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EXHIBIT 2.1
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as
of the 27th day of July, 1999, by and between PRIME BANCSHARES, INC. ("Prime"),
a Texas corporation, and XXXXX FARGO & COMPANY ("Xxxxx Fargo"), a Delaware
corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Xxxxx Fargo will merge with and into Prime (the
"Merger") pursuant to an agreement and plan of merger (the "Merger Agreement")
in substantially the form attached hereto as Exhibit A, which provides, among
other things, for the exchange of the shares of Common Stock of Prime, $.25 par
value ("Prime Common Stock") outstanding immediately prior to the time the
Merger becomes effective in accordance with the provisions of the Merger
Agreement into shares of voting Common Stock of Xxxxx Fargo of the par value of
$1-2/3 per share ("Xxxxx Fargo Common Stock"),
NOW, THEREFORE, to effect such reorganization and in consideration of
the premises and the mutual covenants and agreements contained herein, the
parties hereto do hereby represent, warrant, covenant and agree as follows:
1. BASIC PLAN OF REORGANIZATION
(a) Merger. Subject to the terms and conditions contained herein, a
wholly-owned subsidiary of Xxxxx Fargo (the "Merger Co.") will be merged by
statutory merger with and into Prime pursuant to the Merger Agreement, with
Prime as the surviving corporation, in which merger each share of Prime Common
Stock outstanding immediately prior to the Effective Time of the Merger (as
defined below) (other than shares as to which statutory dissenters' appraisal
rights have been exercised) will be exchanged for the number of shares of Xxxxx
Fargo Common Stock determined by dividing 6,032,096 by the number of shares of
Prime Common Stock then outstanding.
(b) Xxxxx Fargo Common Stock Adjustments. If, between the date hereof
and the Effective Time of the Merger, shares of Xxxxx Fargo Common Stock shall
be changed into a different number of shares or a different class of shares by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or if a stock dividend thereon shall be
declared with a record date within such period (a "Common Stock Adjustment"),
then the number of shares of Xxxxx Fargo Common Stock into which a share of
Prime Common Stock shall be converted pursuant to subparagraph (a), above, will
be appropriately and proportionately adjusted so that the number of such shares
of Xxxxx Fargo Common Stock into which a share of Prime Common Stock shall be
converted will equal the number of shares of Xxxxx Fargo Common Stock which
holders of shares of Prime Common Stock would have received
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pursuant to such Common Stock Adjustment had the record date therefor been
immediately following the Effective Time of the Merger.
(c) Fractional Shares. No fractional shares of Xxxxx Fargo Common Stock
and no certificates or scrip certificates therefor shall be issued to represent
any such fractional interest, and any holder thereof shall be paid an amount of
cash equal to the product obtained by multiplying the fractional share interest
to which such holder is entitled by the average of the closing prices of a share
of Xxxxx Fargo Common Stock as reported by the consolidated tape of the New York
Stock Exchange for each of the five (5) trading days ending on the day
immediately preceding the meeting of shareholders required by paragraph 4(c) of
this Agreement.
(d) Mechanics of Closing Merger. Subject to the terms and conditions
set forth herein, the Merger Agreement shall be executed and Articles of Merger
shall be filed with the Secretary of State of the State of Texas within ten (10)
business days following the satisfaction or waiver of all conditions precedent
set forth in Sections 6 and 7 of this Agreement or on such other date as may be
agreed to by the parties (the "Closing Date"), provided that the Closing Date
shall not occur prior to January 15, 2000. Each of the parties agrees to use its
best efforts to cause the Merger to be completed as soon as practicable after
the receipt of final regulatory approval of the Merger and the expiration of all
required waiting periods. The time that the filing referred to in the first
sentence of this paragraph is made is herein referred to as the "Time of
Filing." The day on which such filing is made and accepted is herein referred to
as the "Effective Date of the Merger." The "Effective Time of the Merger" shall
be 11:59 p.m. Austin, Texas time on the Effective Date of the Merger. At the
Effective Time of the Merger on the Effective Date of the Merger, the separate
existence of Merger Co. shall cease and Merger Co. will be merged with and into
Prime pursuant to the Merger Agreement.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Xxxxx Fargo, Norwest Center, Sixth and Marquette, Minneapolis,
Minnesota, or such other place mutually agreed upon by Xxxxx Fargo and Prime.
2. REPRESENTATIONS AND WARRANTIES OF PRIME. Prime represents and
warrants to Xxxxx Fargo as follows:
(a) Organization and Authority. Prime is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas, is
duly qualified to do business and is in good standing in all jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and failure to be so qualified would have a material adverse
effect on Prime and the Prime Subsidiaries taken as a whole and has corporate
power and authority to own its properties and assets and to carry on its
business as it is now being conducted. Prime is registered as a bank holding
company with the Federal Reserve Board under the Bank Holding Company Act of
1956, as amended (the "BHC Act"). Prime has furnished Xxxxx Fargo true and
correct copies of its articles of incorporation and by-laws, as amended.
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(b) Prime's Subsidiaries. Schedule 2(b) sets forth a complete and
correct list of all of Prime's subsidiaries as of the date hereof (individually
a "Prime Subsidiary" and collectively the "Prime Subsidiaries"), all shares of
the outstanding capital stock of each of which, except as set forth on Schedule
2(b), are owned directly or indirectly by Prime. No equity security of any Prime
Subsidiary is or may be required to be issued by reason of any option, warrant,
scrip, preemptive right, right to subscribe to, call or commitment of any
character whatsoever relating to, or security or right convertible into, shares
of any capital stock of such subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Prime Subsidiary is
bound to issue additional shares of its capital stock, or any option, warrant or
right to purchase or acquire any additional shares of its capital stock. All of
such shares so owned by Prime are fully paid and nonassessable and are owned by
it free and clear of any lien, claim, charge, option, encumbrance or agreement
with respect thereto. Each Prime Subsidiary is a corporation or state banking
association duly organized, validly existing, duly qualified to do business and
in good standing under the laws of its jurisdiction of incorporation, and has
corporate power and authority to own or lease its properties and assets and to
carry on its business as it is now being conducted. Except as set forth on
Schedule 2(b), Prime does not own beneficially, directly or indirectly, more
than 5% of any class of equity securities or similar interests of any
corporation, bank, business trust, association or similar organization, and is
not, directly or indirectly, a partner in any partnership or party to any joint
venture.
(c) Capitalization. The authorized capital stock of Prime consists of
50,000,000 shares of common stock, $.25 par value per share and 15,000,000
shares of Preferred Stock, of which as of the close of business on March 31,
1999, 9,804,483 shares of common stock and no shares of preferred stock were
outstanding and 2,446,497 shares of common stock were held in the treasury. The
maximum number of shares of Prime Common Stock (assuming for this purpose that
phantom shares and other share-equivalents constitute Prime Common Stock) that
would be outstanding as of the Effective Date of the Merger if all options,
warrants, conversion rights and other rights with respect thereto were exercised
is 10,209,483. All of the outstanding shares of capital stock of Prime have been
duly and validly authorized and issued and are fully paid and nonassessable.
Except as set forth in Schedule 2(c), there are no outstanding subscriptions,
contracts, conversion privileges, options, warrants, calls, preemptive rights or
other rights obligating Prime or any Prime Subsidiary to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of Prime or any Prime Subsidiary. Since March 31, 1999, no shares
of Prime capital stock have been purchased, redeemed or otherwise acquired,
directly or indirectly, by Prime or any Prime Subsidiary and no dividends or
other distributions have been declared, set aside, made or paid to the
shareholders of Prime.
(d) Authorization. Prime has the corporate power and authority to enter
into this Agreement and the Merger Agreement and, subject to any required
approvals of its
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shareholders, to carry out its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and the Merger Agreement
by Prime and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Prime. Subject to
such approvals of shareholders and of government agencies and other governing
boards having regulatory authority over Prime as may be required by statute or
regulation, this Agreement and the Merger Agreement are valid and binding
obligations of Prime enforceable against Prime in accordance with their
respective terms.
Except as set forth on Schedule 2(d), neither the execution, delivery
and performance by Prime of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by Prime with any of the provisions hereof or thereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any lien, security interest, charge or encumbrance
upon any of the properties or assets of Prime or any Prime Subsidiary under any
of the terms, conditions or provisions of (x) its articles of incorporation or
by-laws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Prime or
any Prime Subsidiary is a party or by which it may be bound, or to which Prime
or any Prime Subsidiary or any of the properties or assets of Prime or any Prime
Subsidiary may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in the next paragraph, to the best knowledge of Prime,
violate any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Prime or any Prime Subsidiary or any of their
respective properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the "Exchange Act"), the securities or blue
sky laws of the various states or filings, consents, reviews, authorizations,
approvals or exemptions required under the BHC Act or the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 ("HSR Act"), and filings required to effect
the Merger under Texas law, no notice to, filing with, exemption or review by,
or authorization, consent or approval of, any public body or authority is
necessary for the consummation by Prime of the transactions contemplated by this
Agreement and the Merger Agreement.
(e) Prime Financial Statements. The consolidated balance sheets of
Prime and Prime's Subsidiaries as of December 31, 1998 and 1997 and related
consolidated statements of income, shareholders' equity and cash flows for the
three years ended December 31, 1998, together with the notes thereto, certified
by Xxxxx Xxxxxxxx and included in Prime's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 (the "Prime 10-K") as filed with the
Securities and Exchange Commission (the
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"SEC"), and the unaudited consolidated statements of financial condition of
Prime and Prime's Subsidiaries as of March 31, 1999 and the related unaudited
consolidated statements of income, shareholders' equity and cash flows for the
three (3) months then ended included in Prime's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1999 as filed with the SEC (collectively,
the "Prime Financial Statements"), have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
present fairly (subject, in the case of financial statements for interim
periods, to normal recurring adjustments) the consolidated financial position of
Prime and Prime's Subsidiaries at the dates and the consolidated results of
operations and cash flows of Prime and Prime's Subsidiaries for the periods
stated therein.
(f) Reports. Since December 31, 1993, Prime and each Prime Subsidiary
has filed all reports, registrations and statements, together with any required
amendments thereto, that it was required to file with (i) the SEC, including,
but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii) the
Federal Reserve Board, (iii) the Federal Deposit Insurance Corporation (the
"FDIC"), and (iv) any applicable state securities or banking authorities. All
such reports and statements filed with any such regulatory body or authority are
collectively referred to herein as the "Prime Reports." As of their respective
dates, the Prime Reports complied in all material respects with all the rules
and regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, and
applicable state securities or banking authorities, as the case may be, and did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Copies of all the Prime Reports have been made available to Xxxxx
Fargo by Prime.
