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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 23, 1996, by and
between Xxxxx Fargo & Company, a Delaware corporation ("Parent"), and First
Interstate Bancorp, a Delaware corporation ("Subject Company").
WHEREAS, the Boards of Directors of Parent and Subject Company have
determined that it is in the best interests of their respective companies
and their stockholders to consummate the strategic business combination
transaction provided for herein in which Subject Company will, subject to
the terms and conditions set forth herein, merge (the "Merger") with and
into Parent, so that Parent is the surviving corporation in the Merger; and
WHEREAS, Subject Company, First Bank System, Inc., a Delaware
corporation ("North"), and Eleven Acquisition Corp. ("Merger Sub"), a
Delaware corporation, were parties to that certain Agreement and Plan of
Merger (the "Terminated Merger Agreement"), dated as of November 5, 1995,
that Subject Company has terminated in accordance with the terms thereof;
and
WHEREAS, Parent, Subject Company, North and Merger Sub have entered
into that certain Settlement and Release Agreement, dated as of January 23,
1996 (the "Settlement Agreement"), pursuant to which North has agreed, in
consideration of certain payments, to termination of the Fee Letter, dated
as of November 5, 1995, between Subject Company and North (the "North Fee
Letter") and the Stock Option Agreement, dated November 5, 1995 (the
"Subject Company Stock Option Agreement"), between Subject Company as
issuer and North as grantee; and
WHEREAS, as a condition to the execution of this Agreement, Parent
and Subject Company are entering into the Parent Fee Letter (as defined
below) and the Subject Company Fee Letter (as defined below); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending
to be legally bound hereby, the parties agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as defined in Section 1.2 hereof), Subject
Company shall merge with and into Parent. Parent shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") in
the Merger, and shall continue its corporate existence under the laws of
the State of Delaware. The name of the Surviving Corporation shall be
Xxxxx Fargo & Company. Upon consummation of the Merger, the separate
corporate existence of Subject Company shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth
in the certificate of merger (the "Certificate of Merger") which shall be
filed with the Secretary of State of the State of Delaware (the "Delaware
Secretary") on the Closing Date (as defined in Section 9.1 hereof). The
term "Effective Time" shall be the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in the DGCL.
1.4 Conversion of Subject Company Common Stock, Subject Company
Preferred Stock. At the Effective Time, subject to Section 2.2(e) hereof,
by virtue of the Merger and without any action on the part of Parent,
Subject Company or the holder of any of the following securities:
(a) Each share of the common stock, par value $2.00 per
share, of Subject Company (the "Subject Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other than shares of
Subject Company Common Stock held (x) in Subject Company's treasury or (y)
directly or indirectly by Parent or Subject Company or any of their
respective Subsidiaries (as defined below) (except for Trust Account Shares
and DPC shares, as such terms are defined below)), together with the rights
(the "Subject Company Rights") attached thereto issued pursuant to the
Rights Agreement, dated as of November 21, 1988, as amended, between
Subject Company and First Interstate Bank, Ltd., as Rights Agent (the
"Subject Company Rights Agreement"), shall, subject to Section 1.4(d)
hereof, be converted into the right to receive two-thirds of a share (the
"Common Exchange Ratio") of the common stock, par value $5.00 per share, of
Parent ("Parent Common Stock").
(b) Each share of 9.875% preferred stock, Series F, of
Subject Company (the "Subject Company 9.875% Preferred") issued and
outstanding immediately prior to the Effective Time shall be converted into
the right to receive one share of 9.875% preferred
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stock of Parent (the "Parent 9.875% Preferred"). The terms of the Parent
9.875% Preferred shall be substantially the same as the terms of the
Subject Company 9.875% Preferred.
(c) Each share of 9.0% preferred stock, Series G, of Subject
Company (the "Subject Company 9.0% Preferred," and together with the
Subject Company 9.875% Preferred, the "Subject Company Preferred Stock")
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of 9.0% preferred stock of
Parent (the "Parent 9.0% Preferred," and together with the Parent 9.875%
Preferred, the "Parent New Preferred"). The terms of the Parent 9.0%
Preferred shall be substantially the same as the terms of the Subject
Company 9.0% Preferred. For purposes of this Agreement (i) the Subject Com-
pany Common Stock and Subject Company Preferred Stock are referred to
herein as the "Subject Company Capital Stock," and (ii) the Parent Common
Stock and Parent Preferred Stock (as defined below) are collectively
referred to as the "Parent Capital Stock."
(d) All of the shares of Subject Company Common Stock
converted into Parent Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall cease
to exist as of the Effective Time, and each certificate (each a "Common
Certificate") previously representing any such shares of Subject Company
Common Stock shall thereafter represent the right to receive (i) a
certificate representing the number of whole shares of Parent Common Stock
and (ii) the cash in lieu of fractional shares into which the shares of
Subject Company Common Stock represented by such Common Certificate have
been converted pursuant to this Section 1.4 and Section 2.2(e) hereof.
Common Certificates previously representing shares of Subject Company
Common Stock shall be exchanged for certificates representing whole shares
of Parent Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Common Certificates in
accordance with Section 2.2 hereof, without any interest thereon. If prior
to the Effective Time the outstanding shares of Parent Common Stock shall
have been increased, decreased, changed into or exchanged for a different
number or kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar change in Parent's capitalization, then an
appropriate and proportionate adjustment shall be made to the Common
Exchange Ratio.
(e) All of the shares of Subject Company Preferred Stock
converted into Parent New Preferred pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall cease
to exist as of the Effective Time, and each certificate (each a "Preferred
Certificate," and collectively with the Common Certificates, the "Certifi-
xxxxx") previously representing any such shares of Subject Company
Preferred Stock shall thereafter represent the right to receive a
certificate representing the number of shares of corresponding Parent New
Preferred into which the shares of Subject Company Preferred Stock
represented by such Preferred Certificate have been converted pursuant to
this Section 1.4. Preferred Certificates previously representing shares of
Subject Company Preferred Stock shall be exchanged for certificates
representing shares of corresponding Parent New Preferred
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issued in consideration therefor upon the surrender of such Preferred
Certificates in accordance with Section 2.2 hereof, without any interest
thereon.
(f) At the Effective Time, all shares of Subject Company
Capital Stock that are owned by Subject Company as treasury stock and all
shares of Subject Company Capital Stock that are owned directly or
indirectly by Parent or Subject Company or any of their respective
Subsidiaries (other than shares of Subject Company Capital Stock held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of Parent Common Stock which are
similarly held, whether held directly or indirectly by Parent or Subject
Company or any of their respective Subsidiaries, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of
Subject Company Capital Stock held by Parent or Subject Company or any of
their respective Subsidiaries in respect of a debt previously contracted
(any such shares of Subject Company Capital Stock, and shares of Parent
Common Stock which are similarly held, whether held directly or indirectly
by Parent or Subject Company or any of their respective Subsidiaries, being
referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Parent Common Stock that are owned by
Subject Company or any of its Subsidiaries (other than Trust Account Shares
and DPC Shares) shall become treasury stock of Parent.
(g) At the Effective Time, Parent shall assume the
obligations of Subject Company under the Deposit Agreement, dated as of
November 14, 1991, between Subject Company and First Interstate Bank of
California, as depositary (relating to the Subject Company 9.875% Pre-
ferred), and the Deposit Agreement, dated as of May 29, 1992, between
Subject Company and First Interstate Bank of California, as depositary
(relating to the Subject Company 9.0% Preferred). Parent shall instruct
the applicable depositary to treat the shares of Parent 9.875% Preferred
and Parent 9.0% Preferred received by such depositary in exchange for and
upon conversion of the shares of Subject Company 9.875% Preferred and
Subject Company 9.0% Preferred, respectively, as new deposited securities
under the applicable deposit agreement. In accordance with the terms of
the relevant deposit agreement, the depositary receipts then outstanding
shall thereafter represent the shares of Parent 9.875% Preferred and Parent
9.0% Preferred so received upon conversion and exchange for the shares of
Subject Company 9.875% Preferred and Subject Company 9.0% Preferred,
respectively. Parent shall request that such depositary call for the
surrender of all outstanding receipts to be exchanged for new receipts (the
"New Parent Depositary Shares") specifically describing the relevant series
of Parent New Preferred.
1.5 Parent Common Stock; Parent Preferred Stock. At and after the
Effective Time, each share of Parent Common Stock and each share of Parent
Preferred Stock issued and outstanding immediately prior to the Effective
Time shall remain an issued and outstanding share of common stock or
preferred stock, as the case may be, of Parent and shall not be affected by
the Merger.
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1.6 Options. (a) At the Effective Time, each option granted by
Subject Company to purchase shares of Subject Company Common Stock (each a
"Subject Company Option") which is outstanding and unexercised immediately
prior thereto shall cease to represent a right to acquire shares of Subject
Company Common Stock and shall be converted automatically into an option to
purchase shares of Parent Common Stock in an amount and at an exercise
price determined as provided below (and otherwise subject to the terms of
the Subject Company 1995 Performance Stock Plan, the Subject Company 1991
Performance Stock Plan (as amended), the Subject Company 1988 Performance
Stock Plan (as amended), the Subject Company 1983 Performance Stock Plan
(as amended), the Subject Company Performance Stock Plan of 1980 (as
amended and restated) and the Subject Company 1991 Director Option Plan (as
amended and restated), as the case may be (collectively, the "Subject
Company Stock Option Plans"), and the agreements evidencing grants
thereunder, including, but not limited to, the accelerated vesting of such
options which shall occur in connection with and by virtue of the approval
of the Merger Agreement and the Merger by the stockholders of Subject
Company as and to the extent required by such plans and agreements):
(1) the number of shares of Parent Common Stock to be subject
to the new option shall be equal to the product of the number of
shares of Subject Company Common Stock subject to the original option
and the Common Exchange Ratio, provided that any fractional shares of
Parent Common Stock resulting from such multiplication shall be
rounded down to the nearest share; and
(2) the exercise price per share of Parent Common Stock under
the new option shall be equal to the exercise price per share of
Subject Company Common Stock under the original option divided by the
Common Exchange Ratio, provided that such exercise price shall be
rounded up to the nearest cent.
The adjustment provided herein with respect to any options which 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
and, to the extent it is not so consistent, such Section 424(a) shall
override anything to the contrary contained herein. The duration and other
terms of the new option shall be the same as the original option (subject
to Section 6.7(b) hereof) except that all references to Subject Company
shall be deemed to be references to Parent.
1.7 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Parent, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation. At
or prior to the Effective Time, Parent shall duly execute and file with the
Delaware Secretary of State one or more Certificates of Designation
establishing the New Parent Preferred.
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1.8 Bylaws. At the Effective Time, the Bylaws of Parent, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with
applicable law.
1.9 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the
Code, and that this Agreement shall constitute a "plan of reorganization"
for purposes of the Code.
1.10 Board of Directors. At the Effective Time, each person serving
on the Board of Directors of Parent immediately prior to the Effective Time
shall continue to serve on the Board of Directors of Parent. In addition,
Parent shall cause its Board of Directors to be expanded by seven seats as
of the Effective Time and such directorships shall, as of such time, be
filled by persons serving on the Board of Directors of Subject Company
immediately prior to the Effective Time who shall be jointly selected by the
Board of Directors of each of Parent and Subject Company; provided that
Parent's Board of Directors may be expanded by fewer than seven seats in
case there are fewer than seven members of Subject Company's Board of
Directors who choose to serve on Parent's Board.
1.11 Headquarters. Upon consummation of the Merger, the Surviving
Company shall maintain corporate headquarters in each of San Francisco and
Los Angeles, and one or more of the senior corporate officers of the
Surviving Corporation shall be based in Los Angeles.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the Effective
Time, Parent shall deposit, or shall cause to be deposited, with a bank or
trust company which may be a Subsidiary of Parent (the "Exchange Agent"),
for the benefit of the holders of Certificates, for exchange in accordance
with this Article II, certificates representing the shares of Parent Common
Stock and Parent New Preferred and an estimated amount of cash in lieu of
any fractional shares (the cash payable in lieu of fractional shares and
certificates for shares of Parent Common Stock and Parent New Preferred,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to
Section 1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding
shares of Subject Company Capital Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, and in no event later than ten business days thereafter,
the Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only
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upon delivery of the Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing, as the case may be, the shares of Parent Common
Stock or Parent New Preferred and the cash in lieu of fractional shares, if
any, into which the shares of Subject Company Capital Stock represented by
such Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such properly completed
letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor, as applicable, (i) a
certificate representing that number of shares of Parent Common Stock, if
any, to which such holder of Subject Company Common Stock shall have become
entitled pursuant to the provisions of Article I hereof, (ii) certificates
representing that number of shares of Parent 9.875% Preferred and Parent
9.0% Preferred, if any, to which such holder of Subject Company Preferred
Stock shall have become entitled pursuant to the provisions of Article I
hereof and (iii) a check representing the amount of cash in lieu of
fractional shares, if any, which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any, payable
to holders of Certificates.
