AGREEMENT AND PLAN OF REORGANIZATION
between
MERCANTILE BANCORPORATION INC.,
as Buyer,
and
HAWKEYE BANCORPORATION,
as Seller
Dated August 4, 1995
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered into on August 4, 1995 by
and between MERCANTILE BANCORPORATION INC., a Missouri
corporation ("Buyer"), and HAWKEYE BANCORPORATION, an Iowa
corporation (together with its predecessors, "Seller").
W I T N E S S E T H:
WHEREAS, Buyer is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the
"Holding Company Act"); and
WHEREAS, Seller is a registered bank holding
company under the Holding Company Act; and
WHEREAS, the Board of Directors of Seller and the
Executive Committee of the Board of Directors of Buyer have
approved the merger (the "Merger") of Seller with and into a
wholly owned subsidiary of Buyer organized or to be organized
under the laws of Iowa ("Merger Sub") pursuant to the terms and
subject to the conditions of this Agreement; and
WHEREAS, as a condition to, and immediately after
the execution of this Agreement, Buyer and each director of
Seller will enter into Support Agreements (the "Support
Agreements") in the form attached hereto as Exhibit A; and
-1-
WHEREAS, as a condition to, and immediately prior to
execution of this Agreement, Buyer and Seller will enter into a
stock option agreement (the "Stock Option Agreement") in the
form attached hereto as Exhibit B; and
WHEREAS, the parties desire to provide for certain
undertakings, conditions, representations, warranties and
covenants in connection with the transactions contemplated by
this Agreement.
NOW THEREFORE, in consideration of the premises and
the representations, warranties and agreements herein
contained, the parties agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. (a) Subject to the terms and
conditions of this Agreement, Seller shall be merged with and
into Merger Sub in accordance with the Iowa Business
Corporation Act (the "Iowa Act") and the separate corporate
existence of Seller shall cease. Merger Sub shall be the
surviving corporation of the Merger (sometimes referred to
herein as the "Surviving Corporation") and shall continue to
be governed by the laws of the State of Iowa.
-2-
1.02. Closing. The closing (the "Closing") of the
Merger shall take place at 10:00 a.m., local time, on the
date that the Effective Time (as defined in Section 1.03)
occurs, or at such other time, and at such place, as Buyer
and Seller shall agree (the "Closing Date").
1.03. Effective Time. The Merger shall become
effective on the date and at the time (the "Effective Time")
on which appropriate documents in respect of the Merger are
filed with the Secretary of State of the State of Iowa in
such form as required by, and in accordance with, the
relevant provisions of the Iowa Act. Subject to the terms
and conditions of this Agreement, the Effective Time shall
occur on such date as Buyer shall notify Seller in writing
(such notice to be at least five business days in advance of
the Effective Time) but (i) not earlier than the satisfaction
of all conditions set forth in Section 6.01(a) and 6.01(b)
(the "Approval Date") and (ii) subject to clause (i), not
later than the first business day of the first full calendar
month commencing at least five business days after the
Approval Date. As soon as practicable following the
Effective Time, Buyer and Seller shall cause a certificate or
plan of merger reflecting the terms of this Agreement to be
delivered for filing and recordation with other appropriate
state or local officials in the State of Iowa in accordance
with the Iowa Act.
-3-
1.04. Additional Actions. If, at any time after
the Effective Time, Buyer or the Surviving Corporation shall
consider or be advised that any further deeds, assignments or
assurances or any other acts are necessary or desirable to
(b) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of Seller or
Merger Sub or (c) otherwise carry out the purposes of this
Agreement, Seller and Merger Sub and each of their respective
officers and directors, shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments or assurances
and to do all acts necessary or desirable to vest, perfect or
confirm title and possession to such rights, properties or
assets in the Surviving Corporation and otherwise to carry
out the purposes of this Agreement, and the officers and
directors of the Surviving Corporation are authorized in the
name of Seller or otherwise to take any and all such action.
1.05. Articles of Incorporation and Bylaws. The
Articles of Incorporation and Bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the Articles
of Incorporation and Bylaws of the Surviving Corporation
following the Merger until otherwise amended or repealed.
-4-
1.06. Boards of Directors and Officers. At the
Effective Time, the directors and officers of Merger Sub
immediately prior to the Effective Time shall be directors
and officers, respectively, of the Surviving Corporation
following the Merger; such directors and officers shall hold
office in accordance with the Surviving Corporation's Bylaws
and applicable law.
1.07. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the
part of Buyer, Seller or the holder of any of the following
securities:
(i) Each share of the common stock, par value
$.01 per share, of Merger Sub that is issued and outstanding
immediately prior to the Effective Time shall remain
outstanding and shall be unchanged after the Merger and shall
thereafter constitute all of the issued and outstanding
capital stock of the Surviving Corporation; and
(ii) Each share of the common stock, without par
value ("Seller Common Stock"), of Seller issued and
outstanding immediately prior to the Effective Time, other
than any Dissenting Shares (as defined in Section 1.09),
shall cease to be outstanding and shall be converted into and
become the right to receive 0.585 (the "Exchange Ratio") of a
share of common stock, par value $5.00 per share ("Buyer
-5-
Common Stock"), of Buyer; provided, however, that any shares
of Seller Common Stock held by Seller or any of its wholly
owned Subsidiaries (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the
"SEC")), or Buyer or any of its wholly owned Subsidiaries, in
each case other than in a fiduciary capacity or as a result
of debts previously contracted, shall be cancelled and shall
not represent capital stock of the Surviving Corporation and
shall not be exchanged for shares of Buyer Common Stock.
1.08. Exchange Procedures. (a) As soon as
practicable after the Effective Time, holders of record of
certificates formerly representing shares of Seller Common
Stock (the "Certificates") shall be instructed to tender such
Certificates to Buyer pursuant to a letter of transmittal
that Buyer shall deliver or cause to be delivered to such
holders. Such letters of transmittal shall specify that risk
of loss and title to Certificates shall pass only upon
delivery of such Certificates to Buyer.
(b) Subject to Section 1.10, after the Effective
Time, each previous holder of a Certificate that surrenders
such Certificate to the Buyer or, at the election of Buyer,
an exchange agent designated by Buyer (the "Exchange Agent")
will, upon acceptance thereof by Buyer or the Exchange Agent,
be entitled to a certificate or certificates representing the
-6-
number of full shares of Buyer Common Stock into which the
Certificate so surrendered shall have been converted pursuant
to this Agreement and any distribution theretofore declared
and not yet paid with respect to such shares of Buyer Common
Stock, without interest.
(c) Buyer or, at the election of Buyer, the
Exchange Agent shall accept Certificates upon compliance with
such reasonable terms and conditions as Buyer or the Exchange
Agent may impose to effect an orderly exchange thereof in
accordance with customary exchange practices. Certificates
shall be appropriately endorsed or accompanied by such
instruments of transfer as Buyer or the Exchange Agent may
require.
(d) Each outstanding Certificate shall until duly
surrendered to Buyer or the Exchange Agent be deemed to
evidence ownership of the consideration into which the stock
previously represented by such Certificate shall have been
converted pursuant to this Agreement.
(e) After the Effective Time, holders of
Certificates shall cease to have rights with respect to the
stock previously represented by such Certificates, and their
sole rights shall be to exchange such Certificates for the
consideration provided for in this Agreement. After the
Effective Time, there shall be no further transfer on the
records
-7-
of Seller of Certificates, and if such Certificates are
presented to Seller for transfer, they shall be cancelled
against delivery of the consideration provided therefor in
this Agreement. Buyer shall not be obligated to deliver the
consideration to which any former holder of Seller Common
Stock is entitled as a result of the Merger until such holder
surrenders the Certificates as provided herein. No dividends
declared will be remitted to any person entitled to receive
Buyer Common Stock under this Agreement until such person
surrenders the Certificate representing the right to receive
such Buyer Common Stock, at which time such dividends shall
be remitted to such person, without interest and less any
taxes that may have been imposed thereon. Certificates
surrendered for exchange by any person constituting an
"affiliate" of Seller for purposes of Rule 145 of the
Securities Act of 1933, as amended (together with the rules
and regulations thereunder, the "Securities Act"), shall not
be exchanged for certificates representing Buyer Common Stock
until Buyer has received a written agreement from such person
in the form attached as Exhibit C. Neither the Exchange
Agent nor any party to this Agreement nor any affiliate
thereof shall be liable to any holder of stock represented by
any Certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat
or similar laws. Buyer and the Exchange Agent shall be
entitled to rely upon
-8-
the stock transfer books of Seller to establish the identity
of those persons entitled to receive consideration specified
in this Agreement, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, Buyer and
the Exchange Agent shall be entitled to deposit any
consideration represented thereby in escrow with an
independent third party and thereafter be relieved with
respect to any claims thereto.
1.09. Dissenting Shares. (a) "Dissenting Shares"
means any shares held by any holder who becomes entitled to
payment of the fair value of such shares under the Iowa Act.
Any holders of Dissenting Shares shall be entitled to payment
for such shares only to the extent permitted by and in
accordance with the provisions of the Iowa Act; provided,
however, that if, in accordance with the Iowa Act, any holder
of Dissenting Shares shall forfeit such right to payment of
the fair value of such shares, such shares shall thereupon be
deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to
receive the consideration provided in this Article I.
(b) Seller shall give Buyer (i) prompt notice of
any written objections to the Merger and any written demands
for the payment of the fair value of any shares, withdrawals
-9-
of such demands, and any other instruments served pursuant to
the Iowa Act received by Seller and (ii) the opportunity to
direct all negotiations and proceedings with respect to such
demands under the Iowa Act. Seller shall not voluntarily
make any payment with respect to any demands for payment of
fair value and shall not, except with the prior written
consent of Buyer, settle or offer to settle any such demands.
1.10. No Fractional Shares. Notwithstanding any
other provision of this Agreement, neither certificates nor
scrip for fractional shares of Buyer Common Stock shall be
issued in the Merger. Each holder who otherwise would have
been entitled to a fraction of a share of Buyer Common Stock
shall receive in lieu thereof cash (without interest) in an
amount determined by multiplying the fractional share
interest to which such holder would otherwise be entitled by
the Closing Price per share of Buyer Common Stock on the last
business day preceding the Effective Time. With respect to a
share of stock, "Closing Price" shall mean: the closing
price as reported on the Consolidated Tape (as reported in
The Wall Street Journal or in the absence thereof, by any
other authoritative source). No such holder shall be
entitled to dividends, voting rights or any other rights in
respect of any fractional share.
-10-
1.11. Anti-Dilution Adjustments. If prior to the
Effective Time Buyer shall declare a stock dividend or make
distributions upon or subdivide, split up, reclassify or
combine Buyer Common Stock or declare a dividend or make a
distribution on Buyer Common Stock in any security
convertible into Buyer Common Stock, appropriate adjustment
or adjustments will be made to the Exchange Ratio.
1.12. Reservation of Right to Revise Transaction.
Buyer may at any time change the method of effecting the
acquisition of Seller or Seller's Subsidiaries by Buyer
(including without limitation the provisions of this Article I)
if and to the extent it deems such change to be desirable,
including without limitation to provide for a merger of Seller
directly into Buyer, in which Buyer is the surviving
corporation, provided, however, that no such change shall (A)
alter or change the amount or kind of consideration to be
issued to holders of Seller Common Stock as provided for in
this Agreement (the "Merger Consideration"), (B) adversely
affect the tax treatment to Seller's stockholders as a result
of receiving the Merger Consideration or (C) materially impede
or delay receipt of any approval referred to in Section 6.01(b)
or the consummation of the transactions contemplated by this
Agreement.
-11-
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller represents and warrants to and covenants
with Buyer as follows:
2.01. Organization and Authority. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Iowa is duly
qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified
and has corporate power and authority to own its properties
and assets and to carry on its business as it is now being
conducted. Seller is registered as a bank holding company
with the Board of Governors of the Federal Reserve System
(the "Board") under the Holding Company Act. True and
complete copies of the Restated Articles of Incorporation and
the Bylaws of Seller and, to the extent requested in writing
by Buyer, of the Articles of Incorporation and Bylaws of the
Seller Subsidiaries (as defined in Section 2.02), each as in
effect on the date of this Agreement, have been provided to
Buyer.
2.02. Subsidiaries. Schedule 2.02 sets forth,
among other things, a complete and correct list of all of
-12-
Seller's Subsidiaries (each a "Seller Subsidiary" and
collectively the "Seller Subsidiaries"), all outstanding
Equity Securities of each of which, except as set forth on
Schedule 2.02, are owned directly or indirectly by Seller.
