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EXHIBIT 2.1
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AGREEMENT AND PLAN OF REORGANIZATION
by and among
MERCANTILE BANCORPORATION INC.,
AMERIBANC, INC.,
and
FIRSTBANK OF ILLINOIS CO.
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Dated January 30, 1998
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is made and entered into on January 30, 1998, by and among MERCANTILE
BANCORPORATION INC., a Missouri corporation ("Mercantile"), Ameribanc, Inc., a
Missouri corporation and a wholly owned subsidiary of Mercantile ("Merger Sub"),
and FIRSTBANK OF ILLINOIS CO., a Delaware corporation ("Firstbank").
W I T N E S S E T H:
WHEREAS, Mercantile is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHCA"); and
WHEREAS, Firstbank is a registered bank holding company under
the BHCA; and
WHEREAS, the Board of Directors of Firstbank (the "Firstbank
Board") and the Executive Committee of the Board of Directors of Mercantile (the
"Mercantile Executive Committee") have approved the merger (the "Merger") of
Firstbank with and into Merger Sub, pursuant to the terms and subject to the
conditions of this Agreement; and
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, it is intended that the Merger shall qualify for
pooling-of-interests accounting treatment; and
WHEREAS, as a condition to, and immediately after the
execution of this Agreement, Mercantile and certain directors of Firstbank will
enter into Support Agreements (the "Support Agreements") in the form attached
hereto as Exhibit A; and
WHEREAS, as a condition to, and immediately prior to execution
of this Agreement, Mercantile and Firstbank will enter into a stock option
agreement (the "Stock Option Agreement") in the form attached hereto as Exhibit
B; and
WHEREAS, the parties desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the
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parties agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and conditions of this
Agreement, Firstbank shall be merged with and into Merger Sub in accordance with
the Delaware General Corporation Law (the "DGCL") and the Missouri General and
Business Corporation Law (the "MGBCL") and the separate corporate existence of
Firstbank shall cease. Merger Sub shall be the surviving corporation of the
Merger (sometimes referred to herein as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Missouri.
1.02. Closing. The closing (the "Closing") of the Merger shall
take place at 10:00 a.m., local time, on the date that the Effective Time (as
defined in Section 1.03) occurs, or at such other time, and at such place, as
Mercantile and Firstbank shall agree (the "Closing Date").
1.03. Effective Time. The Merger shall become effective on the
date and at the time (the "Effective Time") on which appropriate documents in
respect of the Merger are filed with the Secretaries of State of the States of
Delaware and Missouri in such form as required by, and in accordance with, the
relevant provisions of the DGCL and MGBCL, respectively. Subject to the terms
and conditions of this Agreement, the Effective Time shall occur on any such
date as Mercantile shall notify Firstbank in writing (such notice to be at least
five business days in advance of the Effective Time) but (i) not earlier than
the satisfaction of all conditions set forth in Section 6.01 and 6.02 (the
"Approval Date") and (ii) subject to clause (i), not later than the first
business day of the first full calendar month commencing at least five business
days after the Approval Date. As soon as practicable following the Effective
Time, Mercantile and Firstbank shall cause a certificate or plan of merger
reflecting the terms of this Agreement to be delivered for filing and
recordation with other appropriate state or local officials in the States of
Delaware and Missouri in accordance with the DGCL and the MGBCL, respectively.
1.04. Additional Actions. If, at any time after the Effective
Time, Mercantile or the Surviving Corporation shall consider or be advised that
any further deeds, assignments or assurances or any other acts are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Firstbank or Merger Sub or (b) otherwise carry
out the purposes of this Agreement, Firstbank and Merger Sub and each of their
respective officers and directors,
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shall be deemed to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such deeds, assignments or
assurances and to do all acts necessary or desirable to vest, perfect or confirm
title and possession to such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, and the
officers and directors of the Surviving Corporation are authorized in the name
of Firstbank or otherwise to take any and all such action.
1.05. Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation following the Merger until otherwise amended or repealed.
1.06. Boards of Directors and Officers. At the Effective Time,
the directors and officers of Merger Sub immediately prior to the Effective Time
shall be directors and officers, respectively, of the Surviving Corporation
following the Merger; such directors and officers shall hold office in
accordance with the Surviving Corporation's Bylaws and applicable law.
1.07. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Mercantile, Firstbank
or the holder of any of the following securities:
(i) Each share of the common stock, par value $.01 per share,
of Merger Sub that is issued and outstanding immediately prior to the Effective
Time shall remain outstanding and shall be unchanged after the Merger and shall
thereafter constitute all of the issued and outstanding capital stock of the
Surviving Corporation; and
(ii) Subject to Sections 1.10 and 1.11 hereof, each share of
the common stock, $1.00 par value ("Firstbank Common Stock"), of Firstbank
issued and outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and become the right to receive 0.8308
(the "Exchange Ratio") shares of common stock, par value $.01 per share
("Mercantile Common Stock"), of Mercantile and the associated Rights under the
Mercantile Rights Agreement as those terms are defined in Section 3.02 (the "Per
Share Stock Consideration"), provided, however, that any shares of Firstbank
Common Stock held by Firstbank, Mercantile or any of their respective
Subsidiaries, in each case other than in a fiduciary capacity or as a result of
debts previously contracted, shall be cancelled and shall not be exchanged for
shares of Mercantile Common Stock. The Exchange Ratio was computed by (i)
aggregating (A) the total number of shares of Firstbank Common Stock that were
issued and outstanding on the date of this Agreement (as set forth in Section
2.03
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hereof) with (B) the total number of shares of Firstbank Common Stock that are
reserved for issuance pursuant to Firstbank Stock Options (as set forth in
Section 2.03 hereof) and dividing such number of shares of Firstbank Common
Stock (computed by aggregating (A) and (B) hereof) into (ii) 13,800,000, the
aggregate number of shares of Mercantile Common Stock to be issued in the
Merger.
1.08. Exchange Procedures. (a) Holders of record of
certificates formerly representing shares of Firstbank Common Stock (the
"Certificates") shall be instructed to tender such Certificates to Mercantile
pursuant to a letter of transmittal that Mercantile shall deliver or cause to be
delivered to such holders as soon as practicable following the Effective Time.
Such letters of transmittal shall specify that risk of loss and title to
Certificates shall pass only upon delivery of such Certificates to Mercantile or
the Exchange Agent (as defined below).
(b) Subject to Section 1.10, after the Effective Time, each
previous holder of a Certificate that surrenders such Certificate to Mercantile
or to Xxxxxx Trust and Savings Bank, as the exchange agent designated by
Mercantile (the "Exchange Agent"), will, upon acceptance thereof by Mercantile
or the Exchange Agent, be entitled to a certificate or certificates representing
the number of full shares of Mercantile Common Stock into which the shares
represented by the Certificate so surrendered shall have been converted pursuant
to this Agreement and any distribution theretofore declared and not yet paid
with respect to such shares of Mercantile Common Stock, without interest, and a
check representing the amount of any cash in lieu of fractional shares which
such holder has the right to receive with respect to the Certificate(s)
surrendered.
(c) Mercantile or, at the election of Mercantile, the Exchange
Agent shall accept Certificates upon compliance with such reasonable terms and
conditions as Mercantile or the Exchange Agent may impose to effect an orderly
exchange thereof in accordance with customary exchange practices. Certificates
shall be appropriately endorsed or accompanied by such instruments of transfer
as Mercantile or the Exchange Agent may reasonably require.
(d) Each outstanding Certificate shall until duly surrendered
to Mercantile or the Exchange Agent be deemed to evidence ownership of the
consideration into which the stock previously represented by such Certificate
shall have been converted pursuant to this Agreement.
(e) After the Effective Time, holders of Certificates shall
cease to have rights with respect to the stock previously represented by such
Certificates, and their sole rights shall be to exchange such Certificates for
the consideration provided for
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in this Agreement. After the Effective Time, there shall be no further transfer
on the records of Firstbank of Certificates, and if such Certificates are
presented to Firstbank for transfer, they shall be cancelled against delivery of
the consideration provided therefor in this Agreement. Mercantile shall not be
obligated to deliver the consideration to which any former holder of Firstbank
Common Stock is entitled as a result of the Merger until such holder surrenders
the Certificates as provided herein. No dividends declared will be remitted to
any person entitled to receive Mercantile Common Stock under this Agreement
until such person surrenders the Certificate representing the right to receive
such Mercantile Common Stock, at which time such dividends shall be remitted to
such person, without interest and less any taxes that may have been imposed
thereon. Certificates surrendered for exchange by any person constituting an
"affiliate" of Firstbank for purposes of Rule 145 of the Securities Act of 1933,
as amended (together with the rules and regulations thereunder, the "Securities
Act"), shall not be exchanged for certificates representing Mercantile Common
Stock until Mercantile has received a written agreement from such person in the
form attached as Exhibit C. Neither the Exchange Agent nor any party to this
Agreement nor any affiliate thereof shall be liable to any holder of stock
represented by any Certificate for any consideration paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. Mercantile
and the Exchange Agent shall be entitled to rely upon the stock transfer books
of Firstbank to establish the identity of those persons entitled to receive
consideration specified in this Agreement, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, Mercantile and the Exchange Agent shall be
entitled to deposit any consideration represented thereby in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
1.09. [Intentionally Omitted]
1.10. No Fractional Shares. Notwithstanding any other
provision of this Agreement, neither certificates nor scrip for fractional
shares of Mercantile Common Stock shall be issued in the Merger. Each holder who
otherwise would have been entitled to a fraction of a share of Mercantile Common
Stock shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by the Closing Price per share of Mercantile Common
Stock on the last business day preceding the Effective Time. With respect to a
share of stock, "Closing Price" shall mean: the closing price as reported on the
Consolidated Tape (as reported in The Wall Street Journal or in the absence
thereof, by any other authoritative source). No such holder shall be entitled to
dividends, voting rights or any other rights in respect of any fractional share.
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1.11. Anti-Dilution Adjustments. If prior to the Effective
Time Mercantile shall declare a stock dividend or make distributions upon or
subdivide, split up, reclassify or combine or make other similar change to
Mercantile Common Stock, exchange Mercantile Common Stock for a different number
or kind of shares or securities or declare a dividend or make a distribution on
Mercantile Common Stock or on any security convertible into Mercantile Common
Stock, or is involved in any transaction resulting in any of the foregoing
(including any exchange of Mercantile Common Stock for a different number or
kind of shares or securities), appropriate adjustment or adjustments will be
made to the Exchange Ratio.
1.12. Reservation of Right to Revise Transaction. Mercantile
may at any time change the method of effecting the acquisition of Firstbank or
Firstbank's Subsidiaries by Mercantile and Firstbank shall cooperate in such
efforts (including without limitation (a) the provisions of this Article I and
(b) causing the merger of any of the Banks (as defined herein) with any
depository institution which is a Subsidiary of Mercantile (any such merger
together with the Merger being referred to herein as the "Transactions")) if and
to the extent it deems such change to be desirable, including without limitation
to provide for a merger of Firstbank directly into Mercantile, in which
Mercantile is the surviving corporation, provided, however, that no such change
shall (A) alter or change the amount or kind of consideration to be issued to
holders of Firstbank Common Stock as provided for in this Agreement (the "Merger
Consideration"), (B) adversely affect the tax treatment to Firstbank's
stockholders as a result of receiving the Merger Consideration or (C) materially
delay receipt of any approval referred to in Section 6.01(b) or the consummation
of the transactions contemplated by this Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF FIRSTBANK
Firstbank represents and warrants to and covenants with
Mercantile as follows:
2.01. Organization and Authority. Firstbank is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified to do business and is in good standing
in all jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified, except as set forth on Schedule
2.01 and except where the failure to be so qualified would not have and could
not reasonably be expected to have a material adverse effect on the financial
condition, results of operations or business (collectively, the "Condition") of
Firstbank and its Subsidiaries, taken as a whole, and has corporate power and
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thority to own its properties and assets and to carry on its business as it is
now being conducted. Firstbank is registered as a bank holding company with the
Board of Governors of the Federal Reserve System (the "Board") under the BHCA.
True and complete copies of the Certificate of Incorporation and the Bylaws of
Firstbank and, to the extent requested in writing by Mercantile, of the articles
of incorporation and bylaws of the Firstbank Subsidiaries (as defined in Section
2.02), each as in effect on the date of this Agreement, have been provided to
Mercantile.
2.02. Subsidiaries. Schedule 2.02 sets forth, among other
things, a complete and correct list of all of Firstbank's Subsidiaries (each a
"Firstbank Subsidiary" and collectively the "Firstbank Subsidiaries"), all
outstanding Equity Securities of each of which, except as set forth on Schedule
2.02, are owned directly or indirectly by Firstbank. "Equity Securities" of an
issuer means capital stock or other equity securities of such issuer, options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, shares of any
capital stock or other Equity Securities of such issuer, or contracts,
commitments, understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock or other Equity
Securities of such issuer, or options, warrants, scrip or rights to purchase,
acquire, subscribe to, calls on or commitments for any shares of its capital
stock or other Equity Securities. Except as set forth on Schedule 2.02, all of
the outstanding shares of capital stock of the Firstbank Subsidiaries are
validly issued, fully paid and nonassessable, and those shares owned by
Firstbank are owned free and clear of any lien, claim, charge, option,
encumbrance, agreement, mortgage, pledge, security interest or restriction (a
"Lien") with respect thereto. Each of the Firstbank Subsidiaries is a
corporation, savings bank, bank or bank and trust company duly incorporated or
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or organization, and has corporate power and
authority to own or lease its properties and assets and to carry on its business
as it is now being conducted. Each of the Firstbank Subsidiaries is duly
qualified to do business in each jurisdiction where its ownership or leasing of
property or the conduct of its business requires it so to be qualified, except
where the failure to so qualify would not have and could not reasonably be
expected to have a material adverse effect on the Condition of Firstbank and its
Subsidiaries, taken as a whole. Except as set forth on Schedule 2.02, Firstbank
does not own beneficially, directly or indirectly, any shares of any class of
Equity Securities or similar interests of any corporation, bank, business trust,
association or similar organization. The place and type of charter and the
applicable insurance fund for each of Firstbank's Subsidiaries which are
financial institutions (the "Banks") are set forth on Schedule 2.02. Except as
set forth on Schedule 2.02, neither Firstbank nor any Firstbank Subsidiary
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holds any interest in a partnership or joint venture of any kind.
