EXHIBIT 10.37
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as
of the 8th day of November, 1996, by and between HEARTLAND
FINANCIAL USA, INC., a Delaware corporation ("Buyer"), and the
stockholders of the Cottage Grove State Bank, a Wisconsin state
bank with its main office located in Xxxxxxx Xxxxx, Xxxxxxxxx
(the "Bank"), executing this Agreement (individually, "Seller,"
and collectively, "Sellers").
RECITALS
A. Each of Sellers owns the number of shares of the issued
and outstanding capital stock of the Bank, par value $2.50 per
share (the "Stock"), set forth opposite such Seller's name on the
signature page of this Agreement.
X. Xxxxxxx, together with the other individuals who within
30 days of the date of this Agreement execute the Additional
Stock Purchase Agreement referred to in Section 2.3 (the
"Additional Sellers"), are the owners of not less than 66 2/3% of
all of the issued and outstanding Stock.
C. On the terms and conditions set forth in this Agreement
and the form of Acquisition Agreement, Sellers and the Additional
Sellers wish to sell to Buyer, and Buyer wishes to purchase from
Sellers and the Additional Sellers, all of the issued and
outstanding shares of the Stock that are owned by such Sellers
and Additional Sellers.
In consideration of the foregoing premises and the mutual
promises, covenants and agreements hereinafter set forth, the
parties to this Agreement hereby agree as follows:
AGREEMENTS
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. In addition to those terms
defined throughout this Agreement, the following terms, when used
herein, shall have the following meanings.
(a) "Acquisition" shall mean the purchase by Buyer of all
of the issued and outstanding shares of Stock owned by Sellers.
(b) "Business Day" shall mean any day except Saturday,
Sunday and any day on which the Bank is authorized or required by
law or other government action to close.
(c) "Person" shall mean an individual, corporation,
partnership (including a business trust), joint stock company,
trust, unincorporated association, joint venture or other entity
or a government or any political subdivision or agency thereof.
(d) "Regulatory Authorities" shall mean any state or
federal governmental body or agency which under applicable
statutes and regulations: (i) has supervisory authority over
Buyer or the Bank; (ii) is required to approve, or give its
consent to the transactions contemplated by this Agreement; or
(iii) with which a filing must be made in connection therewith,
including in any case, the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation and the
Division of Banking of the Department of Financial Institutions
of the State of Wisconsin.
(e) "Subsidiary" shall mean, as to any Person: (i) any
corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of
whether or not, at the time, stock of any class or classes of
such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person; and (ii)
any partnership, association, joint venture or other entity in
which such Person and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time.
Section 1.2 Principles of Construction. (a) In this
Agreement, unless otherwise stated or the context otherwise
requires, the following usages apply: (i) unless otherwise
provided herein, actions permitted, but not required, under this
Agreement may be taken at any time and from time to time in the
actor's sole discretion; (ii) in computing periods from a
specified date to a later specified date, the words "from" and
"commencing on" (and the like) mean "from and including," and the
words "to," "until" and "ending on" (and the like) mean "to, but
excluding"; (iii) headings are inserted for convenience of
reference only and are not part of, nor shall they affect any
construction or interpretation of this Agreement; (iv) unless
otherwise specified, indications of time of day mean Dubuque,
Iowa, time; (v) all references to articles, sections, schedules
and exhibits are to articles, sections, schedules and exhibits in
or to this Agreement unless otherwise specified; (vi) references
to a statute shall refer to the statute and any successor
statute, and to all regulations promulgated under or implementing
the statute or successor, as in effect at the relevant time;
(vii) references to a governmental or quasi-governmental agency,
authority or instrumentality shall also refer to a regulatory
body that succeeds to the functions of the agency, authority or
instrumentality; (viii) "including" means "including, but not
limited to"; (ix) unless the context requires otherwise, all
words used in this Agreement in the singular number shall extend
to and include the plural, all words in the plural number shall
extend to and include the singular and all words in any gender
shall extend to and include all genders; and (x) any reference to
a document or set of documents in this Agreement, and the rights
and obligations of the parties under any such documents, shall
mean such document or documents as amended from time to time, and
any and all modifications, extensions, renewals, substitutions or
replacements thereof (b) All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles and other regulatory or
statutory requirements followed in the preparation of the Bank's
most recent Report of Condition and Report of Income filed with
the Federal Deposit Insurance Corporation (a "Bank Call Report").
Section 1.3 Cottage Grove Book of Schedules. The Cottage
Grove Book of Schedules referred to in this Agreement shall
consist of the agreements and other documentation described and
referred to in this Agreement with respect to the Bank. The
Cottage Grove Book of Schedules has been delivered by the Bank to
Buyer and its counsel not less than five Business Days prior to
the date of this Agreement.
ARTICLE 2
BASIC TERMS OF TRANSACTION
Section 2.1 Appointment of Sellers' Representative. (a)
Each of Sellers, by executing this Agreement, hereby appoints Xx.
Xxxxxx Xxxxxxxx, the President of the Bank, as Sellers'
Representative, to act for each Seller as his or her agent and
attorney-in-fact for purposes of all actions to be taken as
provided in this Agreement, and Sellers' Representative, by
executing this Agreement, hereby accepts such appointment.
(b) Buyer shall be entitled to rely on any statement
(which may be given orally, unless a written notice is expressly
required) or action of Sellers' Representative which purports to
be a decision or action of Sellers' Representative on behalf of
Sellers. Buyer shall recognize and give effect to any
designation of a successor Sellers' Representative if and only if
such Sellers' Representative is named in a notice received by
Buyer, which notice appoints such successor Sellers'
Representative and is executed by Sellers holding a majority of
the Stock held by all Sellers. Each Seller agrees that any
successor Sellers' Representative so appointed shall be vested
with the same power and authority as the Sellers' Representative
named in this Agreement.
Section 2.2 Sale and Purchase of Stock. (a) On the terms
and subject to the conditions hereinafter set forth and on the
assumption that Buyer will purchase on the Closing Date (as
defined below) all of the issued and outstanding shares of Stock
owned by Sellers, each of Sellers agrees to sell the Stock owned
by such Seller to Buyer, and Buyer agrees to purchase then and
there and accept delivery of the shares of Stock owned by each of
Sellers, in exchange for the payment to Seller of a cash amount
per share equal to: (i) $7,875,200 (the "Purchase Price"),
divided by (ii) the number of issued and outstanding shares of
Stock immediately prior to the Closing, excepting that any
increase over the minimum capital at Closing (as defined below)
shall increase the per share value at a rate of $1.00 for each
$40,000 increase.
(b) Notwithstanding anything contained herein to the
contrary, Buyer agrees that any Seller entitled to receive such
Seller's pro rata share of the Purchase Price (the "Seller Pro
Rata Portion") at the closing of the Acquisition (the "Closing")
pursuant to the terms of this Agreement may make an irrevocable
election by written notice delivered to Buyer not later than 30
days prior to the Closing Date (the "Installment Election"), to
receive the Seller Pro Rata Portion which shall be payable, at
such Seller's election, in three, four or five equal annual
installments. The first such installment shall be payable on the
Closing Date and the remaining installments shall be payable on
each of the following succeeding anniversaries of the Closing
Date until the full amount of the Seller Pro Rata Portion has
been paid to such Seller. Buyer agrees to pay to any Seller
electing such installment option interest on any outstanding
balance due to such Seller after the Closing Date at an annual
rate equal to 7.50%, payable with and in addition to each
installment payment. Buyer further agrees if requested by any
stockholder to provide a letter of credit collateralizing the
installment election of such stockholder, provided, however, that
any installment election secured by a letter of credit shall bear
interest at an annual rate of 7.00%.
Section 2.3 Additional Sellers. After the execution of
this Agreement by Buyer and Sellers, Buyer agrees to offer to buy
all of the common stock of the Bank owned by stockholders other
than Sellers (the "Additional Sellers") on the terms and
conditions set forth in the form of the Additional Stock Purchase
Agreement attached as Exhibit A, which contains the same
financial terms as set forth in this Agreement. Closing of the
purchase of the Stock from the Additional Sellers shall occur on
the Closing Date simultaneously with the closing of the
Acquisition.
