EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
between
MERCANTILE BANCORPORATION INC.,
as Buyer,
and
ROOSEVELT FINANCIAL GROUP, INC.
as Seller
Dated December 22, 1996
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered into on December 22, 1996 by
and between MERCANTILE BANCORPORATION INC., a Missouri corpora-
tion ("Buyer"), and ROOSEVELT FINANCIAL GROUP, INC., a Delaware
corporation (together with its predecessors, "Seller").
W I T N E S S E T H:
WHEREAS, Buyer is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the
"Holding Company Act") and a registered savings and loan hold-
ing company under the Home Owners' Loan Act, as amended
("HOLA"); and
WHEREAS, Seller is a registered bank holding company
under the Holding Company Act and a registered unitary savings
and loan holding company under HOLA; and
WHEREAS, the Board of Directors of Seller and the
Executive Committee of the Board of Directors of Buyer have
approved the merger (the "Merger") of Seller with and into
Ameribanc, Inc., a Missouri corporation and wholly owned sub-
sidiary of Buyer ("Merger Sub") pursuant to the terms and sub-
ject to the conditions of this Agreement; and
WHEREAS, for federal income tax purposes, it is in-
tended 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 "Internal Revenue Code"); and
WHEREAS, as a condition to, and immediately after the
execution of this Agreement, Buyer and each director of Seller
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, Buyer and Seller 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 cov-
enants in connection with the transactions contemplated by this
Agreement.
NOW THEREFORE, in consideration of the premises and
the representations, warranties and agreements herein con-
tained, the parties agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and condi-
tions of this Agreement, Seller shall be merged with and into
Merger Sub in accordance with the Delaware General Corporation
Law (the "DGCL") and the Missouri General and Business Corpora-
tion Law (the "MGBCL") and the separate corporate existence of
Seller shall cease. Merger Sub shall be the surviving corpora-
tion of the Merger (sometimes referred to herein as the "Sur-
viving 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 Buyer and Seller
shall agree (the "Closing Date").
1.03. Effective Time. The Merger shall become ef-
fective 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 Ef-
fective Time shall occur on any such date on or after May 16,
1997 as Buyer shall notify Seller 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(a) and 6.01(b) (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, Buyer and Seller 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, respec-
tively.
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1.04. Additional Actions. If, at any time after the
Effective Time, Buyer or the Surviving Corporation shall con-
sider or be advised that any further deeds, assignments or as-
surances or any other acts are necessary or desirable to (a)
vest, perfect or confirm, of record or otherwise, in the Sur-
viving Corporation its right, title or interest in, to or under
any of the rights, properties or assets of Seller or Merger Sub
or (b) otherwise carry out the purposes of this Agreement,
Seller and Merger Sub and each of their respective officers and
directors, 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 Sur-
viving 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 Seller 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 fol-
lowing the Merger until otherwise amended or repealed.
1.06. Boards of Directors and Officers. At the Ef-
fective Time, the directors and officers of Merger Sub im-
mediately 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 ap-
plicable law.
1.07. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the
part of Buyer, Seller 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 im-
mediately 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) Each share of the common stock, $.01 par value
("Seller Common Stock"), of Seller issued and outstanding im-
mediately prior to the Effective Time, other than any Dissent-
ing Shares (as defined in Section 1.11), shall cease to be out-
standing and shall be converted into and become the right to
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receive, at the election of the holder thereof as provided in
Section 1.08, either
(1) .4211 (the "Exchange Ratio") shares of common
stock, par value $5.00 per share ("Buyer Common Stock"),
of Buyer and the associated Rights under the Buyer Rights
Agreement as those terms are defined in Section 3.02 (the
"Per Share Stock Consideration"), or
(2) $22.00 in cash (the "Per Share Cash Consider-
ation");
provided that the aggregate number of shares of Buyer Common
Stock that shall be issued in the Merger (the "Stock Amount")
shall, subject to the allocation procedures set forth in
Section 1.09, be equal to (x) 13,042,110 shares less (y) the
number of shares of Buyer Common Stock issuable upon exercise
of the Seller Stock Options or restricted stock outstanding as
of the Effective Time.
1.08. Election Procedures. An election form and
other appropriate and customary transmittal materials (which
shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing Seller
Common Stock shall pass, only upon proper delivery of such cer-
tificates to an exchange agent designated by Buyer (the "Ex-
change Agent")) in such form as Buyer and Seller shall mutually
agree ("Election Form") shall be mailed approximately 25 days
prior to the anticipated Effective Time or on such other date
as Buyer and Seller shall mutually agree ("Mailing Date") to
each holder of record of Seller Common Stock as of five busi-
ness days prior to the Mailing Date ("Election Form Record
Date"). Buyer shall determine the anticipated Effective Time
(the "Anticipated Effective Time") in its sole discretion and
the failure of the Effective Time to occur at the Anticipated
Effective Time for purposes of this Section 1.08 shall not af-
fect the time periods which are established for purposes of
these election procedures.
Each Election Form shall permit the holder (or the
beneficial owner through appropriate and customary documenta-
tion and instructions) to elect to receive only Buyer Common
Stock with respect to such holder's Seller Common Stock ("Stock
Election Shares"), to elect to receive only cash with respect
to such holder's Seller Common Stock ("Cash Election Shares")
or to indicate that such holder makes no election ("No Election
Shares"). For purposes of this Section 1.08, Dissenting Shares
shall be treated as Cash Election Shares but shall not be con-
verted into the Per Share Stock Consideration or the Per Share
Cash consideration except as provided in Section 1.11.
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Any Seller Common Stock with respect to which the
holder (or the beneficial owner, as the case may be) shall not
have submitted to the Exchange Agent an effective, properly
completed Election Form on or before 5:00 p.m. on the 20th day
following the Mailing Date (or such other time and date as
Buyer and Seller may mutually agree) (the "Election Deadline")
shall be deemed to be "No Election Shares."
Buyer shall promptly make available one or more Elec-
tion Forms as may be reasonably requested by all persons who
become holders (or beneficial owners) of Seller Common Stock
between the Election Form Record Date and close of business on
the business day prior to the Election Deadline, and Seller
shall provide to the Exchange Agent all information reasonably
necessary for it to perform as specified herein.
Any such election shall have been properly made only
if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election
Form shall be deemed properly completed only if accompanied by
one or more certificates (or customary affidavits and indemni-
fication regarding the loss or destruction of such certificates
or the guaranteed delivery of such certificates) representing
all shares of Seller Common Stock covered by such Election
Form, together with duly executed transmittal materials in-
cluded in the Election Form. Any Election Form may be revoked
or changed by the person submitting such Election Form at or
prior to the Election Deadline. In the event an Election Form
is revoked prior to the Election Deadline, the shares of Seller
Common Stock represented by such Election Form shall become No
Election Shares and Buyer shall cause the certificates repre-
senting Seller Common Stock to be promptly returned without
charge to the person submitting the Election Form upon written
request to that effect from the person who submitted the Elec-
tion Form. Subject to the terms of this Agreement and of the
Election Form, the Exchange Agent shall have reasonable discre-
tion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial
defects in the Election Forms, and any good faith decisions of
the Exchange Agent regarding such matters shall be binding and
conclusive. Neither Buyer nor the Exchange Agent shall be un-
der any obligation to notify any person of any defect in an
Election Form.
1.09. Allocation Procedures. Within ten business
days after the Election Deadline, unless the Effective Time has
not yet occurred, in which case as soon thereafter as practi-
cable, Buyer shall cause the Exchange Agent to effect the al-
location among the holders of Seller Common Stock of rights to
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receive Buyer Common Stock or cash in the Merger in accordance
with the Election Forms as follows:
(a) Stock Elections Less Than Stock Amount. If the
number of shares of Buyer Common Stock that would be is-
sued upon conversion in the Merger of the Stock Election
Shares is less than the Stock Amount, then:
(i) all Stock Election Shares shall be con-
verted into the right to receive Buyer Common Stock,
(ii) the Exchange Agent shall select first from
among the holders of No Election Shares and then (if
necessary) pro rata from among the Cash Election
Shares (excluding Dissenting Shares), a sufficient
number of shares ("Stock Designated Shares") such
that the number of shares of Buyer Common Stock that
will be issued in the Merger equals as closely as
practicable the Stock Amount, and all Stock Desig-
nated Shares shall be converted into the right to
receive Buyer Common Stock; provided, however, that
Buyer shall have the option, in its sole discretion,
to satisfy some or all of the Stock Designated Shares
by similar pro rata selection in cash in lieu of xx-
xxxxxxxx Buyer Common Stock subject to the require-
ment that the Merger continue to qualify as a tax-
free reorganization for purposes of section 368 of
the Code, and
(iii) the Cash Election Shares and the No Elec-
tion Shares which are not Stock Designated Shares
shall be converted into the right to receive cash;
(b) Stock Elections More Than Stock Amount. If the
number of shares of Buyer Common Stock that would be is-
sued upon the conversion into Buyer Common Stock of the
Stock Election Shares is greater than the Stock Amount,
then:
(i) all Cash Election Shares and No Election
Shares shall be converted into the right to receive
cash,
(ii) the Exchange Agent shall select from among
the Stock Election Shares on a pro rata basis, a suf-
ficient number shares ("Cash Designated Shares") such
that the number of shares of Buyer Common Stock that
will be issued in the Merger equals as closely as
practicable the Stock Amount, and all Cash Designated
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Shares shall be converted into the right to receive
cash, and
(iii) the Stock Election Shares which are not
Cash Designated Shares shall be converted into the
right to receive Buyer Common Stock; or
(c) Stock Elections Equal to Stock Amount. If the
number of shares of Buyer Common Stock that would be is-
sued upon conversion into Buyer Common Stock of the Stock
Election Shares is equal or nearly equal (as determined by
the Exchange Agent) to the Stock Amount, then subpara-
graphs (a) and (b) above and subparagraph (d) below shall
not apply and all Stock Election Shares shall be converted
into the right to receive Buyer Common Stock and all Cash
Election Shares and No Election Shares shall be converted
into the right to receive cash; or
(d) Stock Elections and No Elections Equal to Stock
Amount. If the number of shares of Buyer Common Stock
that would be issued upon the conversion into Buyer Common
Stock of the Stock Election Shares and No Election Shares
would equal or nearly equal (as determined by the Exchange
Agent) the Stock Amount, then subparagraphs (a), (b) and
(c) above shall not apply and all Cash Election Shares
shall be converted into the right to receive cash and all
Stock Election Shares and No Election Shares shall be con-
verted into the right to receive Buyer Common Stock.
