AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 5, 1995, by and among
First Bank System, Inc., a Delaware corporation ("Parent"), Eleven Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and First Interstate Bancorp, a Delaware corporation ("Subject Company").
WHEREAS, the Boards of Directors of Parent and Subject Company have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for herein in which Merger Sub will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into Subject Company,
so that Subject Company is the surviving corporation in the Merger; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, Parent and Subject Company are entering into (i) a Parent Stock
Option Agreement (the "Parent Option Agreement") pursuant to which Parent has
granted Subject Company an option exercisable upon the occurrence of certain
events and (ii) the Parent Fee Letter (as defined below); and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, Parent and Subject Company are entering into (i) a Subject Company
Stock Option Agreement (the "Subject Company Option Agreement"; and together
with the Parent Option Agreement, the "Option Agreements") pursuant to which
Subject Company has granted Parent an option exercisable upon the occurrence of
certain events and (ii) the Subject Company Fee Letter (as defined below); and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
in accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), Merger Sub shall merge with
and into Subject Company. Subject Company shall be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") in the Merger, and
shall continue its corporate existence under the laws of
the State of Delaware. The name of the Surviving Corporation shall be Eleven
Acquisition Corp. Upon consummation of the Merger, the separate corporate
existence of Merger Sub shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in
the certificate of merger (the "Certificate of Merger") which shall be filed
with the Secretary of State of the State of Delaware (the "Delaware Secretary")
on the Closing Date (as defined in Section 9.1 hereof). The term "Effective
Time" shall be the date and time when the Merger becomes effective, as set forth
in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the DGCL.
1.4 Conversion of Subject Company Common Stock, Subject Company
Preferred Stock. At the Effective Time, subject to Section 2.2(e) hereof, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
Subject Company or the holder of any of the following securities:
(a) Each share of the common stock, par value $2.00 per share, of Subject
Company (the "Subject Company Common Stock") issued and outstanding immediately
prior to the Effective Time (other than shares of Subject Company Common Stock
held (x) in Subject Company's treasury or (y) directly or indirectly by Parent
or Subject Company or any of their respective Subsidiaries (as defined below)
(except for Trust Account Shares and DPC shares, as such terms are defined
below)), together with the rights (the "Subject Company Rights") attached
thereto issued pursuant to the Rights Agreement, dated as of November 21, 1988,
as amended, between Subject Company and First Interstate Bank, Ltd., as Rights
Agent (the "Subject Company Rights Agreement"), shall be converted into the
right to receive 2.60 shares (the "Common Exchange Ratio") of the common stock,
par value $1.25 per share, of Parent ("Parent Common Stock"), together with the
number of rights ("Parent Rights") issued pursuant to the Parent Rights
Agreement (as defined in Section 4.2 hereof) associated therewith.
(b) Each share of 9.875% preferred stock, Series F, of Subject Company
(the "Subject Company 9.875% Preferred") issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive one
share of 9.875% preferred stock of Parent (the "Parent 9.875% Preferred"). The
terms of the Parent 9.875% Preferred shall be substantially the same as the
terms of the Subject Company 9.875% Preferred, provided, however, that the terms
of such Parent 9.875% Preferred shall have such voting rights as the parties
shall reasonably agree are necessary in order to ensure that the Merger
constitutes a reorganization within the meaning of Section 368(a) of the Code.
(c) Each share of 9.0% preferred stock, Series G, of Subject Company (the
"Subject Company 9.0% Preferred," and together with the Subject Company 9.875%
Preferred, the "Subject Company Preferred Stock") issued and outstanding
immediately prior
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to the Effective Time shall be converted into the right to receive one share of
9.0% preferred stock of Parent (the "Parent 9.0% Preferred," and together with
the Parent 9.875% Preferred, the "Parent New Preferred"). The terms of the
Parent 9.0% Preferred shall be substantially the same as the terms of the
Subject Company 9.0% Preferred, provided, however, that the terms of such Parent
9.0% Preferred shall have such voting rights as the parties shall reasonably
agree are necessary in order to ensure that the Merger constitutes a
reorganization within the meaning of Section 368(a) of the Code. For purposes of
this Agreement (i) the Subject Company Common Stock and Subject Company
Preferred Stock are referred to herein as the "Subject Company Capital Stock,"
and (ii) the Parent Common Stock and Parent Preferred Stock (as defined below)
are collectively referred to as the "Parent Capital Stock."
(d) All of the shares of Subject Company Common Stock converted into
Parent Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate (each a "Common Certificate") previously
representing any such shares of Subject Company Common Stock shall thereafter
represent the right to receive (i) a certificate representing the number of
whole shares of Parent Common Stock and (ii) the cash in lieu of fractional
shares into which the shares of Subject Company Common Stock represented by such
Common Certificate have been converted pursuant to this Section 1.4 and Section
2.2(e) hereof. Common Certificates previously representing shares of Subject
Company Common Stock shall be exchanged for certificates representing whole
shares of Parent Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Common Certificates in
accordance with Section 2.2 hereof, without any interest thereon. If prior to
the Effective Time the outstanding shares of Parent Common Stock shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in Parent's capitalization, then an appropriate and proportionate
adjustment shall be made to the Common Exchange Ratio.
(e) All of the shares of Subject Company Preferred Stock converted into
Parent New Preferred pursuant to this Article I shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate (each a "Preferred Certificate," and
collectively with the Common Certificates, the "Certificates") previously
representing any such shares of Subject Company Preferred Stock shall thereafter
represent the right to receive a certificate representing the number of shares
of corresponding Parent New Preferred into which the shares of Subject Company
Preferred Stock represented by such Preferred Certificate have been converted
pursuant to this Section 1.4. Preferred Certificates previously representing
shares of Subject Company Preferred Stock shall be exchanged for certificates
representing shares of corresponding Parent New Preferred issued in
consideration therefor upon the surrender of such Preferred Certificates in
accordance with Section 2.2 hereof, without any interest thereon.
(f) At the Effective Time, all shares of Subject Company Capital Stock
that are owned by Subject Company as treasury stock and all shares of Subject
Company Capital Stock
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that are owned directly or indirectly by Parent or Subject Company or any of
their respective Subsidiaries (other than shares of Subject Company Capital
Stock held directly or indirectly in trust accounts, managed accounts and the
like or otherwise held in a fiduciary capacity that are beneficially owned by
third parties (any such shares, and shares of Parent Common Stock which are
similarly held, whether held directly or indirectly by Parent or Subject Company
or any of their respective Subsidiaries, as the case may be, being referred to
herein as "Trust Account Shares") and other than any shares of Subject Company
Capital Stock held by Parent or Subject Company or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
Subject Company Capital Stock, and shares of Parent Common Stock which are
similarly held, whether held directly or indirectly by Parent or Subject Company
or any of their respective Subsidiaries, being referred to herein as "DPC
Shares")) shall be cancelled and shall cease to exist and no stock of Parent or
other consideration shall be delivered in exchange therefor. All shares of
Parent Common Stock that are owned by Subject Company or any of its Subsidiaries
(other than Trust Account Shares and DPC Shares) shall become treasury stock of
Parent.
(g) At the Effective Time, Parent shall assume the obligations of Subject
Company under the Deposit Agreement, dated as of November 14, 1991, between
Subject Company and First Interstate Bank of California, as depositary (relating
to the Subject Company 9.875% Preferred) and the Deposit Agreement, dated as of
May 29, 1992, between Subject Company and First Interstate Bank of California,
as depositary (relating to the Subject Company 9.0% Preferred). Parent shall
instruct the applicable depositary to treat the shares of Parent 9.875%
Preferred and Parent 9.0% Preferred received by such depositary in exchange for
and upon conversion of the shares of Subject Company 9.875% Preferred and
Subject Company 9.0% Preferred, respectively, as new deposited securities under
the applicable deposit agreement. In accordance with the terms of the relevant
deposit agreement, the depositary receipts then outstanding shall thereafter
represent the shares of Parent 9.875% Preferred and Parent 9.0% Preferred so
received upon conversion and exchange for the shares of Subject Company 9.875%
Preferred and Subject Company 9.0% Preferred, respectively. Parent shall request
that such depositary call for the surrender of all outstanding receipts to be
exchanged for new receipts (the "New Parent Depositary Shares") specifically
describing the relevant series of Parent New Preferred.
1.5 Parent Common Stock; Parent Preferred Stock. At and after the
Effective Time, each share of Parent Common Stock and each share of Parent
Preferred Stock issued and outstanding immediately prior to the Effective Time
shall remain an issued and outstanding share of common stock or preferred stock,
as the case may be, of Parent and shall not be affected by the Merger.
1.6 Merger Sub Stock. At and after the Effective Time, each share of
Merger Sub common stock issued and outstanding immediately prior to the Merger
shall remain issued and outstanding and shall constitute a share of the common
stock of the Surviving Corporation.
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1.7 Options. (a) At the Effective Time, each option granted by
Subject Company to purchase shares of Subject Company Common Stock (each a
"Subject Company Option") which is outstanding and unexercised immediately prior
thereto shall cease to represent a right to acquire shares of Subject Company
Common Stock and shall be converted automatically into an option to purchase
shares of Parent Common Stock in an amount and at an exercise price determined
as provided below (and otherwise subject to the terms of the Subject Company
1995 Performance Stock Plan, the Subject Company 1991 Performance Stock Plan (as
amended), the Subject Company 1988 Performance Stock Plan (as amended), the
Subject Company 1983 Performance Stock Plan (as amended), the Subject Company
Performance Stock Plan of 1980 (as amended and restated) and the Subject Company
1991 Director Option Plan (as amended and restated), as the case may be
(collectively, the "Subject Company Stock Option Plans"), and the agreements
evidencing grants thereunder, including, but not limited to, the accelerated
vesting of such options which shall occur in connection with and by virtue of
the Merger as and to the extent required by such plans and agreements)):
(1) the number of shares of Parent Common Stock to be subject to the
new option shall be equal to the product of the number of shares of Subject
Company Common Stock subject to the original option and the Common Exchange
Ratio, provided that any fractional shares of Parent Common Stock resulting
from such multiplication shall be rounded down to the nearest share; and
(2) the exercise price per share of Parent Common Stock under the new
option shall be equal to the exercise price per share of Subject Company
Common Stock under the original option divided by the Common Exchange
Ratio, provided that such exercise price shall be rounded up to the nearest
cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code and, to the
extent it is not so consistent, such Section 424(a) shall override anything to
the contrary contained herein. The duration and other terms of the new option
shall be the same as the original option (subject to Section 6.7(b) hereof)
except that all references to Subject Company shall be deemed to be references
to Parent.
1.8 Certificates of Incorporation. At the Effective Time, (i) the
Certificate of Incorporation of Subject Company, as in effect at the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation and
(ii) the Certificate of Incorporation of Parent, as amended to reflect the
amendments thereto contemplated by this Agreement and as otherwise in effect at
the Effective Time, shall be the Certificate of Incorporation of Parent.
1.9 Bylaws. At the Effective Time, the Bylaws of Subject Company, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
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1.10 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code, and that this
Agreement shall constitute a "plan of reorganization" for purposes of the Code.
1.11 Management Succession. At the Effective Time, Xxxx X. Xxxxxxxxxx
shall be Chairman of the Board and Chief Executive Officer of Parent. At the
Effective Time, Xxxxxxx X. X. Xxxxx shall be the President and Chief Operating
Officer of Parent.