(b) No dividends or other distributions with a record date
after the Effective Time with respect to Parent Common Stock or Parent New
Preferred shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance
with this Article II. After the surrender of a Certificate in accordance
with this Article II, the record holder thereof shall be entitled to
receive any such dividends or other distributions, without any interest
thereon, which theretofore had become payable with respect to shares of
Parent Common Stock or Parent New Preferred represented by such
Certificate.
(c) If any certificate representing shares of Parent Common
Stock or Parent New Preferred is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of the issuance thereof that the Certificate so
surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that
the person requesting such exchange shall pay to the Exchange Agent in
advance any transfer or other taxes required by reason of the issuance of a
certificate representing shares of Parent Common Stock or Parent New
Preferred in any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(d) At or after the Effective Time, there shall be no
transfers on the stock transfer books of Subject Company of the shares of
Subject Company Capital Stock which were issued and outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates
representing such shares are presented for transfer to the Exchange Agent,
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they shall be cancelled and exchanged for certificates representing shares
of Parent Capital Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Common
Certificates, no dividend or distribution with respect to Parent Common
Stock shall be payable on or with respect to any fractional share, and such
fractional share interests shall not entitle the owner thereof to vote or
to any other rights of a stockholder of Parent. In lieu of the issuance of
any such fractional share, Parent shall pay to each former stockholder of
Subject Company who otherwise would be entitled to receive such fractional
share an amount in cash determined by multiplying (i) the average of the
closing sale prices of Parent Common Stock on the New York Stock Exchange
(the "NYSE") as reported by The Wall Street Journal for the five trading
days immediately preceding the date on which the Effective Time occurs by
(ii) the fraction of a share of Parent Common Stock to which such holder
would otherwise be entitled to receive pursuant to Section 1.4 hereto.
(f) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Subject Company for twelve months after the
Effective Time shall be paid to Parent. Any stockholders of Subject
Company who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of the shares of Parent Common
Stock or Parent New Preferred, cash in lieu of any fractional shares and
unpaid dividends and distributions on the Parent Common Stock or Parent New
Preferred deliverable in respect of each share of Subject Company Common
Stock or Subject Company Preferred Stock, as the case may be, such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding anything to the contrary
contained herein, none of Parent, Subject Company, the Exchange Agent or
any other person shall be liable to any former holder of shares of Subject
Company Common Stock or Subject Company Preferred Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by Parent, the posting by such person of a bond in such amount as Parent
may determine is reasonably necessary as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
shares of Parent Common Stock and cash in lieu of fractional shares or
Parent New Preferred, as the case may be, deliverable in respect thereof
pursuant to this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent as follows:
3.1 Corporate Organization. (a) Subject Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Subject Company has the corporate power and authority
to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to
do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets
owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have nor
reasonably be expected to have a Material Adverse Effect (as defined below)
on Subject Company. As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Parent, Subject Company or the Surviving
Corporation, as the case may be, a material adverse effect on the business,
results of operations or financial condition of such party and its
Subsidiaries taken as a whole or a material adverse effect on such party's
ability to consummate the transactions contemplated hereby; provided,
however, that in determining whether a Material Adverse Effect has occurred
there shall be excluded any effect on (I) the referenced party the cause of
which is (i) any change in banking and similar laws, rules or regulations
of general applicability or interpretations thereof by courts or
governmental authorities, (ii) any change in generally accepted accounting
principles or regulatory accounting requirements applicable to banks or
their holding companies generally, (iii) any action or omission of Subject
Company or Parent or any Subsidiary of either of them taken with the prior
written consent of Parent or Subject Company, as applicable, in
contemplation of the Merger and (iv) any changes in general economic
conditions affecting banks or their holding companies generally and (II)
Subject Company and its Subsidiaries caused by, relating to or arising out
of the actions taken or omitted to be taken on or after October 17, 1995 by
Subject Company and its directors, officers, employees, representatives and
agents (i) in response to the various actions taken by Parent in connection
with its efforts to engage in a business combination transaction with
Subject Company and (ii) in connection with Subject Company's pursuit,
prior to the date hereof, of strategic alternatives other than a business
combination transaction with Parent (including without limitation the
execution of the Terminated Merger Agreement and the Settlement Agreement
and the other documents executed in connection therewith and any actions
taken in connection therewith or in respect thereof), in each case
including without limitation all attorneys', investment bankers',
accountants' and other fees and expenses incurred in connection therewith
or as a result of any actions, suits or proceedings relating thereto. As
used in this Agreement, the word "Subsidiary" when used with respect to any
party means any bank, corporation, partnership or other organization,
whether incorporated or unincorporated, which is consolidated with such
party for financial reporting purposes. Subject Company is duly registered
as a bank holding company under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"). The copies of the Certificate
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of Incorporation and Bylaws of Subject Company which have previously been
made available to Parent, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Each Subject Company Subsidiary (i) is duly organized and
validly existing as a bank, corporation or partnership under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and
in good standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be so
qualified would have or reasonably be expected to have a Material Adverse
Effect on Subject Company, and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on its
business as now conducted.
3.2 Capitalization. (a) The authorized capital stock of Subject
Company consists of 250,000,000 shares of Subject Company Common Stock,
15,000,000 shares of preferred stock, no par value, and 43,500,000 shares
of Class A Common Stock, par value $0.01 per share ("Class A Common
Stock"). At the close of business on December 31, 1995, there were
75,929,395 shares of Subject Company Common Stock outstanding, 1,750,000
shares of Subject Company Preferred Stock outstanding (evidenced by
14,000,000 Subject Company Depositary Shares, 8,000,000 of which each
represent a one-eighth interest in a share of Subject Company 9.875%
Preferred and 6,000,000 of which each represent a one-eighth interest in a
share of Subject Company 9.0% Cumulative Preferred), no Shares of Class A
Common Stock outstanding, and 8,356,601 shares of Subject Company Common
Stock held in Subject Company's treasury. As of December 31, 1995, no
shares of Subject Company Common Stock or Subject Company Preferred Stock
were reserved for issuance, except (i) 1,828,250 shares of Subject Company
Common Stock were reserved for issuance pursuant to Subject Company's
dividend reinvestment and stock purchase plans, (ii) 3,505,348 shares of
Subject Company Common Stock were reserved for issuance upon the exercise
of stock options pursuant to the Subject Company Stock Option Plans, (iii)
15,073,106 shares of Subject Company Common Stock were reserved for
issuance pursuant to the Subject Company Stock Option Agreement and (iv)
the shares of Subject Company Common Stock reserved for issuance upon
exercise of the Subject Company Rights distributed to holders of Subject
Company Common Stock pursuant to the Subject Company Rights Agreement. All
of the issued and outstanding shares of Subject Company Common Stock and
Subject Company Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the
date of this Agreement, except (i) as set forth in Section 3.2(a) of the
disclosure schedule of Subject Company delivered to Parent concurrently
herewith (the "Subject Company Disclosure Schedule"), (ii) for the Subject
Company Rights Agreement (a true and correct copy of which, including all
amendments thereto, has been made available to Parent) and (iii) as set
forth elsewhere in this Section 3.2(a), Subject Company does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of Subject
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Company Common Stock or Subject Company Preferred Stock or any other equity
securities of Subject Company or any securities representing the right to
purchase or otherwise receive any shares of Subject Company Common Stock or
Subject Company Preferred Stock. Except (i) as set forth in Section 3.2(a)
of the Subject Company Disclosure Schedule, and (ii) for options permitted
by this Agreement to be granted subsequent to the date of this Agreement,
December 31, 1995 Subject Company has not issued any shares of its capital
stock or any securities convertible into or exercisable for any shares of
its capital stock, other than pursuant to Subject Company's dividend
reinvestment and stock purchase plans, the exercise of employee stock
options granted prior to such date and as disclosed in Section 3.2(a) of
the Subject Company Disclosure Schedule, and the issuance of rights
pursuant to the Subject Company Rights Agreement.
(b) Except as set forth in Section 3.2(b) of the Subject
Company Disclosure Schedule, Subject Company owns, directly or indirectly,
at least 99% of the issued and outstanding shares of capital stock of each
of the material Subject Company Subsidiaries, free and clear of any liens,
charges, encumbrances, adverse rights or claims and security interests
whatsoever ("Liens"), and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. No
Subject Company Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary.
3.3 Authority; No Violation. (a) Subject Company has full
corporate power and authority to execute and deliver this Agreement, the
Fee Letter, of even date herewith, between Parent and Subject Company (the
"Subject Company Fee Letter") pursuant to which Subject Company will in
certain circumstances pay certain amounts to Parent, and the other docu-
ments, including the Settlement Agreement, contemplated to be executed and
delivered by Subject Company in connection with the transactions
contemplated hereby (this Agreement, together with the Subject Company Fee
Letter and such other documents, collectively, the "Subject Company Docu-
ments"), and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of each of the Subject Company
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly and validly approved by the Board of Directors of
Subject Company. The Board of Directors of Subject Company has directed
that the agreement of merger (within the meaning of Section 251 of the
DGCL) contained in this Agreement and the transactions contemplated hereby
be submitted to Subject Company's stockholders for approval at a meeting of
such stockholders and, except for the adoption of such agreement of merger
by the affirmative vote of the holders of a majority of the outstanding
shares of Subject Company Common Stock, no other corporate proceedings on
the part of Subject Company are necessary to approve the Subject Company
Documents and to consummate the transactions contemplated hereby and
thereby. Each of the Subject Company Documents has been duly and validly
executed and delivered by Subject Company
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and (assuming due authorization, execution and delivery by Parent) this
Agreement constitutes a valid and binding obligation of Subject Company,
enforceable against Subject Company in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied
in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 3.3(b) of the Subject
Company Disclosure Schedule, neither the execution and delivery of the
Subject Company Documents by Subject Company nor the consummation by
Subject Company of the transactions contemplated hereby and thereby, nor
compliance by Subject Company with any of the terms or provisions hereof or
thereof, will (i) violate any provision of the Certificate of Incorporation
or Bylaws of Subject Company or any of the similar governing documents of
any of its Subsidiaries or (ii) assuming that the consents and approvals
referred to in Section 3.4 are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Subject Company or any of its Subsidiaries or any
of their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a
right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any Lien upon any of the
respective properties or assets of Subject Company or any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Subject Company or any of its
Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of
clause (ii) above) for such violations, conflicts, breaches or defaults
which, either individually or in the aggregate, will not have and would not
reasonably be expected to have a Material Adverse Effect on Subject
Company.
3.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the BHC Act and
approval of such applications and notices, (ii) the filing of any requisite
applications with the Office of the Comptroller of the Currency (the "OCC")
and the approval of such applications, (iii) the filing of any required
applications or notices with any state agencies and approval of such
applications and notices (the "State Approvals"), (iv) approvals of boards
of directors (or similar boards) and of shareholders of investment compa-
xxxx sponsored, advised or administered by Subject Company or its
subsidiaries (the "Fund Approvals") (and related SEC filings) (v) approval
of the listing of the Parent Capital Stock to be issued in the Merger on
the NYSE, (vi) the filing with the Securities and Exchange Commission (the
"SEC") of a joint proxy statement in definitive form relating to the
meetings of Parent's and Subject Company's stockholders to be held in
connection with this Agreement and the transactions contemplated hereby
(the "Joint Proxy Statement") and the filing and declaration of effective-
ness of the registration statement on Form S-4 (the "S-4") in which the
Joint Proxy Statement will be included as a prospectus, (vii) the filing of
the Certificate of
13
Merger with the Delaware Secretary pursuant to the DGCL, (viii) such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Parent Capital Stock pursuant to this Agreement,
(ix) the adoption of the agreement of merger (within the meaning of Section
251 of the DGCL) contained in this Agreement by the requisite votes of the
stockholders of Subject Company and the stockholders of Parent, (x) the
consents and approvals set forth in Section 3.4 of the Subject Company
Disclosure Schedule, and (xi) the consents and approvals of third parties
which are not Governmental Entities (as defined below), the failure of
which to obtain will not have and would not be reasonably expected to have
a Material Adverse Effect, no consents or approvals of, or filings or
registrations with, any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or
with any third party are necessary in connection with (A) the execution and
delivery by Subject Company of the Subject Company Documents and (B) the
consummation by Subject Company of the Merger and the other transactions
contemplated hereby and thereby.
