AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 9th day of April, 2000, by and between FIRST SECURITY CORPORATION
("Company"), a Delaware corporation, and XXXXX FARGO & COMPANY ("Xxxxx Fargo"),
a Delaware corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Xxxxx Fargo 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, which provides, among
other things, for the conversion of the shares of Common Stock of Company of the
par value of $1.25 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"),
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) MERGER. Subject to the terms and conditions contained herein, a
wholly-owned subsidiary of Xxxxx Fargo (the "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 (d) below) will be converted into the right to
receive, and exchanged for certificates representing 0.355 shares of Xxxxx Fargo
Common Stock (the "Exchange Ratio").
(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 Comprehensive Management Incentive Plan, as amended, and the 1995
Non-Employee Director Stock Option Plan (the "Company Stock Option Plans") which
is outstanding and unexercised immediately prior thereto (the "Company Stock
Options") shall be converted automatically into an option to purchase shares of
Xxxxx Fargo Common Stock 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 new option shall be the product of the number of shares of Company
Common Stock subject to the original option and the Exchange Ratio,
provided that any fractional shares of Xxxxx Fargo Common Stock resulting
from such multiplication shall be rounded down to the nearest share; and
(ii) The exercise price per share of Xxxxx Fargo Common Stock under
the new option shall be equal to the exercise price per share of Company
Common Stock under the original option divided by the 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 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 subparagraph (a), above, will be appropriately and proportionately
adjusted so that the number of such shares of Xxxxx Fargo Common Stock issuable
in the 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 as reported by Bloomberg
for each of the five (5) consecutive trading days ending on the day immediately
preceding the meeting of stockholders required by paragraph 4(c) of this
Agreement.
(e) MECHANICS OF CLOSING 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 Delaware 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
2
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. Salt Lake City, Utah, 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 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 may alternatively be structured so that (1) Company is merged with
and into 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 (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 stockholders in the Merger or under such
alternative structure (the "Merger Consideration"), (B) adversely affect the tax
treatment of Company's stockholders as a result of receiving the Merger
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. 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. Company represents and
warrants 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 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 Company and the Company Subsidiaries (as defined in
paragraph 2(b)) 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 registered as a financial holding company with the Federal
Reserve Board under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). Company has furnished Xxxxx Fargo true and correct copies of its
certificate 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
3
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 12 U.S.C. Section 55 (1982), 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 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. 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)
18,052 shares of Series A Preferred Stock, no par value ("Company Preferred
Stock"), of which, at the close of business on December 31, 1999, 8,596 shares
were outstanding, and (ii) 600,000,000 shares of Company Common Stock, of which,
as of the close of business on December 31, 1999, 195,971,330.59 shares were
outstanding and 1,675,000 shares were held in the treasury. As of the date
hereof, there are outstanding options (each, a "Company Stock Option") to
purchase an aggregate of 10,132,937.92 shares of Company Common Stock under the
Company Stock Option Plans. 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, except the option to purchase Company Common Stock granted
pursuant to the Stock Option Agreement dated the date hereof between Company and
Xxxxx Fargo (the "Stock Option Agreement"), were exercised is 210,00,000. 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
in Schedule 2(c) and except for the option granted pursuant to the Stock Option
Agreement, there are no outstanding subscriptions, contracts, conversion
privileges, options, warrants, calls, 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 December 31, 1999 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 in
Schedule 2(c) and except as permitted by this
4
Agreement, no dividends or other distributions have been declared, set aside,
made or paid to the stockholders 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 stockholders, 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 stockholders 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.
Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Company of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by Company 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 certificate 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 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 and the rules and regulations thereunder (the "Securities
Act"), the Securities Exchange Act of 1934 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 or the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 ("HSR Act"), and filings required to effect the Merger under Delaware
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 and
the Merger Agreement.
5
(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, stockholders' equity and cash flows for the
three years ended December 31, 1999, together with the notes thereto, certified
by Deloitte & Touche 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") (collectively, the "Company
Financial Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and present fairly 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 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")
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 "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 and 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. 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
restrictions to all the real and personal property reflected in Company's
consolidated balance sheet as of December 31, 1999 included in Company's Annual
Report on Form 10-K 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 of 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.
6
(h) TAXES. Each of Company and the Company Subsidiaries has filed all
material 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 to Company'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 a Material Adverse Effect
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, or adequately reserved for. 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.