1.12 Board of Directors. At the Effective Time, the total number of
persons serving on the Board of Directors of Parent shall be 20 (unless
otherwise agreed in writing by the parties hereto prior to the Effective Time),
10 of whom shall be Parent Directors and 10 of whom shall be Subject Company
Directors (as such terms are defined below). The persons to serve initially on
the Board of Directors of Parent at the Effective Time who are Parent Directors
shall be selected solely by and at the absolute discretion of the Board of
Directors of Parent prior to the Effective Time from among persons who are
members of the Board of Directors of Parent prior to the Effective Time; and the
persons to serve on the Board of Directors of Parent at the Effective Time who
are Subject Company Directors shall be selected solely by and at the absolute
discretion of the Board of Directors of Subject Company prior to the Effective
Time from among persons who are members of the Board of Directors of Subject
Company prior to the Effective Time. Thereafter, the Board of Directors of
Parent shall consist of an even number of directors. To the extent practicable,
from and after the Effective Time, and until the third anniversary thereof, each
class of directors of Parent shall contain an equal number of Parent Directors
and Subject Company Directors, and each Committee of the Board of Directors of
Parent shall contain an equal number of Parent Directors and Subject Company
Directors. If at any time during the three-year period following the Effective
Time the number of Parent Directors and Subject Company Directors serving, or
that would be serving following the next annual meeting of stockholders, as
directors of Parent, would not be equal, then, subject to the fiduciary duties
of the directors, the Board of Directors and the Nominating Committee of Parent
shall take such steps as may be requested by the Parent Directors (if the number
of Parent Directors is, or would otherwise become, less than the number of
Subject Company Directors) or the Subject Company Directors (if the number of
Subject Company Directors is, or would otherwise become, less than the number of
Parent Directors) to assure that there shall be an equal number of Parent
Directors and Subject Company Directors, including by nominating and/or electing
a person or persons designated by the Parent Directors or the Subject Company
Directors, as applicable. The term "Parent Directors" means (i) any person
serving as a director of Parent prior to the Effective Time who remains a
director of Parent at the Effective Time and (ii) any person who becomes a
director of Parent pursuant to the immediately preceding sentence and who is
designated by the Parent Directors; and the term "Subject Company Director"
means (i) any person serving as a director of Subject Company prior to the
Effective Time who becomes a director of Parent at the Effective Time and (ii)
any person who becomes a director of Parent pursuant to the immediately
preceding sentence and who is designated by the Subject Company Directors.
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1.13 Name. Effective immediately upon the consummation of the Merger, the
name of Parent shall be First Interstate Bancorp.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the Effective Time,
Parent shall deposit, or shall cause to be deposited, with a bank or trust
company which will be a Subsidiary of Parent (the "Exchange Agent"), for the
benefit of the holders of Certificates, for exchange in accordance with this
Article II, certificates representing the shares of Parent Common Stock and
Parent New Preferred and an estimated amount of cash in lieu of any fractional
shares (the cash payable in lieu of fractional shares and certificates for
shares of Parent Common Stock and Parent New Preferred, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant
to Section 2.2(a) in exchange for outstanding shares of Subject Company Capital
Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event later than ten business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing, as
the case may be, the shares of Parent Common Stock or Parent New Preferred and
the cash in lieu of fractional shares, if any, into which the shares of Subject
Company Capital Stock represented by such Certificate or Certificates shall have
been converted pursuant to this Agreement. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such properly completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor, as applicable,
(i) a certificate representing that number of shares of Parent Common Stock, if
any, to which such holder of Subject Company Common Stock shall have become
entitled pursuant to the provisions of Article I hereof, (ii) certificates
representing that number of shares of Parent 9.875% Preferred and Parent 9.0%
Preferred, if any, to which such holder of Subject Company Preferred Stock shall
have become entitled pursuant to the provisions of Article I hereof and (iii) a
check representing the amount of cash in lieu of fractional shares, if any,
which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be cancelled. No interest will be paid or
accrued on the cash in lieu of fractional shares and unpaid dividends and
distributions, if any, payable to holders of Certificates.
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(b) No dividends or other distributions with a record date after the
Effective Time with respect to Parent Common Stock or Parent New Preferred shall
be paid to the holder of any unsurrendered Certificate until the holder thereof
shall surrender such Certificate in accordance with this Article II. After the
surrender of a Certificate in accordance with this Article II, the record holder
thereof shall be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable with respect
to shares of Parent Common Stock or Parent New Preferred represented by such
Certificate.
(c) If any certificate representing shares of Parent Common Stock or Parent
New Preferred is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
(or accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Parent Common Stock or
Parent New Preferred in any name other than that of the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of Subject Company of the shares of Subject Company Capital
Stock which were issued and outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be cancelled and
exchanged for certificates representing shares of Parent Capital Stock as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Common Certificates, no
dividend or distribution with respect to Parent Common Stock shall be payable on
or with respect to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. In lieu of the issuance of any such fractional share,
Parent shall pay to each former stockholder of Subject Company who otherwise
would be entitled to receive such fractional share an amount in cash determined
by multiplying (i) the average of the closing sale prices of Parent Common Stock
on the New York Stock Exchange (the "NYSE") as reported by The Wall Street
Journal for the five trading days immediately preceding the date on which the
Effective Time occurs by (ii) the fraction of a share of Parent Common Stock to
which such holder would otherwise be entitled to receive pursuant to Section 1.4
hereto.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Subject Company for twelve months after the Effective Time shall
be paid to Parent. Any stockholders of Subject Company who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of the shares of Parent Common Stock or Parent New Preferred, cash in lieu of
any fractional shares and unpaid dividends and distributions on
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the Parent Common Stock or Parent New Preferred deliverable in respect of each
share of Subject Company Common Stock or Subject Company Preferred Stock, as the
case may be, such stockholder holds as determined pursuant to this Agreement, in
each case, without any interest thereon. Notwithstanding anything to the
contrary contained herein, none of Parent, Subject Company, the Exchange Agent
or any other person shall be liable to any former holder of shares of Subject
Company Common Stock or Subject Company Preferred for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such person of a bond in such amount as Parent may determine is
reasonably necessary as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Parent Common Stock and
cash in lieu of fractional shares or Parent New Preferred, as the case may be,
deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent as follows:
3.1 Corporate Organization. (a) Subject Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Subject Company has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have or reasonably be expected to have a Material Adverse Effect (as
defined below) on Subject Company. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to Parent, Merger Sub, Subject
Company or the Surviving Corporation, as the case may be, a material adverse
effect on the business, results of operations or financial condition of such
party and its Subsidiaries taken as a whole or a material adverse effect on such
party's ability to consummate the transactions contemplated hereby; provided,
however, that in determining whether a Material Adverse Effect has occurred
there shall be excluded any effect on the referenced party the cause of which is
(i) any change in banking and similar laws, rules or regulations of general
applicability or interpretations thereof by courts or governmental authorities,
(ii) any change in generally accepted accounting principles or regulatory
accounting requirements applicable to banks, thrifts or their holding companies
generally, (iii) any action or omission of Subject Company or Parent or any
Subsidiary of
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either of them taken with the prior written consent of Parent or Subject
Company, as applicable, in contemplation of the Merger, (iv) any changes in
general economic conditions affecting banks, thrifts or their holding companies
generally and (v) in the case of members of the Savings Association Insurance
Fund ("SAIF") of the Federal Deposit Insurance Corporation, the funding of the
SAIF. As used in this Agreement, the word "Subsidiary" when used with respect to
any party means any bank, corporation, partnership or other organization,
whether incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes. Subject Company is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). The copies of the Certificate of Incorporation and Bylaws of Subject
Company which have previously been made available to Parent, are true, complete
and correct copies of such documents as in effect as of the date of this
Agreement.
(b) Each Subject Company Subsidiary (i) is duly organized and validly
existing as a bank, corporation or partnership under the laws of its
jurisdiction of organization, (ii) is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified would have or
reasonably be expected to have a Material Adverse Effect on Subject Company, and
(iii) has all requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as now conducted.
3.2 Capitalization. (a) The authorized capital stock of Subject Company
consists of 250,000,000 shares of Subject Company Common Stock, 15,000,000
shares of preferred stock, no par value, and 43,500,000 shares of Class A Common
Stock, par value $0.01 per share ("Class A Common Stock"). At the close of
business on October 31, 1995, there were 75,744,254 shares of Subject Company
Common Stock outstanding, 1,750,000 shares of Subject Company Preferred Stock
outstanding (evidenced by 14,000,000 Subject Company Depositary Shares,
8,000,000 of which each represent a one-eighth interest in a share of Subject
Company 9.875% Preferred and 6,000,000 of which each represent a one-eighth
interest in a share of Subject Company 9.0% Cumulative Preferred), no Shares of
Class A Common Stock outstanding, and 8,541,742 shares of Subject Company Common
Stock held in Subject Company's treasury. As of October 31, 1995, no shares of
Subject Company Common Stock or Subject Company Preferred Stock were reserved
for issuance, except (i) 392,936 shares of Subject Company Common Stock were
reserved for issuance pursuant to Subject Company's dividend reinvestment and
stock purchase plans, (ii) 3,740,384 shares of Subject Company Common Stock were
reserved for issuance upon the exercise of stock options pursuant to the Subject
Company Stock Option Plans, and (iii) the shares of Subject Company Common Stock
reserved for issuance upon exercise of the Subject Company Rights distributed to
holders of Subject Company Common Stock pursuant to the Subject Company Rights
Agreement. All of the issued and outstanding shares of Subject Company Common
Stock and Subject Company Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except (i) as set forth in Section
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3.2(a) of the Subject Company Disclosure Schedule (as defined below), (ii) for
the Subject Company Option Agreement, (iii) for the Subject Company Rights
Agreement (a true and correct copy of which, including all amendments thereto,
has been made available to Parent) and (iv) as set forth elsewhere in this
Section 3.2(a), Subject Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Subject
Company Common Stock or Subject Company Preferred Stock or any other equity
securities of Subject Company or any securities representing the right to
purchase or otherwise receive any shares of Subject Company Common Stock or
Subject Company Preferred Stock. Except (i) as set forth in Section 3.2(a) of
the disclosure schedule of Subject Company delivered to Parent concurrently
herewith (the "Subject Company Disclosure Schedule"), (ii) for options permitted
by this Agreement to be granted subsequent to the date of this Agreement, and
(iii) for the Subject Company Option Agreement, since October 31, 1995 Subject
Company has not issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other than
pursuant to Subject Company's dividend reinvestment and stock purchase plans,
the exercise of employee stock options granted prior to such date and as
disclosed in Section 3.2(a) of the Subject Company Disclosure Schedule, and the
issuance of rights pursuant to the Subject Company Rights Agreement.
(b) Except as set forth in Section 3.2(b) of the Subject Company Disclosure
Schedule, Subject Company owns, directly or indirectly, at least 99% of the
issued and outstanding shares of capital stock of each of the material Subject
Company Subsidiaries, free and clear of any liens, charges, encumbrances,
adverse rights or claims and security interests whatsoever ("Liens"), and all of
such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Subject Company Subsidiary has or is
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary. Assuming
compliance by Parent with Section 1.7 hereof, at the Effective Time, there will
not be any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which Subject Company or any of its Subsidiaries
will be bound calling for the purchase or issuance of any shares of the capital
stock of Subject Company or any of its Subsidiaries.
3.3 Authority; No Violation. (a) Subject Company has full corporate power
and authority to execute and deliver this Agreement, the Fee Letter, of even
date herewith, between Parent and Subject Company (the "Subject Company Fee
Letter") pursuant to which Subject Company will in certain circumstances pay
certain amounts to Parent, the Subject Company Option Agreement and the other
documents contemplated to be executed and delivered by Subject Company in
connection with the transactions contemplated hereby (this Agreement, together
with the Subject Company Fee Letter, the Subject Company Option Agreement and
such other documents, collectively, the "Subject Company Documents"), and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery
11
of each of the Subject Company Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of Subject Company. The Board of Directors of Subject
Company has directed that the agreement of merger (within the meaning of Section
251 of the DGCL) contained in this Agreement and the transactions contemplated
hereby be submitted to Subject Company's stockholders for approval at a meeting
of such stockholders and, except for the adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
Subject Company Common Stock, no other corporate proceedings on the part of
Subject Company are necessary to approve the Subject Company Documents and to
consummate the transactions contemplated hereby and thereby. Each of the Subject
Company Documents has been duly and validly executed and delivered by Subject
Company and (assuming due authorization, execution and delivery by Parent and
Merger Sub) this Agreement constitutes a valid and binding obligation of Subject
Company, enforceable against Subject Company in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 3.3(b) of the Subject Company Disclosure
Schedule, neither the execution and delivery of the Subject Company Documents by
Subject Company nor the consummation by Subject Company of the transactions
contemplated hereby and thereby, nor compliance by Subject Company with any of
the terms or provisions hereof or thereof, will (i) violate any provision of the
Certificate of Incorporation or Bylaws of Subject Company or any of the similar
governing documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 3.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Subject Company or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Subject Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Subject
Company or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case of
clause (ii) above) for such violations, conflicts, breaches or defaults which,
either individually or in the aggregate, will not have and would not reasonably
be expected to have a Material Adverse Effect on Subject Company.
