AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 23, 1996,
by and between Xxxxx Fargo & Company, a Delaware corporation
("Parent"), and First Interstate Bancorp, a Delaware corporation
("Subject Company").
WHEREAS, the Boards of Directors of Parent and Subject
Company have determined that it is in the best interests of their
respective companies and their stockholders to consummate the
strategic business combination transaction provided for herein in
which Subject Company will, subject to the terms and conditions
set forth herein, merge (the "Merger") with and into Parent, so
that Parent is the surviving corporation in the Merger; and
WHEREAS, Subject Company, First Bank System, Inc., a Delaware
corporation ("North"), and Eleven Acquisition Corp. ("Merger
Sub"), a Delaware corporation, were parties to that certain
Agreement and Plan of Merger (the "Terminated Merger Agreement"),
dated as of November 5, 1995, that Subject Company has terminated
in accordance with the terms thereof; and
WHEREAS, Parent, Subject Company, North and Merger Sub have
entered into that certain Settlement and Release Agreement, dated
as of January 23, 1996 (the "Settlement Agreement"), pursuant to
which North has agreed, in consideration of certain payments, to
termination of the Fee Letter, dated as of November 5, 1995,
between Subject Company and North (the "North Fee Letter") and the
Stock Option Agreement, dated November 5, 1995 (the "Subject
Company Stock Option Agreement"), between Subject Company as
issuer and North as grantee; and
WHEREAS, as a condition to the execution of this Agreement,
Parent and Subject Company are entering into the Parent Fee Letter
(as defined below) and the Subject Company Fee Letter (as defined
below); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also
to prescribe certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law
(the "DGCL"), at the Effective Time (as defined in Section 1.2
hereof), Subject Company shall merge with and into Parent. Parent
shall be the surviving corporation (hereinafter sometimes called
the "Surviving Corporation") in the Merger, and shall continue its
corporate existence under the laws of the State of Delaware. The
name of the Surviving Corporation shall be Xxxxx Fargo & Company.
Upon consummation of the Merger, the separate corporate existence
of Subject Company shall terminate.
1.2 Effective Time. The Merger shall become effective as
set forth in the certificate of merger (the "Certificate of
Merger") which shall be filed with the Secretary of State of the
State of Delaware (the "Delaware Secretary") on the Closing Date
(as defined in Section 9.1 hereof). The term "Effective Time"
shall be the date and time when the Merger becomes effective, as
set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time,
the Merger shall have the effects set forth in the DGCL.
1.4 Conversion of Subject Company Common Stock, Subject
Company Preferred Stock. At the Effective Time, subject to
Section 2.2(e) hereof, by virtue of the Merger and without any
action on the part of Parent, Subject Company or the holder of any
of the following securities:
(a) Each share of the common stock, par value $2.00 per
share, of Subject Company (the "Subject Company Common Stock")
issued and outstanding immediately prior to the Effective Time
(other than shares of Subject Company Common Stock held (x) in
Subject Company's treasury or (y) directly or indirectly by Parent
or Subject Company or any of their respective Subsidiaries (as
defined below) (except for Trust Account Shares and DPC shares, as
such terms are defined below)), together with the rights (the
"Subject Company Rights") attached thereto issued pursuant to the
Rights Agreement, dated as of November 21, 1988, as amended,
between Subject Company and First Interstate Bank, Ltd., as Rights
Agent (the "Subject Company Rights Agreement"), shall, subject to
Section 1.4(d) hereof, be converted into the right to receive two-
thirds of a share (the "Common Exchange Ratio") of the common
stock, par value $5.00 per share, of Parent ("Parent Common
Stock").
(b) Each share of 9.875% preferred stock, Series F, of
Subject Company (the "Subject Company 9.875% Preferred") issued
and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of 9.875% preferred
stock of Parent (the "Parent 9.875% Preferred"). The terms of the
Parent 9.875% Preferred shall be substantially the same as the
terms of the Subject Company 9.875% Preferred.
(c) Each share of 9.0% preferred stock, Series G, of
Subject Company (the "Subject Company 9.0% Preferred," and
together with the Subject Company 9.875% Preferred, the "Subject
Company Preferred Stock") issued and outstanding immediately prior
to the Effective Time shall be converted into the right to receive
one share of 9.0% preferred stock of Parent (the "Parent 9.0%
Preferred," and together with the Parent 9.875% Preferred, the
"Parent New Preferred"). The terms of the Parent 9.0% Preferred
shall be substantially the same as the terms of the Subject
Company 9.0% Preferred. For purposes of this Agreement (i) the
Subject Company Common Stock and Subject Company Preferred Stock
are referred to herein as the "Subject Company Capital Stock," and
(ii) the Parent Common Stock and Parent Preferred Stock (as
defined below) are collectively referred to as the "Parent Capital
Stock."
(d) All of the shares of Subject Company Common Stock
converted into Parent Common Stock pursuant to this Article I
shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist as of the Effective Time, and
each certificate (each a "Common Certificate") previously
representing any such shares of Subject Company Common Stock shall
thereafter represent the right to receive (i) a certificate
representing the number of whole shares of Parent Common Stock and
(ii) the cash in lieu of fractional shares into which the shares
of Subject Company Common Stock represented by such Common
Certificate have been converted pursuant to this Section 1.4 and
Section 2.2(e) hereof. Common Certificates previously
representing shares of Subject Company Common Stock shall be
exchanged for certificates representing whole shares of Parent
Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Common
Certificates in accordance with Section 2.2 hereof, without any
interest thereon. If prior to the Effective Time the outstanding
shares of Parent Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or
kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar change in Parent's
capitalization, then an appropriate and proportionate adjustment
shall be made to the Common Exchange Ratio.
(e) All of the shares of Subject Company Preferred
Stock converted into Parent New Preferred pursuant to this Article
I shall no longer be outstanding and shall automatically be
cancelled and shall cease to exist as of the Effective Time, and
each certificate (each a "Preferred Certificate," and collectively
with the Common Certificates, the "Certificates") previously
representing any such shares of Subject Company Preferred Stock
shall thereafter represent the right to receive a certificate
representing the number of shares of corresponding Parent New
Preferred into which the shares of Subject Company Preferred Stock
represented by such Preferred Certificate have been converted
pursuant to this Section 1.4. Preferred Certificates previously
representing shares of Subject Company Preferred Stock shall be
exchanged for certificates representing shares of corresponding
Parent New Preferred issued in consideration therefor upon the
surrender of such Preferred Certificates in accordance with
Section 2.2 hereof, without any interest thereon.
(f) At the Effective Time, all shares of Subject
Company Capital Stock that are owned by Subject Company as
treasury stock and all shares of Subject Company Capital Stock
that are owned directly or indirectly by Parent or Subject Company
or any of their respective Subsidiaries (other than shares of
Subject Company Capital Stock held directly or indirectly in trust
accounts, managed accounts and the like or otherwise held in a
fiduciary capacity that are beneficially owned by third parties
(any such shares, and shares of Parent Common Stock which are
similarly held, whether held directly or indirectly by Parent or
Subject Company or any of their respective Subsidiaries, as the
case may be, being referred to herein as "Trust Account Shares")
and other than any shares of Subject Company Capital Stock held by
Parent or Subject Company or any of their respective Subsidiaries
in respect of a debt previously contracted (any such shares of
Subject Company Capital Stock, and shares of Parent Common Stock
which are similarly held, whether held directly or indirectly by
Parent or Subject Company or any of their respective Subsidiaries,
being referred to herein as "DPC Shares")) shall be cancelled and
shall cease to exist and no stock of Parent or other consideration
shall be delivered in exchange therefor. All shares of Parent
Common Stock that are owned by Subject Company or any of its
Subsidiaries (other than Trust Account Shares and DPC Shares)
shall become treasury stock of Parent.
(g) At the Effective Time, Parent shall assume the
obligations of Subject Company under the Deposit Agreement, dated
as of November 14, 1991, between Subject Company and First
Interstate Bank of California, as depositary (relating to the
Subject Company 9.875% Preferred), and the Deposit Agreement,
dated as of May 29, 1992, between Subject Company and First
Interstate Bank of California, as depositary (relating to the
Subject Company 9.0% Preferred). Parent shall instruct the
applicable depositary to treat the shares of Parent 9.875%
Preferred and Parent 9.0% Preferred received by such depositary in
exchange for and upon conversion of the shares of Subject Company
9.875% Preferred and Subject Company 9.0% Preferred, respectively,
as new deposited securities under the applicable deposit
agreement. In accordance with the terms of the relevant deposit
agreement, the depositary receipts then outstanding shall
thereafter represent the shares of Parent 9.875% Preferred and
Parent 9.0% Preferred so received upon conversion and exchange for
the shares of Subject Company 9.875% Preferred and Subject Company
9.0% Preferred, respectively. Parent shall request that such
depositary call for the surrender of all outstanding receipts to
be exchanged for new receipts (the "New Parent Depositary Shares")
specifically describing the relevant series of Parent New
Preferred.
1.5 Parent Common Stock; Parent Preferred Stock. At and
after the Effective Time, each share of Parent Common Stock and
each share of Parent Preferred Stock issued and outstanding
immediately prior to the Effective Time shall remain an issued and
outstanding share of common stock or preferred stock, as the case
may be, of Parent and shall not be affected by the Merger.
1.6 Options. (a) At the Effective Time, each option
granted by Subject Company to purchase shares of Subject Company
Common Stock (each a "Subject Company Option") which is
outstanding and unexercised immediately prior thereto shall cease
to represent a right to acquire shares of Subject Company Common
Stock and shall be converted automatically into an option to
purchase shares of Parent Common Stock in an amount and at an
exercise price determined as provided below (and otherwise subject
to the terms of the Subject Company 1995 Performance Stock Plan,
the Subject Company 1991 Performance Stock Plan (as amended), the
Subject Company 1988 Performance Stock Plan (as amended), the
Subject Company 1983 Performance Stock Plan (as amended), the
Subject Company Performance Stock Plan of 1980 (as amended and
restated) and the Subject Company 1991 Director Option Plan (as
amended and restated), as the case may be (collectively, the
"Subject Company Stock Option Plans"), and the agreements
evidencing grants thereunder, including, but not limited to, the
accelerated vesting of such options which shall occur in
connection with and by virtue of the approval of the Merger
Agreement and the Merger by the stockholders of Subject Company as
and to the extent required by such plans and agreements):
(1) the number of shares of Parent Common Stock to be
subject to the new option shall be equal to the product of
the number of shares of Subject Company Common Stock subject
to the original option and the Common Exchange Ratio,
provided that any fractional shares of Parent Common Stock
resulting from such multiplication shall be rounded down to
the nearest share; and
(2) the exercise price per share of Parent Common Stock
under the new option shall be equal to the exercise price per
share of Subject Company Common Stock under the original
option divided by the Common Exchange Ratio, provided that
such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code")) shall
be and is intended to be effected in a manner which is consistent
with Section 424(a) of the Code and, to the extent it is not so
consistent, such Section 424(a) shall override anything to the
contrary contained herein. The duration and other terms of the
new option shall be the same as the original option (subject to
Section 6.7(b) hereof) except that all references to Subject
Company shall be deemed to be references to Parent.
1.7 Certificate of Incorporation. At the Effective Time,
the Certificate of Incorporation of Parent, as in effect at the
Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation. At or prior to the Effective Time, Parent
shall duly execute and file with the Delaware Secretary of State
one or more Certificates of Designation establishing the New
Parent Preferred.
1.8 Bylaws. At the Effective Time, the Bylaws of Parent, as
in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.9 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a)
of the Code, and that this Agreement shall constitute a "plan of
reorganization" for purposes of the Code.
1.10 Board of Directors. At the Effective Time, each person
serving on the Board of Directors of Parent immediately prior to
the Effective Time shall continue to serve on the Board of
Directors of Parent. In addition, Parent shall cause its Board of
Directors to be expanded by seven seats as of the Effective Time
and such directorships shall, as of such time, be filled by
persons serving on the Board of Directors of Subject Company
immediately prior to the Effective Time who shall be jointly
selected by of the Board of Directors of each of Parent and
Subject Company; provided that Parent's Board of Directors may be
expanded by fewer than seven seats in case there are fewer than
seven members of Subject Company's Board of Directors who choose
to serve on Parent's Board.
1.11 Headquarters. Upon consummation of the Merger, the
Surviving Company shall maintain corporate headquarters in each of
San Francisco and Los Angeles, and one or more of the senior
corporate officers of the Surviving Corporation shall be based in
Los Angeles.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the
Effective Time, Parent shall deposit, or shall cause to be
deposited, with a bank or trust company which may be a Subsidiary
of Parent (the "Exchange Agent"), for the benefit of the holders
of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of Parent Common Stock and
Parent New Preferred and an estimated amount of cash in lieu of
any fractional shares (the cash payable in lieu of fractional
shares and certificates for shares of Parent Common Stock and
Parent New Preferred, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 1.4 and paid
pursuant to Section 2.2(a) in exchange for outstanding shares of
Subject Company Capital Stock.
2.2 Exchange of Shares. (a) As soon as practicable after
the Effective Time, and in no event later than ten business days
thereafter, the Exchange Agent shall mail to each holder of record
of a Certificate or Certificates a form letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of the Certificates in exchange for
certificates representing, as the case may be, the shares of
Parent Common Stock or Parent New Preferred and the cash in lieu
of fractional shares, if any, into which the shares of Subject
Company Capital Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement.