3.5 Reports. Subject Company and each of its Subsidiaries have
timely filed all material reports, registrations and statements, together
with any amendments required to be made with respect thereto, that they
were required to file since January 1, 1993 with (i) the Federal Reserve
Board, (ii) the OCC, (iii) any state regulatory authority (each a "State
Regulator"), (iv) the SEC, (v) the FDIC, (vi) any self-regulatory
organization ("SRO") and (vii) any foreign financial or self-regulatory
organization (collectively "Regulatory Agencies") and have paid all fees
and assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of Subject Company and its Subsidiaries or as set forth in Section
3.5 of the Subject Company Disclosure Schedule, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of Subject Company,
investigation into the business or operations of Subject Company or any of
its Subsidiaries since January 1, 1993. Except as set forth in Section 3.5
of the Subject Company Disclosure Schedule, there is no material unresolved
violation, criticism or exception by any Regulatory Agency with respect to
any report or statement relating to any examinations of Subject Company or
any of its Subsidiaries. The deposits of each Subject Company Subsidiary
that is an insured institution are insured by the FDIC in accordance with
the Federal Deposit Insurance Act up to applicable limits.
3.6 Financial Statements. Subject Company has previously made
available to Parent copies of (a) the consolidated balance sheets of
Subject Company and its Subsidiaries, as of December 31, for the fiscal
years 1993 and 1994, and the related consolidated statements of operations,
shareholders' equity and cash flows for the fiscal years 1992 through 1994,
inclusive, as reported in Subject Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994 filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each
case accompanied by the audit report of Ernst & Young LLP, independent
auditors with respect to Subject Company and (b) the unaudited consolidated
balance sheet of Subject Company and its Subsidiaries as of September 30,
1994
14
and September 30, 1995 and the related unaudited consolidated statements of
operations, shareholders' equity and cash flows for the periods then ended,
as reported in Subject Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1995 filed with the SEC under the Exchange Act.
The December 31, 1994 consolidated balance sheet of Subject Company
(including the related notes, where applicable) fairly presents the
consolidated financial position of Subject Company and its Subsidiaries as
of the date thereof, and the other financial statements referred to in this
Section 3.6 (including the related notes, where applicable) fairly present,
and the financial statements referred to in Section 6.12 hereof will fairly
present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the
consolidated operations and changes in stockholders' equity and
consolidated financial position of Subject Company and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set
forth. Each of such statements (including the related notes, where
applicable) complies, and the financial statements referred to in Section
6.12 hereof will comply, in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto and each of such statements (including the related
notes, where applicable) has been, and the financial statements referred to
in Section 6.12 will be, prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied during the periods
involved, except in each case as indicated in such statements or in the
notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q. The books and records of Subject Company and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect
only actual transactions.
3.7 Broker's Fees. Except as set forth in Section 3.7 of the
Subject Company Disclosure Schedule, neither Subject Company nor any
Subject Company Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for
any broker's fees, commissions or finder's fees in connection with any of
the transactions contemplated by the Subject Company Documents.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Subject Company Reports (as defined in Section 3.12) filed
prior to the date hereof, or as set forth in Section 3.8(a) of the Subject
Company Disclosure Schedule, since September 30, 1995, no event (including,
without limitation, any earthquake or other act of God) has occurred which
has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company or the Surviving
Corporation.
(b) Except as set forth in Section 3.8(b) of the Subject
Company Disclosure Schedule, since September 30, 1995, Subject Company and
its Subsidiaries have carried on their respective businesses in all
material respects in the ordinary course of business, and neither Subject
Company nor any of its Subsidiaries has (i) except for normal increases in
the ordinary course of business consistent with past practice and except as
required by applicable law, increased the wages, salaries, compensation,
pension or other fringe benefits or perqui-
15
sites payable to any named executive officer (within the meaning of
Regulation S-K of the SEC) or director, other than persons newly hired for
such position, from the amount thereof in effect as of September 30, 1995,
or granted any severance or termination pay, entered into any contract to
make or grant any severance or termination pay, or paid any bonus, in each
case to any such named executive officer or director, other than pursuant
to preexisting agreements or arrangements or (ii) suffered any strike, work
stoppage, slow-down or other labor disturbance.
3.9 Legal Proceedings. (a) Except as set forth in Section 3.9 of
the Subject Company Disclosure Schedule, neither Subject Company nor any of
its Subsidiaries is a party to any, and there are no pending or, to the
best of Subject Company's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulato-
ry investigations of any nature against Subject Company or any of its
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by the Subject Company Documents as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on Subject Company.
(b) There is no injunction, order, judgment, decree or
regulatory restriction imposed upon Subject Company, any of its
Subsidiaries or the assets of Subject Company or any of its Subsidiaries
which has had, or would reasonably be expected to have, a Material Adverse
Effect on Subject Company or the Surviving Corporation.
3.10 Taxes and Tax Returns. (a) Subject Company and each of its
Subsidiaries has timely filed or caused to be filed all returns,
declarations, reports, estimates, information returns and statements
required to be filed under federal, state, local or any foreign tax laws
("Tax Returns") with respect to Subject Company or any of its Subsidiaries,
except where the failure to file timely such Tax Returns would not have and
would not reasonably be expected to have a Material Adverse Effect on
Subject Company. All Taxes shown to be due on such Tax Returns have been
paid or adequate reserves have been established for the payment of such
Taxes, except where the failure to pay or establish adequate reserves would
not have and would not reasonably be expected to have a Material Adverse
Effect on Subject Company. Except as set forth in Section 3.10(a) of the
Subject Company Disclosure Schedule, no material (i) audit or examination
or (ii) refund litigation with respect to any Tax Return is pending. All
material Tax Returns filed by Subject Company and each of its Subsidiaries
are complete and accurate in all material respects.
(b) Subject Company has no reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
(c) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, goods and services, capital, transfer, franchise, profits,
16
license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes, customs
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority.
3.11 Employees. (a) Section 3.11(a) of the Subject Company
Disclosure Schedule sets forth a true and complete list of each material
employee benefit plan, arrangement or agreement that is maintained as of
the date of this Agreement (the "Plans") by Subject Company or any of its
Subsidiaries or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), all of which together with Subject Company would be
deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) As soon as practicable after the date hereof, Subject
Company shall make available to Parent true and complete copies of each of
the Plans and all related documents, including but not limited to (i) the
actuarial report for such Plan (if applicable) for each of the last two
years, and (ii) the most recent determination letter from the Internal
Revenue Service (if applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the Subject
Company Disclosure Schedule, (i) each of the Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code, (ii) each of the Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code
is so qualified, (iii) with respect to each Plan which is subject to Title
IV of ERISA, the present value of accrued benefits under such Plan, based
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Plan's actuary with respect to such Plan,
did not, as of its latest valuation date, exceed the then current value of
the assets of such Plan allocable to such accrued benefits, (iv) no Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
Subject Company, its Subsidiaries or any ERISA Affiliate beyond their
retirement or other termination of service, other than (w) coverage
mandated by applicable law, (x) death benefits or retirement benefits under
any "employee pension plan," as that term is defined in Section 3(2) of
ERISA, (y) deferred compensation benefits accrued as liabilities on the
books of Subject Company, its Subsidiaries or the ERISA Affiliates or (z)
benefits the full cost of which is borne by the current or former employee
(or his beneficiary), (v) no liability under Title IV of ERISA has been
incurred by Subject Company, its Subsidiaries or any ERISA Affiliate that
has not been satisfied in full, and no condition exists that presents a
material risk to Subject Company, its Subsidiaries or any ERISA Affiliate
of incurring a material liability thereunder, (vi) no Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by Subject Company
or its Subsidiaries as of the Effective Time with respect to each Plan in
respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of
the Code, (viii) since January 1,
17
1994 neither Subject Company, its Subsidiaries nor any ERISA Affiliate has
engaged in a transaction in connection with which Subject Company, its
Subsidiaries or any ERISA Affiliate could be subject to either a material
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix)
to the best knowledge of Subject Company there are no pending, threatened
or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto which
would, individually or in the aggregate, have or be reasonably expected to
have a Material Adverse Effect on Subject Company.
3.12 SEC Reports. Subject Company has previously made available to
Parent an accurate and complete copy of each final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1994 and prior to the date hereof by Subject Company with the
SEC pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act (the "Subject Company Reports"), and no such
registration statement, prospectus, report, schedule or proxy statement
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances in which they were
made, not misleading. Subject Company has timely filed all Subject Company
Reports and other documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective dates, all Subject
Company Reports complied in all material respects with the published rules
and regulations of the SEC with respect thereto.
3.13 Compliance with Applicable Law. Except as disclosed in Section
3.13 of the Subject Company Disclosure Schedule, Subject Company and each
of its Subsidiaries hold, and have at all times held, all material
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their respective businesses under and pursuant to all, and have
complied with and are not in default in any material respect under any,
applicable law, statute, order, rule, regulation, policy and/or guideline
of any Governmental Entity relating to Subject Company or any of its
Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect on Subject Company, and neither Subject Company nor
any of its Subsidiaries knows of, or has received notice of, any violations
of any of the above which, individually or in the aggregate, would have or
would reasonably be expected to have a Material Adverse Effect on Subject
Company.
3.14 Certain Contracts. (a) Except as set forth in Section 3.14(a)
of the Subject Company Disclosure Schedule and except for the Settlement
Agreement, neither Subject Company nor any of its Subsidiaries is a party
to or is bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) which is a material contract (as defined in
Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the
date of this Agreement that has not been filed or incorporated by reference
in the Subject Company Reports, (ii) which materially restricts the conduct
of any line of business by Subject Company, or (iii) with or to a labor
union or guild (including any collective bargaining agreement).
18
Subject Company has made available to Parent true and correct copies of all
material employment, consulting and deferred compensation agreements to
which Subject Company or any of its Subsidiaries is a party. Each
contract, arrangement, commitment or understanding of the type described in
this Section 3.14(a), other than the Subject Company Documents, whether or
not set forth in Section 3.14(a) of the Subject Company Disclosure
Schedule, is referred to herein as a "Subject Company Contract," and
neither Subject Company nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other parties
thereto which, individually or in the aggregate, would have or would
reasonably be expected to have a Material Adverse Effect on Subject
Company.
(b) (i) Each Subject Company Contract is valid and binding
and in full force and effect, (ii) Subject Company and each of its
Subsidiaries has in all material respects performed all obligations
required to be performed by it to date under each Subject Company Contract,
and (iii) no event or condition exists which constitutes or, after notice
or lapse of time or both, would constitute a material default on the part
of Subject Company or any of its Subsidiaries under any such Subject
Company Contract, except, in each case, where such invalidity, failure to
be binding, failure to so perform or default, individually or in the
aggregate, would not have or reasonably be expected to have a Material
Adverse Effect on Subject Company.
3.15 Agreements with Regulatory Agencies. Except as set forth in
Section 3.15 of the Subject Company Disclosure Schedule, neither Subject
Company nor any of its Subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or has adopted any board resolutions at the request of (each,
whether or not set forth in Section 3.15 of the Subject Company Disclosure
Schedule, a "Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in
any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has Subject Company or any of its
Subsidiaries been advised by any Regulatory Agency or other Governmental
Entity that it is considering issuing or requesting any Regulatory Agree-
ment.
3.16 Undisclosed Liabilities. Except (i) for those liabilities that
are fully reflected or reserved against on the consolidated balance sheet
of Subject Company included in the Subject Company Form 10-Q for the
quarter ended September 30, 1995, (ii) for liabilities incurred in the
ordinary course of business consistent with past practice since September
30, 1995, and (iii) as set forth in Section 3.16 of the Subject Company
Disclosure Schedule, neither Subject Company nor any of its Subsidiaries
has incurred any liability of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether due or to become due) that,
either alone or when combined with all similar liabilities, has had, or
would reasonably be expected to have, a Material Adverse Effect on Subject
Company.
19
3.17 State Takeover Laws. The Board of Directors of Subject Company
has taken all action required to be taken by it to provide that this
Agreement, the Subject Company Fee Letter and the transactions contemplated
hereby and thereby shall be exempt from the requirements of any
"moratorium," "control share," "fair price" or other anti-takeover laws or
regulations of any state.
3.18 Rights Agreement. Subject Company has taken all action
(including, if required, redeeming all of the outstanding common stock
purchase rights issued pursuant to the Subject Company Rights Agreement or
amending or terminating the Subject Company Rights Agreement) so that the
entering into of the Subject Company Documents and the consummation of the
transactions contemplated hereby and thereby do not and will not result in
the grant of any rights to any person under the Subject Company Rights
Agreement or enable or require the Subject Company Rights to be exercised,
distributed or triggered.
