Exhibit 2.1.
AGREEMENT AND PLAN OF MERGER
between
STAR BANC CORPORATION
as Buyer,
and
TRANS FINANCIAL, INC.
as Seller
Dated April 9, 1998
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 The Merger
1.2 Closing
1.3 Effective Time
1.4 Additional Actions
1.5 Articles of Incorporation and Regulations
1.6 Boards of Directors and Officers
1.7 Conversion of Securities
1.8 Exchange Procedures
1.9 Dissenting Shares
1.10 No Fractional Shares
1.11 Anti-Dilution Adjustments
1.12 Reservation of Right to Revise Transaction
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
2.1 Organization and Authority
2.2 Subsidiaries
2.3 Capitalization
2.4 Authorization
2.5 Seller Financial Statements
2.6 Seller Reports
2.7 Properties and Leases
2.8 Taxes
2.9 Material Adverse Change
2.10 Commitments and Contracts
2.11 Litigation and Other Proceedings
2.12 Insurance
2.13 Compliance with Laws
2.14 Labor
2.15 Material Interests of Certain Persons
2.16 Allowance for Loan and Lease Losses; Nonperforming Assets
2.17 Employee Benefit Plans
2.18 Conduct of Seller to Date
2.19 Proxy Statement, etc
2.20 Registration Obligations
2.21 State Takeover Statutes; Seller's Articles of Incorporation;
Seller Rights Agreement
2.22 Accounting Tax and Regulatory Matters
2.23 Brokers and Finders
2.24 Other Activities
2.25 Interest Rate Risk Management Instruments
2.26 Accuracy of Information
2.27 Year 2000 Compliant
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
3.1 Organization and Authority
3.2 Capitalization of Buyer
3.3 Authorization
3.4 Buyer Financial Statements
3.5 Buyer Reports
3.6 Material Adverse Change
3.7 Compliance with Laws
3.8 Registration Statement
3.9 Brokers and Finders
3.10 Litigation and Other
3.11 Taxes
3.12 Accounting, Tax and Regulatory Matters
3.13 Accuracy of Information
3.14 Year 2000 Compliant
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Businesses Prior to the Effective Time
4.2 Forbearances
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access and Information
5.2 Registration Statement; Regulatory Matters
5.3 Stockholder Approval
5.4 Current Information
5.5 Agreements of Affiliates
5.6 Expenses
5.7 Securities Act and Exchange Act Filings
5.8 Miscellaneous Agreements and Consents
5.9 Employee Benefits
5.10 Seller Stock Options
5.11 Seller Employee Stock Ownership Plan
5.12 D&O Indemnification
5.13 Press Releases
5.14 State Takeover Statutes; Seller's Articles of Incorporation;
Seller Rights Agreement
5.15 Best Efforts
5.16 Insurance
5.17 Conforming Entries
5.18 Charitable Foundation
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation To Effect the Merger
6.2 Conditions to Obligations of Seller To Effect the Merger
6.3 Conditions to Obligations of Buyer To Effect the Merger
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination
7.2 Effect of Termination
7.3 Amendment
7.4 Severability 7.5 Waiver
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements
8.2 Notices
8.3 Miscellaneous
EXHIBITS
Exhibit A.........Form of Stock Option Agreement
Exhibit B.........Form of Affiliate Letter
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into on April 9, 1998 by and between Star Banc Corporation, an Ohio
corporation ("Buyer"), and Trans Financial, Inc., a Kentucky corporation
("Seller").
W I T N E S S E T H:
WHEREAS, Buyer is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended (the "Holding Company Act"); and
WHEREAS, Seller is a registered bank holding company under
the Holding Company Act; and
WHEREAS, the Board of Directors of Seller and the Executive
Committee of the Board of Directors of Buyer have approved the merger (the
"Merger") of Seller with and into Buyer pursuant to the terms and subject to the
conditions of this Agreement; and
WHEREAS, the parties intend the transactions contemplated
hereby to qualify as a "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), and
as a "pooling of interests" for accounting and financial reporting purposes; and
WHEREAS, as a condition to, and immediately prior to execution
of this Agreement, Buyer and Seller will enter into a stock option agreement
(the "Stock Option Agreement") in the form attached hereto as Exhibit A; and
WHEREAS, the parties desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, Seller
shall be merged with and into Buyer in accordance with the Kentucky Business
Corporation Act (the "KBCA") and the Ohio General Corporation Law (the "OGCL")
and the separate corporate existence of Seller shall cease. Buyer shall be the
surviving corporation of the Merger (sometimes referred to herein as the
"Surviving Corporation") and shall continue its existence under the name "Star
Banc Corporation" and to be governed by the laws of the State of Ohio.
1.2 Closing. The closing (the "Closing") of the Merger shall take place at
10:00 a.m., local time, on the date that the Effective Time (as defined in
Section 1.3) occurs, or at such other time, and at such place, as Buyer and
Seller shall agree (the "Closing Date").
1.3 Effective Time. The Merger shall
become effective on the date and at the time (the "Effective Time") on which
appropriate documents in respect of the Merger are filed with the Secretaries of
State of the State of Ohio and the Commonwealth of Kentucky in such form as
required by, and in accordance with, the relevant provisions of the KBCA and
OGCL. Subject to the terms and conditions of this Agreement, the Effective Time
shall occur on any such date on or after July 1, 1998 as Buyer shall notify
Seller in writing (such notice to be at least five business days in advance of
the Effective Time) but (i) not earlier than the satisfaction of all conditions
set forth in Section 6.1(a) and 6.1(b) (the "Approval Date") and (ii) subject to
clause (i), not later than the first business day of the first full calendar
month commencing at least five business days after the Approval Date. As soon as
practicable following the Effective Time, Buyer and Seller shall cause a
certificate/articles or plan of merger reflecting the terms of this Agreement to
be delivered for filing and recordation with other appropriate state or local
officials in the State of Ohio and the Commonwealth of Kentucky in accordance
with the OGCL and the KBCA, respectively.
1.4 Additional Actions. If, at any
time after the Effective Time, Buyer or the Surviving Corporation shall consider
or be advised that any further deeds, assignments or assurances or any other
acts are necessary or desirable to (a) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of Seller or Buyer or (b)
otherwise carry out the purposes of this Agreement, Seller and Buyer and each of
their respective officers and directors, shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such deeds, assignments or assurances and to do all acts necessary or
desirable to vest, perfect or confirm title and possession to such rights,
properties or assets in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement, and the officers and directors of the Surviving
Corporation are authorized in the name of Seller or otherwise to take any and
all such action.
1.5 Articles of Incorporation and Regulations. The Articles of
Incorporation and Regulations of Buyer in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and Regulations of the
Surviving Corporation following the Merger until otherwise amended or repealed.
1.6 Boards of Directors and Officers. At the Effective Time, the directors and
officers of Buyer immediately prior to the Effective Time shall be directors and
officers, respectively, of the Surviving Corporation following the Merger; such
directors and officers shall hold office in accordance with the Surviving
Corporation's Articles of Incorporation and Regulations and applicable law.
Promptly following the Effective Time, one member of Seller's current Board of
Directors, to be mutually agreed upon by the parties prior to the Effective
Time, shall be invited to serve as an additional member of the Buyer's Board of
Directors.
1.7 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Buyer, Seller or the holder of
any of the following securities: Each share of the common stock, par value $5.00
per share, of Buyer ("Buyer Common Stock") that is issued and outstanding
immediately prior to the Effective Time shall remain outstanding and shall be
unchanged after the Merger and thereafter shall together with shares of Buyer
Common Stock issued in the Merger constitute all of the issued and outstanding
capital stock of the Surviving Corporation; and Each share of the common stock,
no par value per share, of Seller ("Seller Common Stock") issued and outstanding
immediately prior to the Effective Time shall cease to be outstanding and, other
than any Dissenting Shares (as defined in Section 1.9) and any shares of Seller
Common Stock held by Seller, Buyer or any of their respective Subsidiaries, in
each case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be converted into and become the right to receive 0.9003 (the
"Exchange Ratio") shares of Buyer Common Stock (the "Per Share Consideration").
1.8 Exchange Procedures. (a) At or prior to the Effective Time, Buyer shall
deposit with Star Bank, N.A., as exchange agent (the "Exchange Agent"), for the
benefit of holders of certificates the Merger Consideration (as defined below)
(the Merger Consideration so deposited with the Exchange Agent being the
"Exchange Fund"). Seller shall deliver to Buyer, in a form reasonably acceptable
to Buyer, a complete list of Seller's shareholders (including their respective
names, addresses and TINs to the extent reflected in the records maintained by
Seller or its transfer agent) as of the record date for the shareholder meeting
to be called by Seller pursuant to Section 5.3 hereof and as of the Effective
Time, in each case which delivery shall be made as soon as practicable after the
respective date. Holders of record of certificates formerly representing shares
of Seller Common Stock (the "Certificates") shall be instructed to tender such
Certificates to Buyer pursuant to a letter of transmittal that Buyer shall
deliver or cause to be delivered to such holders. Such letters of transmittal
shall specify that risk of loss and title to Certificates shall pass only upon
delivery of such Certificates to Buyer. Subject to Section 1.10, after the
Effective Time, each previous holder of a Certificate that surrenders such
Certificate with a duly executed letter of transmittal to the Exchange Agent
will be entitled to a certificate or certificates representing the number of
full shares of Buyer Common Stock into which the Certificate so surrendered
shall have been converted pursuant to this Agreement and any distribution
theretofore declared and not yet paid with respect to such shares of Buyer
Common Stock, without interest. Buyer or the Exchange Agent shall accept
Certificates upon compliance with such reasonable terms and conditions as Buyer
or the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with customary exchange practices. Certificates shall be
appropriately endorsed or accompanied by such instruments of transfer as Buyer
or the Exchange Agent may require. Each outstanding Certificate shall until duly
surrendered to Buyer or the Exchange Agent be deemed to evidence ownership of
the consideration into which the stock previously represented by such
Certificate shall have been converted pursuant to this Agreement. Any portion of
the Exchange Fund, including any earnings thereon, which remains undistributed
to the holders of Certificates for six months after the Effective Time shall be
delivered to Buyer, upon demand, and any holders of Certificates who have not
theretofore complied with this Section 1.8 shall thereafter look only to Buyer
for payment of their claim for the Merger Consideration. After the Effective
Time, holders of Certificates shall cease to have rights with respect to the
stock previously represented by such Certificates, and their sole rights shall
be to exchange such Certificates for the consideration provided for in this
Agreement. After the Effective Time, there shall be no further transfer on the
records of Seller of Certificates, and if such Certificates are presented to
Seller for transfer, they shall be cancelled against delivery of the
consideration provided therefor in this Agreement. Buyer shall not be obligated
to deliver the consideration to which any former holder of Seller Common Stock
is entitled as a result of the Merger until such holder surrenders the
Certificates as provided herein. No dividends declared will be remitted to any
person entitled to receive Buyer Common Stock under this Agreement until such
person surrenders the Certificate representing the right to receive such Buyer
Common Stock, at which time such dividends shall be remitted to such person,
without interest and less any taxes that may have been imposed thereon.
Certificates surrendered for exchange by any person constituting an "affiliate"
of Seller for purposes of Rule 145 of the Securities Act of 1933, as amended
(together with the rules and regulations thereunder, the "Securities Act"),
shall not be exchanged for certificates representing Buyer Common Stock until
Buyer has received a written agreement from such person in the form attached as
Exhibit B. Neither the Exchange Agent nor any party to this Agreement nor any
affiliate thereof shall be liable to any holder of stock represented by any
Certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. Buyer and the Exchange
Agent shall be entitled to rely upon the stock transfer books of Seller to
establish the identity of those persons entitled to receive consideration
specified in this Agreement, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, Buyer and the Exchange Agent shall be entitled
to deposit any consideration represented thereby in escrow with an independent
third party and thereafter be relieved with respect to any claims thereto.