Upon proper surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such properly
completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor, as
applicable, (i) a certificate representing that number of shares
of Parent Common Stock, if any, to which such holder of Subject
Company Common Stock shall have become entitled pursuant to the
provisions of Article I hereof, (ii) certificates representing
that number of shares of Parent 9.875% Preferred and Parent 9.0%
Preferred, if any, to which such holder of Subject Company
Preferred Stock shall have become entitled pursuant to the
provisions of Article I hereof and (iii) a check representing the
amount of cash in lieu of fractional shares, if any, which such
holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to
holders of Certificates.
(b) No dividends or other distributions with a record
date after the Effective Time with respect to Parent Common Stock
or Parent New Preferred shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender
such Certificate in accordance with this Article II. After the
surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of
Parent Common Stock or Parent New Preferred represented by such
Certificate.
(c) If any certificate representing shares of Parent
Common Stock or Parent New Preferred is to be issued in a name
other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer)
and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in
advance any transfer or other taxes required by reason of the
issuance of a certificate representing shares of Parent Common
Stock or Parent New Preferred in any name other than that of the
registered holder of the Certificate surrendered, or required for
any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) At or after the Effective Time, there shall be no
transfers on the stock transfer books of Subject Company of the
shares of Subject Company Capital Stock which were issued and
outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be
cancelled and exchanged for certificates representing shares of
Parent Capital Stock as provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for
exchange of Common Certificates, no dividend or distribution with
respect to Parent Common Stock shall be payable on or with respect
to any fractional share, and such fractional share interests shall
not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu of the issuance of any such
fractional share, Parent shall pay to each former stockholder of
Subject Company who otherwise would be entitled to receive such
fractional share an amount in cash determined by multiplying (i)
the average of the closing sale prices of Parent Common Stock on
the New York Stock Exchange (the "NYSE") as reported by The Wall
Street Journal for the five trading days immediately preceding the
date on which the Effective Time occurs by (ii) the fraction of a
share of Parent Common Stock to which such holder would otherwise
be entitled to receive pursuant to Section 1.4 hereto.
(f) Any portion of the Exchange Fund that remains
unclaimed by the stockholders of Subject Company for twelve months
after the Effective Time shall be paid to Parent. Any
stockholders of Subject Company who have not theretofore complied
with this Article II shall thereafter look only to Parent for
payment of the shares of Parent Common Stock or Parent New
Preferred, cash in lieu of any fractional shares and unpaid
dividends and distributions on the Parent Common Stock or Parent
New Preferred deliverable in respect of each share of Subject
Company Common Stock or Subject Company Preferred Stock, as the
case may be, such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
Notwithstanding anything to the contrary contained herein, none of
Parent, Subject Company, the Exchange Agent or any other person
shall be liable to any former holder of shares of Subject Company
Common Stock or Subject Company Preferred Stock for any amount
properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Parent, the posting by such person
of a bond in such amount as Parent may determine is reasonably
necessary as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the
shares of Parent Common Stock and cash in lieu of fractional
shares or Parent New Preferred, as the case may be, deliverable in
respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent as
follows:
3.1 Corporate Organization. (a) Subject Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Subject Company has the
corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business
in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets
owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified
would not have nor reasonably be expected to have a Material
Adverse Effect (as defined below) on Subject Company. As used in
this Agreement, the term "Material Adverse Effect" means, with
respect to Parent, Subject Company or the Surviving Corporation,
as the case may be, a material adverse effect on the business,
results of operations or financial condition of such party and its
Subsidiaries taken as a whole or a material adverse effect on such
party's ability to consummate the transactions contemplated
hereby; provided, however, that in determining whether a Material
Adverse Effect has occurred there shall be excluded any effect on
(I) the referenced party the cause of which is (i) any change in
banking and similar laws, rules or regulations of general
applicability or interpretations thereof by courts or governmental
authorities, (ii) any change in generally accepted accounting
principles or regulatory accounting requirements applicable to
banks or their holding companies generally, (iii) any action or
omission of Subject Company or Parent or any Subsidiary of either
of them taken with the prior written consent of Parent or Subject
Company, as applicable, in contemplation of the Merger and (iv)
any changes in general economic conditions affecting banks or
their holding companies generally and (II) Subject Company and its
Subsidiaries caused by, relating to or arising out of the actions
taken or omitted to be taken on or after October 17, 1995 by
Subject Company and its directors, officers, employees,
representatives and agents (i) in response to the various actions
taken by Parent in connection with its efforts to engage in a
business combination transaction with Subject Company and (ii) in
connection with Subject Company's pursuit, prior to the date
hereof, of strategic alternatives other than a business
combination transaction with Parent (including without limitation
the execution of the Terminated Merger Agreement and the
Settlement Agreement and the other documents executed in
connection therewith and any actions taken in connection therewith
or in respect thereof), in each case including without limitation
all attorneys', investment bankers', accountants' and other fees
and expenses incurred in connection therewith or as a result of
any actions, suits or proceedings relating thereto. As used in
this Agreement, the word "Subsidiary" when used with respect to
any party means any bank, corporation, partnership or other
organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes.
Subject Company is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHC Act").
The copies of the Certificate of Incorporation and Bylaws of
Subject Company which have previously been made available to
Parent, are true, complete and correct copies of such documents as
in effect as of the date of this Agreement.
(b) Each Subject Company Subsidiary (i) is duly
organized and validly existing as a bank, corporation or
partnership under the laws of its jurisdiction of organization,
(ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its
ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so
qualified would have or reasonably be expected to have a Material
Adverse Effect on Subject Company, and (iii) has all requisite
corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
3.2 Capitalization. (a) The authorized capital stock of
Subject Company consists of 250,000,000 shares of Subject Company
Common Stock, 15,000,000 shares of preferred stock, no par value,
and 43,500,000 shares of Class A Common Stock, par value $0.01 per
share ("Class A Common Stock"). At the close of business on
December 31, 1995, there were 75,929,395 shares of Subject Company
Common Stock outstanding, 1,750,000 shares of Subject Company
Preferred Stock outstanding (evidenced by 14,000,000 Subject
Company Depositary Shares, 8,000,000 of which each represent a
one-eighth interest in a share of Subject Company 9.875% Preferred
and 6,000,000 of which each represent a one-eighth interest in a
share of Subject Company 9.0% Cumulative Preferred), no Shares of
Class A Common Stock outstanding, and 8,356,601 shares of Subject
Company Common Stock held in Subject Company's treasury. As of
December 31, 1995, no shares of Subject Company Common Stock or
Subject Company Preferred Stock were reserved for issuance, except
(i) 1,828,250 shares of Subject Company Common Stock were reserved
for issuance pursuant to Subject Company's dividend reinvestment
and stock purchase plans, (ii) 3,505,348 shares of Subject Company
Common Stock were reserved for issuance upon the exercise of stock
options pursuant to the Subject Company Stock Option Plans, (iii)
15,073,106 shares of Subject Company Common Stock were reserved
for issuance pursuant to the Subject Company Stock Option
Agreement and (iv) the shares of Subject Company Common Stock
reserved for issuance upon exercise of the Subject Company Rights
distributed to holders of Subject Company Common Stock pursuant to
the Subject Company Rights Agreement. All of the issued and
outstanding shares of Subject Company Common Stock and Subject
Company Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except (i) as set
forth in Section 3.2(a) of the disclosure schedule of Subject
Company delivered to Parent concurrently herewith (the "Subject
Company Disclosure Schedule"), (ii) for the Subject Company Rights
Agreement (a true and correct copy of which, including all
amendments thereto, has been made available to Parent) and (iii)
as set forth elsewhere in this Section 3.2(a), Subject Company
does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of
Subject Company Common Stock or Subject Company Preferred Stock or
any other equity securities of Subject Company or any securities
representing the right to purchase or otherwise receive any shares
of Subject Company Common Stock or Subject Company Preferred
Stock. Except (i) as set forth in Section 3.2(a) of the Subject
Company Disclosure Schedule, and (ii) for options permitted by
this Agreement to be granted subsequent to the date of this
Agreement, December 31, 1995 Subject Company has not issued any
shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than
pursuant to Subject Company's dividend reinvestment and stock
purchase plans, the exercise of employee stock options granted
prior to such date and as disclosed in Section 3.2(a) of the
Subject Company Disclosure Schedule, and the issuance of rights
pursuant to the Subject Company Rights Agreement.
(b) Except as set forth in Section 3.2(b) of the
Subject Company Disclosure Schedule, Subject Company owns,
directly or indirectly, at least 99% of the issued and outstanding
shares of capital stock of each of the material Subject Company
Subsidiaries, free and clear of any liens, charges, encumbrances,
adverse rights or claims and security interests whatsoever
("Liens"), and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership
thereof. No Subject Company Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock
or any other equity security of such Subsidiary.
3.3 Authority; No Violation. (a) Subject Company has full
corporate power and authority to execute and deliver this
Agreement, the Fee Letter, of even date herewith, between Parent
and Subject Company (the "Subject Company Fee Letter") pursuant to
which Subject Company will in certain circumstances pay certain
amounts to Parent, and the other documents, including the
Settlement Agreement, contemplated to be executed and delivered by
Subject Company in connection with the transactions contemplated
hereby (this Agreement, together with the Subject Company Fee
Letter and such other documents, collectively, the "Subject
Company Documents"), and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of
each of the Subject Company Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and
validly approved by the Board of Directors of Subject Company.
The Board of Directors of Subject Company has directed that the
agreement of merger (within the meaning of Section 251 of the
DGCL) contained in this Agreement and the transactions
contemplated hereby be submitted to Subject Company's stockholders
for approval at a meeting of such stockholders and, except for the
adoption of such agreement of merger by the affirmative vote of
the holders of a majority of the outstanding shares of Subject
Company Common Stock, no other corporate proceedings on the part
of Subject Company are necessary to approve the Subject Company
Documents and to consummate the transactions contemplated hereby
and thereby. Each of the Subject Company Documents has been duly
and validly executed and delivered by Subject Company and
(assuming due authorization, execution and delivery by Parent)
this Agreement constitutes a valid and binding obligation of
Subject Company, enforceable against Subject Company in accordance
with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court
of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) Except as set forth in Section 3.3(b) of the
Subject Company Disclosure Schedule, neither the execution and
delivery of the Subject Company Documents by Subject Company nor
the consummation by Subject Company of the transactions
contemplated hereby and thereby, nor compliance by Subject Company
with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or
Bylaws of Subject Company or any of the similar governing
documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 3.4 are duly
obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable
to Subject Company or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or
assets of Subject Company or any of its Subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Subject Company or any of its
Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except
(in the case of clause (ii) above) for such violations, conflicts,
breaches or defaults which, either individually or in the
aggregate, will not have and would not reasonably be expected to
have a Material Adverse Effect on Subject Company.
3.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board") under the BHC Act and approval of such applications and
notices, (ii) the filing of any requisite applications with the
Office of the Comptroller of the Currency (the "OCC") and the
approval of such applications, (iii) the filing of any required
applications or notices with any state agencies and approval of
such applications and notices (the "State Approvals"), (iv)
approvals of boards of directors (or similar boards) and of
shareholders of investment companies sponsored, advised or
administered by Subject Company or its subsidiaries (the "Fund
Approvals") (and related SEC filings) (v) approval of the listing
of the Parent Capital Stock to be issued in the Merger on the
NYSE, (vi) the filing with the Securities and Exchange Commission
(the "SEC") of a joint proxy statement in definitive form relating
to the meetings of Parent's and Subject Company's stockholders to
be held in connection with this Agreement and the transactions
contemplated hereby (the "Joint Proxy Statement") and the filing
and declaration of effectiveness of the registration statement on
Form S-4 (the "S-4") in which the Joint Proxy Statement will be
included as a prospectus, (vii) the filing of the Certificate of
Merger with the Delaware Secretary pursuant to the DGCL, (viii)
such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of Parent Capital Stock
pursuant to this Agreement, (ix) the adoption of the agreement of
merger (within the meaning of Section 251 of the DGCL) contained
in this Agreement by the requisite votes of the stockholders of
Subject Company and the stockholders of Parent, (x) the consents
and approvals set forth in Section 3.4 of the Subject Company
Disclosure Schedule, and (xi) the consents and approvals of third
parties which are not Governmental Entities (as defined below),
the failure of which to obtain will not have and would not be
reasonably expected to have a Material Adverse Effect, no consents
or approvals of, or filings or registrations with, any court,
administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or
with any third party are necessary in connection with (A) the
execution and delivery by Subject Company of the Subject Company
Documents and (B) the consummation by Subject Company of the
Merger and the other transactions contemplated hereby and thereby.
3.5 Reports. Subject Company and each of its Subsidiaries
have timely filed all material reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file since January 1,
1993 with (i) the Federal Reserve Board, (ii) the OCC, (iii) any
state regulatory authority (each a "State Regulator"), (iv) the
SEC, (v) the FDIC, (vi) any self-regulatory organization ("SRO")
and (vii) any foreign financial or self-regulatory organization
(collectively "Regulatory Agencies") and have paid all fees and
assessments due and payable in connection therewith. Except for
normal examinations conducted by a Regulatory Agency in the
regular course of the business of Subject Company and its
Subsidiaries or as set forth in Section 3.5 of the Subject Company
Disclosure Schedule, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Subject Company,
investigation into the business or operations of Subject Company
or any of its Subsidiaries since January 1, 1993. Except as set
forth in Section 3.5 of the Subject Company Disclosure Schedule,
there is no material unresolved violation, criticism or exception
by any Regulatory Agency with respect to any report or statement
relating to any examinations of Subject Company or any of its
Subsidiaries. The deposits of each Subject Company Subsidiary
that is an insured institution are insured by the FDIC in
accordance with the Federal Deposit Insurance Act up to applicable
limits.