2.03. Capitalization. The authorized capital stock of
Firstbank consists of (i) 20,000,000 shares of Firstbank Common Stock, of which,
as of January 2, 1998, 15,753,053 shares were issued and outstanding and (ii)
1,000,000 shares of preferred stock, no par value per share, of which, as of
January 2, 1998, no shares were issued and outstanding ("Firstbank Preferred
Stock"). As of January 2, 1998, Firstbank had reserved 857,201 shares of
Firstbank Common Stock for issuance under Firstbank's stock option and incentive
plans, a list of which is set forth on Schedule 2.03 (the "Firstbank Stock
Plans"), pursuant to which options ("Firstbank Stock Options") covering 857,201
shares of Firstbank Common Stock were outstanding as of January 2, 1998. Except
as set forth on Schedule 2.03, since December 31, 1997, no Equity Securities of
Firstbank have been issued other than shares of Firstbank Common Stock which may
have been issued upon the exercise of Firstbank Stock Options. Except as set
forth above, there are no other Equity Securities of Firstbank outstanding. All
of the issued and outstanding shares of Firstbank Common Stock are validly
issued, fully paid, and nonassessable, and have not been issued in violation of
any preemptive right of any stockholder of Firstbank. Since January 2, 1998,
Firstbank has not granted any options or similar rights pursuant to which shares
of Firstbank Common Stock may be issued and has not issued any shares of
Firstbank Common Stock. Neither Firstbank nor any Firstbank Subsidiary, to the
best of Firstbank's knowledge, has taken or agreed to take any action or has any
knowledge of any fact or circumstance and neither Firstbank nor any Firstbank
Subsidiary will take any action that would, or intentionally will fail to take
any action the failure of which to take would, prevent the Merger from
qualifying for pooling-of-interests accounting treatment.
2.04. Authorization. (a) Except as set forth on Schedule
2.04A, Firstbank has the corporate power and authority to enter into this
Agreement and, subject to the approval of this Agreement by the stockholders of
Firstbank, to carry out its obligations hereunder. The only stockholder vote
required for Firstbank to approve this Agreement is the affirmative vote of the
holders of at least a majority of the shares of Firstbank Common Stock entitled
to vote at a meeting called for such purpose. The execution, delivery and
performance of this Agreement by Firstbank and the consummation by Firstbank of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of Firstbank. Subject to approval by the stockholders of Firstbank,
this Agreement is a valid and binding obligation of Firstbank enforceable
against Firstbank in accordance with its terms, except as enforceability may be
limited by applicable laws relating to bankruptcy, insolvency or creditors
rights generally and general principles of equity.
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(b) Except as set forth on Schedule 2.04B, neither the
execution nor delivery nor performance by Firstbank of this Agreement, nor the
consummation by Firstbank of the transactions contemplated hereby, nor
compliance by Firstbank with any of the provisions hereof, will (i) violate,
conflict with, or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any Lien upon any of the material properties or
assets of Firstbank or any Firstbank Subsidiary under any of the terms,
conditions or provisions of (x) its articles or certificate of incorporation or
bylaws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Firstbank
or any Firstbank Subsidiary is a party or by which it may be bound, or to which
Firstbank or any Firstbank Subsidiary or any of the material properties or
assets of Firstbank or any Firstbank Subsidiary may be subject (in all cases
other than any of the foregoing which would not have and could not reasonably be
expected to have a material adverse effect on the Condition of Firstbank and the
Firstbank Subsidiaries, taken as a whole), or (ii) subject to compliance with
the statutes and regulations referred to in paragraph (c) of this Section 2.04,
to the best knowledge of Firstbank, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Firstbank or any
Firstbank Subsidiary or any of their respective material properties or assets.
(c) Other than in connection or in compliance with the
provisions of the DGCL, the MGBCL, the Securities Act, the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange
Act"), the Investment Company Act of 1940, the securities or blue sky laws of
the various states or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHCA or any required approvals or filings pursuant
to any state statutes or regulations applicable to Firstbank, Mercantile or
their respective Subsidiaries with respect to the transactions contemplated by
this Agreement, no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Firstbank of the transactions contemplated by this
Agreement.
2.05. Firstbank Financial Statements. The consolidated balance
sheets of Firstbank and its Subsidiaries as of December 31, 1996, 1995 and 1994
and related consolidated statements of income, cash flows and changes in
stockholders' equity for each of the three years in the three-year period ended
December 31, 1996, together with the notes thereto, audited by KPMG Peat Marwick
LLP and included in an annual report on Form 10-K (including amendments thereto)
as filed with the Securities
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and Exchange Commission (the "SEC"), and the unaudited consolidated balance
sheets of Firstbank and its Subsidiaries as of March 31, June 30, and September
30, 1997 and the related unaudited consolidated statements of income and cash
flows for the periods then ended, together with the notes thereto, included in
quarterly reports on Form 10-Q (including amendments thereto) (each a "Firstbank
Form 10-Q") as filed with the SEC (collectively, the "Firstbank Financial
Statements"), except as set forth on Schedule 2.05, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis ("GAAP"), present fairly the consolidated financial position of Firstbank
and its Subsidiaries at the dates and the consolidated results of operations,
cash flows and changes in stockholders' equity of Firstbank and its Subsidiaries
for the periods stated therein and are derived from the books and records of
Firstbank and its Subsidiaries, which are complete and accurate in all material
respects and have been maintained in all material respects in accordance with
applicable laws and regulations. Except as set forth on Schedule 2.05, neither
Firstbank nor any of its Subsidiaries has any contingent liabilities that are
material to Firstbank and the Firstbank Subsidiaries, taken as a whole, and
which are not reflected in the Firstbank Reports (defined below) or disclosed in
the financial statements described above.
2.06. Firstbank Reports. Except as set forth on Schedule 2.06,
since January 1, 1994, each of Firstbank and the Firstbank Subsidiaries has
filed all material reports, registrations and statements, together with any
required material amendments thereto, that it was required to file with (i) the
SEC, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy
statements, (ii) the FDIC, (iii) the Board and (iv) any other federal, state,
municipal, local or foreign government, securities, banking, savings and loan,
insurance and other governmental or regulatory authority and the agencies and
staffs thereof (the entities in the foregoing clauses (i) through (iv) being
referred to herein collectively as the "Regulatory Authorities" and individually
as a "Regulatory Authority"). All such reports and statements filed with any
such Regulatory Authority are collectively referred to herein as the "Firstbank
Reports." As of its respective date, each Firstbank Report complied in all
material respects with all the rules and regulations promulgated by the
applicable Regulatory Authority and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
2.07. Properties and Leases. Except as set forth on Schedule
2.07 or as may be reflected in the Firstbank Financial Statements, except for
any Lien for current taxes not yet delinquent and except with respect to assets
classified as real estate owned, Firstbank and its Subsidiaries have good title
free
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and clear of any material Lien to all the real and personal property reflected
in Firstbank's consolidated balance sheet as of September 30, 1997 included in
the most recent Firstbank Form 10-Q and, in each case, all real and personal
property acquired since such date, except such real and personal property as has
been disposed of in the ordinary course of business. All leases material to
Firstbank or any Firstbank Subsidiary pursuant to which Firstbank or any
Firstbank Subsidiary, as lessee, leases real or personal property, are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any material existing default by Firstbank or any Firstbank
Subsidiary or any event which, with notice or lapse of time or both, would
constitute such a material default. Substantially all of Firstbank's and
Firstbank Subsidiaries' buildings, structures and equipment in regular use have
been well maintained and are in good and serviceable condition, normal wear and
tear excepted.
2.08. Taxes. Except as set forth on Schedule 2.08, Firstbank
and each Firstbank Subsidiary have timely filed or will timely (including
extensions) file all material tax returns, reports and certifications required
to be filed on or prior to the Closing Date ("Firstbank Returns"), and such
filed Firstbank Returns are and will be complete and accurate in all material
respects. Each of Firstbank and its Subsidiaries has paid (taking into account
all applicable extensions), or set up adequate reserves on the Firstbank
Financial Statements for the payment of, all taxes required to be paid in
respect of the periods covered by the Firstbank Financial Statements and has set
up adequate reserves on the most recent financial statements Firstbank has filed
under the Exchange Act for the payment of all taxes anticipated to be payable in
respect of all periods up to and including the latest period covered by such
financial statements. Neither Firstbank nor any Firstbank Subsidiary will have
any liability material or reasonably expected to be material to the Condition of
Firstbank and the Firstbank Subsidiaries, taken as a whole, for any such taxes
in excess of the amounts so paid or reserves so established and, to the
knowledge of Firstbank, no material deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed (tentatively or
definitely) against any of Firstbank or any Firstbank Subsidiary which would not
be covered by existing reserves. Neither Firstbank nor any Firstbank Subsidiary
is delinquent in the payment of any material tax, assessment or governmental
charge, nor has it requested any extension of time within which to file any tax
returns in respect of any fiscal year which have not since been timely filed and
no requests for extensions or waivers of the time to assess any tax are pending.
The federal and state income tax returns of Firstbank and the Firstbank
Subsidiaries have been audited and settled by the Internal Revenue Service (the
"IRS") or appropriate state tax authorities for all periods ended through
December 31, 1994 (with respect to federal income tax returns) and
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December 31, 1993 (with respect to state income tax returns) or the period for
assessment of taxes in respect of such periods has expired. There is no
deficiency or refund litigation or matter in controversy with respect to
Firstbank Returns. Neither Firstbank nor any Firstbank Subsidiary has extended
or waived any statute of limitations on the assessment of any tax due that is
currently in effect.
2.09. Material Adverse Change. Since September 30, 1997, there
has been no material adverse change in the Condition of Firstbank and its
Subsidiaries, taken as a whole, except (i) as may have resulted or may result
from changes to laws and regulations or changes in economic conditions
applicable to banking institutions generally or in general levels of interest
rates affecting banking institutions generally and (ii) costs, up to the amounts
set forth on Schedule 2.23, incurred or to be incurred by Firstbank in
connection with this Agreement, which include costs incurred for investment
banking, accounting and legal services.
2.10. Commitments and Contracts. (a) Except as set forth on
Schedule 2.10A, neither Firstbank nor any Firstbank Subsidiary is a party or
subject to any of the following (whether written or oral, express or implied):
(i) any material agreement, arrangement or commitment
(A) not made in the ordinary course of business or (B)
pursuant to which Firstbank or any of its Subsidiaries is or
may become obligated to invest in or contribute capital to any
Firstbank Subsidiary;
(ii) any agreement, indenture or other instrument not
disclosed in the Firstbank Financial Statements relating to
the borrowing of money by Firstbank or any Firstbank
Subsidiary or the guarantee by Firstbank or any Firstbank
Subsidiary of any such obligation (other than trade payables
or instruments related to transactions entered into in the
ordinary course of business by any Firstbank Subsidiary, such
as deposits and Fed Funds borrowings);
(iii) any contract, agreement or understanding with
any labor union or collective bargaining organization relating
to employees of Firstbank or any Firstbank Subsidiaries;
(iv) any contract containing covenants which limit
the ability of Firstbank or any Firstbank Subsidiary to
compete in any line of business or with any person or which
involve any restriction of the geographical area in which, or
method by which, Firstbank or any Firstbank Subsidiary may
carry on its
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business (other than as may be required by law or any
applicable Regulatory Authority) and which are not material or
reasonably expected to be material to the Condition of
Firstbank and the Firstbank Subsidiaries, taken as a whole;
(v) any other contract or agreement which is a
"material contract" within the meaning of Item 601(b)(10) of
Regulation S-K promulgated by the SEC; or
(vi) any lease with annual rental payments
aggregating $250,000 or more.
(b) Neither Firstbank nor any Firstbank Subsidiary is in
violation of its charter documents or bylaws or in default under any material
agreement, commitment, arrangement, lease, insurance policy, or other
instrument, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that, with the
lapse of time or giving of notice or both, would constitute such a default,
except, in all cases, where such default would not have and could not reasonably
be expected to have a material adverse effect on the Condition of Firstbank and
its Subsidiaries, taken as a whole.
2.11. Litigation and Other Proceedings. Except as set forth on
Schedule 2.11, neither Firstbank nor any Firstbank Subsidiary is a party to any
pending or, to the best knowledge of Firstbank, threatened claim, action, suit,
investigation or proceeding, or is subject to any order, judgment or decree,
except for matters which, in the aggregate, will not have, or reasonably could
not be expected to have, a material adverse effect on the Condition of Firstbank
and its Subsidiaries, taken as a whole, or which purports or seeks to enjoin or
restrain the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, as of the date of this Agreement, there are no
actions, suits, or proceedings pending or, to the best knowledge of Firstbank,
threatened against Firstbank or any Firstbank Subsidiary or any of their
respective officers or directors by any stockholder of Firstbank or any
Firstbank Subsidiary (or any former stockholder of Firstbank or any Firstbank
Subsidiary) or involving claims under the Securities Act, the Exchange Act, the
Community Reinvestment Act of 1977, as amended, or the fair lending laws.