1.9 Dissenting Shares. (a) "Dissenting Shares" means any shares of Seller
Common Stock held by any holder who becomes entitled to payment of the fair
value of such shares under the KBCA. Any holders of Dissenting Shares shall be
entitled to payment for such shares only to the extent permitted by and in
accordance with the provisions of the KBCA; provided, however, that if, in
accordance with the KBCA, any holder of Dissenting Shares shall forfeit such
right to payment of the fair value of such shares, such shares shall thereupon
be deemed to have been converted into and to have become exchangeable for, as of
the Effective Time, the right to receive the consideration provided in this
Article I. Seller shall give Buyer (i) prompt notice of any written objections
to the Merger and any written demands for the payment of the fair value of any
shares, withdrawals of such demands, and any other instruments served pursuant
to the KBCA received by Seller and (ii) the opportunity to direct all
negotiations and proceedings with respect to such demands under the KBCA. Seller
shall not voluntarily make any payment with respect to any demands for payment
of fair value and shall not, except with the prior written consent of Buyer,
settle or offer to settle any such demands.
1.10 No Fractional Shares.
Notwithstanding any other provision of this Agreement, neither certificates nor
scrip for fractional shares of Buyer Common Stock shall be issued in the Merger.
Each holder who otherwise would have been entitled to a fraction of a share of
Buyer Common Stock shall receive in lieu thereof cash (without interest) in an
amount determined by multiplying the fractional share interest to which such
holder would otherwise be entitled by the closing price of a share of Buyer
Common Stock on the New York Stock Exchange, Inc. ("NYSE") composite tape on the
last full trading day prior to the Effective Time. No such holder shall be
entitled to dividends, voting rights or any other rights in respect of any
fractional share.
1.11 Anti-Dilution Adjustments. If prior to the Effective
Time Buyer shall declare a stock dividend or make distributions upon or
subdivide, split up, reclassify or combine or make similar changes to Buyer
Common Stock or exchange Buyer Common Stock for a different number or kind of
shares or securities or declare a dividend or make a distribution on Buyer
Common Stock or on any security convertible into Buyer Common Stock, or is
involved in any transaction resulting in any of the foregoing (including any
exchange of Buyer Common Stock for a different number or kind of shares or
securities), appropriate adjustment or adjustments will be made to the Exchange
Ratio.
1.12 Reservation of Right to Revise Transaction. Buyer may with Seller's
consent (which will not be unreasonably withheld) at any time change the method
of effecting the acquisition of Seller or Seller's Subsidiaries by Buyer and
Seller shall cooperate in such efforts (including without limitation (a)
modifying the provisions of this Article I and (b) causing the merger of Trans
Financial Bank, National Association and/or Trans Financial Bank Tennessee,
National Association, each a national association and a wholly owned subsidiary
of Seller (the "Seller Banks") with any depository institution which is a
Subsidiary of Buyer (any such merger or other method of effecting the
acquisition, together with the Merger, being referred to herein as the
"Transactions")) if and to the extent Buyer deems such change to be desirable,
including without limitation to provide for a merger of Seller into a
wholly-owned subsidiary of Buyer in which such subsidiary of Buyer is the
surviving corporation; provided, however, that no such change shall (A) alter or
change the amount or kind of consideration to be issued to holders of Seller
Common Stock as provided for in this Agreement (the "Merger Consideration"), (B)
adversely affect the tax treatment to Seller's stockholders as a result of
receiving the Merger Consideration, or (C) materially impede or delay the
consummation of the transactions contemplated by this Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller represents and warrants to and covenants with Buyer as follows:
2.1 Organization and Authority. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Kentucky, 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 has corporate power and authority to own its properties
and assets and to carry on its business as it is now being conducted. Seller is
registered as a bank holding company with the Board of Governors of the Federal
Reserve System (the "Board") under the Holding Company Act. True and complete
copies of the Articles of Incorporation and the Bylaws of Seller and, to the
extent requested in writing by Buyer, of the articles of incorporation and
bylaws of the Seller Subsidiaries (as defined in Section 2.2), each as in effect
on the date of this Agreement, have been provided to Buyer.
2.2 Subsidiaries.
Schedule 2.2 sets forth, among other things, a complete and correct list of all
of Seller's Subsidiaries (each a "Seller Subsidiary" and collectively the
"Seller Subsidiaries"), all outstanding Equity Securities of each of which are
owned directly or indirectly by Seller. "Equity Securities" of an issuer means
capital stock or other equity securities of such issuer, options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, shares of any capital
stock or other Equity Securities of such issuer, or contracts, commitments,
understandings or arrangements by which such issuer is or may become bound to
issue additional shares of its capital stock or other Equity Securities of such
issuer, or options, warrants, scrip or rights to purchase, acquire, subscribe
to, calls on or commitments for any shares of its capital stock or other Equity
Securities. All of the outstanding shares of capital stock of the Seller
Subsidiaries are validly issued, fully paid and nonassessable, and those shares
owned by Seller are owned free and clear of any lien, claim, charge, option,
encumbrance, agreement, mortgage, pledge, security interest or restriction (a
"Lien") with respect thereto. Each of the Seller Subsidiaries is a corporation
or association duly incorporated or organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation or organization,
and has corporate power and authority to own or lease its properties and assets
and to carry on its business as it is now being conducted. Each of the Seller
Subsidiaries is duly qualified to do business in each jurisdiction where its
ownership or leasing of property or the conduct of its business requires it so
to be qualified, except where the failure to so qualify would not have a
material adverse effect on the financial condition, results of operations or
business (collectively, the "Condition") of Seller and its Subsidiaries, taken
as a whole. Except for the Equity Securities of the Seller Banks of which Seller
owns 100%, Seller 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. The Seller Banks are
chartered by the Office of the Comptroller of the Currency. The deposits of
Seller Bank are insured by the Federal Deposit Insurance Corporation ("FDIC").
Neither Seller nor any Seller Subsidiary holds any interest in a partnership or
joint venture of any kind.
2.3 Capitalization. The authorized capital stock
of Seller consists of (i) 50,000,000 shares of Seller Common Stock, of which, as
of April 8, 1998, 11,718,405 shares were issued and outstanding, (ii) 50,000
shares of Class A Preferred Stock, no par value ("Seller Class A Preferred
Stock"), of which, as of April 8, 1998, no shares were issued or outstanding,
and (iii) 5,000,000 shares of Class B Preferred Stock, no par value ("Seller
Class B Preferred Stock" and, together with the Seller Class A Preferred Stock,
the "Seller Preferred Stock"), of which, as of April 8, 1998, no shares were
issued and outstanding. Seller has reserved the shares of Seller Class B
Preferred Stock for issuance upon exercise of Preferred Stock Purchase Rights
under a Rights Agreement, dated January 20, 1992 (the "Seller Rights
Agreement"), between Seller and Manufacturers Hanover, as Rights Agent. Pursuant
to the Seller Rights Agreement, each certificate representing one share of
Seller Common Stock also represents one Right (as defined in the Seller Rights
Agreement). As of April 8, 1998, Seller had reserved 173,118 shares of Seller
Common Stock for issuance under Seller's stock option and incentive plans, a
list of which is set forth on Schedule 2.3 (the "Seller Stock Plans"), pursuant
to which options ("Seller Stock Options") covering 839,980 shares of Seller
Common Stock were outstanding as of April 8, 1998. Since April 1, 1998, no
Equity Securities of Seller have been issued other than shares of Seller Common
Stock which may have been issued upon the exercise of Seller Stock Options.
Except as set forth above and except pursuant to the Seller Rights Agreement,
there are no other Equity Securities of Seller outstanding. All of the issued
and outstanding shares of Seller Common Stock are validly issued, fully paid,
and nonassessable, and have not been issued in violation of any preemptive right
of any stockholder of Seller. Seller maintains a dividend reinvestment plan or
similar plan.
2.4 Authorization. (a) Seller has the corporate power and
authority to enter into this Agreement and, subject to the approval of this
Agreement by the stockholders of Seller, to carry out its obligations hereunder.
The only stockholder vote required for Seller to approve this Agreement is the
affirmative vote of the holders of at least a majority of the shares of Seller
Common Stock entitled to vote at a meeting called for such purpose. The
execution, delivery and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Seller. Subject to approval by the
stockholders of Seller, this Agreement is a valid and binding obligation of
Seller enforceable against Seller in accordance with its terms. Except as set
forth on Schedule 2.4B, neither the execution nor delivery nor performance by
Seller of this Agreement, nor the consummation by Seller of the transactions
contemplated hereby, nor compliance by Seller with any of the provisions hereof,
will (i) violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of, any material Lien upon any of the
material properties or assets of Seller or any Seller Subsidiary under any of
the terms, conditions or provisions of (x) its articles or certificate of
incorporation or bylaws or (y) any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Seller or any Seller Subsidiary is a party or by which it may be bound, or
to which Seller or any Seller Subsidiary or any of the material properties or
assets of Seller or any Seller Subsidiary may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in paragraph (c) of
this Section 2.4, to the best knowledge of Seller, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any Seller Subsidiary or any of their respective material properties
or assets. Other than as set forth on Schedule 2.4C or in connection or
compliance with the provisions of the KBCA, the OGCL, 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 Holding Company Act, and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"), or any required approvals or filings
pursuant to any state statutes or regulations applicable to the Seller Banks
with respect to the transactions contemplated by this Agreement, no notice to,
filing with, exemption or review by, or authorization, consent or approval of,
any public body or authority is necessary for the consummation by Seller of the
transactions contemplated by this Agreement.
2.5 Seller Financial Statements.
The consolidated balance sheets of Seller and its Subsidiaries as of December
31, 1997, 1996 and 1995 and related consolidated statements of income, cash
flows and changes in stockholders' equity for each of the three years in the
three-year period ended December 31, 1997, together with the notes thereto,
audited by KPMG Peat Marwick LLP and included in an annual report on Form 10-K
as filed with the Securities and Exchange Commission (the "SEC") (collectively,
the "Seller Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP"),
present fairly the consolidated financial position of Seller and its
Subsidiaries at the dates and the consolidated results of operations, cash flows
and changes in stockholders' equity of Seller and its Subsidiaries for the
periods stated therein and are derived from the books and records of Seller and
its Subsidiaries, which are complete and accurate in all material respects and
have been maintained in all material respects in accordance with applicable laws
and regulations. Neither Seller nor any of its Subsidiaries has any material
contingent liabilities that are not described in the financial statements
described above.
2.6 Seller Reports. Except as set forth in Schedule 2.6, since January 1, 1995
each of Seller and the Seller Subsidiaries has filed all material reports,
registrations and statements, together with any required material amendments
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements, (ii) the
Board, (iii) the FDIC, and (iv) any other federal, state, municipal, local or
foreign government, securities, banking, savings and loan, insurance and other
governmental or regulatory authority and the agencies and staffs thereof (the
entities in the foregoing clauses (i) through (iv) being referred to herein
collectively as the "Regulatory Authorities" and individually as a "Regulatory
Authority"). All such reports and statements filed with any such Regulatory
Authority are collectively referred to herein as the "Seller Reports." As of its
respective date, each Seller Report complied in all material respects with all
the rules and regulations promulgated by the applicable Regulatory Authority and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.7 Properties and Leases. Except as may be reflected in the
Seller Financial Statements, except for any Lien for current taxes not yet
delinquent and except with respect to assets classified as real estate owned,
Seller and its Subsidiaries have good title free and clear of any material Lien
to all the real and personal property reflected in Seller's consolidated balance
sheet as of December 31, 1997 included in the most recent Seller Form 10-K and,
in each case, all real and personal property acquired since such date, except
such real and personal property as has been disposed of in the ordinary course
of business. All leases material to Seller or any Seller Subsidiary pursuant to
which Seller or any Seller Subsidiary, as lessee, leases real or personal
property, are valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any material existing default by Seller
or any Seller Subsidiary or any event which, with notice or lapse of time or
both, would constitute such a material default. All of Seller's and Seller
Subsidiaries' buildings, structures and equipment in regular use have been well
maintained and are in good and serviceable condition, normal wear and tear
excepted.