3.6 Financial Statements. Subject Company has previously
made available to Parent copies of (a) the consolidated balance
sheets of Subject Company and its Subsidiaries, as of December 31,
for the fiscal years 1993 and 1994, and the related consolidated
statements of operations, shareholders' equity and cash flows for
the fiscal years 1992 through 1994, inclusive, as reported in
Subject Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in each
case accompanied by the audit report of Ernst & Young LLP,
independent auditors with respect to Subject Company and (b) the
unaudited consolidated balance sheet of Subject Company and its
Subsidiaries as of September 30, 1994 and September 30, 1995 and
the related unaudited consolidated statements of operations,
shareholders' equity and cash flows for the periods then ended, as
reported in Subject Company's Quarterly Report on Form 10-Q for
the period ended September 30, 1995 filed with the SEC under the
Exchange Act. The December 31, 1994 consolidated balance sheet of
Subject Company (including the related notes, where applicable)
fairly presents the consolidated financial position of Subject
Company and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 3.6 (including
the related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.12 hereof will
fairly present (subject, in the case of the unaudited statements,
to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and changes in
stockholders' equity and consolidated financial position of
Subject Company and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth. Each of
such statements (including the related notes, where applicable)
complies, and the financial statements referred to in Section 6.12
hereof will comply, in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto and each of such
statements (including the related notes, where applicable) has
been, and the financial statements referred to in Section 6.12
will be, prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods
involved, except in each case as indicated in such statements or
in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Subject Company
and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable
legal and accounting requirements and reflect only actual
transactions.
3.7 Broker's Fees. Except as set forth in Section 3.7 of
the Subject Company Disclosure Schedule, neither Subject Company
nor any Subject Company Subsidiary nor any of their respective
officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions
contemplated by the Subject Company Documents.
3.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Subject Company Reports (as defined in
Section 3.12) filed prior to the date hereof, or as set forth in
Section 3.8(a) of the Subject Company Disclosure Schedule, since
September 30, 1995, no event (including, without limitation, any
earthquake or other act of God) has occurred which has had or
would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company or the
Surviving Corporation.
(b) Except as set forth in Section 3.8(b) of the
Subject Company Disclosure Schedule, since September 30, 1995,
Subject Company and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary
course of business, and neither Subject Company nor any of its
Subsidiaries has (i) except for normal increases in the ordinary
course of business consistent with past practice and except as
required by applicable law, increased the wages, salaries,
compensation, pension or other fringe benefits or perquisites
payable to any named executive officer (within the meaning of
Regulation S-K of the SEC) or director, other than persons newly
hired for such position, from the amount thereof in effect as of
September 30, 1995, or granted any severance or termination pay,
entered into any contract to make or grant any severance or
termination pay, or paid any bonus, in each case to any such named
executive officer or director, other than pursuant to preexisting
agreements or arrangements or (ii) suffered any strike, work
stoppage, slow-down or other labor disturbance.
3.9 Legal Proceedings. (a) Except as set forth in Section
3.9 of the Subject Company Disclosure Schedule, neither Subject
Company nor any of its Subsidiaries is a party to any, and there
are no pending or, to the best of Subject Company's knowledge,
threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of
any nature against Subject Company or any of its Subsidiaries or
challenging the validity or propriety of the transactions
contemplated by the Subject Company Documents as to which there is
a reasonable probability of an adverse determination and which, if
adversely determined, would, individually or in the aggregate,
have or reasonably be expected to have a Material Adverse Effect
on Subject Company.
(b) There is no injunction, order, judgment, decree or
regulatory restriction imposed upon Subject Company, any of its
Subsidiaries or the assets of Subject Company or any of its
Subsidiaries which has had, or would reasonably be expected to
have, a Material Adverse Effect on Subject Company or the
Surviving Corporation.
3.10 Taxes and Tax Returns. (a) Subject Company and each of
its Subsidiaries has timely filed or caused to be filed all
returns, declarations, reports, estimates, information returns and
statements required to be filed under federal, state, local or any
foreign tax laws ("Tax Returns") with respect to Subject Company
or any of its Subsidiaries, except where the failure to file
timely such Tax Returns would not have and would not reasonably be
expected to have a Material Adverse Effect on Subject Company.
All Taxes shown to be due on such Tax Returns have been paid or
adequate reserves have been established for the payment of such
Taxes, except where the failure to pay or establish adequate
reserves would not have and would not reasonably be expected to
have a Material Adverse Effect on Subject Company. Except as set
forth in Section 3.10(a) of the Subject Company Disclosure
Schedule, no material (i) audit or examination or (ii) refund
litigation with respect to any Tax Return is pending. All
material Tax Returns filed by Subject Company and each of its
Subsidiaries are complete and accurate in all material respects.
(b) Subject Company has no reason to believe that any
conditions exist that might prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(c) For purposes of this Agreement, "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including,
without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, goods and services, capital, transfer,
franchise, profits, license, withholding, payroll, employment,
employer health, excise, estimated, severance, stamp, occupation,
property or other taxes, customs duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any
taxing authority.
3.11 Employees. (a) Section 3.11(a) of the Subject Company
Disclosure Schedule sets forth a true and complete list of each
material employee benefit plan, arrangement or agreement that is
maintained as of the date of this Agreement (the "Plans") by
Subject Company or any of its Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), all
of which together with Subject Company would be deemed a "single
employer" within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) As soon as practicable after the date hereof,
Subject Company shall make available to Parent true and complete
copies of each of the Plans and all related documents, including
but not limited to (i) the actuarial report for such Plan (if
applicable) for each of the last two years, and (ii) the most
recent determination letter from the Internal Revenue Service (if
applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the
Subject Company Disclosure Schedule, (i) each of the Plans has
been operated and administered in all material respects in
accordance with applicable laws, including but not limited to
ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so
qualified, (iii) with respect to each Plan which is subject to
Title IV of ERISA, the present value of accrued benefits under
such Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such
Plan's actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of the assets
of such Plan allocable to such accrued benefits, (iv) no Plan
provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or
former employees of Subject Company, its Subsidiaries or any ERISA
Affiliate beyond their retirement or other termination of service,
other than (w) coverage mandated by applicable law, (x) death
benefits or retirement benefits under any "employee pension plan,"
as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of
Subject Company, its Subsidiaries or the ERISA Affiliates or (z)
benefits the full cost of which is borne by the current or former
employee (or his beneficiary), (v) no liability under Title IV of
ERISA has been incurred by Subject Company, its Subsidiaries or
any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to Subject Company,
its Subsidiaries or any ERISA Affiliate of incurring a material
liability thereunder, (vi) no Plan is a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, (vii)
all contributions or other amounts payable by Subject Company or
its Subsidiaries as of the Effective Time with respect to each
Plan in respect of current or prior plan years have been paid or
accrued in accordance with generally accepted accounting practices
and Section 412 of the Code, (viii) since January 1, 1994 neither
Subject Company, its Subsidiaries nor any ERISA Affiliate has
engaged in a transaction in connection with which Subject Company,
its Subsidiaries or any ERISA Affiliate could be subject to either
a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975
or 4976 of the Code, and (ix) to the best knowledge of Subject
Company there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto which
would, individually or in the aggregate, have or be reasonably
expected to have a Material Adverse Effect on Subject Company.
3.12 SEC Reports. Subject Company has previously made
available to Parent an accurate and complete copy of each final
registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1994 and prior
to the date hereof by Subject Company with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act (the "Subject Company Reports"), and no such
registration statement, prospectus, report, schedule or proxy
statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading.
Subject Company has timely filed all Subject Company Reports and
other documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective dates, all
Subject Company Reports complied in all material respects with the
published rules and regulations of the SEC with respect thereto.
3.13 Compliance with Applicable Law. Except as disclosed in
Section 3.13 of the Subject Company Disclosure Schedule, Subject
Company and each of its Subsidiaries hold, and have at all times
held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied
with and are not in default in any material respect under any,
applicable law, statute, order, rule, regulation, policy and/or
guideline of any Governmental Entity relating to Subject Company
or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance
or default would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect on
Subject Company, and neither Subject Company nor any of its
Subsidiaries knows of, or has received notice of, any violations
of any of the above which, individually or in the aggregate, would
have or would reasonably be expected to have a Material Adverse
Effect on Subject Company.
3.14 Certain Contracts. (a) Except as set forth in Section
3.14(a) of the Subject Company Disclosure Schedule and except for
the Settlement Agreement, neither Subject Company nor any of its
Subsidiaries is a party to or is bound by any contract,
arrangement, commitment or understanding (whether written or oral)
(i) which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in
the Subject Company Reports, (ii) which materially restricts the
conduct of any line of business by Subject Company, or (iii) with
or to a labor union or guild (including any collective bargaining
agreement). Subject Company has made available to Parent true and
correct copies of all material employment, consulting and deferred
compensation agreements to which Subject Company or any of its
Subsidiaries is a party. Each contract, arrangement, commitment
or understanding of the type described in this Section 3.14(a),
other than the Subject Company Documents, whether or not set forth
in Section 3.14(a) of the Subject Company Disclosure Schedule, is
referred to herein as a "Subject Company Contract," and neither
Subject Company nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other
parties thereto which, individually or in the aggregate, would
have or would reasonably be expected to have a Material Adverse
Effect on Subject Company.
(b) (i) Each Subject Company Contract is valid and
binding and in full force and effect, (ii) Subject Company and
each of its Subsidiaries has in all material respects performed
all obligations required to be performed by it to date under each
Subject Company Contract, and (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would
constitute a material default on the part of Subject Company or
any of its Subsidiaries under any such Subject Company Contract,
except, in each case, where such invalidity, failure to be
binding, failure to so perform or default, individually or in the
aggregate, would not have or reasonably be expected to have a
Material Adverse Effect on Subject Company.
3.15 Agreements with Regulatory Agencies. Except as set
forth in Section 3.15 of the Subject Company Disclosure Schedule,
neither Subject Company nor any of its Subsidiaries is subject to
any cease-and-desist or other order issued by, or is a party to
any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive
by, or has adopted any board resolutions at the request of (each,
whether or not set forth in Section 3.15 of the Subject Company
Disclosure Schedule, a "Regulatory Agreement"), any Regulatory
Agency or other Governmental Entity that restricts the conduct of
its business or that in any manner relates to its capital
adequacy, its credit policies, its management or its business, nor
has Subject Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
3.16 Undisclosed Liabilities. Except (i) for those
liabilities that are fully reflected or reserved against on the
consolidated balance sheet of Subject Company included in the
Subject Company Form 10-Q for the quarter ended September 30,
1995, (ii) for liabilities incurred in the ordinary course of
business consistent with past practice since September 30, 1995,
and (iii) as set forth in Section 3.16 of the Subject Company
Disclosure Schedule, neither Subject Company nor any of its
Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether
due or to become due) that, either alone or when combined with all
similar liabilities, has had, or would reasonably be expected to
have, a Material Adverse Effect on Subject Company.
3.17 State Takeover Laws. The Board of Directors of Subject
Company has taken all action required to be taken by it to provide
that this Agreement, the Subject Company Fee Letter and the
transactions contemplated hereby and thereby shall be exempt from
the requirements of any "moratorium," "control share," "fair
price" or other anti-takeover laws or regulations of any state.
3.18 Rights Agreement. Subject Company has taken all action
(including, if required, redeeming all of the outstanding common
stock purchase rights issued pursuant to the Subject Company
Rights Agreement or amending or terminating the Subject Company
Rights Agreement) so that the entering into of the Subject Company
Documents and the consummation of the transactions contemplated
hereby and thereby do not and will not result in the grant of any
rights to any person under the Subject Company Rights Agreement or
enable or require the Subject Company Rights to be exercised,
distributed or triggered.
3.19 Subject Company Information. The information relating
to Subject Company and its Subsidiaries to be provided by Subject
Company to be contained in the Joint Proxy Statement and the S-4,
or in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which
they are made, not misleading. The Joint Proxy Statement (except
for such portions thereof that relate only to Parent or any of its
Subsidiaries) will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations
thereunder.
3.20 Environmental Liability. Except as set forth in Section
3.20 of the Subject Company Disclosure Schedule, there are no
legal, administrative, arbitral or other proceedings, claims,
actions, causes of action, private environmental investigations or
remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could be expected to
result in the imposition, on Subject Company or any of its
Subsidiaries of any liability or obligation arising under common
law standards relating to environmental protection, human health
or safety, or under any local, state or federal environmental
statute, regulation or ordinance, including, without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (collectively, the
"Environmental Laws"), pending or, to the knowledge of Subject
Company, threatened, against Subject Company or any of its
Subsidiaries, which liability or obligation would have or would
reasonably be expected to have a Material Adverse Effect on
Subject Company. To the knowledge of Subject Company or any of
its Subsidiaries, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would
impose any liability or obligation that would have or would
reasonably be expected to have a Material Adverse Effect on
Subject Company. To the knowledge of Subject Company, during or
prior to the period of (i) its or any of its Subsidiaries'
ownership or operation of any of their respective current
properties, (ii) its or any of its Subsidiaries' participation in
the management of any property, or (iii) its or any of its
Subsidiaries' holding of a security interest or other interest in
any property, there were no releases or threatened releases of
hazardous, toxic, radioactive or dangerous materials or other
materials regulated under Environmental Laws in, on, under or
affecting any such property which would reasonably be expected to
have a Material Adverse Effect. Neither Subject Company nor any
of its Subsidiaries is subject to any agreement, order, judgment,
decree, letter or memorandum by or with any court, governmental
authority, regulatory agency or third party imposing any material
liability or obligation pursuant to or under any Environmental Law
that would have or would reasonably be expected to have a Material
Adverse Effect on Subject Company.