(i) NO MATERIAL ADVERSE EFFECT. Since December 31, 1999, 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 Company. "Material Adverse
Effect" means, with respect to Xxxxx Fargo or Company, any effect that (i) is
material and adverse to the financial condition, results of operations, or
business of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries, taken as a whole, or
Company and the Company Subsidiaries, taken as a whole, respectively, excluding
the impact of (A) changes in banking and other laws of general applicability or
interpretations thereof by Governmental Authorities, (B) changes in generally
accepted accounting principles ("GAAP") or regulatory accounting requirements
applicable to banks and their holding companies generally, (C) changes in
general economic conditions affecting banks and their holding companies
generally, provided that, with respect to each of clause (A), (B) or (C), to the
extent that a change does not materially affect it in a way that materially
differs from the way it affects other banking organizations, (D) actions or
omissions of a party to this Agreement, taken with the prior written consent of
the other party to this Agreement, in contemplation of the transactions
contemplated hereby, and (E) any modifications or changes to valuation policies
and practices in connection with the Merger or restructuring charges, in each
case taken with the prior approval of Xxxxx Fargo or Company, as the case may
be, in connection with the Merger, in each case in accordance with GAAP; or (ii)
would materially impair the ability of Xxxxx Fargo or Company to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby. "Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
7
(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);
(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 or with whom, 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;
(vi) any real property lease and any other lease with annual rental
payments aggregating $20,000,000 or more;
(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.
Except for contracts identified on Schedule 2(j), copies of which have been made
available to Xxxxx Fargo, there is no contract described in subparagraph (iv) of
this paragraph 2(j) which would have or could reasonably be expected to have a
material adverse effect on a business activity of Xxxxx Fargo.
8
(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 is 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) has 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 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 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
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
9
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.
(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 to contribute on behalf of any current or
former officer, director or employee (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.
(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
10
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 (including all
amendments) 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 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 the accrued benefit
obligations determined as of the date of the most recent actuarial
valuation do not exceed the fair market value of the assets of the Plan as
of the date of the most recent actuarial valuation.
(vi) Except as disclosed in 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 for which the 30-day
notice requirement has not been waived, with respect to any Plan, other
than those events which may result from the transactions contemplated by
this Agreement and the Merger Agreement.
11
(viii) Except as disclosed in 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, (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 in 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 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
pursuant to the provisions of the Merger Agreement (the "Registration
Statement"), (ii) the proxy statement included in the Registration Statement to
be mailed to Company's stockholders in connection with the meeting to be called
to consider the 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 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
stockholders referred to in paragraph 4(c), 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 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 X. X. Xxxxxx Securities 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
12
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 any director, officer or 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
13
environmental assessments, reports, studies and other related information in its
possession with respect to each bank facility and each non-residential OREO
property.
(w) ANTI-TAKEOVER PROVISIONS NOT APPLICABLE. The provisions of Section 203
of the Delaware General Corporation Law as they relate to Company do not and
will not apply to this Agreement, the Merger Agreement, and the Stock Option
Agreement or to any of the transactions contemplated hereby or thereby.
(x) ZIONS BANCORPORATION MERGER AGREEMENT. The Agreement and Plan of Merger
dated as of June 6, 1999 by and between Company and Zions Bancorporation has
been terminated by Company in accordance with its terms.
(y) RIGHTS PLAN. Company has taken all actions necessary to provide that
Xxxxx Fargo is not, and will not become, an Acquiring Person, as defined in the
Shareholder Rights Agreement, dated August 28, 1989 and amended as of September
26, 1989, May 18, 1993 and October 27, 1998, between Company and First Chicago
Trust Company of New York (the "Rights Plan"), as a result of the execution of
this Agreement or consummation of the transactions contemplated by this
Agreement. Company has provided copies of such actions to Xxxxx Fargo.
3. REPRESENTATIONS AND WARRANTIES OF XXXXX FARGO. Xxxxx Fargo represents
and warrants to Company 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 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 in Schedule 3(b), are on the
date of this Agreement owned directly or indirectly by Xxxxx Fargo. No equity
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
14
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.
Section 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
15
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 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 or the HSR Act, and filings required to effect the
Merger under Delaware 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 (collectively, the "Xxxxx Fargo
Financial Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and present fairly 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,
16
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 sheet as of December 31, 1999 included in Xxxxx Fargo's
Annual Report on Form 10-K 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.
17
(i) NO MATERIAL ADVERSE EFFECT. Since December 31, 1999, 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 Xxxxx Fargo.
(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);
(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
18
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 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.
(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(p)(iv), 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.
19
(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
stockholders referred to in paragraph 4(c), 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. Except for Credit Suisse First Boston, 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.
