1
Exhibit 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
between
MERCANTILE BANCORPORATION INC.
and
MERCANTILE BANCORPORATION INC. OF ARKANSAS
as Buyers
and
SECURITY BANK OF XXXXXX, F.S.B.
as Seller
Dated July 7, 1995
Amended and Restated as of September 18, 1995
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TABLE OF CONTENTS
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Page
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Recitals 1
ARTICLE I
THE TRANSACTION
1.01 The Transaction 2
1.02 Closing 2
1.03 Effective Time 2
1.04 Additional Actions 2
1.05 Payment of Purchase Price 3
1.06 Exchange Procedures 3
1.07 Dissenting Shares 4
1.08 No Fractional Shares 4
1.09 Closing of Stock Transfer Books 4
1.10 Anti-Dilution Adjustments 4
1.11 Reservation of Right to Revise Transaction 5
1.12 Definitions 5
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
2.01 Organization and Authority 6
2.02 Subsidiaries 7
2.03 Capitalization 7
2.04 Authorization 7
2.05 Seller Financial Statements 8
2.06 Seller Reports 9
2.07 Title to and Condition of Assets 9
2.08 Real Property 10
2.09 Taxes 11
2.10 Material Adverse Change 11
2.11 Loans, Commitments and Contracts 11
2.12 Absence of Defaults 14
2.13 Litigation and Other Proceedings 14
2.14 Directors' and Officers' Insurance 14
2.15 Compliance with Laws 14
2.16 Labor 16
2.17 Material Interests of Certain Persons 16
2.18 Allowance for Loan and Lease Losses; Non-Performing Assets 16
2.19 Employee Benefit Plans 17
2.20 Conduct of Seller to Date 18
2.21 Absence of Undisclosed Liabilities 19
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2.22 Proxy Statement, Etc. 19
2.23 Registration Obligations 20
2.24 Tax and Regulatory Matters 20
2.25 Brokers and Finders 20
2.26 Interest Rate Risk Management Instruments 20
2.27 Accuracy of Information 20
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYERS
3.01 Organization and Authority 20
3.02 Capitalization of Buyers 21
3.03 Authorization 21
3.04 Mercantile Financial Statements 22
3.05 Mercantile Reports 22
3.06 Material Adverse Change 23
3.07 Legal Proceedings or Other Adverse Facts 23
3.08 Registration Statement, Etc. 23
3.09 Brokers and Finders 23
3.10 Accuracy of Information 23
3.11 Tax and Regulatory Matters 23
3.12 Compliance with Laws 23
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01 Conduct of Businesses Prior to the Effective Time 24
4.02 Forbearances of Seller 24
4.03 Forbearances of Buyers 26
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Access and Information 27
5.02 Registration Statement; Regulatory Matters 27
5.03 Shareholder Approval 27
5.04 Current Information 28
5.05 Conforming Entries 28
5.06 Environmental Reports 29
5.07 Agreements of Affiliates 29
5.08 Expenses 30
5.09 Miscellaneous Agreements 30
5.10 Employee Agreements and Benefits 30
5.11 Press Releases 31
5.12 State Takeover Statutes 31
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5.13 Directors' and Officers' Indemnification 31
5.14 Tax Opinion Certificates 31
5.15 Best Efforts to Insure Pooling 31
5.16 Surrender of Charter 31
5.17 Escrow Account 32
ARTICLE VI
CONDITIONS
6.01 Conditions to Each Party's Obligation To Effect the Transaction 32
6.02 Conditions to Obligations of Seller To Effect the Transaction 33
6.03 Conditions to Obligations of Buyers To Effect the Transaction 33
ARTICLE VII
CLOSING
7.01 Closing 34
7.02 Deliveries at Closing 35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination 37
8.02 Effect of Termination 38
8.03 Amendment 38
8.04 Waiver 38
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties and Agreements 39
9.02 Indemnification 39
9.03 No Assignment; Successors and Assigns 39
9.04 No Implied Waiver 39
9.05 Headings 39
9.06 Entire Agreement 40
9.07 Counterparts 40
9.08 Notices 40
9.09 Severability 41
9.10 Governing Law 41
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AMENDED AND RESTATED
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AGREEMENT AND PLAN OF REORGANIZATION
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This AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is dated July 7, 1995, and amended and restated as of September
18, 1995, by and among MERCANTILE BANCORPORATION INC., a Missouri corporation
("Mercantile"), MERCANTILE BANCORPORATION INC. OF ARKANSAS, an Arkansas
corporation ("Mercantile-Arkansas" and, collectively with Mercantile, the
"Buyers"), and SECURITY BANK OF XXXXXX, F.S.B., a federally-chartered stock
savings bank ("Seller").