3.19 Subject Company Information. The information relating to
Subject Company and its Subsidiaries to be provided by Subject Company to
be contained in the Joint Proxy Statement and the S-4, or in any other
document filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Joint Proxy
Statement (except for such portions thereof that relate only to Parent or
any of its Subsidiaries) will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
3.20 Environmental Liability. Except as set forth in Section 3.20
of the Subject Company Disclosure Schedule, there are no legal,
administrative, arbitral or other proceedings, claims, actions, causes of
action, private environmental investigations or remediation activities or
governmental investigations of any nature seeking to impose, or that
reasonably could be expected to result in the imposition, on Subject
Company or any of its Subsidiaries of any liability or obligation arising
under common law standards relating to environmental protection, human
health or safety, or 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 (collectively, the "Environmental Laws"), pending or, to
the knowledge of Subject Company, threatened, against Subject Company or
any of its Subsidiaries, which liability or obligation would have or would
reasonably be expected to have a Material Adverse Effect on Subject
Company. To the knowledge of Subject Company or any of its Subsidiaries,
there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation
that would have or would reasonably be expected to have a Material Adverse
Effect on Subject Company. To the knowledge of Subject Company, during or
prior to the period of (i) its or any of its Subsidiaries' ownership or
operation of any of their respective current properties, (ii) its or any of
its Subsidiaries' participation in the management of any property, or (iii)
its or any of its Subsidiaries' holding of a security interest or other
interest in any property, there were no releases or threatened releases of
hazardous, toxic, radioactive or
20
dangerous materials or other materials regulated under Environmental Laws
in, on, under or affecting any such property which would reasonably be
expected to have a Material Adverse Effect. Neither Subject Company nor
any of its Subsidiaries is subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability or
obligation pursuant to or under any Environmental Law that would have or
would reasonably be expected to have a Material Adverse Effect on Subject
Company.
3.21 Interest Rate Risk Management Instruments. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Subject
Company or for the account of a customer of Subject Company or one of its
Subsidiaries, were entered into in accordance with prudent banking
practices and applicable rules, regulations and policies of any regulatory
authority and with counterparties believed to be financially responsible at
the time and are legal, valid and binding obligations of Subject Company or
one of its Subsidiaries enforceable in accordance with their terms (except
as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally), and are in full force and effect. Subject Company and each of
its Subsidiaries have duly performed in all material respects all of their
material obligations thereunder to the extent that such obligations to
perform have accrued; and, to Subject Company's knowledge, there are no
breaches, violations or defaults or allegations or assertions of such by
any party thereunder which would have or would reasonably be expected to
have a Material Adverse Effect on Subject Company.
3.22 Terminated Merger Agreement. Subject Company (i) has taken all
corporate action necessary to terminate the Terminated Merger Agreement
pursuant to the provisions of Section 8.1(f) thereof and (ii) has no
further obligation under the Terminated Merger Agreement and the other
agreements executed in connection therewith, including the Subject Company
Stock Option Agreement and the North Fee Letter, other than as specified in
Section 8.2 of the Terminated Merger Agreement or in the Settlement
Agreement. Before Subject Company provided Parent with any nonpublic
information, otherwise facilitated any effort or attempt by Parent to make
or implement a Takeover Proposal (as defined, for purposes of this Section
3.22, in Section 5.2(f) of the Terminated Merger Agreement) for Subject
Company, recommended or endorsed Parent's Takeover Proposal or participated
in discussions and negotiations with Parent relating to such Takeover
Proposal, or authorized its officers, directors, employees or agents to do
any of the foregoing, the Board of Directors of Subject Company, after
having consulted with and considered the advice of outside counsel, reason-
ably determined in good faith that the failure to do so would have caused
the members of such Board of Directors to breach their fiduciary duties
under applicable law.
ARTICLE IV
21
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to Subject Company as follows:
4.1 Corporate Organization. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Parent has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not have or reasonably be
expected to have a Material Adverse Effect on Parent. Parent is duly
registered as a bank holding company under the BHC Act. The copies of the
Restated Certificate of Incorporation and Bylaws of Parent, which have
previously been made available to Subject Company, are true, complete and
correct copies of such documents as in effect as of the date of this Agree-
ment.
(b) Each Parent Subsidiary (i) is duly organized and validly
existing as a bank, corporation or partnership under the laws of its
jurisdiction of organization, (ii) is duly qualified to do business and in
good standing in all jurisdictions (whether federal, state, local or
foreign) where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and in which the failure to be so
qualified would have or reasonably be expected to have a Material Adverse
Effect on Parent, and (iii) has all requisite corporate power and authority
to own or lease its properties and assets and to carry on its business as
now conducted.
4.2 Capitalization. (a) The authorized capital stock of Parent
consists of 150,000,000 shares of Parent Common Stock and 25,000,000 shares
of Preferred Stock, par value $5.00 per share ("Parent Preferred Stock").
At the close of business on December 31, 1995, there were 46,973,319 shares
of Parent Common Stock outstanding, 1,500,000 shares of Parent Preferred
Stock designated and 1,500,000 shares issued and outstanding as Series
Adjustable Rate Cumulative Preferred Stock, Series B ("Parent Series B
Preferred Stock"), 517,500 shares of Parent Preferred Stock designated and
517,500 shares issued and outstanding as 9% Preferred Stock, Series C
("Parent Series C Preferred Stock"), 368,000 shares of Parent Preferred
Stock designated and 368,000 shares issued and outstanding as 8 7/8%
Preferred Stock, Series D ("Parent Series D Preferred Stock"), and no
shares of Parent Common Stock held in Parent's treasury. On December 31,
1995, no shares of Parent Common Stock or Parent Preferred Stock were
reserved for issuance, except that (i) 11,555,655 shares of Parent Common
Stock were reserved for issuance pursuant to outstanding options, the
Parent dividend reinvestment plan, the Parent employee stock purchase plan,
the Parent director option plans and employee benefit plans and (ii) $180
million in stockholders equity designated for the retirement or redemption
of the Parent Mandatory Equity Notes
22
due 1998. All of the issued and outstanding shares of the Parent Common
Stock and Parent Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. As of the
date of this Agreement, except (i) as set forth in Schedule 4.2(a) of the
Parent Disclosure Schedule (as defined below) and (ii) as set forth
elsewhere in this Section 4.2(a), Parent does not have and is not bound by
any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any
shares of Parent Common Stock or Parent Preferred Stock or any other equity
securities of Parent or any securities representing the right to purchase
or otherwise receive any shares of Parent Common Stock or Parent Preferred
Stock. Except (i) as set forth in Section 4.2(a) of the disclosure
schedule of Parent delivered to Subject Company concurrently herewith (the
"Parent Disclosure Schedule") and (ii) for options permitted by this
Agreement to be granted subsequent to the date of this Agreement, since
December 31, 1995, Parent has not issued any shares of its capital stock or
any securities convertible into or exercisable for any shares of its
capital stock, other than pursuant to Parent's dividend reinvestment and
stock purchase plans and the exercise of employee stock options granted
prior to such date and as disclosed in Section 4.2(a) of the Parent
Disclosure Schedule. The shares of Parent Capital Stock to be issued
pursuant to the Merger will be duly authorized and validly issued and, at
the Effective Time, all such shares will be fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent
Disclosure Schedule, Parent owns, directly or indirectly, at least 99% of
the issued and outstanding shares of capital stock of each of the material
Parent Subsidiaries, free and clear of any Liens, and all of such shares
are duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. No Parent Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent has full corporate power
and authority to execute and deliver this Agreement, the Fee Letter, of
even date herewith, between Parent and Subject Company (the "Parent Fee
Letter," and together with the Subject Company Fee Letter, the "Fee
Letters") pursuant to which Parent will in certain circumstances pay
certain amounts to Subject Company, and the other documents contemplated to
be executed and delivered by Parent, including the Settlement Agreement, in
connection with the transactions contemplated hereby (this Agreement,
together with the Parent Fee Letter, and such other documents,
collectively, the "Parent Documents") and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of each of the
Parent Documents and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by the Board of
Directors of Parent. The Board of Directors of Parent has directed that
the
23
agreement of merger (within the meaning of Section 251 of the DGCL)
contained in this Agreement and the transactions contemplated hereby be
submitted to Parent's stockholders for approval at a meeting of such
stockholders and, except for the adoption of such agreement of merger by
the affirmative vote of the holders of a majority of the outstanding shares
of Parent Common Stock, no other corporate proceedings on the part of
Parent are necessary to approve the Parent Documents and to consummate the
transactions contemplated hereby and thereby. Each of the Parent Documents
has been duly and validly executed and delivered by Parent and (assuming
due authorization, execution and delivery by Subject Company) this
Agreement constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 4.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of the Parent
Documents by Parent, nor the consummation by Parent of the transactions
contemplated hereby and thereby, nor compliance by Parent with any of the
terms or provisions hereof or thereof, will (i) violate any provision of
the Restated Certificate of Incorporation or Bylaws of Parent or any of the
similar governing documents of any of its Subsidiaries or (ii) assuming
that the consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Parent or any of
its Subsidiaries or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any Lien upon any
of the respective properties or assets of Parent or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Parent or any of its Subsidiaries is a
party, or by which they or any of their respective properties or assets may
be bound or affected, except (in the case of clause (ii) above) for such
violations, conflicts, breaches or defaults which either individually or in
the aggregate will not have and would not reasonably be expected to have a
Material Adverse Effect on Parent.
4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal Reserve Board
under the BHC Act and approval of such applications and notices, (ii) the
filing of any requisite applications with the OCC and the approval of such
applications, (iii) the filings with respect to the State Approvals
(including receipt of such State Approvals), (iv) the Fund Approvals (and
related SEC filings), (v) approval of the listing of the Parent Capital
Stock to be issued in the Merger on the NYSE, (vi) the filing with the SEC
of the Joint Proxy Statement and the filing and declaration of
effectiveness of the S-4, (vii) the filing of the Certificate of Merger
with the Delaware Secretary pursuant to the DGCL, (viii) such filings and
approvals as are required to be made or obtained under the
24
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Parent Capital Stock pursuant to this Agreement,
(ix) the adoption of the agreement of merger (within the meaning of Section
251 of the DGCL) contained in this Agreement by the requisite votes of the
stockholders of Subject Company and the stockholders of Parent, (x) the
consents and approvals set forth in Section 4.4 of the Parent Disclosure
Schedule, and (xi) the consents and approvals of third parties which are
not Governmental Entities, the failure of which to obtain will not have and
would not be reasonably expected to have a Material Adverse Effect, no
consents or approvals of, or filings or registrations with, any
Governmental Entity or any third party are necessary in connection with (A)
the execution and delivery by Parent of the Parent Documents and (B) the
consummation by Parent of the Merger and the other transactions
contemplated hereby and thereby.
4.5 Reports. Parent and each of its Subsidiaries have timely filed
all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since January 1, 1993 with the Regulatory Agencies, and
have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of Parent and its Subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the best knowledge of
Parent, investigation into the business or operations of Parent or any of
its Subsidiaries since January 1, 1993. There is no material unresolved
violation, criticism, or exception by any Regulatory Agency with respect to
any report or statement relating to any examinations of Parent or any of
its Subsidiaries. The deposits of each Parent Subsidiary that is an
insured institution are insured by the FDIC in accordance with the Federal
Deposit Insurance Act up to applicable limits.
4.6 Financial Statements. Parent has previously made available to
Subject Company copies of (a) the consolidated balance sheets of Parent and
its Subsidiaries, as of December 31, for the fiscal years 1993 and 1994,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1992 through 1994, inclusive, as
reported in Parent's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of KPMG Peat Marwick LLP, independent
public accountants with respect to Parent and (b) the unaudited
consolidated balance sheet of Parent and its Subsidiaries as of September
30, 1994 and September 30, 1995 and the related unaudited consolidated
statements of income, cash flows and changes in stockholders' equity for
the periods then ended, as reported in Parent's Quarterly Report on Form
10-Q for the period ended September 30, 1995 filed with the SEC under the
Exchange Act. The December 31, 1994 consolidated balance sheet of Parent
(including the related notes, where applicable) fairly presents the
consolidated financial position of Parent and its Subsidiaries as of the
date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present,
and the financial statements referred to in Section 6.12 hereof will fairly
present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the
consolidated operations and changes in stockholders'
25
equity and consolidated financial position of Parent and its Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth. Each of such statements (including the related notes, where
applicable) complies, and the financial statements referred to in Section
6.12 hereof will comply, in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements
referred to in Section 6.12 will be, prepared in accordance with GAAP
consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and records of
Parent and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual transactions.
4.7 Broker's Fees. Except as set forth in Section 4.7 of the
Parent Disclosure Schedule, neither Parent nor any Parent Subsidiary nor
any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by
the Parent Documents.
4.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Parent Reports (as defined below) filed prior to the date
hereof, since September 30, 1995, no event (including, without limitation,
any earthquake or other act of God) has occurred which has had or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
(b) Except as set forth in Section 4.8(b) of the Parent
Disclosure Schedule, since September 30, 1995, Parent and its Subsidiaries
have carried on their respective businesses in all material respects in the
ordinary course of business, and neither Parent nor any of its Subsidiaries
has (i) except for normal increases in the ordinary course of business
consistent with past practice and except as required by applicable law,
increased the wages, salaries, compensation, pension or other fringe
benefits or perquisites payable to any named executive officer (within the
meaning of Regulation S-K of the SEC) or director, other than persons newly
hired for such positions, from the amount thereof in effect as of September
30, 1995, or granted any severance or termination pay, entered into any
contract to make or grant any severance or termination pay, or paid any
bonus, in each case to any such named executive officer or director, other
than pursuant to preexisting agreements or arrangements or (ii) suffered
any strike, work stoppage, slow-down or other labor disturbance.