(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
20
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 stockholders, and the Merger Agreement
will be a valid and binding obligation of Merger Co., enforceable against Merger
Co. 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 consent requirement shall be deemed to be waived
as to any loan approval request to which Xxxxx Fargo has made no response by the
end of the third business day following the day of receipt of the request by a
representative designated by Xxxxx Fargo in writing), (A) make any loan or
extension of credit aggregating an amount equal to or in excess of $1,000,000 to
a person or entity that is not a borrower as of the date hereof, or (B) 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 who has
aggregate extensions of
21
credit in excess of $1,000,000 if the amount of the resulting loan, when
aggregated with all other loans or extensions of credit to such person, would be
in excess of $2,500,000; 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 that Company may issue
shares of Company Common Stock upon the exercise of the option granted under the
Stock Option Agreement or upon the exercise of outstanding stock options
described in Schedule 4(b); 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
$100,000,000 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 Preferred Stock and
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 $0.56 PROVIDED, HOWEVER, that the
22
stockholders of Company shall be entitled to a dividend 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 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) STOCKHOLDER MEETING. 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
stockholders 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 stockholders in
compliance with the Delaware General Corporation Law and other 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 the Merger Agreement, and
(iii) use its best efforts to solicit from its stockholders 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 Deloitte & Touche 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
23
shall be maintained and such information shall not be used in competition with
Xxxxx Fargo (except to the extent 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 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 terminate or amend, if requested by Xxxxx Fargo,
all qualified retirement and welfare benefit plans and all non-qualified benefit
plans and compensation arrangements as of the Effective Date of the Merger, 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) POOLING OF INTERESTS. Neither Company nor any Company Subsidiary shall
take any action which with respect to Company would disqualify the Merger as a
"pooling of interests" for accounting purposes.
(l) AFFILIATE LETTERS. Company shall use its best efforts to obtain and
deliver at least 32 days 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 stockholder 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.
24
(m) COMFORT CERTIFICATE. Company shall furnish Xxxxx Fargo with a
certificate 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 Closing Date, in form and substance satisfactory to
Xxxxx Fargo, to the effect that:
(i) the interim quarterly consolidated 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 consolidated financial
statements of Company;
(ii) the amounts reported in the interim quarterly consolidated
financial statements of Company agree with the general ledger of Company;
(iii) the annual and quarterly consolidated 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 and to a date 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
25
analyses prepared by Company included in the annual and quarterly
consolidated financial statements, except as disclosed in such letters.
(n) REDEMPTION OF PREFERRED STOCK. Immediately prior to the Effective Time
of the Merger, Company shall redeem outstanding shares of Company Preferred
Stock, in accordance with the terms of Company's amended certificate of
incorporation, using Company's own funds.
(o) REDEMPTION OF RIGHTS. Immediately prior to the Effective Date of the
Merger, Company shall take such actions as may be necessary to redeem all rights
outstanding under the Rights Plan, in accordance with the terms of the Rights
Plan, at a cost of no more than $0.01 per right.
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.
(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 stockholders 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 stockholders of Company pursuant to the 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 stockholders, at the time of the Company stockholders' meeting referred
to in paragraph 4(c) hereof and at the Effective Time of the Merger the
prospectus included as
26
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.
(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 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 stockholders of Company pursuant to this Agreement and the
Merger Agreement will, upon such issuance and delivery to said stockholders
pursuant to the Merger Agreement, be duly authorized, validly issued, fully paid
and nonassessable. The shares of Xxxxx Fargo Common Stock to be delivered to the
stockholders of Company pursuant to the 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, 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
27
documents and any copies thereof 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 under the Delaware General
Corporation Law.
(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) POOLING OF INTERESTS. Neither Xxxxx Fargo nor any Xxxxx Fargo
Subsidiary shall take any action which with respect to Xxxxx Fargo would
disqualify the Merger as a "pooling of interests" for accounting purposes. Xxxxx
Fargo shall use its best efforts to obtain and deliver to Company, prior to the
Effective Date of the Merger, signed representations from the directors and
executive officers of Xxxxx Fargo to the effect that, except for DE MINIMUS
dispositions which will not disqualify the Merger as a pooling of interests,
they will not dispose of shares of Xxxxx Fargo or Company during the period
commencing 30 days prior to the Effective Date and ending upon publication by
Xxxxx Fargo of financial results including at least 30 days of combined
operations of Company and Xxxxx Fargo.
(n) INDEMNIFICATION.
(i) Following the Effective Date of the Merger, Xxxxx Fargo shall
indemnify, defend and hold harmless the present and former directors and
officers of Company and the Company Subsidiaries (each, an "Indemnified
Party") against all costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") as incurred, in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of actions or omissions occurring at or prior
to the Effective Time of the Merger (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that
Company and the Company Subsidiaries are permitted to indemnify (and
advance expenses to) their respective directors and officers under the laws
of their respective jurisdictions of incorporation, their respective
charters and their respective bylaws;
28
(ii) any Indemnified Party wishing to claim indemnification under
paragraph 5(n)(i), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Xxxxx Fargo thereof;
provided that the failure to so notify shall not affect the obligations of
Xxxxx Fargo under paragraph 5(n)(i) unless and to the extent that Xxxxx
Fargo is actually and materially prejudiced as result of such failure. 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 reasonable best efforts to provide
directors' and officers' liability insurance that serves to reimburse the
present and former officers and directors of Company and the Company
Subsidiaries (determined as of the Effective Time of the Merger) with
respect to claims against such directors and officers arising from facts or
events occurring at or prior to the Effective Time of the Merger
(including, without limitation, the transactions contemplated by this
Agreement) which insurance shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that
coverage currently provided by Company;
(iv) if Xxxxx Fargo or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the
continuing or surviving entity of such consolidation or merger or shall
transfer all or substantially all of its properties and assets to any other
entity, then and in each such case, Xxxxx Fargo shall cause proper
provision to be made so that the successors and assigns of Xxxxx Fargo
shall assume the obligations set forth in this paragraph 5(n); and
(v) the provisions of this paragraph 5(n) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
29
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; PROVIDED, HOWEVER, that for
purposes of this paragraph, such representations and warranties (other than the
representations and warranties contained in paragraph 3(c), which shall be true
and correct in all material respects) shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be so
true and correct, either individually or in the aggregate, and without giving
effect to any qualification as to materiality set forth in such representations
and warranties, will have a Material Adverse Effect on Company.