2.8 Taxes. Seller and each Seller Subsidiary have timely filed or
will timely (including extensions) file all material tax returns required to be
filed at or prior to the Closing Date ("Seller Returns"). Each of Seller and its
Subsidiaries has paid, or set up adequate reserves on the Seller Financial
Statements for the payment of, all taxes required to be paid in respect of the
periods covered by such returns and has set up adequate reserves on the most
recent financial statements Seller has filed under the Exchange Act for the
payment of all taxes anticipated to be payable in respect of all periods up to
and including the latest period covered by such financial statements. Neither
Seller nor any Seller Subsidiary will have any material liability for any such
taxes in excess of the amounts so paid or reserves so established and no
material deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or definitely) against any of Seller
or any Seller Subsidiary which would not be covered by existing reserves.
Neither Seller nor any Seller Subsidiary is delinquent in the payment of any
material tax, assessment or governmental charge, nor, except as previously
disclosed, has it requested any extension of time within which to file any tax
returns in respect of any fiscal year which have not since been filed and no
requests for waivers of the time to assess any tax are pending. The federal and
state income tax returns of Seller and the Seller Subsidiaries have been audited
and finally settled by the Internal Revenue Service (the "IRS") or appropriate
state tax authorities or the relevant statute of limitations has expired for all
periods ended through December 31, 1993. There is no deficiency or refund
litigation or matter in controversy with respect to Seller Returns. Neither
Seller nor any Seller Subsidiary has extended or waived any statute of
limitations on the assessment of any tax due that is currently in effect.
2.9 Material Adverse Change. Since December 31, 1997, there has been no
material adverse change in the Condition of Seller and its Subsidiaries, taken
as a whole, except as may have resulted or may result from changes to laws and
regulations or changes in economic conditions applicable to banking institutions
generally or in general levels of interest rates affecting banking institutions
generally.
2.10 Commitments and Contracts. (a) Except as set forth on Schedule
2.10A, neither Seller nor any Seller Subsidiary is a party or subject to any of
the following (whether written or oral, express or implied): any material
agreement, arrangement or commitment (A) not made in the ordinary course of
business or (B) pursuant to which Seller or any of its Subsidiaries is or may
become obligated to invest in or contribute capital to any Seller Subsidiary;
any agreement, indenture or other instrument not disclosed in the Seller
Financial Statements relating to the borrowing of money by Seller or any Seller
Subsidiary or the guarantee by Seller or any Seller Subsidiary of any such
obligation (other than trade payables or instruments related to transactions
entered into in the ordinary course of business by any Seller Subsidiary, such
as deposits and Fed Funds or similar borrowings); any contract, agreement or
understanding with any labor union or collective bargaining organization; any
contract containing covenants which limit the ability of Seller or any Seller
Subsidiary to compete in any line of business or with any person or which
involve any restriction of the geographical area in which, or method by which,
Seller or any Seller Subsidiary may carry on its business (other than as may be
required by law or any applicable Regulatory Authority); any other contract or
agreement which is a "material contract" within the meaning of Item 601(b)(10)
of Regulation S-K promulgated by the SEC and which is not listed in the Seller
Reports filed with the SEC; or any lease with annual rental payments aggregating
$500,000 or more. Neither Seller nor any Seller Subsidiary is in violation of
its charter documents or bylaws or in default under any material agreement,
commitment, arrangement, lease, insurance policy, or other instrument, whether
entered into in the ordinary course of business or otherwise and whether written
or oral, and there has not occurred any event that, with the lapse of time or
giving of notice or both, would constitute such a default, except, in all cases,
where such default would not have a material adverse effect on the Condition of
Seller and its Subsidiaries, taken as a whole.
2.11 Litigation and Other Proceedings. Except as set forth on Schedule 2.11,
neither Seller nor any Seller Subsidiary is a party to any pending or, to the
best knowledge of Seller, threatened claim, action, suit, investigation or
proceeding, or is subject to any order, judgment or decree, except for matters
which, in the aggregate, will not have, or reasonably could not be expected to
have, a material adverse effect on the Condition of Seller and its Subsidiaries,
taken as a whole, or which purports or seeks to enjoin or restrain the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, there are no actions, suits, or proceedings pending or, to the
best knowledge of Seller, threatened against Seller or any Seller Subsidiary or
any of their respective officers or directors by any stockholder of Seller or
any Seller Subsidiary (or any former stockholder of Seller or any Seller
Subsidiary) or involving claims under the Securities Act, the Exchange Act, the
Community Reinvestment Act of 1977, as amended, or the fair lending laws.
2.12 Insurance. Each of Seller and its Subsidiaries has taken all requisite
action (including without limitation the making of claims and the giving of
notices) pursuant to its directors' and officers' liability insurance policy or
policies in order to preserve all rights thereunder with respect to all matters
(other than matters arising in connection with this Agreement and the
transactions contemplated hereby) occurring prior to the Effective Time that are
known to Seller, except for such matters which, individually or in the
aggregate, will not have and reasonably could not be expected to have a material
adverse effect on the Condition of Seller and its Subsidiaries, taken as a
whole.
2.13 Compliance with Laws. (a) Seller and each of its Subsidiaries have
all permits, licenses, authorizations, orders and approvals of, and have made
all filings, applications and registrations with, all Regulatory Authorities
that are required in order to permit them to own or lease their properties and
assets and to carry on their business as presently conducted and that are
material to the business of Seller and its Subsidiaries; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the best knowledge of Seller, no suspension or cancellation of
any of them is threatened; and all such filings, applications and registrations
are current. Except for failures to comply or defaults which individually or in
the aggregate would not have a material adverse effect on the Condition of
Seller and its Subsidiaries, taken as a whole, (i) each of Seller and its
Subsidiaries has complied with all laws, regulations and orders (including
without limitation zoning ordinances, building codes, the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and securities, tax,
environmental, civil rights, and occupational health and safety laws and
regulations and including without limitation in the case of any Seller
Subsidiary that is a bank or savings association, banking organization, banking
corporation or trust company, all statutes, rules, regulations and policy
statements pertaining to the conduct of a banking, deposit-taking, lending or
related business, or to the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business, and (ii) neither Seller
nor any Seller Subsidiary is in default under, and no event has occurred which,
with the lapse of time or notice or both, could result in the default under, the
terms of any judgment, order, writ, decree, permit, or license of any Regulatory
Authority or court, whether federal, state, municipal, or local and whether at
law or in equity. Except as set forth in Schedule 2.13B, neither Seller nor any
Seller Subsidiary is subject to or reasonably likely to incur a liability as a
result of its ownership, operation, or use of any Property (as defined below) of
Seller (whether directly or, to the best knowledge of Seller, as a consequence
of such Property being part of the investment portfolio of Seller or any Seller
Subsidiary) (A) that is contaminated by or contains any hazardous waste, toxic
substance, or related materials, including without limitation asbestos, PCBs,
pesticides, herbicides, and any other substance or waste that is hazardous to
human health or the environment (collectively, a "Toxic Substance"), or (B) on
which any Toxic Substance has been stored, disposed of, placed, or used in the
construction thereof. "Property" of a person shall include all property (real or
personal, tangible or intangible) owned or controlled by such person, including
without limitation property under foreclosure, property held by such person or
any Subsidiary of such person in its capacity as a trustee and property in which
any venture capital or similar unit of such person or any Subsidiary of such
person has an interest. Except as set forth in Schedule 2.13B, no claim, action,
suit, or proceeding is pending against Seller or any Seller Subsidiary relating
to Property of Seller before any court or other Regulatory Authority or
arbitration tribunal relating to hazardous substances, pollution, or the
environment, and there is no outstanding judgment, order, writ, injunction,
decree, or award against or affecting Seller or any Seller Subsidiary with
respect to the same. Except for statutory or regulatory restrictions of general
application, no Regulatory Authority has placed any restriction on the business
of Seller or any Seller Subsidiary which reasonably could be expected to have a
material adverse effect on the Condition of Seller and its Subsidiaries, taken
as a whole. From and after January 1, 1995, neither Seller nor any Seller
Subsidiary has received any notification or communication which has not been
resolved from any Regulatory Authority (i) asserting that any Seller or any
Subsidiary of Seller, is not in substantial compliance with any of the statutes,
regulations or ordinances that such Regulatory Authority enforces, except with
respect to matters which (A) are set forth on Schedule 2.13C or in any writing
previously furnished to Buyer and (B) reasonably could not be expected to have a
material adverse effect on the Condition of Seller and its Subsidiaries, taken
as a whole, (ii) threatening to revoke any license, franchise, permit or
governmental authorization that is material to the Condition of Seller and its
Subsidiaries, taken as a whole, including without limitation such company's
status as an insured depository institution under the Federal Deposit Insurance
Act, or (iii) requiring or threatening to require Seller or any of its
Subsidiaries, or indicating that Seller or any of its Subsidiaries may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or purporting to
direct, restrict or limit in any manner the operations of Seller or any of its
Subsidiaries, including without limitation any restriction on the payment of
dividends. No such cease and desist order, agreement or memorandum of
understanding or other agreement is currently in effect. Neither Seller nor any
Seller Subsidiary is required by Section 32 of the Federal Deposit Insurance Act
to give prior notice to any federal banking agency of the proposed addition of
an individual to its board of directors or the employment of an individual as a
senior executive officer.
2.14 Labor. No work stoppage involving Seller or any Seller Subsidiary, is
pending or, to the best knowledge of Seller, threatened. Neither Seller nor any
Seller Subsidiary is involved in, or, to the best knowledge of Seller,
threatened with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding which reasonably could be expected to have a material
adverse affect on the Condition of Seller and its Subsidiaries, taken as a
whole. Employees of neither Seller nor any Seller Subsidiary are represented by
any labor union or any collective bargaining organization.
2.15 Material Interests of Certain Persons. (a) Except as set forth in Seller's
Proxy Statement for its 1998 Annual Meeting of Stockholders, to the best
knowledge of Seller, no officer or director of Seller or any Subsidiary of
Seller, or any "associate" (as such term is defined in Rule 14a-1 under the
Exchange Act) of any such officer or director, has any material interest in any
material contract or property (real or personal, tangible or intangible), used
in, or pertaining to the business of, Seller or any Subsidiary of Seller, which
in the case of Seller is required to be disclosed by Item 404 of Regulation S-K
promulgated by the SEC or in the case of any such Subsidiary would be required
to be so disclosed if such Subsidiary had a class of securities registered under
Section 12 of the Exchange Act. Each outstanding loan from Seller or any Seller
Subsidiary to any present officer, director, employee or any associate or
related interest of any such person which was or would be required under any
rule or regulation to be approved by or reported to Seller's or Seller
Subsidiary's Board of Directors ("Insider Loans") was approved by or reported to
the appropriate board of directors in accordance with applicable law and
regulations. Except as set forth on Schedule 2.15B, no Insider Loan has a
principal balance as of the date hereof in excess of $250,000 or a line of
credit in excess of $100,000.