Section 2.4 Merger Option. Sellers agree that Buyer may,
at its option and if permitted by applicable law, elect to
structure the Acquisition as a cash merger of the Bank with a
wholly-owned subsidiary of Buyer (the "Bank Merger") to be
organized for the sole purpose of effectuating the Bank Merger,
on financial terms the same as those set forth in the Agreement
for the purchase by Buyer of the Stock. If Buyer elects to
accomplish the Acquisition through the Bank Merger, Sellers
agree:
(a) to cause the Board of Directors of the Bank to
approve the Bank Merger and to submit it to the stockholders
of the Bank for their approval;
(b) to vote the shares of Stock owned by them in favor
of the Bank Merger; and
(c) to take, or cause the Bank and its Board of
Directors to take, all steps necessary to consummate the
Bank Merger.
Any such Bank Merger shall be accomplished pursuant to a merger
agreement containing the same financial terms and substantially
the same other terms and conditions as set forth in this
Agreement.
Section 2.5 Closing. (a) Pursuant to the terms of this
Agreement, the Closing shall occur at the offices of Buyer at
0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxx, as soon as practicable after
Buyer has obtained all necessary regulatory approvals and all
applicable waiting periods have expired, but in no event later
than March 1, 1997, unless mutually extended by Buyer and
Sellers' Representative. Notwithstanding anything contained
herein to the contrary, if on the date that is otherwise
prescribed by this Section to be the Closing Date the
stockholders' equity of the Bank is less than $4,875,000, then
the Closing Date shall be extended to the end of the next
succeeding calendar month when the stockholders' equity of the
Bank is greater than or equal to $4,875,000, but in no event
shall the Closing Date be extended pursuant to the provisions of
this sentence any later than June 30, 1997. Time is of the
essence.
(b) For purposes of this Section, the stockholders' equity
of the Bank shall be calculated in accordance with generally
accepted accounting principles, consistently applied, but not
including the adjustment prescribed by Financial Accounting
Standards Board Statement No. 115. As part of the calculation of
such stockholder's equity, Sellers shall cause the Bank to permit
Buyer to conduct a review of the Bank's loans and allowance for
loan and lease losses (the "Loss Reserve"). Sellers agree that
the calculation of the Bank's stockholders' equity shall take
into account any increase in the Loss Reserve determined by Buyer
to be reasonably necessary as a result of such review, subject,
however, to Sellers' right to challenge loan characterization of
Buyer.
Section 2.6 Buyer's Deliveries at Closing. At the
Closing, Buyer shall deliver, or cause to be delivered, to the
Sellers' Representative the following items:
(a) a certified or cashier's check in, or evidence of the
credit to any bank account of Seller at the Bank of, an amount
equal to the applicable Seller Pro Rata Portion receivable by
each Seller, or the first installment of such Seller Pro Rata
Portion, with respect to any Seller who has made an effective
Installment Election;
(b) a good standing certificate for Buyer issued by the
Secretary of State of the State of Delaware, and dated not more
than 15 Business Days prior to the Closing Date;
(c) a copy of the certificate of incorporation of Buyer
certified as of the Closing Date by the Secretary or any
Assistant Secretary of Buyer;
(d) a copy of the bylaws of Buyer certified as of the
Closing Date by the Secretary or any Assistant Secretary of
Buyer;
(e) copies of resolutions of the board of directors of
Buyer authorizing and approving this Agreement and the
consummation of the transactions contemplated hereby, certified
as of the Closing Date by the Secretary or any Assistant
Secretary of Buyer;
(f) a certificate of the President or any Vice President
and the Secretary or any Assistant Secretary of Buyer dated the
Closing Date certifying that: (i) all of the representations and
warranties of Buyer set forth in this Agreement are true and
correct with the same force and effect as if all of such
representations and warranties were made at the Closing Date; and
(ii) Buyer has performed or complied with all of the covenants
and obligations to be performed or complied with by Buyer under
the terms of this Agreement on or prior to the Closing Date;
(g) copies of each of the regulatory approvals necessary to
consummate the transactions contemplated herein; and
(h) such other documents as the Sellers' Representative
shall reasonably request.
Section 2.7 Sellers' Deliveries at Closing. At the
Closing, the Sellers' Representative shall deliver, or cause to
be delivered to Buyer the following items:
(a) a good standing certificate for the Bank issued by the
Division of Banking of the Department of Financial Institutions
of the State of Wisconsin (the "Banking Division") dated not more
than 15 Business Days prior to the Closing Date;
(b) a copy of the articles of incorporation of the Bank
certified by the Banking Division and dated not more than 15
Business Days prior to the Closing Date;
(c) a certificate of the Cashier or any Assistant Cashier
of the Bank dated the Closing Date certifying a copy of the
bylaws of the Bank;
(d) a certificate executed by the Sellers' Representative
dated the Closing Date certifying that: (i) there have been no
further amendments to the articles of incorporation delivered
pursuant to subsection (b) of this Section; (ii) all of the
representations and warranties of Sellers set forth in this
Agreement are true and correct with the same force and effect as
if all of such representations and warranties were made at the
Closing Date; and (iii) Sellers have performed or complied with
all of the covenants and obligations to be performed or complied
with by Sellers under the terms of this Agreement on or prior to
the Closing Date;
(e) a list of the Bank's stockholders as of the Closing
Date certified by the Cashier or any Assistant Cashier of the
Bank;
(f) a legal opinion of Sellers' counsel dated the Closing
Date to the effect set forth in Exhibit B attached hereto; and
(g) such other documents as Buyer or its counsel shall
reasonably request.
Section 2.8 Default by Seller. If any of Sellers shall
fail or refuse on the Closing Date to sell and deliver to Buyer
all of the shares of Stock of the Bank to be sold and delivered
by such Seller pursuant to this Agreement, Buyer shall have the
right on the Closing Date exercisable in its sole discretion to:
(a) terminate this Agreement without liability on the part of
Buyer to any Seller and without liability on the part of any
non-defaulting Seller to Buyer; or (b) purchase all the shares of
such Bank Stock owned by the non-defaulting Sellers. Any action
taken by Buyer pursuant to this Section shall not relieve any
defaulting Seller from liability to Buyer in respect to any
default of such Seller under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each of Sellers hereby represents and warrants to Buyer as
follows:
Section 3.1 Ownership of Stock. Seller owns the number
of shares of Stock set forth opposite his or her name on the
signature page of this Agreement. Such shares of Stock are free
of any lien or encumbrance, are freely transferable and are
subject to no claim of right except pursuant to this Agreement.
Section 3.2 Authorization; Enforceability. Seller has
full power and authority to enter into, execute, deliver and
perform this Agreement and all other agreements and instruments
to be executed by Seller in connection herewith. All of such
actions and consummation by Seller of the transactions
contemplated hereby have been duly authorized and approved by all
required action. This Agreement constitutes a legal, valid and
binding obligation of Seller enforceable in accordance with its
terms.
Section 3.3 Bank Organization. The Bank is a Wisconsin
state bank with its main office located in Cottage Grove,
Wisconsin, and is duly organized, validly existing and in good
standing under the laws of the State of Wisconsin. The Bank has
full power and authority, corporate or otherwise, to carry on its
business as it is now being conducted and to own or hold under
lease the properties and assets it owns or holds under lease.
Except as set forth on Schedule 3.3 of the Cottage Grove Book of
Schedules, the Bank owns no voting stock or equity securities of
any corporation, association, partnership or other entity. All
of the deposit liabilities of the Bank are insured by the Federal
Deposit Insurance Corporation (the "FDIC") through the Bank
Insurance Fund to the fullest extent permitted by applicable law
and the Bank pays the premium assessed by the FDIC for such
deposit insurance.
Section 3.4 Bank Capitalization. The authorized capital
stock of the Bank consists, and immediately prior to the Closing
will consist, of 40,000 shares of common stock, $2.50 par value
per share, all of which shares are issued and outstanding. All
of the outstanding shares of capital stock of the Bank have been
duly and validly authorized and issued and are fully paid and
nonassessable. There are no options, warrants, rights, calls or
commitments of any character relating to any additional shares of
the capital stock of the Bank. No capital stock or other
security issued by the Bank has been issued in violation of, or
without compliance with, the rights of stockholders.