4.9 Legal Proceedings. (a) Neither Parent nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
Parent's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against Parent or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by the Parent
Documents as to which there is a
26
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on Parent.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Parent, any of its Subsidiaries or the
assets of Parent or any of its Subsidiaries which has had, or would
reasonably be expected to have, a Material Adverse Effect on Parent or the
Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Parent and each of its
Subsidiaries has timely filed or caused to be filed all Tax Returns with
respect to Parent or any of its Subsidiaries, except where the failure to
file timely such Tax Returns would not have and would not reasonably be
expected to have a Material Adverse Effect on Parent. All Taxes shown to
be due on such Tax Returns have been paid or adequate reserves have been
established for the payment of such Taxes, except where the failure to pay
or establish adequate reserves would not have and would not reasonably be
expected to have a Material Adverse Effect on Parent. Except as set forth
in Section 4.10(a) of the Parent Disclosure Schedule, no material (i) audit
or examination or (ii) refund litigation with respect to any Tax Return is
pending. All material Tax Returns filed by Parent and each of its
Subsidiaries are complete and accurate in all material respects.
(b) Parent has no reason to believe that any conditions exist
that might prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
4.11 Employees. (a) Section 4.11(a) of the Parent Disclosure
Schedule sets forth a true and complete list of each material employee
benefit plan, arrangement or agreement that is maintained as of the date of
this Agreement (the "Parent Plans") by Parent or any of its Subsidiaries or
by any trade or business, whether or not incorporated (a "Parent ERISA
Affiliate"), all of which together with Parent would be deemed a "single
employer" within the meaning of Section 4001 of ERISA.
(b) As soon as practicable after the date hereof, Parent
shall make available to Subject Company true and complete copies of each of
the Parent Plans and all related documents, including but not limited to
(i) the actuarial report for such Parent Plan (if applicable) for each of
the last two years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Parent Plan.
(c) Except as set forth in Section 4.11(c) of the Parent
Disclosure Schedule, (i) each of the Parent Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code, (ii) each of the Parent
Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, (iii) with respect to each Parent Plan which is
subject to Title IV of ERISA, the present value of accrued benefits under
such Parent Plan, based upon the actuarial assumptions
27
used for funding purposes in the most recent actuarial report prepared by
such Parent Plan's actuary with respect to such Parent Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of
such Parent Plan allocable to such accrued benefits, (iv) no Parent Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
Parent, its Subsidiaries or any Parent ERISA Affiliate beyond their
retirement or other termination of service, other than (w) coverage
mandated by applicable law, (x) death benefits or retirement benefits under
any "employee pension plan," as that term is defined in Section 3(2) of
ERISA, (y) deferred compensation benefits accrued as liabilities on the
books of Parent, its Subsidiaries or the Parent ERISA Affiliates or (z)
benefits the full cost of which is borne by the current or former employee
(or his beneficiary), (v) no liability under Title IV of ERISA has been
incurred by Parent, its Subsidiaries or any Parent ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a
material risk to Parent, its Subsidiaries or any Parent ERISA Affiliate of
incurring a material liability thereunder, (vi) no Parent Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by Parent or its
Subsidiaries as of the Effective Time with respect to each Parent Plan in
respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of
the Code, (viii) since January 1, 1994 neither Parent, its Subsidiaries nor
any Parent ERISA Affiliate has engaged in a transaction in connection with
which Parent, its Subsidiaries or any Parent ERISA Affiliate could be
subject to either a material civil penalty assessed pursuant to Section 409
or 502(i) of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code, and (ix) to the best knowledge of Parent there are no
pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Parent Plans or any trusts
related thereto which would, individually or in the aggregate, have or be
reasonably expected to have a Material Adverse Effect on Parent.
4.12 SEC Reports. Parent has previously made available to Subject
Company an accurate and complete copy of each final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1994 and prior to the date hereof by Parent with the SEC
pursuant to the Securities Act or the Exchange Act (the "Parent Reports"),
and no such registration statement, prospectus, report, schedule or proxy
statement contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances in which they
were made, not misleading. Parent has timely filed all Parent Reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Parent Reports
complied in all material respects with the published rules and regulations
of the SEC with respect thereto.
4.13 Compliance with Applicable Law. Except as disclosed in Section
4.13 of the Parent Disclosure Schedule, Parent and each of its Subsidiaries
hold, and have at all times held, all material licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and
28
are not in default in any material respect under any, applicable law,
statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to Parent or any of its Subsidiaries, except
where the failure to hold such license, franchise, permit or authorization
or such noncompliance or default would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect
on Parent, and neither Parent nor any of its Subsidiaries knows of, or has
received notice of, any material violations of any of the above which,
individually or in the aggregate, would have or reasonably be expected to
have a Material Adverse Effect on Parent.
4.14 Certain Contracts. (a) Except as set forth in Section 4.14(a)
of the Parent Disclosure Schedule and except for the Settlement Agreement,
neither Parent nor any of its Subsidiaries is a party to or is bound by any
contract, arrangement, commitment or understanding (whether written or
oral) (i) which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement
that has not been filed or incorporated by reference in the Parent Reports,
(ii) which materially restricts the conduct of any line of business by
Parent, or (iii) with or to a labor union or guild (including any
collective bargaining agreement). Parent has made available to Subject
Company true and correct copies of all material employment, consulting and
deferred compensation agreements to which Parent or any of its Subsidiaries
is a party. Each contract, arrangement, commitment or understanding of the
type described in this Section 4.14(a), other than the Parent Documents,
whether or not set forth in Section 4.14(a) of the Parent Disclosure
Schedule, is referred to herein as a "Parent Contract," and neither Parent
nor any of its Subsidiaries knows of, or has received notice of, any
violation of the above by any of the other parties thereto which,
individually or in the aggregate, would have or would reasonably be
expected to have a Material Adverse Effect on Parent.
(b) (i) Each Parent Contract is valid and binding and in full
force and effect, (ii) Parent and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it
to date under each Parent Contract, and (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would
constitute, a material default on the part of Parent or any of its
Subsidiaries under any such Parent Contract, except, in each case, where
any such invalidity, failure to be binding, failure to so perform or
default, individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect on Parent.
4.15 Agreements with Regulatory Agencies. Except as set forth in
Section 4.15 of the Parent Disclosure Schedule, neither Parent nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued
by, or is a party to any written agreement, consent agreement or memorandum
of understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has adopted
any board resolutions at the request of (each, whether or not set forth in
Section 4.15 of the Parent Disclosure Schedule, a "Parent Regulatory
Agreement"), any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital
29
adequacy, its credit policies, its management or its business, nor has
Parent or any of its Subsidiaries been advised by any Regulatory Agency or
other Governmental Entity that it is considering issuing or requesting any
Regulatory Agreement.
4.16 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of
Parent included in the Parent Form 10-Q for the quarter ended September 30,
1995, and for liabilities incurred in the ordinary course of business
consistent with past practice since September 30, 1995, neither Parent nor
any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to
become due) that, either alone or when combined with all similar
liabilities, has had, or would reasonably be expected to have, a Material
Adverse Effect on Parent.
4.17 State Takeover Laws. The Board of Directors of Parent has
taken all action required to be taken by it to provide that this Agreement,
the Parent Fee Letter and the transactions contemplated hereby and thereby
shall be exempt from the requirements of any "moratorium," "control share,"
"fair price" or other anti-takeover laws or regulations of any state.
4.18 Parent Information. The information relating to Parent and its
Subsidiaries to be provided by Parent to be contained in the Joint Proxy
Statement and the S-4, or in any other document filed with any other
regulatory agency in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances in which they
are made, not misleading. The Joint Proxy Statement (except for such
portions thereof that relate only to Subject Company or any of its
Subsidiaries) will comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder. The S-4 will
comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder.
4.19 Environmental Liability. Except as set forth in Section 4.19
of the Parent Disclosure Schedule, there are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that reasonably would be
expected to result in the imposition, on Parent or any of its Subsidiaries
of any liability or obligation arising under any Environmental Law, pending
or, to the knowledge of Parent, threatened, against Parent or any of its
Subsidiaries, which liability or obligation would reasonably be expected to
have a Material Adverse Effect on Parent. To the knowledge of Parent,
there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation
that would reasonably be expected to have a Material Adverse Effect on
Parent. To the knowledge of Parent, during or prior to the period of (i)
its or any of its Subsidiaries' ownership or operation of any of their
respective current properties, (ii) its or any of its Subsidiaries'
participation in the management of any
30
property, or (iii) its or any of its Subsidiaries' holding of a security
interest or other interest in any property, there were no releases or
threatened releases of hazardous, toxic, radioactive or dangerous materials
or other materials regulated under Environmental Laws in, on, under or
affecting any such property, which would reasonably be expected to have a
Material Adverse Effect on Parent. Neither Parent nor any of its Subsid-
iaries is subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency
or third party imposing any material liability or obligation pursuant to or
under any Environmental Law that would reasonably be expected to have a
Material Adverse Effect on Parent.
4.20 Interest Rate Risk Management Instruments. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Parent or
for the account of a customer of Parent or one of its Subsidiaries, were
entered into in accordance with prudent banking practices and applicable
rules, regulations and policies of any regulatory authority and with
counterparties believed to be financially responsible at the time and are
legal, valid and binding obligations of Parent or one of its Subsidiaries
enforceable in accordance with their terms (except as enforcement may be
limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally), and are in full force
and effect. Parent and each of its Subsidiaries have duly performed in all
material respects all of their material obligations thereunder to the
extent that such obligations to perform have accrued; and, to Parent's
knowledge, there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder which would have
or would reasonably be expected to have a Material Adverse Effect on
Parent.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. Except as
set forth in the Subject Company Disclosure Schedule or the Parent
Disclosure Schedule, as the case may be, as expressly contemplated or
permitted by this Agreement, the Settlement Agreement, or the Fee Letters,
as required by applicable law, rule or regulation, during the period from
the date of this Agreement to the Effective Time, each of Parent and
Subject Company shall, and shall cause each of their respective
Subsidiaries to, (i) conduct its business in the usual, regular and
ordinary course consistent with past practice, (ii) use reasonable best
efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the services
of its officers and key employees and (iii) take no action which would
reasonably be expected to adversely affect or delay the ability of either
Parent or Subject Company to obtain any approvals of any Regulatory Agency
or other governmental authority required to consummate the transactions
contemplated hereby or by the Fee Letters or to
31
perform its covenants and agreements under the Subject Company Documents or
the Parent Documents, as the case may be.