1.10. Exchange Procedures. (a) In accordance with
Section 1.08, holders of record of certificates formerly repre-
senting shares of Seller Common Stock (the "Certificates")
shall be instructed to tender such Certificates to Buyer pursu-
ant to a letter of transmittal that Buyer shall deliver or
cause to be delivered to such holders, which letter of trans-
mittal shall be included within the election forms distributed
pursuant to Section 1.08. Such letters of transmittal shall
specify that risk of loss and title to Certificates shall pass
only upon delivery of such Certificates to Buyer or the Ex-
change Agent (as defined below).
(b) Subject to Section 1.12, after the Effective
Time, each previous holder of a Certificate that surrenders
such Certificate to the Buyer or, at the election of Buyer, an
exchange agent designated by Buyer (the "Exchange Agent") will,
upon acceptance thereof by Buyer or the Exchange Agent, be en-
titled to a certificate or certificates representing the number
of full shares of Buyer Common Stock or cash, as the case may
be, into which the Certificate so surrendered shall have been
converted pursuant to this Agreement and any distribution
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theretofore declared and not yet paid with respect to such
shares of Buyer Common Stock, without interest.
(c) Buyer or, at the election of Buyer, the Exchange
Agent shall accept Certificates upon compliance with such rea-
sonable terms and conditions as Buyer or the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with
customary exchange practices. Certificates shall be ap-
propriately endorsed or accompanied by such instruments of
transfer as Buyer or the Exchange Agent may require.
(d) Each outstanding Certificate shall until duly
surrendered to Buyer or the Exchange Agent be deemed to evi-
dence ownership of the consideration into which the stock pre-
viously represented by such Certificate shall have been con-
verted pursuant to this Agreement.
(e) After the Effective Time, holders of Certifi-
xxxxx shall cease to have rights with respect to the stock pre-
viously represented by such Certificates, and their sole rights
shall be to exchange such Certificates for the consideration
provided for in this Agreement. After the Effective Time,
there shall be no further transfer on the records of Seller of
Certificates, and if such Certificates are presented to Seller
for transfer, they shall be cancelled against delivery of the
consideration provided therefor in this Agreement. Buyer shall
not be obligated to deliver the consideration to which any
former holder of Seller 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 Buyer Common Stock under this Agree-
ment until such person surrenders the Certificate representing
the right to receive such Buyer Common Stock, at which time
such dividends shall be remitted to such person, without inter-
est and less any taxes that may have been imposed thereon.
Certificates surrendered for exchange by any person constitut-
ing an "affiliate" of Seller 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 Buyer Common Stock un-
til Buyer 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. Buyer
and the Exchange Agent shall be entitled to rely upon the stock
transfer books of Seller to establish the identity of those
persons entitled to receive consideration specified in this
Agreement, which books shall be conclusive with respect
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thereto. In the event of a dispute with respect to ownership
of stock represented by any Certificate, Buyer and the Exchange
Agent shall be entitled to deposit any consideration repre-
sented thereby in escrow with an independent third party and
thereafter be relieved with respect to any claims thereto.
1.11. Dissenting Shares. (a) "Dissenting Shares"
means any shares held by any holder who becomes entitled to
payment of the fair value of such shares under the DGCL. Any
holders of Dissenting Shares shall be entitled to payment for
such shares only to the extent permitted by and in accordance
with the provisions of the DGCL; provided, however, that if, in
accordance with the DGCL, any holder of Dissenting Shares shall
forfeit such right to payment of the fair value of such shares,
such shares shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective
Time, the right to receive the consideration provided in this
Article I.
(b) Seller shall give Buyer (i) prompt notice of any
written objections to the Merger and any written demands for
the payment of the fair value of any shares, withdrawals of
such demands, and any other instruments served pursuant to the
DGCL received by Seller and (ii) the opportunity to participate
in all negotiations and proceedings with respect to such de-
mands under the DGCL. Seller shall not voluntarily make any
payment with respect to any demands for payment of fair value
and shall not, except with the prior written consent of Buyer,
settle or offer to settle any such demands.
1.12. No Fractional Shares. Notwithstanding any
other provision of this Agreement, neither certificates nor
scrip for fractional shares of Buyer Common Stock shall be is-
sued in the Merger. Each holder who otherwise would have been
entitled to a fraction of a share of Buyer 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 Buyer 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 re-
ported 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.
1.13. Anti-Dilution Adjustments. If prior to the
Effective Time Buyer shall declare a stock dividend or make
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distributions upon or subdivide, split up, reclassify or com-
bine or make other similar change to Buyer Common Stock, ex-
change Buyer Common Stock for a different number or kind of
shares or securities or declare a dividend or make a distri-
bution on Buyer Common Stock or on any security convertible
into Buyer Common Stock, or is involved in any transaction re-
sulting in any of the foregoing (including any exchange of
Buyer Common Stock for a different number or kind of shares or
securities), appropriate adjustment or adjustments will be made
to the Exchange Ratio.
1.14. Reservation of Right to Revise Transaction.
Buyer may at any time change the method of effecting the acqui-
sition of Seller or Seller's Subsidiaries by Buyer and Seller
shall cooperate in such efforts (including without limitation
(a) the provisions of this Article I and (b) causing the merger
of Roosevelt Bank, a wholly owned subsidiary of Seller ("Seller
Bank") and/or any of the Banks (as defined herein) with any
depository institution which is a Subsidiary of Buyer (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 Seller directly into Buyer, in which Buyer 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 Seller Common Stock as provided for
in this Agreement (the "Merger Consideration"), (B) adversely
affect the tax treatment to Seller'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 Agree-
ment.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller represents and warrants to and covenants with
Buyer as follows:
2.01. Organization and Authority. Seller is a cor-
poration 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 a material adverse effect on the fi-
nancial condition, results of operations or business (col-
lectively, the "Condition") of Seller and its Subsidiaries,
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taken as a whole, and has corporate power and authority to own
its properties and assets and to carry on its business as it is
now being conducted. Seller is registered as a bank holding
company with the Board of Governors of the Federal Reserve Sys-
tem (the "Board") under the Holding Company Act and as a uni-
tary savings and loan holding company with the Office of Thrift
Supervision (the "OTS") under HOLA. True and complete copies
of the Certificate of Incorporation and the Bylaws of Seller
and, to the extent requested in writing by Buyer, of the ar-
ticles of incorporation and bylaws of the Seller Subsidiaries
(as defined in Section 2.02), each as in effect on the date of
this Agreement, have been provided to Buyer.
2.02. Subsidiaries. Schedule 2.02 sets forth, among
other things, a complete and correct list of all of Seller's
Subsidiaries (each a "Seller Subsidiary" and collectively the
"Seller Subsidiaries"), all outstanding Equity Securities of
each of which, except as set forth on Schedule 2.02, are owned
directly or indirectly by Seller. "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 se-
curities 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 is-
xxxx 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, sub-
scribe to, calls on or commitments for any shares of its capi-
tal stock or other Equity Securities. Except as set forth on
Schedule 2.02, all of the outstanding shares of capital stock
of the Seller Subsidiaries are validly issued, fully paid and
nonassessable, and those shares owned by Seller 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 Seller Subsidiar-
ies is a corporation, savings 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 Seller 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 a material adverse effect on the Condi-
tion of Seller and its Subsidiaries, taken as a whole. Except
for the Equity Securities of Seller Bank of which Seller owns
100% and except as set forth on Schedule 2.02, Seller does not
own beneficially, directly or indirectly, any shares of any
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class of Equity Securities or similar interests of any corpora-
tion, bank, business trust, association or similar organiza-
tion. Seller Bank is chartered by the OTS. The deposits of
Seller Bank are insured by the Savings Association Insurance
Fund ("SAIF") or the Bank Insurance Fund ("BIF"). The place
and type of charter and the applicable insurance fund for each
of Seller's other Subsidiaries which are financial institutions
(the "Banks") are set forth on Schedule 2.02. Except as set
forth on Schedule 2.02, neither Seller nor any Seller Subsid-
iary holds any interest in a partnership or joint venture of
any kind.
2.03. Capitalization. The authorized capital stock
of Seller consists of (i) 90,000,000 shares of Seller Common
Stock, of which, as of December 20, 1996, 44,147,886 shares
were issued and outstanding and (ii) 1,000,000 shares of Class
I serial preferred stock, par value $.01 per share, of which,
as of December 20, 1996, 999,100 shares were issued and out-
standing, and (iii) 2,000,000 shares of Class II serial pre-
ferred stock, no par value, of which, as of December 20, 1996,
289,725 shares were issued and outstanding (clauses (ii) and
(iii) together, "Seller Preferred Stock"). As of December 20,
1996, Seller had reserved 4,650,000 shares of Seller Common
Stock for issuance under Seller's stock option and incentive
plans, a list of which is set forth on Schedule 2.03 (the
"Seller Stock Plans"), pursuant to which options ("Seller Stock
Options") covering 1,176,993 shares of Seller Common Stock were
outstanding as of December 20, 1996. Except as set forth on
Schedule 2.03, since December 20, 1996, no Equity Securities of
Seller have been issued other than shares of Seller Common
Stock which may have been issued upon the exercise of Seller
Stock Options. Except as set forth above, there are no other
Equity Securities of Seller outstanding. All of the issued and
outstanding shares of Seller Common Stock are validly issued,
fully paid, and nonassessable, and have not been issued in vio-
lation of any preemptive right of any stockholder of Seller.
Each share of Seller Preferred Stock may be called for redemp-
tion on and after May 16, 1997. Since December 20, 1996,
Seller has not granted any options or similar rights pursuant
to which shares of Seller Common Stock may be issued and has
not issued any shares of Seller Common Stock.
2.04. Authorization. (a) Except as set forth on
Schedule 2.04A, Seller has the corporate power and authority to
enter into this Agreement and, subject to the approval of this
Agreement by the stockholders of Seller, to carry out its obli-
gations hereunder. The only stockholder vote required for
Seller to approve this Agreement is the affirmative vote of the
holders of at least a majority of the shares of Seller Common
Stock entitled to vote at a meeting called for such purpose.
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The execution, delivery and performance of this Agreement by
Seller and the consummation by Seller of the transactions con-
templated hereby have been duly authorized by the Board of Di-
rectors of Seller. Subject to approval by the stockholders of
Seller, this Agreement is a valid and binding obligation of
Seller enforceable against Seller in accordance with its terms.