Section 3.5 Litigation and Regulatory Matters. Schedule
3.5 of the Cottage Grove Book of Schedules sets forth a list of
all actions, suits, agreements with Regulatory Authorities or
legal or administrative proceedings pending or existing as of the
date hereof in or to which the Bank is a named party or is
subject. Except as set forth on Schedule 3.5 of the Cottage
Grove Book of Schedules, there is no action, suit, proceeding,
claim or formal written protest by any Person or agency, or any
investigation, report or agreement by or with any regulatory
authority having jurisdiction over Seller or the Bank or any of
their respective assets or businesses which exists or is pending
or, to Seller's knowledge, threatened against Seller or the Bank,
or any of the Bank's officers or directors in their capacities as
such, or its assets, business or goodwill which would reasonably
be expected to have a material adverse effect on the financial
condition, assets or business of the Bank or which would impair
Seller's ability to consummate the Acquisition. Seller further
represents and warrants that except as set forth on Schedule 3.5
of the Cottage Grove Book of Schedules, Seller does not know or
have any reason to believe that there is any basis for assertion
against the Bank of any material claims based upon the wrongful
action or inaction of any of its officers, directors or employees
which would reasonably be expected to have a material adverse
effect on the financial condition, assets or business of the Bank
or which would impair Seller's ability to consummate the
Acquisition. The Bank is not subject to, or in default with
respect to, nor are any of its assets subject to, any outstanding
judgment, regulatory agreement, injunction, writ, order or decree
or any other requirement of any governmental body or court or of
any governmental agency or instrumentality which would reasonably
be expected to have a material adverse effect on the financial
condition, assets or business of the Bank.
Section 3.6 Insurance. Schedule 3.6 of the Cottage Grove
Book of Schedules lists and briefly describes the policies of
insurance (including fidelity bonds and all policies of, and
binders evidencing, life, fire, workers' compensation, banker's
blanket bond, directors and officers, title, general liability
and insurance providing benefits for employees) owned or held by
the Bank on the date hereof. Such policies cover risks and are
in such amounts as are customary for banks similarly situated to
the Bank. Each such policy is now, and at the Closing will be in
full force and effect (except for any expiring policy which is
replaced by coverage at least as extensive). All premiums due on
such policies have been paid.
Section 3.7 Defaults Under Agreements. The Bank is not
in default or, to the best of Seller's knowledge, alleged to be
in default, under any loan or credit agreement, conditional sales
contract or other title retention agreement or security agreement
relating to money borrowed by the Bank, agreements pursuant to
which it leases real or personal property or any other instrument
or obligation, which would reasonably be expected to have a
material adverse effect on the financial condition, assets or
business of the Bank. The Bank is not in default in any material
respect and Seller has no knowledge of any material default under
such instruments by any other party thereto and has no knowledge
of any event which with notice or lapse of time or both would
constitute a material default.
Section 3.8 Bank Financial Statements. Copies of the
Bank Call Reports for the Bank at the close of business on March
31 and June 30, 1996, and December 31, 1991, 1992, 1993, 1994 and
1995 (collectively, the "Bank Financial Statements") are set
forth on Schedule 3.8 of the Cottage Grove Book of Schedules.
The Bank Financial Statements are complete and correct in all
material respects and fairly present the financial position of
the Bank at the dates shown and the results of operations for the
periods covered. The Bank Financial Statements are unaudited
statements and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and
as required by applicable rules or regulations. The Bank
Financial Statements do not include any material assets or omit
to state any material liabilities, absolute or contingent, or
other facts, which inclusion or omission would render the Bank
Financial Statements misleading in any material respect.
Section 3.9 Loans; Loan Loss Reserve. (a) All loans and
loan commitments extended by the Bank and any extensions,
renewals or continuations of such loans and loan commitments (the
"Loans") were made in accordance with customary lending standards
of the Bank in the ordinary course of business. The Loans are
evidenced by appropriate and sufficient documentation and
constitute valid and binding obligations to the Bank enforceable
in accordance with their terms. All such Loans are, and at the
Closing will be, free and clear of any security interest, lien,
encumbrance or other charge and the Bank has complied, and at the
Closing will have complied, in all respects with all laws and
regulations relating to such Loans. To the best knowledge of
Sellers after due inquiry, none of such Loans is subject to any
material offset or claim of offset.
(b) The reserve for possible loan and lease losses shown on
the June 30, 1996 Call Report for the Bank is adequate in all
material respects under the requirements of generally accepted
accounting principles to provide for possible losses, net of
recoveries relating to loans previously charged off, on loans
outstanding (including accrued interest receivable) as of June
30, 1996, and contains and will contain an additional amount of
unallocated reserves for unanticipated future losses at an
adequate level. The aggregate loan balances at such date in
excess of such reserves are, based on past loan loss experience,
collectible in accordance with their terms, and all uncollectible
loans have been charged off.
Section 3.10 Investments. None of the investments
reflected under the heading "Securities" in the most recent Bank
Call Report which are owned by the Bank or any investment
securities owned by the Bank and none of the investments made by
the Bank or the Bank since the date of such report is subject to
any investment or other restriction, whether contractual or
statutory, which materially impairs the ability of the Bank or
the Bank freely to dispose of such investment at any time.
Section 3.11 Regulatory Filings. The Bank has filed in a
timely manner all required filings with all proper regulatory
authorities, including the FDIC and the Banking Division. All
such filings were accurate and complete in all material respects
as of the dates of the filings, and no such filing has made any
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading.
Section 3.12 Properties, Contracts, Employee Benefit Plans
and Other Agreements. Schedule 3.12 of the Cottage Grove Book of
Schedules lists or describes the following:
(a) Each parcel of real property owned by the Bank and the
principal buildings and structures located thereon, together with
a legal description of such real estate, and each lease of real
property to which the Bank is a party, identifying the parties
thereto, the annual rental payable, the expiration date thereof
and a brief description of the property covered, and in each case
of either owned or leased real property, a description of the
property's current use, including, if applicable, identification
of each such property as a branch or main office of the Bank;
(b) Each loan and credit agreement, conditional sales
contract or other title retention agreement or security agreement
relating to money borrowed by the Bank, exclusive of any deposit
agreement with customers of the Bank entered into in the ordinary
course of business, agreement for the purchase of federal funds
and repurchase agreement;
(c) Each agreement, loan, contract, lease, guarantee,
letter of credit, line of credit or commitment of the Bank not
referred to elsewhere in this Section which:
(i) involves payment by the Bank (other than as
disbursement of loan proceeds to customers) of more than
$10,000 in any calendar year, or of more than $20,000 when
aggregated with any of the foregoing that involved payments
of less than $10,000 in any calendar year;
(ii) involves payments based on profits of the Bank;
(iii) relates to the future purchase of goods or
services in excess of the requirements of its business at
current levels or for normal operating purposes;
(iv) was not made in the ordinary course of business; or
(v) materially affects the business or financial condition
of the Bank;
(d) Each profit sharing, group insurance, hospitalization,
stock option, pension, retirement, bonus, deferred compensation,
stock bonus, stock purchase or other employee welfare or benefit
agreement, plan, contract or arrangement under which pensions,
deferred compensation and any other retirement or employee
benefits are being paid, may become payable, provided or made
available by the Bank, which was established, maintained,
sponsored or undertaken by the Bank for the benefit of its
officers, directors or employees, including each trust or other
agreement with any custodian or any trustee for funds held under
any such agreement, plan or arrangement, and all other
agreements, contracts or arrangements under which pensions,
deferred compensation or other retirement benefits are being paid
or may become payable by the Bank (collectively, the "Employee
Benefit Plans"), and, in respect to any of them, the latest
reports or forms, if any, filed with the Department of Labor and
Pension Benefit Guaranty Corporation under ERISA, any current
financial or actuarial reports and any currently effective United
States Internal Revenue Service ("IRS") private rulings or
determination letters obtained by or for the benefit of the Bank;
(e) Each lease or license to which the Bank is a party with
respect to personal property, whether as lessee or licensee, with
rental or other payments due thereunder in excess of $12,000 in
any calendar year, or of more than $20,000 in any calendar year
when aggregated with any of the foregoing that involved payments
of less than $10,000 in any calendar year;
(f) Any collective bargaining agreement and each employment
and consulting contract or similar arrangement between any Person
and the Bank (except for any ordinary oral employment contract
with an employee of the Bank creating an at will employment
relationship); and
(g) The name and annual salary of each director, officer or
employee of the Bank, and the profit sharing, bonus or other form
of compensation (other than salary) paid or payable by the Bank
to or for the benefit of each such person in question for the
current year and for the year ended December 31, 1995.
Copies of each document, plan or contract listed and
described on Schedule 3.12 of the Cottage Grove Book of Schedules
are appended to such Schedule and included in the Cottage Grove
Book of Schedules.
Section 3.13 Disclosures. No representation or warranty
made herein by Seller contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the
statements contained herein under the circumstances under which
they were made not misleading, and Seller has made full
disclosure of all material facts with respect to the Bank.