W I T N E S S E T H:
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WHEREAS, Mercantile is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA") and a registered savings
and loan holding company under the Home Owners' Loan Act of 1933, as amended
(the "HOLA"); and
WHEREAS, Mercantile holds all of the issued and outstanding capital
stock of Mercantile-Arkansas which, in turn, holds all of the issued and
outstanding capital stock of certain state and national banks located in the
State of Arkansas; and
WHEREAS, Seller is a federally-chartered stock savings bank; and
WHEREAS, the Board of Directors of Seller, the Board of Directors of
Mercantile-Arkansas, and the Executive Committee of the Board of Directors of
Mercantile have approved the purchase of all of the assets and the assumption
of all of the liabilities of Seller by Mercantile-Arkansas (the
"Transaction"); and
WHEREAS, Seller acknowledges and agrees that Mercantile-Arkansas, in its
sole and absolute discretion, may assign its right to receive the assets and
its obligation to assume the liabilities of Seller to one or more
Mercantile-Arkansas banking subsidiaries (each, an "Assignee") prior to the
Effective Time, as defined in Section 1.03 hereof; and
WHEREAS, Seller and Mercantile-Arkansas believe that the Transaction is
desirable and in the best interests of their respective shareholders; and
WHEREAS, Seller and Mercantile-Arkansas intend that the Transaction
constitute a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and that the purchase of all of
the assets and the assumption of all of the liabilities of Seller by
Mercantile-Arkansas for shares of Mercantile Common Stock (as defined in
Section 1.01 hereof), and the subsequent distribution of the shares of
Mercantile Common Stock to shareholders of Seller as a liquidating
distribution, will not give rise to a gain or loss to the shareholders of
Seller with respect to such liquidating distribution, except with respect to
cash received in lieu of fractional shares; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
Transaction.
NOW THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
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ARTICLE I
THE TRANSACTION
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1.01 The Transaction. Subject to the terms and conditions of this
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Agreement, Buyers and Seller shall effect the Transaction in accordance with
Section 10(s) of the HOLA and Title 12 of the United States Code (the "United
States Code" or "U.S.C.") and in accordance with all additional federal and
state laws and regulations that may be applicable. The parties hereby
acknowledge that Mercantile-Arkansas has the authority to assign its right to
receive the assets, and its obligation to assume the liabilities, of Seller to
an Assignee or Assignees at or prior to the Effective Time, as such term is
defined in Section 1.03 hereof. As of the Effective Time, Seller shall
deliver to Mercantile a certified list of all shareholders of Seller and
report the number of shares of common stock, $100.00 par value, of Seller
("Seller Common Stock") held by each shareholder. The parties agree that
prior to the Effective Time, Seller and Mercantile-Arkansas shall appoint
KeyCorp Shareholder Services, Inc., as trustee and agent (the "Exchange
Agent") for the purpose of receiving from Mercantile-Arkansas, on behalf of
Seller, certificates of common stock, $5.00 par value, of Mercantile and the
associated "Rights" under the "Rights Agreement," as those terms are defined
in Section 3.02 hereof ("Mercantile Common Stock") and such amounts of cash as
shall be required for payment in lieu of fractional shares of Mercantile
Common Stock, all in consideration of and as full payment for the purchase of
all of the assets and the assumption of all of the liabilities of Seller by
Mercantile-Arkansas, such shares of Mercantile Common Stock to be issued in
the name of the shareholders of Seller or their designees (the "Mercantile
Certificates"). As soon as practicable after the Effective Time, the Exchange
Agent shall deliver the Mercantile Certificates and such amounts of cash in
lieu of fractional shares of Mercantile Common Stock to the shareholders of
Seller, on behalf of Seller, as a liquidating distribution, and Seller shall
surrender its charter to the Office of Thrift Supervision (the "OTS"). The
number of shares of Mercantile Common Stock to be delivered to the Exchange
Agent pursuant to the Transaction and pursuant to the terms of this Agreement
shall be determined as set forth in Section 1.05 hereof.
1.02 Closing. The closing (the "Closing") of the Transaction shall
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take place at 10:00 a.m., local time, on the date that the Effective Time
occurs (the "Closing Date"), or at such other time, and at such place, as
Buyers and Seller shall agree.