5.2 Forbearances. Except as set forth in Section 5.2 of the
Subject Company Disclosure Schedule or Section 5.2 of the Parent Disclosure
Schedule, as the case may be, as expressly contemplated or permitted by
this Agreement, the Settlement Agreement, or the Fee Letters, as required
by applicable law, rule or regulation, during the period from the date of
this Agreement to the Effective Time, neither Parent nor Subject Company
shall, and neither Parent nor Subject Company shall permit any of their
respective Subsidiaries to, without the prior written consent of the other:
(a) adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend or make any other distribution on,
or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock,
or grant any stock appreciation rights or grant any individual,
corporation or other entity any right to acquire any shares of its
capital stock (except for regular quarterly cash dividends on Subject
Company Common Stock and on Parent Common Stock at a rate equal to
the rates recently paid by each of Subject Company and Parent, as the
case may be, as such rates may be increased by either party in the
ordinary course of business consistent with past practice and, in the
case of Subject Company Preferred Stock and Parent Preferred Stock,
for regular quarterly or semiannual cash dividends thereon at the
rates set forth in the applicable certificate of incorporation or
certificate of designation for such securities and except for
dividends paid by any of the wholly owned Subsidiaries of each of
Parent and Subject Company to Parent or Subject Company or any of
their wholly owned Subsidiaries, respectively, and except for the
issuance of employee stock options and restricted stock consistent
with past practices); or issue any additional shares of capital stock
except pursuant to (A) the exercise of stock options outstanding as
of the date hereof or issued after the date hereof in a manner
consistent with past practice, (B) the award of restricted shares of
Subject Company Common Stock in a manner consistent with past
practice, (C) the vesting of Performance Units outstanding as of the
date hereof pursuant to Subject Company Stock Option Plans, (D) the
Subject Company Rights Agreement, and (E) acquisitions and
investments permitted by paragraph (c) hereof;
(b) sell, transfer, mortgage, encumber or otherwise dispose
of any of its properties or assets to any individual, corporation or
other entity other than a direct or indirect wholly owned Subsidiary,
or cancel, release or assign any indebtedness to any such person or
any claims held by any such person, in each case that is material to
such party, except (i) in the ordinary course of business consistent
with past practice, (ii) pursuant to contracts or agreements in force
at the date of this Agreement or (iii) pursuant to plans disclosed in
writing prior to the execution of this Agreement to the other party;
32
(c) except for (i) transactions in the ordinary course of
business consistent with past practice, or (ii) acquisitions of an
entity or business having assets not exceeding 10% of the
consolidated assets of Subject Company or Parent, as applicable, on a
pro forma basis giving effect to such transaction, make any material
acquisition or investment either by purchase of stock or securities,
merger or consolidation, contributions to capital, property
transfers, or purchases of any property or assets of any other
individual, corporation or other entity other than a wholly owned
Subsidiary thereof;
(d) except for transactions in the ordinary course of
business consistent with past practice, enter into or terminate any
contract or agreement, or make any change in any of its leases or
contracts, in each case that is material to such party, other than
renewals of contracts and leases without materially adverse changes
of terms thereof;
(e) other than (i) in the ordinary course of business
consistent with past practice, or (ii) in an aggregate amount not
exceeding $10 million, increase in any material respect the
compensation or fringe benefits of any of its employees or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such employees or become a party to, amend or commit
itself to any material pension, retirement, profit-sharing or welfare
benefit plan or agreement or employment agreement with or for the
benefit of any employee or accelerate the vesting of any stock
options or other stock-based compensation;
(f) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating to, or the making of any proposal
which constitutes, a Takeover Proposal (as defined below), or
recommend or endorse any Takeover Proposal, or participate in any
discussions or negotiations, or provide third parties with any
nonpublic information, relating to any such inquiry or proposal or
otherwise facilitate any effort or attempt to make or implement a
Takeover Proposal, provided, however, that each of Parent and Subject
Company may, and may authorize and permit its officers, directors,
employees or agents to, provide third parties with nonpublic
information, otherwise facilitate any effort or attempt by any third
party to make or implement a Takeover Proposal, recommend or endorse
any Takeover Proposal with or by any third party, and participate in
discussions and negotiations with any third party relating to any
Takeover Proposal, if such party's Board of Directors, after having
consulted with and considered the advice of outside counsel, has
reasonably determined in good faith that the failure to do so would
cause the members of such Board of Directors to breach their
fiduciary duties under applicable law. Subject Company will
immediately cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Parent with respect to any of
the foregoing. Each party shall immediately advise the other
following the receipt by it of any Takeover Proposal and the details
thereof, and advise the other of any developments with respect to
such Takeover Proposal immediately upon the occurrence
33
thereof. As used in this Agreement, "Takeover Proposal" shall mean, with
respect to any person, any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Subject Company or
Parent or any of their respective Subsidiaries or any proposal or offer to
acquire in any manner a substantial equity interest in, or a substantial
portion of the assets of, Subject Company or Parent or any of their
respective Subsidiaries other than the transactions contemplated or
permitted by this Agreement;
(g) settle any claim, action or proceeding involving money
damages which is material to Parent or Subject Company, as
applicable, except (x) in the ordinary course of business consistent
with past practice and (y) in the case of Subject Company, for any
claim, action or proceeding caused by, relating to or arising out of
the matters described in clause (II) of the definition of Material
Adverse Effect set forth in Section 3.1, which claim, action or
proceeding may be settled with the consent of Parent (which consent
shall not be unreasonably withheld);
(h) take any action that would prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section
368(a) of the Code;
(i) amend its certificate of incorporation, bylaws or similar
governing documents or, in the case of Subject Company, the Subject
Company Rights Agreement, in a manner that would materially and
adversely affect either party's ability to consummate the Merger or
the economic benefits of the Merger to either party;
(j) except in the ordinary course or following prior
consultation with the other party to this Agreement, materially
change its investment securities portfolio policy, or the manner in
which the portfolio is classified or reported;
(k) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in any of the
conditions to the Merger set forth in Article VII not being satisfied
or in a violation of any provision of this Agreement, except, in
every case, as may be required by applicable law; or
(l) agree to, or make any commitment to, take any of the
actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
34
6.1 Regulatory Matters. (a) Parent and Subject Company shall
promptly prepare and file with the SEC a preliminary version of the Joint
Proxy Statement and, following comment thereon, Parent shall promptly
prepare and file with the SEC the S-4, in which the definitive Joint Proxy
Statement will be included as a prospectus. Each of Parent and Subject
Company shall use all reasonable efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing, and
Parent and Subject Company shall thereafter mail the definitive Joint Proxy
Statement to their respective stockholders. Parent shall also use all
reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement, and Subject Company shall furnish all
information concerning Subject Company and the holders of Subject Company
Capital Stock as may be reasonably requested in connection with any such
action.
(b) The parties hereto shall cooperate with each other and
use reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings,
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Entities. Parent and Subject
Company shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the
information relating to Subject Company or Parent, as the case may be, and
any of their respective Subsidiaries which appear in any filing made with,
or written materials submitted to, any third party or any Governmental
Entity in connection with the transactions contemplated by this Agreement.
In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised
of the status of matters relating to completion of the transactions
contemplated herein.
(c) Parent and Subject Company shall, upon request, furnish
each other with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Joint Proxy
Statement, the S-4 or any other statement, filing, notice or application
made by or on behalf of Parent, Subject Company or any of their respective
Subsidiaries to any Governmental Entity in connection with the Merger and
the other transactions contemplated by this Agreement.
(d) Parent and Subject Company shall promptly advise each
other upon receiving any communication from any Governmental Entity whose
consent or approval is
35
required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (as defined below) will
not be obtained or that the receipt of any such approval will be materially
delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject
to applicable laws relating to the exchange of information, each of Parent
and Subject Company shall, and shall cause each of their respective
Subsidiaries to, afford to the officers, employees, accountants, counsel
and other representatives of the other party access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records, and to its officers, employees,
accountants, counsel and other representatives and, during such period,
each of Parent and Subject Company shall, and shall cause their respective
Subsidiaries to, make available to the other party (i) a copy of each
report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws (other than reports or
documents which Parent or Subject Company, as the case may be, is not
permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Neither Parent nor Subject Company nor any of their
respective Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize the attorney-client
privilege of the institution in possession or control of such information
or contravene any law, rule, regulation, order, judgment, decree, fiduciary
duty or binding agreement entered into prior to the date of this Agreement.
The parties hereto will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence
apply.
(b) All information furnished pursuant to Section 6.2(a) or
otherwise by Parent or its representatives to Subject Company or its
representatives or by Subject Company or its representatives to Parent or
its representatives, as the case may be, shall be treated as the sole
property of the party furnishing such information and, if the Merger shall
not occur, Parent and Subject Company and their respective representatives
shall return to the other party all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information. Each of Parent and Subject
Company shall, and shall use its best efforts to cause its representatives
to, keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purpose. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and
shall not apply to (i) any information which (x) was already in the
receiving party's possession prior to the disclosure thereof by the other
party; (y) was then generally known to the public; or (z) was disclosed to
the receiving party by a third party not bound by an obligation of
confidentiality or (ii) disclosures made as required by law. It is further
agreed that, if in the absence of a protective order or the receipt of a
waiver hereunder the receiving party is nonetheless, in the opinion of its
counsel, compelled to disclose information concerning the
36
other party to any tribunal or governmental body or agency or else stand
liable for contempt or suffer other censure or penalty, the receiving party
may disclose such information to such tribunal or governmental body or
agency without liability hereunder.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth herein.
6.3 Stockholders' Approvals. Each of Parent and Subject Company
shall duly call, give notice of, convene and hold a meeting of its
stockholders to be held as soon as practicable following the date hereof
for the purpose of obtaining the requisite stockholder approvals required
in connection with this Agreement and the Merger, and each shall use its
best efforts to cause such meetings to occur on the same date. Subject to
the provisions of the next sentence, each of Parent and Subject Company
shall, through its Board of Directors, recommend to its stockholders
approval of such matters. The Board of Directors of each party may fail to
make such recommendation, or withdraw, modify or change any such
recommendation in a manner adverse to the other party hereto, if such Board
of Directors, after having consulted with and considered the advice of
outside counsel, has reasonably determined in good faith that the making of
such recommendation, or the failure to withdraw, modify or change its
recommendation, would constitute a breach of the fiduciary duties of the
members of such Board of Directors under applicable law.
6.4 Legal Conditions to Merger. (a) Subject to the terms and
conditions of this Agreement, each of Parent and Subject Company shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (i) to
take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such
party or its Subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VII hereof, to consummate the transactions
contemplated by this Agreement and (ii) to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other third party
which is required to be obtained by Subject Company or Parent or any of
their respective Subsidiaries in connection with the Merger and the other
transactions contemplated by this Agreement, and to comply with the terms
and conditions of any such consent, authorization, order or approval.
(b) Subject to the terms and conditions of this Agreement,
each of Parent and Subject Company agrees to use reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary, proper or advisable to consummate and make effective,
as soon as practicable after the date of this Agreement, the transactions
contemplated hereby, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby and using reasonable efforts to defend any
litigation seeking to enjoin, prevent or delay the consummation of the
transactions contemplated hereby or seeking material damages.
37
6.5 Affiliates; Publication of Combined Financial Results. Subject
Company shall use its reasonable best efforts to cause each director,
executive officer and other person who is an "affiliate" (for purposes of
Rule 145 under the Securities Act) of Subject Company to deliver to Parent,
as soon as practicable after the date of this Agreement, and in any event
prior to the date of the stockholders meetings called by Parent and Subject
Company pursuant to Section 6.3 hereof, a written agreement, in the form of
Exhibit 6.5 hereto.
6.6 Stock Exchange Listing. Parent shall use its best efforts to
cause the shares of Parent Common Stock to be issued in the Merger and the
New Parent Depositary Shares to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the Effective
Time, unless otherwise mutually determined and except as provided in
Section 1.6 hereof, Parent Plans and Plans in effect as of the date of this
Agreement shall remain in effect with respect to employees of Parent or
Subject Company (or their Subsidiaries) covered by such plans at the
Effective Time until such time as Parent shall, subject to applicable law,
the terms of this Agreement and the terms of such plans, adopt new benefit
plans with respect to employees of the Surviving Corporation and its
Subsidiaries (the "New Parent Plans"). Prior to the Closing Date, Parent
and Subject Company shall cooperate in reviewing, evaluating and analyzing
the Parent Plans and the Plans with a view toward developing appropriate
New Parent Plans for the employees covered thereby subsequent to the
Merger. Except as provided in paragraphs (c) - (e) hereof, Parent and
Subject Company shall use their reasonable best efforts to develop New
Parent Plans which, among other things, treat similarly situated employees
of the Surviving Corporation and its Subsidiaries on a substantially
equivalent basis, taking into account all relevant factors, including,
without limitation, duties, geographic location, tenure, qualifications and
abilities. In view of the changed nature of the benefit programs which
will be applicable to employees of Subject Company after the Effective
Time, Parent and Subject Company further agree to use their reasonable best
efforts to develop equitable transition rules relating to the benefits to
be provided to one or more groups of such employees, with particular
emphasis on retirement benefits to be provided to those Subject Company
employees who are nearing eligibility for early retirement. Parent agrees
that for purposes of all Plans and New Parent Plans (including, without
limitation, all policies and employee fringe benefit programs of the
Surviving Corporation) under which an employee's benefit depends, in whole
or in part, on length of service, credit will be given to current employees
of the Subject Company and its Subsidiaries for service with Subject
Company or its Subsidiaries prior to the Effective Time, provided that such
crediting of service does not result in duplication of benefits, require an
accrual of benefits under, or contributions to, a pension benefit plan on
behalf of an employee for periods before such employee becomes a
participant in such plan or require that certain additional contributions
currently made to a Parent Plan on behalf of certain employees who had
participated in Parent's prior defined benefit plan and attained a
specified age upon termination of that plan be extended to any additional
employees.
38
(b) Notwithstanding the foregoing, Parent shall, and shall
cause its Subsidiaries to, honor in accordance with their terms all Plans,
as amended as permitted hereunder, and other contracts, arrangements,
commitments or understandings described in the Subject Company Disclosure
Schedule; provided, however, that this paragraph (b) shall be subject to
the provisions of paragraph (f) hereof. Parent and Subject Company hereby
acknowledge that approval of the Merger Agreement and the Merger by
stockholders of the Subject Company will constitute a "Change in Control"
for purposes of the Plans and agree to abide by the provisions of any Plan
which relate to a Change in Control, including, but not limited to, the
accelerated vesting and/or payment of equity-based awards under the Subject
Company Stock Option Plans, each as amended to the date hereof.