(g) Properties and Leases. Except as may be reflected in the Prime
Financial Statements and except for any lien for current taxes not yet
delinquent, Prime and each Prime Subsidiary have good title free and clear of
any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Prime's
consolidated balance sheet as of March 31, 1999 included in Prime's Quarterly
Report on Form 10-Q for the period then ended, and all real and personal
property acquired since such date, except such real and personal property as has
been disposed of in the ordinary course of business. All leases of real property
and all other leases material to Prime or any Prime Subsidiary pursuant to which
Prime or such Prime Subsidiary, as lessee, leases real or personal property,
which leases are described on Schedule 2(g), are valid and effective in
accordance with their respective terms, and there is not, under any such lease,
any material existing default by Prime or such Prime Subsidiary or any event
which, with notice or lapse of time or both, would constitute such a material
default. Substantially all Prime's and each Prime Subsidiary's buildings and
equipment in regular use have been well maintained and are in good and
serviceable condition, reasonable wear and tear excepted.
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(h) Taxes. Each of Prime and the Prime Subsidiaries has filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and paid all taxes owed by it, including
those with respect to income, withholding, social security, unemployment,
workers compensation, franchise, ad valorem, premium, excise and sales taxes,
and no taxes shown on such returns to be owed by it or assessments received by
it are delinquent. The federal income tax returns of Prime and the Prime
Subsidiaries for the fiscal year ended December 31, 1995, and for all fiscal
years prior thereto, are for the purposes of routine audit by the Internal
Revenue Service closed because of the statute of limitations, and no claims for
additional taxes for such fiscal years are pending. Except only as set forth on
Schedule 2(h), (i) neither Prime nor any Prime Subsidiary is a party to any
pending action or proceeding, nor is any such action or proceeding threatened by
any governmental authority, for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies and (ii) no issue has been raised by any
federal, state, local or foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties of Prime or any Prime
Subsidiary which has not been settled, resolved and fully satisfied. Each of
Prime and the Prime Subsidiaries has paid all taxes owed or which it is required
to withhold from amounts owing to employees, creditors or other third parties.
The consolidated balance sheet as of March 31, 1999, referred to in paragraph
2(e) hereof, includes adequate provision for all accrued but unpaid federal,
state, county, local and foreign taxes, interest, penalties, assessments or
deficiencies of Prime and the Prime Subsidiaries with respect to all periods
through the date thereof.
(i) Absence of Certain Changes. Since March 31, 1999 there has been no
change in the business, financial condition or results of operations of Prime or
any Prime Subsidiary, which has had, or may reasonably be expected to have, a
material adverse effect on the business, financial condition or results of
operations of Prime and the Prime Subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
neither Prime nor any Prime Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any present or former officer,
director, employee or consultant (other than those which are terminable
at will by Prime or such Prime Subsidiary);
(ii) any plan, contract or understanding providing for any
bonus, pension, option, deferred compensation, retirement payment,
profit sharing or similar arrangement with respect to any present or
former officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
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(iv) any contract not made in the ordinary course of business
containing covenants which limit the ability of Prime or any Prime
Subsidiary to compete in any line of business or with any person or
which involve any restriction of the geographical area in which, or
method by which, Prime or any Prime Subsidiary may carry on its
business (other than as may be required by law or applicable regulatory
authorities);
(v) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K;
(vi) any lease with annual rental payments aggregating $10,000
or more;
(vii) any agreement or commitment with respect to the
Community Reinvestment Act with any state or federal bank regulatory
authority or any other party; or
(viii) any current or past agreement, contract or
understanding with any current or former director, officer, employee,
consultant, financial adviser, broker, dealer, or agent providing for
any rights of indemnification in favor of such person or entity.
(k) Litigation and Other Proceedings. Prime has furnished Xxxxx Fargo
copies of (i) all attorney responses to the request of the independent auditors
for Prime with respect to loss contingencies as of December 31, 1998 in
connection with the Prime financial statements included in the Prime 10-K, and
(ii) a written list of legal and regulatory proceedings filed against Prime or
any Prime Subsidiary since said date. Neither Prime nor any Prime Subsidiary is
a party to any pending or, to the best knowledge of Prime, threatened, claim,
action, suit, investigation or proceeding, or is subject to any order, judgment
or decree, except for matters which, in the aggregate, will not have, or cannot
reasonably be expected to have, a material adverse effect on the business,
financial condition or results of operations of Prime and the Prime Subsidiaries
taken as a whole.
(l) Insurance. Prime and each Prime Subsidiary is presently insured,
and during each of the past five calendar years (or during such lesser period of
time as Prime has owned such Prime Subsidiary) has been insured, for reasonable
amounts with financially sound and reputable insurance companies against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured and has maintained all insurance
required by applicable law and regulation.
(m) Compliance with Laws. Prime and each Prime Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties and assets and to carry on its business as presently
conducted and that are material to the business of Prime or such Prime
Subsidiary; all such permits, licenses, certificates of authority, orders and
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approvals are in full force and effect and, to the best knowledge of Prime, no
suspension or cancellation of any of them is threatened; and all such filings,
applications and registrations are current. The conduct by Prime and each Prime
Subsidiary of its business and the condition and use of its properties does not
violate or infringe, in any respect material to any such business, any
applicable domestic (federal, state or local) or foreign law, statute,
ordinance, license or regulation. Neither Prime nor any Prime Subsidiary is in
default under any order, license, regulation or demand of any federal, state,
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court. Except for statutory or regulatory
restrictions of general application and except as set forth on Schedule 2(m), no
federal, state, municipal or other governmental authority has placed any
restriction on the business or properties of Prime or any Prime Subsidiary which
reasonably could be expected to have a material adverse effect on the business
or properties of Prime and the Prime Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Prime or any Prime Subsidiary is
pending or, to the best knowledge of Prime, threatened. Neither Prime nor any
Prime Subsidiary is involved in, or threatened with or affected by, any labor
dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Prime or such Prime Subsidiary.
Employees of Prime and the Prime Subsidiaries are not represented by any labor
union nor are any collective bargaining agreements otherwise in effect with
respect to such employees.
(o) Material Interests of Certain Persons. Except as set forth on
Schedule 2(o), to the best knowledge of Prime no officer or director of Prime or
any Prime Subsidiary, or any "associate" (as such term is defined in Rule l4a-1
under the Exchange Act) of any such officer or director, has any interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of Prime or any Prime Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from
Prime or any Prime Subsidiary to any present officer, director, employee or any
associate or related interest of any such person which was required under
Regulation O of the Federal Reserve Board to be approved by or reported to
Prime's or such Prime Subsidiary's Board of Directors.
(p) Prime Benefit Plans.
(i) Schedule 2(p)(i) sets forth each employee benefit plan
with respect to which Prime or any Prime Subsidiary contributes,
sponsors or otherwise has any obligation (the "Plans"). For purposes of
this Section 2(p) and Schedule 2(p)(i), "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended, and the term "Plan"
or "Plans" means all employee benefit plans as defined in Section 3(3)
of ERISA, and all other benefit arrangements including, without
limitation, any plan, program, agreement, policy or commitment
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providing for insurance coverage of employees, workers' compensation,
disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, severance or termination of employment
benefits, life, health, death, disability or accidental benefits.
(ii) Except as disclosed on Schedule 2(p)(ii), no Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iii) Except as disclosed on Schedule 2(p)(iii), no Plan
promises or provides health or life benefits to retirees or former
employees except as required by federal continuation of coverage laws
or similar state laws.
(iv) Except as disclosed on Schedule 2(p)(iv), (a) each Plan
is and has been in all material respects operated and administered in
accordance with its provisions and applicable law including, if
applicable, ERISA and the Code; (b) all reports and filings with
governmental agencies (including but not limited to the Department of
Labor, Internal Revenue Service, Pension Benefit Guaranty Corporation
and the Securities and Exchange Commission) required in connection with
each Plan have been timely made; (c) all disclosures and notices
required by law or Plan provisions to be given to participants and
beneficiaries in connection with each Plan have been properly and
timely made; (d) there are no actions, suits or claims pending, other
than routine uncontested claims for benefits with respect to each Plan;
and (e) each Plan intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal
Revenue Service stating that the Plan (including all amendments) is tax
qualified under Section 401(a) of the Code and Prime knows of no reason
that any such Plan is not qualified within the meaning of Section
401(a) of the Code and knows of no reason that each related Plan trust
is not exempt from taxation under Section 501(a) of the Code.
(v) Except as disclosed on Schedule 2(p)(v), (a) all
contributions, premium payments and other payments required to be made
in connection with the Plans as of the date of this Agreement have been
made; (b) a proper accrual has been made on the books of Prime for all
contributions, premium payments and other payments due in the current
fiscal year but not made as of the date of this Agreement; (c) no
contribution, premium payment or other payment has been made in support
of any Plan that is in excess of the allowable deduction for federal
income tax purposes for the year with respect to which the contribution
was made (whether under Sections 162, 280G, 404, 419, 419A of the Code
or otherwise); and (d) with respect to each Plan that is subject to
Section 301 of ERISA or Section 412 of the Code, Prime is not liable
for any accumulated funding deficiency as that them is defined in
Section 412 of the Code and the projected benefit obligations
determined as of the date of this Agreement do not exceed the assets of
the Plan.
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(vi) Except as disclosed in Schedule 2(p)(vi) and to best
knowledge of Prime, no Plan or any trust created thereunder, nor any
trustee, fiduciary or administrator thereof, has engaged in a
"prohibited transaction," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA or violated any of the fiduciary
standards under Part 4 of Title 1 of ERISA which could subject such
Plan or trust, or any trustee, fiduciary or administrator thereof, or
any party dealing with any such Plan or trust, to a tax penalty or
prohibited transactions imposed by Section 4975 of the Code or would
result in material liability to Prime and the Prime Subsidiaries as a
whole.
(vii) No Plan subject to Title IV of ERISA or any trust
created thereunder has been terminated, nor have there been any
"reportable events" as that term is defined in Section 4043 of ERISA,
with respect to any Plan, other than those events which may result from
the transactions contemplated by this Agreement and the Merger
Agreement.