(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) STOCKHOLDER APPROVALS. This Agreement and the Merger Agreement shall
have been approved by the affirmative vote of the holders of the percentage of
the outstanding shares of Company required for approval of a plan of merger in
accordance with the provisions of Company's Certificate of Incorporation and the
Delaware General Corporation Law.
(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 and the 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.
30
(g) SHARES AUTHORIZED FOR LISTING. The shares of Xxxxx Fargo Common Stock
to be delivered to the stockholders of Company pursuant to this Agreement and
the Merger Agreement shall have been authorized for listing on the New York
Stock Exchange and the Chicago Stock Exchange.
(h) TAX OPINION. Company shall have received an opinion, dated the Closing
Date, of Wachtell, Lipton, Xxxxx & Xxxx, 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 with respect to cash received in lieu of fractional shares;
(iii) the basis of the Xxxxx Fargo Common Stock received by the stockholders of
Company (including fractional shares deemed received and redeemed) 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
stockholders of Company (including fractional shares deemed received and
redeemed) will include the holding period of the Company Common Stock exchanged
therefor, provided such shares of Company Common Stock were held as a capital
asset as of the Effective Time of the Merger.
(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) NO MATERIAL ADVERSE CHANGE. Since December 31, 1999, 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 Xxxxx Fargo.
7. CONDITIONS PRECEDENT TO OBLIGATION OF XXXXX FARGO. The obligation of
Xxxxx Fargo to effect the 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;
PROVIDED, HOWEVER, that for purposes of this paragraph, such
31
representations and warranties (other than the representations and warranties
contained in paragraph 2(c), which shall be true and correct in all material
respects) shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, either
individually or in the aggregate, and without giving effect to any qualification
as to materiality set forth in such representations and warranties, will have a
Material Adverse Effect on Xxxxx Fargo.
(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) STOCKHOLDER APPROVALS. This Agreement and the Merger Agreement shall
have been approved by the affirmative vote of the holders of the percentage of
the outstanding shares of Company required for approval of a plan of merger in
accordance with the provisions of Company's Certificate of Incorporation and the
Delaware General Corporation Law.
(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 and the 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 any regulatory approval 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 recently
been reviewed 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 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.
32
(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) POOLING OF INTERESTS OPINIONS. The Merger shall qualify as a "pooling
of interests" for accounting purposes and Xxxxx Fargo shall have received from
KPMG and Deloitte & Touche LLP opinions to that effect.
(i) 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 210,00,000.
(j) 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 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.
(k) [Intentionally left blank]
(l) [Intentionally left blank]
(m) [Intentionally left blank]
(n) NO MATERIAL ADVERSE CHANGE. Since December 31, 1999 except as set forth
in the Company 10-K, 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 Company.
(p) RESIGNATIONS. Company shall have delivered the resignations of each
member of its Board of Directors as of the Effective Time, and such resignations
shall not have been withdrawn.
(q) REDEMPTION OF PREFERRED STOCK. Company shall have taken all actions
necessary to redeem the Company Preferred Stock, effective prior to the
Effective Time of the Merger.
(o) COMPANY RIGHTS PLAN. At the Effective Date of the Merger, there shall
be no rights issuable or outstanding under the Rights Plan and all rights
previously outstanding
33
shall have been redeemed in accordance with the terms of the Rights Plan. No
Person shall have become an Acquiring Person and the Separation Time shall not
have occurred (as each of such terms is defined in the Rights Plan).
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 after
taking into account paragraph 8(d) hereof, 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, 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
(b) EMPLOYEE RETIREMENT BENEFIT PLANS. As of the Benefits Conversion Date,
each Company Employee shall be eligible to participate in the Xxxxx Fargo 401(k)
Plan (the "401(k) Plan") and the Xxxxx Fargo Cash Balance Plan (the "Cash
Balance Plan"), subject to any eligibility requirements applicable to such plans
after taking into account paragraph 8(d) hereof. As of the Benefits Conversion
Date, each Company Employee shall be eligible for access to Xxxxx Fargo's
retiree medical benefit program, subject to any eligibility requirements
applicable to such benefit after taking into account paragraph 8(d) hereof.