2.16 Allowance for Loan and Lease Losses; Nonperforming Assets.(a)The allowances
for loan and lease losses contained in the Seller Financial Statements were
established in accordance with the past practices and experiences of Seller and
its Subsidiaries, and the allowance for loan losses shown on the consolidated
condensed balance sheet of Seller and its Subsidiaries contained in the most
recent Seller Report filed with the SEC is adequate in all material respects
under the requirements of GAAP to provide for possible losses on loans
(including without limitation accrued interest receivable) and credit
commitments (including without limitation stand-by letters of credit)
outstanding as of the date of such balance sheet. The aggregate amount of all
Nonperforming Assets (as defined below) on the books of Seller and its
Subsidiaries did not exceed $25,543,000 as of December 31, 1997. "Nonperforming
Assets" shall mean (i) all loans and leases (A) that are contractually past due
90 days or more in the payment of principal and/or interest, (B) that are on
nonaccrual status, and (C) where the interest rate terms have been reduced
and/or the maturity dates have been extended and/or otherwise restructured by
Seller's Subsidiary subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's ability to pay in
accordance with such initial terms, and (ii) all assets classified as real
estate acquired through foreclosure or repossession and other assets acquired
through foreclosure or repossession.
2.17 Employee Benefit Plans. (a) Except as
set forth in Schedule 2.17A, neither Seller nor any Seller Subsidiary is a party
to any existing employment, management, consulting, deferred compensation,
change-in-control or other similar contract. Schedule 2.17A lists all pension,
retirement, supplemental retirement, savings, profit sharing, stock option,
stock purchase, stock ownership, stock appreciation right, deferred
compensation, consulting, bonus, medical, disability, workers' compensation,
vacation, group insurance, severance and other material employee benefit,
incentive and welfare policies, contracts, plans and arrangements, and all trust
agreements related thereto, maintained (currently or at any time in the last
five years) by or contributed to by Seller or any Seller Subsidiary in respect
of any of the present or former directors, officers, or other employees of
and/or consultants to Seller or any Seller Subsidiary (collectively, "Seller
Employee Plans"). Seller has furnished or made available to Buyer the following
documents with respect to each Seller Employee Plan: (i) a true and complete
copy of all written documents comprising such Seller Employee Plan (including
amendments and individual agreements relating thereto) or, if there is no such
written document, an accurate and complete description of the Seller Employee
Plan; (ii) the most recent Form 5500 or Form 5500-C (including all schedules
thereto), if applicable; (iii) the most recent financial statements and
actuarial reports, if any; (iv) the summary plan description currently in effect
and all material modifications thereof, if any; and (v) the most recent Internal
Revenue Service determination letter, if any. Without limiting the generality of
the foregoing, Seller has furnished or made available to Buyer true and complete
copies of each form of stock option grant or stock option agreement that is
outstanding under any stock option plan of Seller or any Seller Subsidiary. All
Seller Employee Plans have been maintained and operated materially in accordance
with their terms and with the material requirements of all applicable statutes,
orders, rules and final regulations, including without limitation ERISA and the
Internal Revenue Code. All contributions required to be made to Seller Employee
Plans have been made. With respect to each of the Seller Employee Plans which is
a pension plan (as defined in Section 3(2) of ERISA) (the "Pension Plans"): (i)
each Pension Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Internal Revenue Code has been determined to be so
qualified by the Internal Revenue Service and, to the knowledge of Seller, such
determination letter may still be relied upon, except as disclosed in Schedule
2.17A, and each related trust is exempt from taxation under Section 501(a) of
the Internal Revenue Code; (ii) the present value of all benefits vested and all
benefits accrued under each Pension Plan which is subject to Title IV of ERISA,
valued using the assumptions in the most recent actuarial report, did not, in
each case, as of the last applicable annual valuation date, exceed the value of
the assets of the Pension Plan allocable to such vested or accrued benefits;
(iii) to the best knowledge of Seller, there has been no "prohibited
transaction," as such term is defined in Section 4975 of the Internal Revenue
Code or Section 406 of ERISA, which could subject any Pension Plan or associated
trust, or the Seller or any Seller Subsidiary, to any material tax or penalty;
(iv) except as set forth on Schedule 2.17C, no Pension Plan or any trust created
thereunder has been terminated, nor have there been any "reportable events" with
respect to any Pension Plan, as that term is defined in Section 4043 of ERISA on
or after January 1, 1985; and (v) no Pension Plan or any trust created
thereunder has incurred any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA (whether or not waived), except as disclosed in
Schedule 2.17A. No Pension Plan is a "multiemployer plan" as that term is
defined in Section 3(37) of ERISA. Seller has no Pension Plan that is described
in Section 4063(a) of ERISA (a "Multiple Employer Plan"). Except as disclosed in
Schedule 2.17D, neither Seller nor any Seller Subsidiary has any liability for
any post-retirement health, medical or similar benefit of any kind whatsoever,
except as required by statute or regulation. Neither Seller nor any Seller
Subsidiary has any material liability under ERISA or the Internal Revenue Code
as a result of its being a member of a group described in Sections 414(b), (c),
(m) or (o) of the Internal Revenue Code. Except as set forth on Schedule 2.17F,
neither the execution nor delivery of this Agreement, nor the consummation of
any of the transactions contemplated hereby, will (i) result in any material
payment (including without limitation severance, unemployment compensation or
golden parachute payment) becoming due to any director or employee of Seller or
any Seller Subsidiary from any of such entities, (ii) materially increase any
benefit otherwise payable under any of the Seller Employee Plans or (iii) result
in the acceleration of the time of payment of any such benefit. Except as set
forth in Schedule 2.17F, no holder of an option to acquire stock of Seller has
or will have at any time through the Effective Time the right to receive any
cash or other payment (other than the issuance of stock of Seller) in exchange
for or with respect to all or any portion of such option. Seller shall use its
best efforts to insure that no amounts paid or payable by Seller, Seller
Subsidiaries or Buyer to or with respect to any employee or former employee of
Seller or any Seller Subsidiary will fail to be deductible for federal income
tax purposes by reason of Section 280G of the Internal Revenue Code. No Seller
Stock Option has an associated "additional option right" or similar "re-load"
feature.
2.18 Conduct of Seller to Date. From and after January 1, 1998 through
the date of this Agreement, except as set forth on Schedule 2.18 or reflected in
Seller Financial Statements: (i) Seller and the Seller Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practices; (ii) Seller has not issued, sold, granted,
conferred or awarded any of its Equity Securities (except shares of Seller
Common Stock upon exercise of Seller Stock Options), or any corporate debt
securities which would be classified under GAAP as long-term debt on the balance
sheets of Seller; (iii) Seller has not effected any stock split or adjusted,
combined, reclassified or otherwise changed its capitalization; (iv) Seller has
not declared, set aside or paid any dividend (other than its regular quarterly
or regular semi-annual common dividends) or other distribution in respect of its
capital stock, or purchased, redeemed, retired, repurchased, or exchanged, or
otherwise acquired or disposed of, directly or indirectly, any of its Equity
Securities, whether pursuant to the terms of such Equity Securities or
otherwise; (v) neither Seller nor any Seller Subsidiary has incurred any
material obligation or liability (absolute or contingent), except normal trade
or business obligations or liabilities incurred in the ordinary course of
business, or subjected to Lien any of its assets or properties other than in the
ordinary course of business consistent with past practice; (vi) neither Seller
nor any Seller Subsidiary has discharged or satisfied any material Lien or paid
any material obligation or liability (absolute or contingent), other than in the
ordinary course of business; (vii) neither Seller nor any Seller Subsidiary has
sold, assigned, transferred, leased, exchanged, or otherwise disposed of any of
its properties or assets other than for a fair consideration in the ordinary
course of business; (viii) except as required by contract or law, neither Seller
nor any Seller Subsidiary has (A) increased the rate of compensation of, or paid
any bonus to, any of its directors, officers, or other employees, except merit
or promotion increases in accordance with existing policy, (B) entered into any
new, or amended or supplemented any existing, employment, management,
consulting, deferred compensation, severance, or other similar contract, (C)
entered into, terminated, or substantially modified any of the Seller Employee
Plans or (D) agreed to do any of the foregoing; (ix) neither Seller nor any
Seller Subsidiary has suffered any material damage, destruction, or loss,
whether as the result of fire, explosion, earthquake, accident, casualty, labor
trouble, requisition, or taking of property by any Regulatory Authority, flood,
windstorm, embargo, riot, act of God or the enemy, or other casualty or event,
and whether or not covered by insurance; (x) neither Seller nor any Seller
Subsidiary has cancelled or compromised any debt, except for debts charged off
or compromised in accordance with the past practice of Seller and its
Subsidiaries; and (xi) neither Seller nor any Seller Subsidiary has entered into
any material transaction, contract or commitment outside the ordinary course of
its business.
2.19 Proxy Statement,etc. None of the information regarding
Seller or any Seller Subsidiary supplied or to be supplied by Seller for
inclusion in (i) the registration statement on Form S-4 to be filed with the SEC
by Buyer for the purpose of registering the shares of Buyer Common Stock to be
exchanged for shares of Seller Common Stock pursuant to the provisions of this
Agreement (the "Registration Statement"), (ii) the proxy or information
statement (the "Proxy Statement") to be mailed to Seller's stockholders in
connection with the transactions contemplated by this Agreement or (iii) any
other documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed with any 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 Seller's stockholders referred
to in Section 5.3 (the "Meeting") (or, if no Meeting is held, at the time the
Proxy Statement is first furnished to Seller's stockholders), be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Meeting. All documents which Seller or any
Seller Subsidiary is responsible for filing with any Regulatory Authority in
connection with the Merger will comply as to form in all material respects with
the provisions of applicable law.
2.20 Registration Obligations. Neither
Seller nor any Seller Subsidiary is under any obligation, contingent or
otherwise to register any of its securities under the Securities Act.
2.21 State Takeover Statutes; Seller's Articles of Incorporation;
Seller Rights Agreement.
(a) The transactions contemplated by this Agreement are not subject to, or have
been exempted from, any applicable state law which purports to limit or restrict
business combinations or the ability to acquire or to vote shares. The
transactions contemplated by this Agreement and the agreements contemplated
hereby are not, and will not be, prohibited by, or subject to, or have been
exempted from, Article X of the Seller's Articles of Incorporation. Seller has
taken all necessary steps to render the Seller Rights Agreement inapplicable to
the Merger and the transactions contemplated by this Agreement and by the Stock
Option Agreement (including, such that the Rights related thereto will not be
distributed, become exercisable or be triggered in any way as a result of the
execution of this Agreement or the Stock Option Agreement or the consummation of
the transactions contemplated hereby or thereby).
2.22 Accounting, Tax and Regulatory Matters. Neither Seller nor any Seller
Subsidiary has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated hereby
from qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code or as a pooling of interests for accounting and financial
reporting purposes or (ii) materially impede or delay receipt of any approval
referred to in Section 6.1(b) or the consummation of the transactions
contemplated by this Agreement.
2.23 Brokers and Finders. Except for Xxxxxxxxx,
Xxxxxx & Xxxxxxxx ("DLJ") and Chartwell Capital Limited ("CCL"), neither Seller
nor any Seller Subsidiary nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted directly or indirectly for Seller or any Seller
Subsidiary in connection with this Agreement or the transactions contemplated
hereby. Seller has furnished Buyer with a copy of any written contractual
arrangement with DLJ and CCL.