Except as and to the extent reflected or reserved against in the
Bank Financial Statements or the Subsequent Bank Financial
Statements (as defined below), the Bank does not have, and with
respect to the Subsequent Bank Financial Statements will not
have, any liabilities or obligations, of any nature, secured or
unsecured, (whether accrued, absolute, contingent or otherwise)
including any tax liabilities due or to become due, which would
reasonably be expected to have a material adverse effect on the
financial condition, assets or business of the Bank.
Section 3.14 Effect of Agreement. The execution, delivery
and performance of this Agreement by Seller and the consummation
by Seller of the transactions contemplated hereby do not: (a)
require the consent, waiver, order, registration, qualification,
approval, license or authorization of any Person, court,
regulatory authority or other governmental body, other than as
may be required in connection or in compliance with the
provisions of applicable law; (b) violate, with or without the
giving of notice or the passage of time or both, in any material
respect any provision of law applicable to Seller; (c) conflict
with or result in a breach of any terms of its articles of
incorporation or bylaws, if applicable, or any material mortgage,
deed of trust, license, indenture or other agreement or
instrument, or any order, judgment, decree, statute, regulation
or other restriction of any kind or character, to which Seller or
the Bank is a party or by which Seller or the Bank or any of
their respective assets may be bound; (d) give to others any
right to accelerate or terminate, or result in acceleration or
termination of, any such agreement or instrument; (e) result in
termination of any provision of any such agreement or instrument;
or (f) result in the creation of any lien, charge or encumbrance
upon any of the property or assets of the Bank.
Section 3.15 Articles of Incorporation and Bylaws. The
copies of: (a) the articles of incorporation and all amendments
thereto of the Bank; and (b) the bylaws of the Bank, as amended
to date, are all complete and correct and set forth on Schedule
3.15 of the Cottage Grove Book of Schedules.
Section 3.16 Books and Records. The books and records of
the Bank are in all material respects complete and correct and
accurately reflect the basis for the financial condition and
results of operations of the Bank set forth in the Bank Financial
Statements.
Section 3.17 Interim Events. Except as set forth in
Schedule 3.17 of the Cottage Grove Book of Schedules, since June
30, 1996, the Bank has not:
(a) Suffered any changes having a material adverse effect
on the financial condition, assets or business of the Bank, or in
the operation or conduct of its business;
(b) Suffered any material damage, destruction or loss to
any of its properties whether covered by insurance or not;
(c) Declared any dividend or other distribution with
respect to its stock, repurchased or redeemed shares of its
stock, issued any shares of its stock or sold or agreed to issue
or sell any of its stock or any right to purchase or acquire any
such stock or any security convertible into such stock or taken
any action to reclassify, recapitalize or split up its stock or
issued any stock appreciation rights;
(d) Granted or agreed to grant any increase in benefits
payable or to become payable under any Employee Benefit Plan;
(e) Cancelled or compromised any debt or claim other than
in the ordinary course of business;
(f) Entered into any transaction, contract or commitment
other than in the ordinary course of business;
(g) Incurred any obligation or liability (fixed or
contingent) other than obligations and liabilities incurred in
the ordinary course of its business;
(h) Mortgaged, pledged or subjected to a lien, security
interest or other encumbrance any of its assets except to tax and
other liens which arise by operation of law and with respect to
which payment is not past due and except for pledges or liens:
(i) required to be granted in connection with the acceptance by
the Bank of government deposits; (ii) granted in connection with
repurchase or reverse repurchase agreements; or (iii) otherwise
incurred in the ordinary course of the conduct of its business;
(i) Conducted its business in any manner other than
substantially as it was being conducted prior to such time;
(j) Leased, sold or otherwise disposed of any of its assets
except in the ordinary course of business or leased, purchased or
otherwise acquired from third parties any assets except in the
ordinary course of business;
(k) Except for the transactions contemplated by this
Agreement, merged, consolidated or agreed to merge or consolidate
with or into any other Person, or acquired or agreed to acquire
any stock, equity interest or business of any other Person;
(l) Agreed to enter into any transaction for the borrowing
or loaning of monies, other than in the ordinary course of
business;
(m) Made any principal or interest payment on any
outstanding indebtedness of the Bank; or
(n) Increased the salary of any officer or the compensation
or fees payable to any director, or entered into any employment
contract with any officer or salaried employee or implemented or
made any material amendment to any employee welfare, stock
option, profit sharing or other similar plan or arrangement.
Section 3.18 Taxes. The Bank has filed with the
appropriate governmental agencies all federal, state and local
income, franchise, excise, sales, use, real and personal property
and other tax returns and reports required to be filed by it.
Except as set forth on Schedule 3.18 of the Cottage Grove Book of
Schedules, the Bank is not: (a) delinquent in the payment of any
taxes shown on such returns or reports or on any assessments
received by it for such taxes; (b) aware of any pending or
threatened examination for income taxes for any year by the IRS
or any state tax agency; (c) subject to any agreement extending
the period for assessment or collection of any federal or state
tax; or (d) a party to any action or proceeding nor has any claim
been asserted against it by any governmental authority for
assessment or collection of taxes. None of the tax liabilities
of the Bank has ever been audited by the IRS or any state tax
agency for any period since January 1, 1993. The Bank is not a
party to any threatened action or proceeding by any governmental
authority for assessment or collection of taxes. The reserve for
taxes in the financial statements of the Bank for the year ended
December 31, 1995, is adequate to cover all of the tax
liabilities of the Bank (including income taxes and franchise
fees) that may become payable in future years in respect to any
transactions consummated prior to December 31, 1995. The Bank
does not nor will it have any liability for taxes of any nature
for or in respect of the operation of its business or ownership
of its assets from December 31, 1995, up to and including the
Closing, except to the extent reflected on the Subsequent Bank
Financial Statements or otherwise reflected in the books and
records of the Bank for the period following its then most recent
of the Subsequent Bank Financial Statements.
Section 3.19 Title to Properties. The Bank has good and
marketable title to all assets and properties shown in the most
recent Bank Financial Statements, whether real or personal,
tangible or intangible, which it purports to own subject to no
liens, mortgages, security interests, encumbrances or charges of
any kind except: (a) as noted in the Bank Financial Statements or
on Schedule 3.19 of the Cottage Grove Book of Schedules; (b)
statutory liens for taxes not yet delinquent or being contested
in good faith by appropriate proceedings and for which
appropriate reserves have been established and reflected on the
Bank Financial Statements or will be reflected on the Subsequent
Bank Financial Statements; (c) pledges or liens required to be
granted in connection with the acceptance of government deposits,
granted in connection with repurchase or reverse repurchase
agreements or otherwise incurred in the ordinary course of
business; and (d) minor defects and irregularities in title and
encumbrances which do not materially impair the use thereof for
the purposes for which they are held and which would not
reasonably be expected to have a material adverse effect on the
financial condition, assets or business of the Bank. The Bank as
lessee has the right under valid and existing leases to occupy,
use, possess and control any and all of the real property leased
by it.
Section 3.20 Compliance with Applicable Law. The Bank
holds all licenses, certificates, permits, franchises and rights
from all appropriate federal, state or other public authorities
necessary for the conduct of its business and where failure to do
so would reasonably be expected to have a material adverse effect
on the financial condition, assets or business of the Bank. The
Bank has complied in all material respects with all applicable
federal, state and local statutes, ordinances, regulations, rules
or requirements, and the Bank is not presently charged with, or
to its knowledge, under governmental investigation with respect
to, any actual or alleged material violations of any statute,
ordinance, regulation or rule.
Section 3.21 Compliance With ERISA. Except as set forth
on Schedule 3.21 of the Cottage Grove Book of Schedules, all
employee benefit plans (as defined in Section 3(3) of ERISA)
established or maintained by the Bank, or to which the Bank
contributes, are in compliance in all material respects with all
applicable requirements of ERISA, and are in compliance in all
material respects with all applicable requirements (including
qualification and non-discrimination requirements in effect as of
the Closing) of the Code for obtaining the tax benefits the Code
thereupon permits with respect to such employee benefit plans.