2.12. Insurance. Each of Firstbank and its Subsidiaries has
taken all requisite action (including without limitation the making of claims
and the giving of notices) pursuant to its directors' and officers' liability
insurance policy or policies in order to preserve all rights thereunder with
respect to all matters (other than matters arising in connection with this
Agreement and the transactions contemplated hereby) occurring prior to the
Effective Time that are known to Firstbank, except
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for such matters which, individually or in the aggregate, will not have and
reasonably could not be expected to have a material adverse effect on the
Condition of Firstbank and its Subsidiaries, taken as a whole. Set forth on
Schedule 2.12 is a list of all insurance policies maintained by or for the
benefit of Firstbank or its Subsidiaries or their directors, officers, employees
or agents.
2.13. Compliance with Laws. (a) Except as set forth on
Schedule 2.13A, Firstbank and each of its Subsidiaries have all permits,
licenses, authorizations, orders and approvals of, and have made all filings,
applications and registrations with, all Regulatory Authorities that are
required in order to permit them to own or lease their properties and assets and
to carry on their business as presently conducted and that are material or
reasonably expected to be material to the Condition of Firstbank and its
Subsidiaries, taken as a whole; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the best
knowledge of Firstbank, no suspension or cancellation of any of them is
threatened; and all such filings, applications and registrations are current.
(b) Except as set forth on Schedule 2.13B and except for
failures to comply or defaults which individually or in the aggregate would not
have and could not reasonably be expected to have a material adverse effect on
the Condition of Firstbank and its Subsidiaries, taken as a whole, (i) each of
Firstbank and its Subsidiaries has complied with all laws, regulations and
orders (including without limitation zoning ordinances, building codes, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
securities, tax, environmental, civil rights, and occupational health and safety
laws and regulations and including without limitation in the case of any
Firstbank Subsidiary that is a bank, banking organization, banking corporation
or trust company, all statutes, rules, regulations and policy statements
pertaining to the conduct of a banking, deposit-taking, lending or related
business, or to the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business, and (ii) neither
Firstbank nor any Firstbank Subsidiary is in default under, and no event has
occurred which, with the lapse of time or notice or both, could result in the
default under, the terms of any judgment, order, writ, decree, permit, or
license of any Regulatory Authority or court, whether federal, state, municipal,
or local and whether at law or in equity. Except as set forth on Schedule 2.13B
and except as would not have and could not reasonably be expected to have a
material adverse effect on the Condition of Firstbank and its Subsidiaries,
taken as a whole, as of the date of this Agreement, neither Firstbank nor any
Firstbank Subsidiary is subject to or reasonably likely to incur a liability as
a result of its ownership, operation, or use of any Property (as defined below)
of Firstbank (whether directly or, to the best knowledge of Firstbank, as a
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consequence of such Property being part of the investment portfolio of Firstbank
or any Firstbank Subsidiary) (A) that is contaminated by or contains any
hazardous waste, toxic substance, or related materials, including without
limitation asbestos, PCBs, pesticides, herbicides, and any other substance or
waste that is hazardous to human health or the environment (collectively, a
"Toxic Substance"), or (B) on which any Toxic Substance has been stored,
disposed of, placed, or used in the construction thereof. "Property" of a person
shall include all property (real or personal, tangible or intangible) owned or
controlled by such person, including without limitation property under
foreclosure, property held by such person or any Subsidiary of such person in
its capacity as a trustee and property in which any venture capital or similar
unit of such person or any Subsidiary of such person has an interest. Except as
set forth on Schedule 2.13B, no claim, action, suit, or proceeding is pending
against Firstbank or any Firstbank Subsidiary relating to Property of Firstbank
before any court or other Regulatory Authority or arbitration tribunal relating
to hazardous substances, pollution, or the environment, and there is no
outstanding judgment, order, writ, injunction, decree, or award against or
affecting Firstbank or any Firstbank Subsidiary with respect to the same. Except
for statutory or regulatory restrictions of general application, no Regulatory
Authority has placed any restriction on the business of Firstbank or any
Firstbank Subsidiary which reasonably could be expected to have a material
adverse effect on the Condition of Firstbank and its Subsidiaries, taken as a
whole.
(c) From and after January 1, 1994, neither Firstbank nor any
Firstbank Subsidiary has received any notification or communication which has
not been finally resolved from any Regulatory Authority (i) asserting that any
Firstbank or any Subsidiary of Firstbank, is not in substantial compliance with
any of the statutes, regulations or ordinances that such Regulatory Authority
enforces, except with respect to matters which (A) are set forth on Schedule
2.13C or (B) reasonably could not be expected to have a material adverse effect
on the Condition of Firstbank and its Subsidiaries, taken as a whole, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization that is material or reasonably expected to be material to the
Condition of Firstbank and its Subsidiaries, taken as a whole, including without
limitation such company's status as an insured depositary institution under the
Federal Deposit Insurance Act, or (iii) requiring or threatening to require
Firstbank or any of its Subsidiaries, or indicating that Firstbank or any of its
Subsidiaries may be required, to enter into a cease and desist order, agreement
or memorandum of understanding or any other agreement restricting or limiting or
purporting to direct, restrict or limit in any manner the operations of
Firstbank or any of its Subsidiaries, including without limitation any
restriction on the payment of dividends. No such cease and desist order,
agreement or memorandum of understanding or other agreement is
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currently in effect.
(d) Except as set forth on Schedule 2.13D, neither Firstbank
nor any Firstbank Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to any federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer.
2.14. Labor. No work stoppage involving Firstbank or any
Firstbank Subsidiary, is pending or, to the best knowledge of Firstbank,
threatened which reasonably could be expected to have a material adverse effect
on the Condition of Firstbank and its Subsidiaries, taken as a whole. Neither
Firstbank nor any Firstbank Subsidiary is involved in, or, to the best knowledge
of Firstbank, threatened with or affected by, any labor dispute, arbitration,
lawsuit or administrative proceeding which reasonably could be expected to have
a material adverse affect on the Condition of Firstbank and its Subsidiaries,
taken as a whole. Employees of neither Firstbank nor any Firstbank Subsidiary,
are represented by any labor union or any collective bargaining organization.
2.15. Material Interests of Certain Persons. (a) Except as set
forth in Firstbank's Proxy Statement for its 1997 Annual Meeting of
Shareholders, to the best knowledge of Firstbank, no officer or director of
Firstbank or any Subsidiary of Firstbank, or any "associate" (as such term is
defined in Rule l4a-1 under the Exchange Act) of any such officer or director,
has any material interest in any material contract or property (real or
personal, tangible or intangible), used in, or pertaining to the business of,
Firstbank or any Subsidiary of Firstbank, which in the case of Firstbank is
required to be disclosed by Item 404 of Regulation S-K promulgated by the SEC or
in the case of any such Subsidiary would be required to be so disclosed if such
Subsidiary had a class of securities registered under Section 12 of the Exchange
Act.
(b) Except as set forth in Firstbank's Proxy Statement for its
1997 Annual Meeting of Shareholders or on Schedule 2.15B, there are no loans
from Firstbank or any Firstbank Subsidiary to any present officer, director,
employee or any associate or related interest of any such person which was or
would be required under any rule or regulation to be approved by or reported to
Firstbank's or Firstbank Subsidiary's Board of Directors ("Insider Loans"). All
outstanding Insider Loans from Firstbank or any Firstbank Subsidiary were
approved by or reported to the appropriate board of directors to the extent
required in accordance with applicable law and regulations.
2.16. Allowance for Loan and Lease Losses; Nonperforming
Assets. (a) The allowances for loan and lease losses contained in the Firstbank
Financial Statements were established
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in accordance with the past practices and experiences of Firstbank and its
Subsidiaries, and the allowance for loan losses shown on the consolidated
condensed balance sheet of Firstbank and its Subsidiaries contained in the most
recent Firstbank Form 10-Q is adequate in all material respects under the
requirements of GAAP to provide for possible losses on loans (including without
limitation accrued interest receivable) and credit commitments (including
without limitation stand-by letters of credit) outstanding as of the date of
such balance sheet.
(b) As of September 30, 1997, the aggregate amount of all
Nonperforming Assets (as defined below) on the books of Firstbank and its
Subsidiaries does not exceed $12,000,000. "Nonperforming Assets" shall mean (i)
all loans and leases (A) that are contractually past due 90 days or more in the
payment of principal and/or interest, (B) that are on nonaccrual status, (C)
where a reasonable doubt exists, in the reasonable judgment of Firstbank, as to
the timely future collectibility of principal and/or interest, whether or not
interest is still accruing or the loan is less than 90 days past due, (D) where
the interest rate terms have been reduced and/or the maturity dates have been
extended subsequent to the agreement under which the loan was originally created
due to concerns regarding the borrower's ability to pay in accordance with such
initial terms, (E) where a specific reserve allocation exists in connection
therewith, or (F) that have been classified "doubtful", "loss" or the equivalent
thereof by any Regulatory Authority, and (ii) all assets classified as real
estate acquired through foreclosure or repossession and other assets acquired
through foreclosure or repossession.
2.17. Employee Benefit Plans. (a) Except as set forth on
Schedule 2.17A, neither Firstbank nor any Firstbank Subsidiary is a party to any
existing employment, management, consulting, deferred compensation,
change-in-control or other similar contract. Schedule 2.17A lists all pension,
retirement, supplemental retirement, savings, profit sharing, stock option,
stock purchase, stock ownership, stock appreciation right, deferred
compensation, consulting, bonus, medical, disability, workers' compensation,
vacation, group insurance, severance and other material employee benefit,
incentive and welfare policies, contracts, plans and arrangements, and all trust
agreements related thereto, maintained (currently or at any time in the last
five years) by or contributed to by Firstbank or any Firstbank Subsidiary in
respect of any of the present or former directors, officers, or other employees
of and/or consultants to Firstbank or any Firstbank Subsidiary (collectively,
"Firstbank Employee Plans"). Firstbank has furnished Mercantile with the
following documents with respect to each Firstbank Employee Plan: (i) a true and
complete copy of all material written documents comprising such Firstbank
Employee Plan (including amendments and individual agreements relating thereto)
or, if there is no such
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written document, an accurate and complete description of the Firstbank Employee
Plan; (ii) the most recent Form 5500 or Form 5500-C (including all schedules
thereto), if applicable; (iii) the most recent financial statements and
actuarial reports, if any; (iv) the summary plan description currently in effect
and all material modifications thereof, if any; and (v) the most recent IRS
determination letter, if any. Without limiting the generality of the foregoing,
Firstbank has furnished Mercantile with true and complete copies of each form of
stock option grant or stock option agreement that is outstanding under any stock
option plan of Firstbank or any Firstbank Subsidiary.
(b) Except as set forth on Schedule 2.17B, all Firstbank
Employee Plans have been maintained and operated materially in accordance with
their terms and with the material requirements of all applicable statutes,
orders, rules and final regulations, including without limitation ERISA and the
Code. All contributions required to be made to Firstbank Employee Plans have
been made.
(c) With respect to each of the Firstbank Employee Plans which
is a pension plan (as defined in Section 3(2) of ERISA) (the "Pension Plans"),
except as set forth on Schedule 2.17C: (i) each Pension Plan which is intended
to be "qualified" within the meaning of Section 401(a) of the Code has been
determined to be so qualified by the IRS and, to the knowledge of Firstbank,
such determination letter may still be relied upon, and each related trust is
exempt from taxation under Section 501(a) of the Internal Revenue Code of 1986,
as amended, together with the Treasury regulations thereunder (the "IRC"); (ii)
the actuarial present value of all benefits under each Pension Plan which is
subject to Title IV of ERISA, valued using the assumptions in the most recent
actuarial report, did not, in each case, as of the last applicable annual
valuation date (as indicated on Schedule 2.17A), exceed the value of the assets
of the Pension Plan allocable to such vested or accrued benefits; (iii) to the
best knowledge of Firstbank, there has been no "prohibited transaction," as such
term is defined in Section 4975 of the Code or Section 406 of ERISA, which could
subject any Pension Plan or associated trust, or Firstbank or any Firstbank
Subsidiary, to any material tax or penalty; (iv) except as set forth on Schedule
2.17C, no Pension Plan subject to Title IV of ERISA or any trust created
thereunder has been terminated, nor have there been any "reportable events" with
respect to any Pension Plan, as that term is defined in Section 4043 of ERISA
for which the 30-day notice requirement has not been waived on or after January
1, 1993; and (v) no Pension Plan or any trust created thereunder has incurred
any "accumulated funding deficiency", as such term is defined in Section 302 of
ERISA (whether or not waived). Except as set forth on Schedule 2.17C, no Pension
Plan is a "multiemployer plan" as that term is defined in Section 3(37) of
ERISA. With respect to each Pension Plan that is described in Section 4063(a) of
ERISA (a
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"Multiple Employer Pension Plan"): (i) neither Firstbank nor any Firstbank
Subsidiary would have any liability or obligation to post a bond under Section
4063 of ERISA if Firstbank and all Firstbank Subsidiaries were to withdraw from
such Multiple Employer Pension Plan; and (ii) neither Firstbank nor any
Firstbank Subsidiary would have any liability under Section 4064 of ERISA if
such Multiple Employer Pension Plan were to terminate.
(d) Except as set forth on Schedule 2.17D, neither Firstbank
nor any Firstbank Subsidiary has any liability for any post-retirement health,
medical or similar benefit of any kind whatsoever, except as required by statute
or regulation.
(e) Except as set forth on Schedule 2.17E, to the knowledge of
Firstbank, neither Firstbank nor any Firstbank Subsidiary has any material
liability under ERISA or the Code as a result of its being a member of a group
described in Sections 414(b), (c), (m) or (o) of the IRC.