2.24 Other Activities. (a) Except as disclosed
in Schedule 2.24A, neither Seller nor any of its Subsidiaries engages in any
insurance activities other than acting as a principal, agent or broker for
insurance that is directly related to an extension of credit by Seller or any of
its Subsidiaries and limited to assuring the repayment of the balance due on the
extension of credit in the event of the death, disability or involuntary
unemployment of the debtor. To the knowledge of Seller's management: each
Subsidiary that is a national bank that performs personal trust, corporate trust
and other fiduciary activities ("Trust Activities") is doing so with requisite
authority under applicable law of Regulatory Authorities and in material
accordance with the agreements and instruments governing such Trust Activities,
sound fiduciary principles and applicable law and regulation (specifically
including but not limited to Section 9 of Title 12 of the Code of Federal
Regulations); there is no investigation or inquiry by any governmental entity
pending or threatened against Seller or any of its Subsidiaries thereof relating
to the compliance by Seller or any of its Subsidiaries with sound fiduciary
principles and applicable law and regulations; and each employee of any such
bank had the authority to act in the capacity in which such employee acted with
respect to Trust Activities in each case in which such employee was held out as
a representative of such bank; and such bank has established policies and
procedures for the purpose of complying with applicable laws of governmental
entities relating to Trust Activities, has followed such policies and procedures
in all material respects and has performed appropriate internal audit reviews of
Trust Activities, which audits have disclosed no material violations of
applicable laws of governmental entities or such policies and procedures.
2.25 Interest Rate Risk Management Instruments. (a) Set forth on Schedule 2.25A
is a list of all interest rate swaps, caps, floors, and option agreements to
which Seller or any of its Subsidiaries is a party or by which any of their
properties or assets may be bound. All interest rate swaps, caps, floors and
option agreements and other interest rate risk management arrangements to which
Seller or any of its Subsidiaries is a party or by which any of their properties
or assets may be bound were entered into in the ordinary course of business and
in accordance with prudent banking practice and applicable rules, regulations
and policies of Regulatory Authorities and with counterparties believed to be
financially responsible at the time and are legal, valid and binding obligations
and are in full force and effect. Seller and each of its Subsidiaries has duly
performed in all material respects all of its obligations thereunder to the
extent that such obligations to perform have accrued, and there are no material
breaches, violations or defaults or allegations or assertions of such by any
party thereunder.
2.26 Accuracy of Information. The statements of Seller
contained in this Agreement, the Schedules and any other written document
executed and delivered by or on behalf of Seller pursuant to the terms of this
Agreement are true and correct in all material respects, and such statements and
documents do not omit any material fact necessary to make the statements
contained therein not misleading.
2.27 Year 2000 Compliant. None of Seller or any of the Seller
Subsidiaries has received, or reasonably expects to receive, a "Year 2000
Deficiency Notification Letter" (as such term is employed in the Federal
Reserve's Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4,
1998). Seller has disclosed to Buyer a complete and accurate copy of Seller's
plan for addressing the issues set forth in the statements of the Federal
Financial Institutions Examination Council, dated May 5, 1997, entitled "Year
2000 Project Management Awareness," and December 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect Seller and its Subsidiaries. Between the date of this Agreement and the
Effective Time, Seller shall use commercially practicable efforts to implement
such plan.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents and warrants to and covenants with Seller as follows:
3.1 Organization and Authority. Buyer and each of its Subsidiaries is a
corporation, bank, trust company or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
organization, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and has corporate power and authority to
own its properties and assets and to carry on its business as it is now being
conducted, except, in the case of the Buyer Subsidiaries, where the failure to
be so qualified would not have a material adverse effect on the Condition of
Buyer and its Subsidiaries, taken as a whole. Buyer is registered as a bank
holding company with the Board under the Holding Company Act. True and complete
copies of the Articles of Incorporation and Regulations of Buyer, each in effect
on the date of this Agreement, have been provided to Seller.
3.2 Capitalization of Buyer. The authorized capital stock of Buyer consists of
(i) 200,000,000 shares of Buyer Common Stock, of which, as of April 1, 1998,
95,567,122 shares were issued and outstanding and (ii) 1,000,000 shares of
preferred stock, no par value ("Buyer Preferred Stock"), issuable in series,
none of which, as of April 1, 1998, is issued or outstanding. Buyer has
designated (i) 500,000 shares of Buyer Preferred Stock as "Series A Preferred
Stock" and has reserved such shares for issuance upon exercise of Preferred
Stock Purchase Rights under a Rights Agreement dated October 27, 1989 (the
"Buyer Rights Agreement"), between Buyer and Star Bank, N.A., as Rights Agent
and (ii) 218,000 shares of Buyer Preferred Stock as "Series B Cumulative
Preferred Stock." Pursuant to the Buyer Rights Agreement, each certificate
representing one share of Buyer Common Stock also represents one Rights (as
defined in the Buyer Rights Agreement). As of December 31, 1997 Buyer had
options outstanding for 6,586,501 shares of Buyer Common Stock for issuance
under various employee stock option and incentive plans ("Buyer Stock Options").
From April 1, 1998 through the date of this Agreement, no shares of Buyer Common
Stock or other Equity Securities of Buyer have been issued excluding any such
shares which may have been issued pursuant to stock-based employee benefit or
incentive plans and programs. Buyer continually evaluates possible acquisitions
and may prior to the Effective Time enter into one or more agreements providing
for, and may consummate, the acquisition by it of another bank, association,
bank holding company, savings and loan holding company or other company (or the
assets thereof) for consideration that may include Equity Securities. In
addition, prior to the Effective Time, Buyer may, depending on market conditions
and other factors, otherwise determine to issue equity, equity-linked or other
securities for financing purposes. Notwithstanding the foregoing, Buyer will not
take any action that would (i) prevent the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code or as a pooling of interests for accounting and financial
reporting purposes or (ii) materially impede or delay receipt of any approval
referred to in Section 6.1(b) or the consummation of the transactions
contemplated by this Agreement. Except as set forth above and except pursuant to
the Buyer Rights Agreement, there are no other Equity Securities of Buyer
outstanding. All of the issued and outstanding shares of Buyer Common Stock are
validly issued, fully paid, and nonassessable, and have not been issued in
violation of any preemptive right of any stockholder of Buyer. At the Effective
Time, the Buyer Common Stock, including associated Rights, to be issued in the
Merger will be duly authorized, validly issued, fully paid and non-assessable,
and will not be issued in violation of any preemptive right of any stockholder
of Buyer.
3.3 Authorization. (a) Buyer has the corporate power and authority
to enter into this Agreement and to carry out its obligations hereunder. No
stockholder vote is required for Buyer to approve this Agreement. The execution,
delivery and performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby have been duly authorized by all
requisite corporate action of Buyer. This Agreement is a valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms.
Neither the execution, delivery and performance by Buyer of this Agreement, nor
the consummation by Buyer of the transactions contemplated hereby, nor
compliance by Buyer with any of the provisions hereof, will (i) violate,
conflict with or result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any Lien upon any of the material properties or
assets of Buyer or any Buyer Subsidiary under any of the terms, conditions or
provisions of (x) its articles or certificate of incorporation or bylaws, or (y)
any material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Buyer or any of the
material properties or assets of Buyer is a party or by which it may be bound,
or to which Buyer may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in paragraph (c) of this Section 3.3, to
the best knowledge of Buyer, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or any of
its Subsidiaries or any of their respective material properties or assets. Other
than in connection with or in compliance with the provisions of the KBCA, the
OGCL, 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 Holding Company Act, and the HSR Act, or any
required approvals of any other Regulatory Authority, no notice to, filing with,
exemption or review by, or authorization, consent or approval of, any public
body or authority is necessary for the consummation by Buyer of the transactions
contemplated by this Agreement.
3.4 Buyer Financial Statements.
The supplementalconsolidated and parent company only balance sheets of Buyer and
its Subsidiaries as of December 31, 1997, 1996 and 1995 and related supplemental
consolidated and parent company only statements of income, cash flows and
changes in stockholders' equity for each of the three years in the three-year
period ended December 31, 1997, together with the notes thereto, audited by
Xxxxxx Xxxxxxxx LLP ("Buyer Auditors") (collectively, the "Buyer Financial
Statements"), have been prepared in accordance with GAAP, present fairly the
consolidated financial position of Buyer and its Subsidiaries at the dates and
the consolidated results of operations, changes in stockholders' equity and cash
flows of Buyer and its Subsidiaries for the periods stated therein and are
derived from the books and records of Buyer and its Subsidiaries, which are
complete and accurate in all material respects and have been maintained in all
material respects in accordance with applicable laws and regulations. Neither
Buyer nor any of its Subsidiaries has any material contingent liabilities that
are not described in the financial statements described above.
3.5 Buyer Reports. Since January 1, 1995, each of Buyer and the Buyer
Subsidiaries has filed all material reports, registrations and statements,
together with any required material amendments thereto, that it was required to
file with any Regulatory Authority. All such reports and statements filed with
any such Regulatory Authority are collectively referred to herein as the "Buyer
Reports." As of its respective date, each Buyer Report complied in all material
respects with all the rules and regulations promulgated by the applicable
Regulatory Authority and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
3.6 Material Adverse Change. Since December 31,
1997, there has been no material adverse change in the Condition of Buyer and
its Subsidiaries, taken as a whole, except as may have resulted or may result
from changes to laws and regulations or changes in economic conditions
applicable to banking institutions generally or in general levels of interest
rates affecting banking institutions generally.
3.7 Compliance with Laws. Each
of Buyer and its Subsidiaries has complied with all laws, regulations, and
orders (including without limitation zoning ordinances, building codes, ERISA,
and securities, tax, environmental, civil rights, and occupational health and
safety laws and regulations and including without limitation in the case of any
Buyer Subsidiary that is a bank, banking organization, banking corporation or
trust company, all statutes, rules and regulations, pertaining to the conduct of
a banking, deposit-taking or lending or related business or to the exercise of
trust powers) and governing instruments applicable to them and to the conduct of
their business, and to the knowledge of Buyer all applicable listing
requirements and policies of the NYSE, except where such failure to comply would
not have a material adverse effect on the Condition of Buyer and its
Subsidiaries, taken as a whole, and (ii) neither Buyer nor any Buyer Subsidiary
is in default under, and no event has occurred which, with the lapse of time or
notice or both, could result in the default under, the terms of any judgment,
order, writ, decree, permit, or license of any Regulatory Authority or court,
whether federal, state, municipal, or local and whether at law or in equity,
except where such default would not have a material adverse effect on the
Condition of Buyer and its Subsidiaries, taken as a whole. Neither Buyer nor any
Buyer Subsidiary is subject to or reasonably likely to incur a liability as a
result of its ownership, operation, or use of any Property of Buyer (whether
directly or, to the best knowledge of Buyer, as a consequence of such Property
being part of the investment portfolio of Buyer or any Buyer Subsidiary) (A)
that is contaminated by or contains any Toxic Substance, or (B) on which any
Toxic Substance has been stored, disposed of, placed, or used in the
construction thereof; and which, in each case, reasonably could be expected to
have a material adverse effect on the Condition of Buyer and its Subsidiaries,
taken as a whole. Except for statutory or regulatory restrictions of general
application, no Regulatory Authority has placed any restriction on the business
of Buyer or any Buyer Subsidiary which reasonably could be expected to have a
material adverse effect on the Condition of Buyer and its Subsidiaries, taken as
a whole.
3.8 Registration Statement,etc. None of the information regarding
Buyer or any of its Subsidiaries supplied or to be supplied by Buyer for
inclusion or included in (i) the Registration Statement, (ii) the Proxy
Statement, or (iii) any other documents to be filed with any Regulatory
Authority in connection with the transactions contemplated hereby will, at the
respective times such documents are filed with any Regulatory Authority and, in
the case of the Registration Statement, when it becomes effective and, with
respect to the Proxy Statement, when mailed (or furnished to stockholders of
Seller), be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Meeting. All documents which Buyer or any of
its Subsidiaries are responsible for filing with any Regulatory Authority in
connection with the Merger will comply as to form in all material respects with
the provisions of applicable law.