"Equity Securities" of an issuer means capital stock or other
equity securities of such issuer, options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible
into, shares of any capital stock or other Equity Securities
of such issuer, or contracts, commitments, understandings or
arrangements by which such issuer is or may become bound to
issue additional shares of its capital stock or other Equity
Securities of such issuer, or options, warrants, scrip or
rights to purchase, acquire, subscribe to, calls on or
commitments for, or stock appreciation or similar rights in
respect of, any shares of its capital stock or other Equity
Securities. Except as set forth on Schedule 2.02, all of the
outstanding shares of capital stock of the Seller
Subsidiaries are validly issued, fully paid and
nonassessable, and those shares owned by Seller are owned
free and clear of any lien, claim, charge, option,
encumbrance, agreement, mortgage, pledge, security interest
or restriction (a "Lien") with respect thereto. Each of the
Seller Subsidiaries is a corporation or association duly
incorporated or organized, validly existing, and in good
standing under the laws of its
-13-
jurisdiction of incorporation or organization, and has
corporate power and authority to own or lease its properties
and assets and to carry on its business as it is now being
conducted. Each of the Seller Subsidiaries is duly qualified
to do business in each jurisdiction where its ownership or
leasing of property or the conduct of its business requires
it so to be qualified, except where the failure to so qualify
would not have a material adverse effect on the financial
condition, results of operations or business (collectively,
the "Condition") of Seller and its Subsidiaries, taken as a
whole. Except as set forth on Schedule 2.02, Seller does not
own beneficially, directly or indirectly, five percent or
more of any shares of any class of Equity Securities or
similar interests of any corporation, bank, business trust,
association or similar organization. All of Seller's bank
Subsidiaries (the "Banks") are either state banking
associations chartered under the laws of the State of Iowa or
national banking associations chartered by the Office of the
Comptroller of the Currency. The deposits of each of the
Banks are insured by the Bank Insurance Fund ("BIF") or, to
the extent transferred to a Bank by the Resolution Trust
Corporation, by the Savings Association Insurance Fund, of
the Federal Deposit Insurance Corporation (the "FDIC"). The
aggregate "adjusted attributable deposit amount" (as defined
in 12 U.S.C. Section 1815) of the Banks, as of June 30, 1995,
is
-14-
$54,866,000. The Banks identified as such on Schedule 2.02
are members in good standing of the Federal Reserve System.
Except as set forth on Schedule 2.02, neither Seller nor any
Seller Subsidiary holds any interest in a partnership or
joint venture of any kind.
2.03. Capitalization. The authorized capital
stock of Seller consists of (i) 200,000,000 shares of Seller
Common Stock, of which, as of June 30, 1995, 13,461,373
shares were issued and outstanding, (ii) 200,000,000 shares
of Preference Stock, without par value, of which no shares
are issued and outstanding, (iii) 5,000,000 shares of
Preferred Stock, par value $1.00 per share, of which no
shares are issued and outstanding. As of June 30, 1995,
Seller had reserved 208,630 shares of Seller Common Stock for
issuance under Seller's stock option and incentive plans, a
list of which is set forth on Schedule 2.03 (the "Seller
Stock Plans"), pursuant to which options ("Seller Stock
Options") covering 208,630 shares of Seller Common Stock and
65,000 stock appreciation rights were outstanding as of June
30, 1995. Since June 30, 1995, no Equity Securities of
Seller have been issued other than shares of Seller Common
Stock which may have been issued upon the exercise of Seller
Employee Stock Options. Except as set forth above, there are
no other Equity Securities of Seller outstanding. All of the
issued and outstanding shares of Seller Common Stock are
-15-
validly issued, fully paid, and nonassessable, and have not
been issued in violation of any preemptive right of any
stockholder of Seller. Seller maintains no dividend
reinvestment or similar plan.
2.04. Authorization. (a) Seller has the
corporate power and authority to enter into this Agreement
and, subject to the approval of this Agreement by the
stockholders of Seller, to carry out its obligations
hereunder. The only stockholder vote required for Seller to
approve this Agreement is the affirmative vote of the holders
of at least a majority of the votes entitled to be cast on
the Agreement by the holders of shares of Seller Common
Stock. The execution, delivery and performance of this
Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by
the Board of Directors of Seller. Subject to approval by the
stockholders of Seller, this Agreement is a valid and binding
obligation of Seller enforceable against Seller in accordance
with its terms.
(b) Except as set forth on Schedule 2.04B, neither
the execution nor delivery nor performance by Seller of this
Agreement, nor the consummation by Seller of the transactions
contemplated hereby, nor compliance by Seller with any of the
provisions hereof, will (i) violate, conflict with, or result
in a breach of any provisions of, or constitute a default (or
-16-
an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the
creation of, any Lien upon any of the material properties or
assets of Seller or any Seller Subsidiary under any of the
terms, conditions or provisions of (x) its articles or
certificate of incorporation or bylaws or (y) any material
note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which
Seller or any Seller Subsidiary is a party or by which it may
be bound, or to which Seller or any Seller Subsidiary or any
of the material properties or assets of Seller or any Seller
Subsidiary may be subject, or (ii) subject to compliance with
the statutes and regulations referred to in paragraph (c) of
this Section 2.04, to the best knowledge of Seller, violate
any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Seller or any
Seller Subsidiary or any of their respective material
properties or assets.
(c) Other than in connection or in compliance with
the provisions of the Iowa Act, the Securities Act, the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (the "Exchange Act"), the securities or blue sky
laws of the various states or filings, consents, reviews,
-17-
authorizations, approvals or exemptions required under the
Holding Company Act, and the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"), or any required
approvals of or filings with the Superintendant of the
Banking Division of the Commerce Department of the State of
Iowa (the "State Bank Regulator"), no notice to, filing with,
exemption or review by, or authorization, consent or approval
of, any public body or authority is necessary for the
consummation by Seller of the transactions contemplated by
this Agreement.
2.05. Seller Financial Statements. The
consolidated and parent-company only balance sheets of Seller
and its Subsidiaries as of December 31, 1994, 1993 and 1992
and related consolidated statements of income, cash flows and
changes in stockholders' equity for each of the three years
in the three-year period ended December 31, 1994, together
with the notes thereto, audited by Deloitte & Touche LLP and
included in an annual report on Form 10-K as filed with the
SEC, and the unaudited consolidated balance sheets of Seller
and its Subsidiaries as of March 31 and June 30, 1995 and the
related unaudited consolidated statements of income and cash
flows for the periods then ended included in quarterly
reports on Form 10-Q (each a "Seller Form 10-Q") as filed
with the SEC (collectively, the "Seller Financial
Statements"), have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
("GAAP"),
-18-
present fairly the consolidated financial position of Seller
and its Subsidiaries at the dates and the consolidated
results of operations, cash flows and changes in
stockholders' equity of Seller and its Subsidiaries for the
periods stated therein and are derived from the books and
records of Seller and its Subsidiaries, which are complete
and accurate in all material respects and have been
maintained in all material respects in accordance with
applicable laws and regulations. Neither Seller nor any of
its Subsidiaries has any material contingent liabilities that
are not described in the financial statements described
above. The Seller Financial Statements are set forth on
Schedule 2.05.
2.06. Seller Reports. Since January 1, 1992, each
of Seller and the Seller Subsidiaries has filed all material
reports, registrations and statements, together with any
required material amendments thereto, that it was required to
file with (i) the SEC, including, but not limited to, Forms
10-K, Forms 10-Q, Forms 8-K and proxy statements, (ii) the
Board, (iii) the FDIC, (iv) the State Bank Regulator, and (v)
any other federal, state, municipal, local or foreign
government, securities, banking, savings and loan, insurance
and other governmental or regulatory authority and the
agencies and staffs thereof (the entities in the foregoing
clauses (i) through (v) being referred to herein collectively
as the "Regulatory Authorities" and individually as a
"Regulatory
-19-
Authority"). All such reports and statements filed with any
such Regulatory Authority are collectively referred to herein
as the "Seller Reports." As of its respective date, each
Seller Report complied in all material respects with all the
rules and regulations promulgated by the applicable
Regulatory Authority and did not contain any untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
2.07. Properties and Leases. Except as may be
reflected in the Seller Financial Statements, except for any
Lien for current taxes not yet delinquent and except with
respect to assets classified as real estate owned, Seller and
its Subsidiaries have good title free and clear of any
material Lien to all the real and personal property reflected
in Seller's consolidated balance sheet as of June 30, 1995
included in the most recent Seller Form 10-Q and, in each
case, all real and personal property acquired since such
date, except such real and personal property as has been
disposed of in the ordinary course of business. All leases
material to Seller or any Seller Subsidiary pursuant to which
Seller or any Seller Subsidiary, as lessee, leases real or
personal property, are valid and effective in accordance with
their respective terms, and there is not, under any of such
leases,
-20-
any material existing default by Seller or any Seller
Subsidiary or any event which, with notice or lapse of time
or both, would constitute such a material default.
Substantially all of Seller's and Seller Subsidiaries'
buildings, structures and equipment in regular use have been
well maintained and are in good and serviceable condition,
normal wear and tear excepted.
2.08. Taxes. Except as previously disclosed,
Seller and each Seller Subsidiary have timely filed or will
timely (including extensions) file all material tax returns
required to be filed at or prior to the Closing Date ("Seller
Returns"). Each of Seller and its Subsidiaries has paid, or
set up adequate reserves on the Seller Financial Statements
for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and has set up
adequate reserves on the most recent financial statements
Seller has filed under the Exchange Act for the payment of
all taxes anticipated to be payable in respect of all periods
up to and including the latest period covered by such
financial statements. Neither Seller nor any Seller
Subsidiary will have any liability material to the Condition
of Seller and the Seller Subsidiaries, taken as a whole, for
any such taxes in excess of the amounts so paid or reserves
so established and no material deficiencies for any tax,
assessment
-21-
or governmental charge have been proposed, asserted or
assessed (tentatively or definitely) against any of Seller or
any Seller Subsidiary which would not be covered by existing
reserves. Neither Seller nor any Seller Subsidiary is
delinquent in the payment of any material tax, assessment or
governmental charge, nor, except as previously disclosed, has
it requested any extension of time within which to file any
tax returns in respect of any fiscal year which have not
since been filed and no requests for waivers of the time to
assess any tax are pending. The federal and state income tax
returns of Seller and the Seller Subsidiaries have been
audited and settled by the Internal Revenue Service (the
"IRS") or appropriate state tax authorities for all periods
ended through December 31, 1981. There is no deficiency or
refund litigation or matter in controversy with respect to
Seller Returns. Neither Seller nor any Seller Subsidiary has
extended or waived any statute of limitations on the
assessment of any tax due that is currently in effect.
2.09. Material Adverse Change. Since December 31,
1994, there has been no material adverse change in the
Condition of Seller and its Subsidiaries, taken as a whole,
except as may have resulted or may result from changes to
laws and regulations or changes in economic conditions
applicable to banking institutions generally or in general
levels of interest rates affecting banking institutions
generally.
-22-
2.10. Commitments and Contracts. (a) Except as set
forth on Schedule 2.10A, neither Seller nor any Seller
Subsidiary is a party or subject to any of the following
(whether written or oral, express or implied):
(i) any material agreement, arrangement or
commitment (A) not made in the ordinary course of
business or (B) pursuant to which Seller or any of
its Subsidiaries is or may become obligated to
invest in or contribute capital to any Seller
Subsidiary;
(ii) any agreement, indenture or other
instrument not disclosed in the Seller Financial
Statements relating to the borrowing of money by
Seller or any Seller Subsidiary or the guarantee by
Seller or any Seller Subsidiary of any such
obligation (other than trade payables or
instruments related to transactions entered into in
the ordinary course of business by any Seller
Subsidiary, such as deposits and Fed Funds
borrowings);
(iii) any contract, agreement or
understanding with any labor union or collective
bargaining organization;
-23-
(iv) any contract containing covenants
which limit the ability of Seller or any Seller
Subsidiary to compete in any line of business or
with any person or which involve any restriction of
the geographical area in which, or method by which,
Seller or any Seller Subsidiary may carry on its
business (other than as may be required by law or
any applicable Regulatory Authority);
(v) any other contract or agreement which
is a "material contract" within the meaning of Item
601(b)(10) of Regulation S-K promulgated by the
SEC; or
(vi) any lease with annual rental payments
aggregating $250,000 or more.
(b) Neither Seller nor any Seller Subsidiary is in
violation of its charter documents or bylaws or in default
under any material agreement, commitment, arrangement, lease,
insurance policy, or other instrument, whether entered into in
the ordinary course of business or otherwise and whether
written or oral, and there has not occurred any event that,
with the lapse of time or giving of notice or both, would
constitute such a default, except, in all cases, where such
default would not have a material adverse effect on the
Condition of Seller and its Subsidiaries, taken as a whole.