(b) Except as set forth on Schedule 2.04B, neither
the execution nor delivery nor performance by Seller of this
Agreement, nor the consummation by Seller of the transactions
contemplated hereby, nor compliance by Seller 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
Seller or any Seller Subsidiary under any of the terms, condi-
tions or provisions of (x) its articles or certificate of in-
corporation or bylaws or (y) any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Seller or any Seller Subsid-
iary is a party or by which it may be bound, or to which Seller
or any Seller Subsidiary or any of the material properties or
assets of Seller or any Seller Subsidiary may be subject, 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 Seller, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to
Seller or any Seller Subsidiary or any of their respective ma-
terial 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 securities or
blue sky laws of the various states or filings, consents, re-
views, authorizations, approvals or exemptions required under
the Holding Company Act, and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"), or any required ap-
provals or filings pursuant to any state statutes or regula-
tions applicable to Seller, Buyer or their respective Subsid-
iaries 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 Seller of the
transactions contemplated by this Agreement.
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2.05. Seller Financial Statements. The consolidated
balance sheets of Seller and its Subsidiaries as of December
31, 1995, 1994 and 1993 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,
1995, together with the notes thereto, audited by KPMG Peat
Marwick LLP and included in an annual report on Form 10-K (in-
cluding amendments thereto) as filed with the Securities and
Exchange Commission (the "SEC"), and the unaudited consolidated
balance sheets of Seller and its Subsidiaries as of March 31,
June 30, and September 30, 1996 and the related unaudited con-
solidated statements of income and cash flows for the periods
then ended, together with the notes thereto, included in quar-
terly reports on Form 10-Q (including amendments thereto) (each
a "Seller Form 10-Q") as filed with the SEC (collectively, the
"Seller 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 Seller
and its Subsidiaries at the dates and the consolidated results
of operations, cash flows and changes in stockholders' equity
of Seller and its Subsidiaries for the periods stated therein
and are derived from the books and records of Seller 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 Seller nor any of its Subsid-
iaries has any material contingent liabilities that are not
reflected in the Seller Reports (defined below) or disclosed in
the financial statements described above.
2.06. Seller Reports. Except as set forth on Sched-
ule 2.06, since January 1, 1993, each of Seller and the Seller
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, includ-
ing, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and
proxy statements, (ii) the OTS, (iii) the FDIC, (iv) the Board
and (v) 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 (v) being referred to herein collectively as the "Regu-
latory Authorities" and individually as a "Regulatory Author-
ity"). All such reports and statements filed with any such
Regulatory Authority are collectively referred to herein as the
"Seller Reports." As of its respective date, each Seller Re-
port 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
-14-
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 Seller Financial
Statements, except for any Lien for current taxes not yet de-
linquent and except with respect to assets classified as real
estate owned, Seller and its Subsidiaries have good title free
and clear of any material Lien to all the real and personal
property reflected in Seller's consolidated balance sheet as of
September 30, 1996 included in the most recent Seller 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 Seller or any Seller Subsidiary pursuant to
which Seller or any Seller 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 Seller or any
Seller Subsidiary or any event which, with notice or lapse of
time or both, would constitute such a material default. Sub-
stantially all of Seller's and Seller Subsidiaries' buildings,
structures and equipment in regular use have been well main-
tained and are in good and serviceable condition, normal wear
and tear excepted.
2.08. Taxes. Except as set forth on Schedule 2.08
or except as previously disclosed to Buyer, Seller and each
Seller Subsidiary have timely filed or will timely (including
extensions) file all material tax returns required to be filed
at or prior to the Closing Date ("Seller Returns"). Each of
Seller and its Subsidiaries has paid, or set up adequate re-
serves on the Seller Financial Statements for the payment of,
all taxes required to be paid in respect of the periods covered
by such returns and has set up adequate reserves on the most
recent financial statements Seller 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 Seller nor any
Seller Subsidiary will have any liability material to the Con-
dition of Seller and the Seller Subsidiaries, taken as a whole,
for any such taxes in excess of the amounts so paid or reserves
so established and no material deficiencies for any tax, as-
sessment or governmental charge have been proposed, asserted or
assessed (tentatively or definitely) against any of Seller or
any Seller Subsidiary which would not be covered by existing
-15-
reserves. Neither Seller nor any Seller Subsidiary is xxxxx-
xxxxx in the payment of any material tax, assessment or govern-
mental charge, nor, except as previously disclosed, has it re-
quested any extension of time within which to file any tax re-
turns in respect of any fiscal year which have not since been
filed and no requests for waivers of the time to assess any tax
are pending. The federal and state income tax returns of
Seller and the Seller Subsidiaries have been audited and
settled by the Internal Revenue Service (the "IRS") or ap-
propriate state tax authorities for all periods ended through
December 31, 1991 or the period for assessment of taxes in re-
spect of such periods has expired. There is no deficiency or
refund litigation or matter in controversy with respect to
Seller Returns. Neither Seller nor any Seller 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,
1996, there has been no material adverse change in the Condi-
tion of Seller 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 and thrift institutions generally or in general levels
of interest rates affecting banking and thrift institutions
generally.
2.10. Commitments and Contracts. (a) Except as set
forth on Schedule 2.10A, neither Seller nor any Seller Subsid-
iary is a party or subject to any of the following (whether
written or oral, express or implied):
(i) any material agreement, arrangement or com-
mitment (A) not made in the ordinary course of busi-
ness or (B) pursuant to which Seller or any of its
Subsidiaries is or may become obligated to invest in
or contribute capital to any Seller Subsidiary;
(ii) any agreement, indenture or other instru-
ment not disclosed in the Seller Financial Statements
relating to the borrowing of money by Seller or any
Seller Subsidiary or the guarantee by Seller or any
Seller Subsidiary of any such obligation (other than
trade payables or instruments related to transactions
entered into in the ordinary course of business by
any Seller Subsidiary, such as deposits and Fed Funds
borrowings);
(iii) any contract, agreement or understanding
with any labor union or collective bargaining organi-
zation;
-16-
(iv) any contract containing covenants which
limit the ability of Seller or any Seller 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, Seller or any
Seller Subsidiary may carry on its business (other
than as may be required by law or any applicable
Regulatory Authority);
(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 ag-
gregating $250,000 or more.
(b) Neither Seller nor any Seller Subsidiary is in
violation of its charter documents or bylaws or in default un-
der any material agreement, commitment, arrangement, lease,
insurance policy, or other instrument, whether entered into in
the ordinary course of business or otherwise and whether writ-
ten 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 a material adverse effect on the Condition of Seller
and its Subsidiaries, taken as a whole.
2.11. Litigation and Other Proceedings. Except as
set forth on Schedule 2.11, neither Seller nor any Seller Sub-
sidiary is a party to any pending or, to the best knowledge of
Seller, threatened claim, action, suit, investigation or pro-
ceeding, or is subject to any order, judgment or decree, except
for matters which, in the aggregate, will not have, or reason-
ably could not be expected to have, a material adverse effect
on the Condition of Seller 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 Agree-
ment, there are no actions, suits, or proceedings pending or,
to the best knowledge of Seller, threatened against Seller or
any Seller Subsidiary or any of their respective officers or
directors by any stockholder of Seller or any Seller Subsidiary
(or any former stockholder of Seller or any Seller Subsidiary)
or involving claims under the Securities Act, the Exchange Act,
the Community Reinvestment Act of 1977, as amended, or the fair
lending laws.
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2.12. Insurance. Each of Seller and its Subsidiar-
ies has taken all requisite action (including without limita-
tion 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 re-
spect 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 Seller,
except for such matters which, individually or in the aggre-
gate, will not have and reasonably could not be expected to
have a material adverse effect on the Condition of Seller 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 Seller or its Subsidiaries or their directors, of-
ficers, employees or agents.
2.13. Compliance with Laws. (a) Except as set
forth on Schedule 2.13A, Seller and each of its Subsidiaries
have all permits, licenses, authorizations, orders and approv-
als of, and have made all filings, applications and registra-
tions with, all Regulatory Authorities that are required in
order to permit them to own or lease their properties and as-
sets and to carry on their business as presently conducted and
that are material to the business of Seller and its Subsidiar-
ies; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the
best knowledge of Seller, 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 a material adverse effect on the Con-
dition of Seller and its Subsidiaries, taken as a whole, (i)
each of Seller and its Subsidiaries has complied with all laws,
regulations and orders (including without limitation zoning
ordinances, building codes, the Employee Retirement Income Se-
curity 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 Seller Subsidiary that is a bank or savings as-
sociation, 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 Seller nor any Seller Subsid-
iary is in default under, and no event has occurred which, with
the lapse of time or notice or both, could result in the de-
fault under, the terms of any judgment, order, writ, decree,
-18-
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, as of the
date of this Agreement, neither Seller nor any Seller Subsid-
iary 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 Seller (whether directly or, to the best
knowledge of Seller, as a consequence of such Property being
part of the investment portfolio of Seller or any Seller Sub-
sidiary) (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 in-
tangible) 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 Seller or any
Seller Subsidiary relating to Property of Seller before any
court or other Regulatory Authority or arbitration tribunal
relating to hazardous substances, pollution, or the environ-
ment, and there is no outstanding judgment, order, writ, in-
junction, decree, or award against or affecting Seller or any
Seller Subsidiary with respect to the same. Except for statu-
tory or regulatory restrictions of general application, no
Regulatory Authority has placed any restriction on the business
of Seller or any Seller Subsidiary which reasonably could be
expected to have a material adverse effect on the Condition of
Seller and its Subsidiaries, taken as a whole.
(c) From and after January 1, 1993, neither Seller
nor any Seller Subsidiary has received any notification or com-
munication which has not been resolved from any Regulatory Au-
thority (i) asserting that any Seller or any Subsidiary of
Seller, is not in substantial compliance with any of the stat-
utes, regulations or ordinances that such Regulatory Authority
enforces, except with respect to matters which (A) are set
forth on Schedule 2.13C or in any writing previously furnished
to Buyer and (B) reasonably could not be expected to have a
material adverse effect on the Condition of Seller and its Sub-
sidiaries, taken as a whole, (ii) threatening to revoke any
license, franchise, permit or governmental authorization that
is material to the Condition of Seller and its Subsidiaries,
taken as a whole, including without limitation such company's
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status as an insured depositary institution under the Federal
Deposit Insurance Act, or (iii) requiring or threatening to
require Seller or any of its Subsidiaries, or indicating that
Seller or any of its Subsidiaries may be required, to enter
into a cease and desist order, agreement or memorandum of un-
derstanding or any other agreement restricting or limiting or
purporting to direct, restrict or limit in any manner the op-
erations of Seller or any of its Subsidiaries, including with-
out limitation any restriction on the payment of dividends. No
such cease and desist order, agreement or memorandum of under-
standing or other agreement is currently in effect.
(d) Except as set forth on Schedule 2.17D, neither
Seller nor any Seller 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 indi-
vidual to its board of directors or the employment of an indi-
vidual as a senior executive officer.