3.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the filing of any requisite applications with the
Office of the Comptroller of the Currency (the "OCC") and the approval of such
applications, (iii) the filing of any required applications or notices with
12
any state agencies and approval of such applications and notices (the "State
Approvals"), (iv) the filing of any requisite applications with the Office of
Thrift Supervision and the approval of such applications, (v) approval of the
listing of the Parent Capital Stock to be issued in the Merger on the NYSE, (vi)
the filing with the Securities and Exchange Commission (the "SEC") of a joint
proxy statement in definitive form relating to the meetings of Parent's and
Subject Company's stockholders to be held in connection with this Agreement and
the transactions contemplated hereby (the "Joint Proxy Statement") and the
filing and declaration of effectiveness of the registration statement on Form S-
4 (the "S-4") in which the Joint Proxy Statement will be included as a
prospectus, (vii) the filing of the Certificate of Merger with the Delaware
Secretary pursuant to the DGCL, (viii) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Parent Capital
Stock pursuant to this Agreement, (ix) the adoption of the agreement of merger
(within the meaning of Section 251 of the DGCL) contained in this Agreement by
the requisite vote of the stockholders of Subject Company and the approval of
the Parent Vote Matters (as defined below) by the requisite votes of the
stockholders of Parent, (x) the consents and approvals set forth in Section 3.4
of the Subject Company Disclosure Schedule, and (xi) the consents and approvals
of third parties which are not Governmental Entities (as defined below), the
failure of which to obtain will not have and would not be reasonably expected to
have a Material Adverse Effect, no consents or approvals of, or filings or
registrations with, any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or with
any third party are necessary in connection with (A) the execution and delivery
by Subject Company of the Subject Company Documents and (B) the consummation by
Subject Company of the Merger and the other transactions contemplated hereby and
thereby.
3.5 Reports. Subject Company and each of its Subsidiaries have timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since January 1, 1993 with (i) the Federal Reserve Board, (ii) the OCC,
(iii) any state regulatory authority (each a "State Regulator"), (iv) the SEC
(Form BD), (v) the FDIC, (vi) any self-regulatory organization ("SRO") and (vii)
any foreign financial or self-regulatory organization (collectively "Regulatory
Agencies") and have paid all fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of Subject Company and its Subsidiaries or as
set forth in Section 3.5 of the Subject Company Disclosure Schedule, no
Regulatory Agency has initiated any proceeding or, to the best knowledge of
Subject Company, investigation into the business or operations of Subject
Company or any of its Subsidiaries since January 1, 1993. Except as set forth
in Section 3.5 of the Subject Company Disclosure Schedule, there is no material
unresolved violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of Subject
Company or any of its Subsidiaries. The deposits of each Subject Company
Subsidiary that is an insured institution are insured by the FDIC in accordance
with the Federal Deposit Insurance Act up to applicable limits.
13
3.6 Financial Statements. Subject Company has previously made available
to Parent copies of (a) the consolidated balance sheets of Subject Company and
its Subsidiaries, as of December 31, for the fiscal years 1993 and 1994, and the
related consolidated statements of operations, shareholders' equity and cash
flows for the fiscal years 1992 through 1994, inclusive, as reported in Subject
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of Ernst & Young
LLP, independent auditors with respect to Subject Company, (b) the unaudited
consolidated balance sheet of Subject Company and its Subsidiaries as of June
30, 1994 and June 30, 1995 and the related unaudited consolidated statements of
operations, shareholders' equity and cash flows for the periods then ended as
reported in Subject Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1995 filed with the SEC under the Exchange Act and (c) the unaudited
consolidated balance sheet of Subject Company and its Subsidiaries as of
September 30, 1995 and the related unaudited consolidated statements of
operations, shareholders' equity and cash flows for the period then ended. The
December 31, 1994 consolidated balance sheet of Subject Company (including the
related notes, where applicable) fairly presents the consolidated financial
position of Subject Company and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present, and the financial statements
referred to in Section 6.13 hereof will fairly present (subject, in the case of
the unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated operations and changes in stockholders'
equity and consolidated financial position of Subject Company and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth. Each of such statements (including the related notes, where
applicable) complies, and the financial statements referred to in Section 6.13
hereof will comply, in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.13
will be, prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except in each case
as indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and records of
Subject Company and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
3.7 Broker's Fees. Except as set forth in Section 3.7 of the Subject
Company Disclosure Schedule, neither Subject Company nor any Subject Company
Subsidiary nor any of their respective officers or directors has employed any
broker or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by the
Subject Company Documents.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Subject Company Reports (as defined in Section 3.12) filed prior to
the date hereof, since June 30, 1995, no event (including, without limitation,
any earthquake or other act of God) has
14
occurred which has had or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Subject Company or the Surviving
Corporation.
(b) Except as set forth in Section 3.8(b) of the Subject Company Disclosure
Schedule, since June 30, 1995, Subject Company and its Subsidiaries have carried
on their respective businesses in all material respects in the ordinary course
of business, and neither Subject Company nor any of its Subsidiaries has (i)
except for normal increases in the ordinary course of business consistent with
past practice and except as required by applicable law, increased the wages,
salaries, compensation, pension or other fringe benefits or perquisites payable
to any named executive officer (within the meaning of Regulation S-K of the SEC)
or director, other than persons newly hired for such position, from the amount
thereof in effect as of June 30, 1995, or granted any severance or termination
pay, entered into any contract to make or grant any severance or termination
pay, or paid any bonus, in each case to any such named executive officer or
director, other than pursuant to preexisting agreements or arrangements or (ii)
suffered any strike, work stoppage, slow-down or other labor disturbance.
3.9 Legal Proceedings. (a) Neither Subject Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
Subject Company's knowledge, threatened, legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against Subject Company or any of its Subsidiaries or challenging
the validity or propriety of the transactions contemplated by the Subject
Company Documents as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect on
Subject Company.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon Subject Company, any of its Subsidiaries or the assets
of Subject Company or any of its Subsidiaries which has had, or would reasonably
be expected to have, a Material Adverse Effect on Subject Company.
3.10 Taxes and Tax Returns. (a) Subject Company and each of its
Subsidiaries has timely filed or caused to be filed all returns, declarations,
reports, estimates, information returns and statements required to be filed
under federal, state, local or any foreign tax laws ("Tax Returns") with respect
to Subject Company or any of its Subsidiaries, except where the failure to file
timely such Tax Returns would not have and would not reasonably be expected to
have a Material Adverse Effect on Subject Company. All Taxes shown to be due on
such Tax Returns have been paid or adequate reserves have been established for
the payment of such Taxes, except where the failure to pay or establish adequate
reserves would not have and would not reasonably be expected to have a Material
Adverse Effect on Subject Company. Except as set forth in Section 3.10(a) of
the Subject Company Disclosure Schedule, no material (i) audit or examination or
(ii) refund litigation with respect to any Tax Return is pending. All material
Tax Returns filed by Subject Company and each of its Subsidiaries are complete
and accurate in all material respects.
15
(b) Subject Company has no reason to believe that any conditions exist
that might prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(c) For purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valorem, goods and
services, capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, estimated, severance, stamp, occupation,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority.
3.11 Employees. (a) Section 3.11(a) of the Subject Company Disclosure
Schedule sets forth a true and complete list of each material employee benefit
plan, arrangement or agreement that is maintained as of the date of this
Agreement (the "Plans") by Subject Company or any of its Subsidiaries or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), all of
which together with Subject Company would be deemed a "single employer" within
the meaning of Section 4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(b) As soon as practicable after the date hereof, Subject Company shall
make available to Parent true and complete copies of each of the Plans and all
related documents, including but not limited to (i) the actuarial report for
such Plan (if applicable) for each of the last two years, and (ii) the most
recent determination letter from the Internal Revenue Service (if applicable)
for such Plan.
(c) Except as set forth in Section 3.11(c) of the Subject Company
Disclosure Schedule, (i) each of the Plans has been operated and administered in
all material respects in accordance with applicable laws, including but not
limited to ERISA and the Code, (ii) each of the Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified, (iii) with
respect to each Plan which is subject to Title IV of ERISA, the present value of
accrued benefits under such Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such Plan's
actuary with respect to such Plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such Plan allocable to such
accrued benefits, (iv) no Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees of Subject Company, its Subsidiaries or any ERISA Affiliate
beyond their retirement or other termination of service, other than (w) coverage
mandated by applicable law, (x) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA, (y)
deferred compensation benefits accrued as liabilities on the books of Subject
Company, its Subsidiaries or the ERISA Affiliates or (z) benefits the full cost
of which is borne by the current or former employee (or his beneficiary), (v) no
liability under Title IV of ERISA has been incurred by Subject Company, its
Subsidiaries or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that
16
presents a material risk to Subject Company, its Subsidiaries or any ERISA
Affiliate of incurring a material liability thereunder, (vi) no Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
(vii) all contributions or other amounts payable by Subject Company or its
Subsidiaries as of the Effective Time with respect to each Plan in respect of
current or prior plan years have been paid or accrued in accordance with
generally accepted accounting practices and Section 412 of the Code, (viii)
since January 1, 1994 neither Subject Company, its Subsidiaries nor any ERISA
Affiliate has engaged in a transaction in connection with which Subject Company,
its Subsidiaries or any ERISA Affiliate could be subject to either a material
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material
tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to the best
knowledge of Subject Company there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Plans or any trusts related thereto which would, individually or in the
aggregate, have or be reasonably expected to have a Material Adverse Effect on
Subject Company.
3.12 SEC Reports. Subject Company has previously made available to Parent
an accurate and complete copy of each final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1994 and
prior to the date hereof by Subject Company with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act
(the "Subject Company Reports"), and no such registration statement, prospectus,
report, schedule or proxy statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading. Subject Company has timely filed all
Subject Company Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Subject Company Reports complied in all material respects with the published
rules and regulations of the SEC with respect thereto.
3.13 Compliance with Applicable Law. Except as disclosed in Section 3.13
of the Subject Company Disclosure Schedule, Subject Company and each of its
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not in default in any material respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Subject Company or any of its Subsidiaries, except where the failure
to hold such license, franchise, permit or authorization or such noncompliance
or default would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on Subject Company, and neither
Subject Company nor any of its Subsidiaries knows of, or has received notice of,
any violations of any of the above which, individually or in the aggregate,
would have or would reasonably be expected to have a Material Adverse Effect on
Subject Company.
3.14 Certain Contracts. (a) Except as set forth in Section 3.14(a) of
the Subject Company Disclosure Schedule, neither Subject Company nor any of its
Subsidiaries is a party to or is bound by any contract, arrangement, commitment
or understanding (whether written
17
or oral) (i) which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the Subject Company Reports,
(ii) which materially restricts the conduct of any line of business by Subject
Company, or (iii) with or to a labor union or guild (including any collective
bargaining agreement). Subject Company has made available to Parent true and
correct copies of all employment, consulting and deferred compensation
agreements to which Subject Company or any of its Subsidiaries is a party. Each
contract, arrangement, commitment or understanding of the type described in this
Section 3.14(a), other than the Subject Company Documents, whether or not set
forth in Section 3.14(a) of the Subject Company Disclosure Schedule, is referred
to herein as a "Subject Company Contract," and neither Subject Company nor any
of its Subsidiaries knows of, or has received notice of, any violation of the
above by any of the other parties thereto which, individually or in the
aggregate, would have or would reasonably be expected to have a Material Adverse
Effect on Subject Company.
(b) (i) Each Subject Company Contract is valid and binding and in full
force and effect, (ii) Subject Company and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each Subject Company Contract, and (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would constitute a
material default on the part of Subject Company or any of its Subsidiaries under
any such Subject Company Contract, except, in each case, where such invalidity,
failure to be binding, failure to so perform or default, individually or in the
aggregate, would not have or reasonably be expected to have a Material Adverse
Effect on Subject Company.
3.15 Agreements with Regulatory Agencies. Except as set forth in Section
3.15 of the Subject Company Disclosure Schedule, neither Subject Company nor any
of its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has adopted any
board resolutions at the request of (each, whether or not set forth in Section
3.15 of the Subject Company Disclosure Schedule, a "Regulatory Agreement"), any
Regulatory Agency or other Governmental Entity that restricts the conduct of its
business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Subject Company or any of its
Subsidiaries been advised by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any Regulatory Agreement.
3.16 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Subject
Company included in the Subject Company Form 10-Q for the quarter ended June 30,
1995, and for liabilities incurred in the ordinary course of business consistent
with past practice, since June 30, 1995, neither Subject Company nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, has had, or
would reasonably be expected to have, a Material Adverse Effect on Subject
Company.