-24-
2.11. Litigation and Other Proceedings. Except as
set forth on Schedule 2.11, neither Seller nor any Seller
Subsidiary is a party to any pending or, to the best
knowledge of Seller, threatened claim, action, suit,
investigation or proceeding, or is subject to any order,
judgment or decree, except for matters which, in the
aggregate, will not have, or reasonably could not be expected
to have, a material adverse effect on the Condition of Seller
and its Subsidiaries, taken as a whole, or which purports or
seeks to enjoin or restrain the transactions contemplated by
this Agreement. Without limiting the generality of the
foregoing, there are no actions, suits, or proceedings
pending or, to the best knowledge of Seller, threatened
against Seller or any Seller Subsidiary or any of their
respective officers or directors by any stockholder of Seller
or any Seller Subsidiary (or any former stockholder of Seller
or any Seller Subsidiary) or involving claims under the
Securities Act, the Exchange Act, the Community Reinvestment
Act of 1977, as amended, or the fair lending laws.
2.12. Insurance. Set forth on Schedule 2.12 is a
list of all insurance policies maintained by or for the
benefit of Seller or its Subsidiaries or their directors,
officers, employees or agents.
-25-
2.13. Compliance with Laws. (a) Seller and each of
its Subsidiaries have all permits, licenses, authorizations,
orders and approvals of, and have made all filings,
applications and registrations with, all Regulatory Authorities
that are required in order to permit them to own or lease their
properties and assets and to carry on their business as
presently conducted and that are material to the business of
Seller and its Subsidiaries; all such permits, licenses,
certificates of authority, orders and approvals are in full
force and effect and, to the best knowledge of Seller, no
suspension or cancellation of any of them is threatened; and
all such filings, applications and registrations are current.
(b) Except for failures to comply or defaults
which individually or in the aggregate would not have a
material adverse effect on the Condition of Seller and its
Subsidiaries, taken as a whole, (i) each of Seller and its
Subsidiaries has complied with all laws, regulations and
orders (including without limitation zoning ordinances,
building codes, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and securities, tax,
environmental, civil rights, and occupational health and
safety laws and regulations and including without limitation
in the case of any Seller Subsidiary that is a bank or
savings association, banking organization, banking
corporation or trust
-26-
company, all statutes, rules, regulations and policy
statements pertaining to the conduct of a banking, deposit-
taking, lending or related business, or to the exercise of
trust powers) and governing instruments applicable to them
and to the conduct of their business, and (ii) neither Seller
nor any Seller Subsidiary is in default under, and no event
has occurred which, with the lapse of time or notice or both,
could result in the default under, the terms of any judgment,
order, writ, decree, permit, or license of any Regulatory
Authority or court, whether federal, state, municipal, or
local and whether at law or in equity. Except for
liabilities which individually or in the aggregate would not
have a material adverse effect on the Condition of Seller and
its Subsidiaries, taken as a whole, neither Seller nor any
Seller Subsidiary is subject to or reasonably likely to incur
a liability as a result of its ownership, operation, or use
of any Property (as defined below) of Seller (whether
directly or, to the best knowledge of Seller, as a
consequence of such Property being part of the investment
portfolio of Seller or any Seller Subsidiary) (A) that is
contaminated by or contains any hazardous waste, toxic
substance, or related materials, including without limitation
asbestos, PCBs, pesticides, herbicides, and any other
substance or waste that is hazardous to human health or the
environment (collectively, a "Toxic Substance"), or (B) on
which any Toxic Substance has
-27-
been stored, disposed of, placed, or used in the construction
thereof. "Property" of a person shall include all property
(real or personal, tangible or intangible) owned or
controlled by such person, including without limitation
property under foreclosure, property held by such person or
any Subsidiary of such person in its capacity as a trustee
and property in which any venture capital or similar unit of
such person or any Subsidiary of such person has an interest.
No claim, action, suit, or proceeding is pending against
Seller or any Seller Subsidiary relating to Property of
Seller before any court or other Regulatory Authority or
arbitration tribunal relating to hazardous substances,
pollution, or the environment, and there is no outstanding
judgment, order, writ, injunction, decree, or award against
or affecting Seller or any Seller Subsidiary with respect to
the same. Except for statutory or regulatory restrictions of
general application, no Regulatory Authority has placed any
restriction on the business of Seller or any Seller
Subsidiary which reasonably could be expected to have a
material adverse effect on the Condition of Seller and its
Subsidiaries, taken as a whole.
(c) From and after January 1, 1992, neither Seller
nor any Seller Subsidiary has received any notification or
communication which has not been resolved from any Regulatory
Authority (i) asserting that any Seller or any Subsidiary of
-28-
Seller, is not in substantial compliance with any of the
statutes, regulations or ordinances that such Regulatory
Authority enforces, except with respect to matters which (A)
are set forth on Schedule 2.13(c) or in any writing previously
furnished to Buyer or (B) reasonably could not be expected to
have a material adverse effect on the Condition of Seller and
its Subsidiaries, taken as a whole, (ii) threatening to revoke
any license, franchise, permit or governmental authorization
that is material to the Condition of Seller and its
Subsidiaries, taken as a whole, including without limitation
such company's status as an insured depositary institution
under the Federal Deposit Insurance Act, or (iii) requiring or
threatening to require Seller or any of its Subsidiaries, or
indicating that Seller or any of its Subsidiaries may be
required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting
or limiting or purporting to direct, restrict or limit in any
manner the operations of Seller or any of its Subsidiaries,
including without limitation any restriction on the payment of
dividends. No such cease and desist order, agreement or
memorandum of understanding or other agreement is currently in
effect.
(d) Neither Seller nor any Seller Subsidiary is
required by Section 32 of the Federal Deposit Insurance Act
to give prior notice to any federal banking agency of the
proposed addition of an individual to its board of directors
-29-
or the employment of an individual as a senior executive
officer.
2.14. Labor. No work stoppage involving Seller or
any Seller Subsidiary, is pending or, to the best knowledge of
Seller, threatened. Neither Seller nor any Seller Subsidiary
is involved in, or, to the best knowledge of Seller, threatened
with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding which reasonably could be expected to
have a material adverse affect on the Condition of Seller and
its Subsidiaries, taken as a whole. Employees of neither
Seller nor any Seller Subsidiary, are represented by any labor
union or any collective bargaining organization.
2.15. Material Interests of Certain Persons. (a)
Except as set forth in Seller's Proxy Statement for its 1995
Annual Meeting of Stockholders, to the best knowledge of
Seller, no officer or director of Seller or any Subsidiary of
Seller, or any "associate" (as such term is defined in Rule
l4a-1 under the Exchange Act) of any such officer or
director, has any material interest in any material contract
or property (real or personal, tangible or intangible), used
in, or pertaining to the business of, Seller or any
Subsidiary of Seller, which in the case of Seller is required
to be disclosed by Item 404 of Regulation S-K promulgated by
the SEC or in the case of any such Subsidiary would be
required to be
-30-
so disclosed if such Subsidiary had a class of securities
registered under Section 12 of the Exchange Act.
(b) Except as set forth in Seller's Proxy
Statement for its 1995 Annual Meeting of Stockholders or on
Schedule 2.15B, as of June 30, 1995, there are no loans from
Seller or any Seller Subsidiary to any present officer,
director, employee or any associate or related interest of
any such person which was or would be required under any rule
or regulation to be approved by or reported to Seller's or
Seller Subsidiary's Board of Directors ("Insider Loans"), and
no Insider Loans in excess of $500,000 have been made since
June 30, 1995. All outstanding Insider Loans from Seller or
any Seller Subsidiary were approved by or reported to the
appropriate board of directors in accordance with applicable
law and regulations.
2.16. Allowance for Loan and Lease Losses;
Nonperforming Assets. (a) The allowances for loan and lease
losses contained in the Seller Financial Statements were
established in accordance with the past practices and
experiences of Seller and its Subsidiaries, and the allowance
for loan losses shown on the consolidated condensed balance
sheet of Seller and its Subsidiaries contained in the most
recent Seller Form 10-Q is adequate in all material respects
under the requirements of GAAP to provide for possible losses
on
-31-
loans (including without limitation accrued interest
receivable) and credit commitments (including without
limitation stand-by letters of credit) outstanding as of the
date of such balance sheet.
(b) The aggregate amount of all Nonperforming Assets
(as defined below) on the books of Seller and its Subsidiaries
does not exceed $5,498,000. "Nonperforming Assets" shall mean
(i) all loans and leases (A) that are contractually past due 90
days or more in the payment of principal and/or interest, (B)
that are on nonaccrual status, (C) where the interest rate
terms have been reduced and/or the maturity dates have been
extended subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's
ability to pay in accordance with such initial terms, (D) that
have been classified "doubtful", "loss" or the equivalent
thereof by any Regulatory Authority, and (ii) all assets
classified as real estate acquired through foreclosure or
repossession and other assets acquired through foreclosure or
repossession.
2.17. Employee Benefit Plans. (a) Except as set
forth in Schedule 2.17A, neither Seller nor any Seller
Subsidiary is a party to any existing employment, management,
consulting, deferred compensation, change-in-control or other
similar contract. "Seller Employee Plans" means all pension,
-32-
retirement, supplemental retirement, savings, profit sharing,
stock option, stock purchase, stock ownership, stock
appreciation right, deferred compensation, consulting, bonus,
medical, disability, workers' compensation, vacation, group
insurance, severance and other material employee benefit,
incentive and welfare policies, contracts, plans and
arrangements, and all trust agreements related thereto,
maintained (currently or at any time in the last five years)
by or contributed to by Seller or any Seller Subsidiary in
respect of any of the present or former directors, officers,
or other employees of and/or consultants to Seller or any
Seller Subsidiary. Schedule 2.17A lists all Seller Employee
Plans currently in effect. Seller has furnished Buyer with
the following documents with respect to each Seller Employee
Plan: (i) a true and complete copy of all written documents
comprising such Seller Employee Plan (including amendments
and individual agreements relating thereto) or, if there is
no such written document, an accurate and complete
description of the Seller Employee Plan; (ii) the most recent
Form 5500 or Form 5500-C (including all schedules thereto),
if applicable; (iii) the most recent financial statements and
actuarial reports, if any; (iv) the summary plan description
currently in effect and all material modifications thereof,
if any; and (v) the most recent Internal Revenue Service
determination letter, if any. Without limiting the
generality
-33-
of the foregoing, Seller has furnished Buyer with true and
complete copies of each form of stock option grant or stock
option agreement that is outstanding under any stock option
plan of Seller or any Seller Subsidiary.
(b) Except as set forth in Schedule 2.17A, all
Seller Employee Plans have been maintained and operated
materially in accordance with their terms and with the
material requirements of all applicable statutes, orders,
rules and final regulations, including without limitation
ERISA and the Internal Revenue Code. All contributions
required to be made to Seller Employee Plans have been made.
(c) With respect to each of the Seller Employee
Plans which is a pension plan (as defined in Section 3(2) of
ERISA) (the "Pension Plans"): (i) each Pension Plan which is
intended to be "qualified" within the meaning of Section
401(a) of the Internal Revenue Code has been determined to be
so qualified by the Internal Revenue Service and, to the
knowledge of Seller, such determination letter may still be
relied upon, and each related trust is exempt from taxation
under Section 501(a) of the Internal Revenue Code; (ii) the
present value of all benefits vested and all benefits accrued
under each Pension Plan which is subject to Title IV of
-34-
ERISA, valued using the assumptions in the most recent
actuarial report, did not, in each case, as of the last
applicable annual valuation date (as indicated on Schedule
2.17A), exceed the value of the assets of the Pension Plan
allocable to such vested or accrued benefits; (iii) to the
best knowledge of Seller, there has been no "prohibited
transaction," as such term is defined in Section 4975 of the
Internal Revenue Code or Section 406 of ERISA, which could
subject any Pension Plan or associated trust, or the Seller
or any Seller Subsidiary, to any material tax or penalty;
(iv) except as set forth on Schedule 2.17C, no Pension Plan
subject to Title IV of ERISA or any trust created thereunder
has been terminated, nor have there been any "reportable
events" with respect to any Pension Plan, as that term is
defined in Section 4043 of ERISA on or after January 1, 1985;
and (v) no Pension Plan or any trust created thereunder has
incurred any "accumulated funding deficiency", as such term
is defined in Section 302 of ERISA (whether or not waived).