1.03 Effective Time. Subject to the terms and conditions of this
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Agreement, the Transaction shall become effective (the "Effective Time") on
such date specified by Mercantile-Arkansas in writing to Seller (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) not later than the first
business day of the first full calendar month commencing at least five
business days after the Approval Date.
1.04 Additional Actions. If, at any time after the Effective Time,
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Buyers or any Assignee shall consider or be advised that any further deeds,
assignments or assurances or any other acts are necessary or desirable to (a)
vest, perfect or confirm, of record or otherwise, in Mercantile-Arkansas or
such Assignee the right, title or interest in, to or under any of the rights,
properties or assets of Seller or (b) otherwise carry out the purposes of this
Agreement and the Transaction, Seller and each of its officers and directors
shall be deemed to have granted to Mercantile-Arkansas or such Assignee 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 Mercantile-Arkansas or such Assignee and otherwise to carry out the
purposes of this Agreement and the Transaction, and the officers and directors
of Mercantile-Arkansas or such Assignee are authorized in the name of Seller
or otherwise to take any and all such action.
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1.05 Payment of Purchase Price. At the Effective Time,
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Mercantile-Arkansas shall deliver to the Exchange Agent, on behalf of the
Seller, 31.189 shares (the "Distribution Ratio") of Mercantile Common Stock
for each share of Seller Common Stock outstanding immediately prior to the
Effective Time (collectively, the "Shares"). Mercantile-Arkansas shall also
deliver to the Exchange Agent, on behalf of Seller, such amounts of cash as
shall be required for payment in lieu of fractional shares of Mercantile
Common Stock (collectively, the "Cash"). The delivery by Mercantile-Arkansas
of the Shares and the Cash shall be in full payment for the purchase of all of
the assets and the assumption of all of the liabilities of Seller by
Mercantile-Arkansas or any Assignee. The Distribution Ratio was computed by
dividing (i) the total number of shares of Seller Common Stock that were
issued and outstanding on the date of this Agreement into (ii) 322,000, the
aggregate number of shares of Mercantile Common Stock to be issued in the
Transaction. Mercantile hereby undertakes to deliver or cause to be delivered
to the Exchange Agent the Shares and the Cash. Any such delivery shall
constitute delivery by Mercantile-Arkansas for purposes of this Agreement.
1.06 Exchange Procedures.
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(a) At the Effective Time, holders of record of
certificates representing shares of Seller Common Stock (the
"Certificates") shall be instructed to tender such Certificates to
the Exchange Agent pursuant to a letter of transmittal that Buyers
shall deliver or cause to be delivered to such holders in a form
substantially similar to that attached hereto as Exhibit A, it
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being the intent of Buyers that such letters of transmittal shall
be delivered as soon after the Effective Date as is reasonably
practicable.
(b) Subject to Section 1.09, after the Effective
Time, each previous holder of a Certificate that surrenders such
Certificate to the Exchange Agent, with a properly completed and
executed letter of transmittal with respect to such Certificate,
will be entitled to receive from the Exchange Agent, on behalf of
Seller, as a liquidating distribution, (i) a Mercantile
Certificate representing such number of whole shares of Mercantile
Common Stock that shall equal the number of full shares of Seller
Common Stock held by such shareholder multiplied by the
Distribution Ratio without interest, and (ii) a cash payment for
any fractional share interest to which such shareholder would have
otherwise been entitled, computed pursuant to the provisions of
Section 1.07 hereof.
(c) Each outstanding Certificate shall until
duly surrendered to the Exchange Agent be deemed to evidence the
right to receive such shareholder's pro rata portion of the
liquidating distribution.