18
3.17 State Takeover Laws. The Board of Directors of Subject Company has
approved the execution of the Subject Company Option Agreement and authorized
and approved the Merger (prior to the execution by Subject Company of this
Agreement and prior to the execution of the Subject Company Option Agreement) in
accordance with Section 203 of the DGCL, such that Section 203 will not apply to
this Agreement, the Subject Company Option Agreement, the Subject Company Fee
Letter or the transactions contemplated hereby and thereby. The Board of
Directors of Subject Company has taken all such action required to be taken by
it to provide that this Agreement, the Subject Company Option Agreement, the
Subject Company Fee Letter and the transactions contemplated hereby and thereby
shall be exempt from the requirements of any "moratorium," "control share,"
"fair price" or other anti-takeover laws or regulations of any state.
3.18 Rights Agreement. Subject Company has taken all action (including,
if required, redeeming all of the outstanding common stock purchase rights
issued pursuant to the Subject Company Rights Agreement or amending or
terminating the Subject Company Rights Agreement) so that the entering into of
the Subject Company Documents and the consummation of the transactions
contemplated hereby and thereby do not and will not result in the grant of any
rights to any person under the Subject Company Rights Agreement or enable or
require the Subject Company Rights to be exercised, distributed or triggered.
3.19 Pooling of Interests. As of the date of this Agreement, Subject
Company has no reason to believe that the Merger will not qualify as a pooling
of interests for accounting purposes.
3.20 First Interstate Name. Except as set forth in Section 3.20 of the
Subject Company Disclosure Schedule, Subject Company has the right to use the
First Interstate name in each state of the United States, free and clear of any
Liens, and no other person has the right to use such name in any such state.
3.21 Subject Company Information. The information relating to Subject
Company and its Subsidiaries to be provided by Subject Company to be contained
in the Joint Proxy Statement and the S-4, or in any other document filed with
any other regulatory agency in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The Joint Proxy Statement (except for such portions thereof
that relate only to Parent or any of its Subsidiaries) will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
3.22 Environmental Liability. Except as set forth in Section 3.22 of the
Subject Company Disclosure Schedule, there are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that reasonably could be
expected to result in the imposition, on Subject Company or any of its
Subsidiaries of any liability or obligation arising under common law standards
relating to environmental
19
protection, human health or safety, or under any local, state or federal
environmental statute, regulation or ordinance, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (collectively, the "Environmental Laws"), pending or, to the
knowledge of Subject Company, threatened, against Subject Company or any of its
Subsidiaries, which liability or obligation would have or would reasonably be
expected to have a Material Adverse Effect on Subject Company. To the knowledge
of Subject Company or any of its Subsidiaries, there is no reasonable basis for
any such proceeding, claim, action or governmental investigation that would
impose any liability or obligation that would have or would reasonably be
expected to have a Material Adverse Effect on Subject Company. To the knowledge
of Subject Company, during or prior to the period of (i) its or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (ii) its or any of its Subsidiaries' participation in the management
of any property, or (iii) its or any of its Subsidiaries' holding of a security
interest or other interest in any property, there were no releases or threatened
releases of hazardous, toxic, radioactive or dangerous materials or other
materials regulated under Environmental Laws in, on, under or affecting any such
property. Neither Subject Company nor any of its Subsidiaries is subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any material
liability or obligation pursuant to or under any Environmental Law that would
have or would reasonably be expected to have a Material Adverse Effect on
Subject Company.
3.23 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of Subject Company or for the
account of a customer of Subject Company or one of its Subsidiaries, were
entered into in accordance with prudent banking practices and applicable rules,
regulations and policies of any regulatory authority and with counterparties
believed to be financially responsible at the time and are legal, valid and
binding obligations of Subject Company or one of its Subsidiaries enforceable in
accordance with their terms (except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally), and are in full force and effect. Subject Company and each
of its Subsidiaries have duly performed in all material respects all of their
material obligations thereunder to the extent that such obligations to perform
have accrued; and, to Subject Company's knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder which would have or would reasonably be expected to have a Material
Adverse Effect on Subject Company.
20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to Subject Company as follows:
4.1 Corporate Organization. (a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Parent has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have or reasonably be expected to have a Material Adverse Effect on
Parent. Parent is duly registered as a bank holding company under the BHC Act.
The copies of the Certificate of Incorporation and Bylaws of Parent, which have
previously been made available to Subject Company, are true, complete and
correct copies of such documents as in effect as of the date of this Agreement.
(b) Each Parent Subsidiary is (i) duly organized and validly existing as a
bank, corporation or partnership under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have or reasonably
be expected to have a Material Adverse Effect on Parent, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
(c) Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
4.2 Capitalization. (a) The authorized capital stock of Parent consists
of 200,000,000 shares of Parent Common Stock and 10,000,000 shares of Preferred
Stock, par value $1.00 per share ("Parent Preferred Stock"). At the close of
business on October 31, 1995, there were 129,798,913 shares of Parent Common
Stock outstanding, 3,702,750 shares of Parent Preferred Stock designated and
2,077,800 shares issued and outstanding as Series 1991A Convertible Preferred
Stock ("Parent Series 1991A Preferred Stock"), 12,750 shares of Parent Preferred
Stock designated and no shares outstanding as Adjustable Rate Cumulative
Preferred Stock Series 1990A ("Parent Series 1990A Preferred Stock"), 1,400,000
shares of Parent Preferred Stock designated and no shares issued and outstanding
as Parent Series A Junior Participating Preferred Stock pursuant to the Rights
Agreement, dated as of December 21, 1988, between Parent and Xxxxxx Shareholder
Services Trust Company, as Rights Agent, as amended (the "Parent Rights
Agreement"), and 5,833,411 shares of Parent Common Stock
21
held in Parent's treasury. On October 31, 1995, no shares of Parent Common Stock
or Parent Preferred Stock were reserved for issuance, except that (i) 22,718,744
shares of Parent Common Stock were reserved for issuance pursuant to outstanding
options, warrants, periodic stock purchase rights ("PSPRs"), risk event
warrants, the Parent dividend reinvestment plan, the Parent employee stock
purchase plan and employee benefit plans, (ii) 3,585,452 shares of Parent Common
Stock were reserved for issuance upon conversion of the Parent Series 0000X
Xxxxxxxxx Xxxxx, (xxx) 16,950,057 shares of Parent Common Stock were reserved
for issuance upon consummation of the acquisition by Parent of FirsTier
Financial, Inc. (the "FirsTier Acquisition"), (iv) 12,750 shares of Parent
Series 1990A Preferred Stock were reserved for issuance upon exercise of PSPRs
or risk event warrants, and (v) 1,400,000 shares of Parent Series A Junior
Participating Preferred Stock were reserved for issuance upon exercise of the
Parent Rights distributed to holders of Parent Common Stock pursuant to the
Parent Rights Agreement. All of the issued and outstanding shares of the Parent
Common Stock and Parent Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except (i) as set forth in Schedule 4.2(a) of the Parent Disclosure
Schedule (as defined below), (ii) for the Parent Rights Agreement (a true and
correct copy of which, including all amendments thereto, has been made available
to Subject Company), (iii) for the Parent Option Agreement and (iv) as set forth
elsewhere in this Section 4.2(a), Parent does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Parent
Common Stock or Parent Preferred Stock or any other equity securities of Parent
or any securities representing the right to purchase or otherwise receive any
shares of Parent Common Stock or Parent Preferred Stock. Except (i) as set forth
in Section 4.2(a) of the disclosure schedule of Parent delivered to Subject
Company concurrently herewith (the "Parent Disclosure Schedule") and (ii) for
options permitted by this Agreement to be granted subsequent to the date of this
Agreement, since October 31, 1995, Parent has not issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock, other than pursuant to Parent's dividend reinvestment and
stock purchase plans, the exercise of employee stock options granted prior to
such date and as disclosed in Section 4.2(a) of the Parent Disclosure Schedule,
warrants, PSPRs and risk event warrants granted prior to such date and disclosed
in Section 4.2(a) of the Parent Disclosure Schedule, the conversion of shares of
Parent Series 1991A Preferred Stock, the Parent Rights Agreement and the
FirsTier Acquisition. The shares of Parent Capital Stock to be issued pursuant
to the Merger will be duly authorized and validly issued and, at the Effective
Time, all such shares will be fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent Disclosure
Schedule, Parent owns, directly or indirectly, (i) at least 99% of the issued
and outstanding shares of capital stock of each of the material Parent
Subsidiaries (other than Merger Sub) and (ii) all of the issued and outstanding
shares of capital stock of Merger Sub, in each case, free and clear of any
Liens, and all of such shares are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the
22
ownership thereof. No Parent Subsidiary has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent has full corporate power and
authority to execute and deliver this Agreement, the Fee Letter, of even date
herewith, between Parent and Subject Company (the "Parent Fee Letter," and
together with the Subject Company Fee Letter, the "Fee Letters") pursuant to
which Parent will in certain circumstances pay certain amounts to Subject
Company, the Parent Option Agreement and the other documents contemplated to be
executed and delivered by Parent in connection with the transactions
contemplated hereby (this Agreement, together with the Parent Fee Letter, the
Subject Company Option Agreement and such other documents, collectively, the
"Parent Documents") and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of each of the Parent Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of Parent. The Board of
Directors of Parent has directed that the issuance of Parent Common Stock
pursuant hereto and an amendment (the "Charter Amendment") to Parent's
Certificate of Incorporation to (i) increase the number of authorized shares of
Parent Common Stock to 500,000,000 and to increase the number of authorized
shares of Parent Preferred Stock to 15,000,000 and (ii) to change the name of
Parent to First Interstate Bancorp (collectively, the "Parent Vote Matters") be
submitted to Parent's stockholders for approval at a meeting of such
stockholders and, except for the approval of the Charter Amendment by the
affirmative vote of the holders of a majority of the outstanding shares of
Parent Common Stock and the approval of the issuance of shares of Parent Common
Stock pursuant hereto by a majority of the shares of Parent Common Stock voting
at the meeting of shareholders called for such purpose at which a quorum was
present, no other corporate proceedings on the part of Parent are necessary to
approve the Parent Documents and to consummate the transactions contemplated
hereby and thereby. Each of the Parent Documents has been duly and validly
executed and delivered by Parent and (assuming due authorization, execution and
delivery by Subject Company) this Agreement constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Merger Sub has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Merger Sub and by Parent as the sole stockholder of Merger
Sub, and no other corporate proceedings on the part of Merger Sub are necessary
to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Merger Sub and (assuming due
authorization, execution and delivery by Subject Company) constitutes a valid
and binding
23
obligation of Merger Sub, enforceable against Merger Sub in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(c) Except as set forth in Section 4.3(c) of the Parent Disclosure
Schedule, neither the execution and delivery of the Parent Documents by Parent
or Merger Sub, nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby and thereby, nor compliance by Parent or Merger Sub with any
of the terms or provisions hereof or thereof, will (i) violate any provision of
the Certificate of Incorporation or Bylaws of Parent or any of the similar
governing documents of any of its Subsidiaries or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Parent or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Parent or any of its
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except (in the case of clause (ii) above)
for such violations, conflicts, breaches or defaults which either individually
or in the aggregate will not have and would not reasonably be expected to have a
Material Adverse Effect on Parent.
4.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the filing of any requisite
applications with the OCC and the approval of such applications, (iii) the
filings with respect to the State Approvals (including receipt of such State
Approvals), (iv) the filing of any requisite applications with the Office of
Thrift Supervision and the approval of such applications, (v) approval of the
listing of the Parent Capital Stock to be issued in the Merger on the NYSE, (vi)
the filing with the SEC of the Joint Proxy Statement and the filing and
declaration of effectiveness of the S-4, (vii) the filing of the Certificate of
Merger with the Delaware Secretary pursuant to the DGCL, (viii) such filings and
approvals as are required to be made or obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of the shares of
Parent Capital Stock pursuant to this Agreement, (ix) the adoption of the
agreement of merger (within the meaning of Section 251 of the DGCL) contained in
this Agreement by the requisite vote of the stockholders of Subject Company and
the approval of the Parent Vote Matters by the requisite votes of the
stockholders of Parent, (x) the filing of the appropriate documents necessary to
cause the Charter Amendment to become effective with the Secretary of State of
the State of Delaware, (xi) the consents and approvals set forth in Section 4.4
of the Parent Disclosure Schedule, and (xii) the consents and approvals of third
parties which are not Governmental Entities, the
24
failure of which to obtain will not have and would not be reasonably expected to
have a Material Adverse Effect, no consents or approvals of, or filings or
registrations with, any Governmental Entity or any third party are necessary in
connection with (A) the execution and delivery by Parent and Merger Sub of the
Parent Documents and (B) the consummation by Parent and Merger Sub of the Merger
and the other transactions contemplated hereby and thereby.