(c) To the extent permitted by applicable law, (1) Parent
and the Subject Company agree that (i) until such time (the "Transition
Date") as those employees of the Subject Company who continue in employment
with the Surviving Corporation following the Effective Time become eligible
to participate in Parent's qualified defined contribution plan, Parent
shall maintain in accordance with its terms (as in effect immediately prior
to the date hereof) the Retirement Plan for the Employees of First
Interstate Bancorp and its Affiliates (the "Subject Company Pension Plan"),
(ii) prior to the Transition Date, Parent shall not terminate the Subject
Company Pension Plan, cease benefit accruals under such Plan, merge such
plan with or into any other plan or amend such plan in any manner adverse
to participants or beneficiaries of such plan (including, but not limited
to, amending to the detriment of participants the actuarial factors or
assumptions utilized in determining early retirement benefits or lump sum
present values), and (iii) from and after the Transition Date, Parent shall
be free to terminate the Subject Company Pension Plan or to freeze accruals
thereunder, subject to compliance with the terms of paragraph (2) below.
(2) Parent hereby agrees that in the event Parent terminates
the Subject Company Pension Plan on or after the Effective Time,
Parent shall cause such termination to be implemented in all respects
in accordance with applicable law (and without limiting the gener-
ality of the foregoing, shall cause to be purchased from an insurance
company rated AAA or better by Bests, irrevocable annuities
representing the accrued benefits of all participants and
beneficiaries of such plan); provided, however, that Parent may cause
accrued benefits subject to Section 417(e)(1) of the Code to be
cashed out in a lump sum.
(d) Parent and the Subject Company agree that, effective as
of the date of the approval of the Merger Agreement and the Merger by the
stockholders of the Subject Company, each participant in The Employee
Savings Plan of First Interstate Bancorp shall become fully vested with
respect to such participant's account balance thereunder.
(e) Parent and the Subject Company hereby agree as follows:
39
(1) each individual who is currently receiving benefits under
the First Interstate Retiree Medical Plan (the "Subject Company
Retiree Medical Plan"), or who would be entitled to receive such
benefits if such individual ceased employment with the Subject
Company and its subsidiaries as of the date hereof, shall, after the
Effective Time, receive (or, upon termination of employment with the
Surviving Corporation and its subsidiaries, shall be entitled to re-
ceive) retiree medical benefits which are no less favorable than the
benefits which similarly situated retirees (or employees) of the
Parent are entitled to receive (or would be entitled to receive)
under the Parent's retiree medical plan, as such plan may be amended
from time to time;
(2) each employee of the Subject Company who was hired prior
to January 1, 1992 and whose employment is terminated under
circumstances entitling such employee to severance benefits under the
First Interstate Bancorp Broad-Based Change in Control Severance Pay
Plan, the First Interstate Bancorp Middle Management Change in
Control Severance Pay Plan, the First Interstate Bancorp Senior
Management Change in Control Severance Pay Plan or an employment
agreement between such participant and Subject Company or a subsid-
iary thereof which is listed on Exhibit 3.11(a) hereto (collectively,
the "Subject Company Severance Plans"), shall be entitled to receive
retiree medical benefits which are no less favorable than the bene-
fits provided under the Parent's retiree medical plan (as such plan
may be amended from time to time) if such employee would have been
eligible for benefits under such plan had such employee remained
employed through the end of the period with respect to which
severance benefits are payable under the Subject Company Severance
Plans.
(f) Except as otherwise provided herein, nothing in this
Section 6.7 shall be interpreted as preventing Parent or its Subsidiaries
from amending, modifying or terminating any Parent Plans, Plans, or other
contracts, arrangements, commitments or understandings, in accordance with
their terms and applicable law.
(g) It is the express understanding and intention of Subject
Company and Parent that no Subject Company Employee or Parent Employee or
other person shall be deemed to be a third party beneficiary, or have or
acquire any right to enforce the provisions, of this Section 6.7, and that
nothing in this Agreement shall be deemed to constitute a Plan, a Parent
Plan or a New Parent Plan or an amendment to a Plan, a Parent Plan or a New
Parent Plan. Parent agrees, however, that, prior to the Effective Time,
the Subject Company may take all necessary action to amend the appropriate
Plans to reflect the provisions of this Section 6.7.
6.8 Indemnification; Directors' and Officers' Insurance. (a) In
the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including,
without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior
to the date of this Agreement, or who becomes prior to the Effective Time,
a director, officer or employee of
40
Subject Company or any of its Subsidiaries (the "Indemnified Parties") is,
or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he
is or was a director, officer or employee of Subject Company, any of the
Subject Company Subsidiaries or any of their respective predecessors or was
prior to the Effective Time serving at the request of any such party as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, trust or other enterprise, (ii) the Terminated Merger
Agreement, the Subject Company Stock Option Agreement and the North Fee
Letter and all actions by any Indemnified Party in connection therewith or
(iii) this Agreement, the Fee Letters or any of the transactions
contemplated hereby or thereby and all actions taken by an Indemnified
Party in connection therewith, whether in any case asserted or arising
before or after the Effective Time, the parties hereto agree to cooperate
and use their best efforts to defend against and respond thereto. It is
understood and agreed that after the Effective Time, Parent shall indemnify
and hold harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of
the final disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by law upon receipt
of an undertaking from such Indemnified Party to repay such advanced
expenses if it is finally and unappealably determined that such Indemnified
Party was not entitled to indemnification hereunder), judgments, fines and
amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any
such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time), the
Indemnified Parties may retain counsel reasonably satisfactory to them
after consultation with Parent; provided, however, that (1) Parent shall
have the right to assume the defense thereof and upon such assumption
Parent shall not be liable to any Indemnified Party for any legal expenses
of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if
Parent elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are or may be
(whether or not any have yet actually arisen) issues which raise conflicts
of interest between Parent and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them, and Parent
shall pay the reasonable fees and expenses of such counsel for the Indemni-
fied Parties who are non-management directors of the Subject Company and
one other firm of counsel for all other Indemnified Parties, (2) Parent
shall be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties who are non-management directors of the
Subject Company and one other firm of counsel for all of the other
Indemnified Parties, (3) Parent shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (4) Parent shall have no obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim indemnification under this Section 6.8, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify
Parent thereof, provided that the failure to so notify
41
shall not affect the obligations of Parent under this Section 6.8 except
(and only) to the extent such failure to notify materially prejudices
Parent. Parent's obligations under this Section 6.8 shall continue in full
force and effect for a period of six (6) years from the Effective Time;
provided, however, that all rights to indemnification in respect of any
claim (a "Claim") asserted or made within such period shall continue until
the final disposition of such Claim.
(b) Without limiting any of the obligations under paragraph
(a) of this Section 6.8, Parent agrees that all rights to indemnification
and all limitations of liability existing in favor of the Indemnified
Parties as provided in Subject Company's Certificate of Incorporation or
By-Laws or in the similar governing documents of any of Subject Company's
Subsidiaries as in effect as of the date of this Agreement with respect to
matters occurring on or prior to the Effective Time shall survive the
Merger and shall continue in full force and effect, without any amendment
thereto, for a period of six years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Claim
asserted or made within such period shall continue until the final
disposition of such Claim; provided further, however, that nothing
contained in this Section 6.8(b) shall be deemed to preclude the
liquidation, consolidation or merger of Subject Company or any Subject
Company Subsidiary, in which case all of such rights to indemnification and
limitations on liability shall be deemed to so survive and continue
notwithstanding any such liquidation, consolidation or merger and shall
constitute rights which may be asserted against Parent. Nothing contained
in this Section 6.8(b) shall be deemed to preclude any rights to
indemnification or limitations on liability provided in Subject Company's
Certificate of Incorporation or By-laws or the similar governing documents
of any of Subject Company's Subsidiaries with respect to matters occurring
subsequent to the Effective Time to the extent that the provisions
establishing such rights or limitations are not otherwise amended to the
contrary.
(c) Parent shall use its best efforts to cause the persons
serving as officers and directors of Subject Company immediately prior to
the Effective Time to be covered for a period of six (6) years from the
Effective Time by the directors' and officers' liability insurance policy
maintained by Subject Company (provided that Parent may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous to such directors and officers
of Subject Company than the terms and conditions of such existing policy)
with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as
such; provided, however, that the Surviving Corporation shall not be
obligated to make annual premium payments for such insurance to the extent
such premiums exceed 250% of the premiums paid as of the date hereof by
Subject Company for such insurance ("Subject Company's Current Premium"),
and if such premiums for such insurance would at any time exceed 250% of
Subject Company's Current Premium, then the Surviving Corporation shall
cause to be maintained policies of insurance which, in the Surviving
Corporation's good faith determination, provide the maximum coverage
available at an annual premium equal to 250% of Subject Company's Current
Premium.
42
(d) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Parent shall assume the obligations set forth in this Section
6.8.
(e) The provisions of this Section 6.8 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
6.9 Additional Agreements. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes
of this Agreement (including, without limitation, any merger between a
Subsidiary of Parent and a Subsidiary of Subject Company) or to vest the
Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the merger,
the proper officers and directors of each party to this Agreement and their
respective Subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, Parent.
6.10 Advice of Changes. Parent and Subject Company shall promptly
advise the other party of any change or event which, individually or in the
aggregate with other such changes or events, has a Material Adverse Effect
on it or which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of Parent
and Subject Company shall coordinate with the other the declaration of any
dividends in respect of Parent Common Stock and Subject Company Common
Stock and the record dates and payment dates relating thereto, it being the
intention of the parties hereto that holders of Parent Common Stock or
Subject Company Common Stock shall not receive more than one dividend, or
fail to receive one dividend, for any single calendar quarter with respect
to their shares of Parent Common Stock and/or Subject Company Common Stock
and any shares of Parent Common Stock any such holder receives in exchange
therefor in the Merger.
6.12 Subsequent Interim and Annual Financial Statements. As soon as
reasonably available, but in no event more than 45 days after the end of
each fiscal quarter (other than the fourth quarter of a fiscal year) or 90
days after December 31, 1995 or the end of each fiscal year ending after
the date of this Agreement, each party will deliver to the other party its
Quarterly Report on Form 10-Q or its Annual Report on Form 10-K, as the
case may be, as filed with the SEC under the Exchange Act.
6.13 Litigation. Each of Parent and Subject Company shall
immediately dismiss, with prejudice, with each party bearing its own costs,
attorneys' fees and litigation expenses and without payment by Parent or
Subject Company to any adverse party of any damages,
43
costs, expenses or attorneys' fees, all proceedings pending in Xxxxx Fargo &
Company v. First Interstate Bancorp, et al., Delaware Chancery, C.A. No.
14696, and First Interstate Bancorp x. Xxxxx Fargo & Company, et al.,
United States District Court for the District of Delaware, C.A. No. 95-800,
and shall execute and deliver such further papers as may be necessary in
connection with such dismissals, including, but not limited to, exchanging
mutual releases with respect or relating to the subject matter of such
proceedings.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. The agreement of merger contained
in this Agreement shall have been approved and adopted by the
requisite affirmative votes of the holders of Subject Company Common
Stock and Parent Common Stock entitled to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock which
shall be issued to the stockholders of Subject Company upon
consummation of the Merger and the New Parent Depositary Shares shall
have been authorized for listing on the NYSE, subject to official
notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired (all such
approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals") and no
such approval shall have imposed any condition, requirement or
restriction which the Board of Directors of either Parent or Subject
Company reasonably determines in good faith would so materially
adversely impact the economic or business benefits of the
transactions contemplated by this Agreement to Parent and its
stockholders or Subject Company and its stockholders, as the case may
be, as to render inadvisable the consummation of the Merger (any such
condition, requirement or restriction, a "Burdensome Condition").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the
S-4 shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
44
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger or any of the
other transactions contemplated by this Agreement shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, restricts or makes illegal the consummation
of the Merger.
7.2 Conditions to Obligations of Parent. The obligation of Parent
to effect the Merger is also subject to the satisfaction or waiver by
Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The representations
and warranties of Subject Company set forth in Sections 3.2, 3.3(a),
3.6, 3.8(a), 3.17 and 3.18 of this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of
the Closing Date and (ii) the representations and warranties of
Subject Company set forth in this Agreement other than those
specifically enumerated in clause (i) hereof shall be true and
correct in all respects as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the
Closing Date; provided, however, that for purposes of determining the
satisfaction of the condition contained in this clause (ii), no
effect shall be given to any exception in such representations and
warranties relating to materiality or a Material Adverse Effect, and
provided, further, however, that, for purposes of this clause (ii),
such representations and warranties shall be deemed to be true and
correct in all respects unless the failure or failures of such
representations and warranties to be so true and correct,
individually or in the aggregate, results or would reasonably be
expected to result in a Material Adverse Effect on Subject Company
and its Subsidiaries taken as a whole. Parent shall have received a
certificate signed on behalf of the Subject Company by the Chief
Executive Officer and Chief Financial Officer of Subject Company to
the foregoing effect.