(c) CONTINUITY OF COVERAGE. 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 or interruption in participation and without
duplication of costs to Xxxxx
34
Fargo. Prior to the Benefits Conversion Date, the Company Plans as in effect of
the date of this Agreement shall remain in effect with respect to the Company
Employees.
(d) SERVICE CREDIT; PRE-EXISTING CONDITIONS. From and after the Effective
Date of the Merger, Xxxxx Fargo shall, or shall cause the surviving corporation
to, recognize the prior service with Company or the Company Subsidiaries (and
any of their predecessor entities, to the extent such service was recognized by
the Company or the Company Subsidiaries under any comparable Company Plan) of
each Company Employee in connection with the Xxxxx Fargo Plans in which such
Company Employee is eligible to participate following the Benefits Conversion
Date, including without limitation the 401(k) Plan and the Cash Balance Plan,
for purposes of eligibility, vesting and levels of benefits, provided, that such
crediting of service shall in no event result in the duplication of benefits
with respect to the same period of service. From and after the Benefits
Conversion Date, Xxxxx Fargo shall, or shall cause the surviving corporation to,
(i) cause any pre-existing conditions or limitations and eligibility waiting
periods under any group health plans of Xxxxx Fargo to be waived with respect to
the Company Employees and their eligible dependents (to the extent permitted to
do so by the applicable insurance carrier) and (ii) give each Company Employee
credit for the plan year in which the Benefits Conversion Date occurs towards
applicable deductibles and annual out-of-pocket limits for expenses incurred
prior to the Benefits Conversion Date.
(e) COMPANY SEVERANCE PLAN. Notwithstanding anything to the contrary
contained in this Agreement, during the 18-month period following the Effective
Date of the Merger, Xxxxx Fargo shall, or shall cause the surviving corporation
to, honor and continue the Company Severance Pay Plan (as amended and restated
April 3, 2000, and further amended April 9, 2000) as in effect immediately prior
to the Effective Date of the Merger; provided, however, that no Company Employee
who is a participant in any Company severance or salary continuation plan or who
has an employment agreement with the Company or any Company Subsidiary in each
case that would provide such Company Employee with severance or salary
continuation benefits after the Effective Date of the Merger shall be eligible
to participate in the Xxxxx Fargo Salary Continuation Plan, until such time as
such Company Employee is no longer eligible or entitled to receive severance or
salary continuation benefits under such Company plan or agreement.
9. TERMINATION OF AGREEMENT.
(a) TERMINATION. This Agreement may be terminated, and the Merger may be
abandoned:
(i) Mutual Consent. At any time prior to the Effective Time of the
Merger, by mutual consent of Company and Xxxxx Fargo, if the board of
directors of each so determines by vote of a majority of the members of its
entire board.
(ii) Breach. At any time prior to the Effective Time of the Merger, by
Company or Xxxxx Fargo, if its board of directors of so determines by vote
of a
35
majority of the members of its entire board, in the event of either: (A) a
breach by the other party of any representation or warranty contained
therein, which breach cannot be or has not been cured within 30 calendar
days after the giving of written notice to the breaching party of such
breach, or (B) a breach by the other party of any of the covenants or
agreements contained herein, which breach cannot be or has not been cured
within 30 calendar days after the giving of written notice to the breaching
party of such breach; provided that such breach under clause (A) or (B)
would entitle the non-breaching party not to consummate the Merger under
paragraphs 6 or 7 hereof.
(iii) Delay. At any time prior to the Effective Time of the Merger, by
Company or Xxxxx Fargo, if its board of directors so determines by vote of
a majority of the members of its entire board, in the event that the Merger
is not consummated by December 31, 2000, except to the extent that the
failure of the Merger then to be consummated arises out of or results from
the knowing action or inaction of the party seeking to terminate pursuant
to this paragraph 9(a)(iii), which action or inaction is in violation of
its obligations under this Agreement.
(iv) No Approval. By Company or Xxxxx Fargo, if its board of directors
of so determines by vote of a majority of the members of its entire board,
in the event that the approval of any Governmental Authority required for
consummation of the transactions contemplated by this Agreement shall have
been denied by final nonappealable action of such Governmental Authority.
(b) EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this paragraph 9,
no party to this Agreement shall have any liability or further obligation to the
other party hereto except as set forth below and except that termination will
not relieve a breaching party from liability for any breach of this Agreement
giving rise to such termination and except that paragraphs 4(g), 5(h) and 10
shall survive any termination of this Agreement.
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 paragraph
5(n) hereof with respect to indemnification of directors and officers, each
party hereto intends that this Agreement shall not benefit or create any right
or cause of action in or on behalf of any person other than the parties hereto.