No Pension Plan is a "multiemployer plan" as that term is
defined in Section 3(37) of ERISA. With respect to each
Pension Plan that is described in Section 4063(a) of ERISA (a
"Multiple Employer Pension Plan"): (i) neither Seller nor
any Seller Subsidiary would have any liability or obligation
to post a bond under Section 4063 of ERISA if Seller and all
-35-
Seller Subsidiaries were to withdraw from such Multiple
Employer Pension Plan; and (ii) neither Seller nor any Seller
Subsidiary would have any liability under Section 4064 of
ERISA if such Multiple Employer Pension Plan were to
terminate.
(d) Except as set forth on Schedule 2.17D, neither
Seller nor any Seller Subsidiary has any liability for any
post-retirement health, medical or similar benefit of any
kind whatsoever, except as required by statute or regulation.
(e) Neither Seller nor any Seller Subsidiary has
any material liability under ERISA or the Internal Revenue
Code as a result of its being a member of a group described
in Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code.
(f) Except as set forth on Schedule 2.17F, neither
the execution nor delivery of this Agreement, nor the
consummation of any of the transactions contemplated hereby,
will (i) result in any material payment (including without
limitation severance, unemployment compensation or golden
parachute payment) becoming due to any director or employee
of Seller or any Seller Subsidiary from any of such entities,
(ii) materially increase any benefit otherwise payable under
any of the Seller Employee Plans or (iii) result in the
acceleration of the time of payment of any such benefit. No
-36-
holder of an option to acquire stock of Seller has or will
have at any time through the Effective Time the right to
receive any cash or other payment (other than the issuance of
stock of Seller) in exchange for or with respect to all or
any portion of such option. Seller shall use its best
efforts to insure that no amounts paid or payable by Seller,
Seller Subsidiaries or Buyer to or with respect to any
employee or former employee of Seller or any Seller
Subsidiary will fail to be deductible for federal income tax
purposes by reason of Section 280G of the Internal Revenue
Code. No Seller Employee Stock Option has an associated
"Additional Option Right" or similar "re-load" feature.
2.18. Conduct of Seller to Date. From and after
January 1, 1995 through the date of this Agreement, except as
set forth on Schedule 2.18 or in Seller Financial Statements:
(i) Seller and the Seller Subsidiaries have conducted their
respective businesses in the ordinary and usual course
consistent with past practices; (ii) Seller has not issued,
sold, granted, conferred or awarded any of its Equity
Securities (except shares of Seller Common Stock upon
exercise of Seller Employee Stock Options), or any corporate
debt securities which would be classified under GAAP as long-
term debt on the balance sheets of Seller; (iii) Seller has
not effected any stock split or adjusted, combined,
reclassified or otherwise changed its capitalization; (iv)
Seller has not
-37-
declared, set aside or paid any dividend (other than its
regular quarterly or regular semi-annual common dividends) or
other distribution in respect of its capital stock, or
purchased, redeemed, retired, repurchased, or exchanged, or
otherwise acquired or disposed of, directly or indirectly,
any of its Equity Securities, whether pursuant to the terms
of such Equity Securities or otherwise; (v) neither Seller
nor any Seller Subsidiary has incurred any material
obligation or liability (absolute or contingent), except
normal trade or business obligations or liabilities incurred
in the ordinary course of business, or subjected to Lien any
of its assets or properties other than in the ordinary course
of business consistent with past practice; (vi) neither
Seller nor any Seller Subsidiary has discharged or satisfied
any material Lien or paid any material obligation or
liability (absolute or contingent), other than in the
ordinary course of business; (vii) neither Seller nor any
Seller Subsidiary has sold, assigned, transferred, leased,
exchanged, or otherwise disposed of any of its properties or
assets other than for a fair consideration in the ordinary
course of business; (viii) except as required by contract or
law, neither Seller nor any Seller Subsidiary has (A)
increased the rate of compensation of, or paid any bonus to,
any of its directors, officers, or other employees, except
merit or promotion increases in accordance with existing
policy, (B) entered into
-38-
any new, or amended or supplemented any existing, employment,
management, consulting, deferred compensation, severance, or
other similar contract, (C) entered into, terminated, or
substantially modified any of the Seller Employee Plans or
(D) agreed to do any of the foregoing; (ix) neither Seller
nor any Seller Subsidiary has suffered any material damage,
destruction, or loss, whether as the result of fire,
explosion, earthquake, accident, casualty, labor trouble,
requisition, or taking of property by any Regulatory
Authority, flood, windstorm, embargo, riot, act of God or the
enemy, or other casualty or event, and whether or not covered
by insurance; (x) neither Seller nor any Seller Subsidiary
has cancelled or compromised any debt, except for debts
charged off or compromised in accordance with the past
practice of Seller and its Subsidiaries, and (xi) neither
Seller nor any Seller Subsidiary has entered into any
material transaction, contract or commitment outside the
ordinary course of its business.
2.19. Proxy Statement, etc. None of the
information regarding Seller or any Seller Subsidiary
supplied or to be supplied by Seller for inclusion or
included in (i) the registration statement on Form S-4 to be
filed with the SEC by Buyer for the purpose of registering
the shares of Buyer Common Stock to be exchanged for shares
of Seller Common Stock pursuant to the provisions of this
Agreement (the
-39-
"Registration Statement"), (ii) the proxy or information
statement (the "Proxy Statement") to be mailed to Seller's
stockholders in connection with the transactions contemplated
by this Agreement or (iii) any other documents to be filed
with any Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective
times such documents are filed with any Regulatory Authority
and, in the case of the Registration Statement, when it
becomes effective and, with respect to the Proxy Statement,
when mailed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary
in order to make the statements therein not misleading or, in
the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the meeting of Seller's
stockholders referred to in Section 5.03 (the "Meeting") (or,
if no Meeting is held, at the time the Proxy Statement is
first furnished to Seller's stockholders), be false or
misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of
any proxy for the Meeting. All documents which Seller or any
Seller Subsidiary is responsible for filing with any
Regulatory Authority in connection with the Merger will
comply as to form in all material respects with the
provisions of applicable law.
-40-
2.20. Registration Obligations. Except as set
forth on Schedule 2.20, neither Seller nor any Seller
Subsidiary is under any obligation, contingent or otherwise
to register any of its securities under the Securities Act.
2.21. State Takeover Statutes. The transactions
contemplated by this Agreement are not subject to any
applicable state takeover law under the laws of the State of
Iowa.
2.22. Accounting, Tax and Regulatory Matters.
Neither Seller nor any Seller Subsidiary has taken or agreed
to take any action or has any knowledge of any fact or
circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-
interests accounting treatment or (B) as a reorganization
within the meaning of Section 368 of the Internal Revenue
Code or (ii) materially impede or delay receipt of any
approval referred to in Section 6.01(b) or the consummation
of the transactions contemplated by this Agreement.
2.23. Brokers and Finders. Except for Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation, neither Seller nor
any Seller Subsidiary nor any of their respective officers,
directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker
or
-41-
finder has acted directly or indirectly for Seller or any
Seller Subsidiary in connection with this Agreement or the
transactions contemplated hereby. Schedule 2.23 discloses a
bona fide estimate of the aggregate amount of all fees and
expenses expected to be paid by Seller to all attorneys,
accountants or investment bankers in connection with the
Merger ("Merger Fees").
2.24. Other Activities. (a) Except as set forth
on Schedule 2.24A, neither Seller nor any of its Subsidiaries
engages in any insurance activities other than acting as a
principal, agent or broker for insurance that is directly
related to an extension of credit by Seller or any of its
Subsidiaries and limited to assuring the repayment of the
balance due on the extension of credit in the event of the
death, disability or involuntary unemployment of the debtor.
(b) Except as set forth on Schedule 2.24B, to the
knowledge of Seller's management: each Subsidiary that is a
bank that performs personal trust, corporate trust and other
fiduciary activities ("Trust Activities") has done so with
requisite authority under applicable law of Regulatory
Authorities and in material accordance with the agreements
and instruments governing such Trust Activities, sound
fiduciary principles and applicable law and regulation
(specifically including but not limited to Section 9 of Title
12 of the
-42-
Code of Federal Regulations); there is no investigation or
inquiry by any governmental entity pending or threatened
against Seller or any of its Subsidiaries thereof relating to
the compliance by Seller or any of its Subsidiaries with
sound fiduciary principles and applicable law and
regulations; and each employee of any such bank had the
authority to act in the capacity in which such employee acted
with respect to Trust Activities in each case in which such
employee was held out as a representative of such bank; and
such bank has established policies and procedures for the
purpose of complying with applicable laws of governmental
entities relating to Trust Activities, has followed such
policies and procedures in all material respects and has
performed appropriate internal audit reviews of Trust
Activities, which audits have disclosed no material
violations of applicable laws of governmental entities or
such policies and procedures.
2.25. Interest Rate Risk Management Instruments.
(a) Set forth on Schedule 2.25A is a list of all interest
rate swaps, caps, floors, and option agreements and other
interest rate risk management arrangements to which Seller or
any of its Subsidiaries is a party or by which any of their
properties or assets may be bound.
-43-
(b) All interest rate swaps, caps, floors and
option agreements and other interest rate risk management
arrangements to which Seller or any of its Subsidiaries is a
party or by which any of their properties or assets may be
bound were entered into in the ordinary course of business
and in accordance with prudent banking practice and
applicable rules, regulations and policies of Regulatory
Authorities and with counterparties believed to be
financially responsible at the time and are legal, valid and
binding obligations and are in full force and effect. Seller
and each of its Subsidiaries has duly performed in all
material respects all of its obligations thereunder to the
extent that such obligations to perform have accrued, and
there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
2.26. Accuracy of Information. The statements of
Seller contained in this Agreement, the Schedules and any
other written document executed and delivered by or on behalf
of Seller pursuant to the terms of this Agreement are true
and correct in all material respects, and such statements and
documents do not omit any material fact necessary to make the
statements contained therein not misleading.
-44-
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents, and warrants to and covenants
with Seller as follows:
3.01. Organization and Authority. Buyer and each
of its Subsidiaries is a corporation, bank, trust company or
other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of organization,
is duly qualified to do business and is in good standing in
all jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so qualified
and has corporate power and authority to own its properties
and assets and to carry on its business as it is now being
conducted, except, in the case of the Buyer Subsidiaries,
where the failure to be so qualified would not have a
material adverse effect on the Condition of Buyer and its
Subsidiaries, taken as a whole. Buyer is registered as a
bank holding company with the Board under the Holding Company
Act. True and complete copies of the Articles of
Incorporation and Bylaws of Buyer, each in effect on the date
of this Agreement, have been provided to Seller.
3.02. Capitalization of Buyer. The authorized
capital stock of Buyer consists of (i) 100,000,000 shares of
Buyer Common Stock, of which, as of July 31, 1995, 54,423,205
-45-
shares were issued and outstanding and (ii) 5,000,000 shares
of preferred stock, no par value ("Buyer Preferred Stock"),
issuable in series, of which 5,306 shares of Series B-1
Preferred Stock and 9,500 shares of Series B-2 Preferred
Stock are issued or outstanding. Buyer has designated
1,000,000 shares of Buyer Preferred Stock as "Series A Junior
Participating Preferred Stock" and has reserved such shares
under a Rights Agreement dated May 23, 1988 (the "Buyer
Rights Agreement"), between Buyer and Mercantile Bank of St.
Louis National Association, as Rights Agent. As of July 31,
1995 Buyer had reserved (i) 4,515,373 shares of Buyer Common
Stock for issuance under various stock option and incentive
plans ("Buyer Stock Options"), (ii) 322,000 shares of Buyer
Common Stock for issuance upon the acquisition of Security
Bank of Xxxxxx, FSB ("Xxxxxx") pursuant to an Agreement and
Plan of Reorganization dated July 7, 1995, (iii) 675,000
shares of Buyer Common Stock for issuance upon the
acquisition of Southwest Bancshares, Inc. ("Southwest")
pursuant to an Agreement and Plan of Merger dated January 27,
1995, (iv) 661,385 shares of Buyer Common Stock for issuance
upon the acquisition of AmeriFirst Bancorporation Inc.