4.5 Reports. Parent and each of its Subsidiaries have timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
January 1, 1993 with the Regulatory Agencies, and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of Parent and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Parent, investigation into the business
or operations of Parent or any of its Subsidiaries since January 1, 1993. There
is no material unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
Parent or any of its Subsidiaries. The deposits of each Parent Subsidiary that
is an insured institution are insured by the FDIC in accordance with the Federal
Deposit Insurance Act up to applicable limits.
4.6 Financial Statements. Parent has previously made available to Subject
Company copies of (a) the consolidated balance sheets of Parent and its
Subsidiaries, as of December 31, for the fiscal years 1993 and 1994, and the
related consolidated statements of income, shareholders' equity and cash flows
for the fiscal years 1992 through 1994, inclusive, as reported in Parent's
Restated Annual Report as filed on Form 8-K for the fiscal year ended December
31, 1994 filed with the SEC under the Exchange Act, in each case accompanied by
the audit report of Ernst & Young LLP, independent public accountants with
respect to Parent, (b) the unaudited consolidated balance sheet of Parent and
its Subsidiaries as of June 30, 1994 and June 30, 1995 and the related unaudited
consolidated statements of income, cash flows and shareholders' equity for the
six month periods then ended as reported in Parent's Quarterly Report on Form
10-Q for the period ended June 30, 1995 filed with the SEC under the Exchange
Act and (c) the unaudited consolidated balance sheet of Parent and its
Subsidiaries as of September 30, 1995 and the related unaudited consolidated
statements of income, shareholders' equity and cash flows for the period then
ended. The December 31, 1994 consolidated balance sheet of Parent (including
the related notes, where applicable) fairly presents the consolidated financial
position of Parent and its Subsidiaries as of the date thereof, and the other
financial statements referred to in this Section 4.6 (including the related
notes, where applicable) fairly present, and the financial statements referred
to in Section 6.13 hereof will fairly present (subject, in the case of the
unaudited statements, to recurring audit adjustments normal in nature and
amount), the results of the consolidated income and changes in stockholders'
equity and consolidated financial position of Parent and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set forth.
Each of such statements (including the related notes, where applicable)
complies, and the financial statements referred to in Section 6.13 hereof will
comply, in all material respects with applicable
25
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been, and the financial statements referred to in Section
6.13 will be, prepared in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-
Q. The books and records of Parent and its Subsidiaries have been, and are
being, maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.
4.7 Broker's Fees. Except as set forth in Section 4.7 of the Parent
Disclosure Schedule, neither Parent nor any Parent Subsidiary nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by the Parent Documents.
4.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Parent Reports (as defined below) filed prior to the date hereof,
since June 30, 1995, no event (including, without limitation, any earthquake or
other act of God) has occurred which has had or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
(b) Except as set forth in Section 4.8(b) of the Parent Disclosure
Schedule, since June 30, 1995, Parent and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary course of
business, and neither Parent nor any of its Subsidiaries has (i) except for
normal increases in the ordinary course of business consistent with past
practice and except as required by applicable law, increased the wages,
salaries, compensation, pension or other fringe benefits or perquisites payable
to any named executive officer (within the meaning of Regulation S-K of the SEC)
or director, other than persons newly hired for such positions, from the amount
thereof in effect as of June 30, 1995, or granted any severance or termination
pay, entered into any contract to make or grant any severance or termination
pay, or paid any bonus, in each case to any such named executive officer or
director, other than pursuant to preexisting agreements or arrangements or (ii)
suffered any strike, work stoppage, slow-down or other labor disturbance.
4.9 Legal Proceedings. (a) Neither Parent nor any of its Subsidiaries is
a party to any, and there are no pending or, to the best of Parent's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against
Parent or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by the Parent Documents as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect on Parent.
26
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Parent, any of its Subsidiaries or the assets of Parent
or any of its Subsidiaries which has had, or would reasonably be expected to
have, a Material Adverse Effect on Parent or the Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Parent and each of its Subsidiaries has
timely filed or caused to be filed all Tax Returns with respect to Parent or any
of its Subsidiaries, except where the failure to file timely such Tax Returns
would not have and would not reasonably be expected to have a Material Adverse
Effect on Parent. All Taxes shown to be due on such Tax Returns have been paid
or adequate reserves have been established for the payment of such Taxes, except
where the failure to pay or establish adequate reserves would not have and would
not reasonably be expected to have a Material Adverse Effect on Parent. Except
as set forth in Section 4.10(a) of the Parent Disclosure Schedule, no material
(i) audit or examination or (ii) refund litigation with respect to any Tax
Return is pending. All material Tax Returns filed by Parent and each of its
Subsidiaries are complete and accurate in all material respects.
(b) Parent has no reason to believe that any conditions exist that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
4.11 Employees. (a) Section 4.11(a) of the Parent Disclosure Schedule
sets forth a true and complete list of each material employee benefit plan,
arrangement or agreement that is maintained as of the date of this Agreement
(the "Parent Plans") by Parent or any of its Subsidiaries or by any trade or
business, whether or not incorporated (a "Parent ERISA Affiliate"), all of which
together with Parent would be deemed a "single employer" within the meaning of
Section 4001 of ERISA.
(b) As soon as practicable after the date hereof, Parent shall make
available to Subject Company true and complete copies of each of the Parent
Plans and all related documents, including but not limited to (i) the actuarial
report for such Parent Plan (if applicable) for each of the last two years, and
(ii) the most recent determination letter from the Internal Revenue Service (if
applicable) for such Parent Plan.
(c) Except as set forth in Section 4.11(c) of the Parent Disclosure
Schedule, (i) each of the Parent Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code, (ii) each of the Parent Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified, (iii) with
respect to each Parent Plan which is subject to Title IV of ERISA, the present
value of accrued benefits under such Parent Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Parent Plan's actuary with respect to such Parent Plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such Parent Plan allocable to such accrued benefits, (iv) no Parent
Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of Parent,
its Subsidiaries or any
27
Parent ERISA Affiliate beyond their retirement or other termination of service,
other than (w) coverage mandated by applicable law, (x) death benefits or
retirement benefits under any "employee pension plan," as that term is defined
in Section 3(2) of ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of Parent, its Subsidiaries or the Parent ERISA
Affiliates or (z) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no liability under Title IV of ERISA
has been incurred by Parent, its Subsidiaries or any Parent ERISA Affiliate that
has not been satisfied in full, and no condition exists that presents a material
risk to Parent, its Subsidiaries or any Parent ERISA Affiliate of incurring a
material liability thereunder, (vi) no Parent Plan is a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by Parent or its Subsidiaries as of the
Effective Time with respect to each Parent Plan in respect of current or prior
plan years have been paid or accrued in accordance with generally accepted
accounting practices and Section 412 of the Code, (viii) since January 1, 1994
neither Parent, its Subsidiaries nor any Parent ERISA Affiliate has engaged in a
transaction in connection with which Parent, its Subsidiaries or any Parent
ERISA Affiliate could be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of Parent there
are no pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Parent Plans or any trusts
related thereto which would, individually or in the aggregate, have or be
reasonably expected to have a Material Adverse Effect on Parent.
4.12 SEC Reports. Parent has previously made available to Subject Company
an accurate and complete copy of each final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1994 and
prior to the date hereof by Parent with the SEC pursuant to the Securities Act
or the Exchange Act (the "Parent Reports"), and no such registration statement,
prospectus, report, schedule or proxy statement contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading. Parent has timely filed
all Parent Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Parent Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. Except as disclosed in Section 4.13
of the Parent Disclosure Schedule, Parent and each of its Subsidiaries hold, and
have at all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Parent or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not, individually
or in the aggregate, have or reasonably be expected to have a Material Adverse
Effect on Parent, and neither Parent nor any of its Subsidiaries knows of, or
has received notice of, any material violations of any of
28
the above which, individually or in the aggregate, would have or reasonably be
expected to have a Material Adverse Effect on Parent.
4.14 Certain Contracts. (a) Except as set forth in Section 4.14(a) of
the Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to or is bound by any contract, arrangement, commitment or understanding
(whether written or oral) (i) which is a material contract (as defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after the date of this
Agreement that has not been filed or incorporated by reference in the Parent
Reports, (ii) which materially restricts the conduct of any line of business by
Parent, or (iii) with or to a labor union or guild (including any collective
bargaining agreement). Parent has made available to Subject Company true and
correct copies of all employment, consulting and deferred compensation
agreements to which Parent or any of its Subsidiaries is a party. Each contract,
arrangement, commitment or understanding of the type described in this Section
4.14(a), other than the Parent Documents, whether or not set forth in Section
4.14(a) of the Parent Disclosure Schedule, is referred to herein as a "Parent
Contract," and neither Parent nor any of its Subsidiaries knows of, or has
received notice of, any violation of the above by any of the other parties
thereto which, individually or in the aggregate, would have or would reasonably
be expected to have a Material Adverse Effect on Parent.
(b) (i) Each Parent Contract is valid and binding and in full force and
effect, (ii) Parent and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each
Parent Contract, and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a material default on
the part of Parent or any of its Subsidiaries under any such Parent Contract,
except, in each case, where any such invalidity, failure to be binding, failure
to so perform or default, individually or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect on Parent.
4.15 Agreements with Regulatory Agencies. Except as set forth in Section
4.15 of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has adopted any
board resolutions at the request of (each, whether or not set forth in Section
4.15 of the Parent Disclosure Schedule, a "Parent Regulatory Agreement"), any
Regulatory Agency or other Governmental Entity that restricts the conduct of its
business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Parent or any of its
Subsidiaries been advised by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any Regulatory Agreement.
4.16 Undisclosed Liabilities. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Parent
included in the Parent Form 10Q for the quarter ended June 30, 1995, and for
liabilities incurred in the ordinary course of
29
business consistent with past practice, since June 30, 1995, neither Parent nor
any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) that, either alone or when combined with all similar liabilities, has had,
or would reasonably be expected to have, a Material Adverse Effect on Parent.
4.17 State Takeover Laws; Certificate of Incorporation. The Board of
Directors of Parent has approved the execution of the Parent Option Agreement
and authorized and approved the Merger (prior to the execution by Parent of this
Agreement and prior to the execution of the Parent Option Agreement) in
accordance with Section 203 of the DGCL and Article Eight of Parent's
Certificate of Incorporation such that Section 203 and Article Eight will not
apply to this Agreement, the Parent Option Agreement, the Parent Fee Letter or
the transactions contemplated hereby and thereby. The Board of Directors of
Parent has taken all such action required to be taken by it to provide that this
Agreement, the Parent Option Agreement, the Parent Fee Letter and the
transactions contemplated hereby and thereby shall be exempt from the
requirements of any "moratorium," "control share," "fair price" or other anti-
takeover laws or regulations of any state.
4.18 Rights Agreement. Subject to the execution of an amendment to the
Parent Rights Agreement which has been approved by Parent's Board of Directors
and shall be executed as promptly as practicable after the date of this
Agreement, Parent has taken all action (including, if required, redeeming all of
the outstanding preferred stock purchase rights issued pursuant to the Parent
Rights Agreement or amending or terminating the Parent Rights Agreement) so that
the entering into of the Parent Documents and the consummation of the
transactions contemplated hereby and thereby do not and will not result in the
grant of any rights to any person under the Parent Rights Agreement or enable or
require the Parent Rights to be exercised, distributed or triggered.
4.19 Pooling of Interests. As of the date of this Agreement, Parent has
no reason to believe that the Merger will not qualify as a pooling of interests
for accounting purposes.
4.20 Parent Information. The information relating to Parent and its
Subsidiaries to be provided by Parent to be contained in the Joint Proxy
Statement and the S-4, or in any other document filed with any other regulatory
agency in connection herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading.
The Joint Proxy Statement (except for such portions thereof that relate only to
Subject Company or any of its Subsidiaries) will comply in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply in all material respects with the provisions of
the Securities Act and the rules and regulations thereunder.