2.14. Labor. No work stoppage involving Seller or
any Seller Subsidiary, is pending or, to the best knowledge of
Seller, threatened which reasonably could be expected to have a
material adverse effect on the Condition of Seller and its Sub-
sidiaries, taken as a whole. Neither Seller nor any Seller
Subsidiary is involved in, or, to the best knowledge of Seller,
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
Seller and its Subsidiaries, taken as a whole. Employees of
neither Seller nor any Seller 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 Seller's Proxy Statement for its 1996
Annual Meeting of Stockholders, to the best knowledge of
Seller, no officer or director of Seller or any Subsidiary of
Seller, 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 per-
taining to the business of, Seller or any Subsidiary of Seller,
which in the case of Seller 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 Sec-
tion 12 of the Exchange Act.
(b) Except as set forth in Seller's Proxy Statement
for its 1996 Annual Meeting of Stockholders or on Schedule
2.15B, there are no loans from Seller or any Seller Subsidiary
-20-
to any present officer, director, employee or any associate or
related interest of any such person which was or would be re-
quired under any rule or regulation to be approved by or re-
ported to Seller's or Seller Subsidiary's Board of Directors
("Insider Loans"). All outstanding Insider Loans from Seller
or any Seller Subsidiary were approved by or reported to the
appropriate board of directors in accordance with applicable
law and regulations.
2.16. Allowance for Loan and Lease Losses; Nonper-
forming Assets. (a) The allowances for loan and lease losses
contained in the Seller Financial Statements were established
in accordance with the past practices and experiences of Seller
and its Subsidiaries, and the allowance for loan losses shown
on the consolidated condensed balance sheet of Seller and its
Subsidiaries contained in the most recent Seller 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) out-
standing as of the date of such balance sheet.
(b) As of September 30, 1996, the aggregate amount
of all Nonperforming Assets (as defined below) on the books of
Seller and its Subsidiaries does not exceed $74,889,000. "Non-
performing 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 Seller, 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 Seller nor any Seller Subsid-
iary is a party to any existing employment, management, con-
sulting, deferred compensation, change-in-control or other
similar contract. Schedule 2.17A lists all pension, retire-
ment, supplemental retirement, savings, profit sharing, stock
option, stock purchase, stock ownership, stock appreciation
-21-
right, deferred compensation, consulting, bonus, medical, dis-
ability, workers' compensation, vacation, group insurance, sev-
erance and other material employee benefit, incentive and wel-
fare 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 Seller or
any Seller Subsidiary in respect of any of the present or
former directors, officers, or other employees of and/or con-
sultants to Seller or any Seller Subsidiary (collectively,
"Seller Employee Plans"). Seller has furnished, or will
promptly furnish after the date hereof, Buyer with the follow-
ing documents with respect to each Seller Employee Plan: (i) a
true and complete copy of all written documents comprising such
Seller Employee Plan (including amendments and individual
agreements relating thereto) or, if there is no such written
document, an accurate and complete description of the Seller
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 gener-
ality of the foregoing, Seller has furnished Buyer 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 Seller or any Seller Subsidiary.
(b) All Seller 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 Internal Revenue Code ("IRC"). All contributions re-
quired to be made to Seller Employee Plans have been made.
(c) With respect to each of the Seller Employee
Plans which is a pension plan (as defined in Section 3(2) of
ERISA) (the "Pension Plans"): (i) each Pension Plan which is
intended to be "qualified" within the meaning of Section 401(a)
of the IRC has been determined to be so qualified by the IRS
and, to the knowledge of Seller, such determination letter may
still be relied upon, and each related trust is exempt from
taxation under Section 501(a) of 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 Seller, there has been no "prohibited trans-
action," as such term is defined in Section 4975 of the IRC or
-22-
Section 406 of ERISA, which could subject any Pension Plan or
associated trust, or the Seller or any Seller Subsidiary, to
any material tax or penalty; (iv) except as set forth on Sched-
ule 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 Janu-
ary 1, 1985; 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 Sec-
tion 3(37) of ERISA. With respect to each Pension Plan that is
described in Section 4063(a) of ERISA (a "Multiple Employer
Pension Plan"): (i) neither Seller nor any Seller Subsidiary
would have any liability or obligation to post a bond under
Section 4063 of ERISA if Seller and all Seller Subsidiaries
were to withdraw from such Multiple Employer Pension Plan; and
(ii) neither Seller nor any Seller 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
Seller nor any Seller 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, neither
Seller nor any Seller Subsidiary has any material liability
under ERISA or the IRC 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 consumma-
tion of any of the transactions contemplated hereby, will (i)
result in any material payment (including without limitation
severance, unemployment compensation or golden parachute pay-
ment) becoming due to any director or employee of Seller or any
Seller Subsidiary from any of such entities, (ii) materially
increase any benefit otherwise payable under any of the Seller
Employee Plans or (iii) result in the acceleration of the time
of payment of any such benefit. No holder of an option to ac-
quire stock of Seller 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 Seller) in exchange for or
with respect to all or any portion of such option. Seller
shall use its best efforts to insure that no amounts paid or
payable by Seller, Seller Subsidiaries or Buyer to or with re-
spect to any employee or former employee of Seller or any
-23-
Seller Subsidiary will fail to be deductible for federal income
tax purposes by reason of Section 280G of the IRC. No Seller
Stock Option has an associated "Additional Option Right" or
similar "re-load" feature.
2.18. Conduct of Seller to Date. From and after
January 1, 1996 through the date of this Agreement, except as
set forth on Schedule 2.18 or in Seller Financial Statements or
Seller Reports: (i) Seller and the Seller Subsidiaries have
conducted their respective businesses in all material respects
in the ordinary and usual course consistent with past prac-
tices; (ii) neither Seller nor any Seller Subsidiary has in-
curred any material obligation or liability (absolute or con-
tingent), except normal trade or business obligations or li-
abilities incurred in the ordinary course of business, or sub-
jected to Lien any of its assets or properties other than in
the ordinary course of business consistent with past practice;
(iii) neither Seller nor any Seller Subsidiary has discharged
or satisfied any material Lien or paid any material obligation
or liability (absolute or contingent), other than in the ordi-
nary course of business; (iv) neither Seller nor any Seller
Subsidiary has sold, assigned, transferred, leased, exchanged,
or otherwise disposed of any of its material properties or as-
sets other than for a fair consideration in the ordinary course
of business; (v) except as required by contract or law, neither
Seller nor any Seller 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 Seller
Employee Plans or (D) agreed to do any of the foregoing; (vi)
neither Seller nor any Seller 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 Seller nor any Seller Subsidiary
has cancelled or compromised any debt, except for debts charged
off or compromised in accordance with the past practice of
Seller and its Subsidiaries.
2.19. Proxy Statement, etc. None of the information
regarding Seller or any Seller Subsidiary supplied or to be
supplied by Seller for inclusion or included in (i) the regis-
tration statement on Form S-4 to be filed with the SEC by Buyer
for the purpose of registering the shares of Buyer Common Stock
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to be exchanged for shares of Seller Common Stock pursuant to
the provisions of this Agreement (the "Registration State-
ment"), (ii) the proxy or information statement (the "Proxy
Statement") to be mailed to Seller'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 Regu-
latory Authority and, in the case of the Registration State-
ment, 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 Seller'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 Seller's stockholders), be false or misleading
with respect to any material fact, or omit to state any mate-
rial fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for
the Meeting. All documents which Seller or any Seller Subsid-
iary is responsible for filing with any Regulatory Authority in
connection with the Merger will comply as to form in all mate-
rial respects with the provisions of applicable law.
2.20. Registration Obligations. Except as set forth
on Schedule 2.20, neither Seller nor any Seller Subsidiary is
under any obligation, contingent or otherwise to register any
of its securities under the Securities Act.
2.21. State Takeover Statutes; Seller'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.
(b) Except as set forth on Schedule 2.21, the trans-
actions contemplated by this Agreement and the agreements con-
templated hereby are not, and will not be, prohibited by, or
subject to the super majority provisions of Sections 9 or 12 of
the Seller's Certificate of Incorporation.
2.22. Accounting, Tax and Regulatory Matters. Nei-
ther Seller nor any Seller Subsidiary has taken or agreed to
take any action or has any knowledge of any fact or circum-
stance that would (i) prevent the transactions contemplated
hereby from qualifying as a reorganization within the meaning
of Section 368 of the IRC or (ii) materially impede or delay
receipt of any approval referred to in Section 6.01(b) or the
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consummation of the transactions contemplated by this Agree-
ment.
2.23. Brokers and Finders. Except for Xxxxxxxxxx
Securities and Xxxxxx, Xxxxxxxx & Company, Incorporated neither
Seller nor any Seller 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 bro-
ker or finder has acted directly or indirectly for Seller or
any Seller 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 ex-
penses expected to be paid by Seller to all third parties in
connection with the Merger ("Merger Fees").
2.24. Other Activities. (a) Except as set forth on
Schedule 2.24A, neither Seller nor any of its Subsidiaries en-
gages in any insurance activities other than acting as a prin-
cipal, agent or broker for insurance that is directly related
to an extension of credit by Seller 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 Seller's management: each Subsidiary that is a
bank that performs personal trust, corporate trust and other
fiduciary activities ("Trust Activities") has done so with req-
uisite 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 Regula-
tions); there is no investigation or inquiry by any governmen-
tal entity pending or threatened against Seller or any of its
Subsidiaries thereof relating to the compliance by Seller or
any of its Subsidiaries with sound fiduciary principles and
applicable law and regulations; and 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 poli-
cies 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.
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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 Seller 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 Seller or any of its Subsidiaries is a party or by
which any of their properties or assets may be bound were en-
tered into in the ordinary course of business and, to the best
knowledge of Seller, in accordance with prudent banking prac-
xxxx and applicable rules, regulations and policies of Regula-
tory Authorities and with counterparties believed to be xxxxx-
cially responsible at the time and are legal, valid and binding
obligations and are in full force and effect. Seller and each
of its Subsidiaries has duly performed in all material respects
all of its obligations thereunder to the extent that such obli-
gations to perform have accrued, and 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 knowl-
edge of Seller, the statements of Seller contained in this
Agreement, the Schedules and any other written document ex-
ecuted and delivered by or on behalf of Seller 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.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents, and warrants to and covenants with
Seller as follows:
3.01. Organization and Authority. Buyer 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 juris-
dictions where its ownership or leasing of property or the con-
duct of its business requires it to be so qualified and, except
where the failure to be so qualified would not have a material
adverse effect on the Condition of Buyer and its Subsidiaries,
taken as a whole, has corporate power and authority to own its
properties and assets and to carry on its business as it is now
-27-
being conducted, except, in the case of the Buyer Subsidiaries,
where the failure to be so qualified would not have a material
adverse effect on the Condition of Buyer and its Subsidiaries,
taken as a whole. Buyer is registered as a bank holding com-
pany with the Board under the Holding Company Act. True and
complete copies of the Articles of Incorporation and Bylaws of
Buyer and Merger Sub, each in effect on the date of this Agree-
ment, have been provided to Seller.