(b) Performance of Obligations of Subject Company. Subject
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to
the Closing Date, and Parent shall have received a certificate signed
on behalf of Subject Company by the Chief Executive Officer and the
Chief Financial Officer of Subject Company to such effect.
(c) Subject Company Rights Agreement. The rights issued
pursuant to the Subject Company Rights Agreement shall not have
become nonredeemable, exercisable, distributed or triggered pursuant
to the terms of such agreement.
45
(d) Federal Tax Opinion. Parent shall have received an
opinion of Xxxxxxxx & Xxxxxxxx, counsel to Parent, in form and
substance reasonably satisfactory to Parent, dated as of the
Effective Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code and that accordingly:
(1) No gain or loss will be recognized by Parent or
Subject Company as a result of the Merger;
(2) No gain or loss will be recognized by the
stockholders of Subject Company who exchange their Subject
Company Capital Stock solely for Parent Capital Stock pursuant
to the Merger (except with respect to cash received in lieu of
a fractional share interest in Parent Common Stock); and
(3) The tax basis of the Parent Capital Stock received
by stockholders who exchange all of their Subject Company
Capital Stock solely for Parent Capital Stock in the Merger
will be the same as the tax basis of the Subject Company
Capital Stock surrendered in exchange therefor (reduced by any
amount of tax basis allocable to a fractional share interest
for which cash is received).
In rendering such opinion, Xxxxxxxx & Xxxxxxxx may require and
rely upon representations and covenants including those contained in
certificates of officers of Parent and Subject Company and others.
7.3 Conditions to Obligations of Subject Company. The obligation
of Subject Company to effect the Merger is also subject to the satisfaction
or waiver by Subject Company at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. (i) The representations
and warranties of Parent set forth in Sections 4.2, 4.3(a), 4.6,
4.8(a), 4.17 and 4.18 of this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing
Date and (ii) the representations and warranties of Parent set forth
in this Agreement other than those specifically enumerated in clause
(i) hereof shall be true and correct in all respects as of the date
of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date; provided, however, that
for purposes of determining the satisfaction of the condition
contained in this clause (ii), no effect shall be given to any
exception in such representations and warranties relating to
materiality or a Material Adverse Effect,
46
and provided, further, however, that, for purposes of this clause (ii),
such representations and warranties shall be deemed to be true and correct
in all respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
results or would reasonably be expected to result in a Material Adverse
Effect on Parent and its Subsidiaries taken as a whole. Subject Company
shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to the
foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date,
and Subject Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the Chief
Financial Officer of Parent to such effect.
(c) Federal Tax Opinion. Subject Company shall have received
an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx, counsel to
Subject Company, in form and substance reasonably satisfactory to
Subject Company, dated as of the Effective Time, substantially to the
effect that, on the basis of facts, representations and assumptions
set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated for
Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and that accordingly:
(1) No gain or loss will be recognized by Parent or
Subject Company as a result of the Merger;
(2) No gain or loss will be recognized by the
stockholders of Subject Company who exchange their Subject
Company Capital Stock solely for Parent Capital Stock pursuant
to the Merger (except with respect to cash received in lieu of
a fractional share interest in Parent Common Stock); and
(3) The tax basis of the Parent Capital Stock received
by stockholders who exchange all of their Subject Company
Capital Stock solely for Parent Capital Stock in the Merger
will be the same as the tax basis of the Subject Company
Capital Stock surrendered in exchange therefor (reduced by any
amount of tax basis allocable to a fractional share interest
for which cash is received).
In rendering such opinion, Skadden, Arps, Slate, Xxxxxxx & Xxxx
may require and rely upon representations and covenants including
those contained in certificates of officers of Parent and Subject
Company and others.
ARTICLE VIII
47
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual consent of Parent and Subject Company in a
written instrument, if the Board of Directors of each so determines;
(b) by either the Board of Directors of Parent or the Board
of Directors of Subject Company if (i) any Governmental Entity which
must grant a Requisite Regulatory Approval has denied approval of the
Merger and such denial has become final and nonappealable or (ii) any
Governmental Entity of competent jurisdiction shall have issued a
final nonappealable order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement;
(c) by either the Board of Directors of Parent or the Board
of Directors of Subject Company if the Merger shall not have been
consummated on or before December 31, 1996, unless the failure of the
Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(d) by either the Board of Directors of Parent or the Board
of Directors of Subject Company (provided that the terminating party
is not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if the other party
shall have breached (i) any of the covenants or agreements made by
such other party herein or (ii) any of the representations or
warranties made by such other party herein, and in either case, such
breach (x) is not cured within thirty (30) days following written
notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing and (y) would entitle
the non-breaching party not to consummate the transactions
contemplated hereby under Article VII hereof;
(e) by either the Board of Directors of Parent or the Board
of Directors of Subject Company if any approval of the stockholders
of Parent or the Subject Company contemplated by this Agreement shall
not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or at any
adjournment or postponement thereof;
(f) prior to the approval of this Agreement by the requisite
vote of Subject Company's stockholders (if Subject Company is the
terminating party) or by the requisite vote of Parent's stockholders
(if Parent is the terminating party), by either the Board of
Directors of Parent or the Board of Directors of Subject Company, if
there exists at such time a Takeover Proposal for the party whose
Board of Directors is seeking to terminate this Agreement pursuant to
this paragraph (f) and such Board of
48
Directors, after having consulted with and considered the advice of outside
legal counsel, reasonably determines in good faith that such action is
necessary in the exercise of its fiduciary duties under applicable laws;
(g) by either the Board of Directors of Parent or the Board
of Directors of Subject Company, if such Board shall have reasonably
determined in good faith that any of the Requisite Regulatory Approv-
als contains a Burdensome Condition; or
(h) by either the Board of Directors of Parent or the Board
of Directors of Subject Company, if the Board of Directors of the
other party shall have withdrawn, modified or changed in a manner
adverse to the terminating party its approval or recommendation of
this Agreement and the transactions contemplated hereby.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or Subject Company as provided in Section 8.1,
this Agreement shall forthwith become void and have no effect, and none of
Parent, Subject Company, any of their respective Subsidiaries or any of the
officers or directors of any of them shall have any liability of any nature
whatsoever hereunder, or in connection with the transactions contemplated
hereby, except that (i) Sections 6.2(b), 8.2, and 9.3 shall survive any
termination of this Agreement and (ii) notwithstanding anything to the
contrary contained in this Agreement, neither Parent nor Subject Company
shall be relieved or released from any liabilities or damages arising out
of its willful breach of any provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or
after approval of the matters presented in connection with the Merger by
the stockholders of Subject Company and Parent; provided, however, that
after any approval of the transactions contemplated by this Agreement by
Subject Company's stockholders, there may not be, without further approval
of such stockholders, any amendment of this Agreement which reduces the
amount or changes the form of the consideration to be delivered to the
Subject Company stockholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Board
of Directors, may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid only if set forth in a written instrument signed
on behalf of such party, but such extension or waiver or failure to insist
on strict compliance with
49
an obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at
10:00 a.m. on a date to be specified by the parties, which shall be no
later than two business days after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth in
Article VII hereof (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement (other
than the Fee Letters, for which provision has been made therein) shall
survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
9.3 Expenses. Except as provided in the Fee Letters or in Section
8.2 hereof, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, provided, however, that (i) the costs and
expenses of printing and mailing the Joint Proxy Statement, and all filing
and other fees paid to the SEC in connection with the Merger, shall be
borne equally by Parent and Subject Company and (ii) notwithstanding
anything to the contrary contained in this Agreement, neither Parent nor
Subject Company shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this
Agreement.
9.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
50
(a) if to Parent, to:
Xxxxx Fargo & Company
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Fax: (000) 000-0000
Attn: Xxx Xxxxxxxxxxx, Xx., Esq.
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxx, Esq.
(000) 000-0000
(000) 000-0000 (Fax)
(b) if to Subject Company, to:
First Interstate Bancorp
000 Xxxx Xxxxx Xxxxxx, X0-00
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxx, III, Esq.
9.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". Whenever the word "material"
is used in this Agreement and the context in which
51
it is used refers to any of the parties to this Agreement or any of their
respective Subsidiaries, it shall be deemed to be followed by "to [Subject
Company] [Parent] and its Subsidiaries, taken together as a whole," as
applicable. No provision of this Agreement shall be construed to require
Subject Company, Parent or any of their respective Subsidiaries or
affiliates to take any action which would violate or conflict with any
applicable law (whether statutory or common), rule or regulation.
9.6 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties
need not sign the same counterpart.
9.7 Entire Agreement. This Agreement (together with the documents
and the instruments referred to herein) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof, other
than the Subject Company Documents and the Parent Documents.
9.8 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.
9.9 Severability. Except to the extent that application of this
Section 9.9 would have a Material Adverse Effect on either party or the
Surviving Corporation, any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdic-
tion, be ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
9.10 Publicity. Except as otherwise required by applicable law or
the rules of the NYSE, neither Parent nor Subject Company shall, or shall
permit any of its Subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by this
Agreement or the Fee Letters without the consent of the other party, which
consent shall not be unreasonably withheld.
9.11 Assignment; Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations of any party hereunder
shall be assigned by any of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their
respective successors and assigns. Except as otherwise specifically
provided in Section 6.8 hereof, this Agreement (including the
52
documents and instruments referred to herein) is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
9.12 Alternative Structure. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Effective Time, the
parties may mutually agree to revise the structure of the Merger and
related transactions provided that each of the transactions comprising such
revised structure shall (i) not change the amount or form of consideration
to be received by the stockholders of Subject Company and the holders of
Subject Company Options, (ii) be capable of consummation in as timely a
manner as the structure contemplated herein and (iii) not otherwise be
prejudicial to the interests of the stockholders of Subject Company. This
Agreement and any related documents shall be appropriately amended in order
to reflect any such revised structure.
9.13 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof
in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or
in equity.
53
IN WITNESS WHEREOF, Parent and Subject Company have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
XXXXX FARGO & COMPANY
By:
Name:
Title:
FIRST INTERSTATE BANCORP
By:
Name:
Title:
1
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Conversion of Subject Company Common Stock,
Subject Company Preferred Stock . . . . . . . . . . . . . . . . . 2
1.5 Parent Common Stock; Parent Preferred Stock . . . . . . . . . . . 4
1.6 Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Certificate of Incorporation . . . . . . . . . . . . . . . . . . 5
1.8 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.9 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 6
1.11 Headquarters . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available . . . . . . . . . . . . . . . . . 6
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 9
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . . 11
3.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 12
3.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 13
3.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . 14
3.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Compliance with Applicable Law . . . . . . . . . . . . . . . . . 17
3.14 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . 17
2
3.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . 18
3.16 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . 18
3.17 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . 19
3.18 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . 19
3.19 Subject Company Information. . . . . . . . . . . . . . . . . . . 19
3.20 Environmental Liability . . . . . . . . . . . . . . . . . . . . . 19
3.21 Interest Rate Risk Management Instruments. . . . . . . . . . . . 20
3.22 Terminated Merger Agreement. . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 21
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . . 22
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 23
4.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 24
4.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . 25
4.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 25
4.10 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . . . . 25
4.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.13 Compliance with Applicable Law . . . . . . . . . . . . . . . . . 27
4.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . 28
4.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . 28
4.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . 29
4.17 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . 29
4.18 Parent Information. . . . . . . . . . . . . . . . . . . . . . . . 29
4.19 Environmental Liability. . . . . . . . . . . . . . . . . . . . . 29
4.20 Interest Rate Risk Management Instruments. . . . . . . . . . . . 30
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. . . . . . . . 30
5.2 Forbearances . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . 35
6.3 Stockholders' Approvals . . . . . . . . . . . . . . . . . . . . . 36
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . 36
6.5 Affiliates; Publication of Combined Financial Results. . . . . . 37
6.6 Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . 37
6.7 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 37
6.8 Indemnification; Directors' and Officers' Insurance . . . . . . 39
6.9 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . 42
6.10 Advice of Changes. . . . . . . . . . . . . . . . . . . . . . . . 42
6.11 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.12 Subsequent Interim and Annual Financial Statements. . . . . . . . 42
6.13 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger . . . 43
7.2 Conditions to Obligations of Parent. . . . . . . . . . . . . . . 44
7.3 Conditions to Obligations of Subject Company . . . . . . . . . . 45
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . 48
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.2 Nonsurvival of Representations, Warranties and Agreements. . . . 49
4
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.7 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 51
9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.11 Assignment; Third Party Beneficiaries. . . . . . . . . . . . . . 51
9.12 Alternative Structure . . . . . . . . . . . . . . . . . . . . . . 52
9.13 Enforcement of the Agreement. . . . . . . . . . . . . . . . . . . 52