(f) Except as set forth on Schedule 2.17F, neither the
execution nor delivery of this Agreement, nor the consummation of any of the
transactions contemplated hereby, will (i) result in any material payment
(including without limitation severance, unemployment compensation or golden
parachute payment) becoming due to any director or employee of Firstbank or any
Firstbank Subsidiary from any of such entities, (ii) materially increase any
benefit otherwise payable under any of the Firstbank Employee Plans or (iii)
result in the acceleration of the time of payment of any such benefit. No holder
of an option to acquire stock of Firstbank has or will have at any time through
the Effective Time the right to receive any cash or other payment (other than
the issuance of stock of Firstbank) in exchange for or with respect to all or
any portion of such option. Except as described on Schedule 2.17F, Firstbank
shall use its best efforts to insure that no amounts paid or payable by
Firstbank, Firstbank Subsidiaries or Mercantile to or with respect to any
employee or former employee of Firstbank or any Firstbank Subsidiary will fail
to be deductible for federal income tax purposes by reason of Section 280G of
the IRC. No Firstbank Stock Option has an associated "Additional Option Right"
(e.g., an SAR, etc.) or similar "re-load" feature.
2.18. Conduct of Firstbank to Date. From and after January 1,
1997 through the date of this Agreement, except as set forth on Schedule 2.18 or
in Firstbank Financial Statements or Firstbank Reports: (i) Firstbank and the
Firstbank Subsidiaries have conducted their respective businesses in all
material respects in the ordinary and usual course consistent with past
practices; (ii) neither Firstbank nor any Firstbank Subsidiary has incurred any
material obligation or liability (absolute or contingent), except normal trade
or business obligations or liabilities incurred in the ordinary course of
business, or sub-
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jected to Lien any of its material assets or properties other than in the
ordinary course of business consistent with past practice; (iii) neither
Firstbank nor any Firstbank Subsidiary has discharged or satisfied any material
Lien or paid any material obligation or liability (absolute or contingent),
other than in the ordinary course of business; (iv) neither Firstbank nor any
Firstbank Subsidiary has sold, assigned, transferred, leased, exchanged, or
otherwise disposed of any of its material properties or assets other than for a
fair consideration in the ordinary course of business; (v) except as required by
contract or law, neither Firstbank nor any Firstbank Subsidiary has (A)
increased the rate of compensation of, or paid any bonus to, any of its
directors, officers, or other employees, except merit, promotion or annual
increases and bonuses in accordance with existing policy, (B) entered into any
new, or amended or supplemented any existing, employment, management,
consulting, deferred compensation, severance, or other similar contract, (C)
entered into, terminated, or substantially modified any of the Firstbank
Employee Plans or (D) agreed to do any of the foregoing; (vi) neither Firstbank
nor any Firstbank Subsidiary has suffered any material damage, destruction, or
loss, whether as the result of fire, explosion, earthquake, accident, casualty,
labor trouble, requisition, or taking of property by any Regulatory Authority,
flood, windstorm, embargo, riot, act of God or the enemy, or other casualty or
event, and whether or not covered by insurance; and (vii) neither Firstbank nor
any Firstbank Subsidiary has cancelled or compromised any material debt, except
for debts charged off or compromised in accordance with the past practice of
Firstbank and its Subsidiaries.
2.19. Proxy Statement, etc. None of the information regarding
Firstbank or any Firstbank Subsidiary supplied or to be supplied by Firstbank
for inclusion and included in (i) the registration statement on Form S-4 to be
filed with the SEC by Mercantile for the purpose of registering the shares of
Mercantile Common Stock to be exchanged for shares of Firstbank Common Stock
pursuant to the provisions of this Agreement (the "Registration Statement"),
(ii) the proxy or information statement (the "Proxy Statement") to be mailed to
Firstbank's stockholders in connection with the transactions contemplated by
this Agreement or (iii) any other documents to be filed with any Regulatory
Authority in connection with the transactions contemplated hereby will, at the
respective times such documents are filed with any Regulatory Authority and, in
the case of the Registration Statement, when it becomes effective and, with
respect to the Proxy Statement, when mailed, be false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements therein not misleading or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
meeting of Firstbank's stockholders referred to in Section 5.03 (the "Meeting")
(or, if no Meeting is held, at the time the Proxy Statement is first furnished
to Firstbank's
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stockholders), be false or misleading with respect to any material fact, or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Meeting. All
documents which Firstbank or any Firstbank Subsidiary is responsible for filing
with any Regulatory Authority in connection with the Merger will comply as to
form in all material respects with the provisions of applicable law.
2.20. Registration Obligations. Except as set forth on
Schedule 2.20, neither Firstbank nor any Firstbank Subsidiary is under any
obligation, contingent or otherwise to register any of its securities under the
Securities Act.
2.21. State Takeover Statutes; Firstbank's Certificate of
Incorporation. (a) Except as set forth on Schedule 2.21, the transactions
contemplated by this Agreement are not subject to any applicable state takeover
law assuming that neither Mercantile nor any of its affiliates or associates
beneficially own (other than pursuant to or as a result of the Stock Option
Agreement) more than 15 percent of the outstanding voting shares of Firstbank
prior to the Effective Time.
(b) Except as set forth on Schedule 2.21, the transactions
contemplated by this Agreement and the agreements contemplated hereby are not,
and will not be, prohibited by, or subject to any super majority provisions
under Firstbank's Certificate of Incorporation or Bylaws.
2.22. Accounting, Tax and Regulatory Matters. Neither
Firstbank nor any Firstbank Subsidiary has taken or agreed to take any action or
has any knowledge of any fact or circumstance that would, or intentionally will
fail to take any action the failure of which to take would, (i) prevent the
transactions contemplated hereby from qualifying as a reorganization within the
meaning of Section 368(a) of the Code or (ii) materially impede or delay receipt
of any approval referred to in Section 6.01(b) or the consummation of the
transactions contemplated by this Agreement.
2.23. Brokers and Finders. Except for Xxxxx Xxxxxx, Inc.,
neither Firstbank nor any Firstbank Subsidiary nor any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
Firstbank or any Firstbank Subsidiary in connection with this Agreement or the
transactions contemplated hereby. Schedule 2.23 discloses a bona fide estimate
of the aggregate amount of all fees and expenses expected to be paid by
Firstbank to all third parties in connection with the Merger ("Merger Fees").
2.24. Other Activities. (a) Except as set forth on
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Schedule 2.24A, neither Firstbank nor any of its Subsidiaries engages in any
insurance activities other than acting as a principal, agent or broker for
insurance that is directly related to an extension of credit by Firstbank or any
of its Subsidiaries and limited to assuring the repayment of the balance due on
the extension of credit in the event of the death, disability or involuntary
unemployment of the debtor.
(b) Except as set forth on Schedule 2.24B, to the knowledge of
Firstbank's management: each Firstbank Subsidiary that is a bank that performs
personal trust, corporate trust and other fiduciary activities ("Trust
Activities") has done so with requisite authority under applicable law of
Regulatory Authorities and in material accordance with the agreements and
instruments governing such Trust Activities, sound fiduciary principles and
applicable law and regulation (specifically including but not limited to Section
9 of Title 12 of the Code of Federal Regulations); there is no investigation or
inquiry by any governmental entity pending or, to the knowledge of Firstbank,
threatened against Firstbank or any of its Subsidiaries thereof relating to the
compliance by Firstbank or any of its Subsidiaries with sound fiduciary
principles and applicable law and regulations; and, except where such failures
would not have and could not reasonably be expected to have a material adverse
effect on the Condition of Firstbank and the Firstbank Subsidiaries, taken as a
whole, each employee of any such bank had the authority to act in the capacity
in which such employee acted with respect to Trust Activities in each case in
which such employee was held out as a representative of such bank; and such bank
has established policies and procedures for the purpose of complying with
applicable laws of governmental entities relating to Trust Activities, has
followed such policies and procedures in all material respects and has performed
appropriate internal audit reviews of Trust Activities, which audits have
disclosed no material violations of applicable laws of governmental entities or
such policies and procedures.
2.25. Interest Rate Risk Management Instruments. (a) Set forth
on Schedule 2.25A is a list, as of the date hereof, of all interest rate swaps,
caps, floors, and option agreements and other interest rate risk management
arrangements to which Firstbank or any of its Subsidiaries is a party or by
which any of their properties or assets may be bound.
(b) All interest rate swaps, caps, floors and option
agreements and other interest rate risk management arrangements to which
Firstbank or any of its Subsidiaries is a party or by which any of their
properties or assets may be bound were entered into in the ordinary course of
business and, to the best knowledge of Firstbank, in accordance with prudent
banking practice and applicable rules, regulations and policies of Regulatory
Authorities and with counterparties believed to be financially responsible at
the time and are legal, valid and binding
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obligations, except as enforceability may be limited by applicable laws relating
to bankruptcy, insolvency or creditors rights generally and general principles
of equity, and are in full force and effect. Firstbank and each of its
Subsidiaries has duly performed in all material respects all of its obligations
thereunder to the extent that such obligations to perform have accrued, and, to
the knowledge of Firstbank, there are no material breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
2.26. Accuracy of Information. To the best knowledge of
Firstbank, the statements of Firstbank contained in this Agreement, the
Schedules and any other written document executed and delivered by or on behalf
of Firstbank pursuant to the terms of this Agreement are true and correct in all
material respects, and such statements and documents do not omit any material
fact necessary to make the statements contained therein not misleading.
2.27. Year 2000 Compliant. Except as set forth on Schedule
2.27, to the best knowledge of Firstbank, all computer software and hardware
utilized by Firstbank or any Firstbank Subsidiary is, or is reasonably expected
to be, Year 2000 compliant, which, for purposes of this Agreement, shall mean
that the data outside the range 1900-1999 will be correctly processed in any
level of computer hardware or software including, but not limited to, microcode,
firmware, applications programs, files and data bases. All computer software is,
or Firstbank is taking steps to ensure that all computer software will be,
designed to be used prior to, during and after the calendar year 2000 A.D., and
such software will operate during each such time period without material error
relating to date data, specifically including any error relating to, or the
product of, date data that represents or references different centuries or more
than one century.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
MERCANTILE AND MERGER SUB
Each of Mercantile and Merger Sub represents, and warrants to
and covenants with Firstbank as follows:
3.01. Organization and Authority. Mercantile and each of its
Subsidiaries is a corporation, bank, trust company or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of organization, is duly qualified to do business and is in good
standing in all jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified and, except where the
failure to be so qualified would not have and could not reasonably be expected
to have a material adverse effect on the Condition of Mercantile and its
Subsidiaries, taken as a whole, has corporate power and
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authority to own its properties and assets and to carry on its business as it is
now being conducted, except, in the case of the Mercantile Subsidiaries, where
the failure to be so qualified would not have and could not reasonably be
expected to have a material adverse effect on the Condition of Mercantile and
its Subsidiaries, taken as a whole. Mercantile is registered as a bank holding
company with the Board under the BHCA. True and complete copies of the Articles
of Incorporation and Bylaws of Mercantile and Merger Sub, each in effect on the
date of this Agreement, have been provided to Firstbank.
3.02. Capitalization of Mercantile. The authorized capital
stock of Mercantile consists of (i) 200,000,000 shares of Mercantile Common
Stock, of which, as of December 31, 1997, 130,508,090 shares were issued and
outstanding and (ii) 5,000,000 shares of preferred stock, no par value
("Mercantile Preferred Stock"), issuable in series, none of which, as of
December 31, 1997, is issued or outstanding. Mercantile has designated 2,000,000
shares of Mercantile Preferred Stock as "Series A Junior Participating Preferred
Stock" and has reserved such shares for issuance upon exercise of Preferred
Stock Purchase Rights ("Rights") under a Rights Agreement dated May 23, 1988
(the "Mercantile Rights Agreement"), between Mercantile and Mercantile Bank of
St. Louis National Association, as Rights Agent. As of December 31, 1997
Mercantile had reserved (i) 14,840,856 shares of Mercantile Common Stock for
issuance under various employee stock option and incentive plans and the
Mercantile Shareholder Investment Plan ("Mercantile Stock Options"), (ii) up to
951,380 shares of Mercantile Common Stock for issuance upon the acquisition of
HomeCorp, Inc. pursuant to an agreement dated October 29, 1997, (iii) up to
2,550,000 shares of Mercantile Common Stock for issuance upon the acquisition of
Horizon Bancorp, Inc. pursuant to an agreement dated July 31, 1997, and (iv) up
to 5,400,000 shares of Mercantile Common Stock for issuance upon the acquisition
of CBT Corporation pursuant to an agreement dated January 10, 1998. From
December 31, 1997 through the date of this Agreement, no shares of Mercantile
Common Stock or other Equity Securities of Mercantile have been issued excluding
any such shares which may have been issued pursuant to stock-based employee
benefit or incentive plans and programs or pursuant to the foregoing agreements.
Mercantile continually evaluates possible acquisitions and may prior to the
Effective Time enter into one or more agreements providing for, and may
consummate, the acquisition by it of another bank, association, bank holding
company, savings and loan holding company or other company (or the assets
thereof) for consideration that may include equity securities. In addition,
prior to the Effective Time, Mercantile may, depending on market conditions and
other factors, otherwise determine to issue equity, equity-linked or other
securities for financing purposes. Notwithstanding the foregoing, neither
Mercantile nor Merger Sub will take any action that would, or intentionally will
fail to take any action the failure of which to take would, (i)
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prevent the transactions contemplated hereby from qualifying as a reorganization
within the meaning of Section 368 of the Code, (ii) materially impede or delay
receipt of any approval referred to in Section 6.01(b) or the consummation of
the transactions contemplated by this Agreement or (iii) unless Mercantile shall
have waived the condition set forth in Section 6.03(c), prevent the Merger from
qualifying for pooling-of-interests accounting treatment. Except as set forth
above and except pursuant to the Mercantile Rights Agreement, there are no other
Equity Securities of Mercantile outstanding. All of the issued and outstanding
shares of Mercantile Common Stock are validly issued, fully paid, and
nonassessable, and have not been issued in violation of any preemptive right of
any stockholder of Mercantile. At the Effective Time, the Mercantile Common
Stock to be issued in the Merger will be duly authorized, validly issued, fully
paid and non-assessable, and will not be issued in violation of any preemptive
right of any stockholder of Mercantile.