3.02. Capitalization of Buyer. The authorized capi-
tal stock of Buyer consists of (i) 100,000,000 shares of Buyer
Common Stock, of which, as of November 30, 1996, 61,586,802
shares were issued and outstanding and (ii) 5,000,000 shares of
preferred stock, no par value ("Buyer Preferred Stock"), issu-
able in series, none of which, as of November 30, 1996, is is-
sued or outstanding. Buyer has designated 1,000,000 shares of
Buyer Preferred Stock as "Series A Junior Participating Pre-
ferred Stock" and has reserved such shares for issuance upon
exercise of Preferred Stock Purchase Rights under a Rights
Agreement dated May 23, 1988 (the "Buyer Rights Agreement"),
between Buyer and Mercantile Bank of St. Louis National As-
sociation, as Rights Agent. As of November 30, 1996 Buyer had
reserved (i) 4,074,479 shares of Buyer Common Stock for issu-
ance under various employee stock option and incentive plans
("Buyer Stock Options"), (ii) 600,418 shares of Buyer Common
Stock for issuance upon the acquisition of Regional Bancshares,
Inc. pursuant to an agreement dated August 22, 1996, and (iii)
up to 17,235,960 shares of Buyer Common Stock for issuance upon
the acquisition of Xxxx Xxxxx Bancshares, Inc. ("Xxxx Xxxxx")
pursuant to an agreement dated October 27, 1996 (the "Xxxx
Xxxxx Merger Agreement"). From November 30, 1996 through the
date of this Agreement, no shares of Buyer Common Stock or
other Equity Securities of Buyer 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. Buyer continually evaluates possible
acquisitions and may prior to the Effective Time enter into one
or more agreements providing for, and may consummate, the ac-
quisition by it of another bank, association, bank holding com-
pany, savings and loan holding company or other company (or the
assets thereof) for consideration that may include equity secu-
rities. In addition, prior to the Effective Time, Buyer may,
depending on market conditions and other factors, otherwise
determine to issue equity, equity-linked or other securities
for financing purposes. Notwithstanding the foregoing, Buyer
will not take any action that would (i) prevent the transac-
tions contemplated hereby from qualifying as a reorganization
within the meaning of Section 368 of the IRC 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
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this Agreement. Except as set forth above and except pursuant
to the Buyer Rights Agreement, there are no other Equity Secu-
rities of Buyer outstanding. All of the issued and outstanding
shares of Buyer Common Stock are validly issued, fully paid,
and nonassessable, and have not been issued in violation of any
preemptive right of any stockholder of Buyer. At the Effective
Time, the Buyer 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 Buyer.
3.03. Authorization. (a) Each of Buyer 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 Buyer to approve this Agree-
ment. The execution, delivery and performance of this Agree-
ment by Buyer and Merger Sub and the consummation by Buyer and
Merger Sub of the transactions contemplated hereby have been
duly authorized by all requisite corporate action of Buyer.
This Agreement is a valid and binding obligation of Buyer en-
forceable against Buyer in accordance with its terms.
(b) Neither the execution, delivery and performance
by Buyer of this Agreement, nor the consummation by Buyer of
the transactions contemplated hereby, nor compliance by Buyer
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 cre-
ation of, any Lien upon any of the material properties or as-
sets of Buyer or any Buyer 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, xxxx-
xxxx, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Buyer or any of the
material properties or assets of Buyer is a party or by which
it may be bound, or to which Buyer may be subject, or (ii) sub-
ject to compliance with the statutes and regulations referred
to in paragraph (c) of this Section 3.03, to the best knowledge
of Buyer, violate any judgment, ruling, order, writ, injunc-
tion, decree, statute, rule or regulation applicable to Buyer
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,
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the Exchange Act, the securities or blue sky laws of the vari-
ous states or filings, consents, reviews, authorizations, ap-
provals or exemptions required under the Holding Company Act,
and the HSR Act, or any required approvals of, or notice to,
any other Regulatory Authority, no notice to, filing with, ex-
emption or review by, or authorization, consent or approval of,
any public body or authority is necessary for the consummation
by Buyer of the transactions contemplated by this Agreement.
3.04. Buyer Financial Statements. The supplemental
consolidated and parent company only balance sheets of Buyer
and its Subsidiaries as of December 31, 1995, 1994 and 1993 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, 1995, together with the notes thereto, au-
dited by KPMG Peat Marwick ("Buyer Auditors") and included in
Buyer's current report on Form 8-K dated May 31, 1995 as filed
with the SEC, and the unaudited consolidated balance sheets of
Buyer and its Subsidiaries as of March 31, June 30, and Septem-
ber 30, 1996 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 "Buyer Financial
Statements"), have been prepared in accordance with GAAP,
present fairly the consolidated financial position of Buyer and
its Subsidiaries at the dates and the consolidated results of
operations, changes in stockholders' equity and cash flows of
Buyer and its Subsidiaries for the periods stated therein and
are derived from the books and records of Buyer and its Subsid-
iaries, which are complete and accurate in all material re-
spects and have been maintained in all material respects in
accordance with applicable laws and regulations. Neither Buyer
nor any of its Subsidiaries has any material contingent li-
abilities that are not reflected in the Buyer Reports (defined
below) or disclosed in the financial statements described
above.
3.05. Buyer Reports. Since January 1, 1993, each of
Buyer and the Buyer Subsidiaries has filed all material re-
ports, registrations and statements, together with any 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 re-
ferred to herein as the "Buyer Reports." As of its respective
date, each Buyer 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
-30-
therein, in light of the circumstances under which they were
made, not misleading.
3.06. Material Adverse Change. Since September 30,
1996, there has been no material adverse change in the Condi-
tion of Buyer and its Subsidiaries, taken as a whole, except as
may have resulted or may result from changes to laws and regu-
lations or changes in economic conditions applicable to banking
and thrift institutions generally or in general levels of in-
terest rates affecting banking and thrift institutions gener-
ally.
3.07. Compliance with Laws. (a) Each of Buyer and
its Subsidiaries has complied with all laws, regulations, and
orders (including without limitation zoning ordinances, build-
ing 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 Buyer Sub-
sidiary that is a bank, banking organization, banking corpora-
tion or trust company, all statutes, rules and regulations,
pertaining to the conduct of a banking, deposit-taking or lend-
ing or related business or to the exercise of trust powers) and
governing instruments applicable to them and to the conduct of
their business, except where such failure to comply would not
have a material adverse effect on the Condition of Buyer and
its Subsidiaries, taken as a whole, and (ii) neither Buyer nor
any Buyer Subsidiary is in default under, and no event has oc-
curred 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 where such default would not have a
material adverse effect on the Condition of Buyer and its Sub-
sidiaries, taken as a whole. Neither Buyer nor any Buyer Sub-
sidiary is subject to or reasonably likely to incur a liability
as a result of its ownership, operation, or use of any Property
of Buyer (whether directly or, to the best knowledge of Buyer,
as a consequence of such Property being part of the investment
portfolio of Buyer or any Buyer Subsidiary) (A) that is con-
taminated 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; and which, in each case, rea-
sonably could be expected to have a material adverse effect on
the Condition of Buyer and its Subsidiaries, taken as a whole.
Except for statutory or regulatory restrictions of general ap-
plication, no Regulatory Authority has placed any restriction
on the business of Buyer or any Buyer Subsidiary which reason-
ably could be expected to have a material adverse effect on the
Condition of Buyer and its Subsidiaries, taken as a whole. As
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of the date of this Agreement, no claim, action, suit, or pro-
ceeding is pending against Buyer or any Buyer Subsidiary re-
lating to Property of Buyer before any court or other Regula-
tory Authority or arbitration tribunal relating to hazardous
substances, pollution, or the environment, and there is no out-
standing judgment, order, writ, injunction, decree, or award
against or affecting Buyer or any Buyer Subsidiary with respect
to the same.
(b) Buyer and each of its Subsidiaries have all per-
mits, 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, except where the
failure to so have or make would not have a material adverse
effect on the Condition of Buyer 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 Buyer, no suspension or cancellation of any
of them is threatened; and all such filings, applications and
registrations are current.
(c) From and after January 1, 1993, neither Buyer
nor any Buyer Subsidiary has received any notification or com-
munication which has not been resolved from any Regulatory Au-
thority (i) asserting that any Buyer or any Subsidiary of
Buyer, is not in substantial compliance with any of the stat-
utes, regulations or ordinances that such Regulatory Authority
enforces, except with respect to matters which (A) are set
forth on Schedule 3.07C or in any writing previously furnished
to Buyer or (B) reasonably could not be expected to have a ma-
terial adverse effect on the Condition of Buyer and its Subsid-
iaries, taken as a whole, (ii) threatening to revoke any li-
cense, franchise, permit or governmental authorization that is
material to the Condition of Buyer 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
Buyer or any of its Subsidiaries, or indicating that Buyer 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 material manner the operations
of Buyer or any of its Subsidiaries, including without limita-
tion any restriction on the payment of dividends. No such
cease and desist order, agreement or memorandum of understand-
ing or other agreement is currently in effect.
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(d) Neither Buyer nor any Buyer Subsidiary is re-
quired 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 em-
ployment of an individual as a senior executive officer.
3.08. Registration Statement, etc. None of the in-
formation regarding Buyer or any of its Subsidiaries supplied
or to be supplied by Buyer 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 Regula-
tory Authority and, in the case of the Registration Statement,
when it becomes effective and, with respect to the Proxy State-
ment, when mailed (or furnished to stockholders of Seller), 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 re-
spect to the solicitation of any proxy for the Meeting. All
documents which Buyer or any of its Subsidiaries are respon-
sible 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.
3.09. Brokers and Finders. Except for UBS Securi-
ties Inc., neither Buyer 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 xxxxx-
cial advisory fees, brokerage fees, commissions or finder's
fees, and no broker or finder has acted directly or indirectly
for Buyer or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
3.10. Commitments and Contracts. Neither Buyer nor
any Buyer Subsidiary is in violation of its charter documents
or bylaws or in default under any material agreement, commit-
ment, arrangement, lease, insurance policy, or other instru-
ment, 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 a material adverse
effect on the Condition of Buyer and its Subsidiaries, taken as
a whole.