("AmeriFirst") pursuant to an Agreement and Plan of Merger
dated February 16, 1995, and (v) 521,424 shares of Buyer
Common Stock for issuance upon the acquisition of First
Sterling Bancorp, Inc. ("Sterling") pursuant to an Agreement
and Plan of Merger
-46-
dated July 24, 1995. From July 31, 1995 through the date of
this Agreement, no shares of Buyer Common Stock or other
Equity Securities of Buyer have been issued excluding any
such shares which may have been issued pursuant to stock-
based employee benefit or incentive plans and programs, or
pursuant to the foregoing agreements. Buyer continually
evaluates possible acquisitions and may prior to the
Effective Time enter into one or more agreements providing
for, and may consummate, the acquisition by it of another
bank, association, bank holding company, savings and loan
holding company or other company (or the assets thereof) for
consideration that may include equity securities. In
addition, prior to the Effective Time, Buyer may, depending
on market conditions and other factors, otherwise determine
to issue equity, equity-linked or other securities for
financing purposes. Notwithstanding the foregoing, Buyer
will not take any action that would (i) prevent the
transactions contemplated hereby from qualifying (A) for
pooling-of-interests accounting treatment or (B) as a
reorganization within the meaning of Section 368 of the
Internal Revenue Code or (ii) materially impede or delay
receipt of any approval referred to in Section 6.01(b) or the
consummation of the transactions contemplated by this
Agreement. Except as set forth above and except for
securities to be issued in connection with Buyer's
-47-
pending acquisitions of Xxxxxx and Sterling and except
pursuant to the Buyer Rights Agreement, there are no other
Equity Securities of Buyer outstanding. All of the issued
and outstanding shares of Buyer Common Stock are validly
issued, fully paid, and nonassessable, and have not been
issued in violation of any preemptive right of any
stockholder of Buyer. At the Effective Time, the Buyer
Common Stock to be issued in the Merger will be duly
authorized, validly issued, fully paid and non-assessable,
and will not be issued in violation of any preemptive right
of any stockholder of Buyer.
3.03. Authorization. (a) Buyer has the corporate
power and authority to enter into this Agreement and to carry
out its obligations hereunder. No stockholder vote is
required for Buyer to approve this Agreement. The execution,
delivery and performance of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby
have been duly authorized by all requisite corporate action
of Buyer. This Agreement is a valid and binding obligation
of Buyer enforceable against Buyer in accordance with its
terms.
(b) Neither the execution, delivery and
performance by Buyer of this Agreement, nor the consummation
by Buyer of the transactions contemplated hereby, nor
compliance
-48-
by Buyer with any of the provisions hereof, will (i) violate,
conflict with or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or
result in the creation of, any Lien upon any of the material
properties or assets of Buyer or any Buyer Subsidiary under
any of the terms, conditions or provisions of (x) its
articles or certificate of incorporation or bylaws, or (y)
any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation
to which Buyer or any of the material properties or assets of
Buyer is a party or by which it may be bound, or to which
Buyer may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in paragraph (c) of this
Section 3.03, to the best knowledge of Buyer, violate any
judgment, ruling, order, writ, injunction, decree, statute,
rule or regulation applicable to Buyer or any of its
Subsidiaries or any of their respective material properties
or assets.
(c) Other than in connection with or in compliance
with the provisions of The General and Business Corporation
Law of Missouri (the "Missouri Act"), the Iowa Act, the
Securities Act, the Exchange Act, the securities or blue sky
-49-
laws of the various states or filings, consents, reviews,
authorizations, approvals or exemptions required under the
Holding Company Act, and the HSR Act, or any required
approvals of any other Regulatory Authority, no notice to,
filing with, exemption or review by, or authorization,
consent or approval of, any public body or authority is
necessary for the consummation by Buyer of the transactions
contemplated by this Agreement.
3.04. Buyer Financial Statements. The
supplemental consolidated and parent company only balance
sheets of Buyer and its Subsidiaries as of December 31, 1994,
1993 and 1992 and related supplemental consolidated and
parent company only statements of income, cash flows and
changes in stockholders' equity for each of the three years
in the three-year period ended December 31, 1994, together
with the notes thereto, audited by KPMG Peat Marwick ("Buyer
Auditors") and included in Buyer's current report on Form 8-K
dated May 31, 1995 as filed with the SEC, and the unaudited
consolidated balance sheets of Buyer and its Subsidiaries as
of March 31 and June 30, 1995 and the related unaudited
consolidated statements of income and cash flows for the
periods then ended included in quarterly reports on Form 10-Q
as filed with the SEC (collectively, the "Buyer Financial
Statements"), have been prepared in accordance with GAAP,
present fairly the consolidated financial position of Buyer
and its
-50-
Subsidiaries at the dates and the consolidated results of
operations, changes in stockholders' equity and cash flows of
Buyer and its Subsidiaries for the periods stated therein and
are derived from the books and records of Buyer and its
Subsidiaries, which are complete and accurate in all material
respects and have been maintained in all material respects in
accordance with applicable laws and regulations. Neither
Buyer nor any of its Subsidiaries has any material contingent
liabilities that are not described in the financial
statements described above.
3.05. Buyer Reports. Since January 1, 1992, each
of Buyer and the Buyer Subsidiaries has filed all material
reports, registrations and statements, together with any
required material amendments thereto, that it was required to
file with any Regulatory Authority. All such reports and
statements filed with any such Regulatory Authority are
collectively referred to herein as the "Buyer Reports." As
of its respective date, each Buyer Report complied in all
material respects with all the rules and regulations
promulgated by the applicable Regulatory Authority and did
not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading.
-51-
3.06. Material Adverse Change. Since December 31,
1994, there has been no material adverse change in the
Condition of Buyer and its Subsidiaries, taken as a whole,
except as may have resulted or may result from changes to
laws and regulations or changes in economic conditions
applicable to banking institutions generally or in general
levels of interest rates affecting banking institutions
generally.
3.07. Compliance with Laws. (a) Each of Buyer
and its Subsidiaries has complied with all laws, regulations,
and orders (including without limitation zoning ordinances,
building codes, ERISA, and securities, tax, environmental,
civil rights, and occupational health and safety laws and
regulations and including without limitation in the case of
any Buyer Subsidiary that is a bank, banking organization,
thrift, banking corporation or trust company, all statutes,
rules and regulations, pertaining to the conduct of a
banking, deposit-taking or lending or related business or to
the exercise of trust powers) and governing instruments
applicable to them and to the conduct of their business,
except where such failure to comply would not have a material
adverse effect on the Condition of Buyer and its
Subsidiaries, taken as a whole, and (ii) neither Buyer nor
any Buyer Subsidiary is in default under, and no event has
occurred which, with the lapse of time or notice or both,
could result in the
-52-
default under, the terms of any judgment, order, writ,
decree, permit, or license of any Regulatory Authority or
court, whether federal, state, municipal, or local and
whether at law or in equity, except where such default would
not have a material adverse effect on the Condition of Buyer
and its Subsidiaries, taken as a whole. Neither Buyer nor
any Buyer Subsidiary is subject to or reasonably likely to
incur a liability as a result of its ownership, operation, or
use of any Property of Buyer (whether directly or, to the
best knowledge of Buyer, as a consequence of such Property
being part of the investment portfolio of Buyer or any Buyer
Subsidiary) (A) that is contaminated by or contains any Toxic
Substance, or (B) on which any Toxic Substance has been
stored, disposed of, placed, or used in the construction
thereof; and which, in each case, reasonably could be
expected to have a material adverse effect on the Condition
of Buyer and its Subsidiaries, taken as a whole. Except for
statutory or regulatory restrictions of general application,
no Regulatory Authority has placed any restriction on the
business of Buyer or any Buyer Subsidiary which reasonably
could be expected to have a material adverse effect on the
Condition of Buyer and its Subsidiaries, taken as a whole.
No claim, action, suit, or proceeding is pending against
Buyer or any Buyer Subsidiary relating to Property of Buyer
before any court or other Regulatory Authority or arbitration
-53-
tribunal relating to hazardous substances, pollution, or the
environment, and there is no outstanding judgment, order,
writ, injunction, decree, or award against or affecting Buyer
or any Buyer Subsidiary with respect to the same.
(b) Buyer and each of its Subsidiaries have all
permits, licenses, authorizations, orders and approvals of,
and have made all filings, applications and registrations
with, all Regulatory Authorities that are required in order
to permit them to own or lease their properties and assets
and to carry on their business as presently conducted and
that are material to the business of Buyer and its
Subsidiaries; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect
and, to the best knowledge of Buyer, no suspension or
cancellation of any of them is threatened; and all such
filings, applications and registrations are current.
(c) From and after January 1, 1992, neither Buyer
nor any Buyer Subsidiary has received any notification or
communication which has not been resolved from any Regulatory
Authority (i) asserting that any Buyer or any Subsidiary of
Buyer, is not in substantial compliance with any of the
statutes, regulations or ordinances that such Regulatory
Authority enforces, except with respect to matters which (A)
are set forth on Schedule 3.07 or in any writing previously
-54-
furnished to Buyer or (B) reasonably could not be expected to
have a material adverse effect on the Condition of Buyer and
its Subsidiaries, taken as a whole, (ii) threatening to
revoke any license, franchise, permit or governmental
authorization that is material to the Condition of Buyer and
its Subsidiaries, taken as a whole, including without
limitation such company's status as an insured depositary
institution under the Federal Deposit Insurance Act, or (iii)
requiring or threatening to require Buyer or any of its
Subsidiaries, or indicating that Buyer or any of its
Subsidiaries may be required, to enter into a cease and
desist order, agreement or memorandum of understanding or any
other agreement restricting or limiting or purporting to
direct, restrict or limit in any manner the operations of
Buyer or any of its Subsidiaries, including without
limitation any restriction on the payment of dividends. No
such cease and desist order, agreement or memorandum of
understanding or other agreement is currently in effect.
3.08. Registration Statement, etc. None of the
information regarding Buyer or any of its Subsidiaries supplied
or to be supplied by Buyer for inclusion or included in (i) the
Registration Statement, (ii) the Proxy Statement, or (iii) any
other documents to be filed with any Regulatory Authority in
connection with the transactions contemplated hereby will, at
-55-
the respective times such documents are filed with any
Regulatory Authority and, in the case of the Registration
Statement, when it becomes effective and, with respect to the
Proxy Statement, when mailed (or furnished to stockholders of
Seller), be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to
make the statements therein not misleading or, in the case of
the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Meeting, be false or misleading
with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for
the Meeting. All documents which Buyer or any of its
Subsidiaries are responsible for filing with any Regulatory
Authority in connection with the Merger will comply as to form
in all material respects with the provisions of applicable law.
3.09. Brokers and Finders. Neither Buyer nor any
of its Subsidiaries nor any of their respective officers,
directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker
or finder has acted directly or indirectly for Buyer or any
of its Subsidiaries in connection with this Agreement or the
transactions contemplated hereby.
-56-
3.10. Commitments and Contracts. Neither Buyer
nor any Buyer Subsidiary is in violation of its charter
documents or bylaws or in default under any material
agreement, commitment, arrangement, lease, insurance policy,
or other instrument, whether entered into in the ordinary
course of business or otherwise and whether written or oral,
and there has not occurred any event that, with the lapse of
time or giving of notice or both, would constitute such a
default, except, in all cases, where such default would not
have a material adverse effect on the Condition of Buyer and
its Subsidiaries, taken as a whole.
3.11. Litigation and Other Proceedings. Neither
Buyer nor any Buyer Subsidiary is a party to any pending or,
to the best knowledge of Buyer, threatened claim, action,
suit, investigation or proceeding, or is subject to any
order, judgment or decree, except for matters which, in the
aggregate, will not have, or reasonably could not be expected
to have, a material adverse effect on the Condition of Buyer
and its Subsidiaries, taken as a whole, or which purports or
seeks to enjoin or restrain the transactions contemplated by
this Agreement. Without limiting the generality of the
foregoing, there are no actions, suits, or proceedings
pending or, to the best knowledge of Buyer, threatened
against Buyer or any Buyer Subsidiary or any of their
respective officers or directors by any stockholder of Buyer
-57-
or any Buyer Subsidiary (or any former stockholder of Buyer
or any Buyer Subsidiary) or involving claims under the
Securities Act, the Exchange Act, the Community Reinvestment
Act of 1977, as amended, or the fair lending laws.
3.12. Interest Rate Risk Management Instruments.
All interest rate swaps, caps, floors and option agreements
and other interest rate risk management arrangements to which
Buyer or any of its Subsidiaries is a party or by which any
of their properties or assets may be bound were entered into
in the ordinary course of business and in accordance with
prudent banking practice and applicable rules, regulations
and policies of Regulatory Authorities and with
counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations and are in
full force and effect. Buyer and each of its Subsidiaries
has duly performed in all material respects all of its
obligations thereunder to the extent that such obligations to
perform have accrued, and there are no material breaches,
violations or defaults or allegations or assertions of such
by any party thereunder.