3.9 Brokers and Finders. Except for Credit
Suisse First Boston, neither Buyer nor any of its Subsidiaries nor any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for Buyer or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
3.10 Litigation and Other Proceedings. Neither Buyer nor any Buyer Subsidiary is
a party to any pending or, to the best knowledge of Buyer, threatened claim,
action, suit, investigation or proceeding, or is subject to any order, judgment
or decree, except for matters which, in the aggregate, will not have, or
reasonably could not be expected to have, a material adverse effect on the
Condition of Buyer and its Subsidiaries, taken as a whole. Without limiting the
generality of the foregoing, as of the date of this Agreement, there are no
actions, suits, or proceedings pending or, to the best knowledge of Buyer,
threatened against Buyer or any Buyer Subsidiary or any of their respective
officers or directors by any stockholder of Buyer or any Buyer Subsidiary (or
any former stockholder of Buyer or any Buyer Subsidiary) or involving claims
under the Securities Act, the Exchange Act, the Community Reinvestment Act of
1977, as amended, or the fair lending laws or which purport or seek to enjoin or
restrain the transactions contemplated by this Agreement.
3.11 Taxes. Buyer
and each Buyer Subsidiary have timely filed or will timely file (including
extensions) all material tax returns required to be filed at or prior to the
Closing Date ("Buyer Returns"). Each of Buyer and its Subsidiaries has paid, or
set up adequate reserves on the Buyer Financial Statements for the payment of,
all taxes required to be paid in respect of the periods covered by the Buyer
Financial Statements and has paid or set up adequate reserves on the most recent
financial statements Buyer has filed under the Exchange Act for the payment of,
all taxes anticipated to be payable in respect of the periods covered by such
financial statements. No material deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed in writing by any
governmental or taxing authority against any of Buyer or any Buyer Subsidiary
which have not been settled or would not be covered by existing reserves. To the
knowledge of Buyer, neither Buyer nor any Buyer Subsidiary is delinquent in the
payment of any material tax, assessment or governmental charge shown to be due
on any Buyer Return (taking into account extensions properly obtained), and no
waiver of the time to assess any tax granted in writing by Buyer or any Buyer
Subsidiary is pending. The federal and state income tax returns of Buyer and the
Buyer Subsidiaries have been audited and finally settled by the IRS or
appropriate state tax authorities or the relevant statute of limitations has
expired for all periods ended through December 31, 1994, or the period for
assessment of taxes in respect of such periods has expired.
3.12 Accounting, Tax and Regulatory Matters. Neither Buyer nor any Buyer
Subsidiary has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated hereby
from qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code or as a pooling of interests for accounting and financial
reporting purposes or (ii) materially impede or delay receipt of any approval
referred to in Section 6.1(b) or the consummation of the transactions
contemplated by this Agreement.
3.13 Accuracy of Information. The statements of
Buyer contained in this Agreement, the Schedules and in any other written
document executed and delivered by or on behalf of Buyer pursuant to the terms
of this Agreement are true and correct in all material respects, and such
statements and documents do not omit any material fact necessary to make the
statements contained herein or therein not misleading.
3.14 Year 2000 Compliant. None of Buyer or any of
the Buyer Subsidiaries has received, or reasonably expects to receive, a "Year
2000 Deficiency Notification Letter" (as such term is employed in the Federal
Reserve's Supervision and Regulation Letter No. SR 98-3(SUP), dated March 4,
1998). Buyer has disclosed to Seller a complete and accurate copy of Buyer's
plan for addressing the issues set forth in the statements of the Federal
Financial Institutions Examination Council, dated May 5, 1997, entitled "Year
2000 Project Management Awareness," and December 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect Buyer and its Subsidiaries. Between the date of this Agreement and the
Effective Time, Buyer shall use commercial practicable efforts to implement such
plan.
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the Effective Time, each
of Buyer and Seller shall, and shall cause each of their respective Subsidiaries
to, conduct its business according to the ordinary and usual course consistent
with past practices and shall, and shall cause each such Subsidiary to, use
its reasonable best efforts to maintain and preserve its business organization,
employees and advantageous business relationships and retain the services
of its officers and key employees.
4.2 Forbearances. Except as set forth on Schedule 4.2 or as
otherwise contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, Seller shall not and shall not permit any
of its Subsidiaries to, without the prior written consent of Buyer: declare, set
aside or pay any dividends or other distributions, directly or indirectly, in
respect of its capital stock (other than dividends from a Subsidiary of Seller
to Seller or another Subsidiary of Seller), except that Seller may declare and
pay cash dividends on the Seller Common Stock of not more than $.18 per share
per quarterly period; provided, that Seller shall not declare any dividends on
Seller Common Stock or Seller Preferred Stock during any quarter in which its
stockholders will be entitled to receive any regular quarterly dividend on the
shares of Buyer Common Stock to be issued in the Merger; or enter into or amend
any employment, severance or similar agreement or arrangement with any director
or officer or employee, or materially modify any of the Seller Employee Plans or
grant any salary or wage increase or materially increase any employee benefit
(including incentive or bonus payments), except normal individual increases in
compensation to employees consistent with past practice, or as required by law
or contract; or authorize, recommend, propose or announce an intention to
authorize, so recommend or propose, or enter into an agreement in principle with
respect to, any merger, consolidation or business combination (other than the
Transactions), any acquisition or disposition of a material amount of assets
(except in the usual course of business consistent with past practices),
including mortgage servicing rights, loans or securities as well as any release
or relinquishment of any material contract rights; or propose or adopt any
amendments to its articles of incorporation, association or other charter
document or bylaws; or issue, sell, grant, confer or award any of its Equity
Securities (except shares of Seller Common Stock issued upon exercise of Seller
Stock Options outstanding on the date of this Agreement (Seller agreeing to
promptly notify Buyer of any such issuance of treasury or previously unissued
shares)) or effect any stock split or adjust, combine, reclassify or otherwise
change its capitalization as it existed on the date of this Agreement; or
purchase, redeem, retire, repurchase, or exchange, or otherwise acquire or
dispose of, directly or indirectly, any of its Equity Securities, whether
pursuant to the terms of such Equity Securities or otherwise; or directly or
indirectly (including through its officers, directors, employees or other
representatives) initiate, solicit, engage in or encourage any discussions,
inquiries or proposals with any third party relating to the disposition of any
significant portion of the business or assets of Seller or any Seller Subsidiary
or the acquisition of Equity Securities of Seller or any Seller Subsidiary or
the merger of Seller or any Seller Subsidiary with any person (other than Buyer)
or any similar transaction (each such transaction being referred to herein as an
"Acquisition Transaction"), or provide any such person with information or
assistance or negotiate with any such person with respect to an Acquisition
Transaction, and Seller shall notify Buyer orally of all the relevant details
relating to all inquiries, indications of interest and proposals which it may
receive with respect to any Acquisition Transaction within 24 hours of the
receipt of any such inquiry, indication, or proposal; or take any action that
would (A) materially impede or delay the consummation of the transactions
contemplated by this Agreement or the ability of Buyer or Seller to obtain any
approval of any Regulatory Authority required for the transactions contemplated
by this Agreement or to perform its covenants and agreements under this
Agreement or (B) prevent the transactions contemplated hereby from qualifying as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code or as a pooling of interests for accounting and financial reporting
purposes; or other than in the ordinary course of business consistent with past
practice (but not pursuant to any outstanding letters of credit), incur any
indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an
accommodation become responsible or liable for the obligations of any other
individual, corporation or other entity; or materially restructure or materially
change its investment securities portfolio, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported as of
the date of the Agreement; or agree in writing or otherwise to take any of the
foregoing actions or engage in any activity, enter into any transaction or take
or omit to take any other act which would make any of the representations and
warranties in Article II of this Agreement untrue or incorrect in any material
respect if made anew after engaging in such activity, entering into such
transaction, or taking or omitting such other act.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access and Information. Buyer and its Subsidiaries, on the one hand, and
Seller and its Subsidiaries, on the other hand, shall each afford to each other,
and to the other's accountants, counsel and other representatives, full access
during normal business hours, during the period prior to the Effective Time, to
all their respective properties, books, contracts, commitments and records and,
during such period, each shall furnish promptly to the other (i) a copy of each
report, schedule and other document filed or received by it during such period
pursuant to the requirements of federal and state securities laws and (ii) all
other existing or regularly produced information concerning its business,
properties and personnel as such other party may reasonably request. Each party
hereto shall, and shall cause its advisors and representatives to, (A) hold
confidential all information obtained in connection with any transaction
contemplated hereby with respect to the other party which is not otherwise
public knowledge, (B) return all documents (including copies thereof) obtained
hereunder from the other party to such other party and (C) use its reasonable
best efforts to cause all information obtained pursuant to this Agreement or in
connection with the negotiation of this Agreement to be treated as confidential
and not use, or knowingly permit others to use, any such information unless such
information becomes generally available to the public without breach of either
party's confidentiality obligation.
5.2 Registration Statement; Regulatory Matters. (a) Buyer shall prepare and,
subject to the review and consent of Seller with respect to matters relating to
Seller, file with the SEC as soon as is reasonably practicable the Registration
Statement (or the equivalent in the form of preliminary proxy material) with
respect to the shares of Buyer Common Stock to be issued in the Merger and shall
apply to the NYSE to list the shares of Buyer Common Stock to be issued in
connection with the transactions contemplated by this Agreement. Buyer shall
prepare and file a notice with the Board as soon as reasonably practicable.
Buyer shall use all reasonable efforts to cause the Registration Statement to
become effective. Buyer shall also take any action required to be taken under
any applicable state blue sky or securities laws in connection with the issuance
of such shares, and Seller and its Subsidiaries shall furnish Buyer all
information concerning Seller and its Subsidiaries and the stockholders thereof
as Buyer may reasonably request in connection with any such action. Seller and
Buyer shall cooperate and use their respective best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Regulatory Authorities
necessary to consummate the transactions contemplated by this Agreement and, as
and if directed by Buyer, to consummate such other mergers, consolidations or
asset transfers or other transactions by and among Buyer's Subsidiaries and
Seller's Subsidiaries concurrently with or following the Effective Time.
5.3 Stockholder Approval. Seller shall call a meeting of its stockholders to
be held as soon as practicable after the Registration Statement is declared
effective for the purpose of voting upon the Merger or take other action for
stockholders to authorize the Merger. In connection therewith, Buyer shall
prepare the Proxy Statement and, with the approval of each of Buyer and Seller,
the Proxy Statement shall be filed with the SEC and mailed to the stockholders
of Seller. The Board of Directors of Seller shall submit for approval of
Seller's stockholders the matters to be voted upon in order to authorize the
Merger. The Board of Directors of Seller hereby does and (subject to the
fiduciary duty of Seller's Board of Directors, as advised in writing by outside
counsel) will recommend this Agreement and the transactions contemplated hereby
to stockholders of Seller and will use its best efforts to obtain any vote of
Seller's stockholders that is necessary for the approval and adoption of this
Agreement and consummation of the transactions contemplated hereby.
5.4 Current Information. During the period from the date of this Agreement to
the Effective Time, each party shall promptly furnish the other with copies of
all monthly and other interim financial statements as the same become available
and shall cause one or more of its designated representatives to confer on a
regular and frequent basis with representatives of the other party. Each party
shall promptly notify the other party of any material change in its business or
operations and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of material litigation involving such party, and shall keep the
other party fully informed of such events.
5.5 Agreements of Affiliates.
As soon as practicable after the date of this Agreement, Seller shall deliver to
Buyer a letter identifying all persons whom Seller believes to be, at the time
this Agreement is submitted to a vote of the stockholders of Seller,
"affiliates" of Seller for purposes of Rule 145 under the Securities Act or for
determining the qualification of the Merger as a pooling of interests for
accounting and financial reporting purposes. Seller shall use its reasonable
best efforts to cause each person who is so identified as such an "affiliate" to
deliver to Buyer as soon as practicable thereafter, and in any event no later
than the publication of notice in the Federal Register of Buyer's notice to the
Board referred to in Section 5.2, a written agreement in the form attached
hereto as Exhibit B. Prior to the Effective Time, Seller shall amend and
supplement such letter and use its reasonable best efforts to cause each
additional person who is identified as an "affiliate" to execute a written
agreement as set forth in this Section 5.5.