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3.11. Litigation and Other Proceedings. Neither
Buyer nor any Buyer Subsidiary is a party to any pending or, to
the best knowledge of Buyer, threatened claim, action, suit,
investigation or proceeding, or is subject to any order, judg-
ment 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 Buyer and its Sub-
sidiaries, 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 Buyer, threatened against Buyer or any Buyer Sub-
sidiary or any of their respective officers or directors by any
stockholder of Buyer or any Buyer Subsidiary (or any former
stockholder of Buyer or any Buyer Subsidiary) or involving
claims under the Securities Act, the Exchange Act, the Com-
munity Reinvestment Act of 1977, as amended, or the fair lend-
ing laws or which purport or seek to enjoin or restrain the
transactions contemplated by this Agreement.
3.12. Interest Rate Risk Management Instruments.
All interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements to which Buyer
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 or-
dinary course of business and, to the knowledge of Buyer, 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 obligations and are in
full force and effect. Buyer 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 Buyer, as of the date hereof,
there are no material breaches, violations or defaults or al-
legations or assertions of such by any party thereunder.
3.13. Taxes. Buyer and each Buyer Subsidiary have
timely filed or will timely file (including extensions) all
material tax returns required to be filed at or prior to the
Closing Date ("Buyer Returns"). Each of Buyer and its Subsid-
iaries has paid, or set up adequate reserves on the Buyer Fi-
nancial Statements for the payment of, all taxes required to be
paid in respect of the periods covered by the Buyer Financial
Statements and has paid or set up adequate reserves on the most
recent financial statements Buyer has filed under the Exchange
Act for the payment of, all taxes anticipated to be payable in
respect of the periods covered by such financial statements.
No material deficiencies for any tax, assessment or governmen-
tal charge have been proposed, asserted or assessed in writing
by any governmental or taxing authority against any of Buyer or
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any Buyer Subsidiary which have not been settled or would not
be covered by existing reserves. Neither Buyer nor any Buyer
Subsidiary is delinquent in the payment of any material tax,
assessment or governmental charge shown to be due on any Buyer
Return (taking into account extensions properly obtained), and
no waiver of the time to assess any tax granted in writing by
Buyer or any Buyer Subsidiary is pending. The federal and
state income tax returns of Buyer and the Buyer Subsidiaries
have been audited and settled by the IRS or appropriate state
tax authorities for all periods ended through December 31,
1992, or the period for assessment of taxes in respect of such
periods has expired.
3.14. Accounting, Tax and Regulatory Matters. Nei-
ther Buyer nor any Buyer 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 Sec-
tion 368 of the IRC or (ii) materially impede or delay receipt
of any approval referred to in Section 6.01(b) or the consumma-
tion of the transactions contemplated by this Agreement.
3.15. Accuracy of Information. The statements of
Buyer contained in this Agreement, the Schedules and in any
other written document executed and delivered by or on behalf
of Buyer pursuant to the terms of this Agreement are true and
correct in all material respects, and such statements and docu-
ments do not omit any material fact necessary to make the
statements contained herein or therein not misleading.
3.16. Labor. No work stoppage involving Buyer or
any Buyer Subsidiary, is pending or, to the best knowledge of
Buyer, threatened which reasonably could be expected to have a
material adverse effect on the Condition of Buyer and its Sub-
sidiaries, taken as a whole. Neither Buyer nor any Buyer Sub-
sidiary is involved in, or, to the best knowledge of Buyer,
threatened with or affected by, any labor dispute, arbitration,
law suit or administration proceeding which reasonably could be
expected to have a material adverse effect on the Condition of
Buyer and its Subsidiaries, taken as a whole.
3.17. Xxxx Xxxxx Merger Agreement. In the case of
the representations and warranties made by Xxxx Xxxxx, as of
the date hereof, to the knowledge of Buyer after reasonable
inquiry, (i) the representations and warranties of Xxxx Xxxxx
set forth in Article II of the Xxxx Xxxxx Merger Agreement are
true and correct as if made on the date hereof and (ii) there
has been no breach or violation of, or default under, the Xxxx
Xxxxx Merger Agreement by Xxxx Xxxxx or by Buyer. As of the
date hereof, the Xxxx Xxxxx Merger Agreement has not been
-35-
amended, modified or supplemented, and there have been no waiv-
ers of any conditions granted by either party thereto.
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 Buyer and Seller 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 its best efforts to maintain and preserve its business or-
ganization, employees and advantageous business relationships
and retain the services of its officers and key employees.
4.02. Forbearances. Except as set forth on Schedule
4.02 or as otherwise contemplated by this Agreement, during the
period from the date of this Agreement to the Effective Time,
Seller shall not and shall not permit any of its Subsidiaries
to, without the prior written consent of Buyer:
(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
Seller to Seller or another Subsidiary of Seller), except
that Seller may (i) declare and pay cash dividends on the
Seller Common Stock of not more than $.17 per share per
quarterly period and (ii) declare and pay cash dividends on
Seller Preferred Stock of not more than $.8125 per share
per quarterly period; provided, that the parties agree to
consult with respect to the last quarterly dividend of
Seller payable prior to the Effective Time with the object
of assuring that the shareholders of Seller do not receive
a shortfall or a premium based on the record and payment
dates of their last dividend prior to the Merger and the
record and payment dates of the first dividend of Buyer
following the Merger; or
(b) enter into or amend any employment, severance or
similar agreement or arrangement with any director or of-
ficer or employee, or materially modify any of the Seller
Employee Plans or grant any salary or wage increase or ma-
terially 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
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(c) authorize, recommend (subject to the fiduciary
duties of Seller's Board of Directors, based upon written
advice of counsel to Seller, which counsel is reasonably
acceptable to Buyer), propose or announce an intention to
authorize, so recommend or propose, or enter into an agree-
ment in principle with respect to, any merger, consolida-
tion 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 securi-
ties or any release or relinquishment of any material con-
tract 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 Seller may (i) issue shares
of Seller Common Stock upon exercise of Seller Stock Op-
tions outstanding on the date of this Agreement, (ii) issue
shares of Seller Common Stock upon the conversion of Seller
Preferred Stock, (iii) issue shares of Seller Common Stock
as contemplated by the Seller's Supplemental Pension Plan,
or (iv) issue shares of Seller Common Stock pursuant to the
Seller's 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 Agree-
ment; or
(f) purchase, redeem, retire, repurchase, or ex-
change, 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; pro-
vided, however, that Seller shall be permitted to purchase
up to 6,973,380 shares of Seller Common Stock (as contem-
plated by Section 5.17) at a purchase price per share not
to exceed $22.00 per share; or
(g) (i) without first consulting with Buyer, enter
into, renew or increase any loan or credit commitment (in-
cluding stand-by letters of credit) to, or invest or agree
to invest in any person or entity or modify any of the ma-
terial provisions or renew or otherwise extend the maturity
date of any existing loan or credit commitment (col-
lectively, "Lend to") in an amount in excess of (A)
$500,000 in respect of commercial transactions, including
commercial real estate transactions ("Commercial Transac-
tions") and (B) $1,000,000 in respect of residential real
estate transactions, or in an amount which, or when ag-
gregated with any and all loans or credit commitments to
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such person or entity, would be in excess of (A) $500,000
in respect of commercial transactions, including Commercial
Transactions and (B) $1,000,000 in respect of residential
real estate transactions; (ii) without first obtaining the
written consent of Buyer, lend to any person or entity in
an amount in excess of $750,000 in respect of Commercial
Transactions or in an amount which, when aggregated with
any and all loans or credit commitments to such person or
entity, would be in excess of $750,000 in respect of Com-
mercial Transactions; (iii) Lend to any person other than
in accordance with lending policies as in effect on the
date hereof; provided that in the case of clauses (ii) and
(iii) Seller or any Seller Subsidiary may make any such
loan in the event (A) Seller or any Seller Subsidiary has
delivered to Buyer or its designated representative a no-
xxxx of its intention to make such loan and such informa-
tion as Buyer or its designated representative may reason-
ably require in respect thereof and (B) Buyer or its desig-
nated 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 Buyer of the notice of intention and information as
aforesaid; or (iv) Lend to any person or entity any of the
loans or other extensions of credit to which or investments
in which are on a "watch list" or similar internal report
of Seller or any Seller Subsidiary (except those denoted
"pass" thereon), in an amount in excess of $250,000; pro-
vided, however, that nothing in this paragraph shall pro-
hibit Seller or any Seller Subsidiary from honoring any
contractual obligation in existence on the date of this
Agreement. Notwithstanding the provisions of clauses (i)
and (ii) of this Section 4.02(g), Seller shall be autho-
rized without first consulting with Buyer or obtaining
Buyer'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 Facil-
ity"), provided that the aggregate amount of any and all
such increases with respect to any Pre-Existing Facility
shall not without Buyer's prior written consent, which con-
sent shall not be unreasonably withheld or delayed, be in
excess of the lesser of five percent (5%) of such Pre-
Existing Facility or $25,000; or;
(h) directly or indirectly (including through its
officers, directors, employees or other representatives)
initiate, solicit or encourage any discussions, inquiries
or proposals with any third party relating to the disposi-
tion of any significant portion of the business or assets
of Seller or any Seller Subsidiary or the acquisition of
Equity Securities of Seller or any Seller Subsidiary or the
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merger of Seller or any Seller Subsidiary with any person
(other than Buyer) 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 re-
spect to an Acquisition Transaction, and Seller shall
promptly notify Buyer orally of all the relevant details
relating to all inquiries, indications of interest and pro-
posals 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 Buyer or Seller to ob-
tain any approval of any Regulatory Authority required for
the transactions contemplated by this Agreement or to per-
form its covenants and agreements under this Agreement or
(B) prevent the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Sec-
tion 368 of the IRC; 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 ob-
ligations of any other individual, corporation or other
entity, or pay without prior approval of Buyer, 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 con-
sent of Buyer which consent shall not be unreasonably with-
held or delayed, through purchases, sales or otherwise, or
the manner in which the portfolio is classified or re-
ported, 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 ac-
tivity, entering into such transaction, or taking or omit-
ting such other act.
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4.03. Forbearances of Buyer. Except to the extent
required by law, regulation or Regulatory Authority, or with
the prior written consent of Seller, during the period from the
date of this Agreement to the Effective Time, Buyer shall not
and shall not permit any of the Buyer 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 Buyer
Subsidiaries to Buyer or to another of the Buyer Subsidiar-
ies), except that Buyer may pay its regular quarterly divi-
dends in amounts as it shall determine from time to time;
(b) take any action that would (A) materially impede
or delay the consummation of the transactions contemplated
by this Agreement or the ability of Seller or Buyer to ob-
tain any approval of any Regulatory Authority required for
the transactions contemplated by this Agreement or to per-
form its covenants and agreements under this Agreement or
(B) prevent the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Sec-
tion 368 of the Code; 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 war-
ranties in Article III of this Agreement untrue or incor-
rect 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. Buyer and its Subsid-
iaries, on the one hand, and Seller 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
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information obtained in connection with any transaction contem-
plated hereby with respect to the other party which is not oth-
erwise 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 informa-
tion 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 infor-
mation unless such information becomes generally available to
the public.