3.13. Taxes. Buyer and each Buyer Subsidiary have
timely filed or will timely (including extensions) file all
material tax returns required to be filed at or prior to the
-58-
Closing Date ("Buyer Returns"). Each of Buyer and its
Subsidiaries has paid, or set up adequate reserves on the Buyer
Financial Statements for the payment of, all taxes required to
be paid in respect of the periods covered by such returns and
has set up adequate reserves on the most recent financial
statements Buyer has filed under the Exchange Act for the
payment of all taxes anticipated to be payable in respect of
all periods up to and including the latest period covered by
such financial statements. Neither Buyer nor any Buyer
Subsidiary will have any liability material to the Condition of
Buyer and the Buyer Subsidiaries, taken as a whole, for any
such taxes in excess of the amounts so paid or reserves so
established and no material deficiencies for any tax,
assessment or governmental charge have been proposed, asserted
or assessed (tentatively or definitely) against any of Buyer or
any Buyer Subsidiary which would not be covered by existing
reserves. Neither Buyer nor any Buyer Subsidiary is delinquent
in the payment of any material tax, assessment or governmental
charge, nor, except as previously disclosed, has it requested
any extension of time within which to file any tax returns in
respect of any fiscal year which have not since been filed and
no requests for waivers of the time to assess any tax are
pending. The federal and state income tax returns of Buyer and
the Buyer Subsidiaries have been audited and settled by the
Internal Revenue Service
-59-
(the "IRS") or appropriate state tax authorities for all
periods ended through December 31, 1988. There is no
deficiency or material refund litigation or matter in
controversy with respect to Buyer Returns. Neither Buyer nor
any Buyer Subsidiary has extended or waived any statute of
limitations on the assessment of any tax due that is currently
in effect.
3.14. Accounting, Tax and Regulatory Matters.
Neither Buyer nor any Buyer Subsidiary has taken or agreed to
take any action or has any knowledge of any fact or
circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-
interests accounting treatment or (B) as a reorganization
within the meaning of Section 368 of the Internal Revenue Code
or (ii) materially impede or delay receipt of any approval
referred to in Section 6.01(b) or the consummation of the
transactions contemplated by this Agreement.
3.15. Accuracy of Information. The statements of
Buyer contained in this Agreement, the Schedules and in any
other written document executed and delivered by or on behalf
of Buyer pursuant to the terms of this Agreement are true and
correct in all material respects, and such statements and
documents do not omit any material fact necessary to make the
statements contained herein or therein not misleading.
-60-
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01. Conduct of Businesses Prior to the Effective
Time. During the period from the date of this Agreement to
the Effective Time, each of Buyer and Seller shall, and shall
cause each of their respective Subsidiaries to, conduct its
business according to the ordinary and usual course
consistent with past practices and shall, and shall cause
each such Subsidiary to, use its best efforts to maintain and
preserve its business organization, employees and
advantageous business relationships and retain the services
of its officers and key employees.
4.02. Forbearances. Except as set forth on
Schedule 4.02 or as otherwise contemplated by this Agreement,
during the period from the date of this Agreement to the
Effective Time, Seller shall not and shall not permit any of
its Subsidiaries to, without the prior written consent of
Buyer:
(a) declare, set aside or pay any dividends or
other distributions, directly or indirectly, in respect
of its capital stock (other than dividends from a
Subsidiary of Seller to Seller or another Subsidiary of
Seller), except that Seller may declare and pay cash
dividends on the Seller Common Stock of not more than
-61-
(x) for dividends payable in 1995, $.17 per share per
quarterly period and (y) for dividends payable in 1996,
per quarterly period, $.19 per share; provided, that
Seller shall not declare or pay any dividends on Seller
Common Stock for any period in which its stockholders
will be entitled to receive any regular quarterly
dividend on the shares of Buyer Common Stock to be
issued in the Merger; or,
(b) enter into or amend any employment, severance
or similar agreement or arrangement with any director or
officer or employee, or materially modify any of the
Seller Employee Plans or grant any salary or wage
increase or materially increase any employee benefit
(including incentive or bonus payments), except normal
individual increases in compensation to employees
consistent with past practice, or as required by law or
contract; or,
(c) authorize, recommend (subject to the fiduciary
duties of Seller's Board of Directors, based upon
written advice of counsel to Seller, which counsel is
reasonably acceptable to Buyer), propose or announce an
intention to authorize, so recommend or propose, or
enter into an agreement in principle with respect to,
any merger, consolidation or business combination (other
-62-
than the Merger), any acquisition of a material amount
of assets or securities, any disposition of a material
amount of assets or securities or any release or
relinquishment of any material contract rights; or
(d) propose or adopt any amendments to its
articles of incorporation, association or other charter
document or bylaws; or
(e) issue, sell, grant, confer or award any of its
Equity Securities (except shares of Seller Common Stock
issued upon exercise of Seller Employee Stock Options
outstanding on the date of this Agreement) or effect any
stock split or adjust, combine, reclassify or otherwise
change its capitalization as it existed on the date of
this Agreement; or
(f) purchase, redeem, retire, repurchase, or
exchange, or otherwise acquire or dispose of, directly
or indirectly, any of its Equity Securities, whether
pursuant to the terms of such Equity Securities or
otherwise; or
(g) (i) without first consulting with Buyer,
enter into, renew or increase any loan or credit
commitment (including stand-by letters of credit) to, or
invest or agree to invest in any person or entity or
-63-
modify any of the material provisions or renew or
otherwise extend the maturity date of any existing loan
or credit commitment (collectively, "Lend to") in an
amount in excess of $1,500,000 or in an amount which, or
when aggregated with any and all loans or credit
commitments to such person or entity, would be in excess
of $1,500,000; (ii) without first obtaining the written
consent of Buyer, lend to any person or entity in an
amount in excess of $3,000,000 or in an amount which,
when aggregated with any and all loans or credit
commitments to such person or entity, would be in excess
of $3,000,000; (iii) Lend to any person other than in
accordance with lending policies as in effect on the
date hereof; provided that in the case of clauses (ii)
and (iii) Seller or any Seller Subsidiary may make any
such loan in the event (A) Seller or any Seller
Subsidiary has delivered to Buyer or its designated
representative a notice of its intention to make such
loan and such information as Buyer or its designated
representative may reasonably require in respect thereof
and (B) Buyer or its designated representative shall not
have reasonably objected to such loan by giving written
or facsimile notice of such objection within two
business days following the delivery to Buyer of the
notice of intention and information as aforesaid; or
(iv) Lend to any
-64-
person or entity any of the loans or other extensions of
credit to which or investments in which are on a "watch
list" or similar internal report of Seller or any Seller
Subsidiary (except those denoted "pass" thereon), in an
amount in excess of $500,000; provided, however, that
nothing in this paragraph shall prohibit Seller or any
Seller Subsidiary from honoring any contractual
obligation in existence on the date of this Agreement.
Notwithstanding clauses (i) and (ii) of this Section
4.02(g), Seller shall be authorized without first
consulting with Buyer or obtaining Buyer's prior written
consent, to increase the aggregate amount of any credit
facilities theretofore established in favor of any
person or entity (each a "Pre-Existing Facility"),
provided that the aggregate amount of any and all such
increases with respect to any Pre-Existing Facility
shall not be in excess of the lesser of ten percent
(10%) of such Pre-Existing Facility or $250,000; or
(h) directly or indirectly (including through its
officers, directors, employees or other representatives)
initiate, solicit or encourage any discussions,
inquiries or proposals with any third party relating to
the disposition of any significant portion of the
business or assets of Seller or any Seller Subsidiary or
the acquisition of Equity Securities of Seller or any
Seller
-65-
Subsidiary or the merger of Seller or any Seller
Subsidiary with any person (other than Buyer) or any
similar transaction (each such transaction being
referred to herein as an "Acquisition Transaction"), or
provide any such person with information or assistance
or negotiate with any such person with respect to an
Acquisition Transaction, and Seller shall promptly
notify Buyer orally of all the relevant details relating
to all inquiries, indications of interest and proposals
which it may receive with respect to any Acquisition
Transaction; or
(i) take any action that would (A) materially impede
or delay the consummation of the transactions contemplated
by this Agreement or the ability of Buyer or Seller to
obtain any approval of any Regulatory Authority required
for the transactions contemplated by this Agreement or to
perform its covenants and agreements under this Agreement
or (B) prevent the transactions contemplated hereby from
qualifying as a reorganization within the meaning of
Section 368 of the Internal Revenue Code; or
(j) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for
borrowed money, assume, guarantee, endorse or otherwise as
-66-
an accommodation become responsible or liable for the
obligations of any other individual, corporation or other
entity, or, without prior approval of Buyer, which shall
not be unreasonably withheld, pay any Merger Fees in
excess of the amount set forth on Schedule 2.23; or
(k) restructure or materially change its investment
securities portfolio, through purchases, sales or
otherwise, or the manner in which the portfolio is
classified or reported, or execute any individual
investment transaction (i) in United States Treasury
securities in excess of $5,000,000 and (ii) in any other
investment securities in excess of $1,000,000; or
(l) agree in writing or otherwise to take any of
the foregoing actions or engage in any activity, enter
into any transaction or take or omit to take any other
act which would make any of the representations and
warranties in Article II of this Agreement untrue or
incorrect in any material respect if made anew after
engaging in such activity, entering into such
transaction, or taking or omitting such other act.
-67-
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Access and Information. (a) Buyer and its
Subsidiaries, on the one hand, and Seller and its
Subsidiaries, on the other hand, shall each afford to each
other, and to the other's accountants, counsel and other
representatives, full access during normal business hours,
during the period prior to the Effective Time, to all their
respective properties, books, contracts, commitments and
records and, during such period, each shall furnish promptly
to the other (i) a copy of each report, schedule and other
document filed or received by it during such period pursuant
to the requirements of federal and state securities laws and
(ii) all other information concerning its business,
properties and personnel as such other party may reasonably
request. Each party hereto shall, and shall cause its
advisors and representatives to, (A) hold confidential all
information obtained in connection with any transaction
contemplated hereby with respect to the other party which is
not otherwise public knowledge, (B) return all documents
(including copies thereof) obtained hereunder from the other
party to such other party and (C) use its best efforts to
cause all information obtained pursuant to this Agreement or
in connection with the negotiation of this Agreement to be
treated as confidential and not use, or knowingly permit
others to use, any
-68-
such information unless such information becomes generally
available to the public.
(b) Each party promptly following the date of this
Agreement shall commence its review of the other and the
respective operations, business affairs, prospects and
financial conditions of each, including, without limitation,
those matters which are the subject of Seller's
representations and warranties (the "Due Diligence Review").
Each party shall conclude such review by not later than
thirty (30) business days after the date of this Agreement
(the "Due Diligence Period"), but the pendency of such Due
Diligence Review shall not delay Buyer's obligation pursuant
to Section 5.02 of this Agreement to file a Registration
Statement with the SEC and all other necessary applications
and filings with the appropriate federal and state regulatory
agencies. Each party shall promptly advise the other of any
situation, event, circumstance or other matter which first
came to the attention of such party after the date hereof
which could result in the termination of this Agreement
pursuant to Section 7.01 hereof, or, if applicable, of the
absence of any situation, event, circumstance or other
matter. Notwithstanding anything herein or implied to the
contrary, the Due Diligence Review shall not limit, restrict
or preclude, or be construed to limit, restrict or preclude,
either party, at any time or from time to time thereafter,
from conducting such further
-69-
reviews or from exercising any rights available to it
hereunder as a result of the existence or occurrence prior to
the Due Diligence Period of any event or condition which was
not detected in the Due Diligence Review and which would
constitute a breach of any representation, warranty or
agreement under this Agreement.
5.02. Registration Statement; Regulatory Matters.
(a) Buyer shall prepare and, subject to the review and consent
of Seller with respect to matters relating to Seller, file with
the SEC as soon as is reasonably practicable the Registration
Statement (or the equivalent in the form of preliminary proxy
material) with respect to the shares of Buyer Common Stock to
be issued in the Merger. Buyer shall prepare and file an
application with the Federal Reserve Board as soon as
reasonably practicable. Buyer shall use all reasonable efforts
to cause the Registration Statement to become effective. Buyer
shall also take any action required to be taken under any
applicable state blue sky or securities laws in connection with
the issuance of such shares, and Seller and its Subsidiaries
shall furnish Buyer all information concerning Seller and its
Subsidiaries and the stockholders thereof as Buyer may
reasonably request in connection with any such action.
-70-
(b) Seller and Buyer shall cooperate and use their
respective best efforts to prepare all documentation, to
effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and
Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement and, as and if directed by
Buyer, to consummate such other mergers, consolidations or
asset transfers or other transactions by and among Buyer's
Subsidiaries and Seller's Subsidiaries concurrently with or
following the Effective Time.