3.21 Interest Rate Risk Management Instruments. All interest
rate swaps, caps, floors and option agreements and other interest
rate risk management arrangements, whether entered into for the
account of Subject Company or for the account of a customer of
Subject Company or one of its Subsidiaries, were entered into in
accordance with prudent banking practices and applicable rules,
regulations and policies of any regulatory authority and with
counterparties believed to be financially responsible at the time
and are legal, valid and binding obligations of Subject Company or
one of its Subsidiaries enforceable in accordance with their terms
(except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally), and are in full force and effect.
Subject Company and each of its Subsidiaries have duly performed
in all material respects all of their material obligations
thereunder to the extent that such obligations to perform have
accrued; and, to Subject Company's knowledge, there are no
breaches, violations or defaults or allegations or assertions of
such by any party thereunder which would have or would reasonably
be expected to have a Material Adverse Effect on Subject Company.
3.22 Terminated Merger Agreement. Subject Company (i) has
taken all corporate action necessary to terminate the Terminated
Merger Agreement pursuant to the provisions of Section 8.1(f)
thereof and (ii) has no further obligation under the Terminated
Merger Agreement and the other agreements executed in connection
therewith, including the Subject Company Stock Option Agreement
and the North Fee Letter, other than as specified in Section 8.2
of the Terminated Merger Agreement or in the Settlement Agreement.
Before Subject Company provided Parent with any nonpublic
information, otherwise facilitated any effort or attempt by Parent
to make or implement a Takeover Proposal (as defined, for purposes
of this Section 3.22, in Section 5.2(f) of the Terminated Merger
Agreement) for Subject Company, recommended or endorsed Parent's
Takeover Proposal or participated in discussions and negotiations
with Parent relating to such Takeover Proposal, or authorized its
officers, directors, employees or agents to do any of the
foregoing, the Board of Directors of Subject Company, after having
consulted with and considered the advice of outside counsel,
reasonably determined in good faith that the failure to do so
would have caused the members of such Board of Directors to breach
their fiduciary duties under applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to Subject Company as
follows:
4.1 Corporate Organization. (a) Parent is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. Parent has the corporate power and
authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or
location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not have or
reasonably be expected to have a Material Adverse Effect on
Parent. Parent is duly registered as a bank holding company under
the BHC Act. The copies of the Restated Certificate of
Incorporation and Bylaws of Parent, which have previously been
made available to Subject Company, are true, complete and correct
copies of such documents as in effect as of the date of this
Agreement.
(b) Each Parent Subsidiary (i) is duly organized and
validly existing as a bank, corporation or partnership under the
laws of its jurisdiction of organization, (ii) is duly qualified
to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing
of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have
or reasonably be expected to have a Material Adverse Effect on
Parent, and (iii) has all requisite corporate power and authority
to own or lease its properties and assets and to carry on its
business as now conducted.
4.2 Capitalization. (a) The authorized capital stock of
Parent consists of 150,000,000 shares of Parent Common Stock and
25,000,000 shares of Preferred Stock, par value $5.00 per share
("Parent Preferred Stock"). At the close of business on December
31, 1995, there were 46,973,319 shares of Parent Common Stock
outstanding, 1,500,000 shares of Parent Preferred Stock designated
and 1,500,000 shares issued and outstanding as Series Adjustable
Rate Cumulative Preferred Stock, Series B ("Parent Series B
Preferred Stock"), 517,500 shares of Parent Preferred Stock
designated and 517,500 shares issued and outstanding as 9%
Preferred Stock, Series C ("Parent Series C Preferred Stock"),
368,000 shares of Parent Preferred Stock designated and 368,000
shares issued and outstanding as 8 7/8% Preferred Stock, Series D
("Parent Series D Preferred Stock"), and no shares of Parent
Common Stock held in Parent's treasury. On December 31, 1995, no
shares of Parent Common Stock or Parent Preferred Stock were
reserved for issuance, except that (i) 11,555,655 shares of Parent
Common Stock were reserved for issuance pursuant to outstanding
options, the Parent dividend reinvestment plan, the Parent
employee stock purchase plan, the Parent director option plans
and employee benefit plans and (ii) $180 million in stockholders
equity designated for the retirement or redemption of the Parent
Mandatory Equity Notes due 1998. All of the issued and
outstanding shares of the Parent Common Stock and Parent Preferred
Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the
date of this Agreement, except (i) as set forth in Schedule 4.2(a)
of the Parent Disclosure Schedule (as defined below) and (ii) as
set forth elsewhere in this Section 4.2(a), Parent does not have
and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of Parent
Common Stock or Parent Preferred Stock or any other equity
securities of Parent or any securities representing the right to
purchase or otherwise receive any shares of Parent Common Stock or
Parent Preferred Stock. Except (i) as set forth in Section 4.2(a)
of the disclosure schedule of Parent delivered to Subject Company
concurrently herewith (the "Parent Disclosure Schedule") and (ii)
for options permitted by this Agreement to be granted subsequent
to the date of this Agreement, since December 31, 1995, Parent has
not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital
stock, other than pursuant to Parent's dividend reinvestment and
stock purchase plans and the exercise of employee stock options
granted prior to such date and as disclosed in Section 4.2(a) of
the Parent Disclosure Schedule. The shares of Parent Capital
Stock to be issued pursuant to the Merger will be duly authorized
and validly issued and, at the Effective Time, all such shares
will be fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent
Disclosure Schedule, Parent owns, directly or indirectly, at least
99% of the issued and outstanding shares of capital stock of each
of the material Parent Subsidiaries, free and clear of any Liens,
and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof. No
Parent Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any
shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity
security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent has full corporate
power and authority to execute and deliver this Agreement, the Fee
Letter, of even date herewith, between Parent and Subject Company
(the "Parent Fee Letter," and together with the Subject Company
Fee Letter, the "Fee Letters") pursuant to which Parent will in
certain circumstances pay certain amounts to Subject Company, and
the other documents contemplated to be executed and delivered by
Parent, including the Settlement Agreement, in connection with the
transactions contemplated hereby (this Agreement, together with
the Parent Fee Letter, and such other documents, collectively, the
"Parent Documents") and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of
each of the Parent Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and
validly approved by the Board of Directors of Parent. The Board
of Directors of Parent has directed that the agreement of merger
(within the meaning of Section 251 of the DGCL) contained in this
Agreement and the transactions contemplated hereby be submitted to
Parent's stockholders for approval at a meeting of such
stockholders and, except for the adoption of such agreement of
merger by the affirmative vote of the holders of a majority of the
outstanding shares of Parent Common Stock, no other corporate
proceedings on the part of Parent are necessary to approve the
Parent Documents and to consummate the transactions contemplated
hereby and thereby. Each of the Parent Documents has been duly
and validly executed and delivered by Parent and (assuming due
authorization, execution and delivery by Subject Company) this
Agreement constitutes a valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except as
enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and
remedies generally.
(b) Except as set forth in Section 4.3(b) of the Parent
Disclosure Schedule, neither the execution and delivery of the
Parent Documents by Parent, nor the consummation by Parent of the
transactions contemplated hereby and thereby, nor compliance by
Parent with any of the terms or provisions hereof or thereof, will
(i) violate any provision of the Restated Certificate of
Incorporation or Bylaws of Parent or any of the similar governing
documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable
to Parent or any of its Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation
of any Lien upon any of the respective properties or assets of
Parent or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries is a party,
or by which they or any of their respective properties or assets
may be bound or affected, except (in the case of clause (ii)
above) for such violations, conflicts, breaches or defaults which
either individually or in the aggregate will not have and would
not reasonably be expected to have a Material Adverse Effect on
Parent.
4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal Reserve
Board under the BHC Act and approval of such applications and
notices, (ii) the filing of any requisite applications with the
OCC and the approval of such applications, (iii) the filings with
respect to the State Approvals (including receipt of such State
Approvals), (iv) the Fund Approvals (and related SEC filings), (v)
approval of the listing of the Parent Capital Stock to be issued
in the Merger on the NYSE, (vi) the filing with the SEC of the
Joint Proxy Statement and the filing and declaration of
effectiveness of the S-4, (vii) the filing of the Certificate of
Merger with the Delaware Secretary pursuant to the DGCL, (viii)
such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of Parent Capital Stock
pursuant to this Agreement, (ix) the adoption of the agreement of
merger (within the meaning of Section 251 of the DGCL) contained
in this Agreement by the requisite votes of the stockholders of
Subject Company and the stockholders of Parent, (x) the consents
and approvals set forth in Section 4.4 of the Parent Disclosure
Schedule, and (xi) the consents and approvals of third parties
which are not Governmental Entities, the failure of which to
obtain will not have and would not be reasonably expected to have
a Material Adverse Effect, no consents or approvals of, or filings
or registrations with, any Governmental Entity or any third party
are necessary in connection with (A) the execution and delivery by
Parent of the Parent Documents and (B) the consummation by Parent
of the Merger and the other transactions contemplated hereby and
thereby.
4.5 Reports. Parent and each of its Subsidiaries have
timely filed all material reports, registrations and statements,
together with any amendments required to be made with respect
thereto, that they were required to file since January 1, 1993
with the Regulatory Agencies, and have paid all fees and
assessments due and payable in connection therewith. Except for
normal examinations conducted by a Regulatory Agency in the
regular course of the business of Parent and its Subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the best
knowledge of Parent, investigation into the business or operations
of Parent or any of its Subsidiaries since January 1, 1993. There
is no material unresolved violation, criticism, or exception by
any Regulatory Agency with respect to any report or statement
relating to any examinations of Parent or any of its Subsidiaries.
The deposits of each Parent Subsidiary that is an insured
institution are insured by the FDIC in accordance with the Federal
Deposit Insurance Act up to applicable limits.
4.6 Financial Statements. Parent has previously made
available to Subject Company copies of (a) the consolidated
balance sheets of Parent and its Subsidiaries, as of December 31,
for the fiscal years 1993 and 1994, and the related consolidated
statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1992 through 1994, inclusive, as
reported in Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 filed with the SEC under the Exchange
Act, in each case accompanied by the audit report of KPMG Peat
Marwick LLP, independent public accountants with respect to Parent
and (b) the unaudited consolidated balance sheet of Parent and its
Subsidiaries as of September 30, 1994 and September 30, 1995 and
the related unaudited consolidated statements of income, cash
flows and changes in stockholders' equity for the periods then
ended, as reported in Parent's Quarterly Report on Form 10-Q for
the period ended September 30, 1995 filed with the SEC under the
Exchange Act. The December 31, 1994 consolidated balance sheet of
Parent (including the related notes, where applicable) fairly
presents the consolidated financial position of Parent and its
Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 4.6 (including the related
notes, where applicable) fairly present, and the financial
statements referred to in Section 6.12 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the
consolidated operations and changes in stockholders' equity and
consolidated financial position of Parent and its Subsidiaries for
the respective fiscal periods or as of the respective dates
therein set forth. Each of such statements (including the related
notes, where applicable) complies, and the financial statements
referred to in Section 6.12 hereof will comply, in all material
respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in
Section 6.12 will be, prepared in accordance with GAAP
consistently applied during the periods involved, except in each
case as indicated in such statements or in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q.
The books and records of Parent and its Subsidiaries have been,
and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.
4.7 Broker's Fees. Except as set forth in Section 4.7 of
the Parent Disclosure Schedule, neither Parent nor any Parent
Subsidiary nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any
of the transactions contemplated by the Parent Documents.
4.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Parent Reports (as defined below) filed
prior to the date hereof, since September 30, 1995, no event
(including, without limitation, any earthquake or other act of
God) has occurred which has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect
on Parent.
(b) Except as set forth in Section 4.8(b) of the Parent
Disclosure Schedule, since September 30, 1995, Parent and its
Subsidiaries have carried on their respective businesses in all
material respects in the ordinary course of business, and neither
Parent nor any of its Subsidiaries has (i) except for normal
increases in the ordinary course of business consistent with past
practice and except as required by applicable law, increased the
wages, salaries, compensation, pension or other fringe benefits or
perquisites payable to any named executive officer (within the
meaning of Regulation S-K of the SEC) or director, other than
persons newly hired for such positions, from the amount thereof in
effect as of September 30, 1995, or granted any severance or
termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus, in each case to
any such named executive officer or director, other than pursuant
to preexisting agreements or arrangements or (ii) suffered any
strike, work stoppage, slow-down or other labor disturbance.
4.9 Legal Proceedings. (a) Neither Parent nor any of its
Subsidiaries is a party to any, and there are no pending or, to
the best of Parent's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or
regulatory investigations of any nature against Parent or any of
its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by the Parent Documents as to which
there is a reasonable probability of an adverse determination and
which, if adversely determined, would, individually or in the
aggregate, have or reasonably be expected to have a Material
Adverse Effect on Parent.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Parent, any of its
Subsidiaries or the assets of Parent or any of its Subsidiaries
which has had, or would reasonably be expected to have, a Material
Adverse Effect on Parent or the Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Parent and each of its
Subsidiaries has timely filed or caused to be filed all Tax
Returns with respect to Parent or any of its Subsidiaries, except
where the failure to file timely such Tax Returns would not have
and would not reasonably be expected to have a Material Adverse
Effect on Parent. All Taxes shown to be due on such Tax Returns
have been paid or adequate reserves have been established for the
payment of such Taxes, except where the failure to pay or
establish adequate reserves would not have and would not
reasonably be expected to have a Material Adverse Effect on
Parent. Except as set forth in Section 4.10(a) of the Parent
Disclosure Schedule, no material (i) audit or examination or (ii)
refund litigation with respect to any Tax Return is pending. All
material Tax Returns filed by Parent and each of its Subsidiaries
are complete and accurate in all material respects.