5.6 Expenses. Each party hereto shall bear its own expenses incident to
preparing, entering into and carrying out this Agreement and to consummating
the Merger.
5.7 Securities Act and Exchange Act Filings.
Buyer shall make all filings with the SEC that are described in Section (c) of
Rule 144 under the Securities Act for a
period of two years following the Effective Time. Buyer shall within 30 days
after the Effective Time file a registration statement on Form S-3 or Form S-8,
as the case may be (or any successor or other appropriate forms), with respect
to the shares of Buyer Common Stock subject to the options issued pursuant to
Section 5.10 and shall use its reasonable efforts to maintain the effectiveness
of such registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding.
5.8 Miscellaneous Agreement and Consents. (a) Subject to the terms
and conditions herein provided, each of the parties hereto agrees to use its
respective reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as possible,
including without limitation using its respective reasonable best efforts to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby. Each party shall, and shall cause each of its respective Subsidiaries
to, use its reasonable best efforts to obtain consents of all third parties and
Regulatory Authorities necessary or, in the opinion of Buyer, desirable for the
consummation of the transactions contemplated by this Agreement. Seller, prior
to the Effective Time, shall (i) consult and cooperate with Buyer regarding the
implementation of those policies and procedures established by Buyer for its
governance and that of its Subsidiaries and not otherwise referenced in Section
5.17 hereof, including, without limitation, policies and procedures pertaining
to the accounting, asset/liability management, audit, credit, human resources,
treasury and legal functions, and (ii) at the request of Buyer, effective not
later than the Effective Time conform Seller's existing policies and procedures
in respect of such matters to Buyer's policies and procedures or, in the absence
of any existing Seller policy or procedure regarding any such function,
introduce Buyer's policies or procedures in respect thereof, unless to do so
would cause Seller or any of the Seller Subsidiaries to be in violation of any
law, rule or regulation of any Regulatory Authority having jurisdiction over
Seller and/or the Seller Subsidiary affected thereby.
5.9 Employee Benefits.
(a) Subject to Section 5.10, the provisions of the Seller Stock Plans and of any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of Seller or any Seller
Subsidiary shall be deleted and terminated as of the Effective Time, and Seller
shall ensure that following the Effective Time no holder of Seller Stock Options
or any participant in any Seller Stock Plan shall have any right thereunder to
acquire any securities of Seller or any Seller Subsidiary. Buyer shall take such
steps as are necessary or required to integrate the employees of Seller and the
Seller Subsidiaries in Buyer's employee benefit plans available to similarly
situated employees of Buyer and Buyer Subsidiaries as soon as practicable after
the Effective Time, (i) with full credit for prior service with Seller or any of
the Seller Subsidiaries for all purposes other than determining benefit accruals
under any tax-qualified defined benefit plan, (ii) without any waiting periods,
evidence of insurability or application of any pre-existing condition
limitation, and (iii) with full credit for claims arising prior to the Effective
Time for purposes of deductibles, out-of-pocket maximums, benefit maximums and
all other similar limitations for the applicable plan year during which the
Merger is consummated. Each of Buyer and Seller shall use all reasonable efforts
to insure that no amounts paid or payable by Seller, Seller Subsidiaries or
Buyer to or with respect to any employee or former employee of Seller or any
Seller Subsidiary will fail to be deductible for federal income tax purposes by
reason of Section 280G of the Internal Revenue Code. Prior to the Effective
Time, Buyer and Seller agree to establish a supplemental employee severance
program in accordance with the terms outlined in Schedule 5.9C to provide
supplemental severance for the employees of Seller. Buyer agrees to enter into
Employment Agreements with the individuals identified in Schedule 5.9D in the
forms previously provided to Seller. For a period of one (1) year from and after
the Effective Time, the Buyer will continue the Seller's severance plans and
policies with respect to the employees of the Seller and the Seller Subsidiaries
immediately prior to the Effective Time, as such severance plans and policies
are in effect immediately prior to the Effective Time, and will honor all
obligations of the Seller thereunder.
5.10 Seller Stock Options. At the Effective Time, all rights with respect
to Seller Common Stock pursuant to
Seller Stock Options that are outstanding at the Effective Time, whether or not
then exercisable, shall be converted into and become rights with respect to
Buyer Common Stock, and Buyer shall assume each Seller Stock Option in
accordance with the terms of the stock option plan governing outstanding Seller
Stock Options. From and after the Effective Time, (i) each Seller Stock Option
assumed by Buyer shall be exercised solely for shares of Buyer Common Stock,
(ii) the number of shares of Buyer Common Stock subject to each Seller Stock
Option shall be equal to the number of shares of Seller Common Stock subject to
such Seller Stock Option immediately prior to the Effective Time multiplied by
the Exchange Ratio, rounded down to the nearest whole share of Buyer Common
Stock and (iii) the per share exercise price under each Seller Stock Option
shall be adjusted by dividing the per share exercise price under such Seller
Stock Option by the Exchange Ratio and rounding up to the nearest cent;
provided, however, that the terms of each Seller Stock Option shall, in
accordance with its terms, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, recapitalization or other similar
transaction subsequent to the Effective Time. The foregoing assumption shall be
undertaken by Buyer in a manner that will comply with Section 424(a) of the
Internal Revenue Code, as to any Seller Stock Option that is an "incentive stock
option."
5.11 Seller Employee Stock Ownership Plan. Seller may cause the Employee
Stock Ownership Plan of the Seller Banks (the "Seller ESOP") to allocate, prior
to the Effective Time, to participants in the Seller ESOP the maximum number of
currently unallocated shares of Seller Common Stock allowable under Section 415
of the Internal Revenue Code. Except as provided in the following paragraph,
Seller shall not take any action which would cause the Seller ESOP to be
disqualified under Section 401(a) of the Internal Revenue Code or to lose its
status as an employee stock ownership plan under Section 4975 of the Internal
Revenue Code.
On or before the Effective Time, Seller will take steps
reasonably necessary to cause the Seller ESOP to be terminated as of the
Effective Time. Any indebtedness of the ESOP shall be repaid from the Trust
associated with the Seller ESOP. A final allocation will be prepared, and a
request for a favorable determination letter on the termination of the Seller
ESOP will be filed with the Internal Revenue Service. To the maximum extent
permitted by the rules and regulations of the Internal Revenue Service, upon
receipt of the favorable determination letter, the assets of the Seller ESOP
will be distributed to the participants in due course. At and after the
Effective Time, no additional employees will become eligible to participate in
the Seller ESOP and the assets of the Seller ESOP will be applied in accordance
with its terms and the rules and regulations of the Internal Revenue Service and
the Department of Labor.
5.12 D & O Indemnification. Buyer agrees that the Merger shall not affect or
diminish any of Seller's duties and obligations of indemnification existing as
of the Effective Time in favor of employees, agents, directors or officers of
Seller or its Subsidiaries arising by virtue of its Certificate of Incorporation
or Bylaws in the form in effect at the date of this Agreement or arising by
operation of law or arising by virtue of any contract, resolution or other
agreement or document existing at the date of this Agreement, and such duties
and obligations shall continue in full force and effect and be honored by Buyer
for so long as they would (but for the Merger) otherwise survive and continue in
full force and effect. Buyer will provide, or cause to be provided, for a period
of not less than two years from the Effective Time, a "tail" insurance and
indemnification policy that provides the officers and directors of Seller
Subsidiaries immediately prior to the Effective Time coverage no less favorable,
in the aggregate, than as currently provided by Buyer to its officers and
directors.
5.13 Press Releases. Except as may be required by law, Seller and
Buyer shall consult and agree with each other as to the form, substance and
timing of any proposed press release relating to this Agreement or any of the
transactions contemplated hereby.
5.14 State Takeover Statutes; Seller's Articles of Incorporation; Seller Rights
Agreement.
(a) Seller will take all steps necessary to exempt the transactions contemplated
by this Agreement and any agreement contemplated hereby from, and if necessary
challenge the validity of, any applicable state takeover law. Seller will take
all steps necessary to exempt the transactions contemplated by this Agreement
and any agreement contemplated hereby from the provisions of Article X of
Seller's Articles of Incorporation. Seller shall take all action (including, if
required, redeeming all of the outstanding Rights related to the Seller Rights
Agreement or amending or terminating the Seller Rights Agreement) so that the
entering into of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby shall not
result in the grant of any rights to any person under the Seller Rights
Agreement to purchase or receive additional shares of capital stock of Seller,
Buyer or any affiliate of the foregoing or enable or require the Rights related
thereto to be exercised, distributed or triggered in any way.
5.15 Best Efforts. Each of Buyer and Seller undertakes and agrees to use its
best efforts to cause the Merger (i) to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code and as a pooling of
interests for accounting and financial reporting purposes (in each case,
including, if necessary, to take reasonable steps to restructure the
transactions contemplated by this Agreement to so qualify) and (ii) to occur as
soon as practicable. Each of Buyer and Seller agrees to not take any action that
would materially impede or delay the consummation of the transactions
contemplated by this Agreement or the ability of Buyer or Seller to obtain any
approval of any Regulatory Authority required for the transactions contemplated
by this Agreement or to perform its covenants and agreements under this
Agreement.
5.16 Insurance. Seller shall, and Seller shall cause its
Subsidiaries to, use its best efforts to maintain its existing insurance.
5.17 Conforming Entries. (a) Notwithstanding that Seller believes that Seller
and the Seller Subsidiaries have established all reserves and taken all
provisions for possible loan losses required by GAAP and applicable laws, rules
and regulations, Seller recognizes that Buyer may have adopted different loan,
accrual and reserve policies (including loan classifications and levels of
reserves for possible loan losses). From and after the date of this Agreement,
Seller and Buyer shall consult and cooperate with each other with respect to
conforming the loan, accrual and reserve policies of Seller and the Seller
Subsidiaries to those policies of Buyer, as specified in each case in writing to
Seller, based upon such consultation and as hereinafter provided. In addition,
from and after the date of this Agreement to the Effective Time, Seller and
Buyer shall consult and cooperate with each other with respect to determining
appropriate Seller accruals, reserves and charges to establish and take in
respect of excess equipment write-off or write-down of various assets and other
appropriate charges and accounting adjustments taking into account the parties'
business plans following the Merger, as specified in each case in writing to
Seller, based upon such consultation and as hereinafter provided. Seller and
Buyer shall consult and cooperate with each other with respect to determining,
as specified in a written notice from Buyer to Seller, based upon such
consultation and as hereinafter provided, the amount and the timing for
recognizing for financial accounting purposes Seller's expenses of the Merger
and the restructuring charges relating to or to be incurred in connection with
the Merger. To the extent permissible under applicable laws, regulations, and
requirements of Regulatory Authorities, and provided further, that Seller shall
not be required to take any such action that, in the opinion of Seller's
independent auditors, is not consistent with GAAP and regulatory accounting
principles, Seller shall (i) establish and take such reserves and accruals at
such time as Buyer shall reasonably request to conform Seller's loan, accrual
and reserve policies to Buyer's policies, and (ii) establish and take such
accruals, reserves and charges in order to implement such policies in respect of
excess facilities and equipment capacity, severance costs, litigation matters,
write-off or write-down of various assets and other appropriate accounting
adjustments, and to recognize for financial accounting purposes such expenses of
the Merger and restructuring charges related to or to be incurred in connection
with the Merger, in each case at such times as are reasonably requested by
Buyer; provided, however, that on the date such reserves, accruals and charges
are to be taken, Buyer shall certify to Seller that Buyer's representations and
warranties are true and correct as of such date, that the approval conditions to
its obligations contemplated by Section 6.1(b) have been satisfied or waived
(except to the extent that any waiting period associated therewith may then have
commenced but not expired) and that Buyer is otherwise in compliance with this
Agreement and is prepared to proceed with the Closing; and provided, further,
that Seller shall not be required to take any such action that is not consistent
with GAAP and regulatory accounting principles.