(viii) Except as disclosed in Schedule 2(p)(viii), neither the
execution and delivery of this Agreement and the Merger Agreement nor
the consummation of the transactions contemplated hereby and thereby
will (a) result in any material payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or employee or former employee of Prime
under any Plan or otherwise, (b) materially increase any benefits
otherwise payable under any Plan, or (c) result in the acceleration of
the time of payment or vesting of any such benefits to any material
extent.
(q) Proxy Statement, etc. None of the information regarding Prime and
the Prime Subsidiaries supplied or to be supplied by Prime for inclusion in (i)
a Registration Statement on Form S-4 to be filed with the SEC by Xxxxx Fargo for
the purpose of registering the shares of Xxxxx Fargo Common Stock to be
exchanged for shares of Prime Common Stock pursuant to the provisions of the
Merger Agreement (the "Registration Statement"), (ii) the proxy statement to be
mailed to Prime's shareholders in connection with the meeting to be called to
consider the Merger (the "Proxy Statement") and (iii) any other documents to be
filed with the SEC or any regulatory authority in connection with the
transactions contemplated hereby or by the Merger Agreement will, at the
respective times such documents are filed with the SEC or any regulatory
authority and, in the case of the Registration Statement, when it becomes
effective and, with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading or, in the case
of the Proxy Statement or any amendment thereof or supplement thereto, at the
time of the meeting of shareholders referred to in paragraph 4(c), be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for such meeting. All documents which Prime and
the Prime Subsidiaries are responsible for filing with the SEC and any other
regulatory authority in connection with the Merger will comply as to form in all
material respects with the provisions of applicable law.
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(r) Registration Obligations. Except as set forth on Schedule 2(r),
neither Prime nor any Prime Subsidiary is under any obligation, contingent or
otherwise, which will survive the Merger by reason of any agreement to register
any of its securities under the Securities Act.
(s) Brokers and Finders. Except for Xxxxx, Xxxxxxxx & Xxxxx, Inc.,
neither Prime nor any Prime Subsidiary nor any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for
Prime or any Prime Subsidiary in connection with this Agreement and the Merger
Agreement or the transactions contemplated hereby and thereby.
(t) Administration of Trust Accounts. Prime and each Prime Subsidiary
has properly administered in all respects material and which could reasonably be
expected to be material to the financial condition of Prime and the Prime
Subsidiaries taken as a whole all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable state and
federal law and regulation and common law. Neither Prime, any Prime Subsidiary,
nor any director, officer or employee of Prime or any Prime Subsidiary has
committed any breach of trust with respect to any such fiduciary account which
is material to or could reasonably be expected to be material to the financial
condition of Prime and the Prime Subsidiaries taken as a whole, and the
accountings for each such fiduciary account are true and correct in all material
respects and accurately reflect the assets of such fiduciary account.
(u) No Defaults. Neither Prime nor any Prime Subsidiary is in default,
nor has any event occurred which, with the passage of time or the giving of
notice, or both, would constitute a default, under any material agreement,
indenture, loan agreement or other instrument to which it is a party or by which
it or any of its assets is bound or to which any of its assets is subject, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Prime and the Prime Subsidiaries, taken as a whole. To the
best of Prime's knowledge, all parties with whom Prime or any Prime Subsidiary
has material leases, agreements or contracts or who owe to Prime or any Prime
Subsidiary material obligations other than with respect to those arising in the
ordinary course of the banking business of the Prime Subsidiaries are in
compliance therewith in all material respects.
(v) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could result in the imposition of, on Prime or any Prime Subsidiary, any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute,
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regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), pending or to the best of Prime's knowledge, threatened against
Prime or any Prime Subsidiary the result of which has had or could reasonably be
expected to have a material adverse effect upon Prime and Prime's Subsidiaries
taken as a whole; to the best of Prime's knowledge there is no reasonable basis
for any such proceeding, claim or action; and to the best of Prime's knowledge
neither Prime nor any Prime Subsidiary is subject to any agreement, order,
judgment, or decree by or with any court, governmental authority or third party
imposing any such environmental liability. Prime has provided Xxxxx Fargo with
copies of all environmental assessments, reports, studies and other related
information in its possession with respect to each bank facility and each
non-residential OREO property.
(w) Compliance with Year 2000 Requirements. Except as set forth in
Schedule 2(w), Prime is in full compliance with its Year 2000 project management
process as set forth in the May 5, 1997 Federal Financial Institutions
Examination Council ("FFIEC") Interagency Statement on the Year 2000 and
subsequent guidance documents (the "FFIEC Requirements"). Prime has made its
Year 2000 project assessment and remediation plan available to Xxxxx Fargo for
review and has furnished Xxxxx Fargo with copies of all communications between
Prime or any Prime Subsidiary and regulators having responsibility for
overseeing compliance with such FFIEC Requirements.
3. REPRESENTATIONS AND WARRANTIES OF XXXXX FARGO. Xxxxx Fargo
represents and warrants to Prime as follows:
(a) Organization and Authority. Xxxxx Fargo is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on Xxxxx Fargo and its subsidiaries taken as a
whole and has corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted. Xxxxx Fargo is registered
as a bank holding company with the Federal Reserve Board under the BHC Act.
(b) Xxxxx Fargo Subsidiaries. Schedule 3(b) sets forth a complete and
correct list as of December 31, 1998, of Xxxxx Fargo's Significant Subsidiaries
(as defined in Regulation S-X promulgated by the SEC) (individually a "Xxxxx
Fargo Subsidiary" and collectively the "Xxxxx Fargo Subsidiaries"), all shares
of the outstanding capital stock of each of which, except as set forth in
Schedule 3(b), are owned directly or indirectly by Xxxxx Fargo. No equity
security of any Xxxxx Fargo Subsidiary is or may be required to be issued to any
person or entity other than Xxxxx Fargo by reason of any option, warrant, scrip,
right to subscribe to, call or commitment of any character whatsoever relating
to, or security or right convertible into, shares of any capital stock of such
subsidiary, and there
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are no contracts, commitments, understandings or arrangements by which any Xxxxx
Fargo Subsidiary is bound to issue additional shares of its capital stock, or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock. Subject to 12 U.S.C. Section 55 (1982), all of such shares so
owned by Xxxxx Fargo are fully paid and nonassessable and are owned by it free
and clear of any lien, claim, charge, option, encumbrance or agreement with
respect thereto. Each Xxxxx Fargo Subsidiary is a corporation or national
banking association duly organized, validly existing, duly qualified to do
business and in good standing under the laws of its jurisdiction of
incorporation, and has corporate power and authority to own or lease its
properties and assets and to carry on its business as it is now being conducted.
(c) Xxxxx Fargo Capitalization. As of March 31, 1999, the authorized
capital stock of Xxxxx Fargo consists of (i) 20,000,000 shares of Preferred
Stock, without par value, of which as of the close of business on December 31,
1998, 980,000 shares of Cumulative Tracking Preferred Stock, at $200 stated
value, 9,661 shares of ESOP Cumulative Convertible Preferred Stock, at $1,000
stated value, 20,016 shares of 1995 ESOP Cumulative Convertible Preferred Stock,
at $1,000 stated value, 21,466 shares of 1996 ESOP Cumulative Convertible
Preferred Stock, at $1,000 stated value, 18,810 shares of 1997 ESOP Cumulative
Convertible Preferred Stock, at $1,000 stated value, 8,740 shares of 1998 ESOP
Cumulative Convertible Preferred Stock, $1,000 stated value, 58,787 shares of
1999 ESOP Cumulative Convertible Preferred Stock, $1,000 stated value, 1,500,000
shares of Adjustable-Rate Cumulative Preferred Stock, Series B, $50 stated
value, and 4,000,000 shares of 6.59% Adjustable Rate Noncumulative Preferred
Stock, Series B, $50 stated value, were outstanding; (ii) 4,000,000 shares of
Preference Stock, without par value, of which as of the close of business on
December 31, 1998, no shares were outstanding; and (iii) 4,000,000,000 shares of
Common Stock, $1-2/3 par value, of which as of the close of business on March
31, 1999, 1,666,095,285 shares were outstanding and 13,478,919 shares were held
in the treasury. All of the outstanding shares of capital stock of Xxxxx Fargo
have been duly and validly authorized and issued and are fully paid and
nonassessable.
(d) Authorization. Xxxxx Fargo has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Xxxxx Fargo and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Xxxxx Fargo. No approval or consent by the
stockholders of Xxxxx Fargo is necessary for the execution and delivery of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated hereby and thereby. Subject to such approvals of government
agencies and other governing boards having regulatory authority over Xxxxx Fargo
as may be required by statute or regulation, this Agreement is a valid and
binding obligation of Xxxxx Fargo enforceable against Xxxxx Fargo in accordance
with its terms.
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Neither the execution, delivery and performance by Xxxxx Fargo of this
Agreement or the Merger Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by Xxxxx Fargo with any of the
provisions hereof or thereof, will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of, any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Xxxxx Fargo or any Xxxxx Fargo Subsidiary under any of the terms, conditions or
provisions of (x) its certificate of incorporation or by-laws or (y) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Xxxxx Fargo or any Xxxxx
Fargo Subsidiary is a party or by which it may be bound, or to which Xxxxx Fargo
or any Xxxxx Fargo Subsidiary or any of the properties or assets of Xxxxx Fargo
or any Xxxxx Fargo Subsidiary may be subject, or (ii) subject to compliance with
the statutes and regulations referred to in the next paragraph, to the best
knowledge of Xxxxx Fargo, violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Xxxxx Fargo or any Xxxxx Fargo
Subsidiary or any of their respective properties or assets.
Other than in connection with or in compliance with the provisions of
the Securities Act, the Exchange Act, the securities or blue sky laws of the
various states or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHC Act or the HSR Act, and filings required to
effect the Merger under Texas law, no notice to, filing with, exemption or
review by, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by Xxxxx Fargo of the transactions
contemplated by this Agreement and the Merger Agreement.
