of Company shareholders
contemplated by paragraph 4(c) is not held prior to March 15, 2001 and
Company has failed to comply with its obligations under paragraph
4(c)(i). "Acquisition Event" means any of the following: (i) a merger,
consolidation or similar transaction involving Company or Bank or any
successor to Company or Bank, (ii) a purchase, lease or other
acquisition in one or a series of related transactions of assets of
Company or any of the Company Subsidiaries representing 25% or more of
the consolidated assets of Company and the Company Subsidiaries or
(iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or any similar transaction) in one or a
series of related transactions of beneficial ownership of securities
representing 25% or more of the voting power of Company or the Bank in
each case with or by a person or entity other than Xxxxx Fargo or an
affiliate of Xxxxx Fargo.
(b) Termination of this Agreement under this paragraph 9 shall not
release, or be construed as so releasing, either party hereto from any liability
or damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g),
5(h) and 10 hereof shall survive such termination.
(c) If this Agreement is terminated pursuant to paragraphs 9(a)(iv) or
9(a)(v), and if terminated pursuant to paragraph 9(a)(iv) and prior thereto or
within 12 months after such termination:
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(i) Company, the Holding Company or the Bank or any successor
to Company or the Bank shall have entered into an agreement to engage
in an Acquisition Event (as defined above) or an Acquisition Event
shall have occurred; or
(ii) the Board of Directors of Company shall have authorized
or approved an Acquisition Event or shall have publicly announced an
intention to authorize or approve or shall have recommended that the
shareholders of Company approve or accept any Acquisition Event,
then Company shall promptly, but in no event later than five business days after
the first of such events shall have occurred, pay Xxxxx Fargo a fee equal to
$8,000,000.
(d) If this Agreement is terminated pursuant to this paragraph 9, Xxxxx
Fargo shall immediately pay to Company an amount equal to Company's actual
expenses in connection with obtaining the environmental assessments, asbestos
surveys, title commitments and boundary surveys required by paragraphs 4(m) and
4(n) hereof.
10. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Company and Company Subsidiaries shall be borne by
Company, and all such expenses incurred by Xxxxx Fargo shall be borne by Xxxxx
Fargo.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. THIRD PARTY BENEFICIARIES. Except as otherwise provided in
paragraphs 1(b) with respect to Company Stock Options and 5(m) hereof with
respect to indemnification of directors and officers, each party hereto intends
that nothing in this Agreement shall benefit or create any right or cause of
action in or on behalf of any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be (i) delivered
in person, or (ii) shall be mailed by first class registered or certified mail,
postage prepaid, or (iii) shall be sent by facsimile, or (iv) shall be sent by
reputable overnight courier service addressed as follows:
If to Xxxxx Fargo:
Xxxxx Fargo & Company
Norwest Center
MAC N 9305-173
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Secretary
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If to Company:
Xxxxxxx Xxxxx, Inc.
Xxxxx 000, Xxxxxxx Xxxxxx
000 Xxxxxx
Xxx Xxxxxx, XX 00000
Attention: Xxxxxx X. XxXxxxxxxxxx, CEO & President
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: H. Xxxxxx Xxxxx, Esq.
or to such other address with respect to a party as such party shall notify the
other in writing as above provided. Notice shall be effective upon receipt.
14. COMPLETE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, and the Merger Agreement and the Bank Merger Agreement contain
the complete agreement between the parties hereto with respect to the Merger and
other transactions contemplated hereby and supersede all prior agreements and
understandings between the parties hereto with respect thereto.
15. CAPTIONS. The captions contained in this Agreement and the Exhibits
and Schedules hereto are for convenience of reference only and do not form a
part of this Agreement or the Exhibits or Schedules.
16. WAIVER AND OTHER ACTION. Either party hereto may, by a signed
writing, give any consent, take any action pursuant to paragraph 9 hereof or
otherwise, or waive any inaccuracies in the representations and warranties by
the other party and compliance by the other party with any of the covenants and
conditions herein.
17. AMENDMENT. At any time before the Time of Filing, the parties
hereto, by action taken by their respective Boards of Directors or pursuant to
authority delegated by their respective Boards of Directors, may amend this
Agreement; provided, however, that no amendment after approval by the
shareholders of Company or the Bank, respectively, shall be made which changes
in a manner adverse to such shareholders the consideration to be provided to
said shareholders pursuant to this Agreement and the Merger Agreement or Bank
Merger Agreement, respectively.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware without regard to the conflict
of laws provisions thereof.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty contained in the Agreement, the Merger Agreement or the Bank Merger
shall survive the Merger or, except as set forth in paragraph 9(b) hereof, the
termination of this Agreement. Paragraph 10 of this Agreement shall survive the
Merger.
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20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXX FARGO & COMPANY XXXXXXX XXXXX, INC.
By: /S/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxxxxxxx
------------------------------- ----------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxx X. XxXxxxxxxxxx
-------------------------- -----------------------
Title: Executive Vice President Title: CEO
------------------------- ----------------------
XXXXXXX BANK
By: /s/ Xxxxxx X. XxXxxxxxxxxx
-----------------------------
Name: Xxxxxx X. XxXxxxxxxxxx
------------------------
Title: CEO
-----------------------
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