4.21 Environmental Liability. Except as set forth in Section 4.21 of the
Parent Disclosure Schedule, there are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or
30
governmental investigations of any nature seeking to impose, or that reasonably
would be expected to result in the imposition, on Parent or any of its
Subsidiaries of any liability or obligation arising under any Environmental Law,
pending or, to the knowledge of Parent, threatened, against Parent or any of its
Subsidiaries, which liability or obligation would reasonably be expected to have
a Material Adverse Effect on Parent. To the knowledge of Parent, there is no
reasonable basis for any such proceeding, claim, action or governmental
investigation that would impose any liability or obligation that would
reasonably be expected to have a Material Adverse Effect on Parent. To the
knowledge of Parent, during or prior to the period of (i) its or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (ii) its or any of its Subsidiaries' participation in the management
of any property, or (iii) its or any of its Subsidiaries' holding of a security
interest or other interest in any property, there were no releases or threatened
releases of hazardous, toxic, radioactive or dangerous materials or other
materials regulated under Environmental Laws in, on, under or affecting any such
property. Neither Parent nor any of its Subsidiaries is subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any material
liability or obligation pursuant to or under any Environmental Law that would
reasonably be expected to have a Material Adverse Effect on Parent.
4.22 Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of Parent or for the account
of a customer of Parent or one of its Subsidiaries, were entered into in
accordance with prudent banking practices and applicable rules, regulations and
policies of any regulatory authority and with counterparties believed to be
financially responsible at the time and are legal, valid and binding obligations
of Parent or one of its Subsidiaries enforceable in accordance with their terms
(except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally), and are in
full force and effect. Parent and each of its Subsidiaries have duly performed
in all material respects all of their material obligations thereunder to the
extent that such obligations to perform have accrued; and, to Parent's
knowledge, there are no material breaches, violations or defaults or allegations
or assertions of such by any party thereunder which would have or would
reasonably be expected to have a Material Adverse Effect on Parent.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. Except as set
forth in the Subject Company Disclosure Schedule or the Parent Disclosure
Schedule, as the case may be, during the period from the date of this Agreement
to the Effective Time, except as expressly contemplated or permitted by this
Agreement or the Option Agreements or as required by applicable law, each of
Parent and Subject Company shall, and shall cause each of their respective
Subsidiaries to, (i) conduct its business in the usual, regular and ordinary
course consistent with past practice, (ii) use reasonable best efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees and (iii) take no action which would reasonably be expected to
adversely affect or delay the ability of either Parent or Subject Company to
obtain any approvals of any Regulatory Agency or other governmental authority
required to consummate the transactions contemplated hereby or by the Option
Agreements or to perform its covenants and agreements under the Subject Company
Documents or the Parent Documents, as the case may be.
5.2 Forbearances. Except as set forth in Section 5.2 of the Subject
Company Disclosure Schedule or Section 5.2 of the Parent Disclosure Schedule, as
the case may be, during the period from the date of this Agreement to the
Effective Time and, except as expressly contemplated or permitted by this
Agreement or the Option Agreements or as required by applicable law, rule or
regulation, neither Parent nor Subject Company shall, and neither Parent nor
Subject Company shall permit any of their respective Subsidiaries to, without
the prior written consent of the other:
(a) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock (except for regular
quarterly cash dividends on Subject Company Common Stock and on Parent
Common Stock at a rate equal to the rates recently paid by each of Subject
Company and Parent, as the case may be, as such rates may be increased by
either party in the ordinary course of business consistent with past
practice and, in the case of Subject Company Preferred Stock and Parent
Preferred Stock, for regular quarterly or semiannual cash dividends thereon
at the rates set forth in the applicable certificate of incorporation or
certificate of designation for such securities and except for dividends
paid by any of the wholly owned Subsidiaries of each of Parent and Subject
Company to Parent or Subject Company or any of their wholly owned
Subsidiaries, respectively, and except for the issuance of employee stock
options and restricted stock consistent with past practices); or issue any
additional shares of capital stock except pursuant to (A) the exercise of
32
stock options, PSPRs or risk event warrants outstanding as of the date
hereof, (B) the vesting of Performance Units outstanding as of the date
hereof pursuant to Subject Company Stock Option Plans, (C) the conversion
of shares of Parent Series 0000X Xxxxxxxxx Xxxxx, (X) the Subject Company
Rights Agreement, (E) the Parent Rights Agreement, (F) the FirsTier
Acquisition, (G) the Option Agreements and (H) acquisitions and investments
permitted by paragraph (c) hereof;
(b) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets to any individual, corporation or other entity
other than a direct or indirect wholly owned Subsidiary, or cancel, release
or assign any indebtedness to any such person or any claims held by any
such person, in each case that is material to such party, except (i) in the
ordinary course of business consistent with past practice, (ii) pursuant to
contracts or agreements in force at the date of this Agreement or (iii)
pursuant to plans disclosed in writing prior to the execution of this
Agreement to the other party;
(c) except for (i) transactions in the ordinary course of business
consistent with past practice, or (ii) acquisitions of an entity or
business having assets not exceeding 10% of the consolidated assets of
Subject Company or Parent, as applicable, on a pro forma basis giving
effect to such transaction, make any material acquisition or investment
either by purchase of stock or securities, merger or consolidation,
contributions to capital, property transfers, or purchases of any property
or assets of any other individual, corporation or other entity other than a
wholly owned Subsidiary thereof;
(d) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any contract or
agreement, or make any change in any of its leases or contracts, in each
case that is material to such party, other than renewals of contracts and
leases without materially adverse changes of terms thereof;
(e) other than (i) in the ordinary course of business consistent with
past practice, or (ii) in an aggregate amount not exceeding $10 million,
increase in any material respect the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any material pension, retirement, profit-sharing
or welfare benefit plan or agreement or employment agreement with or for
the benefit of any employee or accelerate the vesting of any stock options
or other stock-based compensation;
(f) authorize or permit any of its officers, directors, employees or
agents to directly or indirectly solicit, initiate or encourage any
inquiries relating to, or the making of any proposal which constitutes, a
Takeover Proposal (as defined below), or recommend or endorse any Takeover
Proposal, or participate in any discussions or negotiations, or provide
third parties with any nonpublic information, relating to any such inquiry
or proposal or otherwise facilitate any effort or attempt to make or
33
implement a Takeover Proposal, provided, however, that each of Parent and
Subject Company may, and may authorize and permit its officers, directors,
employees or agents to, provide third parties with nonpublic information,
otherwise facilitate any effort or attempt by any third party to make or
implement a Takeover Proposal, recommend or endorse any Takeover Proposal
with or by any third party, and participate in discussions and negotiations
with any third party relating to any Takeover Proposal, if such party's
Board of Directors, after having consulted with and considered the advice
of outside counsel, has reasonably determined in good faith that the
failure to do so would cause the members of such Board of Directors to
breach their fiduciary duties under applicable law. Subject Company will
immediately cease and cause to be terminated any activities, discussions or
negotiations conducted prior to the date of this Agreement with any parties
other than Parent with respect to any of the foregoing. Each party shall
immediately advise the other following the receipt by it of any Takeover
Proposal and the details thereof, and advise the other of any developments
with respect to such Takeover Proposal immediately upon the occurrence
thereof. As used in this Agreement, "Takeover Proposal" shall mean, with
respect to any person, any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving Subject Company or
Parent or any of their respective Subsidiaries or any proposal or offer to
acquire in any manner a substantial equity interest in, or a substantial
portion of the assets of, Subject Company or Parent or any of their
respective Subsidiaries other than the transactions contemplated or
permitted by this Agreement;
(g) settle any claim, action or proceeding involving money damages
which is material to Parent or Subject Company, as applicable, except in
the ordinary course of business consistent with past practice;
(h) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368(a) of the Code; provided,
however, that nothing contained herein shall limit the ability of Parent or
Subject Company to exercise its rights under the Subject Company Option
Agreement, the Parent Option Agreement, the Subject Company Fee Letter or
the Parent Fee Letter, as the case may be;
(i) amend its certificate of incorporation, bylaws or similar
governing documents or the Parent Rights Agreement or Subject Company
Rights Agreement, as the case may be, in any case in a manner that would
materially and adversely effect either party's ability to consummate the
Merger or the economic benefits of the Merger to either party;
(j) except in the ordinary course or following prior consultation with
the other party to this Agreement, materially change its investment
securities portfolio policy, or the manner in which the portfolio is
classified or reported;
34
(k) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any provision
of this Agreement, except, in every case, as may be required by applicable
law; or
(l) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Parent and Subject Company shall promptly
prepare and file with the SEC a preliminary version of the Joint Proxy Statement
and, following comment thereon, Parent shall promptly prepare and file with the
SEC the S-4, in which the definitive Joint Proxy Statement will be included as a
prospectus. Each of Parent and Subject Company shall use all reasonable efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and Parent and Subject Company shall thereafter
mail the definitive Joint Proxy Statement to their respective stockholders.
Parent shall also use all reasonable efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement, and Subject Company shall furnish
all information concerning Subject Company and the holders of Subject Company
Capital Stock as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and authorizations
of all such Governmental Entities. Parent and Subject Company shall have the
right to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to Subject Company or Parent, as the
case may be, and any of their respective Subsidiaries which appear in any filing
made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents,
35
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(c) Parent and Subject Company shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Parent, Subject
Company or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) Parent and Subject Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (as defined below) will not be
obtained or that the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Parent and
Subject Company shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, and to its officers, employees, accountants, counsel
and other representatives and, during such period, each of Parent and Subject
Company shall, and shall cause their respective Subsidiaries to, make available
to the other party (i) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of Federal securities laws or Federal or state banking laws (other
than reports or documents which Parent or Subject Company, as the case may be,
is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as such other
party may reasonably request. Neither Parent nor Subject Company nor any of
their respective Subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of its customers, jeopardize the attorney-client privilege of the
institution in possession or control of such information or contravene any law,
rule, regulation, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Each of Parent and Subject Company shall hold all information furnished
by the other party or any of such party's Subsidiaries or representatives
pursuant to Section 6.2(a) in confidence to the extent required by, and in
accordance with, the provisions of the confidenti-
36
ality agreement, dated October 21, 1995 between Parent and Subject Company (the
"Confidentiality Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
6.3 Stockholders' Approvals. Each of Parent and Subject Company shall
duly call, give notice of, convene and hold a meeting of its stockholders to be
held as soon as practicable following the date hereof for the purpose of
obtaining the requisite stockholder approvals required in connection with this
Agreement and the Merger, and each shall use its best efforts to cause such
meetings to occur on the same date. Subject to the provisions of the next
sentence, each of Parent and Subject Company shall, through its Board of
Directors, recommend to its stockholders approval of such matters. The Board of
Directors of each party may fail to make such recommendation, or withdraw,
modify or change any such recommendation in a manner adverse to the other party
hereto, if such Board of Directors, after having consulted with and considered
the advice of outside counsel, has reasonably determined in good faith that the
making of such recommendation, or the failure to withdraw, modify or change its
recommendation, would constitute a breach of the fiduciary duties of the members
of such Board of Directors under applicable law.
6.4 Legal Conditions to Merger. (a) Subject to the terms and conditions
of this Agreement, each of Parent and Subject Company shall, and shall cause its
Subsidiaries to use their reasonable best efforts (i) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and
(ii) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by Subject
Company or Parent or any of their respective Subsidiaries in connection with the
Merger and the other transactions contemplated by this Agreement.
(b) Subject to the terms and conditions of this Agreement, each of Parent
and Subject Company agrees to use reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective, as soon as practicable
after the date of this Agreement, the transactions contemplated hereby,
including, without limitation, using reasonable efforts to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby and using
reasonable efforts to defend any litigation seeking to enjoin, prevent or delay
the consummation of the transactions contemplated hereby or seeking material
damages.
6.5 Affiliates; Publication of Combined Financial Results. Each of Parent
and Subject Company shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and
37
for purposes of qualifying the Merger for "pooling-of-interests" accounting
treatment) of such party to deliver to the other party hereto, as soon as
practicable after the date of this Agreement, and in any event prior to the date
of the stockholders meetings called by Parent and Subject Company pursuant to
Section 6.3 hereof, a written agreement, in the form of Exhibit 6.5(a) hereto
(in the case of affiliates of Subject Company) or Exhibit 6.5(b) hereto (in the
case of affiliates of Parent).