(e) Xxxxx Fargo Financial Statements. The consolidated balance sheets
of Xxxxx Fargo and Xxxxx Fargo's subsidiaries as of December 31, 1998 and 1997
and related consolidated statements of income, stockholders' equity and cash
flows for the three years ended December 31, 1998, together with the notes
thereto, certified by KPMG and included in Xxxxx Fargo's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 (the "Xxxxx Fargo 10-K") as
filed with the SEC, and the unaudited consolidated balance sheets of Xxxxx Fargo
and its subsidiaries as of March 31, 1999 and the related unaudited consolidated
statements of income and cash flows for the three (3) months then ended included
in Xxxxx Fargo's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999, as filed with the SEC (collectively, the "Xxxxx Fargo Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and present fairly (subject,
in the case of financial statements for interim periods, to normal recurring
adjustments) the consolidated financial position of Xxxxx Fargo and its
subsidiaries at the dates and the consolidated results of operations, changes in
financial position and cash flows of Xxxxx Fargo and its subsidiaries for the
periods stated therein. The Year 2000 disclosure contained in Xxxxx Fargo's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999 as
filed with the SEC and designated as Year 2000 Readiness
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Disclosures related to the Year 2000 Information and Readiness Disclosure Act is
true and correct in all material respects as of the date hereof.
(f) Reports. Since December 31, 1993, Xxxxx Fargo and each Xxxxx Fargo
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii)
the Federal Reserve Board, (iii) the FDIC, (iv) the United States Comptroller of
the Currency ("Comptroller"), and (v) any applicable state securities or banking
authorities. All such reports and statements filed with any such regulatory body
or authority are collectively referred to herein as the "Xxxxx Fargo Reports."
As of their respective dates, the Xxxxx Fargo Reports complied in all material
respects with all the rules and regulations promulgated by the SEC, the Federal
Reserve Board, the FDIC, the Comptroller and any applicable state securities or
banking authorities, as the case may be, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) Properties and Leases. Except as may be reflected in the Xxxxx
Fargo Financial Statements and except for any lien for current taxes not yet
delinquent, Xxxxx Fargo and each Xxxxx Fargo Subsidiary has good title free and
clear of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Xxxxx Fargo's
consolidated balance sheet as of March 31, 1999 included in Xxxxx Fargo's
Quarterly Report on Form 10-Q for the period then ended, and all real and
personal property acquired since such date, except such real and personal
property has been disposed of in the ordinary course of business. All leases of
real property and all other leases material to Xxxxx Fargo or any Xxxxx Fargo
Subsidiary pursuant to which Xxxxx Fargo or such Xxxxx Fargo Subsidiary, as
lessee, leases real or personal property, are valid and effective in accordance
with their respective terms, and there is not, under any such lease, any
material existing default by Xxxxx Fargo or such Xxxxx Fargo Subsidiary or any
event which, with notice or lapse of time or both, would constitute such a
material default. Substantially all Xxxxx Fargo's and each Xxxxx Fargo
Subsidiary's buildings and equipment in regular use have been well maintained
and are in good and serviceable condition, reasonable wear and tear excepted.
(h) Taxes. Each of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries has
filed all material federal, state, county, local and foreign tax returns,
including information returns, required to be filed by it, and paid or made
adequate provision for the payment of all taxes owed by it, including those with
respect to income, withholding, social security, unemployment, workers
compensation, franchise, ad valorem, premium, excise and sales taxes, and no
taxes shown on such returns to be owed by it or assessments received by it are
delinquent. The federal income tax returns of Xxxxx Fargo and the Xxxxx Fargo
Subsidiaries for the fiscal year ended December 31, 1982, and for all fiscal
years prior thereto, are for the purposes of routine audit by the Internal
Revenue Service closed because of the statute of limitations, and no claims for
additional taxes for such fiscal
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years are pending. Except only as set forth on Schedule 3(h), (i) neither Xxxxx
Fargo nor any Xxxxx Fargo Subsidiary is a party to any pending action or
proceeding, nor to Xxxxx Fargo's knowledge is any such action or proceeding
threatened by any governmental authority, for the assessment or collection of
taxes, interest, penalties, assessments or deficiencies which could reasonably
be expected to have any material adverse effect on Xxxxx Fargo and its
subsidiaries taken as a whole, and (ii) no issue has been raised by any federal,
state, local or foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties of Xxxxx Fargo or any
Xxxxx Fargo Subsidiary which has not been settled, resolved and fully satisfied,
or adequately reserved for. Each of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries
has paid all taxes owed or which it is required to withhold from amounts owing
to employees, creditors or other third parties.
(i) Absence of Certain Changes. Since December 31, 1998, there has been
no change in the business, financial condition or results of operations of Xxxxx
Fargo or any Xxxxx Fargo Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Xxxxx Fargo and its subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 3(j), as
of December 31, 1996 neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is a
party or subject to any of the following (whether written or oral, express or
implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of Xxxxx Fargo
or any Xxxxx Fargo Subsidiary to compete in any line of business or
with any person or which involve any material restriction of the
geographical area in which, or method by which, Xxxxx Fargo or any
Xxxxx Fargo Subsidiary may carry on its business (other than as may be
required by law or applicable regulatory authorities); or
(iii) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. Neither Xxxxx Fargo nor any Xxxxx
Fargo Subsidiary is a party to any pending or, to the best knowledge of Xxxxx
Fargo, threatened, claim, action, suit, investigation or proceeding, or is
subject to any order, judgment or decree, except for matters which, in the
aggregate, will not have, or cannot reasonably be expected to have, a material
adverse effect on the business, financial condition or results of operations of
Xxxxx Fargo and its subsidiaries taken as a whole.
(l) Insurance. Xxxxx Fargo and each Xxxxx Fargo Subsidiary is presently
insured or self insured, and during each of the past five calendar years (or
during such lesser period of time as Xxxxx Fargo has owned such Xxxxx Fargo
Subsidiary) has been insured
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or self-insured, for reasonable amounts with financially sound and reputable
insurance companies against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured and has maintained all insurance required by applicable law and
regulation.
(m) Compliance with Laws. Xxxxx Fargo and each Xxxxx Fargo Subsidiary
has all permits, licenses, authorizations, orders and approvals of, and has made
all filings, applications and registrations with, federal, state, local or
foreign governmental or regulatory bodies that are required in order to permit
it to own or lease its properties or assets and to carry on its business as
presently conducted and that are material to the business of Xxxxx Fargo or such
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and to the best knowledge of Xxxxx
Fargo, no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current. The conduct by Xxxxx Fargo
and each Xxxxx Fargo Subsidiary of its business and the condition and use of its
properties does not violate or infringe, in any respect material to any such
business, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license or regulation. Neither Xxxxx Fargo nor any Xxxxx
Fargo Subsidiary is in default under any order, license, regulation or demand of
any federal, state, municipal or other governmental agency or with respect to
any order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application, no federal, state, municipal or
other governmental authority has placed any restrictions on the business or
properties of Xxxxx Fargo or any Xxxxx Fargo Subsidiary which reasonably could
be expected to have a material adverse effect on the business or properties of
Xxxxx Fargo and its subsidiaries taken as a whole. As of the date hereof, all
Xxxxx Fargo Subsidiaries that are subject to the Community Reinvestment Act
("CRA") have received a rating of "outstanding" or "satisfactory" as of their
most current CRA examination by the appropriate federal regulator.
(n) Labor. No work stoppage involving Xxxxx Fargo or any Xxxxx Fargo
Subsidiary is pending or, to the best knowledge of Xxxxx Fargo, threatened.
Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is involved in, or threatened
with or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which could materially and adversely affect the business of Xxxxx
Fargo or such Xxxxx Fargo Subsidiary. Except as set forth on Schedule 3(j),
employees of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries are not represented by
any labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees.
(o) Xxxxx Fargo Benefit Plans.
(i) For purposes of this Section 3(o), the term "Xxxxx Fargo
Plan" or "Xxxxx Fargo Plans" means all employee benefit plans as
defined in Section 3(3) of ERISA, to which Xxxxx Fargo contributes,
sponsors, or otherwise has any obligations.
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(ii) No Xxxxx Fargo Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(iii) Each Xxxxx Fargo Plan is and has been in all material
respects operated and administered in accordance with its provisions
and applicable law, including, if applicable, ERISA and the Code.
(iv) Each Xxxxx Fargo Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service stating that the Xxxxx Fargo
Plan (including all amendments) is tax qualified under Section 401(a)
of the Code and Xxxxx Fargo knows of no reason that any such Xxxxx
Fargo Plan is not qualified within the meaning of Section 401(a) of the
Code and knows of no reason that each related Xxxxx Fargo Plan trust is
not exempt from taxation under Section 501(a) of the Code.
(v) All contributions, premium payments, and other payments
required to be made in connection with the Xxxxx Fargo Plans as of the
date of this Agreement have been made.
(vi) With respect to each Xxxxx Fargo Plan that is subject to
Section 301 of ERISA or Section 412 of the Code, neither Xxxxx Fargo
nor any Xxxxx Fargo Subsidiary is liable for any accumulated funding
deficiency as that term is defined in Section 412 of the Code.
(vii) The present value of all benefits vested and all
benefits accrued under each Xxxxx Fargo Plan that is subject to Title
IV of ERISA does not, in each case, exceed the value of the assets of
the Xxxxx Fargo Plans allocable to such vested or accrued benefits as
of the end of the most recent Plan Year.
(p) Registration Statement, etc. None of the information regarding
Xxxxx Fargo and its subsidiaries supplied or to be supplied by Xxxxx Fargo for
inclusion in (i) the Registration Statement, (ii) the Proxy Statement, or (iii)
any other documents to be filed with the SEC or any regulatory authority in
connection with the transactions contemplated hereby or by the Merger Agreement
will, at the respective times such documents are filed with the SEC or any
regulatory authority and, in the case of the Registration Statement, when it
becomes effective and, with respect to the Proxy Statement, when mailed, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading
or, in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the meeting of shareholders referred to in paragraph
4(c), be false or misleading with respect to any material fact, or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for such meeting.
All documents which Xxxxx Fargo and the Xxxxx Fargo Subsidiaries are responsible
for filing with the SEC and any other regulatory authority in connection with
the Merger will comply as to form in all material respects with the provisions
of applicable law.
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(q) Brokers and Finders. Neither Xxxxx Fargo nor any Xxxxx Fargo
Subsidiary nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for Xxxxx Fargo or any Xxxxx Fargo
Subsidiary in connection with this Agreement and the Merger Agreement or the
transactions contemplated hereby and thereby.
(r) No Defaults. Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is
in default, nor has any event occurred which, with the passage of time or the
giving of notice, or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Xxxxx Fargo and its subsidiaries taken as a whole.