For purposes of this Section, non-compliance with the Code and
ERISA is material if such non-compliance would reasonably be
expected to have a material adverse effect on the financial
condition, assets or business of the Bank. No such employee
benefit plan has, or as of the Closing will have, any amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18)
of ERISA) for which the Bank would be liable to any Person under
Title IV of ERISA if any such employee benefit plan were
terminated as of the Closing, which amounts would be material to
the Bank. Such employee benefit plans are funded in accordance
with Section 412 of the Code (if applicable). There would be no
obligations which would be material to the Bank under Title IV of
ERISA relating to any such employee benefit plan that is a
multi-employer plan if any such plan were terminated or if the
Bank withdrew from any such plan as of the Closing.
Section 3.22 Compliance With Environmental Laws. To the
best of the Bank's knowledge, the Bank has conducted its business
in material compliance with all federal, state, county and
municipal environmental laws, including statutes, regulations,
rules, ordinances, orders, restrictions and requirements relating
to underground storage tanks, petroleum products, air pollutants,
water pollutants or process waste water or otherwise relating to
the environment or toxic or hazardous substances or to the
manufacture, processing, distribution, use, recycling,
generation, treatment, handling, storage, disposal or transport
of any hazardous or toxic substances or petroleum products
(including polychlorinated biphenyls, whether contained or
uncontained, and asbestos-containing materials, whether friable
or not), including the Federal Solid Waste Disposal Act, the
Hazardous and Solid Waste Amendments, the Federal Clean Air Act,
the Federal Clean Water Act, the Occupational Health and Safety
Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980
and the Superfund Amendments and Reauthorization Act of 1986, all
as amended, and regulations of the Environmental Protection
Agency, the Nuclear Regulatory Agency and any state department of
natural resources or state environmental protection agency now or
at any time hereafter in effect (collectively, the "Environmental
Laws"). There are no pending or, to Seller's knowledge,
threatened actions or proceedings by any local municipality,
sewerage district or other governmental entity against the Bank
with respect to the Environmental Laws and, to Seller's
knowledge, there is no basis or grounds for any such action or
proceeding. Except as set forth on Schedule 3.22 of the Cottage
Grove Book of Schedules, no environmental clearances or other
governmental approvals are required for the conduct of the
business of the Bank or the consummation of the transactions
contemplated hereby. Except as set forth on Schedule 3.22 of the
Cottage Grove Book of Schedules, the Bank is not the owner of any
interest in real estate on which any substances have been used,
stored, deposited, treated, recycled or disposed of, which
substances if known to be present on, at or under such property,
would require clean-up, removal or some other remedial action
under any Environmental Laws.
Section 3.23 Trust Administration. The Bank has properly
administered, in all material respects, all accounts for which it
acts as fiduciary, including but not limited to accounts for
which it serves as a trustee, agent, custodian, personal
representative, guardian or investment advisor, in accordance
with the terms of the governing documents and applicable state
and federal law and regulations and common law. No director,
officer or employee of the Bank has committed any material breach
of trust with respect to any such fiduciary account, and the
accounting for each such fiduciary account is true and correct in
all material respects and accurately reflects the assets of such
fiduciary account.
Section 3.24 Brokerage Commissions. All negotiations
relating to this Agreement and the transactions contemplated
herein have been and will be carried on by Sellers directly with
Buyer, its counsel, accountants and other representatives in such
a manner that no actions taken by Seller, the Bank or the Bank's
officers, agents or representatives shall give rise to any claim
against Buyer for any brokerage commission, finder's fee,
investment advisor's fee or other like payment in connection with
the transactions contemplated hereby.
Section 3.25 Approval Delays. To the best of Seller's
knowledge after due inquiry, Seller knows of no reason why the
granting of any of the regulatory approvals referred to in
Section 11.2 would be denied or unduly delayed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer hereby represents and warrants to Sellers as follows:
Section 4.1 Organization. Buyer: (a) is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware and is a registered bank holding
company under the Bank Holding Bank Act of 1956, as amended (the
"BHCA"); (b) is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the business
conducted or the properties or assets owned or leased by it makes
such qualification necessary and where failure to be so qualified
would reasonably be expected to have a material adverse effect on
the consolidated financial condition, assets or business of Buyer
and its Subsidiaries; and (c) has full power and authority,
corporate and otherwise, to own, operate and lease its properties
as presently owned, operated and leased, and to carry on its
business as it is now being conducted.
Section 4.2 Authorization. Buyer has the requisite
corporate power and authority to enter into and perform its
obligations under this Agreement and the execution, delivery and
performance of this Agreement by Buyer and the consummation of
the transactions contemplated hereby have been duly authorized by
all necessary corporate action. This Agreement constitutes a
legal, valid and binding obligation of Buyer enforceable in
accordance with its terms.
Section 4.3 Litigation and Regulatory Matters. As of the
date of this Agreement, there is no action, suit, proceeding,
claim or formal written protest by any Person or agency, or any
investigation or report by a governmental agency or authority
pending, or to Buyer's knowledge, threatened against Buyer or any
of its Subsidiaries that challenges the validity or propriety of
the transactions contemplated by this Agreement, or with respect
to any actual or alleged violations of any statute, ordinance,
regulation, rule or the rights of any Person, entity or
organization that would reasonably be expected to have a material
adverse effect on the consolidated financial condition, assets or
business of Buyer and its Subsidiaries. Neither Buyer nor any of
its Subsidiaries is subject to, or in default with respect to,
nor are any of its or their assets subject to, any outstanding
judgment, injunction, order or decree or any other requirement of
any governmental body or court or of any governmental agency or
instrumentality which would reasonably be expected to have a
material adverse effect on the consolidated financial condition,
assets or business of Buyer and its Subsidiaries.
Section 4.4 Effect of Agreement. The execution, delivery
and performance of this Agreement by Buyer and the consummation
by it of the transactions contemplated hereby do not: (a) require
the consent, waiver, order, registration, qualification,
approval, license or authorization of any Person, court,
regulatory authority or other governmental body, other than as
specifically contemplated by this Agreement and as may be
required in connection or in compliance with the provisions of
applicable law, including consents, authorizations, approvals or
exemptions required under the BHCA, the Wisconsin Banking Act or
the Federal Deposit Insurance Act; (b) violate, with or without
the giving of notice or the passage of time or both, in any
material respect any provision of law applicable to Buyer; (c)
conflict with or result in a breach of any terms of Buyer's
certificate of incorporation or bylaws, or any material mortgage,
deed of trust, license, indenture or other agreement or
instrument, or any order, judgment, decree, statute, regulation
or other restriction of any kind or character, to which Buyer or
any of its Subsidiaries is a party or by which its or any of
their assets may be bound; (d) give to others any right to
accelerate or terminate, or result in acceleration or termination
of, any such agreement or instrument; (e) result in termination
of any provision of any such agreement or instrument; or (f)
result in the creation of any lien, charge or encumbrance upon
any of the property or assets of Buyer or its Subsidiaries.
Section 4.5 Brokerage Commissions. All negotiations
relating to this Agreement and the transactions contemplated
herein have been and will be carried on by Buyer directly with
Sellers or the Sellers' Representative, their respective counsel,
accountants and other representatives in such a manner that no
actions taken by Buyer or its officers, agents or representatives
shall give rise to any claim against Sellers or the Sellers'
Representative for any brokerage commission, finder's fee,
investment advisor's fee or other like payment in connection with
the transactions contemplated hereby.
Section 4.6 Financial Capability; Approval Delays. Buyer
has or has available to it the requisite funds necessary to
perform its obligations under this Agreement and to satisfy any
financial requirements necessary to obtain all necessary
regulatory approvals of the transactions contemplated by this
Agreement. To the best of its knowledge, Buyer knows of no
reason why the granting of any of the regulatory approvals
referred to in Section 11.2 would be denied or unduly delayed.
ARTICLE 5
COVENANTS OF SELLERS
From and after the date hereof and through the Closing, each
Seller covenants and agrees with Buyer as follows, and where
applicable as set forth below, that he or she will cause the Bank
to comply with the following covenants:
Section 5.1 Information, Access Thereto, Confidentiality.
(a) Buyer, its representatives and agents shall, at all times
during normal business hours prior to the Closing Date, have full
and continuing access to the facilities, operations, records and
properties of the Bank. Buyer, its representatives and agents
may, prior to the Closing Date, make or cause to be made such
reasonable investigation of the operations, records and
properties of the Bank and of its financial and legal condition
as Buyer shall deem necessary or advisable to familiarize itself
with such records, properties and other matters; provided, that
such access or investigation shall not interfere unnecessarily
with the normal operations of the Bank. Upon request, the Bank
will furnish Buyer or its representatives or agents, its
attorneys' responses to auditors' reasonable requests for
information, and such financial and operating data and other
information reasonably requested by Buyer developed by the Bank,
its auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure would not result in the waiver by the
Bank of any claim of attorney-client privilege), and will permit
Buyer, its representatives or agents to discuss such information
directly with any individual or firm performing auditing or
accounting functions for the Bank, and such auditors and
accountants shall be directed to furnish copies of any reports or
financial information as developed to Buyer or its
representatives or agents. This Section shall not require the
disclosure of any information the disclosure of which to Buyer
would be prohibited by law.