6.6 Stock Exchange Listing. Parent shall use its best efforts to cause
the shares of Parent Common Stock to be issued in the Merger and the New Parent
Depositary Shares to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the Effective Time,
unless otherwise mutually determined and except as provided in Section 1.7
hereof, Parent Plans and Plans in effect as of the date of this Agreement shall
remain in effect with respect to employees of Parent or Subject Company (or
their Subsidiaries) covered by such plans at the Effective Time until such time
as Parent shall, subject to applicable law, the terms of this Agreement and the
terms of such plans, adopt new benefit plans with respect to employees of Parent
and its Subsidiaries (including without limitation the Surviving Corporation and
its Subsidiaries) (the "New Parent Plans"). Prior to the Closing Date, Parent
and Subject Company shall cooperate in reviewing, evaluating and analyzing the
Parent Plans and the Plans with a view toward developing appropriate New Parent
Plans for the employees covered thereby subsequent to the Merger. Parent and
Subject Company shall use their reasonable best efforts to develop New Parent
Plans which, among other things, treat similarly situated employees of Parent
and its Subsidiaries (including without limitation the Surviving Corporation and
its Subsidiaries) on a substantially equivalent basis, taking into account all
relevant factors, including, without limitation, duties, geographic location,
tenure, qualifications and abilities. Parent agrees that if it establishes or
continues employee benefit plans (including severance plans) under which an
employee's benefit depends, in whole or in part, on length of service with
Subject Company or Parent prior to the Effective Time, credit will be given, to
the extent reasonably practicable, for service credited under similar plans of
Subject Company or Parent or any Subsidiary of either, provided that such
crediting of service does not result in duplication of benefits.
(b) Notwithstanding the foregoing, Parent shall, and shall cause its
Subsidiaries to, honor in accordance with their terms all benefits vested as of
the date hereof under the Parent Plans or Plans or under other contracts,
arrangements, commitments or understandings described in the Parent Disclosure
Schedule and the Subject Company Disclosure Schedule. Parent and Subject
Company hereby acknowledge that the Merger will constitute a "Change in Control"
for purposes of the Parent Plans and the Plans and agree to abide by the
provisions of any Plan or Parent Plan which relate to a Change in Control,
including, but not limited to, the accelerated vesting and/or payment of equity-
based awards under the Parent Stock Option Plans and the Subject Company Stock
Option Plans.
38
(c) Nothing in this Section 6.7 shall be interpreted as preventing Parent
or its Subsidiaries from amending, modifying or terminating any Parent Plans,
Plans, or other contracts, arrangements, commitments or understandings, in
accordance with their terms and applicable law.
(d) It is the express understanding and intention of Subject Company,
Parent and Merger Sub that no Subject Company Employee or Parent Employee or
other person shall be deemed to be a third party beneficiary, or have or acquire
any right to enforce the provisions, of this Section 6.7, and that nothing in
this Agreement shall be deemed to constitute a Plan, a Parent Plan or a New
Parent Plan or an amendment to a Plan, a Parent Plan or a New Parent Plan.
6.8 Indemnification; Directors' and Officers' Insurance. (a) Each of
Subject Company and Parent agrees that from and after the Effective Time, Parent
will indemnify and hold harmless each present and former director and officer of
Subject Company and Parent and their respective Subsidiaries, determined as of
the Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that
Subject Company, Parent, or such Subsidiary would have been permitted under
Delaware law and the certificate of incorporation or by-laws of Subject Company,
Parent or such Subsidiary in effect on the date hereof to indemnify such person
(and Parent shall also advance expenses as incurred to the fullest extent
permitted under applicable law; provided, that the person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(b) To the extent that paragraph (a) shall not serve to indemnify and hold
harmless an Indemnified Party, for a period of six years after the Effective
Time, each of Subject Company and Parent agrees that Parent shall, subject to
the terms set forth herein, indemnify and hold harmless, to the fullest extent
permitted under applicable law (and Parent shall also advance expenses as
incurred to the fullest extent permitted under applicable law, provided, that
the person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification), each Indemnified Party against any Costs incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to the transactions contemplated by this Agreement, the Option Agreements or the
Fee Letters. In the event any claim or claims are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until final disposition of any and all such claims.
(c) Any Indemnified Party wishing to claim indemnification under Section
6.8(a) or (b), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly
39
notify Parent thereof, but the failure to so notify shall not relieve Parent of
any liability it may have to such Indemnified Party except to the extent such
failure materially prejudices Parent. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), Parent shall have the right to assume the defense thereof and Parent
shall not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that, if Parent elects not to
assume such defense or counsel for the Indemnified Parties advises that there
are issues which raise conflicts of interest between Parent and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Parent shall pay all reasonable fees and expense of such counsel for the
Indemnified Parties promptly as statements therefor are received. If such
indemnity is not available with respect to any Indemnified Party, then Parent
and the Indemnified Party shall contribute to the amount payable in such
proportion as is appropriate to reflect relative faults and benefits.
(d) From and after the Effective Time, the directors, officers and
employees of Subject Company and its Subsidiaries who become directors, officers
or employees of Parent or any of its Subsidiaries, except for the
indemnification rights set forth in Section 6.8(a) or 6.8(b) or as otherwise
provided by applicable law, shall have indemnification rights (with respect to
their capacities as directors, officers or employees of Parent or any of its
Subsidiaries at or subsequent to the Effective Time) with prospective
application only. The prospective indemnification rights shall consist of such
rights to which directors, officers and employees of Parent and its Subsidiaries
are entitled under the provisions of the Certificate of Incorporation or similar
governing documents of Parent and its Subsidiaries, as in effect from time to
time after the Effective Time, as applicable, and provisions of applicable law
as in effect from time to time after the Effective Time.
(e) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
assume the obligations set forth in this section.
(f) For a period of six years from the Effective Time, Parent shall use its
best efforts to provide that portion of directors' and officers' liability
insurance that serves to reimburse the present and former officers and directors
of Parent, Subject Company or any of their respective Subsidiaries (determined
as of the Effective Time) (as opposed to Parent or Subject Company) with respect
to claims against such officers and directors arising from facts or events which
occurred before the Effective Time, which insurance shall contain at least the
same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by Parent; provided, however,
that the annual premiums for such coverage will not exceed 200% of the annual
premiums currently paid by Subject Company for such coverage; provided, further,
that officers and directors of Subject Company or any
40
Subsidiary may be required to make application and provide customary
representations and warranties to Parent's insurance carrier for the purpose of
obtaining such insurance; and provided, further, that such coverage will have a
single aggregate for such six-year period in an amount not less than the annual
aggregate of such coverage currently provided by Subject Company.
(g) The provisions of this Section 6.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
6.9 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Parent and a Subsidiary of Subject Company) or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of any of the parties to the merger, the proper officers and
directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by, and at
the sole expense of, Parent.
6.10 Advice of Changes. Parent and Subject Company shall promptly advise
the other party of any change or event which, individually or in the aggregate
with other such changes or events, has a Material Adverse Effect on it or which
it believes would or would be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein.
6.11 Dividends. After the date of this Agreement, each of Parent and
Subject Company shall coordinate with the other the declaration of any dividends
in respect of Parent Common Stock and Subject Company Common Stock and the
record dates and payment dates relating thereto, it being the intention of the
parties hereto that holders of Parent Common Stock or Subject Company Common
Stock shall not receive more than one dividend, or fail to receive one dividend,
for any single calendar quarter with respect to their shares of Parent Common
Stock and/or Subject Company Common Stock and any shares of Parent Common Stock
any such holder receives in exchange therefor in the Merger.
6.12 Merger Sub. Parent shall cause Merger Sub to take all necessary
action to complete the transactions contemplated hereby, subject to the terms
and conditions hereof.
6.13 Subsequent Interim and Annual Financial Statements. As soon as
reasonably available, but in no event more than 45 days after the end of each
fiscal quarter (other than the fourth quarter of a fiscal year) or 90 days after
the end of each fiscal year ending after the date of this Agreement, each party
will deliver to the other party its Quarterly Report on Form 10-Q or its Annual
Report on Form 10-K, as the case may be, as filed with the SEC under the
Exchange Act.
41
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the requisite
affirmative votes of the holders of Subject Company Common Stock entitled
to vote thereon and the Parent Vote Matters shall have been approved by the
requisite affirmative vote of the holders of Parent Common Stock entitled
to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock which shall be
issued to the stockholders of Subject Company upon consummation of the
Merger and the New Parent Depositary Shares shall have been authorized for
listing on the NYSE, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall
remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration
of all such waiting periods being referred to herein as the "Requisite
Regulatory Approvals") and no such approval shall contain any conditions or
restrictions which the Board of Directors of either Parent or Subject
Company reasonably determines in good faith will have or reasonably be
expected to have a Material Adverse Effect on Parent and its Subsidiaries
(including the Surviving Corporation and its Subsidiaries) taken as a
whole.
(d) S-4. The S-4 shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or any of the other transactions contemplated by
this Agreement shall be in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, restricts or makes
illegal the consummation of the Merger.
7.2 Conditions to Obligations of Parent. The obligation of Parent to
effect the Merger is also subject to the satisfaction or waiver by Parent at or
prior to the Effective Time of the following conditions:
42
(a) Representations and Warranties. (i) The representations and
warranties of Subject Company set forth in Sections 3.2, 3.3(a), 3.6,
3.8(a), 3.17 and 3.18 of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date and (ii)
the representations and warranties of Subject Company set forth in this
Agreement other than those specifically enumerated in clause (i) hereof
shall be true and correct in all respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date; provided, however, that for purposes of determining the
satisfaction of the condition contained in this clause (ii), no effect
shall be given to any exception in such representations and warranties
relating to materiality or a Material Adverse Effect, and provided,
further, however, that, for purposes of this clause (ii), such
representations and warranties shall be deemed to be true and correct in
all respects unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
results or would reasonably be expected to result in a Material Adverse
Effect on Subject Company and its Subsidiaries taken as a whole. Parent
shall have received a certificate signed on behalf of the Subject Company
by the Chief Executive Officer and Chief Financial Officer of Subject
Company to the foregoing effect.
(b) Performance of Obligations of Subject Company. Subject Company
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of Subject
Company by the Chief Executive Officer and the Chief Financial Officer of
Subject Company to such effect.
(c) Subject Company Rights Agreement. The rights issued pursuant to
the Subject Company Rights Agreement shall not have become nonredeemable,
exercisable, distributed or triggered pursuant to the terms of such
agreement.
(d) Pooling of Interests. Parent shall have received a letter from
Ernst & Young LLP, addressed to Parent, dated as of the Effective Time, to
the effect that the Merger will qualify for "pooling of interests"
accounting treatment.
(e) Federal Tax Opinion. Parent shall have received an opinion of
Xxxxxx & Xxxxxxx P.L.L.P., counsel to Parent, in form and substance
reasonably satisfactory to Parent, dated as of the Effective Time,
substantially to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion which are consistent with the
state of facts existing at the Effective Time, the Merger will be treated
for Federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and that accordingly:
43
(1) No gain or loss will be recognized by Parent, Subject Company
or Merger Sub as a result of the Merger;
(2) No gain or loss will be recognized by the stockholders of
Subject Company who exchange their Subject Company Capital Stock
solely for Parent Capital Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest in
Parent Common Stock); and
(3) The tax basis of the Parent Capital Stock received by
stockholders who exchange all of their Subject Company Capital Stock
solely for Parent Capital Stock in the Merger will be the same as the
tax basis of the Subject Company Capital Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
In rendering such opinion, Xxxxxx & Whitney P.L.L.P. may require and
rely upon representations and covenants including those contained in
certificates of officers of Parent, Subject Company and Merger Sub and
others.
7.3 Conditions to Obligations of Subject Company. The obligation of
Subject Company to effect the Merger is also subject to the satisfaction or
waiver by Subject Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent set forth in Sections 4.2, 4.3(a), 4.3(b), 4.6,
4.8(a), 4.17 and 4.18 of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date and (ii)
the representations and warranties of Parent set forth in this Agreement
other than those specifically enumerated in clause (i) hereof shall be true
and correct in all respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of determining the satisfaction of the
condition contained in this clause (ii), no effect shall be given to any
exception in such representations and warranties relating to materiality or
a Material Adverse Effect, and provided, further, however, that, for
purposes of this clause (ii), such representations and warranties shall be
deemed to be true and correct in all respects unless the failure or
failures of such representations and warranties to be so true and correct,
individually or in the aggregate, results or would reasonably be expected
to result in a Material Adverse Effect on Parent and its Subsidiaries taken
as a whole. Subject Company shall have received a certificate signed on
behalf of Parent by the Chief Executive Officer and the Chief Financial
Officer of Parent to the foregoing effect.