To the best of Xxxxx Fargo's knowledge, all parties with whom Xxxxx Fargo or any
Xxxxx Fargo Subsidiary has material leases, agreements or contracts or who owe
to Xxxxx Fargo or any Xxxxx Fargo Subsidiary material obligations other than
with respect to those arising in the ordinary course of the banking business of
the Xxxxx Fargo Subsidiaries are in compliance therewith in all material
respects.
(s) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could result in the imposition, on Xxxxx Fargo or any Xxxxx Fargo Subsidiary of
any liability relating to the release of hazardous substances as defined under
any local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or to the best of Xxxxx Fargo's
knowledge, threatened against Xxxxx Fargo or any Xxxxx Fargo Subsidiary, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Xxxxx Fargo and its subsidiaries taken as a whole; to the
best of Xxxxx Fargo's knowledge there is no reasonable basis for any such
proceeding, claim or action; and to the best of Xxxxx Fargo's knowledge neither
Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is subject to any agreement, order,
judgment, or decree by or with any court, governmental authority or third party
imposing any such environmental liability.
(t) Merger Co. As of the Closing Date, Merger Co. will be a corporation
duly organized, validly existing, duly qualified to do business and in good
standing under the laws of its jurisdiction of incorporation, and will have
corporate power and authority to own or lease its properties and assets and to
carry on its business.
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4. COVENANTS OF PRIME. Prime covenants and agrees with Xxxxx Fargo as
follows:
(a) Except as otherwise permitted or required by this Agreement, from
the date hereof until the Effective Time of the Merger, Prime, and each Prime
Subsidiary will: maintain its corporate existence in good standing; maintain the
general character of its business and conduct its business in its ordinary and
usual manner; extend credit in accordance with existing lending policies and
provide Xxxxx Fargo access to its loan files (including credits extended after
the date hereof), except that it shall not, without the prior written consent of
Xxxxx Fargo (which shall be deemed to be waived if Xxxxx Fargo has made no
response by the end of the first complete business day following the receipt (by
confirmed facsimile) of the request by a Xxxxx Fargo representative designated
in writing), make any new loan or modify, restructure or renew any existing loan
(except pursuant to commitments made prior to the date of this Agreement and
except for increases in existing loans in excess of 10% of the principal amount
of such loan, but up to a maximum to $100,000 for such loan) to any borrower if
the amount of the resulting loan, when aggregated with all other loans or
extensions of credit to such person, would be in excess of $1,000,000, provided
that such loan complies fully with and is rated a "pass" under Prime's lending
policy as in effect as of the date hereof; maintain proper business and
accounting records in accordance with generally accepted principles; maintain
its properties in good repair and condition, ordinary wear and tear excepted;
maintain in all material respects presently existing insurance coverage; use its
best efforts to preserve its business organization intact, to keep the services
of its present principal employees and to preserve its good will and the good
will of its suppliers, customers and others having business relationships with
it; use its best efforts to obtain any approvals or consents required to
maintain existing leases and other contracts in effect following the Merger;
comply in all material respects with all laws, regulations, ordinances, codes,
orders, licenses and permits applicable to the properties and operations of
Prime and each Prime Subsidiary the non-compliance with which reasonably could
be expected to have a material adverse effect on Prime and the Prime
Subsidiaries taken as a whole; and permit Xxxxx Fargo and its representatives
(including KPMG) to examine its and its subsidiaries books, records and
properties and to interview officers, employees and agents at all reasonable
times when it is open for business. No such examination by Xxxxx Fargo or its
representatives either before or after the date of this Agreement shall in any
way affect, diminish or terminate any of the representations, warranties or
covenants of Prime herein expressed.
(b) Except as otherwise contemplated or required by this Agreement,
from the date hereof until the Effective Time of the Merger, Prime and each
Prime Subsidiary will not (without the prior written consent of Xxxxx Fargo):
amend or otherwise change its articles of incorporation or association or
by-laws; issue or sell or authorize for issuance or sale, or grant any options
or make other agreements with respect to the issuance or sale or conversion of,
any shares of its capital stock, phantom shares or other share-equivalents, or
any other of its securities, except that Prime may issue shares of Prime Common
Stock upon the exercise of outstanding stock options described in
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Schedule 4(b); authorize or incur any long-term debt (other than deposit
liabilities); mortgage, pledge or subject to lien or other encumbrance any of
its properties, except in the ordinary course of business; enter into any
material agreement, contract or commitment in excess of $25,000 except banking
transactions in the ordinary course of business and in accordance with policies
and procedures in effect on the date hereof; make any investments except
investments made by bank subsidiaries in the ordinary course of business for
terms of up to one year and in amounts of $100,000 or less (which consent
requirement shall be deemed to be waived as to any investment to which Xxxxx
Fargo has made no response by the end of the second complete business day
following the receipt of the request by a Xxxxx Fargo representative designated
in writing); amend or terminate any Plan except as required by law or the terms
of this Agreement, except that Prime may take such action as is necessary to
amend the 1993 Incentive Stock Option Plan of Independent Bancorp, Inc. to
permit the acceleration of vesting of options thereunder and to permit such
options to be exercisable prior to the Effective Date otherwise upon and subject
to the conditions set forth therein upon a change in control; make any
contributions to any Plan except as required by the terms of such Plan in effect
as of the date hereof; declare, set aside, make or pay any dividend or other
distribution with respect to its capital stock except any dividend declared by
the Board of Directors of a Prime Subsidiary in accordance with applicable law
and regulation, provided, however, that the Board of Directors of Prime may
declare and pay dividends to the Prime shareholders out of the net earnings of
Prime between June 30, 1999 and the Effective Time of the Merger in accordance
with applicable law and regulation and in accordance with past practice in an
amount not to exceed a quarterly rate of $.08 per share and, provided further,
however, that Prime shareholders shall be entitled to a dividend on Prime Common
Stock or Xxxxx Fargo Common Stock, but not both, in the calendar quarter in
which the Closing shall occur; redeem, purchase or otherwise acquire, directly
or indirectly, any of the capital stock of Prime; increase the compensation of
any officers, directors or executive employees, except pursuant to existing
compensation plans and practices, provided, however, that Prime may, in
addition, accrue and pay bonuses in the aggregate not to exceed $250,000 for
retention purposes; sell or otherwise dispose of any shares of the capital stock
of any Prime Subsidiary; or sell or otherwise dispose of any of its assets or
properties other than in the ordinary course of business.
(c) The Board of Directors of Prime will duly call, and will cause to
be held on a date mutually agreeable to Prime and Xxxxx Fargo, but not later
than twenty-five (25) business days following the effective date of the
Registration Statement referred to in paragraph 5(c) hereof, a meeting of its
shareholders and will direct that this Agreement and the Merger Agreement be
submitted to a vote at such meeting. The Board of Directors of Prime will (i)
cause proper notice of such meeting to be given to its shareholders in
compliance with the Texas Business Corporation Act and other applicable law and
regulation, (ii) recommend by the affirmative vote of the Board of Directors a
vote in favor of approval of this Agreement and the Merger Agreement, and (iii)
use its best efforts to solicit from its shareholders proxies in favor thereof.
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(d) Prime will furnish or cause to be furnished to Xxxxx Fargo all the
information concerning Prime and its subsidiaries required for inclusion in the
Registration Statement referred to in paragraph 5(c) hereof, or any statement or
application made by Xxxxx Fargo to any governmental body in connection with the
transactions contemplated by this Agreement. Any financial statement for any
fiscal year provided under this paragraph must include the audit opinion and the
consent of Xxxxx Xxxxxxxx to use such opinion in such Registration Statement.
(e) Prime will take all necessary corporate and other action and use
its best efforts to obtain all approvals of regulatory authorities, consents and
other approvals required of Prime to carry out the transactions contemplated by
this Agreement and will cooperate with Xxxxx Fargo to obtain all such approvals
and consents required of Xxxxx Fargo.
(f) Prime will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at the
Closing.
(g) Prime will hold in confidence all documents and information
concerning Xxxxx Fargo and its subsidiaries furnished to Prime and its
representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to Prime's outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the transactions contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with Xxxxx Fargo (except to the extent that such
information can be shown to be previously known to Prime, in the public domain,
or later acquired by Prime from other legitimate sources) and, upon request, all
such documents, any copies thereof and extracts therefrom shall immediately
thereafter be returned to Xxxxx Fargo.
(h) Neither Prime, nor any Prime Subsidiary, nor any director, officer,
representative or agent thereof, will, directly or indirectly, solicit,
authorize the solicitation of or enter into any discussions with any
corporation, partnership, person or other entity or group (other than Xxxxx
Fargo) concerning any offer or possible offer (i) to purchase any shares of
common stock, any option or warrant to purchase any shares of common stock, any
securities convertible into any shares of such common stock, or any other equity
security of Prime or any Prime Subsidiary, (ii) to make a tender or exchange
offer for any shares of such common stock or other equity security, (iii) to
purchase, lease or otherwise acquire the assets of Prime or any Prime Subsidiary
except in the ordinary course of business, or (iv) to merge, consolidate or
otherwise combine with Prime or any Prime Subsidiary. If any corporation,
partnership, person or other entity or group makes an offer or inquiry to Prime
or any Prime Subsidiary concerning any of the foregoing, Prime or such Prime
Subsidiary will promptly disclose such offer or inquiry, including the terms
thereof, to Xxxxx Fargo.
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(i) Prime shall consult with Xxxxx Fargo as to the form and substance
of any proposed press release or other proposed public disclosure of matters
related to this Agreement or any of the transactions contemplated hereby.
(j) Prime and each Prime Subsidiary will take all action necessary or
required (i) to terminate or amend, if requested by Xxxxx Fargo, all qualified
pension and welfare benefit plans and all non-qualified benefit plans and
compensation arrangements as of the Effective Date of the Merger, (ii) to submit
application to the Internal Revenue Service for a favorable determination letter
for each of the Plans which is subject to the qualification requirements of
Section 401(a) of the Code prior to the Effective Date of the Merger, and (iii)
authorize and delegate the power to vote Prime Common Stock held in the Prime
Bancshares, Inc. 401(k) to such Plan's independent third party fiduciary.
(k) [Intentionally omitted.]
(l) Prime shall use its best efforts to obtain and deliver prior to the
Effective Date of the Merger signed representations substantially in the form
attached hereto as Exhibit B to Xxxxx Fargo by each executive officer, director
or shareholder of Prime who may reasonably be deemed an "affiliate" of Prime
within the meaning of such term as used in Rule 145 under the Securities Act.