(b) Parent has no reason to believe that any conditions
exist that might prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
4.11 Employees. (a) Section 4.11(a) of the Parent
Disclosure Schedule sets forth a true and complete list of each
material employee benefit plan, arrangement or agreement that is
maintained as of the date of this Agreement (the "Parent Plans")
by Parent or any of its Subsidiaries or by any trade or business,
whether or not incorporated (a "Parent ERISA Affiliate"), all of
which together with Parent would be deemed a "single employer"
within the meaning of Section 4001 of ERISA.
(b) As soon as practicable after the date hereof,
Parent shall make available to Subject Company true and complete
copies of each of the Parent Plans and all related documents,
including but not limited to (i) the actuarial report for such
Parent Plan (if applicable) for each of the last two years, and
(ii) the most recent determination letter from the Internal
Revenue Service (if applicable) for such Parent Plan.
(c) Except as set forth in Section 4.11(c) of the
Parent Disclosure Schedule, (i) each of the Parent Plans has been
operated and administered in all material respects in accordance
with applicable laws, including but not limited to ERISA and the
Code, (ii) each of the Parent Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified,
(iii) with respect to each Parent Plan which is subject to Title
IV of ERISA, the present value of accrued benefits under such
Parent Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such
Parent Plan's actuary with respect to such Parent Plan, did not,
as of its latest valuation date, exceed the then current value of
the assets of such Parent Plan allocable to such accrued benefits,
(iv) no Parent Plan provides benefits, including without
limitation death or medical benefits (whether or not insured),
with respect to current or former employees of Parent, its
Subsidiaries or any Parent ERISA Affiliate beyond their retirement
or other termination of service, other than (w) coverage mandated
by applicable law, (x) death benefits or retirement benefits under
any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of Parent, its Subsidiaries or the Parent
ERISA Affiliates or (z) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) no
liability under Title IV of ERISA has been incurred by Parent, its
Subsidiaries or any Parent ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a
material risk to Parent, its Subsidiaries or any Parent ERISA
Affiliate of incurring a material liability thereunder, (vi) no
Parent Plan is a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vii) all contributions or
other amounts payable by Parent or its Subsidiaries as of the
Effective Time with respect to each Parent Plan in respect of
current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and
Section 412 of the Code, (viii) since January 1, 1994 neither
Parent, its Subsidiaries nor any Parent ERISA Affiliate has
engaged in a transaction in connection with which Parent, its
Subsidiaries or any Parent ERISA Affiliate could be subject to
either a material civil penalty assessed pursuant to Section 409
or 502(i) of ERISA or a material tax imposed pursuant to Section
4975 or 4976 of the Code, and (ix) to the best knowledge of Parent
there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of
the Parent Plans or any trusts related thereto which would,
individually or in the aggregate, have or be reasonably expected
to have a Material Adverse Effect on Parent.
4.12 SEC Reports. Parent has previously made available to
Subject Company an accurate and complete copy of each final
registration statement, prospectus, report, schedule and
definitive proxy statement filed since January 1, 1994 and prior
to the date hereof by Parent with the SEC pursuant to the
Securities Act or the Exchange Act (the "Parent Reports"), and no
such registration statement, prospectus, report, schedule or proxy
statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading. Parent
has timely filed all Parent Reports and other documents required
to be filed by it under the Securities Act and the Exchange Act,
and, as of their respective dates, all Parent Reports complied in
all material respects with the published rules and regulations of
the SEC with respect thereto.
4.13 Compliance with Applicable Law. Except as disclosed in
Section 4.13 of the Parent Disclosure Schedule, Parent and each of
its Subsidiaries hold, and have at all times held, all material
licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant
to all, and have complied with and are not in default in any
material respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity
relating to Parent or any of its Subsidiaries, except where the
failure to hold such license, franchise, permit or authorization
or such noncompliance or default would not, individually or in the
aggregate, have or reasonably be expected to have a Material
Adverse Effect on Parent, and neither Parent nor any of its
Subsidiaries knows of, or has received notice of, any material
violations of any of the above which, individually or in the
aggregate, would have or reasonably be expected to have a Material
Adverse Effect on Parent.
4.14 Certain Contracts. (a) Except as set forth in Section
4.14(a) of the Parent Disclosure Schedule and except for the
Settlement Agreement, neither Parent nor any of its Subsidiaries
is a party to or is bound by any contract, arrangement, commitment
or understanding (whether written or oral) (i) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement that has not
been filed or incorporated by reference in the Parent Reports,
(ii) which materially restricts the conduct of any line of
business by Parent, or (iii) with or to a labor union or guild
(including any collective bargaining agreement). Parent has made
available to Subject Company true and correct copies of all
material employment, consulting and deferred compensation
agreements to which Parent or any of its Subsidiaries is a party.
Each contract, arrangement, commitment or understanding of the
type described in this Section 4.14(a), other than the Parent
Documents, whether or not set forth in Section 4.14(a) of the
Parent Disclosure Schedule, is referred to herein as a "Parent
Contract," and neither Parent nor any of its Subsidiaries knows
of, or has received notice of, any violation of the above by any
of the other parties thereto which, individually or in the
aggregate, would have or would reasonably be expected to have a
Material Adverse Effect on Parent.
(b) (i) Each Parent Contract is valid and binding and
in full force and effect, (ii) Parent and each of its Subsidiaries
has in all material respects performed all obligations required to
be performed by it to date under each Parent Contract, and (iii)
no event or condition exists which constitutes or, after notice or
lapse of time or both, would constitute, a material default on the
part of Parent or any of its Subsidiaries under any such Parent
Contract, except, in each case, where any such invalidity, failure
to be binding, failure to so perform or default, individually or
in the aggregate, would not have or reasonably be expected to have
a Material Adverse Effect on Parent.
4.15 Agreements with Regulatory Agencies. Except as set
forth in Section 4.15 of the Parent Disclosure Schedule, neither
Parent nor any of its Subsidiaries is subject to any cease-and-
desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with,
or is a party to any commitment letter or similar undertaking to,
or is subject to any order or directive by, or has adopted any
board resolutions at the request of (each, whether or not set
forth in Section 4.15 of the Parent Disclosure Schedule, a "Parent
Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or
that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Parent or any of
its Subsidiaries been advised by any Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting
any Regulatory Agreement.
4.16 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the consolidated
balance sheet of Parent included in the Parent Form 10-Q for the
quarter ended September 30, 1995, and for liabilities incurred in
the ordinary course of business consistent with past practice
since September 30, 1995, neither Parent nor any of its
Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether
due or to become due) that, either alone or when combined with all
similar liabilities, has had, or would reasonably be expected to
have, a Material Adverse Effect on Parent.
4.17 State Takeover Laws. The Board of Directors of Parent
has taken all action required to be taken by it to provide that
this Agreement, the Parent Fee Letter and the transactions
contemplated hereby and thereby shall be exempt from the
requirements of any "moratorium," "control share," "fair price" or
other anti-takeover laws or regulations of any state.
4.18 Parent Information. The information relating to Parent
and its Subsidiaries to be provided by Parent to be contained in
the Joint Proxy Statement and the S-4, or in any other document
filed with any other regulatory agency in connection herewith,
will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein,
in light of the circumstances in which they are made, not
misleading. The Joint Proxy Statement (except for such portions
thereof that relate only to Subject Company or any of its
Subsidiaries) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules
and regulations thereunder.
4.19 Environmental Liability. Except as set forth in Section
4.19 of the Parent Disclosure Schedule, there are no legal,
administrative, arbitral or other proceedings, claims, actions,
causes of action, private environmental investigations or
remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably would be expected to
result in the imposition, on Parent or any of its Subsidiaries of
any liability or obligation arising under any Environmental Law,
pending or, to the knowledge of Parent, threatened, against Parent
or any of its Subsidiaries, which liability or obligation would
reasonably be expected to have a Material Adverse Effect on
Parent. To the knowledge of Parent, there is no reasonable basis
for any such proceeding, claim, action or governmental
investigation that would impose any liability or obligation that
would reasonably be expected to have a Material Adverse Effect on
Parent. To the knowledge of Parent, during or prior to the period
of (i) its or any of its Subsidiaries' ownership or operation of
any of their respective current properties, (ii) its or any of its
Subsidiaries' participation in the management of any property, or
(iii) its or any of its Subsidiaries' holding of a security
interest or other interest in any property, there were no releases
or threatened releases of hazardous, toxic, radioactive or
dangerous materials or other materials regulated under
Environmental Laws in, on, under or affecting any such property,
which would reasonably be expected to have a Material Adverse
Effect on Parent. Neither Parent nor any of its Subsidiaries is
subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any material liability
or obligation pursuant to or under any Environmental Law that
would reasonably be expected to have a Material Adverse Effect on
Parent.
4.20 Interest Rate Risk Management Instruments. All interest
rate swaps, caps, floors and option agreements and other interest
rate risk management arrangements, whether entered into for the
account of Parent or for the account of a customer of Parent or
one of its Subsidiaries, were entered into in accordance with
prudent banking practices and applicable rules, regulations and
policies of any regulatory authority and with counterparties
believed to be financially responsible at the time and are legal,
valid and binding obligations of Parent or one of its Subsidiaries
enforceable in accordance with their terms (except as enforcement
may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies
generally), and are in full force and effect. Parent and each of
its Subsidiaries have duly performed in all material respects all
of their material obligations thereunder to the extent that such
obligations to perform have accrued; and, to Parent's knowledge,
there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder which
would have or would reasonably be expected to have a Material
Adverse Effect on Parent.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.
Except as set forth in the Subject Company Disclosure Schedule or
the Parent Disclosure Schedule, as the case may be, as expressly
contemplated or permitted by this Agreement, the Settlement
Agreement, or the Fee Letters, as required by applicable law, rule
or regulation, during the period from the date of this Agreement
to the Effective Time, each of Parent and Subject Company shall,
and shall cause each of their respective Subsidiaries to, (i)
conduct its business in the usual, regular and ordinary course
consistent with past practice, (ii) use reasonable best efforts to
maintain and preserve intact its business organization, employees
and advantageous business relationships and retain the services of
its officers and key employees and (iii) take no action which
would reasonably be expected to adversely affect or delay the
ability of either Parent or Subject Company to obtain any
approvals of any Regulatory Agency or other governmental authority
required to consummate the transactions contemplated hereby or by
the Fee Letters or to perform its covenants and agreements under
the Subject Company Documents or the Parent Documents, as the case
may be.