36
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
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Secretary
Facsimile: (000) 000-0000
If to Company:
First Security Corporation
00 Xxxxx Xxxx Xxxxxx, Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Chairman & CEO
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
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 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.
37
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 stockholders of
Company shall be made which changes in a manner adverse to such stockholders the
consideration to be provided to said stockholders pursuant to this Agreement and
the Merger Agreement.
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 or the Merger Agreement shall survive the
Merger or, except as set forth in paragraph 9(b), the termination of this
Agreement. Paragraph 10 shall survive the Merger.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
XXXXX FARGO & COMPANY FIRST SECURITY CORPORATION
By: By:
------------------------------ -----------------------------------
Name: Name:
------------------------- ------------------------------
Title: Title:
------------------------ -----------------------------
38
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BETWEEN
FIRST SECURITY CORPORATION
a Delaware corporation
(the surviving corporation)
AND
[MERGER CO.]
a Delaware corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of __________, 2000, between
FIRST SECURITY CORPORATION, a Delaware corporation (hereinafter sometimes called
"Company" and sometimes called the "surviving corporation") and [MERGER CO.], a
Delaware corporation ("Merger Co.")(said corporations being hereinafter
sometimes referred to as the "constituent corporations"),
WHEREAS, Merger Co., a wholly-owned subsidiary of Xxxxx Fargo & Company,
was incorporated by a Certificate of Incorporation filed in the office of the
Secretary of State of the State of Delaware on _______, 20__, and said
corporation is now a corporation subject to and governed by the provisions of
the Delaware General Corporation Law. Merger Co. has authorized capital stock of
________ shares of common stock having a par value of $_____ per share ("Merger
Co. Common Stock"), of which _________ shares were outstanding as of the date
hereof; and
WHEREAS, Company was incorporated by a Certificate of Incorporation filed
in the office of the Secretary of State of the State of Delaware on ________,
19__ and said corporation is now a corporation subject to and governed by the
provisions of the Delaware General Corporation Law. Company has authorized
capital stock of ________ shares of Common Stock, par value $_____ per share
("Company Common Stock") of which _______ shares were outstanding and no shares
were held in the treasury as of ___________ , 19__; and
WHEREAS, Xxxxx Fargo & Company and Company are parties to an Agreement and
Plan of Reorganization dated as of __________ , 2000 (the "Reorganization
Agreement"), setting forth certain representations, warranties and covenants in
connection with the merger provided for herein; and
WHEREAS, the directors, or a majority of them, of each of the constituent
corporations respectively deem it advisable for the welfare and advantage of
said corporations and for the best interests of the respective stockholders of
said corporations that said corporations merge and that Merger Co. be merged
with and into Company, with Company continuing as the surviving corporation, on
the terms and
conditions hereinafter set forth in accordance with the provisions of the
Delaware General Corporation Law, which statute permits such merger; and
WHEREAS, it is the intent of the parties to effect a merger which qualifies
as a reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended;
NOW, THEREFORE, the parties hereto, subject to the approval of the
stockholders of Merger Co., in consideration of the premises and of the mutual
covenants and agreements contained herein and of the benefits to accrue to the
parties hereto, have agreed and do hereby agree that Merger Co. shall be merged
with and into Company pursuant to the laws of the State of Delaware, and do
hereby agree upon, prescribe and set forth the terms and conditions of the
merger of Merger Co. with and into Company, the mode of carrying said merger
into effect, the manner and basis of exchanging the shares of Company Common
Stock for shares of common stock of Xxxxx Fargo of the par value of $1-2/3 per
share ("Xxxxx Fargo Common Stock"), and such other provisions with respect to
said merger as are deemed necessary or desirable, as follows:
FIRST: At the time of merger Merger Co. shall be merged with and into
Company, one of the constituent corporations, which shall be the surviving
corporation, and the separate existence of Merger Co. shall cease and the name
of the surviving corporation shall be ________________.
SECOND: The Certificate of Incorporation of Company at the time of merger
shall be amended as set forth below and, as so amended, shall be the Articles of
Incorporation of the surviving corporation until further amended according to
law:
[AMEND TO CHANGE NAME, NUMBER OF DIRECTORS, ETC.]
THIRD: The By-Laws of Company at the time of merger shall be and remain the
By-Laws of the surviving corporation until amended according to the provisions
of the Articles of Incorporation of the surviving corporation or of said
By-Laws.
FOURTH: The directors of Merger Co. at the time of merger shall be and
remain the directors of the surviving corporation and shall hold office from the
time of merger until their respective successors are elected and qualify.
FIFTH: The officers of Merger Co. at the time of merger shall be and remain
the officers of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected or appointed and qualify.
SIXTH: The manner and basis of converting the shares of Company Common
Stock into cash or shares of Xxxxx Fargo Common Stock shall be as follows:
2
1. Each of the shares of Company Common Stock outstanding immediately prior
to the time of merger shall at the time of merger, by virtue of the merger
and without any action on the part of the holder or holders thereof, be
converted into the right to receive ________ shares of Xxxxx Fargo Common
Stock.