(m) Prime shall establish such additional accruals and reserves as may
be necessary to conform Prime's accounting and credit loss reserve practices and
methods to those of Xxxxx Fargo and Xxxxx Fargo's plans with respect to the
conduct of Prime's business following the Merger and to provide for the costs
and expenses relating to the consummation by Prime of the Merger and the other
transactions contemplated by this Agreement; provided, however, that (a) Prime
shall not be required to take such actions more than three (3) business days
prior to the Closing Date or prior to the time Xxxxx Fargo agrees that all of
the conditions to their obligation to close as set forth in paragraph 7 have
been satisfied or waived (other than the deliveries to be made on the Closing
Date) and no such adjustment shall (i) require any prior filing with any
governmental agency or regulatory authority, or (ii) violate any law, rule or
regulation applicable to Prime; provided that in any event no accrual or reserve
made by Prime pursuant to this paragraph 4(m), shall constitute or be deemed to
be a breach, violation of or failure to satisfy any representation, warranty,
covenant, condition or other provision of this Agreement or otherwise be
considered in determining whether any such breach, violation or failure to
satisfy shall have occurred.
(n) Prime shall obtain, at its sole expense, Phase I environmental
assessments for each bank facility and each non-residential OREO property. Oral
reports of such environmental assessments shall be delivered to Xxxxx Fargo no
later than four (4) weeks and written reports shall be delivered to Xxxxx Fargo
no later than eight (8) weeks from the date of this Agreement. Prime shall
obtain, at its sole expense, Phase II environmental assessments for properties
identified by Xxxxx Fargo on the basis of the results of such Phase I
environmental assessments. Prime shall obtain a survey and assessment of all
potential asbestos containing material in owned or leased properties
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(other than OREO property) and a written report of the results shall be
delivered to Xxxxx Fargo within four (4) weeks of the date of this Agreement.
(o) Prime shall obtain, at its sole expense, commitments for title
insurance and boundary surveys for each bank facility which shall be delivered
to Xxxxx Fargo no later than four (4) weeks from the date of this Agreement.
(p) Prime and Xxxxx Fargo will work together to assess the impact of
the transactions contemplated by this Agreement on Prime's continued compliance
with the FFIEC Requirements and Prime will take such action, in consultation
with Xxxxx Fargo, as may be necessary to amend Prime's Year 2000 project
assessment and remediation plan. Prime will continue its current preparations
for compliance with the FFIEC Requirements and will not rely on the consummation
of the transactions contemplated by this Agreement to satisfy its FFIEC
requirements. Prime will provide Xxxxx Fargo with complete access to its Year
2000 project and remediation plan documentation and permit Xxxxx Fargo to review
and investigate Prime's continuing Year 2000 compliance efforts and the results
thereof. Prime will use its commercially reasonable efforts to remove any
exclusion from insurance coverage arising from Year 2000 issues contained in its
current Directors and Officers Liability coverage.
(q) Prime shall take such action as is necessary under the 1984
Incentive Stock Option Plan of Independent Bancorp, Inc., 1993 Incentive Stock
Option Plan of Independent Bancorp, Inc., and the Prime Bancshares, Inc. 1997
Stock Incentive Plan ("Plans") to (i) terminate such Plans as of immediately
prior to the Effective Date, and (ii) to cancel, effective as of immediately
prior to the Effective Date, all options and awards granted under such Plans
that are unexercised as of immediately prior to the Effective Date.
(r) Prime shall amend its bylaws to eliminate as of immediately prior
to the Effective Time any provision that permits the bylaws to be amended only
by the Board of Directors of Prime and to eliminate any requirement that the
Board of Directors of Prime be elected for staggered terms.
5. COVENANTS OF XXXXX FARGO. Xxxxx Fargo covenants and agrees with
Prime as follows:
(a) From the date hereof until the Effective Time of the Merger, Xxxxx
Fargo will maintain its corporate existence in good standing; conduct, and cause
the Xxxxx Fargo Subsidiaries to conduct, their respective businesses in
compliance with all material obligations and duties imposed on them by all laws,
governmental regulations, rules and ordinances, and judicial orders, judgments
and decrees applicable to Xxxxx Fargo or the Xxxxx Fargo Subsidiaries, their
businesses or their properties; maintain all books and records of it and the
Xxxxx Fargo Subsidiaries, including all financial statements, in accordance with
the accounting principles and practices consistent with those used for the Xxxxx
Fargo Financial Statements, except for changes in such principles and practices
required under generally accepted accounting principles.
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(b) Xxxxx Fargo will furnish to Prime all the information concerning
Xxxxx Fargo required for inclusion in a proxy statement or statements to be sent
to the shareholders of Prime, or in any statement or application made by Prime
to any governmental body in connection with the transactions contemplated by
this Agreement.
(c) As promptly as practicable after the execution of this Agreement,
but on a date mutually agreeable to Xxxxx Fargo and Prime, Xxxxx Fargo will file
with the SEC a registration statement on Form S-4 (the "Registration Statement")
under the Securities Act and any other applicable documents, relating to the
shares of Xxxxx Fargo Common Stock to be delivered to the shareholders of Prime
pursuant to the Merger Agreement, and will use its best efforts to cause the
Registration Statement to become effective; provided that Prime and Xxxxx Fargo
will cooperate to determine a filing schedule that is not commercially
burdensome to either Prime or Xxxxx Fargo . At the time the Registration
Statement becomes effective, the Registration Statement will comply in all
material respects with the provisions of the Securities Act and the published
rules and regulations thereunder, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not false or misleading, and at the
time of mailing thereof to the Prime shareholders, at the time of the Prime
shareholders' meeting referred to in paragraph 4(c) hereof and at the Effective
Time of the Merger the prospectus included as part of the Registration
Statement, as amended or supplemented by any amendment or supplement filed by
Xxxxx Fargo (hereinafter the "Prospectus"), will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not false or misleading; provided, however, that
none of the provisions of this subparagraph shall apply to statements in or
omissions from the Registration Statement or the Prospectus made in reliance
upon and in conformity with information furnished by Prime or any Prime
Subsidiary for use in the Registration Statement or the Prospectus.
(d) Xxxxx Fargo will file all documents required to be filed to list
the Xxxxx Fargo Common Stock to be issued pursuant to the Merger Agreement on
the New York Stock Exchange and the Chicago Stock Exchange and use its best
efforts to effect said listings.
(e) The shares of Xxxxx Fargo Common Stock to be issued by Xxxxx Fargo
to the shareholders of Prime pursuant to this Agreement and the Merger Agreement
will, upon such issuance and delivery to said shareholders pursuant to the
Merger Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Xxxxx Fargo Common Stock to be delivered to the
shareholders of Prime pursuant to the Merger Agreement are and will be free of
any preemptive rights of the stockholders of Xxxxx Fargo.
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(f) Xxxxx Fargo will file all documents required to obtain, prior to
the Effective Time of the Merger, all necessary Blue Sky permits and approvals,
if any, required to carry out the transactions contemplated by this Agreement,
will pay all expenses incident thereto and will use its best efforts to obtain
such permits and approvals.
(g) Xxxxx Fargo will take all necessary corporate and other action and
file all documents required to obtain and will use its best efforts to obtain
all approvals of regulatory authorities, consents and approvals required of it
to carry out the transactions contemplated by this Agreement and will cooperate
with Prime to obtain all such approvals and consents required by Prime.
(h) Xxxxx Fargo will hold in confidence all documents and information
concerning Prime and Prime's Subsidiaries furnished to it and its
representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to its outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the transactions contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with Prime (except to the extent that such information
can be shown to be previously known to Xxxxx Fargo, in the public domain, or
later acquired by Xxxxx Fargo from other legitimate sources) and, upon request,
all such documents, copies thereof or extracts therefrom shall immediately
thereafter be returned to Prime.
(i) Xxxxx Fargo will file any documents or agreements required to be
filed in connection with the Merger under the Texas Business Corporation Act and
the Texas Banking Act of 1995.
(j) Xxxxx Fargo will use its best efforts to deliver to the Closing all
opinions, certificates and other documents required to be delivered by it at the
Closing.
(k) Xxxxx Fargo shall consult with Prime as to the form and substance
of any proposed press release or other proposed public disclosure of matters
related to this Agreement or any of the transactions contemplated hereby.
(l) Xxxxx Fargo shall give Prime notice of receipt of the regulatory
approvals referred to in paragraph 7(e).
(m) [Intentionally omitted.]
(o) With respect to the indemnification of directors and officers and
with respect to directors' and officers' insurance, Xxxxx Fargo agrees as
follows:
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(i) Xxxxx Fargo shall ensure that all rights to
indemnification and all limitations of liability existing in favor of
any person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time of the Merger, a
director or officer of Prime or any Prime Subsidiary (an "Indemnified
Party" and, collectively, the "Indemnified Parties"), in Prime's
Articles of Incorporation or Bylaws or similar governing documents of
any Prime Subsidiary, as applicable in the particular case and as in
effect on the date hereof, shall, with respect to claims arising from
(A) facts or events that occurred before the Effective Time of the
Merger, or (B) this Agreement or any of the transactions contemplated
by this Agreement, whether in any case asserted or arising before or
after the Effective Time of the Merger, survive the Merger and shall
continue in full force and effect. Nothing contained in this paragraph
5(o)(i) shall be deemed to preclude the liquidation, consolidation, or
merger of Prime or any Prime Subsidiary, in which case all of such
rights to indemnification and limitations on liability shall be deemed
to survive and continue as contractual rights notwithstanding any such
liquidation or consolidation or merger; provided, however, that in the
event of liquidation or sale of substantially all of the assets of
Prime, Xxxxx Fargo shall guarantee, to the extent of the net asset
value of Prime or any Prime Subsidiary as of the Effective Date of the
Merger, the indemnification obligations of Prime or any Prime
Subsidiary to the extent of indemnification obligations of Prime and
the Prime Subsidiaries described above. Notwithstanding anything to the
contrary contained in this paragraph 5(o)(i), nothing contained herein
shall require Xxxxx Fargo to indemnify any person who was a directors
or officer of Prime or any Prime Subsidiary to a greater extent than
Prime or any Prime Subsidiary is, as of the date of this Agreement,
required to indemnify any such person.