5.02. Registration Statement; Regulatory Matters.
(a) Buyer shall prepare and, subject to the review and consent
of Seller with respect to matters relating to Seller, file with
the SEC as soon as is reasonably practicable the Registration
Statement (or the equivalent in the form of preliminary proxy
material) with respect to the shares of Buyer Common Stock to
be issued in the Merger and the exercise of Buyer Stock Options
after the Effective Time. Buyer shall prepare and file a no-
xxxx with the Board as soon as reasonably practicable. Buyer
shall use all reasonable efforts to cause the Registration
Statement to become effective. Buyer shall also take any ac-
tion 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 Seller and its
Subsidiaries shall furnish Buyer all information concerning
Seller and its Subsidiaries and the stockholders thereof as
Buyer may reasonably request in connection with any such ac-
tion. Buyer shall use its best efforts to cause the shares of
Buyer 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) Seller and Buyer 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, Regulatory Authorities
necessary to consummate the transactions contemplated by this
Agreement and, as and if directed by Buyer, to consummate such
other mergers, consolidations or asset transfers or other
transactions by and among Buyer's Subsidiaries and Seller'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 Sellers' stockholders 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 consumma-
tion of the transactions contemplated by this Agreement.
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5.03. Stockholder Approval. Seller 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 there-
with, Buyer shall prepare the Proxy Statement and, with the
approval of each of Buyer and Seller, the Proxy Statement shall
be filed with the SEC and mailed to the stockholders of Seller.
The Board of Directors of Seller shall submit for approval of
Seller's stockholders the matters to be voted upon in order to
authorize the Merger. The Board of Directors of Seller hereby
does and (subject to the fiduciary duties of Seller's Board of
Directors, as advised by outside counsel) will recommend this
Agreement and the transactions contemplated hereby to stock-
holders of Seller and will use its best efforts to obtain any
vote of Seller's stockholders that is necessary for the ap-
proval 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 involv-
ing such party, and shall keep the other party fully informed
of such events.
5.05. Agreements of Affiliates. As soon as practi-
cable after the date of this Agreement, Seller shall deliver to
Buyer a letter identifying all persons whom Seller believes to
be, at the time this Agreement is submitted to a vote of the
stockholders of Seller, "affiliates" of Seller for purposes of
Rule 145 under the Securities Act. Seller shall use its best
efforts to cause each person who is so identified as an "af-
filiate" to deliver to Buyer as soon as practicable thereafter,
and in any event no later than the publication of notice in the
Federal Register of Buyer'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
Seller held by such person or any shares of Buyer Common Stock
to be received by such person in the Merger except in compli-
ance with the applicable provisions of the Securities Act.
Prior to the Effective Time, Seller shall amend and supplement
such letter and use its best efforts to cause each additional
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person who is identified as an "affiliate" to execute a written
agreement as set forth in this Section 5.05.
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 its respective best 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 appli-
cable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as
possible, including without limitation using its respective
best 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 sub-
sidiaries to, use its best efforts to obtain consents of all
third parties and Regulatory Authorities necessary or, in the
opinion of Buyer, desirable for the consummation of the trans-
actions contemplated by this Agreement.
(b) Subject to applicable laws, regulations and re-
quirements of Regulatory Authorities, Seller, prior to the Ef-
fective Time, shall (i) consult and cooperate with Buyer re-
xxxxxxx the implementation of those policies and procedures
established by Buyer for its governance and that of its Subsid-
iaries and not otherwise referenced in Section 5.15 hereof,
including, without limitation, policies and procedures pertain-
ing to the accounting, asset/liability management, audit,
credit, human resources, treasury and legal functions, and (ii)
at the request of Buyer, conform Seller's existing policies and
procedures in respect of such matters to Buyer's policies and
procedures or, in the absence of any existing Seller policy or
procedure regarding any such function, introduce Buyer's poli-
cies or procedures in respect thereof, unless to do so would
cause Seller or any of the Seller Subsidiaries to be in xxxxx-
tion of any law, rule or regulation of any Regulatory Authority
having jurisdiction over Seller and/or the Seller 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, Buyer shall certify to Seller
that Buyer's representations and warranties are true and cor-
rect as of such date, that the approval conditions to its obli-
gations 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
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Buyer is otherwise in compliance with this Agreement; and pro-
vided, further, that Seller shall not be required to take any
such action that is not consistent with GAAP and regulatory
accounting principles.
5.08. Employee Benefits. The Seller Employee Plans
shall not be terminated by reason of the Merger but shall con-
tinue thereafter as plans of the Surviving Corporation until
such time as the employees of Seller and the Seller Subsidiar-
ies are integrated into Buyer's employee benefit plans that are
available to other employees of Buyer and Buyer Subsidiaries,
subject to the terms and conditions specified in such plans and
to such changes therein as may be necessary to reflect the con-
summation of the Merger. Buyer shall take such steps as are
necessary or required to integrate the employees of Seller and
the Seller Subsidiaries in Buyer's employee benefit plans
available to other employees of Buyer and Buyer Subsidiaries as
soon as practicable after the Effective Time, (i) with full
credit for prior service with Seller or any of the Seller Sub-
sidiaries for all purposes other than determining the amount of
benefit accruals under any defined benefit plan, (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 pur-
poses 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 Buyer and
Seller shall use all reasonable efforts to insure that no
amounts paid or payable by Seller, Seller Subsidiaries or Buyer
to or with respect to any employee or former employee of Seller
or any Seller Subsidiary will fail to be deductible for federal
income tax purposes by reason of Section 280G of the IRC.
Seller shall ensure that following the Effective Time no holder
of Seller Employee Stock Options or any participant in any
Seller Stock Plan shall have any right thereunder to acquire
any securities of Seller or any Seller Subsidiary.
5.09. Seller Stock Options. (a) At the Effective
Time, all rights with respect to Seller Common Stock pursuant
to Seller Stock Options that are outstanding at the Effective
Time, whether or not then exercisable, shall be converted into
and become rights with respect to Buyer Common Stock, and Buyer
shall assume Seller Stock Option in accordance with the terms
of the stock option plan under which it was issued and the
stock option agreement by which it is evidenced. From and af-
ter the Effective Time, (i) each Seller Stock Option assumed by
Buyer shall be exercised solely for shares of Buyer Common
Stock, (ii) the number of shares of Buyer Common Stock subject
to each Seller Stock Option shall be equal to the number of
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shares of Seller Common Stock subject to such Seller Stock Op-
tion immediately prior to the Effective Time multiplied by the
Exchange Ratio and (iii) the per share exercise price under
each Seller Stock Option shall be adjusted by dividing the per
share exercise price under such Seller Stock Option by the Ex-
change Ratio and rounding down to the nearest cent; provided,
however, that the terms of each Seller Stock Option shall, in
accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapi-
talization or other similar transaction subsequent to the Ef-
fective 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 Seller Stock
Option that is an "incentive stock option."
(b) At or prior to the Effective Time, Buyer shall
take all corporate action necessary to authorize and reserve
for issuance a sufficient number of shares of Buyer Common
Stock for delivery upon exercise of Seller Stock Options to
purchase Seller Common Stock assumed by it in accordance para-
graph (a) above. As soon as practicable after the Effective
Time, Buyer shall file a registration statement on Form S-3 or
Form S-8, as the case may be (or any successor or other ap-
propriate forms), or another appropriate form with respect to
the shares of Buyer 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 op-
tions remain outstanding.
5.10. Press Releases. Except as may be required by
law, Seller and Buyer shall consult and agree with each other
as to the form and substance of any proposed press release re-
lating to this Agreement or any of the transactions contem-
plated hereby.
5.11. State Takeover Statutes; Seller's Certificate
of Incorporation. (a) Seller will take all steps 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) Seller will take all steps necessary to exempt
the transactions contemplated by this Agreement and any agree-
ment contemplated hereby from the super-majority voting provi-
sions of Sections 9 and 12 of Seller's Certificate of Incorpo-
ration.
5.12. D&O Indemnification. From and after the Ef-
fective Time, Buyer agrees to (i) indemnify and hold harmless
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the past and present employees, agents, directors or officers
of Seller and its Subsidiaries for all acts or omissions occur-
ring at or prior to the Effective Time to the same extent such
persons are indemnified and held harmless (A) under their re-
spective Articles of Incorporation or Bylaws of Seller and its
Subsidiaries in the form in effect at the date of this Agree-
ment, (B) by operation of law, or (C) by virtue of any con-
tract, 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, and (ii) assume the obligations of
Seller with respect to directors and officers insurance under
its prior acquisition agreements, which obligations are set
forth on Schedule 5.12. Buyer will provide, or cause to be
provided, for a period of not less than six years from the Ef-
fective Time, an insurance and indemnification policy that pro-
vides the officers and directors of Seller and its Subsidiaries
immediately prior to the Effective Time coverage no less favor-
able than as currently provided by Buyer to its officers and
directors.
5.13. Best Efforts. Each of Buyer and Seller under-
takes and agrees to use its best efforts to cause the Merger
(i) to qualify as a reorganization within the meaning of Sec-
tion 368 of the IRC (including, if necessary, to take reason-
able steps to restructure the transactions contemplated by this
Agreement to so qualify) and (ii) to occur as soon as practi-
cable. Each of Buyer and Seller 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
Buyer or Seller to obtain any approval of any Regulatory Au-
thority required for the transactions contemplated by this
Agreement or to perform its covenants and agreements under this
Agreement.
5.14. Insurance. Seller shall, and Seller shall
cause each of its Subsidiaries to, use its best efforts to
maintain its existing insurance.
5.15. Conforming Entries. (a) Notwithstanding that
Seller believes that Seller and the Seller Subsidiaries have
established all reserves and taken all provisions for possible
loan losses required by GAAP and applicable laws, rules and
regulations, Seller recognizes that Buyer may have adopted dif-
ferent loan, accrual and reserve policies (including loan clas-
sifications and levels of reserves for possible loan losses).
Subject to applicable laws, regulations and the requirements of
Regulatory Authorities, from and after the date of this Agree-
ment to the Effective Time, Seller and Buyer shall consult and
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cooperate with each other with respect to conforming the loan,
accrual and reserve policies of Seller and the Seller Subsid-
iaries to those policies of Buyer, as specified in each case in
writing to Seller, based upon such consultation and as herein-
after provided.