2. As soon as practicable after the merger becomes effective, each holder
of a certificate which, prior to the effective time of the merger,
represented shares of Company Common Stock outstanding immediately prior to
the time of merger shall be entitled, upon surrender of such certificate
for cancellation to the surviving corporation or to Norwest Bank Minnesota,
National Association, as the designated agent of the surviving corporation
(the "Agent"), to receive a new certificate representing the number of
whole shares of Xxxxx Fargo Common Stock to which such holder shall be
entitled on the basis set forth in paragraph 1 above. Until so surrendered
each certificate which, immediately prior to the time of merger,
represented shares of Company Common Stock shall not be transferable on the
books of the surviving corporation but shall be deemed to evidence only the
right to receive (except for the payment of dividends as provided below)
the number of whole shares of Xxxxx Fargo Common Stock issuable on the
basis above set forth; provided, however, until the holder of such
certificate for Company Common Stock shall have surrendered the same as
above set forth, no dividend payable to holders of record of Xxxxx Fargo
Common Stock as of any date subsequent to the effective date of merger
shall be paid to such holder with respect to the shares of Xxxxx Fargo
Common Stock, if any, issuable in connection with the merger, but, upon
surrender and exchange thereof as herein provided, there shall be paid by
the surviving corporation or the Agent to the record holder of such
certificate representing Xxxxx Fargo Common Stock issued in exchange
therefor an amount with respect to such shares of Xxxxx Fargo Common Stock
equal to all dividends that shall have been paid or become payable to
holders of record of Xxxxx Fargo Common Stock between the effective date of
merger and the date of such exchange.
3. If between the date of the Reorganization Agreement and the time of
merger, shares of Xxxxx Fargo Common Stock shall be changed into a
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, then the number of shares of Xxxxx
Fargo Common Stock, if any, into which a share of Company Common Stock
shall be converted on the basis above set forth, will be appropriately and
proportionately adjusted so that the number of such shares of Xxxxx Fargo
Common Stock into which a share of Company Common Stock shall be converted
will equal the number of shares of Xxxxx Fargo Common Stock which the
holders of shares of Company Common Stock
3
would have received pursuant to such reclassification, recapitalization,
split-up, combination, exchange of shares or readjustment, or stock
dividend had the record date therefor been immediately following the time
of merger.
4. 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 of a fractional interest 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 as reported by Bloomberg for each of the five (5)
trading days immediately preceding the meeting of stockholders held to vote
on the merger.
5. Each share of Merger Co. Common Stock issued and outstanding at the time
of merger shall be converted into and exchanged for shares of the surviving
corporation after the time of merger.
SEVENTH: The merger provided for by this Agreement shall be effective as
follows:
1. The effective date of merger shall be the date on which Articles of
Merger (as described in subparagraph 1(b) of this Article Seventh) shall be
delivered to and filed by the Secretary of State of the State of Delaware;
provided, however, that all of the following actions shall have been taken
in the following order:
a. This Agreement shall be approved and adopted on behalf of Merger
Co. and Company in accordance with the Delaware General Corporation
Law; and
b. A certificate of merger (which may have this Agreement attached
thereto) with respect to the merger, setting forth the information
required by the Delaware General Corporation Law, shall be executed by
the President or a Vice President of Merger Co. and by the Secretary
or an Assistant Secretary of Merger Co., and by the President or a
Vice President of Company and by the Secretary or an Assistant
Secretary of Company, and shall be filed in the office of the
Secretary of State of the State of Delaware in accordance with the
Delaware General Corporation Law.
2. The merger shall become effective as of 11:59 p.m. (the "time of
merger") on the effective date of merger.
4
EIGHTH: At the time of merger:
1. The separate existence of Merger Co. shall cease, and the corporate
existence and identity of Company shall continue as the surviving
corporation.
2. The merger shall have the other effects prescribed by Section 259 of the
Delaware General Corporation Law.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. The registered office of the surviving corporation in the State of
Delaware shall be _______________, and the name of the registered agent of
Company at such address is _________________.
2. If at any time the surviving corporation shall consider or be advised
that any further assignment or assurance in law or other action is
necessary or desirable to vest, perfect or confirm in the surviving
corporation the title to any property or rights of Merger Co. acquired or
to be acquired as a result of the merger provided for herein, the proper
officers and directors of Company and Merger Co. may execute and deliver
such deeds, assignments and assurances in law and take such other action as
may be necessary or proper to vest, perfect or confirm title to such
property or right in the surviving corporation and otherwise carry out the
purposes of this Agreement.
3. For the convenience of the parties and to facilitate the filing of this
Agreement, any number of counterparts hereof may be executed and each such
counterpart shall be deemed to be an original instrument.