(ii) any Indemnified Party wishing to claim indemnification
under paragraph 5(o)(i), upon learning of any such claim, action, suit,
proceeding, or investigation, shall promptly notify Xxxxx Fargo
thereof, but the failure to so notify shall not relieve Xxxxx Fargo of
any liability it may have to such Indemnified Party. In the event of
any such claim, action, suit, proceeding, or investigation (whether
arising before of after the Effective Time of the Merger) (A) Xxxxx
Fargo shall have the right to assume the defense thereof and Xxxxx
Fargo shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof,
except that if Xxxxx Fargo elects not to assume such defense or counsel
for the Indemnified Party advises that there are issues which raise
conflicts of interest between Xxxxx Fargo and the Indemnified Party,
the Indemnified Party may retain counsel satisfactory to them, and
Xxxxx Fargo shall pay the reasonable fees and expenses of such counsel
for the Indemnified Party promptly as statements therefor are received,
provided, however, that Xxxxx Fargo shall be obligated pursuant to this
subparagraph (ii) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction unless the use of one counsel
for such Indemnified Parties would present such counsel with a conflict
of interest, and (B) such Indemnified Party shall cooperate in the
defense of any such matter.
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(iii) for a period of six (6) years after the Effective Time
of the Merger, Xxxxx Fargo shall use its best efforts to cause to be
maintained in effect the current policies of directors' and officers'
liability insurance maintained by Prime (provided that Xxxxx Fargo may
substitute therefor policies of at least the same coverage and amount
containing terms and conditions which are substantially no less
advantageous) with respect to claims arising from facts or events which
occurred prior to the Effective Time of the Merger;
(iv) if Xxxxx Fargo or any of its successors or assigns (A)
shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of
such consolidation or merger; or (B) shall transfer all or
substantially all of its properties and assets to any individual,
corporation, or other entity, then and in each such case, proper
provision shall be made so that the successors and assigns of Xxxxx
Fargo shall assume the obligations set forth in this paragraph 5(o);
and
(v) the provisions of this paragraph 5(o) shall survive the
Effective Time of the Merger and are intended for the benefit of, and
shall be enforceable by, each Indemnified Party and his or her heirs
and representatives.
6. CONDITIONS PRECEDENT TO OBLIGATION OF PRIME. The obligation of Prime
to effect the Merger shall be subject to the satisfaction at or before the Time
of Filing of the following further conditions, which may be waived in writing by
Prime:
(a) Except as they may be affected by transactions contemplated hereby
and except to the extent such representations and warranties are by their
express provisions made as of a specified date and except for activities or
transactions after the date of this Agreement made in the ordinary course of
business and not expressly prohibited by this Agreement, the representations and
warranties contained in paragraph 3 hereof shall be true and correct in all
respects material to Xxxxx Fargo and its subsidiaries taken as a whole as if
made at the Time of Filing.
(b) Xxxxx Fargo shall have, or shall have caused to be, performed and
observed in all material respects all covenants, agreements and conditions
hereof to be performed or observed by it and Merger Co. at or before the Time of
Filing.
(c) Prime shall have received a favorable certificate, dated as of the
Effective Date of the Merger, signed by the Chairman, the President or any
Executive Vice President or Senior Vice President and by the Secretary or
Assistant Secretary of Xxxxx Fargo, as to the matters set forth in subparagraphs
(a) and (b) of this paragraph 6.
(d) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Prime
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required for approval of a plan of merger in accordance with the provisions of
Prime's Articles of Incorporation and the Texas Business Corporation Act.
(e) Xxxxx Fargo shall have received approval by the Federal Reserve
Board and by such other governmental agencies as may be required by law of the
transactions contemplated by this Agreement and the Merger Agreement and all
waiting and appeal periods prescribed by applicable law or regulation shall have
expired.
(f) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(g) The shares of Xxxxx Fargo Common Stock to be delivered to the
stockholders of Prime pursuant to this Agreement and the Merger Agreement shall
have been authorized for listing on the New York Stock Exchange and the Chicago
Stock Exchange.
(h) Prime shall have received an opinion, dated the Closing Date, of
counsel to Prime, substantially to the effect that, for federal income tax
purposes: (i) the Merger will constitute a reorganization within the meaning of
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code; (ii) no gain or loss will be
recognized by the holders of Prime Common Stock upon receipt of Xxxxx Fargo
Common Stock except for cash received in lieu of fractional shares; (iii) the
basis of the Xxxxx Fargo Common Stock received by the shareholders of Prime will
be the same as the basis of Prime Common Stock exchanged therefor; and (iv) the
holding period of the shares of Xxxxx Fargo Common Stock received by the
shareholders of Prime will include the holding period of the Prime Common Stock,
provided such shares of Prime Common Stock were held as a capital asset as of
the Effective Time of the Merger.
(i) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened and be unresolved. Xxxxx Fargo shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(j) Since March 31, 1999, no change shall have occurred and no
circumstances shall exist which has had or might reasonably be expected to have
a material adverse effect on the financial conditions, results of operations,
business or prospects of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries taken as a
whole (other than changes in banking laws or regulations, or interpretations
thereof, that affect the banking industry generally or changes in the general
level of interest rates).
7. CONDITIONS PRECEDENT TO OBLIGATION OF XXXXX FARGO. The obligation of
Xxxxx Fargo to effect the Merger shall be subject to the satisfaction at or
before the Time
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of Filing of the following conditions, which may be waived in writing by Xxxxx
Fargo:
(a) Except as they may be affected by transactions contemplated hereby
and except to the extent such representations and warranties are by their
express provisions made as of a specified date and except for activities or
transactions or events occurring after the date of this Agreement made in the
ordinary course of business and not expressly prohibited by this Agreement, the
representations and warranties contained in paragraph 2 hereof shall be true and
correct in all respects material to Prime and the Prime Subsidiaries taken as a
whole as if made at the Time of Filing.
(b) Prime shall have, or shall have caused to be, performed and
observed in all material respects all covenants, agreements and conditions
hereof to be performed or observed by it at or before the Time of Filing.
(c) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Prime required for approval of a plan of merger in accordance with the
provisions of Prime's Articles of Incorporation and the Texas Business
Corporation Act.
(d) Xxxxx Fargo shall have received a favorable certificate dated as of
the Effective Date of the Merger signed by the Chairman or President and by the
Secretary or Assistant Secretary of Prime, as to the matters set forth in
subparagraphs (a) through (c) of this paragraph 7.
(e) Xxxxx Fargo shall have received approval by all governmental
agencies as may be required by law of the transactions contemplated by this
Agreement and the Merger Agreement and all waiting and appeal periods prescribed
by applicable law or regulation shall have expired. No approvals, licenses or
consents granted by any regulatory authority shall contain any condition or
requirement relating to Prime or any Prime Subsidiary that, in the good faith
judgment of Xxxxx Fargo, is unreasonably burdensome to Xxxxx Fargo.
(f) Prime and each Prime Subsidiary shall have obtained any and all
material consents or waivers from other parties to loan agreements, leases or
other contracts material to Prime's or such subsidiary's business required for
the consummation of the Merger, and Prime and each Prime Subsidiary shall have
obtained any and all material permits, authorizations, consents, waivers and
approvals required for the lawful consummation by it of the Merger.
(g) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(h) [Intentionally omitted.]
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(i) At any time since the date hereof the total number of shares of
Prime Common Stock outstanding and subject to issuance upon exercise (assuming
for this purpose that phantom shares and other share-equivalents constitute
Prime Common Stock) of all warrants, options, conversion rights, phantom shares
or other share-equivalents, other than any option held by Xxxxx Fargo, shall not
have exceeded 10,209,483.
(j) The Registration Statement (as amended or supplemented) shall have
become effective under the Securities Act and shall not be subject to any stop
order, and no action, suit, proceeding or investigation by the SEC to suspend
the effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened or be unresolved. Xxxxx Fargo shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(k) Xxxxx Fargo shall have received from the Chief Executive Officer
and Chief Financial Officer of Prime a letter, dated as of the effective date of
the Registration Statement and updated through the date of Closing, in form and
substance satisfactory to Xxxxx Fargo, to the effect that:
(i) the interim quarterly financial statements of Prime
included or incorporated by reference in the Registration Statement are
prepared in accordance with generally accepted accounting principles
applied on a basis consistent with the audited financial statements of
Prime;
(ii) the amounts reported in the interim quarterly financial
statements of Prime agree with the general ledger of Prime;
(iii) the annual and quarterly financial statements of Prime
and the Prime Subsidiaries included in, or incorporated by reference
in, the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act and the published rules and regulations thereunder;
(iv) from the date of the most recent unaudited consolidated
financial statements of Prime and the Prime Subsidiaries as may be
included in the Registration Statement to a date five (5) days prior to
the effective date of the Registration Statement or five (5) days prior
to the Closing, there are no increases in long-term debt, changes in
the capital stock or decreases in stockholders' equity of Prime and the
Prime Subsidiaries, except in each case for changes, increases or
decreases which the Registration Statement discloses have occurred or
may occur or which are described in such letters. For the same period,
there have been no decreases in consolidated net interest income,
consolidated net interest income after provision for credit losses,
consolidated income before income taxes, consolidated net income and
net income per share amounts of Prime and the
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Prime Subsidiaries, or in income before equity in undistributed income
of subsidiaries, in each case as compared with the comparable period of
the preceding year, except in each case for changes, increases or
decreases which the Registration Statement discloses have occurred or
may occur or which are described in such letters;
(v) they have reviewed certain amounts, percentages, numbers
of shares and financial information which are derived from the general
accounting records of Prime and the Prime Subsidiaries, which appear in
the Registration Statement under the certain captions to be specified
by Xxxxx Fargo, and have compared certain of such amounts, percentages,
numbers and financial information with the accounting records of Prime
and the Prime Subsidiaries and have found them to be in agreement with
financial records and analyses prepared by Prime included in the annual
and quarterly financial statements, except as disclosed in such
letters.
(l) Prime and the Prime Subsidiaries considered as a whole shall not
have sustained since December 31, 1998 any material loss or interference with
their business from any civil disturbance or any fire, explosion, flood or other
calamity, whether or not covered by insurance.
(m) There shall be no reasonable basis for any proceeding, claim or
action of any nature seeking to impose, or that could result in the imposition
on Prime or any Prime Subsidiary of, any liability relating to the release of
hazardous substances as defined under any local, state or federal environmental
statute, regulation or ordinance including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended, which has had or could reasonably be expected to have a material
adverse effect upon Prime and its subsidiaries taken as a whole.