3.03. Authorization. (a) Each of Mercantile and Merger Sub has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder. No stockholder vote is required for Mercantile to
approve this Agreement. The execution, delivery and performance of this
Agreement by Mercantile and Merger Sub and the consummation by Mercantile and
Merger Sub of the transactions contemplated hereby have been duly authorized by
all requisite corporate action of Mercantile and Merger Sub. This Agreement is a
valid and binding obligation of Mercantile and Merger Sub enforceable against
Mercantile and Merger Sub in accordance with its terms, except as enforceability
may be limited by applicable laws relating to bankruptcy, insolvency or
creditors rights generally and general principles of equity.
(b) Neither the execution, delivery and performance by
Mercantile or Merger Sub of this Agreement, nor the consummation by Mercantile
or Merger Sub of the transactions contemplated hereby, nor compliance by
Mercantile or Merger Sub with any of the provisions hereof, will (i) violate,
conflict with or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any Lien upon any of the material properties or
assets of Mercantile or any Mercantile Subsidiary under any of the terms,
conditions or provisions of (x) its articles or certificate of incorporation or
bylaws, or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Mercantile
or any of the material properties or assets of Mercantile is a party or by which
it may be bound, or to which Mercantile may be subject (in all cases other than
any of the foregoing which would not have and could not reasonably be
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expected to have a material adverse effect on the Condition of Mercantile and
the Mercantile Subsidiaries, taken as a whole), or (ii) subject to compliance
with the statutes and regulations referred to in paragraph (c) of this Section
3.03, to the best knowledge of Mercantile, violate any judgment, ruling, order,
writ, injunction, decree, statute, rule or regulation applicable to Mercantile
or any of its Subsidiaries or any of their respective material properties or
assets.
(c) Other than in connection with or in compliance with the
provisions of the DGCL, the MGBCL, the Securities Act, the Exchange Act, the
Investment Company Act of 1940, the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHCA or any required approvals of, or notice to, any other
Regulatory Authority, no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Mercantile of the transactions contemplated by this
Agreement.
3.04. Mercantile Financial Statements. The supplemental
consolidated and parent company only balance sheets of Mercantile and its
Subsidiaries as of December 31, 1996, 1995 and 1994 and related supplemental
consolidated and parent company only statements of income, cash flows and
changes in stockholders' equity for each of the three years in the three-year
period ended December 31, 1996, together with the notes thereto, audited by KPMG
Peat Marwick LLP ("Mercantile Auditors") and included in Mercantile's current
report on Form 8-K dated May 13, 1997 as filed with the SEC, and the unaudited
consolidated balance sheets of Mercantile and its Subsidiaries as of March 31,
June 30, and September 30, 1997 and the related unaudited consolidated
statements of income and cash flows for the periods then ended included in
quarterly reports on Form 10-Q (including amendments thereto) as filed with the
SEC (collectively, the "Mercantile Financial Statements"), have been prepared in
accordance with GAAP, present fairly the consolidated financial position of
Mercantile and its Subsidiaries at the dates and the consolidated results of
operations, changes in stockholders' equity and cash flows of Mercantile and its
Subsidiaries for the periods stated therein and are derived from the books and
records of Mercantile and its Subsidiaries, which are complete and accurate in
all material respects and have been maintained in all material respects in
accordance with applicable laws and regulations. Neither Mercantile nor any of
its Subsidiaries has any material contingent liabilities that are not reflected
in the Mercantile Reports (defined below) or disclosed in the financial
statements described above.
3.05. Mercantile Reports. Since January 1, 1994, each of
Mercantile and the Mercantile Subsidiaries has filed all material reports,
registrations and statements, together with any
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required material amendments thereto, that it was required to file with any
Regulatory Authority. All such reports and statements filed with any such
Regulatory Authority are collectively referred to herein as the "Mercantile
Reports." As of its respective date, each Mercantile Report complied in all
material respects with all the rules and regulations promulgated by the
applicable Regulatory Authority and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
3.06. Material Adverse Change. Since September 30, 1997, there
has been no material adverse change in the Condition of Mercantile and its
Subsidiaries, taken as a whole, except as may have resulted or may result from
changes to laws and regulations or changes in economic conditions applicable to
banking or thrift institutions generally or in general levels of interest rates
affecting banking or thrift institutions generally.
3.07. Registration Statement, etc. None of the information
regarding Mercantile or any of its Subsidiaries supplied or to be supplied by
Mercantile for inclusion or included in (i) the Registration Statement, (ii) the
Proxy Statement, or (iii) any other documents to be filed with any Regulatory
Authority in connection with the transactions contemplated hereby will, at the
respective times such documents are filed with any Regulatory Authority and, in
the case of the Registration Statement, when it becomes effective and, with
respect to the Proxy Statement, when mailed (or furnished to stockholders of
Firstbank), be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Meeting. All documents which Mercantile or any
of its Subsidiaries are responsible for filing with any Regulatory Authority in
connection with the Merger will comply as to form in all material respects with
the provisions of applicable law.
3.08. Brokers and Finders. Except for UBS Securities Inc.,
neither Mercantile nor any of its Subsidiaries nor any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
Mercantile or any of its Subsidiaries in connection with this Agreement or the
transactions contemplated hereby.
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3.09. Commitments and Contracts. Neither Mercantile nor any
Mercantile Subsidiary is in violation of its charter documents or bylaws or in
default under any material agreement, commitment, arrangement, lease, insurance
policy, or other instrument, whether entered into in the ordinary course of
business or otherwise and whether written or oral, and there has not occurred
any event that, with the lapse of time or giving of notice or both, would
constitute such a default, except, in all cases, where such default would not
have and could not reasonably be expected to have a material adverse effect on
the Condition of Mercantile and its Subsidiaries, taken as a whole.
3.10. Litigation and Other Proceedings. Neither Mercantile nor
any Mercantile Subsidiary is a party to any pending or, to the best knowledge of
Mercantile, threatened claim, action, suit, investigation or proceeding, or is
subject to any order, judgment or decree, except for matters which, in the
aggregate, will not have, or reasonably could not be expected to have, a
material adverse effect on the Condition of Mercantile and its Subsidiaries,
taken as a whole. Without limiting the generality of the foregoing, as of the
date of this Agreement, there are no actions, suits, or proceedings pending or,
to the best knowledge of Mercantile, threatened against Mercantile or any
Mercantile Subsidiary or any of their respective officers or directors by any
stockholder of Mercantile or any Mercantile Subsidiary (or any former
stockholder of Mercantile or any Mercantile Subsidiary) involving claims under
the Securities Act, the Exchange Act, the Community Reinvestment Act of 1977, as
amended, or the fair lending laws or which purport or seek to enjoin or restrain
the transactions contemplated by this Agreement.
3.11. Accounting, Tax and Regulatory Matters. Neither
Mercantile nor any Mercantile Subsidiary has taken or agreed to take any action
or has any knowledge of any fact or circumstance that would (i) prevent the
transactions contemplated hereby from qualifying as a reorganization within the
meaning of Section 368(a) of the Code or (ii) materially impede or delay receipt
of any approval referred to in Section 6.01(b) or the consummation of the
transactions contemplated by this Agreement.
3.12. Accuracy of Information. The statements of Mercantile
and Merger Sub contained in this Agreement, the Schedules and in any other
written document executed and delivered by or on behalf of Mercantile or Merger
Sub pursuant to the terms of this Agreement are true and correct in all material
respects, and such statements and documents do not omit any material fact
necessary to make the statements contained herein or therein not misleading.
3.13. Taxes. Except as set forth on Schedule 3.13, Mercantile
and each Mercantile Subsidiary have timely filed or will timely (including
extensions) file all material tax returns,
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reports and certifications required to be filed on or prior to the Closing Date
("Mercantile Returns"), and such filed Mercantile Returns are and will be
complete and accurate in all material respects. Each of Mercantile and its
Subsidiaries has paid (taking into account all applicable extensions), or set up
adequate reserves on the Mercantile Financial Statements for the payment of, all
taxes required to be paid in respect of the periods covered by the Mercantile
Financial Statements and has set up adequate reserves on the most recent
financial statements Mercantile has filed under the Exchange Act for the payment
of all taxes anticipated to be payable in respect of all periods up to and
including the latest period covered by such financial statements. Neither
Mercantile nor any Mercantile Subsidiary will have any liability material or
reasonably expected to be material to the Condition of Mercantile and the
Mercantile Subsidiaries, taken as a whole, for any such taxes in excess of the
amounts so paid or reserves so established and, to the knowledge of Mercantile,
no material deficiencies for any tax, assessment or governmental charge have
been proposed, asserted or assessed (tentatively or definitely) against any of
Mercantile or any Mercantile Subsidiary which would not be covered by existing
reserves. Neither Mercantile nor any Mercantile Subsidiary is delinquent in the
payment of any material tax, assessment or governmental charge, nor has it
requested any extension of time within which to file any tax returns in respect
of any fiscal year which have not since been timely filed and no requests for
extensions or waivers of the time to assess any tax are pending. The federal and
state income tax returns of Mercantile and the Mercantile Subsidiaries have been
audited and settled by the Internal Revenue Service (the "IRS") or appropriate
state tax authorities for all periods ended through December 31, 1994 or the
period for assessment of taxes in respect of such periods has expired. There is
no deficiency or refund litigation or matter in controversy with respect to
Mercantile Returns. Except as set forth on Schedule 3.13, neither Mercantile nor
any Mercantile Subsidiary has extended or waived any statute of limitations on
the assessment of any tax due that is currently in effect.
3.14. Compliance with Laws. (a) Mercantile and each of its
Subsidiaries have all permits, licenses, authorizations, orders and approvals
of, and have made all filings, applications and registrations with, all
Regulatory Authorities that are required in order to permit them to own or lease
their properties and assets and to carry on their business as presently
conducted and that are material or reasonably expected to be material to the
Condition of Mercantile and its Subsidiaries, taken as a whole; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to the best knowledge of Mercantile, no suspension or
cancellation of any of them is threatened; and all such filings, applications
and registrations are current.
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(b) Except as set forth on Schedule 3.14B and except for
failures to comply or defaults which individually or in the aggregate would not
have and could not reasonably be expected to have a material adverse effect on
the Condition of Mercantile and its Subsidiaries, taken as a whole, (i) each of
Mercantile and its Subsidiaries has complied with all laws, regulations and
orders (including without limitation zoning ordinances, building codes, ERISA,
and securities, tax, environmental, civil rights, and occupational health and
safety laws and regulations and including without limitation in the case of any
Mercantile Subsidiary that is a bank, banking organization, banking corporation
or trust company, all statutes, rules, regulations and policy statements
pertaining to the conduct of a banking, deposit-taking, lending or related
business, or to the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business, and (ii) neither
Mercantile nor any Mercantile Subsidiary is in default under, and no event has
occurred which, with the lapse of time or notice or both, could result in the
default under, the terms of any judgment, order, writ, decree, permit, or
license of any Regulatory Authority or court, whether federal, state, municipal,
or local and whether at law or in equity. Except as set forth on Schedule 3.14B
and except as would not have and could not reasonably be expected to have a
material adverse effect on the Condition of Mercantile and its Subsidiaries,
taken as a whole, as of the date of this Agreement, neither Mercantile nor any
Mercantile Subsidiary is subject to or reasonably likely to incur a liability as
a result of its ownership, operation, or use of any Property of Mercantile
(whether directly or, to the best knowledge of Mercantile, as a consequence of
such Property being part of the investment portfolio of Mercantile or any
Mercantile Subsidiary) (A) that is contaminated by or contains any Toxic
Substance, or (B) on which any Toxic Substance has been stored, disposed of,
placed, or used in the construction thereof. Except as set forth on Schedule
3.14B, no claim, action, suit, or proceeding is pending against Mercantile or
any Mercantile Subsidiary relating to Property of Mercantile before any court or
other Regulatory Authority or arbitration tribunal relating to hazardous
substances, pollution, or the environment, and there is no outstanding judgment,
order, writ, injunction, decree, or award against or affecting Mercantile or any
Mercantile Subsidiary with respect to the same. Except for statutory or
regulatory restrictions of general application, no Regulatory Authority has
placed any restriction on the business of Mercantile or any Mercantile
Subsidiary which reasonably could be expected to have a material adverse effect
on the Condition of Mercantile and its Subsidiaries, taken as a whole.
(c) From and after January 1, 1994, neither Mercantile nor any
Mercantile Subsidiary has received any notification or communication which has
not been finally resolved from any Regulatory Authority (i) asserting that any
Mercantile or any Subsidiary of Mercantile, is not in substantial compliance
with
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any of the statutes, regulations or ordinances that such Regulatory Authority
enforces, except with respect to matters which (A) are set forth on Schedule
3.14C or (B) reasonably could not be expected to have a material adverse effect
on the Condition of Mercantile and its Subsidiaries, taken as a whole, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization that is material or reasonably expected to be material to the
Condition of Mercantile and its Subsidiaries, taken as a whole, including
without limitation such company's status as an insured depositary institution
under the Federal Deposit Insurance Act, or (iii) requiring or threatening to
require Mercantile or any of its Subsidiaries, or indicating that Mercantile or
any of its Subsidiaries may be required, to enter into a cease and desist order,
agreement or memorandum of understanding or any other agreement restricting or
limiting or purporting to direct, restrict or limit in any manner the operations
of Mercantile or any of its Subsidiaries, including without limitation any
restriction on the payment of dividends. No such cease and desist order,
agreement or memorandum of understanding or other agreement is currently in
effect.