4. This Agreement and the legal relations among the parties hereto shall be
governed by and construed in accordance with the laws of the State of
Delaware.
5. This Agreement cannot be altered or amended except pursuant to an
instrument in writing signed by both of the parties hereto.
6. At any time prior to the filing of Articles of Merger with the Secretary
of State of the State of Delaware, subject to the provisions of the
Reorganization Agreement this Agreement may be terminated upon approval by
the Boards of Directors of either of the constituent corporations
notwithstanding the approval of the stockholders of either constituent
corporation.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement and Plan
of Merger to be signed in their respective corporate names by the undersigned
officers and their respective corporate seals to be affixed hereto, pursuant to
authority
5
duly given by their respective Boards of Directors, all as of the day and year
first above written.
FIRST SECURITY CORPORATION
By:
----------------------------------
Its:
---------------------------------
6
[MERGER CO.]
By:
--------------------------------
Its:
-------------------------------
7
EXHIBIT B
Xxxxx Fargo & Company
Norwest Center
Sixth and Marquette
Xxxxxxxxxxx, XX 00000
Attention: Corporate Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate," as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act") of FIRST
SECURITY CORPORATION, a Delaware corporation ("Company").
Pursuant to an Agreement and Plan of Reorganization, dated as of April 9,
2000, (the "Reorganization Agreement"), between Company and Xxxxx Fargo &
Company, a Delaware corporation ("Xxxxx Fargo") it is contemplated that a
wholly-owned subsidiary of Xxxxx Fargo will merge with and into Company (the
"Merger") and as a result, I will receive in exchange for each share of Common
Stock, par value $1.25 per share, of Company ("Company Common Stock") owned by
me immediately prior to the Effective Time of the Merger (as defined in the
Reorganization Agreement), a number of shares of Common Stock, par value $1 2/3
per share, of Xxxxx Fargo ("Xxxxx Fargo Common Stock"), as more specifically set
forth in the Reorganization Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Company Common Stock or Xxxxx Fargo Common Stock held by me during the
30 days prior to the Effective Time of the Merger.
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Xxxxx Fargo Common Stock issued to me pursuant to the Merger (the
"Stock") except (a) in compliance with the applicable provisions of Rule 145,
(b) in a transaction that is otherwise exempt from the registration requirements
of the Securities Act, or (c) in an offering registered under the Securities
Act.
I will not sell, transfer or otherwise dispose of any Xxxxx Fargo Common
Stock or in any way reduce my risk relative to any shares of any Xxxxx Fargo
Common Stock issued to me pursuant to the Merger until such time as financial
results covering at least 30 days of post-Merger combined operations of Company
and Xxxxx Fargo have been published.
I consent to the endorsement of the Stock issued to me pursuant to the
Merger with a restrictive legend which will read substantially as follows:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of 1933,
as amended (the "Act"), applies, and may be sold or otherwise transferred
only in compliance with the limitations of such Rule 145, or upon receipt
by Xxxxx Fargo & Company of an opinion of counsel reasonably satisfactory
to it that some other exemption from registration under the Act is
available, or pursuant to a registration statement under the Act."
Xxxxx Fargo's transfer agent shall be given an appropriate stop transfer
order and shall not be required to register any attempted transfer of the shares
of the Stock, unless the transfer has been effected in compliance with the terms
of this letter agreement.
It is understood and agreed that this letter agreement shall terminate and
be of no further force and effect and the restrictive legend set forth above
shall be removed by delivery of substitute certificates without such legend, and
the related stop transfer restrictions shall be lifted forthwith, if (a) (i) any
such shares of Stock shall have been registered under the Securities Act for
sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Stock are sold
in accordance with the provisions of paragraphs (c), (e), (f) and (g) of Rule
144 promulgated under the Securities Act, or (iii) I am not at the time of such
disposition an affiliate of Xxxxx Fargo and have been the beneficial owner of
the Stock for at least one year (or such other period as may be prescribed
thereunder) and Xxxxx Fargo has filed with the Commission all of the reports it
is required to file under the Securities Exchange Act of 1934, as amended,
during the preceding twelve months, or (iv) I am not and have not been for at
least three months an affiliate of Xxxxx Fargo and have been the beneficial
owner of the Stock for at least two years (or such other period as may be
prescribed by the Securities Act, and the rules and regulations promulgated
thereunder), or (v) Xxxxx Fargo shall have received an opinion of counsel
acceptable to Xxxxx Fargo to the effect that the stock transfer restrictions and
the legend are not required, and (b) financial results covering at least 30 days
of post-Merger combined operations have been published.
I have carefully read this letter agreement and the Reorganization
Agreement and have discussed their requirements and other applicable limitations
upon my ability to offer to sell, transfer or otherwise dispose of shares of
Company Common Stock, Xxxxx Fargo Common Stock or the Stock, to the extent I
felt necessary, with my counsel or counsel for Company.
Sincerely,
-------------------------