(n) Since March 31, 1999, no change shall have occurred and no
circumstances shall exist which has had or might reasonably be expected to have
a material adverse effect on the financial condition, results of operations,
business or prospects of Prime and the Prime Subsidiaries taken as a whole
(other than changes in banking laws or regulations, or interpretations thereof,
that affect the banking industry generally or changes in the general level of
interest rates).
(o) Prime shall be in full compliance with current FFIEC Requirements.
There shall be no feature of Prime's data processing, operating or platform
systems that would prevent those systems from continuing to run independently
after December 31, 1999 until such time as a subsequent conversion to Xxxxx
Fargo systems can be completed. Prime's computer hardware and software used in
the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission, or other utilization of data or in the operation of mechanical
or electrical systems of any kind will function at least as effectively in all
material respects after December 31, 1999 as in the case of dates or time
periods occurring prior to January 1, 2000.
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(p) Prime shall have taken the actions required by paragraph 4(q), and
the Plans and any unexercised options or awards shall have been terminated as of
immediately prior to the Effective Date.
(q) The employment agreements of even date herewith between Xxxxx Fargo
and the individuals listed on Schedule 7(q) shall be in full force and effect.
(r) Prime shall have taken the actions required by Paragraph 4(r).
(s) Prime shall have delivered the resignations of each member of its
Board of Directors as of the Effective Time, and such resignations shall not
have been withdrawn.
8. EMPLOYEE BENEFIT PLANS. Each person who is an employee of Prime or
any Prime Subsidiary as of the Effective Date of the Merger ("Prime Employees")
shall be eligible for participation in the employee welfare and retirement plans
of Xxxxx Fargo, as in effect from time to time, as follows:
(a) Employee Welfare Benefit Plans. Each Prime Employee shall be
eligible for participation in the employee welfare benefit plans of Xxxxx Fargo
listed below subject to any eligibility requirements applicable to such plans
(and not subject to pre-existing condition exclusions, except with respect to
the Xxxxx Fargo Long Term Disability Plan and the Xxxxx Fargo Long Term Care
Plan) and shall enter each plan no later than the first day of the calendar
quarter which begins at least thirty-two (32) days after the Effective Date of
the Merger ("Benefits Conversion Date") (provided that the transition from
Prime's Plans to the Xxxxx Fargo Plans will be facilitated without gaps in
coverage to the participants and without duplication of costs to Xxxxx Fargo):
Medical Plan
Dental Plan
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Salary Continuation Pay Plan
Paid Time Off Program
For purposes of the foregoing, "Medical Plan" means any medical plan sponsored
by Xxxxx Fargo that is available to similarly situated Xxxxx Fargo employees.
Prime Employees shall receive credit for years of service to Prime, the Prime
Subsidiaries and
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any predecessors of Prime or the Prime Subsidiaries (to the extent credited
under the vacation and short-term disability programs of Prime) for the purpose
of determining benefits under the Xxxxx Fargo Paid Time Off Program, Salary
Continuation Pay Plan, and Short Term Disability Plan. The Prime Employees
listed on Schedule 7(q) are ineligible for participation in the Xxxxx Fargo
Salary Continuation Pay Plan.
(b) Employee Retirement Benefit Plans. Each Prime Employee shall be
eligible to participate in the Xxxxx Fargo 401(k) Plan (the "401(k) Plan"),
subject to any eligibility requirements applicable to the 401(k) Plan (with full
credit for years of past service to Prime and the Prime Subsidiaries for the
purpose of satisfying any eligibility and vesting periods applicable to the
401(k) Plan), and shall enter the 401(k) Plan no later than the Benefits
Conversion Date.
Each Prime Employee shall be eligible to participate in the Xxxxx Fargo
Cash Balance Plan (the "Cash Balance Plan") subject to any eligibility
requirements applicable to the Cash Balance Plan. Xxxxx Fargo shall not
recognize a Prime Employee's past service with Prime or any Prime Subsidiary for
any purpose under the Cash Balance Plan. Therefore, each Prime Employee shall be
eligible for participation, as a new employee, in the Xxxxx Fargo Cash Balance
Plan pursuant to the terms thereof.
Each Prime Employee shall be eligible for access to Xxxxx Fargo's
retiree medical benefit, subject to any eligibility requirements applicable to
such benefit. Xxxxx Fargo shall recognize years of past service with Prime and
the Prime Subsidiaries for the purpose of eligibility to access Xxxxx Fargo's
retiree medical benefit.
9. TERMINATION OF AGREEMENT.
(a) This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to
the other party if the Merger shall not have been consummated by March
15, 2000 unless such failure of consummation shall be due to the
failure of the party seeking to terminate to perform or observe in all
material respects the covenants and agreements hereof to be performed
or observed by such party; or
(iii) by Prime or Xxxxx Fargo upon written notice to the other
party if any court or governmental authority of competent jurisdiction
shall have issued a final order restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement; or
(iv) by Prime, within five (5) business days after the end of
the Index Measurement Period (as defined in subparagraph (c)(ii)
below), if both of the following conditions are satisfied:
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(A) the Xxxxx Fargo Measurement Price is less than
$36.00; and
(B) the number obtained by dividing the Xxxxx Fargo
Measurement Price by the closing price of Xxxxx Fargo Common
Stock on the trading day immediately preceding the date of
this Agreement is less than the number obtained by dividing
the Final Index Price (as defined in subparagraph (c) below)
by the Initial Index Price (as defined in subparagraph (c)
below) and subtracting .15 from such quotient.
(b) Termination of this Agreement under this paragraph 9 shall not
release, or be construed as so releasing, either party hereto from any liability
or damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g),
5(h) and 10 shall survive such termination.
(c) For purposes of this paragraph 9:
(i) The "Company Market Capitalization" shall mean (A) the
price of one share of the common stock of a given company at the close
of the trading day immediately preceding the date of this Agreement
multiplied by (B) the number of shares of common stock of such company
outstanding as of June 30, 1999 (adjusted for any stock dividend,
reclassification, recapitalization, exchange of shares or similar
transaction between June 30, 1999 and the close of the trading day
immediately preceding the date of this Agreement).
(ii) The "Index Group" shall mean all of those companies
listed on Exhibit C the common stock of which is publicly traded and as
to which there is, during the period of twenty (20) trading days ending
on the day immediately preceding the meeting of the shareholders of
Prime held to vote on this Agreement and the Merger Agreement (the
"Index Measurement Period"), no pending publicly announced proposal for
such company to be acquired, nor has there been any proposal by such
company publicly announced subsequent to the day before the date of
this Agreement to acquire another company in exchange for stock where,
if the company to be acquired were to become a subsidiary of the
acquiring company, the company to be acquired would be a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated by
the SEC nor has there been any program publicly announced subsequent to
the day before the date of this Agreement to repurchase 5% or more of
the outstanding shares of such company's common stock.
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(iii) The "Initial Index Price" shall mean the sum of the
following, calculated for each of the companies in the Index Group: (A)
the closing price per share of common stock of each such company on the
trading day immediately preceding the date of this Agreement multiplied
by (B) the Weighting Factor (as defined below) for each such company.
(iv) The "Final Index Price" shall mean the sum of the
following, calculated for each of the companies in the Index Group: (A)
the Final Price for each such company multiplied by (B) the Weighting
Factor (as defined below) for each such company.
(v) The "Final Price" of any company in the Index Group shall
mean the average of the daily closing prices of a share of common stock
of such company, as reported on the consolidated transaction reporting
system for the market or exchange on which such common stock is
principally traded, during the Index Measurement Period.
(vi) The "Total Market Capitalization" shall mean the sum of
the Company Market Capitalization for each of the companies in the
Index Group.
(vii) The "Weighting Factor" for any given company shall mean
the Company Market Capitalization for such company divided by the Total
Market Capitalization.
(vii) The "Xxxxx Fargo Measurement Price" means the average
closing price of a share of Xxxxx Fargo Common Stock as reported on the
composite tape of the New York Stock Exchange during the Index
Measurement Period.
If a Common Stock Adjustment occurs with respect to the shares of Xxxxx
Fargo or any company in the Index Group between the date of this Agreement and
the Prime shareholder meeting date, the closing prices for the common stock of
such company shall be appropriately and proportionately adjusted for the
purposes of the definitions above so as to be comparable to what the price would
have been if the record date of the Common Stock Adjustment had been immediately
following the Effective Time of the Merger.
10. EXPENSES. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Prime and Prime Subsidiaries shall be borne by
Prime, and all such expenses incurred by Xxxxx Fargo shall be borne by Xxxxx
Fargo.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
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12. THIRD PARTY BENEFICIARIES. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. NOTICES. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be delivered in
person or shall be mailed by first class registered or certified mail, postage
prepaid, addressed as follows:
If to Xxxxx Fargo:
Xxxxx Fargo & Company
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Secretary
If to Prime:
Prime Bancshares, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: President
With a copy to:
Xxxxxxxxx & Xxxxxxxxx
South Tower Pennzoil Place
000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx Xxxxxx XX, Esq.
or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
14. COMPLETE AGREEMENT. This Agreement and the Merger Agreement contain
the complete agreement between the parties hereto with respect to the Merger and
other transactions contemplated hereby and supersede all prior agreements and
understandings between the parties hereto with respect thereto.
15. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
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16. WAIVER AND OTHER ACTION. Either party hereto may, by a signed
writing, give any consent, take any action pursuant to paragraph 9 hereof or
otherwise, or waive any inaccuracies in the representations and warranties by
the other party and compliance by the other party with any of the covenants and
conditions herein.
17. AMENDMENT. At any time before the Time of Filing, the parties
hereto, by action taken by their respective Boards of Directors or pursuant to
authority delegated by their respective Boards of Directors, may amend this
Agreement; provided, however, that no amendment after approval by the
shareholders of Prime shall be made which changes in a manner adverse to such
shareholders the consideration to be provided to said shareholders pursuant to
this Agreement and the Merger Agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware.
19. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty contained in the Agreement or the Merger Agreement shall survive the
Merger or except as set forth in paragraph 9(b), the termination of this
Agreement. Paragraph 10 shall survive the Merger.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
[The rest of this page has intentionally been left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXX FARGO & COMPANY
By /s/ XXXX XXXXX
Its Executive Vice President
PRIME BANCSHARES, INC.
By /s/ X.X. XXXXXXXX
Its Chairman
[Signature page to Agreement and Plan of Reorganization]
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