(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, Seller
and Buyer shall consult and cooperate with each other with re-
spect to determining appropriate Seller 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 par-
ties' business plans following the Merger, as specified in each
case in writing to Seller, based upon such consultation and as
hereinafter provided.
(c) Subject to applicable laws, regulations and the
requirements of Regulatory Authorities, Seller and Buyer shall
consult and cooperate with each other with respect to determin-
ing, as specified in a written notice from Buyer to Seller,
based upon such consultation and as hereinafter provided, the
amount and the timing for recognizing for financial accounting
purposes Seller's expenses of the Merger and the restructuring
charges relating to or to be incurred in connection with the
Merger.
(d) Subject to applicable laws, regulations and the
requirements of Regulatory Authorities, Seller shall (i) es-
tablish and take such reserves and accruals at such time as
Buyer shall reasonably request to conform Seller's loan, ac-
crual and reserve policies to Buyer's policies, and (ii) estab-
lish 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 ac-
counting adjustments, and to recognize for financial accounting
purposes 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 Buyer;
provided, however, that on the date such reserves, accruals and
charges are to be taken, Buyer shall certify to Seller that
Buyer'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 there-
with may then have commenced but not expired) and that Buyer is
otherwise in compliance with this Agreement; and provided, fur-
ther, that Seller shall not be required to take any such action
that is not consistent with GAAP and regulatory accounting
principles.
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(e) No reserves, accruals or charges taken in ac-
cordance with Section 5.15(d) above may be a basis to assert a
violation of a breach of a representation, warranty or covenant
of Seller herein.
5.16. Environmental Reports. Seller shall cooperate
with Buyer so that Buyer may as soon as reasonably practicable
obtain, at Buyer's expense, a report of a phase one environmen-
tal investigation on all real property owned, leased or oper-
ated by Seller or any of the Seller Subsidiaries as of the date
hereof (but excluding Brio or Brio related properties, "other
real estate owned," property held in trust or in a fiduciary
capacity and space in retail or similar establishments leased
by Seller or any of the Seller Subsidiaries for automatic
teller machines or bank branch facilities where the space
leased comprises less than 20% of the total space leased to all
tenants of such property) and within ten (10) days after the
acquisition or lease of any real property acquired or leased by
Seller or any of the Seller Subsidiaries after the date hereof
(but excluding space in retail and similar establishments
leased by Seller or any of the Seller Subsidiaries for
automatic teller machines or bank branch facilities where the
space leased comprises less than 20% of the total space leased
to all tenants of such property). If advisable in light of the
phase one report with respect to any parcel of real property
referred to above, in the reasonable opinion of Buyer, Seller
shall also cooperate with Buyer so that Buyer may obtain, at
Buyer's expense, a phase two investigation report on such
designated parcels. Buyer shall have fifteen (15) business
days from the receipt of any such phase two investigation
report to notify Seller of any dissatisfaction with the
contents of such report. The after-tax costs (based on the
highest federal marginal tax rate) of all remedial or other
corrective actions or measures with regard to the real
properties referred to above required by applicable law up to
and including $6.5 million in the aggregate shall be paid by
Buyer. Such after-tax costs of remedial or other corrective
actions or measures with regard to such real properties so
required which exceed $6.5 million shall be the responsibility
of Seller and shall be deducted from the consideration to be
paid by Buyer pursuant to this Merger Agreement; provided that
in the event such after-tax costs exceed $30,000,000 Seller
shall have the right pursuant to Section 7.01 (f) hereof to
terminate this Agreement. Any costs associated with the Brio
property or Brio related properties are assumed in the
transaction and are not part of the subject matter of this
Section 5.16.
5.17. Seller Securities. Subject to Buyer's certi-
fication to Seller that Buyer's representations and warranties
are true and correct as of such date, that the approval condi-
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tions 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 Buyer is otherwise in compliance with this
Agreement, Seller shall call for redemption at the earliest
practicable date permitted pursuant to the related certificate
of designation all issued and outstanding shares of Seller Pre-
ferred Stock. Seller shall use its reasonable best efforts,
subject to prudent business practices, to acquire up to
6,973,380 shares of Seller Common Stock in open-market
transactions consummated prior to the Effective Time, and
subject to compliance with applicable securities laws and
regulations, at a cost per share in each transaction of not
more than $22.00 per share.
ARTICLE VI
CONDITIONS
6.01. Conditions to Each Party's Obligation To Ef-
fect 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 Seller.
(b) All requisite approvals of this Agreement and
the transactions contemplated hereby shall have been re-
ceived from the Board and any other Regulatory Authority.
(c) The Registration Statement shall have been de-
clared effective and shall not be subject to a stop order
or any threatened stop order.
(d) Neither Seller nor Buyer 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 prohib-
its the consummation of any of the Transactions.
(e) There shall be no legislative, statutory or
regulatory action (whether federal or state) pending which
prohibits or threatens to prohibit consummation of the
Transactions or which otherwise materially adversely af-
fects the Transactions.
(f) Each of Buyer and Seller shall have received,
from counsel reasonably satisfactory to it, an opinion
reasonably satisfactory in form and substance to it to the
effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the IRC and that no
gain or loss will be recognized by the stockholders of
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Seller to the extent they receive Buyer Common Stock
solely in exchange for shares of Seller Common Stock.
6.02. Conditions to Obligations of Seller To Effect
the Merger. The obligations of Seller 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 representa-
tions and warranties of Buyer set forth in Article III of
this Agreement shall be true and correct in all material
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 trans-
actions contemplated by this Agreement) and Seller shall
have received a certificate of the chairman or vice chair-
man of Buyer to that effect.
(b) Performance of Obligations. Buyer shall have
performed in all material respects all obligations re-
quired to be performed by it under this Agreement prior to
the Effective Time, and Seller shall have received a cer-
tificate of the chairman or vice chairman of Buyer to that
effect.
6.03. Conditions to Obligations of Buyer To Effect
the Merger. The obligations of Buyer 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 representa-
tions and warranties of Seller set forth in Article II of
this Agreement shall be true and correct in all material
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 trans-
actions contemplated by this Agreement) and Buyer shall
have received a certificate of the chairman of Seller and
a certificate of the president and chief executive officer
of Seller to that effect.
(b) Performance of Obligations. Seller shall have
performed in all material respects all obligations re-
quired to be performed by it under this Agreement prior to
the Effective Time, and Buyer shall have received a cer-
tificate of the chairman of Seller and a certificate of
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the president and chief executive officer of Seller to
that effect.
(c) All shares of Seller Preferred Stock shall have
been either converted into shares of Seller Common Stock
or redeemed, in each case in accordance with the terms of
the related certificate of designation.
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 af-
ter any requisite stockholder approval:
(a) by mutual consent by the Executive Committee of
the Board of Directors of Buyer and the Board of Directors
of Seller;
(b) by the Executive Committee of the Board of Di-
rectors of Buyer or the Board of Directors of Seller at
any time after the date that is twelve months after the
date of this Agreement if the Merger shall not theretofore
have been consummated (provided that the terminating party
is not then in material breach of any representation, war-
ranty, covenant or other agreement contained herein);
(c) by the Executive Committee of the Board of Di-
rectors of Buyer or the Board of Directors of Seller if
(i) the Board has denied approval of the Merger and such
denial has become final and nonappealable or (ii) stock-
holders of Seller shall not have approved this Agreement
at the Meeting following a favorable recommendation of
Seller's Board of Directors;
(d) by the Executive Committee of the Board of Di-
rectors of Buyer in the event of a material breach by
Seller 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
Seller by Buyer;
(e) by the Board of Directors of Seller in the event
of a material breach by Buyer of any representation, war-
ranty, covenant or other agreement contained in this
Agreement, which breach is not cured within 30 days after
written notice thereof is given to Buyer by Seller; or
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(f) by the Board of Directors of Seller 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 termi-
nation 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 obli-
gation on the part of Buyer or Seller or their respective of-
ficers or directors except as set forth in the second sentence
of Section 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 stock-
holders of Seller; provided, however, that after any such ap-
proval by the stockholders of Seller no such modification shall
alter or change the amount or kind of consideration to be re-
ceived by holders of Seller Common Stock as provided in this
Agreement. This Agreement may not be amended except by an in-
strument in writing signed on behalf of each of Buyer and
Seller.
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 restric-
tions contained in this Agreement nor the validity or enforce-
ability 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 ben-
efits 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
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such representation and warranty shall survive such investiga-
tion. Except as set forth below in this Section 8.01, all rep-
resentations, warranties and agreements in this Agreement of
Buyer and Seller or in any instrument delivered by Buyer or
Seller pursuant to or in connection with this Agreement shall
expire at the Effective Time or upon termination of this Agree-
ment in accordance with its terms or, in the case of any other
such instrument, in accordance with the terms of such instru-
ment. In the event of consummation of the Merger, the agree-
ments contained in or referred to in Sections 5.02(b), 5.07,
5.08, 5.09 and 5.12 shall survive the Effective Time. In the
event of termination of this Agreement in 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 ser-
vice, if by such service, to the parties at the following ad-
dresses (or at such other address for a party as shall be
specified by like notice):
(i) if to Buyer:
Mercantile Bancorporation Inc.
Xxxxxxxxxx Xxxxx
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxx
Executive Vice President
Copies to:
Xxx X. Xxxxxxxx, Esq.
General Counsel
Mercantile Bancorporation Inc.
Mercantile Tower
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
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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 Seller:
Roosevelt Financial Group, Inc.
000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx, President
and Chief Executive Officer
Copies to:
Silver, Xxxxxxxx & Taff, L.L.P.
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxx, P.C.
Xxxxxxxxxxx X. Xxxxx, P.C.
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 re-
spect to the subject matter hereof, including any confidential-
ity agreement between the parties hereto, (ii) except for the
provisions of Section 5.08 and 5.12, is not intended to confer
upon any person not a party hereto any rights or remedies here-
under, (iii) shall not be assigned by operation of law or oth-
erwise and (iv) shall be governed in all respects by the laws
of the State of Missouri, except as otherwise specifically pro-
vided herein or required by the DGCL. Nothing in this Agree-
ment 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, Buyer and Seller 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/ Xxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------- ----------------------------
Name: Xxxx X. Xxxx Name: Xxxxxx X. Xxxxxxxx
Title: Chairman, President
and Chief Executive
Officer
Attest: ROOSEVELT FINANCIAL GROUP, INC.
/s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------- ---------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice Title: President and Chief
President and Chief Executive Officer
Financial Officer
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