(b) Any confidential information or trade secrets
concerning Buyer or any of its Subsidiaries received by Sellers,
the Bank, or any of their respective employees, representatives
or agents in connection with this Agreement and the transactions
contemplated hereunder shall be treated confidentially, and any
correspondence, memoranda, records, copies, documents and
electronic or other media of any kind containing either such
confidential information, or trade secrets or both shall be
destroyed by Sellers or the Bank, as applicable or, at Buyer's
request, returned to Buyer in the event this Agreement is
terminated as provided in Section 12.1. Such information shall
not be used by Sellers, the Bank or any of their respective
employees, representatives or agents to the detriment of Buyer or
its Subsidiaries.
Section 5.2 Carry on in Regular Course. The Bank shall
carry on its business diligently and substantially in the same
manner as is presently being conducted and shall not make or
institute any unusual or material change in its methods of doing
business without the prior written consent of Buyer. The Bank
shall, unless otherwise consented to in writing in advance by
Buyer:
(a) Provide Buyer with prior notice of any loan, extension
of credit or loan renewal in a principal amount greater than
$200,000;
(b) Take no deliberate action or deliberately omit to take
any action with the effect of reducing the Bank's stockholders'
equity below $4,875,000;
(c) Maintain all of its assets necessary for the conduct of
its business in good operating condition and repair, reasonable
wear and tear and damage by fire or unavoidable casualty
excepted, and maintain policies of insurance upon its assets and
with respect to the conduct of its business in amounts and kinds
comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(d) Use its reasonable best efforts to preserve its present
business organization intact, keep available the services of its
present officers and employees and preserve its present
relationships with Persons having business dealings with it, and
in connection therewith, permit representatives of Buyer:
(i) to participate in meetings or discussions
with such officers and employees of the Bank in
connection with employment opportunities with
Buyer and the Bank after the Closing; and
(ii) to contact Persons having dealings with the
Bank for the purpose of informing such Persons of
the progress of the Acquisition and the services
to be offered by Buyer and the Bank after the
Closing;
(e) Maintain its books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with prior
years and comply in all material respects with all laws and
regulations applicable to it and to the conduct of its business;
(f) Make no amendment to its articles of incorporation or
bylaws and enter into no merger or consolidation with, or sale of
a significant portion of its assets to, any other Person;
(g) Make no change in the number of shares of its capital
stock issued and outstanding, grant or make no option, warrant,
call, right, commitment or any other security or agreement of any
character obligating it to issue any shares of its capital stock
and issue no other securities or evidences of indebtedness;
(h) Make no increase in the compensation payable or to
become payable by it to any employee except as may be required
under the terms of any existing Employee Benefit Plan;
(i) Make no increase in the compensation in excess of 3% to
any employee;
(j) Except for modifications necessary to comply with any
applicable law, rule or regulation, make no change in any
Employee Benefit Plan;
(k) Hire no additional employees or appoint any additional
directors;
(l) Provide prior notice to Buyer before the Bank makes any
purchase or sale of securities for the Bank's investment
portfolio which individually or in the aggregate exceeds
$250,000;
(m) Provide prior notice to Buyer before the Bank accepts
the deposit or renewal of the deposit of any public funds with a
principal amount in excess of $80,000, except temporary deposits
of the Town and Village of Cottage Grove tax deposits;
(n) Maintain a reserve for possible loan and lease losses
which is adequate in all material respects under the requirements
of generally accepted accounting principles to provide for
possible losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including accrued interest
receivable);
(o) Not enter into any new material lease, contract or
agreement (including any such lease, contract or agreement
requiring annual payments in excess of $1,000 or such leases,
contracts or agreements which in the aggregate have annual rental
payments exceeding $5,000), nor make any material change in any
such existing material lease, contract or agreement, including
extending the current term of any such lease, contract or
agreement through action or inaction; and
(p) File in a timely manner all required filings with all
proper regulatory authorities and cause such filings to be true
and correct in all material respects.
Section 5.3 Subsequent Call Reports. As soon as
available after the date hereof, Sellers shall deliver to Buyer
the monthly unaudited consolidated balance sheets and profit and
loss statements of the Bank prepared for its internal use, the
Bank's Call Report for each quarterly period completed prior to
the Closing, and all other financial reports or statements
submitted to regulatory authorities after the date hereof, to the
extent permitted by law (collectively, the "Subsequent Call
Reports"). The Subsequent Call Reports shall be prepared on a
basis consistent with past accounting practices and shall fairly
present the financial condition and results of operations for the
dates and periods presented. The Subsequent Call Reports will
not include any material assets or omit to state any material
liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such financial statements
misleading in any material respect.
Section 5.4 Advice of Changes. Between the date hereof
and the Closing Date, Sellers shall promptly advise Buyer in
writing of any fact which, if existing or known at the date
hereof, would have been required to be set forth or disclosed in
or pursuant to this Agreement or of any fact which, if existing
or known at the date hereof, would have made any of the
representations contained herein materially untrue.
Section 5.5 Title to Real Estate. Within 45 days of the
date of this Agreement, Sellers shall obtain and deliver to
Buyer, with respect to all real estate owned by the Bank, an
owner's preliminary report of title covering a date subsequent to
the date hereof, issued by Chicago Title Insurance Company or
such other title insurance company as is acceptable to Buyer,
which preliminary report shall contain a commitment of such title
insurance company to issue an ALTA owner's title insurance policy
insuring the fee simple title of Buyer or the Bank in such real
estate in an amount to be determined, subject only to: (a)
public utility easements; (b) private easements, covenants and
restrictions which do not,in the reasonable judgment of Buyer,
adversely impair the Bank's ability to use, or the value of, the
property; and (c) liens of current state and local property taxes
which are not delinquent or subject to penalty.
Section 5.6 Environmental Matters. Buyer may in its
discretion, prior to the Closing, retain at its own expense an
independent professional consultant to perform an environmental
site assessment and render to Buyer a report (an "Environmental
Report") to determine if any real property in which the Bank
holds any interest contains or gives evidence that any violations
of Environmental Laws have occurred on any such property.
Neither Buyer nor its independent professional consultant shall
enter upon any such real property in which the Bank holds only a
mortgagee's interest without the prior permission of the Bank and
the Person in possession thereof. Sellers shall cause the Bank
not to withhold such permission unreasonably, and shall cause the
Bank to use all reasonable efforts to obtain such permission for
Buyer from the Person in possession of any such mortgaged real
property for which Buyer desires its independent professional
consultant to conduct a site assessment. Buyer shall not act
upon any information produced by such reviews or investigations
with or for the Bank or any other Persons or Agency without prior
consent of the Seller. Buyer shall be responsible for and cause
the repair of any property that is damaged by the environmental
testing described in this Section.
Section 5.7 Materials Provided to Buyer. Any materials
or information provided by Sellers or the Bank to Buyer for use
in any filing made by Buyer with any of the Regulatory
Authorities or with any other regulatory agency will not contain
any statement that, at the time and in light of the circumstances
under which it is made, will be false or misleading with respect
to any material fact or will omit to state any material fact
necessary in order to make the statements therein not false or
misleading.
Section 5.8 Accounting and Other Adjustments. Sellers
agree that they will cause the Bank to: (a) make any accounting
adjustments or entries to its books of account and other
financial records; (b) make additional contributions to any
allowance for loan and lease losses; (c) sell or transfer any
investment securities held by it; (d) charge-off any loan or
lease; (e) create any new reserve account or make additional
contributions to any other existing reserve account; (f) make
changes in any accounting method; (g) accelerate, defer or accrue
any anticipated obligation, expense or income item; and (h) make
any other adjustments which would affect the financial reporting
of Buyer, on a consolidated basis after the Closing, in any case
as Buyer shall request, provided, however, that Sellers shall not
be obligated to take any such requested action until immediately
prior to the Closing and at such time as Sellers shall have
received reasonable assurances that all conditions precedent to
Sellers' obligations under this Agreement (except for the
completion of actions to be taken at the Closing) have been
satisfied, and provided, further, that any of the actions taken
by the Bank solely as a result of the provisions of this Section
shall be totally disregarded for purposes of the Purchase Price.