(d) After the Effective Time, holders of
Certificates shall cease to have rights with respect to the stock
represented by such Certificates, and their sole rights shall be
to exchange such Certificates for their pro rata portion of the
liquidating distribution as provided in Section 1.06(b) of this
Agreement. After the Effective Time, there shall be no further
transfer on the records of Seller of Certificates, and if such
Certificates are presented to Seller for transfer, they shall be
cancelled against delivery of the pro rata portion of the
liquidating distribution to which the stock represented by such
Certificates are entitled as provided in Section 1.06(b) of this
Agreement. The Exchange Agent shall not be obligated to deliver
the liquidating distribution, on behalf of Seller, to any holder
of Seller Common Stock until such holder surrenders the
Certificates as provided herein. No dividends declared on the
Mercantile Common Stock to be received in the liquidating
distribution will be remitted to any person entitled to receive
such Mercantile Common Stock under this Agreement until such
person surrenders the Certificate representing the right to
receive such Mercantile Common Stock, at which time such
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dividends shall be remitted to such person without interest and less any
taxes that may have been imposed thereon. Certificates surrendered by an
affiliate of Seller within the meaning of Rule 144(a)(1) of the Securities Act
(as defined herein) shall not be exchanged for the Mercantile Common Stock, as
a liquidating distribution until Buyers have received a written agreement from
such affiliate as required pursuant to Section 5.07 hereof. No party to this
Agreement nor any affiliate thereof shall be liable to any holder of stock
represented by any Certificate for any amount paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. Buyers
shall be entitled to rely upon the stock transfer books of Seller to establish
the identity of those persons entitled to receive the liquidating distribution
specified in Section 1.06(b) of 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, Buyers shall be entitled to
deposit the liquidating distribution represented thereby in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
1.07 Dissenting Shares.
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(a) "Dissenting Shares" means any shares held by
any holder who becomes entitled to payment of the fair or
appraised value of such shares under 12 C.F.R. Section 552.14.
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 such law and shall be paid such consideration
with funds provided by Seller, as provided in Section 5.17 hereof.
(b) Each party hereto shall give the other
prompt notice of any written demands for the payment of the fair
or appraised value of any shares, withdrawals of such demands, and
any other instruments served pursuant to the Code of Federal
Regulations received by such party, and Seller shall give Buyers
the opportunity to participate in all negotiations and proceedings
with respect to such demands. Seller shall not voluntarily make
any payment with respect to any demands for payment of the fair or
appraised value and shall not, except with the prior written
consent of Buyers, which consent shall not be unreasonably
withheld, settle or offer to settle any such demands.
1.08 No Fractional Shares. Notwithstanding any other provision of
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this Agreement, neither certificates nor scrip for fractional shares of
Mercantile Common Stock shall be issued in the Transaction. Each holder who
otherwise would have been entitled to a fraction of a share of Mercantile
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 stock price of Mercantile
Common Stock on the New York Stock Exchange (the "NYSE") Composite Tape as
reported in The Wall Street Journal on the Closing Date. No such holder
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shall be entitled to dividends, voting rights or any other rights in respect
of any fractional share.
1.09 Closing of Stock Transfer Books. The stock transfer books of
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Seller shall be closed at the end of business on the business day immediately
preceding the Closing Date. In the event of a transfer of ownership of Seller
Common Stock which is not registered in the transfer records prior to the
closing of such record books, the shares of Mercantile Common Stock issuable
with respect to such stock, as a liquidating distribution, may be delivered to
the transferee, if the Certificate or Certificates representing such stock is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and all applicable stock transfer taxes are
paid.
1.10 Anti-Dilution Adjustments. If between the date of this
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Agreement and the Effective Time a share of Mercantile Common Stock shall be
changed into a different number of shares of Mercantile
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Common Stock or a different class of shares by reason of reclassification,
recapitalization, split-up, exchange of shares or readjustment (including a
merger or consolidation involving Mercantile in which the holders of
Mercantile Common Stock receive securities of another entity or other
consideration), or if a stock dividend thereon shall be declared with a record
date within such period, then appropriate and proportionate adjustment or
adjustments will be made to the Distribution Ratio such that each shareholder
of Seller shall be entitled to receive such number of shares of Mercantile
Common Stock or other securities as a liquidating distribution as such
shareholder would have received pursuant to such reclassification,
recapitalization, split-up, exchange of shares or readjustment (including a
merger or consolidation involving Mercantile in which the holders of
Mercantile Common Stock receive securities of another entity or other
consideration) or as a result of such stock dividend had the record date
therefor been immediately following the Effective Time.