(d) Except as set forth on Schedule 3.14D, neither Mercantile
nor any Mercantile Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to any federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer.
3.15. Labor. No work stoppage involving Mercantile or any
Mercantile Subsidiary, is pending or, to the best knowledge of Mercantile,
threatened which reasonably could be expected to have a material adverse effect
on the Condition of Mercantile and its Subsidiaries, taken as a whole. Neither
Mercantile nor any Mercantile Subsidiary is involved in, or, to the best
knowledge of Mercantile, threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding which reasonably could be
expected to have a material adverse affect on the Condition of Mercantile and
its Subsidiaries, taken as a whole. Employees of neither Mercantile nor any
Mercantile Subsidiary, are represented by any labor union or any collective
bargaining organization.
3.16. Interest Rate Risk Management Instruments. All interest
rate swaps, caps, floors and option agreements and other interest rate risk
management arrangements to which Mercantile or any of its Subsidiaries is a
party or by which any of their properties or assets may be bound were entered
into in the ordinary course of business and, to the best knowledge of
Mercantile, in accordance with prudent banking practice and applicable rules,
regulations and policies of Regulatory Authorities and with counterparties
believed to be financially responsible at the time and are legal, valid and
binding
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obligations, except as enforceability my be limited by applicable laws relating
to bankruptcy, insolvency or creditors rights generally and general principles
of equity, and are in full force and effect. Mercantile and each of its
Subsidiaries has duly performed in all material respects all of its obligations
thereunder to the extent that such obligations to perform have accrued, and, to
the knowledge of Mercantile, there are no material breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
3.17. Year 2000 Compliant. Except as set forth on Schedule
3.17, to the best knowledge of Mercantile, all computer software and hardware
utilized by Mercantile or any Mercantile Subsidiary is, or is reasonably
expected to be, Year 2000 compliant, which, for purposes of this Agreement,
shall mean that the data outside the range 1900-1999 will be correctly processed
in any level of computer hardware or software including, but not limited to,
microcode, firmware, applications programs, files and data bases. All computer
software is, or Mercantile is taking steps to ensure that all computer software
will be, designed to be used prior to, during and after the calendar year 2000
A.D., and such software will operate during each such time period without
material error relating to date data, specifically including any error relating
to, or the product of, date data that represents or references different
centuries or more than one century.
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01. Conduct of Businesses Prior to the Effective Time. During
the period from the date of this Agreement to the Effective Time, each of
Mercantile and Firstbank shall, and shall cause each of their respective
Subsidiaries to, conduct its business according to the ordinary and usual course
consistent with past practices and shall, and shall cause each such Subsidiary
to, use all reasonable efforts to maintain and preserve its business
organization, employees and advantageous business relationships and retain the
services of its officers and key employees.
4.02. Forbearances of Firstbank. Except as set forth on Schedule
4.02, to the extent required by applicable law or Regulatory Authority or as
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Firstbank shall not and shall not permit
any of its Subsidiaries to, without the prior written consent of Mercantile:
(a) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its capital stock
(other than dividends from a Subsidiary of
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Firstbank to Firstbank or another Subsidiary of Firstbank), except that
Firstbank may declare and pay cash dividends on the Firstbank Common
Stock equal to the product of (i) the Exchange Ratio and (ii) the amount
of the dividends per share declared by the Board of Directors of
Mercantile; provided, further, however, that Firstbank shall not declare
or pay a quarterly dividend for any quarter in which Firstbank
shareholders will be entitled to receive a regular quarterly dividend on
the shares of Mercantile Common Stock to be issued in the Merger; or
(b) enter into or amend any employment, severance or similar
agreement or arrangement with any director or officer or employee, or
materially modify any of the Firstbank Employee Plans or grant any
salary or wage increase or materially increase any employee benefit
(including incentive or bonus payments), except normal individual
increases in compensation to employees consistent with past practice, or
as required by law or contract; or
(c) authorize, recommend, propose or announce an intention to
authorize, so recommend or propose, or enter into an agreement in
principle with respect to, any merger, consolidation or business
combination (other than the Merger), any acquisition of a material
amount of assets or securities, any disposition of a material amount of
assets or securities or any release or relinquishment of any material
contract rights; or
(d) propose or adopt any amendments to its articles of
incorporation, association or other charter document or bylaws; or
(e) issue, sell, grant, confer or award any of its Equity
Securities (except that Firstbank may (i) issue shares of Firstbank
Common Stock upon exercise of Firstbank Stock Options outstanding on the
date of this Agreement or granted in compliance with this subsection and
(ii) issue shares of Firstbank Common Stock purchased by Firstbank on
the open market for such purpose, and only such shares, pursuant to its
dividend reinvestment plan) or effect any stock split or adjust,
combine, reclassify or otherwise change its capitalization as it existed
on the date of this Agreement; or
(f) purchase, redeem, retire, repurchase, or exchange, or
otherwise acquire or dispose of, directly or indirectly, any of its
Equity Securities, whether pursuant to the terms of such Equity
Securities or otherwise; or
(g) without first consulting with and obtaining the written
consent of Mercantile, enter into, renew or increase any loan or credit
commitment (including stand-by letters of
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credit) to, or invest or agree to invest in, any person or entity or
modify any of the material provisions or renew or otherwise extend the
maturity date of any existing loan or credit commitment in an amount in
excess of $3,000,000 or in any amount which, when aggregated with any
and all loans or credit commitments to such person or entity, would be
equal to or in excess of $3,000,000; provided that Firstbank or any
Firstbank Subsidiary may make any such loan or credit commitment in the
event (A) Firstbank or any Firstbank Subsidiary has delivered to
Mercantile or its designated representative a notice of its intention to
make such loan and such information as Mercantile or its designated
representative may reasonably require in respect thereof and (B)
Mercantile or its designated representative shall not have reasonably
objected to such loan by giving written or facsimile notice of such
objection within two business days following the delivery to Mercantile
or its designated representative of the notice of intention and
information as aforesaid; provided further, however, that nothing in
this paragraph shall prohibit Firstbank or any Firstbank Subsidiary from
honoring any contractual obligation in existence on the date of this
Agreement. Notwithstanding this Section 4.02(g), Firstbank shall be
authorized without first obtaining Mercantile's prior written consent,
to increase the aggregate amount of any credit facilities theretofore
established in favor of any person or entity (each a "Pre-Existing
Facility") beyond the $3,000,000 credit level, provided that the
aggregate amount of any and all such increases shall not be in excess of
the lesser of five percent (5%) of such Pre-Existing Facility or
$100,000; or
(h) directly or indirectly (including through its officers,
directors, employees or other representatives) initiate, solicit,
encourage or facilitate any discussions, inquiries or proposals with any
third party relating to the disposition of any significant portion of
the business or assets of Firstbank or any Firstbank Subsidiary or the
acquisition of Equity Securities of Firstbank or any Firstbank
Subsidiary or the merger of Firstbank or any Firstbank Subsidiary with
any person (other than Mercantile) or any similar transaction (each such
transaction being referred to herein as an "Acquisition Transaction"),
or provide any such person with information or assistance or negotiate
with any such person with respect to an Acquisition Transaction, and
Firstbank shall promptly notify Mercantile orally of all the relevant
details relating to all inquiries, indications of interest and proposals
which it may receive with respect to any Acquisition Transaction; or
(i) take any action that would (A) materially impede or delay
the consummation of the transactions contemplated by this Agreement or
the ability of Mercantile or Firstbank to
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obtain any approval of any Regulatory Authority required for the
transactions contemplated by this Agreement or to perform its covenants
and agreements under this Agreement, (B) prevent the transactions
contemplated hereby from qualifying as a reorganization within the
meaning of Section 368(a) of the Code or (C) prevent the Merger from
qualifying for pooling-of-interests accounting treatment; or
(j) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible
or liable for the obligations of any other individual, corporation or
other entity, or pay without prior approval of Mercantile, which shall
not be unreasonably withheld, any Merger Fees in excess of the amount
set forth on Schedule 2.23; or
(k) materially restructure or materially change its investment
securities portfolio, without prior written consent of Mercantile which
consent shall not be unreasonably withheld or delayed, through
purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported, or execute any individual investment transaction
for its own account (i) in securities backed by the full faith and
credit of the United States or an agency thereof in excess of
$10,000,000 and (ii) in any other investment securities in excess of
$1,000,000; or
(l) agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or take or
omit to take any other act which would make any of the representations
and warranties in Article II of this Agreement untrue or incorrect in
any material respect if made anew after engaging in such activity,
entering into such transaction, or taking or omitting such other act.
4.03. Forbearances of Mercantile. Except to the extent required
by law, regulation or Regulatory Authority, or with the prior written consent of
Firstbank, during the period from the date of this Agreement to the Effective
Time, Mercantile shall not and shall not permit any of the Mercantile
Subsidiaries to:
(a) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its capital stock
(other than dividends from any of the Mercantile Subsidiaries to
Mercantile or to another of the Mercantile Subsidiaries), except that
Mercantile may pay its regular quarterly dividends in amounts as it
shall determine from time to time consistent with past practices;
(b) take any action that would (A) materially impede or delay
the consummation of the transactions contemplated by
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this Agreement or the ability of Firstbank or Mercantile to obtain any
approval of any Regulatory Authority required for the transactions
contemplated by this Agreement or to perform its covenants and
agreements under this Agreement, (B) prevent the transactions
contemplated hereby from qualifying as a reorganization within the
meaning of Section 368(a) of the Code or (C) unless Mercantile shall
have waived the condition set forth in Section 6.03(c), prevent the
Merger from qualifying for pooling-of-interests accounting treatment; or
(c) agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or
intentionally take or omit to take any other action which would make any
of the representations and warranties in Article III of this Agreement
untrue or incorrect in any material respect if made anew after engaging
in such activity, entering into such transaction, or taking or omitting
such other action.
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Access and Information. Mercantile and its Subsidiaries,
on the one hand, and Firstbank and its Subsidiaries, on the other hand, shall
each afford to each other, and to the other's accountants, counsel and other
representatives, full access during normal business hours, during the period
prior to the Effective Time, to all their respective properties, books,
contracts, commitments and records and, during such period, each shall furnish
promptly to the other (i) a copy of each report, schedule and other document
filed or received by it during such period pursuant to the requirements of
federal and state securities laws and (ii) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Each party hereto shall, and shall cause its advisors and representatives to,
(A) hold confidential all information obtained in connection with any
transaction contemplated hereby with respect to the other party which is not
otherwise public knowledge, (B) return all documents (including copies thereof)
obtained hereunder from the other party to such other party and (C) use its best
efforts to cause all information obtained pursuant to this Agreement or in
connection with the negotiation of this Agreement to be treated as confidential
and not use, or knowingly permit others to use, any such information unless such
information becomes generally available to the public.
5.02. Registration Statement; Regulatory Matters. (a)
Mercantile shall prepare and, subject to the review and consent of Firstbank
with respect to matters relating to Firstbank, file with the SEC as soon as is
reasonably practicable, but in any event within 90 days following the date
hereof, the Registration
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Statement (or the equivalent in the form of preliminary proxy material) with
respect to the shares of Mercantile Common Stock to be issued in the Merger and
the exercise of Mercantile Stock Options (that replace Firstbank Stock Options)
after the Effective Time. After the date of filing the Registration Statement
with the SEC, each party hereto shall promptly notify the others of and correct
any information which it furnished for inclusion in the Registration Statement
that may have become false or misleading in any material respect. Mercantile
shall prepare and file a notice with the Board as soon as reasonably
practicable, but in any event within 90 days following the date hereof.
Mercantile shall use all reasonable efforts to cause the Registration Statement
to become effective. Mercantile shall also take any action required to be taken
under any applicable state blue sky or securities laws in connection with the
issuance of such shares and the exercise of such options, and Firstbank and its
Subsidiaries shall furnish Mercantile all information concerning Firstbank and
its Subsidiaries and the stockholders thereof as Mercantile may reasonably
request in connection with any such action. Mercantile shall use its best
efforts to cause the shares of Mercantile Common Stock to be issued in the
Merger to be approved for listing on the New York Stock Exchange, subject to
official notice of issuance, prior to the Effective Time.
(b) Firstbank and Mercantile shall cooperate and use their
respective best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement and, as and if directed by Mercantile and
consistent with the other provisions of this Agreement, to consummate such other
mergers, consolidations or asset transfers or other transactions by and among
Mercantile's Subsidiaries and Firstbank's Subsidiaries concurrently with or
following the Effective Time, provided, however, that the foregoing shall not
(A) alter or change the Merger Consideration, (B) adversely affect the tax
treatment to Firstbank's stockholders or Firstbank Stock Option holders as a
result of receiving the Merger Consideration or (C) materially impede or delay
receipt of any approval referred to in Section 6.01(b) or the consummation of
the transactions contemplated by this Agreement.
5.03. Stockholder Approval. Firstbank shall call a meeting of
its stockholders to be held as soon as practicable for the purpose of voting
upon the Merger or take other action for stockholders to authorize the Merger.
In connection therewith, Mercantile shall prepare the Proxy Statement and, with
the approval of each of Mercantile and Firstbank, the Proxy Statement shall be
filed with the SEC and, after such review and amendment as may be required,
mailed to the stockholders of Firstbank. The Board of Directors of Firstbank
shall submit for approval of Firstbank's stockholders the matters to be voted
upon in order to
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authorize the Merger. The Board of Directors of Firstbank hereby does and,
unless the Board of Directors of Firstbank reasonably determines not to so
recommend based upon the written opinion of counsel, which counsel either is one
of those identified on Schedule 2.23 or is otherwise reasonably acceptable to
Mercantile, to the effect that to so recommend would constitute a breach of the
Board's fiduciary duties under applicable law, will recommend this Agreement and
the transactions contemplated hereby to stockholders of Firstbank and will use
its best efforts to obtain any vote of Firstbank's stockholders that is
necessary for the approval and adoption of this Agreement and consummation of
the transactions contemplated hereby.