Section 5.9 Other Offers. Sellers shall cause the Bank
and any of its officers, directors, employees, representatives or
agents not to, directly or indirectly, make, encourage,
facilitate, solicit, assist or initiate any inquiry or proposal,
or participate in any negotiations with, or provide any
information to, any corporation, partnership, agent, attorney,
financial advisor, Person or other entity or group (other
than Buyer and its Subsidiaries or an officer, employee or other
authorized representative of Buyer or its Subsidiaries) relating
to any liquidation, dissolution, recapitalization, merger or
consolidation of the Bank; sale of a significant amount of assets
of the Bank; purchase or sale of shares of capital stock of the
Bank; or any similar transactions involving Sellers or the Bank,
other than the transactions contemplated by this Agreement. Upon
execution of this Agreement, each Seller shall immediately, and
shall likewise cause the Bank to, cease and cause to be
terminated any and all such current contacts and negotiations
with respect to any such transaction.
ARTICLE 6
COVENANTS OF BUYER
Buyer hereby covenants and agrees with Sellers as follows:
Section 6.1 Confidentiality. Any confidential
information or trade secrets received by Buyer, its employees or
agents in the course of the examination described in Section 5.1
shall be treated confidentially, and any correspondence,
memoranda, records, copies, documents and electronic or other
media of any kind containing either such confidential
information, or trade secrets or both shall be destroyed by Buyer
or, at the request of the Sellers' Representative, returned to
the Bank in the event this Agreement is terminated as provided in
Section 12.1, provided, however, that the restrictions of this
sentence shall not apply: (a) as may otherwise be required by
law; (b) to the extent such information shall have otherwise
become publicly available; or (c) to disclosure by or on behalf
of Buyer to Regulatory Authorities whose consent or approval may
be required to consummate the transactions contemplated by this
Agreement and to its lenders or other investors for the purpose
of obtaining financing of such transactions. Such information
shall not be used by Buyer or its agents to the detriment of
Sellers or the Bank.
Section 6.2 Materials Provided by Buyer. No certificate
or other instrument or document to be furnished to Sellers or the
Bank by or on behalf of Buyer pursuant to this Agreement will
contain any untrue statement of material fact or will omit to
state any material fact required to be stated herein or therein
which is necessary to make the statements contained herein or
therein, in light of the circumstances in which they are or were
made, not misleading in any material respect.
ARTICLE 7
ADDITIONAL COVENANTS OF ALL PARTIES
Section 7.1 Cooperation. Each of the parties to this
Agreement will fully and promptly cooperate with each other and
their respective counsel and accountants in connection with any
steps to be taken as part of their obligations under this
Agreement.
Section 7.2 Expenses. Except as otherwise provided
herein, all costs and expenses incurred by a party hereto shall
be borne by such party, including the fees of their respective
accountants and attorneys.
Section 7.3 Publicity. Prior to the Closing, the parties
to this Agreement will consult with each other before issuing any
press releases or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby
and shall not issue any such press release or make any such
public statement without the prior consent of the other parties,
except as may be required by law.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject,
unless waived by Buyer, to the satisfaction of the following
conditions on or prior to the Closing:
Section 8.1 Representations and Warranties True at
Closing. The representations and warranties made by Sellers in
this Agreement shall be true and correct as of the Closing with
the same effect as though such representations and warranties had
been made or given as of the Closing, except for changes
contemplated by this Agreement, and except also for
representations and warranties as of a specified time other than
the Closing, which shall be true and correct in all material
respects at such specified time.
Section 8.2 Compliance With Agreement. Sellers shall have
made all the deliveries set forth in Section 2.7 and performed
and complied with all of their other obligations under this
Agreement which are to be performed or complied with prior to or
at the Closing.
Section 8.3 Proceedings and Documents Satisfactory. All
proceedings, corporate or other, to be taken by Sellers in
connection with the transactions contemplated by this Agreement,
and all documents incident thereto, shall be reasonably
satisfactory in form and substance to counsel for Buyer, and the
Bank shall have made available to Buyer for examination the
originals or true and correct copies of all records and documents
relating to the business and affairs of the Bank which Buyer may
reasonably request in connection with said transactions.
Section 8.4 Accuracy of Financial Statements. The Bank
Financial Statements and the Subsequent Bank Financial
Statements, previously or subsequently furnished to Buyer by
Sellers or the Bank shall not be inaccurate in any material
respect, and the stockholders' equity of the Bank on the Closing
Date shall be greater than or equal to $4,875,000.
Section 8.5 Absence of Certain Changes or Events. From
the date hereof to the Closing, there shall be and have been no
material adverse change in the financial condition, assets or
business of the Bank.
Section 8.6 Selling Stockholders. Within 30 days of the
date of this Agreement, stockholders of the Bank holding not less
than 66 2/3% of the Bank's issued and outstanding voting stock
shall have executed this Agreement or the Additional Stock
Purchase Agreement attached as Exhibit A.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
The obligations of each Seller under this Agreement are
subject, unless waived by the Sellers' Representative, to the
satisfaction on or prior to the Closing of the following
conditions:
Section 9.1 Representations and Warranties True at
Closing. The representations and warranties made by Buyer in this
Agreement shall be true and correct on and as of the Closing with
the same effect as though such representations and warranties had
been made or given on and as of the Closing, except for changes
contemplated by this Agreement, and except also for
representations and warranties as of a specified time other than
the Closing, which shall be true and correct in all material
respects at such specified time.
Section 9.2 Compliance With Agreement. Buyer shall have
made all the deliveries set forth in Section 2.6 and shall have
performed and complied with all of its other obligations under
this Agreement which are to be performed or complied with by it
prior to or at the Closing.
Section 9.3 Proceedings and Documents Satisfactory. All
proceedings, corporate or other, to be taken by Buyer in
connection with the transactions contemplated by this Agreement,
and all documents incident thereto, shall be reasonably
satisfactory in form and substance to counsel for the Sellers'
Representative, and Buyer shall have made available to the
Sellers' Representative for examination the originals or true and
correct copies of all records and documents relating to the
business and affairs of Buyer which the Sellers' Representative
or its counsel may reasonably request in connection with said
transactions.
Section 9.4 Litigation. No action, suit, proceeding or
claim shall have been instituted, made or threatened by any
Person relating to the Acquisition or the validity or propriety
of the transactions contemplated by this Agreement which in the
reasonable opinion of the Sellers' Representative would have a
material adverse affect on the ability of Buyer to consummate the
transactions contemplated hereby.
ARTICLE 10
CONDITIONS PRECEDENT TO OBLIGATIONS
OF ALL PARTIES
Section 10.1 Regulatory Approvals. Buyer shall have
received any and all required approvals from the Federal Reserve,
the FDIC and the Banking Division and any other necessary
Regulatory Authority for the consummation of the transactions
contemplated hereby.
Section 10.2 Approval Conditions In addition to the
regulatory approvals described in Section 11.2, all actions,
consents or approvals, governmental or otherwise, which are, or
in the opinion of counsel for Buyer or the Sellers'
Representative may be, necessary to permit or enable the Bank
upon and after the Acquisition, to conduct all or any part of the
business of the Bank, in the manner in which such activities and
businesses are conducted up to the Closing, shall have been
obtained without any conditions which in the reasonable opinion
of Buyer and the Sellers' Representative are materially adverse,
and shall not have been withdrawn or stayed.
Section 10.3 Orders, Decrees and Judgments. Consummation
of the transactions contemplated by this Agreement shall not
violate any order, decree or judgment of any court or
governmental body having competent jurisdiction.
ARTICLE 11
REGULATORY APPROVALS
Section 11.1 Initial Filings. Buyer shall use all
reasonable efforts to make as soon as practicable prior to the
Closing Date all appropriate initial filings necessary to obtain
the regulatory approvals referred to in Section 11.2 at such time
as it reasonably believes that such filings would be accepted and
approved by the appropriate regulatory agencies. Buyer shall in
good faith pursue the regulatory approvals necessary to
consummate the transactions contemplated in this Agreement.
Buyer shall provide the Sellers' Representative and its counsel
with copies of each application or material document to be filed
by Buyer with Regulatory Authorities to obtain such approvals.