5.03. Stockholder Approval. Seller shall call a
meeting of its stockholders to be held as soon as practicable
for the purpose of voting upon the Merger or take other
action for stockholders to authorize the Merger. In
connection therewith, Buyer shall prepare the Proxy Statement
and, with the approval of each of Buyer and Seller, the Proxy
Statement shall be filed with the SEC and mailed to the
stockholders of Seller. The Board of Directors of Seller
shall submit for approval of Seller's stockholders the
matters to be voted upon in order to authorize the Merger.
The Board of Directors of Seller hereby does and (subject to
the fiduciary duties of Seller's Board of Directors, based
upon written advice of counsel to Seller, which counsel is
reasonably acceptable to Buyer) will recommend this Agreement
and the transactions contemplated hereby to stockholders of
Seller
-71-
and will use its best efforts to obtain any vote of Seller's
stockholders that is necessary for the approval and adoption
of this Agreement and consummation of the transactions
contemplated hereby.
5.04. Current Information. During the period from
the date of this Agreement to the Effective Time, each party
shall promptly furnish the other with copies of all monthly
and other interim financial information or reports as the
same become available and shall cause one or more of its
designated representatives to confer on a regular and
frequent basis with representatives of the other party. Each
party shall promptly notify the other party of any material
change in its business or operations and of any governmental
complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the
institution or the threat of material litigation involving
such party, and shall keep the other party fully informed of
such events.
5.05. Agreements of Affiliates. As soon as
practicable after the date of this Agreement, Seller shall
deliver to Buyer a letter identifying all persons whom Seller
believes to be, at the time this Agreement is submitted to a
vote of the stockholders of Seller, "affiliates" of Seller
for purposes of Rule 145 under the Securities Act. Seller
-72-
shall use its best efforts to cause each person who is so
identified as an "affiliate" to deliver to Buyer as soon as
practicable thereafter, and in any event no later than the
publication of notice in the Federal Register of Buyer's
application with the Federal Reserve Board referred to in
Section 5.02, a written agreement providing that from the
date of such agreement each such person will agree not to
sell, pledge, transfer or otherwise dispose of any shares of
stock of Seller held by such person or any shares of Buyer
Common Stock to be received by such person in the Merger
except in compliance with the applicable provisions of the
Securities Act and until such time as financial results
covering at least 30 days of combined operations of Buyer and
Seller shall have been published. Prior to the Effective
Time, Seller shall amend and supplement such letter and use
its best efforts to cause each additional person who is
identified as an "affiliate" to execute a written agreement
as set forth in this Section 5.05.
5.06. Expenses. Each party hereto shall bear its
own expenses incident to preparing, entering into and
carrying out this Agreement and to consummating the Merger.
5.07. Miscellaneous Agreements and Consents. (a)
Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its respective best efforts
-73-
to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as
expeditiously as possible, including without limitation using
its respective best efforts to lift or rescind any injunction
or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions
contemplated hereby. Each party shall, and shall cause each
of its respective subsidiaries to, use its best efforts to
obtain consents of all third parties and Regulatory
Authorities necessary or, in the opinion of Buyer, desirable
for the consummation of the transactions contemplated by this
Agreement.
(b) Seller, prior to the Effective Time, shall (i)
consult and cooperate with Buyers regarding the
implementation of those policies and procedures established
by Buyer for its governance and that of its Subsidiaries and
not otherwise referenced in Section 5.16 hereof, including,
without limitation, policies and procedures pertaining to the
accounting, asset/liability management, audit, credit, human
resources, treasury and legal functions, and (ii) at the
request of Buyer, conform Seller's existing policies and
procedures in respect of such matters to Buyer's policies and
procedures or, in the absence of any existing Seller policy
-74-
or procedure regarding any such function, introduce Buyer's
policies or procedures in respect thereof, unless to do so
would cause Seller or any of the Seller Subsidiaries to be in
violation of any law, rule or regulation of any Regulatory
Authority having jurisdiction over Seller and/or the Seller
Subsidiary affected thereby.
5.08. Employee Benefits. (a) The provisions of
the Seller Stock Plans and of any other plan, program or
arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of Seller or any
Seller Subsidiary shall be deleted and terminated as of the
Effective Time, and Seller shall ensure that following the
Effective Time no holder of Seller Employee Stock Options or
any participant in any Seller Stock Plan shall have any right
thereunder to acquire any securities of Seller or any Seller
Subsidiary.
(b) Except as set forth in Section 5.08(a) hereof,
the Seller Employee Plans shall not be terminated by reason
of the Merger but shall continue thereafter as plans of the
Surviving Corporation until such time as the employees of the
Seller and the Seller Subsidiaries are integrated into
Buyer's employee benefit plans that are available to other
employees of Buyer and Buyer Subsidiaries, subject to the
terms and conditions specified in such plans and to such
-75-
changes therein as may be necessary to reflect the
consummation of the Merger. Buyer shall take such steps as
are necessary or required to integrate the employees of
Seller and the Seller Subsidiaries in Buyer's employee
benefit plans available to other employees of Buyer and Buyer
Subsidiaries as soon as practicable after the Effective Time,
with (i) full credit for prior service with Seller or any of
the Seller Subsidiaries for purposes of vesting and
eligibility for participation (but not benefit accruals under
any defined benefit plan), and co-payments and deductibles,
and (ii) waiver of all waiting periods and pre-existing
condition exclusions or penalties.
5.09. Employee Stock Options. At the Effective
Time, all rights with respect to Seller Common Stock pursuant
to Seller Employee Stock Options that are outstanding at the
Effective Time, whether or not then exercisable, shall be
converted into and become rights with respect to Buyer Common
Stock, and Buyer shall assume each Seller Employee Stock Option
in accordance with the terms of the stock option plan under
which it was issued and the stock option agreement by which it
is evidenced. From and after the Effective Time, (i) each
Seller Employee Stock Option assumed by Buyer shall be
exercised solely for shares of Buyer Common Stock, (ii) the
number of shares of Buyer Common Stock subject to each Seller
Employee Stock Option shall be equal to the number of shares of
Seller
-76-
Common Stock subject to such Seller Employee Stock Option
immediately prior to the Effective Time multiplied by the
Exchange Ratio and (iii) the per share exercise price under
each Seller Employee Stock Option shall be adjusted by dividing
the per share exercise price under such Seller Employee Stock
Option by the Exchange Ratio and rounding down to the nearest
cent; provided, however, that the terms of each Seller Employee
Stock Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization or other similar transaction
subsequent to the Effective Time. It is intended that the
foregoing assumption shall be undertaken in a manner that will
not constitute a "modification" as defined in the Internal
Revenue Code, as to any Seller Employee Stock Option that is an
"incentive stock option."
5.10. Press Releases. Except as may be required
by law, Seller and Buyer shall consult and agree with each
other as to the form and substance of any proposed press
release relating to this Agreement or any of the transactions
contemplated hereby.
5.11. State Takeover Statutes. Seller will take
all steps necessary to exempt the transactions contemplated
by this Agreement and any agreement contemplated hereby from,
-77-
and if necessary challenge the validity of, any applicable
state takeover law.
5.12 D&O Indemnification. Buyer agrees that the
Merger shall not affect or diminish any of Seller's duties
and obligations of indemnification existing as of the
Effective Time in favor of employees, agents, directors or
officers of Seller or its Subsidiaries arising by virtue of
their respective Articles of Incorporation or Bylaws in the
form in effect at the date of this Agreement or arising by
operation of law or arising by virtue of any contract,
resolution or other agreement or document existing at the
date of this Agreement, and such duties and obligations shall
continue in full force and effect for so long as they would
(but for the Merger) otherwise survive and continue in full
force and effect.
5.13. Best Efforts. Each of Buyer and Seller
undertakes and agrees to use its best efforts to cause the
Merger (i) to qualify (A) for pooling-of-interests accounting
treatment and (B) as a reorganization within the meaning of
Section 368 of the Internal Revenue Code (including, if
necessary, to take reasonable steps to restructure the
transactions contemplated by this Agreement to so qualify)
and (ii) to occur as soon as practicable. Each of Buyer and
Seller agrees to not take any action that would materially
impede or
-78-
delay the consummation of the transactions contemplated by
this Agreement or the ability of Buyer or Seller to obtain
any approval of any Regulatory Authority required for the
transactions contemplated by this Agreement or to perform its
covenants and agreements under this Agreement.
5.14. Insurance. As soon as practicable following
the date hereof, Seller shall, and Seller shall cause its
Subsidiaries to, use its best efforts to maintain its
existing insurance and, if not already obtained, obtain (and
maintain through the Effective Time) insurance with respect
to employee benefit matters and umbrella insurance in respect
of automobile fleet coverage for amounts as reasonably
requested by Buyer with financially sound and reputable
insurance companies.
5.15. Bank Minority Shares. As soon as reasonably
practicable, Seller shall use all reasonable efforts to
cooperate with Buyer in respect of each person holding
capital stock of any of the Banks (other than Seller or any
of the Seller Subsidiaries), whether as qualifying shares or
otherwise, with the goal of purchasing such shares at any
time and/or from time to time, at a price reasonably
acceptable to Buyer.
5.16. Conforming Entries. (a) Notwithstanding
that Seller believes that Seller and the Seller Subsidiaries
-79-
have established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws,
rules and regulations, Seller recognizes that Buyer may have
adopted different loan, accrual and reserve policies
(including loan classifications and levels of reserves for
possible loan losses). From and after the date of this
Agreement to the Effective Time, Seller and Buyer shall
consult and cooperate with each other with respect to
conforming the loan, accrual and reserve policies of Seller
and the Seller Subsidiaries to those policies of Buyer, as
specified in each case in writing to Seller, based upon such
consultation and as hereinafter provided.
(b) In addition, from and after the date of this
Agreement to the Effective Time, Seller and Buyer shall
consult and cooperate with each other with respect to
determining appropriate Seller accruals, reserves and charges
to establish and take in respect of excess equipment write-
off or write-down of various assets and other appropriate
charges and accounting adjustments taking into account the
parties' business plans following the Merger, as specified in
each case in writing to Seller, based upon such consultation
and as hereinafter provided.
(c) Seller and Buyer shall consult and cooperate
with each other with respect to determining, as specified in
-80-
a written notice from Buyer to Seller, based upon such
consultation and as hereinafter provided, the amount and the
timing for recognizing for financial accounting purposes
Seller's expenses of the Merger and the restructuring charges
relating to or to be incurred in connection with the Merger.
(d) At the request of Buyer, Seller shall (i)
establish and take such reserves and accruals as Buyer shall
request to conform Seller's loan, accrual and reserve
policies to Buyer's policies, and (ii) establish and take
such accruals, reserves and charges in order to implement
such policies in respect of excess facilities and equipment
capacity, severance costs, litigation matters, write-off or
write-down of various assets and other appropriate accounting
adjustments, and to recognize for financial accounting
purposes such expenses of the Merger and restructuring
charges related to or to be incurred in connection with the
Merger, in each case at such times as are requested by Buyer
in a written notice to Seller, in accordance with the
following objective. It is the objective of Buyer and Seller
that such reserves, accruals and charges referred to in this
Section 5.16 to be taken as at or immediately prior to
December 31, 1995, provided that if such reserves, accruals
and charges are to be taken as at or prior to December 31,
1995 and the Closing Date is to occur thereafter, Buyer shall
certify to
-81-
Seller on or prior to December 31, 1995, that the bank
regulatory approval conditions to its obligations
contemplated by Section 6.01(b) have been satisfied or waived
(except to the extent that any waiting period associated
therewith may then have commenced but not expired) and Buyer
and Seller shall have mutually agreed by December 31, 1995 to
the scheduling of the Closing Date; and provided, further,
that Seller shall not be required to take any such action
that is not consistent with GAAP.
5.17. Environmental Reports. Seller shall provide
to Buyer as soon as reasonably practicable, but not later
than ninety (90) days after the date hereof, a report of a
phase one environmental investigation on all real property
owned, leased or operated by Seller or any of the Seller
Subsidiaries as of the date hereof (but excluding "other real
estate owned," property held in trust or in a fiduciary
capacity and space in retail or similar establishments leased
by Seller or any of the Seller Subsidiaries for automatic
teller machines or bank branch facilities where the space
leased comprises less than 20% of the total space leased to
all tenants of such property) and within ten (10) days after
the acquisition or lease of any real property acquired or
leased by Seller or any of the Seller Subsidiaries after the
-82-
date hereof (but excluding space in retail and similar
establishments leased by Seller or any of the Seller
Subsidiaries for automatic teller machines or bank branch
facilities where the space leased comprises less than 20% of
the total space leased to all tenants of such property). If
advisable in light of the phase one report with respect to
any parcel of real property referred to above, in the
reasonable opinion of Buyer, Seller shall also provide to
Buyer a phase two investigation report on such designated
parcels. Buyer shall have fifteen (15) business days from
the receipt of any such phase two investigation report to
notify Seller of any dissatisfaction with the contents of
such report. If the estimated costs of all remedial or other
corrective actions or measures with regard to the real
properties referred to above required by applicable law
exceed $5,000,000 in the aggregate, as reasonably estimated
by an environmental expert retained for such purpose by
Seller, at Seller's expense, upon Buyer's reasonable request,
or if such cost cannot be so reasonably estimated by such
expert to be such amount or less with any reasonable degree
of certainty, then Buyer, after providing Seller with written
notice of Buyer's intent to do so and allowing Seller a six-
month period from the date of such notice to take and
complete, to the reasonable satisfaction of Buyer, all such
remedial or other corrective actions and measures (the
aggregate cost of which incurred by
-83-
Seller and the Seller Subsidiaries shall not exceed
$5,000,000), shall have the right pursuant to Section 7.01(h)
hereof to terminate this Agreement, which shall be Buyer's
sole remedy in such event.