5.2 Forbearances. Except as set forth in Section 5.2 of the
Subject Company Disclosure Schedule or Section 5.2 of the Parent
Disclosure Schedule, as the case may be, as expressly contemplated
or permitted by this Agreement, the Settlement Agreement, or the
Fee Letters, as required by applicable law, rule or regulation,
during the period from the date of this Agreement to the Effective
Time, neither Parent nor Subject Company shall, and neither Parent
nor Subject Company shall permit any of their respective
Subsidiaries to, without the prior written consent of the other:
(a) adjust, split, combine or reclassify any capital
stock; make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase
or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable
for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or
other entity any right to acquire any shares of its capital
stock (except for regular quarterly cash dividends on Subject
Company Common Stock and on Parent Common Stock at a rate
equal to the rates recently paid by each of Subject Company
and Parent, as the case may be, as such rates may be
increased by either party in the ordinary course of business
consistent with past practice and, in the case of Subject
Company Preferred Stock and Parent Preferred Stock, for
regular quarterly or semiannual cash dividends thereon at the
rates set forth in the applicable certificate of
incorporation or certificate of designation for such
securities and except for dividends paid by any of the wholly
owned Subsidiaries of each of Parent and Subject Company to
Parent or Subject Company or any of their wholly owned
Subsidiaries, respectively, and except for the issuance of
employee stock options and restricted stock consistent with
past practices); or issue any additional shares of capital
stock except pursuant to (A) the exercise of stock options
outstanding as of the date hereof or issued after the date
hereof in a manner consistent with past practice, (B) the
award of restricted shares of Subject Company Common Stock in
a manner consistent with past practice, (C) the vesting of
Performance Units outstanding as of the date hereof pursuant
to Subject Company Stock Option Plans, (D) the Subject
Company Rights Agreement, and (E) acquisitions and
investments permitted by paragraph (c) hereof;
(b) sell, transfer, mortgage, encumber or otherwise
dispose of any of its properties or assets to any individual,
corporation or other entity other than a direct or indirect
wholly owned Subsidiary, or cancel, release or assign any
indebtedness to any such person or any claims held by any
such person, in each case that is material to such party,
except (i) in the ordinary course of business consistent with
past practice, (ii) pursuant to contracts or agreements in
force at the date of this Agreement or (iii) pursuant to
plans disclosed in writing prior to the execution of this
Agreement to the other party;
(c) except for (i) transactions in the ordinary course
of business consistent with past practice, or (ii)
acquisitions of an entity or business having assets not
exceeding 10% of the consolidated assets of Subject Company
or Parent, as applicable, on a pro forma basis giving effect
to such transaction, make any material acquisition or
investment either by purchase of stock or securities, merger
or consolidation, contributions to capital, property
transfers, or purchases of any property or assets of any
other individual, corporation or other entity other than a
wholly owned Subsidiary thereof;
(d) except for transactions in the ordinary course of
business consistent with past practice, enter into or
terminate any contract or agreement, or make any change in
any of its leases or contracts, in each case that is material
to such party, other than renewals of contracts and leases
without materially adverse changes of terms thereof;
(e) other than (i) in the ordinary course of business
consistent with past practice, or (ii) in an aggregate amount
not exceeding $10 million, increase in any material respect
the compensation or fringe benefits of any of its employees
or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or
become a party to, amend or commit itself to any material
pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit
of any employee or accelerate the vesting of any stock
options or other stock-based compensation;
(f) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit,
initiate or encourage any inquiries relating to, or the
making of any proposal which constitutes, a Takeover Proposal
(as defined below), or recommend or endorse any Takeover
Proposal, or participate in any discussions or negotiations,
or provide third parties with any nonpublic information,
relating to any such inquiry or proposal or otherwise
facilitate any effort or attempt to make or implement a
Takeover Proposal, provided, however, that each of Parent and
Subject Company may, and may authorize and permit its
officers, directors, employees or agents to, provide third
parties with nonpublic information, otherwise facilitate any
effort or attempt by any third party to make or implement a
Takeover Proposal, recommend or endorse any Takeover Proposal
with or by any third party, and participate in discussions
and negotiations with any third party relating to any
Takeover Proposal, if such party's Board of Directors, after
having consulted with and considered the advice of outside
counsel, has reasonably determined in good faith that the
failure to do so would cause the members of such Board of
Directors to breach their fiduciary duties under applicable
law. Subject Company will immediately cease and cause to be
terminated any activities, discussions or negotiations
conducted prior to the date of this Agreement with any
parties other than Parent with respect to any of the
foregoing. Each party shall immediately advise the other
following the receipt by it of any Takeover Proposal and the
details thereof, and advise the other of any developments
with respect to such Takeover Proposal immediately upon the
occurrence thereof. As used in this Agreement, "Takeover
Proposal" shall mean, with respect to any person, any tender
or exchange offer, proposal for a merger, consolidation or
other business combination involving Subject Company or
Parent or any of their respective Subsidiaries or any
proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets
of, Subject Company or Parent or any of their respective
Subsidiaries other than the transactions contemplated or
permitted by this Agreement;
(g) settle any claim, action or proceeding involving
money damages which is material to Parent or Subject Company,
as applicable, except (x) in the ordinary course of business
consistent with past practice and (y) in the case of Subject
Company, for any claim, action or proceeding caused by,
relating to or arising out of the matters described in clause
(II) of the definition of Material Adverse Effect set forth
in Section 3.1, which claim, action or proceeding may be
settled with the consent of Parent (which consent shall not
be unreasonably withheld);
(h) take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code;
(i) amend its certificate of incorporation, bylaws or
similar governing documents or, in the case of Subject
Company, the Subject Company Rights Agreement, in a manner
that would materially and adversely affect either party's
ability to consummate the Merger or the economic benefits of
the Merger to either party;
(j) except in the ordinary course or following prior
consultation with the other party to this Agreement,
materially change its investment securities portfolio policy,
or the manner in which the portfolio is classified or
reported;
(k) take any action that is intended or may reasonably
be expected to result in any of its representations and
warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of
any provision of this Agreement, except, in every case, as
may be required by applicable law; or
(l) agree to, or make any commitment to, take any of
the actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Parent and Subject Company
shall promptly prepare and file with the SEC a preliminary version
of the Joint Proxy Statement and, following comment thereon,
Parent shall promptly prepare and file with the SEC the S-4, in
which the definitive Joint Proxy Statement will be included as a
prospectus. Each of Parent and Subject Company shall use all
reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and
Parent and Subject Company shall thereafter mail the definitive
Joint Proxy Statement to their respective stockholders. Parent
shall also use all reasonable efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement, and
Subject Company shall furnish all information concerning Subject
Company and the holders of Subject Company Capital Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other
and use reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable
to consummate the transactions contemplated by this Agreement
(including without limitation the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Entities. Parent and
Subject Company shall have the right to review in advance, and to
the extent practicable each will consult the other on, in each
case subject to applicable laws relating to the exchange of
information, all the information relating to Subject Company or
Parent, as the case may be, and any of their respective
Subsidiaries which appear in any filing made with, or written
materials submitted to, any third party or any Governmental Entity
in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties
hereto shall act reasonably and as promptly as practicable. The
parties hereto agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other apprised of
the status of matters relating to completion of the transactions
contemplated herein.
(c) Parent and Subject Company shall, upon request,
furnish each other with all information concerning themselves,
their Subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in
connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of
Parent, Subject Company or any of their respective Subsidiaries to
any Governmental Entity in connection with the Merger and the
other transactions contemplated by this Agreement.
(d) Parent and Subject Company shall promptly advise
each other upon receiving any communication from any Governmental
Entity whose consent or approval is required for consummation of
the transactions contemplated by this Agreement which causes such
party to believe that there is a reasonable likelihood that any
Requisite Regulatory Approval (as defined below) will not be
obtained or that the receipt of any such approval will be
materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of
information, each of Parent and Subject Company shall, and shall
cause each of their respective Subsidiaries to, afford to the
officers, employees, accountants, counsel and other
representatives of the other party access, during normal business
hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records, and to its
officers, employees, accountants, counsel and other
representatives and, during such period, each of Parent and
Subject Company shall, and shall cause their respective
Subsidiaries to, make available to the other party (i) a copy of
each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the
requirements of Federal securities laws or Federal or state
banking laws (other than reports or documents which Parent or
Subject Company, as the case may be, is not permitted to disclose
under applicable law) and (ii) all other information concerning
its business, properties and personnel as such other party may
reasonably request. Neither Parent nor Subject Company nor any of
their respective Subsidiaries shall be required to provide access
to or to disclose information where such access or disclosure
would violate or prejudice the rights of its customers, jeopardize
the attorney-client privilege of the institution in possession or
control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The
parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All information furnished pursuant to Section
6.2(a) or otherwise by Parent or its representatives to Subject
Company or its representatives or by Subject Company or its
representatives to Parent or its representatives, as the case may
be, shall be treated as the sole property of the party furnishing
such information and, if the Merger shall not occur, Parent and
Subject Company and their respective representatives shall return
to the other party all of such written information and all
documents, notes, summaries or other materials containing,
reflecting or referring to, or derived from, such information.
Each of Parent and Subject Company shall, and shall use its best
efforts to cause its representatives to, keep confidential all
such information, and shall not directly or indirectly use such
information for any competitive or other commercial purpose. The
obligation to keep such information confidential shall continue
for five years from the date the proposed Merger is abandoned and
shall not apply to (i) any information which (x) was already in
the receiving party's possession prior to the disclosure thereof
by the other party; (y) was then generally known to the public; or
(z) was disclosed to the receiving party by a third party not
bound by an obligation of confidentiality or (ii) disclosures made
as required by law. It is further agreed that, if in the absence
of a protective order or the receipt of a waiver hereunder the
receiving party is nonetheless, in the opinion of its counsel,
compelled to disclose information concerning the other party to
any tribunal or governmental body or agency or else stand liable
for contempt or suffer other censure or penalty, the receiving
party may disclose such information to such tribunal or
governmental body or agency without liability hereunder.
(c) No investigation by either of the parties or their
respective representatives shall affect the representations,
warranties, covenants or agreements of the other set forth herein.
6.3 Stockholders' Approvals. Each of Parent and Subject
Company shall duly call, give notice of, convene and hold a
meeting of its stockholders to be held as soon as practicable
following the date hereof for the purpose of obtaining the
requisite stockholder approvals required in connection with this
Agreement and the Merger, and each shall use its best efforts to
cause such meetings to occur on the same date. Subject to the
provisions of the next sentence, each of Parent and Subject
Company shall, through its Board of Directors, recommend to its
stockholders approval of such matters. The Board of Directors of
each party may fail to make such recommendation, or withdraw,
modify or change any such recommendation in a manner adverse to
the other party hereto, if such Board of Directors, after having
consulted with and considered the advice of outside counsel, has
reasonably determined in good faith that the making of such
recommendation, or the failure to withdraw, modify or change its
recommendation, would constitute a breach of the fiduciary duties
of the members of such Board of Directors under applicable law.
6.4 Legal Conditions to Merger. (a) Subject to the terms
and conditions of this Agreement, each of Parent and Subject
Company shall, and shall cause its Subsidiaries to, use their
reasonable best efforts (i) to take, or cause to be taken, all
actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VII hereof, to consummate the
transactions contemplated by this Agreement and (ii) to obtain
(and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to
be obtained by Subject Company or Parent or any of their
respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement, and to comply
with the terms and conditions of any such consent, authorization,
order or approval.
(b) Subject to the terms and conditions of this
Agreement, each of Parent and Subject Company agrees to use
reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions
contemplated hereby, including, without limitation, using
reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby
and using reasonable efforts to defend any litigation seeking to
enjoin, prevent or delay the consummation of the transactions
contemplated hereby or seeking material damages.
6.5 Affiliates; Publication of Combined Financial Results.
Subject Company shall use its reasonable best efforts to cause
each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act) of
Subject Company to deliver to Parent, as soon as practicable after
the date of this Agreement, and in any event prior to the date of
the stockholders meetings called by Parent and Subject Company
pursuant to Section 6.3 hereof, a written agreement, in the form
of Exhibit 6.5 hereto.
6.6 Stock Exchange Listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in
the Merger and the New Parent Depositary Shares to be approved for
listing on the NYSE, subject to official notice of issuance, prior
to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the
Effective Time, unless otherwise mutually determined and except as
provided in Section 1.6 hereof, Parent Plans and Plans in effect
as of the date of this Agreement shall remain in effect with
respect to employees of Parent or Subject Company (or their
Subsidiaries) covered by such plans at the Effective Time until
such time as Parent shall, subject to applicable law, the terms of
this Agreement and the terms of such plans, adopt new benefit
plans with respect to employees of the Surviving Corporation and
its Subsidiaries (the "New Parent Plans"). Prior to the Closing
Date, Parent and Subject Company shall cooperate in reviewing,
evaluating and analyzing the Parent Plans and the Plans with a
view toward developing appropriate New Parent Plans for the
employees covered thereby subsequent to the Merger. Except as
provided in paragraphs (c) - (e) hereof, Parent and Subject
Company shall use their reasonable best efforts to develop New
Parent Plans which, among other things, treat similarly situated
employees of the Surviving Corporation and its Subsidiaries on a
substantially equivalent basis, taking into account all relevant
factors, including, without limitation, duties, geographic
location, tenure, qualifications and abilities. In view of the
changed nature of the benefit programs which will be applicable to
employees of Subject Company after the Effective Time, Parent and
Subject Company further agree to use their reasonable best efforts
to develop equitable transition rules relating to the benefits to
be provided to one or more groups of such employees, with
particular emphasis on retirement benefits to be provided to those
Subject Company employees who are nearing eligibility for early
retirement. Parent agrees that for purposes of all Plans and New
Parent Plans (including, without limitation, all policies and
employee fringe benefit programs of the Surviving Corporation)
under which an employee's benefit depends, in whole or in part, on
length of service, credit will be given to current employees of
the Subject Company and its Subsidiaries for service with Subject
Company or its Subsidiaries prior to the Effective Time, provided
that such crediting of service does not result in duplication of
benefits, require an accrual of benefits under, or contributions
to, a pension benefit plan on behalf of an employee for periods
before such employee becomes a participant in such plan or require
that certain additional contributions currently made to a Parent
Plan on behalf of certain employees who had participated in
Parent's prior defined benefit plan and attained a specified age
upon termination of that plan be extended to any additional
employees.
(b) Notwithstanding the foregoing, Parent shall, and
shall cause its Subsidiaries to, honor in accordance with their
terms all Plans, as amended as permitted hereunder, and other
contracts, arrangements, commitments or understandings described
in the Subject Company Disclosure Schedule; provided, however,
that this paragraph (b) shall be subject to the provisions of
paragraph (f) hereof. Parent and Subject Company hereby
acknowledge that approval of the Merger Agreement and the Merger
by stockholders of the Subject Company will constitute a "Change
in Control" for purposes of the Plans and agree to abide by the
provisions of any Plan which relate to a Change in Control,
including, but not limited to, the accelerated vesting and/or
payment of equity-based awards under the Subject Company Stock
Option Plans, each as amended to the date hereof.
(c) To the extent permitted by applicable law, (1)
Parent and the Subject Company agree that (i) until such time (the
"Transition Date") as those employees of the Subject Company who
continue in employment with the Surviving Corporation following
the Effective Time become eligible to participate in Parent's
qualified defined contribution plan, Parent shall maintain in
accordance with its terms (as in effect immediately prior to the
date hereof) the Retirement Plan for the Employees of First
Interstate Bancorp and its Affiliates (the "Subject Company
Pension Plan"), (ii) prior to the Transition Date, Parent shall
not terminate the Subject Company Pension Plan, cease benefit
accruals under such Plan, merge such plan with or into any other
plan or amend such plan in any manner adverse to participants or
beneficiaries of such plan (including, but not limited to,
amending to the detriment of participants the actuarial factors or
assumptions utilized in determining early retirement benefits or
lump sum present values), and (iii) from and after the Transition
Date, Parent shall be free to terminate the Subject Company
Pension Plan or to freeze accruals thereunder, subject to
compliance with the terms of paragraph (2) below.