5.04. Current Information. During the period from the date of
this Agreement to the Effective Time, each party shall promptly furnish the
other with copies of all monthly and other interim financial statements as the
same become available and shall cause one or more of its designated
representatives to confer on a regular and frequent basis with representatives
of the other party. Each party shall promptly notify the other party of any
material change in its business or operations and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of material
litigation involving such party, and shall keep the other party fully informed
of such events.
5.05. Agreements of Affiliates. (a) As soon as practicable
after the date of this Agreement, Firstbank shall deliver to Mercantile a letter
identifying all persons whom Firstbank believes to be, at the time this
Agreement is submitted to a vote of the stockholders of Firstbank, "affiliates"
of Firstbank for purposes of Rule 145 under the Securities Act and for purposes
of pooling-of-interests accounting treatment. Firstbank shall use all reasonable
efforts to cause each person who is so identified as an "affiliate" to deliver
to Mercantile as soon as practicable thereafter, and in any event no later than
the publication of notice in the Federal Register of Mercantile's notice to the
Board referred to in Section 5.02, a written agreement providing that from the
date of such agreement each such person will agree not to sell, pledge, transfer
or otherwise dispose of any shares of stock of Firstbank held by such person or
any shares of Mercantile Common Stock to be received by such person in the
Merger except in compliance with the applicable provisions of the Securities
Act. Prior to the Effective Time, Firstbank shall amend and supplement such
letter and use all reasonable efforts to cause each additional person who is
identified as an "affiliate" to execute a written agreement as set forth in this
Section 5.05.
(b) Mercantile shall use all reasonable efforts to publish as
promptly as reasonably practicable, but in no event
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later than 90 days after the end of the first month after the Effective Time in
which there are at least 30 days of post-Merger combined operations, combined
sales and net income figures as contemplated by and in accordance with the terms
of SEC Accounting Series Release No. 135.
5.06. Expenses. Each party hereto shall bear its own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger.
5.07. Miscellaneous Agreements and Consents. (a) Subject to
the terms and conditions herein provided, each of the parties hereto agrees to
use, respectively, all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously as possible,
including without limitation using, respectively, all 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. Each party shall, and shall cause each of its respective Subsidiaries
to, use all reasonable efforts to obtain consents of all third parties and
Regulatory Authorities necessary or, in the opinion of Mercantile, desirable for
the consummation of the transactions contemplated by this Agreement.
(b) Subject to applicable laws, regulations and requirements
of Regulatory Authorities, Firstbank, prior to the Effective Time, shall (i)
consult and cooperate with Mercantile regarding the implementation of those
policies and procedures established by Mercantile for its governance and that of
its Subsidiaries and not otherwise referenced in Section 5.15 hereof, including,
without limitation, policies and procedures pertaining to the accounting,
asset/liability management, audit, credit, human resources, treasury and legal
functions, and (ii) at the request of Mercantile, conform Firstbank's existing
policies and procedures in respect of such matters to Mercantile's policies and
procedures or, in the absence of any existing Firstbank policy or procedure
regarding any such function, introduce Mercantile's policies or procedures in
respect thereof, unless to do so would cause Firstbank or any of the Firstbank
Subsidiaries to be in violation of any law, rule or regulation of any Regulatory
Authority having jurisdiction over Firstbank and/or the Firstbank Subsidiary
affected thereby; provided, however, that prior to the date that it shall be a
requirement hereunder for such policies and procedures to be established,
Mercantile shall certify to Firstbank that Mercantile's representations and
warranties are true and correct as of such date, that the approval conditions to
its obligations contemplated by Section 6.01(b) have been satisfied or waived
(except to the extent that any waiting period associated therewith may then have
commenced but not expired) and
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that Mercantile is otherwise in compliance with this Agreement; and provided,
further, that Firstbank shall not be required to take any such action that is
not consistent with GAAP and regulatory accounting principles or would, in the
reasonable judgment of Firstbank's Board of Directors, have a material negative
impact on Firstbank and/or its shareholders if the transactions contemplated by
this Agreement are not consummated.
5.08. Employee Benefits. The Firstbank Employee Plans shall
not be terminated by reason of the Merger but shall continue thereafter as plans
of the Surviving Corporation until such time as the employees of Firstbank and
the Firstbank Subsidiaries are integrated into Mercantile's employee benefit
plans that are available to other employees of Mercantile and Mercantile
Subsidiaries, subject to the terms and conditions specified in such plans and to
such changes therein as may be necessary to reflect the consummation of the
Merger. Mercantile shall take such steps as are necessary or required to
integrate the employees of Firstbank and the Firstbank Subsidiaries in
Mercantile's employee benefit plans available to other employees of Mercantile
and Mercantile Subsidiaries as soon as practicable after the Effective Time, (i)
with full credit for prior service with Firstbank or any of the Firstbank
Subsidiaries for all purposes other than determining the amount of benefit
accruals under any Mercantile defined benefit plan (it being understood that
benefits accrued as of the Effective Time under any Firstbank defined benefit
plan will not be extinguished under any circumstances), (ii) without any waiting
periods, evidence of insurability, or application of any pre-existing condition
limitations, and (iii) with full credit for claims arising prior to the
Effective Time for purposes of deductibles, out-of-pocket maximums, benefit
maximums, and all other similar limitations for the applicable plan year during
which the Merger is consummated. Each of Mercantile and Firstbank shall use all
reasonable efforts to insure that (other than amounts paid pursuant to the
agreement described on Schedule 2.17F under the heading "Parachute Payments") no
amounts paid or payable by Firstbank, Firstbank Subsidiaries or Mercantile to or
with respect to any employee or former employee of Firstbank or any Firstbank
Subsidiary will fail to be deductible for federal income tax purposes by reason
of Section 280G of the IRC. Firstbank shall ensure that following the Effective
Time no holder of Firstbank Stock Options or any participant in any Firstbank
Stock Plan shall have any right thereunder to acquire any securities of
Firstbank or any Firstbank Subsidiary.
5.09. Firstbank Stock Options. (a) At the Effective Time, all
rights with respect to Firstbank Common Stock pursuant to Firstbank Stock
Options that are outstanding at the Effective Time, whether or not then
exercisable, shall be converted into and become rights with respect to
Mercantile Common Stock, and Mercantile shall assume each Firstbank Stock Option
in accordance with the terms of the stock option plan under which it was issued
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and the stock option agreement by which it is evidenced. From and after the
Effective Time, (i) each Firstbank Stock Option assumed by Mercantile shall be
exercised solely for shares of Mercantile Common Stock, (ii) the number of
shares of Mercantile Common Stock subject to each Firstbank Stock Option shall
be equal to the number of shares of Firstbank Common Stock subject to such
Firstbank Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio and (iii) the per share exercise price under each Firstbank Stock
Option shall be adjusted by dividing the per share exercise price under such
Firstbank Stock Option by the Exchange Ratio and rounding down to the nearest
cent; provided, however, that the terms of each Firstbank Stock Option shall, in
accordance with its terms, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, recapitalization or other similar
transaction subsequent to the Effective Time. It is intended that the foregoing
assumption shall be undertaken in a manner that will not constitute a
"modification" as defined in the IRC, as to any Firstbank Stock Option that is
an "incentive stock option." The parties recognize that the Merger will not
cause vesting to occur under the Firstbank Stock Options, except as otherwise
identified on Schedule 2.03.
(b) At or prior to the Effective Time, Mercantile shall take
all corporate action necessary to authorize and reserve for issuance a
sufficient number of shares of Mercantile Common Stock for delivery upon
exercise of Firstbank Stock Options to purchase Firstbank Common Stock assumed
by it in accordance with paragraph (a) above. As soon as practicable after the
Effective Time, Mercantile shall file a registration statement on Form S-3 or
Form S-8, as the case may be (or any successor or other appropriate forms), or
another appropriate form with respect to the shares of Mercantile Common Stock
subject to such options and shall use its best efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus contained therein) for so long as such options remain
outstanding.
5.10. Press Releases. Except as may be required by law,
Firstbank and Mercantile shall consult and agree with each other as to the form
and substance of any proposed press release relating to this Agreement or any of
the transactions contemplated hereby.
5.11. State Takeover Statutes; Firstbank's Certificate of
Incorporation. (a) Each of Mercantile and Firstbank will take all steps
reasonably necessary to exempt the transactions contemplated by this Agreement
and any agreement contemplated hereby from, and if necessary challenge the
validity of, any applicable state takeover law.
(b) Firstbank will take all steps reasonably necessary
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to exempt the transactions contemplated by this Agreement and any agreement
contemplated hereby from any super-majority voting provisions under Firstbank's
Certificate of Incorporation and Bylaws.
5.12. D&O Indemnification. From and after the Effective Time,
Mercantile agrees to indemnify and hold harmless the past and present employees,
agents, directors or officers of Firstbank and/or its Subsidiaries against all
losses, expenses, claims, damages or liabilities relating to acts or omissions
occurring at or prior to the Effective Time to the same extent such persons are
indemnified and held harmless (A) under their respective Articles or Certificate
of Incorporation or Bylaws of Firstbank and its Subsidiaries in the form in
effect at the date of this Agreement, (B) by operation of law, or (C) by virtue
of any contract, resolution or other agreement or document existing at the date
of this Agreement, and such duties and obligations shall continue in full force
and effect for so long as they would (but for the Merger) otherwise survive and
continue in full force and effect. Mercantile will provide, or cause to be
provided, for a period of not less than six years from the Effective Time, an
insurance and indemnification policy that provides the officers and directors of
Firstbank and its Subsidiaries immediately prior to the Effective Time coverage
no less favorable in the aggregate than that provided by Mercantile to its
officers and directors.
5.13. Best Efforts. Each of Mercantile and Firstbank
undertakes and agrees to use its reasonable best efforts to cause the Merger (i)
to qualify as a reorganization within the meaning of Section 368(a) of the Code
(including, if necessary, to take reasonable steps to restructure the
transactions contemplated by this Agreement to so qualify) and (ii) to occur as
soon as practicable. Each of Mercantile and Firstbank agrees to not take any
action that would materially impede or delay the consummation of the
transactions contemplated by this Agreement or the ability of Mercantile or
Firstbank to obtain any approval of any Regulatory Authority required for the
transactions contemplated by this Agreement or to perform its covenants and
agreements under this Agreement.
5.14. Insurance. Firstbank shall, and Firstbank shall cause
each of its Subsidiaries to, use its best efforts to maintain its existing
insurance.
5.15. Conforming Entries. (a) Notwithstanding that Firstbank
believes that Firstbank and the Firstbank Subsidiaries have established all
reserves and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, Firstbank recognizes that Mercantile may
have adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). Subject to
applicable laws, regulations and the
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requirements of Regulatory Authorities, from and after the date of this
Agreement to the Effective Time, Firstbank and Mercantile shall consult and
cooperate with each other with respect to conforming the loan, accrual and
reserve policies of Firstbank and the Firstbank Subsidiaries to those policies
of Mercantile, as specified in each case in writing to Firstbank, based upon
such consultation and as hereinafter provided; provided that Firstbank not be
required to take any action that would, in the reasonable judgment of
Firstbank's Board of Directors, have a material negative impact on Firstbank
and/or its shareholders if the transactions contemplated by this Agreement are
not consummated.
(b) Subject to applicable laws, regulations and the
requirements of Regulatory Authorities, in addition, from and after the date of
this Agreement to the Effective Time, Firstbank and Mercantile shall consult and
cooperate with each other with respect to determining appropriate Firstbank
accruals, reserves and charges to establish and take in respect of excess
equipment write-off or write-down of various assets and other appropriate
charges and accounting adjustments taking into account the parties' business
plans following the Merger, as specified in each case in writing to Firstbank,
based upon such consultation and as hereinafter provided; provided that
Firstbank not be required to take any action that would, in the reasonable
judgment of Firstbank's Board of Directors, have a material negative impact on
Firstbank and/or its shareholders if the transactions contemplated by this
Agreement are not consummated.
(c) Subject to applicable laws, regulations and the
requirements of Regulatory Authorities, Firstbank and Mercantile shall consult
and cooperate with each other with respect to determining, as specified in a
written notice from Mercantile to Firstbank, based upon such consultation and as
hereinafter provided, the amount and the timing for recognizing for financial
accounting purposes Firstbank's expenses of the Merger and the restructuring
charges relating to or to be incurred in connection with the Merger; provided
that Firstbank not be required to take any action that would, in the reasonable
judgment of Firstbank's Board of Directors, have a material negative impact on
Firstbank and/or its shareholders if the transactions contemplated by this
Agreement are not consummated..
(d) Subject to applicable laws, regulations and the
requirements of Regulatory Authorities, Firstbank shall (i) establish and take
such reserves and accruals at such time as Mercantile shall reasonably request
to conform Firstbank's loan, accrual and reserve policies to Mercantile's
policies, and (ii) establish and take such accruals, reserves and charges in
order to implement such policies in respect of excess facilities and equipment
capacity, severance costs, litigation matters, write-off or write-down of
various assets and other appropriate accounting adjustments, and to recognize
for financial accounting purposes
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such expenses of the Merger and restructuring charges related to or to be
incurred in connection with the Merger, in each case at such times as are
reasonably requested by Mercantile; provided, however, that on the date such
reserves, accruals and charges are to be taken, Mercantile shall certify to
Firstbank that Mercantile's representations and warranties are true and correct
as of such date, that the approval conditions to its obligations contemplated by
Section 6.01(b) have been satisfied or waived (except to the extent that any
waiting period associated therewith may then have commenced but not expired) and
that Mercantile is otherwise in compliance with this Agreement; and provided,
further, that Firstbank shall not be required to take any such action that is
not consistent with GAAP and regulatory accounting principles or would, in the
reasonable judgment of Firstbank's Board of Directors, have a material negative
impact on Firstbank and/or its shareholders if the transactions contemplated by
this Agreement are not consummated..