44
(b) Performance of Obligations of Parent. Parent shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date, and Subject Company
shall have received a certificate signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent to such effect.
(c) Parent Rights Agreement. The rights issued pursuant to the Parent
Rights Agreement shall not have become nonredeemable, exercisable,
distributed or triggered pursuant to the terms of such agreement.
(d) Pooling of interests. Subject Company shall have received a
letter from Ernst & Young LLP, addressed to Subject Company, dated as of
the Effective Time, to the effect that the Merger will qualify for "pooling
of interests" accounting treatment.
(e) Federal Tax Opinion. Subject Company shall have received an
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx, counsel to Subject
Company, in form and substance reasonably satisfactory to Subject Company,
dated as of the Effective Time, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective
Time, the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly:
(1) No gain or loss will be recognized by Parent, Subject Company
or Merger Sub as a result of the Merger;
(2) No gain or loss will be recognized by the stockholders of
Subject Company who exchange their Subject Company Capital Stock
solely for Parent Capital Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest in
Parent Common Stock); and
(3) The tax basis of the Parent Capital Stock received by
stockholders who exchange all of their Subject Company Capital Stock
solely for Parent Capital Stock in the Merger will be the same as the
tax basis of the Subject Company Capital Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
In rendering such opinion, Skadden, Arps, Slate, Xxxxxxx & Xxxx may
require and rely upon representations and covenants including those
contained in certificates of officers of Parent, Subject Company and Merger
Sub and others.
45
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual consent of Parent and Subject Company in a written
instrument, if the Board of Directors of each so determines;
(b) by either the Board of Directors of Parent or the Board of
Directors of Subject Company if (i) any Governmental Entity which must
grant a Requisite Regulatory Approval has denied approval of the Merger and
such denial has become final and nonappealable or (ii) any Governmental
Entity of competent jurisdiction shall have issued a final nonappealable
order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement;
(c) by either the Board of Directors of Parent or the Board of
Directors of Subject Company if the Merger shall not have been consummated
on or before December 31, 1996 (or, if at such date the Merger shall not
have been consummated as a result of the failure of the condition set forth
in Section 7.1(e) to be satisfied, and such condition shall not have failed
to have been satisfied by reason of the enactment or promulgation of any
statute, rule or regulation which prohibits, restricts or makes illegal
consummation of the Merger, the earlier of (i) the date on which such
condition is satisfied and (ii) June 30, 1997), unless the failure of the
Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein;
(d) by either the Board of Directors of Parent or the Board of
Directors of Subject Company (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein) if the other party shall have breached (i) any
of the covenants or agreements made by such other party herein or (ii) any
of the representations or warranties made by such other party herein, and
in either case, such breach (x) is not cured within thirty (30) days
following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing and (y) would
entitle the non-breaching party not to consummate the transactions
contemplated hereby under Article VII hereof;
(e) by either the Board of Directors of Parent or the Board of
Directors of Subject Company if any approval of the stockholders of Parent
or the Subject Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a duly
held meeting of stockholders or at any adjournment or postponement thereof;
46
(f) prior to the approval of (x) this Agreement by the requisite vote
of Subject Company's shareholders (if Subject Company is the terminating
party) or (y) the Parent Vote Matters (if Parent is the terminating party),
by either the Board of Directors of Parent or the Board of Directors of
Subject Company, if there exists at such time a Takeover Proposal for the
party whose Board of Directors is seeking to terminate this Agreement
pursuant to this paragraph (f) and such Board of Directors, after having
consulted with and considered the advice of outside legal counsel,
reasonably determines in good faith that such action is necessary in the
exercise of its fiduciary duties under applicable laws; or
(g) by either the Board of Directors of Parent or the Board of
Directors of Subject Company, if the Board of Directors of the other party
shall have withdrawn, modified or changed in a manner adverse to the
terminating party its approval or recommendation of this Agreement and the
transactions contemplated hereby (in the case of Subject Company) or the
Parent Vote Matters (in the case of Parent).
8.2 Effect of Termination. In the event of termination of this Agreement
by either Parent or Subject Company as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of Parent, Subject
Company, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
(i) Sections 6.2(b), 8.2, and 9.3 shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Subject Company shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of Subject
Company and Parent; provided, however, that after any approval of the
transactions contemplated by this Agreement by Subject Company's stockholders,
there may not be, without further approval of such stockholders, any amendment
of this Agreement which reduces the amount or changes the form of the
consideration to be delivered to the Subject Company stockholders hereunder
other than as contemplated by this Agreement. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on
47
behalf of such party, but such extension or waiver or failure to insist on
strict compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date to
be specified by the parties, which shall be no later than two business days
after the satisfaction or waiver (subject to applicable law) of the latest to
occur of the conditions set forth in Article VII hereof (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Fee Letters, for which provision has been made therein) shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the
Effective Time.
9.3 Expenses. Except as provided in the Fee Letters and the Option
Agreements, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense, provided, however, that (i) the costs and expenses of printing and
mailing the Joint Proxy Statement, and all filing and other fees paid to the SEC
in connection with the Merger, shall be borne equally by Parent and Subject
Company and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Subject Company shall be relieved or released from
any liabilities or damages arising out of its willful breach of any provision of
this Agreement.
9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent, to:
First Bank System, Inc.
First Bank Place
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attn: Xxx X. Mitau, Esq.
48
with a copy to each of:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
and
Xxxxxx & Xxxxxxx P.L.L.P.
000 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxx X. Xxxxxxx, Esq.
(b) if to Subject Company, to:
First Interstate Bancorp
000 Xxxx Xxxxx Xxxxxx, XX 0-00
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxx, III, Esq.
9.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". Whenever the word "material" is used in this Agreement and the
context in which it is used refers to any of the parties to this Agreement or
any of their respective Subsidiaries, it shall be deemed to be followed by "to
[Subject Company] [Parent] and its Subsidiaries, taken together as a whole," as
applicable. No provision of this Agreement shall be construed to require
Subject Company, Parent or any of their respective Subsidiaries or affiliates to
take
49
any action which would violate or conflict with any applicable law (whether
statutory or common), rule or regulation.
9.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement. This Agreement (together with the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement, the Subject Company Documents and the Parent
Documents.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.
9.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.10 Publicity. Except as otherwise required by applicable law or the
rules of the NYSE, neither Parent nor Subject Company shall, or shall permit any
of its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement, the
Option Agreements or the Fee Letters without the consent of the other party,
which consent shall not be unreasonably withheld.
9.11 Assignment; Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations of any party hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Except
as otherwise specifically provided in Section 6.8 hereof, this Agreement
(including the documents and instruments referred to herein) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
9.12 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, the parties may
mutually agree to revise the structure of the Merger and related transactions
provided that each of the transactions comprising such
50
revised structure shall (i) not change the amount or form of consideration to be
received by the stockholders of Subject Company and the holders of Subject
Company Options, (ii) be capable of consummation in as timely a manner as the
structure contemplated herein and (iii) not otherwise be prejudicial to the
interests of the stockholders of Subject Company. This Agreement and any related
documents shall be appropriately amended in order to reflect any such revised
structure.
9.13 Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
51
IN WITNESS WHEREOF, Parent, Merger Sub and Subject Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
FIRST BANK SYSTEM, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Chairman, President and Chief Executive
Officer
ELEVEN ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Chairman, President and Chief Executive
Officer
FIRST INTERSTATE BANCORP
By: /s/ Xxxxxxx X. X. Xxxxx
----------------------------------------------
Name: Xxxxxxx X. X. Xxxxx
Title: Chairman and Chief Executive Officer
52
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 The Merger............................................................. 1
1.2 Effective Time......................................................... 2
1.3 Effects of the Merger.................................................. 2
1.4 Conversion of Subject Company Common Stock, Subject Company Preferred
Stock.................................................................. 2
1.5 Parent Common Stock; Parent Preferred Stock............................ 4
1.6 Merger Sub Stock....................................................... 4
1.7 Options................................................................ 4
1.8 Certificates of Incorporation.......................................... 5
1.9 Bylaws................................................................. 5
1.10 Tax Consequences....................................................... 6
1.11 Management Succession.................................................. 6
1.12 Board of Directors..................................................... 6
1.13 Name................................................................... 7
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available........................................ 7
2.2 Exchange of Shares..................................................... 7
ARTICLE III............................... 9
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
3.1 Corporate Organization................................................. 9
3.2 Capitalization......................................................... 10
3.3 Authority; No Violation................................................ 11
3.4 Consents and Approvals................................................. 12
3.5 Reports................................................................ 13
3.6 Financial Statements................................................... 13
3.7 Broker's Fees.......................................................... 14
3.8 Absence of Certain Changes or Events................................... 14
3.9 Legal Proceedings...................................................... 15
3.10 Taxes and Tax Returns.................................................. 15
3.11 Employees.............................................................. 16
3.12 SEC Reports............................................................ 17
3.13 Compliance with Applicable Law......................................... 17
3.14 Certain Contracts...................................................... 17
3.15 Agreements with Regulatory Agencies.................................... 18
i
3.16 Undisclosed Liabilities................................................ 18
3.17 State Takeover Laws.................................................... 18
3.18 Rights Agreement....................................................... 19
3.19 Pooling of Interests................................................... 19
3.20 First Interstate Name.................................................. 19
3.21 Subject Company Information............................................ 19
3.22 Environmental Liability................................................ 19
3.23 Interest Rate Risk Management Instruments.............................. 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
4.1 Corporate Organization................................................ 20
4.2 Capitalization........................................................ 21
4.3 Authority; No Violation............................................... 22
4.4 Consents and Approvals................................................ 24
4.5 Reports............................................................... 24
4.6 Financial Statements.................................................. 25
4.7 Broker's Fees......................................................... 25
4.8 Absence of Certain Changes or Events.................................. 26
4.9 Legal Proceedings..................................................... 26
4.10 Taxes and Tax Returns................................................. 26
4.11 Employees............................................................. 27
4.12 SEC Reports........................................................... 28
4.13 Compliance with Applicable Law........................................ 28
4.14 Certain Contracts..................................................... 28
4.15 Agreements with Regulatory Agencies................................... 29
4.16 Undisclosed Liabilities............................................... 29
4.17 State Takeover Laws; Certificate of Incorporation..................... 29
4.18 Rights Agreement...................................................... 30
4.19 Pooling of Interests.................................................. 30
4.20 Parent Information.................................................... 30
4.21 Environmental Liability............................................... 30
4.22 Interest Rate Risk Management Instruments............................. 31
ii
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time...................... 31
5.2 Forbearances........................................................... 31
ARTICLE VI
ADDITIONAL AGREEMENTS.......................... 34
6.1 Regulatory Matters..................................................... 34
6.2 Access to Information.................................................. 35
6.3 Stockholders' Approvals................................................ 36
6.4 Legal Conditions to Merger............................................. 36
6.5 Affiliates; Publication of Combined Financial Results.................. 37
6.6 Stock Exchange Listing................................................. 37
6.7 Employee Benefit Plans................................................. 38
6.8 Indemnification; Directors' and Officers' Insurance................... 38
6.9 Additional Agreements.................................................. 40
6.10 Advice of Changes...................................................... 40
6.11 Dividends.............................................................. 40
6.12 Merger Sub............................................................. 41
6.13 Subsequent Interim and Annual Financial Statements..................... 41
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger............. 41
7.2 Conditions to Obligations of Parent.................................... 42
7.3 Conditions to Obligations of Subject Company........................... 43
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination............................................................ 45
8.2 Effect of Termination.................................................. 46
8.3 Amendment.............................................................. 46
8.4 Extension; Waiver...................................................... 47
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing................................................................ 47
9.2 Nonsurvival of Representations, Warranties and Agreements.............. 47
9.3 Expenses............................................................... 47
iii
9.4 Notices................................................................ 47
9.5 Interpretation......................................................... 49
9.6 Counterparts........................................................... 49
9.7 Entire Agreement....................................................... 49
9.8 Governing Law.......................................................... 49
9.9 Severability........................................................... 49
9.10 Publicity.............................................................. 49
9.11 Assignment; Third Party Beneficiaries.................................. 50
9.12 Alternative Structure.................................................. 50
9.13 Enforcement of the Agreement........................................... 51
iv