(2) Parent hereby agrees that in the event Parent
terminates the Subject Company Pension Plan on or after the
Effective Time, Parent shall cause such termination to be
implemented in all respects in accordance with applicable law
(and without limiting the generality of the foregoing, shall
cause to be purchased from an insurance company rated AAA or
better by Bests, irrevocable annuities representing the
accrued benefits of all participants and beneficiaries of
such plan); provided, however, that Parent may cause accrued
benefits subject to Section 417(e)(1) of the Code to be
cashed out in a lump sum.
(d) Parent and the Subject Company agree that,
effective as of the date of the approval of the Merger Agreement
and the Merger by the stockholders of the Subject Company, each
participant in The Employee Savings Plan of First Interstate
Bancorp shall become fully vested with respect to such
participant's account balance thereunder.
(e) Parent and the Subject Company hereby agree as
follows:
(1) each individual who is currently receiving benefits
under the First Interstate Retiree Medical Plan (the "Subject
Company Retiree Medical Plan"), or who would be entitled to
receive such benefits if such individual ceased employment
with the Subject Company and its subsidiaries as of the date
hereof, shall, after the Effective Time, receive (or, upon
termination of employment with the Surviving Corporation and
its subsidiaries, shall be entitled to receive) retiree
medical benefits which are no less favorable than the
benefits which similarly situated retirees (or employees) of
the Parent are entitled to receive (or would be entitled to
receive) under the Parent's retiree medical plan, as such
plan may be amended from time to time;
(2) each employee of the Subject Company who was hired
prior to January 1, 1992 and whose employment is terminated
under circumstances entitling such employee to severance
benefits under the First Interstate Bancorp Broad-Based
Change in Control Severance Pay Plan, the First Interstate
Bancorp Middle Management Change in Control Severance Pay
Plan, the First Interstate Bancorp Senior Management Change
in Control Severance Pay Plan or an employment agreement
between such participant and Subject Company or a subsidiary
thereof which is listed on Exhibit 3.11(a) hereto
(collectively, the "Subject Company Severance Plans"), shall
be entitled to receive retiree medical benefits which are no
less favorable than the benefits provided under the Parent's
retiree medical plan (as such plan may be amended from time
to time) if such employee would have been eligible for
benefits under such plan had such employee remained employed
through the end of the period with respect to which severance
benefits are payable under the Subject Company Severance
Plans.
(f) Except as otherwise provided herein, nothing in
this Section 6.7 shall be interpreted as preventing Parent or its
Subsidiaries from amending, modifying or terminating any Parent
Plans, Plans, or other contracts, arrangements, commitments or
understandings, in accordance with their terms and applicable law.
(g) It is the express understanding and intention of
Subject Company and Parent that no Subject Company Employee or
Parent Employee or other person shall be deemed to be a third
party beneficiary, or have or acquire any right to enforce the
provisions, of this Section 6.7, and that nothing in this
Agreement shall be deemed to constitute a Plan, a Parent Plan or a
New Parent Plan or an amendment to a Plan, a Parent Plan or a New
Parent Plan. Parent agrees, however, that, prior to the Effective
Time, the Subject Company may take all necessary action to amend
the appropriate Plans to reflect the provisions of this Section
6.7.
6.8 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person who
is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director,
officer or employee of Subject Company or any of its Subsidiaries
(the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of Subject Company, any of the
Subject Company Subsidiaries or any of their respective
predecessors or was prior to the Effective Time serving at the
request of any such party as a director, officer, employee,
fiduciary or agent of another corporation, partnership, trust or
other enterprise, (ii) the Terminated Merger Agreement, the
Subject Company Stock Option Agreement and the North Fee Letter
and all actions by any Indemnified Party in connection therewith
or (iii) this Agreement, the Fee Letters or any of the
transactions contemplated hereby or thereby and all actions taken
by an Indemnified Party in connection therewith, whether in any
case asserted or arising before or after the Effective Time, the
parties hereto agree to cooperate and use their best efforts to
defend against and respond thereto. It is understood and agreed
that after the Effective Time, Parent shall indemnify and hold
harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees
and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of an undertaking
from such Indemnified Party to repay such advanced expenses if it
is finally and unappealably determined that such Indemnified Party
was not entitled to indemnification hereunder), judgments, fines
and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted
or arising before or after the Effective Time), the Indemnified
Parties may retain counsel reasonably satisfactory to them after
consultation with Parent; provided, however, that (1) Parent shall
have the right to assume the defense thereof and upon such
assumption Parent shall not be liable to any Indemnified Party for
any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Parent elects not to assume
such defense or counsel for the Indemnified Parties reasonably
advises the Indemnified Parties that there are or may be (whether
or not any have yet actually arisen) issues which raise conflicts
of interest between Parent and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to
them, and Parent shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties who are non-management
directors of the Subject Company and one other firm of counsel for
all other Indemnified Parties, (2) Parent shall be obligated
pursuant to this paragraph to pay for only one firm of counsel for
all Indemnified Parties who are non-management directors of the
Subject Company and one other firm of counsel for all of the other
Indemnified Parties, (3) Parent shall not be liable for any
settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) Parent shall
have no obligation hereunder to any Indemnified Party when and if
a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim indemnification under this
Section 6.8, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Parent thereof, provided
that the failure to so notify shall not affect the obligations of
Parent under this Section 6.8 except (and only) to the extent such
failure to notify materially prejudices Parent. Parent's
obligations under this Section 6.8 shall continue in full force
and effect for a period of six (6) years from the Effective Time;
provided, however, that all rights to indemnification in respect
of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) Without limiting any of the obligations under
paragraph (a) of this Section 6.8, Parent agrees that all rights
to indemnification and all limitations of liability existing in
favor of the Indemnified Parties as provided in Subject Company's
Certificate of Incorporation or By-Laws or in the similar
governing documents of any of Subject Company's Subsidiaries as in
effect as of the date of this Agreement with respect to matters
occurring on or prior to the Effective Time shall survive the
Merger and shall continue in full force and effect, without any
amendment thereto, for a period of six years from the Effective
Time; provided, however, that all rights to indemnification in
respect of any Claim asserted or made within such period shall
continue until the final disposition of such Claim; provided
further, however, that nothing contained in this Section 6.8(b)
shall be deemed to preclude the liquidation, consolidation or
merger of Subject Company or any Subject Company Subsidiary, in
which case all of such rights to indemnification and limitations
on liability shall be deemed to so survive and continue
notwithstanding any such liquidation, consolidation or merger and
shall constitute rights which may be asserted against Parent.
Nothing contained in this Section 6.8(b) shall be deemed to
preclude any rights to indemnification or limitations on liability
provided in Subject Company's Certificate of Incorporation or By-
laws or the similar governing documents of any of Subject
Company's Subsidiaries with respect to matters occurring
subsequent to the Effective Time to the extent that the provisions
establishing such rights or limitations are not otherwise amended
to the contrary.
(c) Parent shall use its best efforts to cause the
persons serving as officers and directors of Subject Company
immediately prior to the Effective Time to be covered for a period
of six (6) years from the Effective Time by the directors' and
officers' liability insurance policy maintained by Subject Company
(provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions
which are not less advantageous to such directors and officers of
Subject Company than the terms and conditions of such existing
policy) with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors
in their capacity as such; provided, however, that the Surviving
Corporation shall not be obligated to make annual premium payments
for such insurance to the extent such premiums exceed 250% of the
premiums paid as of the date hereof by Subject Company for such
insurance ("Subject Company's Current Premium"), and if such
premiums for such insurance would at any time exceed 250% of
Subject Company's Current Premium, then the Surviving Corporation
shall cause to be maintained policies of insurance which, in the
Surviving Corporation's good faith determination, provide the
maximum coverage available at an annual premium equal to 250% of
Subject Company's Current Premium.
(d) In the event Parent or any of its successors or
assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of
Parent shall assume the obligations set forth in this Section 6.8.
(e) The provisions of this Section 6.8 are intended to
be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement (including, without
limitation, any merger between a Subsidiary of Parent and a
Subsidiary of Subject Company) or to vest the Surviving
Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the
merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by, and at the
sole expense of, Parent.
6.10 Advice of Changes. Parent and Subject Company shall
promptly advise the other party of any change or event which,
individually or in the aggregate with other such changes or
events, has a Material Adverse Effect on it or which it believes
would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or
covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of
Parent and Subject Company shall coordinate with the other the
declaration of any dividends in respect of Parent Common Stock and
Subject Company Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties
hereto that holders of Parent Common Stock or Subject Company
Common Stock shall not receive more than one dividend, or fail to
receive one dividend, for any single calendar quarter with respect
to their shares of Parent Common Stock and/or Subject Company
Common Stock and any shares of Parent Common Stock any such holder
receives in exchange therefor in the Merger.
6.12 Subsequent Interim and Annual Financial Statements. As
soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter (other than the fourth
quarter of a fiscal year) or 90 days after December 31, 1995 or
the end of each fiscal year ending after the date of this
Agreement, each party will deliver to the other party its
Quarterly Report on Form 10-Q or its Annual Report on Form 10-K,
as the case may be, as filed with the SEC under the Exchange Act.
6.13 Litigation. Each of Parent and Subject Company shall
immediately dismiss, with prejudice, with each party bearing its
own costs, attorneys' fees and litigation expenses and without
payment by Parent or Subject Company to any adverse party of any
damages, costs, expenses or attorneys fees, all proceedings
pending in Xxxxx Fargo & Company v. First Interstate Bancorp, et
al., Delaware Chancery, C.A. No. 14696, and First Interstate
Bancorp x. Xxxxx Fargo & Company, et al., United States District
Court for the District of Delaware, C.A. No. 95-800, and shall
execute and deliver such further papers as may be necessary in
connection with such dismissals, including, but not limited to,
exchanging mutual releases with respect or relating to the subject
matter of such proceedings.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Stockholder Approval. The agreement of merger
contained in this Agreement shall have been approved and
adopted by the requisite affirmative votes of the holders of
Subject Company Common Stock and Parent Common Stock entitled
to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock
which shall be issued to the stockholders of Subject Company
upon consummation of the Merger and the New Parent Depositary
Shares shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required
to consummate the transactions contemplated hereby shall have
been obtained and shall remain in full force and effect and
all statutory waiting periods in respect thereof shall have
expired (all such approvals and the expiration of all such
waiting periods being referred to herein as the "Requisite
Regulatory Approvals") and no such approval shall have
imposed any condition, requirement or restriction which the
Board of Directors of either Parent or Subject Company
reasonably determines in good faith would so materially
adversely impact the economic or business benefits of the
transactions contemplated by this Agreement to Parent and its
stockholders or Subject Company and its stockholders, as the
case may be, as to render inadvisable the consummation of the
Merger (any such condition, requirement or restriction, a
"Burdensome Condition").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness
of the S-4 shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No
order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of
the Merger or any of the other transactions contemplated by
this Agreement shall be in effect. No statute, rule,
regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, restricts or makes illegal the
consummation of the Merger.
7.2 Conditions to Obligations of Parent. The obligation of
Parent to effect the Merger is also subject to the satisfaction or
waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. (i) The
representations and warranties of Subject Company set forth
in Sections 3.2, 3.3(a), 3.6, 3.8(a), 3.17 and 3.18 of this
Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the
Closing Date and (ii) the representations and warranties of
Subject Company set forth in this Agreement other than those
specifically enumerated in clause (i) hereof shall be true
and correct in all respects as of the date of this Agreement
and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; provided, however, that
for purposes of determining the satisfaction of the condition
contained in this clause (ii), no effect shall be given to
any exception in such representations and warranties relating
to materiality or a Material Adverse Effect, and provided,
further, however, that, for purposes of this clause (ii),
such representations and warranties shall be deemed to be
true and correct in all respects unless the failure or
failures of such representations and warranties to be so true
and correct, individually or in the aggregate, results or
would reasonably be expected to result in a Material Adverse
Effect on Subject Company and its Subsidiaries taken as a
whole. Parent shall have received a certificate signed on
behalf of the Subject Company by the Chief Executive Officer
and Chief Financial Officer of Subject Company to the
foregoing effect.
(b) Performance of Obligations of Subject Company.
Subject Company shall have performed in all material respects
all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Parent shall
have received a certificate signed on behalf of Subject
Company by the Chief Executive Officer and the Chief
Financial Officer of Subject Company to such effect.
(c) Subject Company Rights Agreement. The rights
issued pursuant to the Subject Company Rights Agreement shall
not have become nonredeemable, exercisable, distributed or
triggered pursuant to the terms of such agreement.
(d) Federal Tax Opinion. Parent shall have received an
opinion of Xxxxxxxx & Xxxxxxxx, counsel to Parent, in form
and substance reasonably satisfactory to Parent, dated as of
the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts
existing at the Effective Time, the Merger will be treated
for Federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code and that
accordingly:
(1) No gain or loss will be recognized by Parent
or Subject Company as a result of the Merger;
(2) No gain or loss will be recognized by the
stockholders of Subject Company who exchange their
Subject Company Capital Stock solely for Parent Capital
Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in
Parent Common Stock); and
(3) The tax basis of the Parent Capital Stock
received by stockholders who exchange all of their
Subject Company Capital Stock solely for Parent Capital
Stock in the Merger will be the same as the tax basis of
the Subject Company Capital Stock surrendered in
exchange therefor (reduced by any amount of tax basis
allocable to a fractional share interest for which cash
is received).
In rendering such opinion, Xxxxxxxx & Xxxxxxxx may
require and rely upon representations and covenants including
those contained in certificates of officers of Parent and
Subject Company and others.