ARTICLE VI
CONDITIONS
6.01. Conditions to Each Party's Obligation To
Effect the Merger. The respective obligations of each party
to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following
conditions:
(a) This Agreement shall have received the
requisite approval of stockholders of Seller.
(b) All requisite approvals of this Agreement and
the transactions contemplated hereby shall have been
received from the Federal Reserve Board, the State Bank
Regulator and any other Regulatory Authority.
(c) The Registration Statement shall have been
declared effective and shall not be subject to a stop
order or any threatened stop order.
(d) Neither Seller nor Buyer shall be subject to
any order, decree or injunction of a court or agency of
-84-
competent jurisdiction which enjoins or prohibits the
consummation of the Merger.
(e) Each of Buyer and Seller shall have received,
from counsel reasonably satisfactory to it, an opinion
reasonably satisfactory in form and substance to it to
the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the
Internal Revenue Code and that no gain or loss will be
recognized by the stockholders of Seller to the extent
they receive Buyer Common Stock solely in exchange for
shares of Seller Common Stock.
6.02. Conditions to Obligations of Seller To Effect
the Merger. The obligations of Seller to effect the Merger
shall be subject to the fulfillment or waiver at or prior to
the Effective Time of the following additional conditions:
(a) Representations and Warranties. The
representations and warranties of Buyer set forth in
Article III of this Agreement shall be true and correct
in all material respects as of the date of this
Agreement and as of the Effective Time (as though made
on and as of the Effective Time except (i) to the extent
such representations and warranties are by their express
provisions made as of a specified date or period and
(ii) for
-85-
the effect of transactions contemplated by this
Agreement) and Seller shall have received a certificate
of the chairman or chief financial officer of Buyer to
that effect.
(b) Performance of Obligations. Buyer shall have
performed in all material respects all obligations
required to be performed by it under this Agreement
prior to the Effective Time, and Seller shall have
received a certificate of the chairman or chief
financial officer of Buyer to that effect.
6.03. Conditions to Obligations of Buyer To Effect
the Merger. The obligations of Buyer to effect the Merger
shall be subject to the fulfillment or waiver at or prior to
the Effective Time of the following additional conditions:
(a) Representations and Warranties. The
representations and warranties of Seller set forth in
Article II of this Agreement shall be true and correct
in all material respects as of the date of this
Agreement and as of the Effective Time (as though made
on and as of the Effective Time except (i) to the extent
such representations and warranties are by their express
provisions made as of a specific date or period and (ii)
for the effect of transactions contemplated by this
Agreement) and Buyer shall have received a certificate
of the
-86-
chairman of Seller and a certificate of the president
and chief executive officer of Seller to that effect.
(b) Performance of Obligations. Seller shall have
performed in all material respects all obligations
required to be performed by it under this Agreement
prior to the Effective Time, and Buyer shall have
received a certificate of the chairman of Seller and a
certificate of the president and chief executive officer
of Seller to that effect.
(c) Auditors' Opinion. Buyer shall have received
an opinion of Buyer Auditors addressed to Buyer,
satisfactory in form and substance to Buyer, that the
Merger will qualify for pooling-of-interests accounting
treatment, which opinion shall not have been withdrawn.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after any requisite stockholder approval:
(a) by mutual consent by the Executive Committee
of the Board of Directors of Buyer and the Board of
Directors of Seller;
-87-
(b) by the Executive Committee of the Board of
Directors of Buyer or the Board of Directors of Seller
at any time after the date that is twelve months after
the date of this Agreement if the Merger shall not
theretofore have been consummated (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement
contained herein);
(c) by the Executive Committee of the Board of
Directors of Buyer or the Board of Directors of Seller
if (i) the Federal Reserve Board has denied approval of
the Merger and such denial has become final and
nonappealable or (ii) stockholders of Seller shall not
have approved this Agreement at the Meeting following a
favorable recommendation of Seller's Board of Directors;
(d) by the Executive Committee of the Board of
Directors of Buyer in the event of a material breach by
Seller of any representation, warranty, covenant or
other agreement contained in this Agreement, which
breach is not cured within 30 days after written notice
thereof to Seller by Buyer;
(e) by the Executive Committee of the Board of
Directors of Buyer in the event that (i) Buyer's Due
-88-
Diligence Review of Seller and its Subsidiaries
discloses matters the impact of which affects Seller and
its Subsidiaries, taken as a whole, except as may have
resulted from changes to laws and regulations or changes
in economic conditions applicable to banking
institutions generally, or in general interest rates
that affect Seller and its Subsidiaries, taken as a
whole, consistent with the manner in which changes in
the general levels of interest rates since December 31,
1994 have affected Seller and its Subsidiaries, taken as
a whole, which the Executive Committee of the Board of
Directors of Buyer in the good faith exercise of its
reasonable judgment believes either (A) to be
inconsistent in any material and adverse respect with
any of the representations or warranties of Seller, or
(B) (x) to be of such significance as to materially and
adversely affect the Condition of Seller and its
Subsidiaries, taken as a whole, or (y) to deviate
materially and adversely from the financial statements
for the year ended December 31, 1994 of Seller, (ii)
Buyer notifies Seller of such matters within 5 business
days of the expiration of the Due Diligence Period, and
(iii) such matters (A) are not capable of being cured or
(B) have not been cured within 30 days after written
notice thereof to Seller by Buyer;
-89-
(f) by the Board of Directors of Seller in the event
that (i) Seller's Due Diligence Review of Buyer and its
Subsidiaries discloses matters the impact of which affects
Buyer and its Subsidiaries, taken as a whole, except as
may have resulted from changes to laws and regulations or
changes in economic conditions applicable to banking
institutions generally, or in general levels of interest
rates that affect Buyer and its Subsidiaries, taken as a
whole, consistent with the manner in which changes in the
general levels of interest rates since December 31, 1994
has affected Buyer and its Subsidiaries, taken as a whole,
which the Board of Directors of Seller in the good faith
exercise of its reasonable judgment believe either (A) to
be inconsistent in any material and adverse respect with
any of the representations or warranties of Buyer, or (B)
(x) to be of such significance as to materially and
adversely affect the Condition of Buyer and its
Subsidiaries, taken as a whole, or (y) to deviate
materially and adversely from the financial statement for
the year ended December 31, 1994 of Buyer, (ii) Seller
notifies Buyer of such matters within 5 business days of
the expiration of the Due Diligence Period, and (iii) such
matters (A) are not capable of being cured or (B) have not
been cured within 30 days after written notice thereof to
Buyer;
-90-
(g) by the Board of Directors of Seller in the event
of a material breach by Buyer of any representation,
warranty, covenant or other agreement contained in this
Agreement, which breach is not cured within 30 days after
written notice thereof is given to Buyer by Seller; or
(h) by the Executive Committee of the Board of
Directors of Buyer pursuant to and in accordance with the
provisions of Section 5.17 hereof.
7.02. Effect of Termination. In the event of
termination of this Agreement as provided in Sections 7.01(a)
through 7.01(c) and Sections 7.01(e), 7.01(f) and 7.01(h)
above, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Buyer or
Seller or their respective officers or directors except as set
forth in the second sentence of Section 5.01(a) and in Section
5.06.
7.03. Amendment. This Agreement and the Schedules
hereto may be amended by the parties hereto, by action taken
by or on behalf of their respective Boards of Directors, at
any time before or after approval of this Agreement by the
stockholders of Seller; provided, however, that after any
-91-
such approval by the stockholders of Seller no such
modification shall alter or change the amount or kind of
consideration to be received by holders of Seller Common
Stock as provided in this Agreement. This Agreement may not
be amended except by an instrument in writing signed on
behalf of each of Buyer and Seller.
7.04. Severability. Any term, provision, covenant
or restriction contained in this Agreement held by a court or
a Regulatory Authority of competent jurisdiction to be
invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but
neither the remaining terms, provisions, covenants or
restrictions contained in this Agreement nor the validity or
enforceability thereof in any other jurisdiction shall be
affected or impaired thereby. Any term, provision, covenant
or restriction contained in this Agreement that is so found
to be so broad as to be unenforceable shall be interpreted to
be as broad as is enforceable.
7.05. Waiver. Any term, condition or provision of
this Agreement may be waived in writing at any time by the
party which is, or whose stockholders are, entitled to the
benefits thereof.
-92-
ARTICLE VIII
GENERAL PROVISIONS
8.01. Non-Survival of Representations, Warranties
and Agreements. No investigation by the parties hereto made
heretofore or hereafter shall affect the representations and
warranties of the parties which are contained herein and each
such representation and warranty shall survive such
investigation. Except as set forth below in this Section
8.01, all representations, warranties and agreements in this
Agreement of Buyer and Seller or in any instrument delivered
by Buyer or Seller pursuant to or in connection with this
Agreement shall expire at the Effective Time or upon
termination of this Agreement in accordance with its terms
or, in the case of any other such instrument, in accordance
with the terms of such instrument. In the event of
consummation of the Merger, the agreements contained in or
referred to in Sections 5.02(b), 5.07, 5.08, 5.09 and 5.12
shall survive the Effective Time. In the event of
termination of this Agreement in accordance with its terms,
the agreements contained in or referred to in the second
sentence of Section 5.01(a), Section 5.06 and Section 7.02
shall survive such termination.
8.02. Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed to be duly received (vi) on the date given if
delivered personally
-93-
or (vii) upon confirmation of receipt, if by facsimile
transmission or (viii) on the date received if mailed by
registered or certified mail (return receipt requested), or
(iv) on the business date after being delivered to a
reputable overnight delivery service, if by such service, to
the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to Buyer:
Mercantile Bancorporation Inc.
Xxxxxxxxxx Xxxxx
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxx
Executive Vice President,
Mercantile Bank of St. Louis,
National Association
Copies to:
Xxx X. Xxxxxxxx, Esq.
General Counsel
Mercantile Bancorporation Inc.
Xxxxxxxxxx Xxxxx
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
and
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
-94-
(ii) if to Seller:
Hawkeye Bancorporation
222 Equitable Building
000 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
President and Chief Executive
Officer
Copies to:
Baird, Holm, McEachen, Pedersen,
Hamann & Xxxxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
8.03. Miscellaneous. This Agreement (including
the Schedules and other written documents referred to herein
or provided hereunder) (i) constitutes the entire agreement
and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them,
with respect to the subject matter hereof, including any
confidentiality agreement between the parties hereto, (ii) is
not intended to confer upon any person not a party hereto any
rights or remedies hereunder, (iii) shall not be assigned by
operation of law or otherwise and (iv) shall be governed in
all respects by the laws of the State of Missouri, except as
otherwise specifically provided herein or required by the
Iowa Act. Nothing in this Agreement shall be construed to
require any party (or any subsidiary or affiliate of any
party) to take any action or fail to take any action in
violation of applicable law, rule or regulation. This
Agreement
-95-
may be executed in counterparts which together shall
constitute a single agreement.
-96-
IN WITNESS WHEREOF, Buyer and Seller have caused
this Agreement to be signed and, by such signature,
acknowledged by their respective officers thereunto duly
authorized, and such signatures to be attested to by their
respective officers thereunto duly authorized, all as of the
date first written above.
Attest: MERCANTILE BANCORPORATION INC.
/s/ Xxx X. Xxxxxxxx By:/s/ Xxxxxx X. Xxxxxxxx
Name: Xxx X. Xxxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: General Counsel Title: Chairman, President &
Chief Executive Officer
Attest: HAWKEYE BANCORPORATION
/s/ R. Xxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
Name: R. Xxxxxxx Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President, Title: Chief Executive Officer,
Credit Administration Chief Operating Officer &
Secretary Chief Financial Officer
-97-