5.18 Charitable Foundation.
Promptly following the Effective Time, Buyer shall establish a charitable
foundation for the benefit of the communities served by Seller as of immediately
prior to the Effective Time, which charitable foundation will be initially
funded with a $300,000 contribution by Buyer and thereafter funded annually with
such amounts determined by Buyer as will aggregate no less than $3,000,000
during the six years immediately following the Effective Time.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation To Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions: This Agreement shall have received the requisite approval of
stockholders of Seller. All requisite approvals of this Agreement and the
transactions contemplated hereby shall have been received from the Board and any
other Regulatory Authority, and all applicable waiting periods shall have
expired under applicable law. The Registration Statement shall have been
declared effective and shall not be subject to a stop order or any threatened
stop order. Neither Seller nor Buyer shall be subject to any order, decree or
injunction, and there shall be no pending or threatened order, decree or
injunction, of a court or agency of competent jurisdiction which enjoins or
prohibits, or seeks to enjoin or prohibit, the consummation of any of the
Transactions. There shall be no legislative, statutory or regulatory action
(whether federal or state) pending which prohibits or threatens to prohibit
consummation of the Transactions or which otherwise materially adverse affect
the Transactions. Each of Buyer and Seller shall have received, from counsel
reasonably satisfactory to it, an opinion reasonably satisfactory in form and
substance to it to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code and that no
gain or loss will be recognized by the stockholders of Seller who receive solely
Buyer Common Stock in exchange for shares of Seller Common Stock, except with
respect to cash received in lieu of fractional shares of Buyer Common Stock. The
shares of Buyer Common Stock which shall be issued to the holders of Seller
Common Stock (and where applicable, Seller Stock Options) upon consummation of
the Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance. Buyer and Seller shall have received a letter, in
form and substance reasonably satisfactory to each, from the Buyer Auditors,
dated the date of the Proxy Statement and confirmed in writing at the Effective
Time, stating that the Merger will qualify as a pooling of interests transaction
under Opinion 16 of the Accounting Principles Board, the interpretive releases
issued pursuant thereto and the pronouncements of the SEC thereon.
6.2 Conditions to Obligations of Seller To Effect the Merger. The obligations of
Seller to effect the Merger shall be subject to the fulfillment or waiver at or
prior to the Effective Time of the following additional conditions:
Representations and Warranties. The representations and warranties of Buyer set
forth in Article III of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time (as
though made on and as of the Effective Time except (i) to the extent such
representations and warranties are by their express provisions made as of a
specified date or period and (ii) for the effect of transactions contemplated by
this Agreement) and Seller shall have received a certificate of the chief
financial officer of Buyer to that effect. Performance of Obligations. Buyer
shall have performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Effective Time, and Seller
shall have received a certificate of the chief financial officer of Buyer to
that effect.
6.3 Conditions to Obligations of Buyer To Effect the Merger. The
obligations of Buyer to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following additional conditions:
Representations and Warranties. The representations and warranties of Seller set
forth in Article II of this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time (as
though made on and as of the Effective Time except (i) to the extent such
representations and warranties are by their express provisions made as of a
specific date or period and (ii) for the effect of transactions contemplated by
this Agreement) and Buyer shall have received a certificate of the chairman or
president of Seller to that effect. Performance of Obligations. Seller shall
have performed in all material respects all obligations required to be performed
by it under this Agreement prior to the Effective Time, and Buyer shall have
received a certificate of the chairman or president of Seller to that effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after any requisite stockholder approval: by
mutual consent by the Executive Committee of the Board of Directors of Buyer and
the Board of Directors of Seller; by the Executive Committee of the Board of
Directors of Buyer or the Board of Directors of Seller at any time after the
date that is twelve months after the date of this Agreement if the Merger shall
not theretofore have been consummated (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein which has resulted in the delay in performance of
this Agreement); by the Executive Committee of the Board of Directors of Buyer
or the Board of Directors of Seller if (i) the Board has denied approval of the
Merger and such denial has become final and nonappealable or (ii) stockholders
of Seller shall not have approved this Agreement at the Meeting provided that
Seller has not breached its obligation under Section 5.3; by the Executive
Committee of the Board of Directors of Buyer in the event of a material breach
by Seller of any representation, warranty, covenant or other agreement contained
in this Agreement, which breach is not cured within 30 days after written notice
thereof to Seller by Buyer; by the Board of Directors of Seller in the event of
a material breach by Buyer of any representation, warranty, covenant or other
agreement contained in this Agreement, which breach is not cured within 30 days
after written notice thereof is given to Buyer by Seller; or by the Board of
Directors of Seller, upon written notice to Buyer at any time during the ten-day
period commencing two days after the Determination Date (as defined below), if
both of the following conditions are satisfied:
The Average Closing Price shall be less than the product of 0.80
and the Starting Price; and
(A) the quotient obtained by dividing the Average Closing
Price by the Starting Price shall be less than (B) the
quotient obtained by dividing the Average Index Price
by the Index Price on the Starting Date and subtracting
0.15 from the quotient in this clause (ii)(B);
subject, however, to the following provisions. If Seller elects to exercise its
termination right pursuant to the immediately preceding sentence, it shall give
prompt written notice to Buyer; provided, however, that such notice of election
to termination may be withdrawn at any time within the aforementioned ten-day
period.
For purposes of this Section 7.1(f), the following terms shall
have the meanings indicated:
"Average Closing Price" means the average of the daily closing
prices of Buyer Common Stock as reported on the NYSE composite tape (as reported
in The Wall Street Journal or, if not reported therein, in another mutually
agreed upon authoritative source) for the ten consecutive full trading days in
which such shares are traded on the NYSE ending at the close of trading on the
Determination Date.
"Average Index Price" means the average of the Index Prices
for the ten consecutive full trading days ending at the close of trading on the
Determination Date.
"Determination Date" means the date on which the approval of
the Board required for consummation of the Merger shall be received.
"Index Group" means the 22 bank holding companies listed
below, the common stocks of all of which shall be publicly traded and as to
which there shall not have been, since the Starting Date and before the
Determination Date, an announcement of a proposal for such company to be
acquired or for such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market capitalization
as of the Starting Date. In the event that the common stock of any such company
ceases to be publicly traded or any such announcement is made with respect to
any such company, such company shall be removed from the Index Group, and the
weights (which have been determined based on the number of outstanding shares of
common stock) redistributed proportionately for purposes of determining the
Index Price. The 22 bank holding companies and the weights attributed to them
are as follows:
Holding Company Weighting (%)
NationsBank Corp. 11.576
BankAmerica Corp. 9.676
Chase Manhattan Corp. 9.615
Banc One Corp. 6.422
First Union Corp. 5.924
Norwest Corp. 5.110
US Bancorp 4.958
Xxxxx Fargo & Co. 4.918
First Chicago NBD 4.401
X.X. Xxxxxx 4.022
National City Corp. 3.938
Bank New York 3.883
Fleet Financial Group 3.729
PNC Bank Corp. 3.003
Mellon Bank Corp. 2.833
Wachovia Corp. 2.803
KeyCorp 2.769
BankBoston Corp. 2.639
SunTrust Banks 2.551
Bankers Trust New York 2.027
Comerica Inc. 1.765
Summit Bancorp 1.438
"Index Price" on a given date means the weighted average
(weighted in accordance with the factors listed above) of the closing prices on
such date of the companies comprising the Index Group.
"Starting Date" means the last full day on which the NYSE was
open for trading prior to the execution of this Agreement.
"Starting Price" shall mean the closing price per share of
Buyer Common Stock on the Starting Date, as reported on the NYSE composite tape
(as reported in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source).
If Buyer or any company belonging to the Index Group declares
or effects a stock dividend, reclassification, recapitalization, slit-up,
combination, exchange of shares or similar transaction between the Starting Date
and the Determination Date, the prices for the common stock of such company
shall be appropriately adjusted for the purposes of applying this Section
7.1(f).
7.2 Effect of Termination. In the event of termination of this Agreement as
provided in Sections 7.1(a) through 7.1(c) and Section 7.1(f) above, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Buyer or Seller or their respective officers or
directors except as set forth in the second sentence of Section 5.1 and in
Section 5.6.
7.3 Amendment. This Agreement and the Schedules hereto may be
amended by the parties hereto, by action taken by or on behalf of their
respective Boards of Directors, at any time before or after approval of this
Agreement by the stockholders of Seller; provided, however, that after any such
approval by the stockholders of Seller no such modification shall alter or
change the amount or kind of consideration to be received by holders of Seller
Common Stock as provided in this Agreement. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of Buyer and Seller
7.4 Severability. Any term, provision, covenant or restriction contained in
this Agreement held by a court or a Regulatory Authority of competent
jurisdiction or the Board to be invalid, void or unenforceable, shall be
ineffective to the extent of such invalidity, voidness or unenforceability, but
neither the remaining terms, provisions, covenants or restrictions contained in
this Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Agreement that is so found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable.
7.5 Waiver. Any term, condition or provision of this Agreement
may be waived in writing at any time by the party which is, or whose
stockholders are, entitled to the benefits thereof.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements. No investigation
by the parties hereto made heretofore or hereafter shall affect the
representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation. Except
as set forth below in this Section 8.1, all representations, warranties and
agreements in this Agreement of Buyer and Seller or in any instrument delivered
by Buyer or Seller pursuant to or in connection with this Agreement shall expire
at the Effective Time or upon termination of this Agreement in accordance with
its terms or, in the case of any other such instrument, in accordance with the
terms of such instrument. In the event of consummation of the Merger, the
agreements contained in or referred to in Sections 5.2(b), 5.7, 5.9, 5.10, 5.11,
5.12 and 5.18 shall survive the Effective Time. In the event of termination of
this Agreement in accordance with Sections 7.1(a), 7.1(b), 7.1(c) or 7.1(f), the
agreements contained in or referred to in the second sentence of Section 5.1,
Section 5.6 and Section 7.2 shall survive such termination.
8.2 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to be duly received (i) on the date given if delivered
personally or (ii) upon confirmation of receipt, if by facsimile transmission
or (iii) on the date received if mailed by registered or certified mail (return
receipt requested), or (iv) on the business date after being delivered to a
reputable overnight delivery service, if by such service, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Buyer:
Star Banc Corporation
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy: (000) 000-0000
Copies to:
Star Banc Corporation
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopy: (000) 000-0000
(ii) if to Seller:
Trans Financial, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X Xxxxx
Telecopy: (000) 000-0000
Copies to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
8.3 Miscellaneous. This Agreement (including the Schedules and other written
documents referred to herein or provided hereunder) (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof, including any confidentiality agreement between the parties
hereto, (ii) except with respect to Sections 5.9(c) and 5.12 is not intended to
confer upon any person not a party hereto any rights or remedies hereunder,
(iii) shall not be assigned by operation of law or otherwise and (iv) shall be
governed in all respects by the laws of the State of Ohio, except as otherwise
specifically provided herein or required by the KBCA. This Agreement may be
executed in counterparts which together shall constitute a single agreement and
may be delivered by facsimile.
IN WITNESS WHEREOF, Buyer and Seller have caused this
Agreement to be signed as of the date first written above.
STAR BANC CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Chairman, President and Chief
Executive Officer
TRANS FINANCIAL, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and Chief
Executive Officer