7.3 Conditions to Obligations of Subject Company. The
obligation of Subject Company to effect the Merger is also subject
to the satisfaction or waiver by Subject Company at or prior to
the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The
representations and warranties of Parent set forth in
Sections 4.2, 4.3(a), 4.6, 4.8(a), 4.17 and 4.18 of this
Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the
Closing Date and (ii) the representations and warranties of
Parent set forth in this Agreement other than those
specifically enumerated in clause (i) hereof shall be true
and correct in all respects as of the date of this Agreement
and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; provided, however, that
for purposes of determining the satisfaction of the condition
contained in this clause (ii), no effect shall be given to
any exception in such representations and warranties relating
to materiality or a Material Adverse Effect, and provided,
further, however, that, for purposes of this clause (ii),
such representations and warranties shall be deemed to be
true and correct in all respects unless the failure or
failures of such representations and warranties to be so true
and correct, individually or in the aggregate, results or
would reasonably be expected to result in a Material Adverse
Effect on Parent and its Subsidiaries taken as a whole.
Subject Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the Chief
Financial Officer of Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall
have performed in all material respects all obligations
required to be performed by it under this Agreement at or
prior to the Closing Date, and Subject Company shall have
received a certificate signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of
Parent to such effect.
(c) Federal Tax Opinion. Subject Company shall have
received an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx,
counsel to Subject Company, in form and substance reasonably
satisfactory to Subject Company, dated as of the Effective
Time, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing
at the Effective Time, the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and that accordingly:
(1) No gain or loss will be recognized by Parent
or Subject Company as a result of the Merger;
(2) No gain or loss will be recognized by the
stockholders of Subject Company who exchange their
Subject Company Capital Stock solely for Parent Capital
Stock pursuant to the Merger (except with respect to
cash received in lieu of a fractional share interest in
Parent Common Stock); and
(3) The tax basis of the Parent Capital Stock
received by stockholders who exchange all of their
Subject Company Capital Stock solely for Parent Capital
Stock in the Merger will be the same as the tax basis of
the Subject Company Capital Stock surrendered in
exchange therefor (reduced by any amount of tax basis
allocable to a fractional share interest for which cash
is received).
In rendering such opinion, Skadden, Arps, Slate, Xxxxxxx
& Xxxx may require and rely upon representations and
covenants including those contained in certificates of
officers of Parent and Subject Company and others.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent of Parent and Subject Company in
a written instrument, if the Board of Directors of each so
determines;
(b) by either the Board of Directors of Parent or the
Board of Directors of Subject Company if (i) any Governmental
Entity which must grant a Requisite Regulatory Approval has
denied approval of the Merger and such denial has become
final and nonappealable or (ii) any Governmental Entity of
competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this
Agreement;
(c) by either the Board of Directors of Parent or the
Board of Directors of Subject Company if the Merger shall not
have been consummated on or before December 31, 1996, unless
the failure of the Closing to occur by such date shall be due
to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either the Board of Directors of Parent or the
Board of Directors of Subject Company (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement
contained herein) if the other party shall have breached (i)
any of the covenants or agreements made by such other party
herein or (ii) any of the representations or warranties made
by such other party herein, and in either case, such breach
(x) is not cured within thirty (30) days following written
notice to the party committing such breach, or which breach,
by its nature, cannot be cured prior to the Closing and (y)
would entitle the non-breaching party not to consummate the
transactions contemplated hereby under Article VII hereof;
(e) by either the Board of Directors of Parent or the
Board of Directors of Subject Company if any approval of the
stockholders of Parent or the Subject Company contemplated by
this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof;
(f) prior to the approval of this Agreement by the
requisite vote of Subject Company's stockholders (if Subject
Company is the terminating party) or by the requisite vote of
Parent's stockholders (if Parent is the terminating party),
by either the Board of Directors of Parent or the Board of
Directors of Subject Company, if there exists at such time a
Takeover Proposal for the party whose Board of Directors is
seeking to terminate this Agreement pursuant to this
paragraph (f) and such Board of Directors, after having
consulted with and considered the advice of outside legal
counsel, reasonably determines in good faith that such action
is necessary in the exercise of its fiduciary duties under
applicable laws;
(g) by either the Board of Directors of Parent or the
Board of Directors of Subject Company, if such Board shall
have reasonably determined in good faith that any of the
Requisite Regulatory Approvals contains a Burdensome
Condition; or
(h) by either the Board of Directors of Parent or the
Board of Directors of Subject Company, if the Board of
Directors of the other party shall have withdrawn, modified
or changed in a manner adverse to the terminating party its
approval or recommendation of this Agreement and the
transactions contemplated hereby.
8.2 Effect of Termination. In the event of termination of
this Agreement by either Parent or Subject Company as provided in
Section 8.1, this Agreement shall forthwith become void and have
no effect, and none of Parent, Subject Company, any of their
respective Subsidiaries or any of the officers or directors of any
of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated
hereby, except that (i) Sections 6.2(b), 8.2, and 9.3 shall
survive any termination of this Agreement and (ii) notwithstanding
anything to the contrary contained in this Agreement, neither
Parent nor Subject Company shall be relieved or released from any
liabilities or damages arising out of its willful breach of any
provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors, at
any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Subject Company
and Parent; provided, however, that after any approval of the
transactions contemplated by this Agreement by Subject Company's
stockholders, there may not be, without further approval of such
stockholders, any amendment of this Agreement which reduces the
amount or changes the form of the consideration to be delivered to
the Subject Company stockholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or
waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties,
which shall be no later than two business days after the
satisfaction or waiver (subject to applicable law) of the latest
to occur of the conditions set forth in Article VII hereof (the
"Closing Date").
9.2 Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants
and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement (other than the Fee Letters, for which
provision has been made therein) shall survive the Effective Time,
except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the
Effective Time.
9.3 Expenses. Except as provided in the Fee Letters or in
Section 8.2 hereof, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense, provided, however,
that (i) the costs and expenses of printing and mailing the Joint
Proxy Statement, and all filing and other fees paid to the SEC in
connection with the Merger, shall be borne equally by Parent and
Subject Company and (ii) notwithstanding anything to the contrary
contained in this Agreement, neither Parent nor Subject Company
shall be relieved or released from any liabilities or damages
arising out of its willful breach of any provision of this
Agreement.
9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), mailed by registered
or certified mail (return receipt requested) or delivered by an
express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall
be specified by like notice):
(a) if to Parent, to:
Xxxxx Fargo & Company
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Fax: (000) 000-0000
Attn: Xxx Xxxxxxxxxxx, Xx., Esq.
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxx, Esq.
(000) 000-0000
(000) 000-0000 (Fax)
(b) if to Subject Company, to:
First Interstate Bancorp
000 Xxxx Xxxxx Xxxxxx, X0-00
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxx, III, Esq.
9.5 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall
be to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the
words "without limitation". Whenever the word "material" is used
in this Agreement and the context in which it is used refers to
any of the parties to this Agreement or any of their respective
Subsidiaries, it shall be deemed to be followed by "to [Subject
Company] [Parent] and its Subsidiaries, taken together as a
whole," as applicable. No provision of this Agreement shall be
construed to require Subject Company, Parent or any of their
respective Subsidiaries or affiliates to take any action which
would violate or conflict with any applicable law (whether
statutory or common), rule or regulation.
9.6 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties,
it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement. This Agreement (together with the
documents and the instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof, other than the Subject
Company Documents and the Parent Documents.
9.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware,
without regard to any applicable conflicts of law.
9.9 Severability. Except to the extent that application of
this Section 9.9 would have a Material Adverse Effect on either
party or the Surviving Corporation, any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement
or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable,
the provision shall be interpreted to be only so broad as is
enforceable.
9.10 Publicity. Except as otherwise required by applicable
law or the rules of the NYSE, neither Parent nor Subject Company
shall, or shall permit any of its Subsidiaries to, issue or cause
the publication of any press release or other public announcement
with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement or the
Fee Letters without the consent of the other party, which consent
shall not be unreasonably withheld.
9.11 Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations of any
party hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior
written consent of the other party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise specifically provided
in Section 6.8 hereof, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder.
9.12 Alternative Structure. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Effective Time,
the parties may mutually agree to revise the structure of the
Merger and related transactions provided that each of the
transactions comprising such revised structure shall (i) not
change the amount or form of consideration to be received by the
stockholders of Subject Company and the holders of Subject Company
Options, (ii) be capable of consummation in as timely a manner as
the structure contemplated herein and (iii) not otherwise be
prejudicial to the interests of the stockholders of Subject Com
pany. This Agreement and any related documents shall be
appropriately amended in order to reflect any such revised
structure.
9.13 Enforcement of the Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled
at law or in equity.
IN WITNESS WHEREOF, Parent and Subject Company have caused
this Agreement to be executed by their respective officers
thereunto duly authorized as of the date first above written.
XXXXX FARGO & COMPANY
By: /s/ Xxxxxx X. Xxxxxx
___________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice Chairman and Chief
Financial Officer
FIRST INTERSTATE BANCORP
By: /s/ Xxxxxxxx X. Xxxxxx, Xx.
_______________________________
Name: Xxxxxxxx X. Xxxxxx, Xx.
Title: Executive Vice President
and Treasurer
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . 2
1.4 Conversion of Subject Company Common Stock,
Subject Company Preferred Stock . . . . . . . . . . . . 2
1.5 Parent Common Stock; Parent Preferred Stock . . . . . . 4
1.6 Options. . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Certificate of Incorporation . . . . . . . . . . . . . . 5
1.8 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Tax Consequences . . . . . . . . . . . . . . . . . . . . 6
1.10 Board of Directors . . . . . . . . . . . . . . . . . . . 6
1.11 Headquarters . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available . . . . . . . . . . . . 6
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
3.1 Corporate Organization . . . . . . . . . . . . . . . . . 8
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 10
3.3 Authority; No Violation . . . . . . . . . . . . . . . . 11
3.4 Consents and Approvals . . . . . . . . . . . . . . . . . 12
3.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Financial Statements . . . . . . . . . . . . . . . . . . 13
3.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . 14
3.8 Absence of Certain Changes or Events . . . . . . . . . . 14
3.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . 14
3.10 Taxes and Tax Returns . . . . . . . . . . . . . . . . . 15
3.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . 15
3.12 SEC Reports . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Compliance with Applicable Law . . . . . . . . . . . . . 17
3.14 Certain Contracts . . . . . . . . . . . . . . . . . . . 17
3.15 Agreements with Regulatory Agencies. . . . . . . . . . . 18
3.16 Undisclosed Liabilities . . . . . . . . . . . . . . . . 18
3.17 State Takeover Laws . . . . . . . . . . . . . . . . . . 18
3.18 Rights Agreement . . . . . . . . . . . . . . . . . . . . 18
3.19 Subject Company Information. . . . . . . . . . . . . . . 18
3.20 Environmental Liability . . . . . . . . . . . . . . . . 19
3.21 Interest Rate Risk Management Instruments. . . . . . . . 19
3.22 Terminated Merger Agreement. . . . . . . . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
4.1 Corporate Organization . . . . . . . . . . . . . . . . . 20
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . 21
4.3 Authority; No Violation . . . . . . . . . . . . . . . . 22
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . 23
4.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . 23
4.6 Financial Statements . . . . . . . . . . . . . . . . . . 24
4.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . 24
4.8 Absence of Certain Changes or Events . . . . . . . . . . 24
4.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . 25
4.10 Taxes and Tax Returns . . . . . . . . . . . . . . . . . 25
4.11 Employees . . . . . . . . . . . . . . . . . . . . . . . 25
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . 27
4.13 Compliance with Applicable Law . . . . . . . . . . . . . 27
4.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . 27
4.15 Agreements with Regulatory Agencies. . . . . . . . . . . 28
4.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . . 28
4.17 State Takeover Laws; Certificate of Incorporation. . . . 28
4.18 Parent Information. . . . . . . . . . . . . . . . . . . 28
4.19 Environmental Liability. . . . . . . . . . . . . . . . . 29
4.20 Interest Rate Risk Management Instruments. . . . . . . . 29
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. . . . 30
5.2 Forbearances . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . 33
6.2 Access to Information. . . . . . . . . . . . . . . . . . 34
6.3 Stockholders' Approvals . . . . . . . . . . . . . . . . 35
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . . 35
6.5 Affiliates; Publication of Combined Financial Results. . 36
6.6 Stock Exchange Listing . . . . . . . . . . . . . . . . . 36
6.7 Employee Benefit Plans . . . . . . . . . . . . . . . . . 36
6.8 Indemnification; Directors' and Officers' Insurance . . 39
6.9 Additional Agreements . . . . . . . . . . . . . . . . . 41
6.10 Advice of Changes. . . . . . . . . . . . . . . . . . . . 41
6.11 Dividends. . . . . . . . . . . . . . . . . . . . . . . . 41
6.12 Subsequent Interim and Annual Financial Statements. . . 41
6.13 Litigation. . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2 Conditions to Obligations of Parent. . . . . . . . . . . 43
7.3 Conditions to Obligations of Subject Company . . . . . . 44
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . 46
8.2 Effect of Termination . . . . . . . . . . . . . . . . . 47
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . 47
8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . 48
9.2 Nonsurvival of Representations, Warranties and
Agreements. . . . . . . . . . . . . . . . . . . . . . . 48
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 48
9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 48
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . 49
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 50
9.7 Entire Agreement. . . . . . . . . . . . . . . . . . . . 50
9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . 50
9.9 Severability. . . . . . . . . . . . . . . . . . . . . . 50
9.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 50
9.11 Assignment; Third Party Beneficiaries. . . . . . . . . . 50
9.12 Alternative Structure . . . . . . . . . . . . . . . . . 51
9.13 Enforcement of the Agreement. . . . . . . . . . . . . . 51