(e) No reserves, accruals or charges taken in accordance with
Section 5.15(d) above may be a basis to assert a violation of a breach of a
representation, warranty or covenant of Firstbank herein.
5.16. Environmental Reports. Mercantile, at its expense, may
perform, as soon as reasonably practicable, but not later than ninety (90) days
after the date hereof, a phase one environmental investigation and/or asbestos
survey by Environmental Operations, Inc. on all real property owned, leased or
operated by Firstbank or any of the Firstbank Subsidiaries as of the date hereof
(but excluding space in retail and similar establishments leased by Firstbank
for automatic teller machines or leased bank branch facilities where the space
leased comprises less than 20% of the total space leased to all tenants of such
property) and within fifteen (15) days after being notified by Firstbank of the
acquisition or lease of any real property acquired or leased by Firstbank or any
of the Firstbank Subsidiaries after the date hereof (but excluding space in
retail and similar establishments leased by Firstbank for automatic teller
machines or leased bank facilities where the space leased comprises less than
20% of the total space leased to all tenants of such property). If the results
of the phase one investigation indicate, in Mercantile's reasonable opinion,
that additional investigation is warranted, Mercantile may perform, at its
expense, a phase two subsurface investigation or investigations by Environmental
Operations, Inc. on properties deemed to warrant such additional study.
Mercantile shall perform any such phase two investigation as soon as reasonably
practicable after receipt of the phase one report(s) for such properties. Should
the cost of taking all remedial or other corrective actions and measures (i)
required by applicable law or (ii) recommended by Environmental Operations, Inc.
in such phase one or phase two report or reports in light of potentially serious
life, health or
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safety concerns, in the aggregate, exceed the sum of $7,000,000, as reasonably
estimated by Environmental Operations, Inc. or if the cost of such actions or
measures cannot be so reasonably estimated by Environmental Operations, Inc. to
be such amounts or less with any reasonable degree of certainty, Mercantile
shall have the right pursuant to Section 7.01(f) hereof, for a period of fifteen
(15) business days following receipt from Environmental Operations, Inc. of such
estimate or indication that the cost of such actions and measures cannot be so
reasonably estimated, to terminate this Agreement.
5.17. Best Efforts to Insure Pooling. Firstbank undertakes and
agrees and, unless Mercantile shall have waived the condition set forth in
Section 6.03(c), Mercantile undertakes and agrees to use their reasonable best
efforts to cause the Merger to qualify for pooling-of-interests accounting
treatment.
5.18. Community Support. Mercantile shall use all reasonable
efforts following the Effective Time to maintain a level of community support
and involvement in the communities served by Firstbank that is substantially
equivalent in the aggregate to Firstbank's general level of support and
involvement prior to the Merger.
ARTICLE VI
CONDITIONS
6.01. 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 fulfillment or waiver at or prior to the Effective Time of the
following conditions:
(a) This Agreement shall have received the requisite approval
of stockholders of Firstbank.
(b) All requisite approvals of this Agreement and the
transactions contemplated hereby shall have been received from or
waived by the Board and any other Regulatory Authority and all
applicable waiting periods have expired.
(c) The Registration Statement shall have been declared
effective and shall not be subject to a stop order or any threatened
stop order.
(d) Neither Firstbank nor Mercantile shall be subject to any
order, decree or injunction, and there shall be no pending or
threatened order, decree or injunction, of a court or agency of
competent jurisdiction which enjoins or prohibits the consummation of
any of the Transactions.
(e) There shall be no legislative, statutory or
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regulatory action (whether federal or state) pending which prohibits or
threatens in a material way to prohibit consummation of the
Transactions or which otherwise materially adversely affects the
Transactions.
(f) Each of Mercantile and Firstbank shall have received, from
counsel reasonably satisfactory to the recipient, an opinion, dated the
Closing Date, reasonably satisfactory in form and substance to the
recipient, 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, (i)
the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and (ii) no gain or loss will be recognized
by the stockholders of Firstbank who receive solely Mercantile Common
Stock in exchange for shares of Firstbank Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional
share interest in Mercantile Common Stock). In rendering such opinions,
counsel shall receive, and may rely on, customary representations from
Mercantile, Firstbank and others, including but not limited to
representations contained in certificates of officers of Mercantile,
Firstbank and others.
6.02. Conditions to Obligations of Firstbank To Effect the
Merger. The obligations of Firstbank to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of Mercantile set forth in Article III of this Agreement
shall be true and correct in all respects as of the date of this
Agreement and as of the Effective Time (as though made on and as of the
Effective Time except (i) to the extent such representations and
warranties are by their express provisions made as of a specified date
or period and (ii) for the effect of transactions contemplated by this
Agreement), except for such failures to be so true and correct as would
not have and could not reasonably be expected to have in the aggregate
a material adverse effect on the Condition of Mercantile and its
Subsidiaries, taken as a whole, and Firstbank shall have received a
certificate of the chairman or vice chairman of Mercantile to that
effect; provided, however, that for purposes of determining the
satisfaction of the condition contained in this Section 6.02(a), no
effect shall be given to any exception or qualification in such
representations and warranties relating to materiality or material
adverse effect.
(b) Performance of Obligations. Mercantile shall have
performed in all material respects all obligations required
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to be performed by it under this Agreement prior to the Effective Time,
and Firstbank shall have received a certificate of the chairman or vice
chairman of Mercantile to that effect.
6.03. Conditions to Obligations of Mercantile To Effect the
Merger. The obligations of Mercantile to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of Firstbank set forth in Article II of this Agreement shall
be true and correct in all respects as of the date of this Agreement
and as of the Effective Time (as though made on and as of the Effective
Time except (i) to the extent such representations and warranties are
by their express provisions made as of a specific date or period and
(ii) for the effect of transactions contemplated by this Agreement),
except for such failures to be so true and correct as would not have
and could not reasonably be expected to have in the aggregate a
material adverse effect on the Condition of Firstbank and its
Subsidiaries, taken as a whole, and Mercantile shall have received a
certificate of the chairman and president of Firstbank and a
certificate of the chief financial officer of Firstbank to that effect;
provided, however, that for purposes of determining the satisfaction of
the condition contained in this Section 6.03(a), no effect shall be
given to any exception or qualification in such representations and
warranties relating to materiality or material adverse effect.
(b) Performance of Obligations. Firstbank shall have performed
in all material respects all obligations required to be performed by it
under this Agreement prior to the Effective Time, and Mercantile shall
have received a certificate of the chairman and president of Firstbank
and a certificate of the chief financial officer of Firstbank to that
effect.
(c) Pooling Letter. Mercantile shall have received as soon as
practicable after the date of this Agreement an opinion of KPMG Peat
Marwick LLP, reasonably satisfactory in form and substance to
Mercantile, to the effect that the Merger will qualify for
pooling-of-interests accounting treatment, which opinion shall have not
been withdrawn.
(d) Divestitures. Firstbank shall have divested or have
entered into binding agreements to divest, in each case on a basis
reasonably acceptable to Mercantile and as required under applicable
law or by any Regulatory Authority, the Missouri bank Subsidiaries of
Firstbank.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after any requisite
stockholder approval:
(a) by mutual consent by the Executive Committee of the Board
of Directors of Mercantile and the Board of Directors of Firstbank;
(b) by the Executive Committee of the Board of Directors of
Mercantile or the Board of Directors of Firstbank at any time after
January 27, 1999 if the Merger shall not theretofore have been
consummated (provided that the terminating party is not then in
material breach of any representation, warranty, covenant or other
agreement contained herein);
(c) by the Executive Committee of the Board of Directors of
Mercantile or the Board of Directors of Firstbank if (i) the Board has
denied approval of the Merger and such denial has become final and
nonappealable or (ii) stockholders of Firstbank shall not have approved
this Agreement at the Meeting following a favorable recommendation of
Firstbank's Board of Directors;
(d) by the Executive Committee of the Board of Directors of
Mercantile in the event of a material breach by Firstbank of any
representation, warranty, covenant or other agreement contained in this
Agreement, which breach is not cured within 30 days after written
notice thereof to Firstbank by Mercantile;
(e) by the Board of Directors of Firstbank in the event of a
material breach by Mercantile of any representation, warranty, covenant
or other agreement contained in this Agreement, which breach is not
cured within 30 days after written notice thereof is given to
Mercantile by Firstbank; or
(f) by the Executive Committee of the Board of Directors of
Mercantile pursuant to and in accordance with the provisions of the
last sentence of Section 5.16.
7.02. Effect of Termination. In the event of termination of
this Agreement as provided in Sections 7.01(a) through 7.01(c) and Section
7.01(f) above, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Mercantile or Firstbank or their
respective officers or directors except as set forth in the second sentence of
Section
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5.01 and in Section 5.06.
7.03. Amendment. This Agreement and the Schedules hereto may
be amended by the parties hereto, by action taken by or on behalf of their
respective Boards of Directors, at any time before or after approval of this
Agreement by the stockholders of Firstbank; provided, however, that after any
such approval by the stockholders of Firstbank no such modification shall alter
or change the amount or kind of consideration to be received by holders of
Firstbank Common Stock as provided in this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of
Mercantile and Firstbank.
7.04. Severability. Any term, provision, covenant or
restriction contained in this Agreement held by a court or a Regulatory
Authority of competent jurisdiction or the Board to be invalid, void or
unenforceable, shall be ineffective to the extent of such invalidity, voidness
or unenforceability, but neither the remaining terms, provisions, covenants or
restrictions contained in this Agreement nor the validity or enforceability
thereof in any other jurisdiction shall be affected or impaired thereby. Any
term, provision, covenant or restriction contained in this Agreement that is so
found to be so broad as to be unenforceable shall be interpreted to be as broad
as is enforceable.
7.05. Waiver. Any term, condition or provision of this
Agreement may be waived in writing at any time by the party which is, or whose
stockholders are, entitled to the benefits thereof.
ARTICLE VIII
GENERAL PROVISIONS
8.01. Non-Survival of Representations, Warranties and
Agreements. No investigation by the parties hereto made heretofore or hereafter
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive such
investigation. Except as set forth below in this Section 8.01, all
representations, warranties and agreements in this Agreement of Mercantile and
Firstbank or in any instrument delivered by Mercantile or Firstbank pursuant to
or in connection with this Agreement shall expire at the Effective Time or upon
termination of this Agreement in accordance with its terms or, in the case of
any other such instrument, in accordance with the terms of such instrument. In
the event of consummation of the Merger, the agreements contained in or referred
to in Sections 1.12 (last sentence only), 5.02(b), 5.05(b), 5.07, 5.08, 5.09,
5.12, 5.18 and in any other provision contained herein which by its terms
applies in whole or in part after the Effective Time shall survive the Effective
Time. In the event of termination of this Agreement in
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accordance with its terms, the agreements contained in or referred to in the
second sentence of Section 5.01, Section 5.06 and Section 7.02 shall survive
such termination.
8.02. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to be duly received (i) on the date
given if delivered personally or (ii) upon confirmation of receipt, if by
facsimile transmission or (iii) on the date received if mailed by registered or
certified mail (return receipt requested), or (iv) on the business date after
being delivered to a reputable overnight delivery service, if by such service,
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(i) if to Mercantile:
Mercantile Bancorporation Inc.
Xxxxxxxxxx Xxxxx
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxx
Executive Vice President,
Mercantile Bank National
Association
Copies to:
Xxx X. Xxxxxxxx, Esq.
General Counsel
Mercantile Bancorporation Inc.
Xxxxxxxxxx Xxxxx
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
and
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
(ii) if to Firstbank:
Firstbank of Illinois Co.
000 Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
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Copies to:
Suelthaus & Xxxxx, P.C.
0000 Xxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
and
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
8.03. Miscellaneous. This Agreement (including the Schedules
and other written documents referred to herein or provided hereunder) (i)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof, including any confidentiality agreement
between the parties hereto, (ii) except for the provisions of Sections 5.09 and
5.12, is not intended to confer upon any person not a party hereto any rights or
remedies hereunder, (iii) shall not be assigned by operation of law or otherwise
and (iv) shall be governed in all respects by the laws of the State of Missouri,
except as otherwise specifically provided herein or required by the DGCL.
Nothing in this Agreement shall be construed to require any party (or any
subsidiary or affiliate of any party) to take any action or fail to take any
action in violation of applicable law, rule or regulation. This Agreement may be
executed in counterparts which together shall constitute a single agreement.
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IN WITNESS WHEREOF, Mercantile, Merger Sub and Firstbank have
caused this Agreement to be signed and, by such signature, acknowledged by their
respective officers thereunto duly authorized, and such signatures to be
attested to by their respective officers thereunto duly authorized, all as of
the date first written above.
Attest: MERCANTILE BANCORPORATION INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxx X. Xxxx
------------------------------ -----------------------------
Name: Xxxxx X. Xxxxx Name: Xxxx X. Xxxx
Title: Senior Vice President Title: Executive Vice
President
Attest: AMERIBANC, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxx X. Xxxx
------------------------------ -----------------------------
Name: Xxxxx X. Xxxxx Name: Xxxx X. Xxxx
Title: Senior Vice President Title: Vice President
Attest: FIRSTBANK OF ILLINOIS CO.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
------------------------------ -----------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxx X. Xxxxxxxx
Title: Assistant Secretary Title: Chairman & CEO
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