Section 11.2 Necessary Regulatory Approvals. Buyer shall
have primary responsibility for preparation of all applications
for regulatory approval of all the transactions contemplated in
this Agreement, including, but not limited to, the preparation of
an application or any amendment thereto or any other required
statements or documents filed or to be filed by any party with:
(a) the Board of Governors of the Federal Reserve System; (b) the
FDIC; (c) the Banking Division; and (d) any other party or
Regulatory Authority pursuant to any applicable law or
regulation, for authority to consummate the transactions
contemplated by this Agreement. Each Seller and the Sellers'
Representative agree to cooperate with Buyer and use all
reasonable efforts to assist Buyer in preparing such applications
and in pursuit of such approvals.
ARTICLE 12
TERMINATION AND ABANDONMENT
Section 12.1 Reasons for Termination and Abandonment This
Agreement may be terminated and abandoned upon prompt written
notice to the other party or parties before the Closing Date:
(a) This Agreement may be terminated and the other
transactions may be abandoned at any time, for any reason, upon
prompt written notice by Buyer to Sellers' Representative before
the Closing Date, notwithstanding any requisite approval and
adoption of this Agreement, and the transactions contemplated
hereby and this Agreement shall become void and there shall be no
liability or restrictions on the future activities on the part of
any party hereto, or its directors, officers or stockholders,
except for obligations of Sellers and Buyer concerning
confidentiality referred to in Sections 5.1 and 6.1,
respectively.
(b) Except for any Sellers who default in the sale of their
shares of Stock to Buyer, in which case Buyer shall have only the
remedies of specific performance conferred to Buyer under Section
13.11, this Agreement may be terminated and the other
transactions may be abandoned at any time, for any reason, upon
prompt written notice from any Seller to Buyer before the Closing
Date, notwithstanding any requisite approval and adoption of this
Agreement, and the transactions contemplated hereby and this
Agreement shall otherwise become void and there shall be no
monetary liability or restrictions on the future activities on
the part of any party hereto, or its directors, officers or
stockholders, except for obligations of Sellers and Buyer
concerning confidentiality referred to in Sections 5.1 and 6.1,
respectively.
ARTICLE 13
MISCELLANEOUS
Section 13.1 Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement, and
the performance of the obligations imposed by this Agreement
shall be governed by the internal laws of the State of Wisconsin
applicable to contracts made and wholly to be performed in such
state without regard to conflicts of laws.
Section 13.2 Assignment. Neither this Agreement nor any
of the rights or obligations hereunder may be assigned, in whole
or in part, by any of the parties to this Agreement without the
prior written consent of Buyer and the Sellers' Representative
and any purported assignment in violation hereof shall be void
and of no effect.
Section 13.3 Amendment and Modification. The parties may
by written agreement signed by Buyer and the Sellers'
Representative: (a) extend the time for the performance of any
of the obligations or other acts of the parties to this
Agreement; (b) waive any inaccuracies in the representations or
warranties contained in this Agreement or in any document
delivered pursuant to this Agreement; and (c) waive compliance
with or modify, amend or supplement any of the conditions,
covenants, agreements, representations or warranties contained in
this Agreement or waive or modify performance of any of the
obligations of any of the parties to this Agreement, which are
for the benefit of the waiving party. The failure of any party
hereto to enforce at any time any provision of this Agreement
shall not be construed to be a waiver of such provision, nor in
any way affect the validity of this Agreement or any part hereof
or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
Section 13.4 Notices. All notices, requests and other
communications hereunder shall be in writing (which shall include
telecopier communication) and shall be deemed to have been duly
given if delivered by hand or by overnight express delivery
service, mailed with first class postage prepaid or telecopied if
confirmed immediately thereafter by also mailing a copy of any
notice, request or other communication by mail with first class
postage prepaid:
(a) If to Sellers or the Sellers' Representative, to:
Xx. Xxxxxx Xxxxxxxx
0000 Xxxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with copies to:
Cottage Grove State Bank
000 X. Xxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to Buyer, to:
Heartland Financial USA, Inc.
0000 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxx 00000-0000
Attention: Xx. Xxxx X. Xxxxxxx
Executive Vice President and Chief
Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with copies to:
Barack, Xxxxxxxxxx, Xxxxxxxxxx & Xxxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other Person or place as Buyer shall furnish to the
Sellers' Representative or the Sellers' Representative shall
furnish to Buyer in writing. Except as otherwise provided
herein, all such notices, requests or other communications shall
be effective: (i) if delivered by hand, when delivered; (ii) if
mailed in the manner provided in this Section, five Business Days
after deposit with the United States Postal Service; (iii) if
delivered by overnight express delivery service, on the next
Business Day after deposit with such service; (iv) if by
telecopier, on the next Business Day if also confirmed by mail in
the manner provided in this Section.
Section 13.5 Entire Agreement. This Agreement and any
documents executed by the parties pursuant to this Agreement and
referred to herein constitute the entire understanding and
agreement of the parties to this Agreement and supersede all
other prior agreements and understandings, written or oral,
relating to such subject matter between the parties. This
Agreement and every representation, warranty, covenant, agreement
and provision hereof shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective
successors and permitted assigns.
Section 13.6 Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement unless the consummation of the
transactions contemplated hereby is adversely affected thereby.
Section 13.7 Counterparts. This Agreement and any
amendments thereto may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.8 All Reasonable Efforts. Each party
represents and warrants that it will use all reasonable efforts
to bring about the transactions contemplated by this Agreement as
soon as practicable provided that this Section shall not obligate
the Sellers' Representative or Buyer to remedy any breach of any
of its representations, warranties and covenants herein. In the
event that any party becomes aware of the occurrence or impending
occurrence of any event which would constitute or cause a breach
by it of any of the representations or warranties herein, or
would have constituted or caused a breach by it of any of the
representations or warranties herein, had such an event occurred
or been known prior to the date hereof, said party shall
immediately give detailed and written notice thereof to the other
party or parties.
Section 13.9 Survival of Representations and Warranties.
The covenants, representations and warranties contained in this
Agreement shall survive only until the Closing.
Section 13.10 No Third Party Beneficiaries. This Agreement
is not intended to and shall not create any rights in or confer
any benefits upon any Person or entity other than the parties to
this Agreement.
Section 13.11 Remedies. Each of Sellers acknowledges that
the shares of the Stock to be sold to Buyer hereunder are unique
and that monetary damages would not be an adequate remedy for
Buyer if any Seller should breach his or her agreement to sell
any of such shares to Buyer hereunder. Accordingly, it is
understood and agreed that Buyer shall, in addition to all other
available remedies, be entitled to a judgment or decree of
specific performance against any Seller who breaches his or her
agreement to sell any of such shares to Buyer hereunder subject
to the provisions of Article 12.
Section 13.12 Facsimile Signatures. This Agreement may be
executed and accepted by facsimile signature and any such
signature shall be of the same force and effect as an original
signature.
IN WITNESS WHEREOF, Buyer, Sellers and the Sellers'
Representative have executed this Agreement as of the date first
set forth above.
BUYER:
ATTEST: HEARTLAND FINANCIAL USA, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------ ------------------------
Xxxx X. Xxxxxxx Xxxx X. Xxxxxx
Executive Vice President President
SELLERS:
Number of
Signature Printed Name Shares
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx 1,081
/s/ Xxxxxxx X. Xxxx Xxxxxxx X. Xxxx 1,400
/s/ Molbreak Trustee Xxxxxx Xxxxxxxx 2,591
/s/ Xxxxx Xxxxxxx Xxxxx Xxxxxxx 100
/s/ Xxxxxx X. Xxxxx Xxxxxx X. Xxxxx 1,080
/s/ Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx 60
/s/ Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx XXX 325
Total 6,637
SELLERS' REPRESENTATIVE:
/s/ XXXXXX XXXXXXXX
------------------------
XXXXXX XXXXXXXX
LIST OF EXHIBITS
Exhibit A Form of Additional Stock Purchase Agreement
Exhibit B Form of Opinion of Counsel to Sellers
LIST OF SCHEDULES
Schedule 3.3 Bank Organization
Schedule 3.5 Litigation and Regulatory Matters
Schedule 3.6 Insurance
Schedule 3.8 Bank Financial Statements
Schedule 3.12 Properties, Contracts,Employee
Benefit Plans and Other Agreements
Schedule 3.15 Articles of Incorporation and Bylaws
Schedule 3.17 Interim Events
Schedule 3.18 Taxes
Schedule 3.19 Title to Properties
Schedule 3.21 Compliance With ERISA
Schedule 3.22 Compliance With Environmental Laws