1.11 Reservation of Right to Revise Transaction. Buyers may at any
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time change the method of effecting the Transaction (including without
limitation the provisions of this Article I) if and to the extent Buyers deems
such change to be desirable, including without limitation to provide for (i) a
merger, consolidation, purchase and assumption transaction, or otherwise of
Seller with and into one or more affiliates of Buyers (including an Assignee)
in which such one or more affiliates of Buyers is/are the surviving
corporations; (ii) a merger, consolidation, purchase and assumption
transaction, or otherwise of one or more affiliates of Buyers (including an
Assignee) with and into Seller, in which Seller is the surviving corporation,
or (iii) a conversion of Seller's charter to an alternative federal or state
charter type; provided, however, that no such change shall (A) alter or
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change the amount or kind of the consideration to be received by the
shareholders of Seller in the Transaction as a liquidating distribution, (B)
adversely affect, in the reasonable opinion of Seller, the tax treatment to
Seller shareholders, as generally described in Section 6.01(e) hereof, as a
result of receiving the Mercantile Common Stock as a liquidating distribution
in the Transaction or (C) materially impede or delay receipt of any approvals,
referred to in Section 6.01(b) or the consummation of the transactions
contemplated by this Agreement.
1.12 Definitions. For purposes of this Agreement, unless the context
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otherwise requires, the following terms will have the meanings applied to them
in this Section 1.12 and will include the plural as well as the singular.
Additional definitions may be found throughout this Agreement.
"Xxxx of Sale" means the document executed by an authorized
representative of Seller, by which Seller sells, assigns and conveys to
Mercantile-Arkansas or an Assignee all rights, title, and interests of Seller
in the Loans and other assets which are the subject of this Agreement.
"Collateral" means the real or personal property, guaranty, pledge or
other property, if any, securing a Loan.
"Collateral Document" means any and all of the agreements, certificates,
legal opinions or other documents or instruments in Seller's possession
relating to, or evidencing the Loan or obligation as obtained at the time of
its origination, if any, including, but not limited to, each deed of trust,
mortgage, assignment of production, security agreement, collateral agreement,
loan agreement, assumption agreement, modification agreement, appraisal,
insurance certificate, financial or operating statement, credit report,
lender's title insurance policy, engineering report, soil report,
environmental audit report, architect's certificate or other agreement or
document whether an original or copy or whether similar to those enumerated,
securing the performance or payment of any promissory note evidencing a Loan
included in this Transaction, and inuring to the benefit of the holder of the
promissory note.
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"Credit File" means all documents, excluding the promissory note,
renewals of the promissory note, and Collateral Documents, maintained by or in
the possession of Seller pertaining to any Loan included in this Transaction.
"Debtor" means any obligor, guarantor, or surety of, or any party liable
for, the performance of a Loan.
"Loans or Loans" means and includes (a) the obligations evidenced by
each promissory note included in the Transaction, including any amendments
and/or restatements thereof; (b) all rights, powers, liens or security
interests of Seller in or under any Collateral Document; (c) any judgments
founded upon a promissory note, to the extent attributable thereto, and any
lien arising therefrom, and (d) the proprietary interest of Seller in any
promissory note or the Collateral therefor, forming the subject matter of any
litigation (including, without limitation, any foreclosure) or bankruptcy to
which Seller is a party or claimant.
"Property or Properties" means each real property set forth in Schedule
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2.08(a) and includes all interests relating to such real property as set
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forth in Section 7.02(d).
"Schedule of Loans and Properties" means those documents containing a
full and complete list of all Loans and Properties, delivered by Seller at the
Closing, which sets forth the following concerning each Loan or Property, to
the extent applicable to such Loan or Property:
(a) Name of Debtor;
(b) Control Number;
(c) The unpaid principal balance of the Loan (exclusive of
unpaid accrued interest and other charges) and the amount of any unfunded
commitment as to a Loan;
(d) Street address of the Property or real property serving
as Collateral for a Loan (if applicable);
(e) Whether a mortgage Loan or a business Loan; and
(f) Whether, in the case of a mortgage Loan, the related
mortgage is other than a first lien on the mortgaged Property, and in the
case of a Property whether there are any liens on any such Property.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
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As an inducement to Buyers to enter into and perform their obligations
under this Agreement, and notwithstanding any examination, inspection, audit
or any other investigation made by Buyers, Seller (but not any officer,
director or stockholder of Seller in his or her individual capacity)
represents and warrants to and covenants with Buyers as follows:
2.01 Organization and Authority. Seller is a stock savings bank duly
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organized, validly existing and in good standing under the laws of the United
States, 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
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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. The deposits of Seller are insured up to applicable limits
by the Federal Deposit Insurance Corporation (the "FDIC") through the Savings
Association Insurance Fund ("SAIF"). True and complete copies of the Charter
and Bylaws of Seller, each as in effect on the date of this Agreement, are
attached hereto as Schedule 2.01.
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2.02 Subsidiaries. Schedule 2.02 sets forth, a complete and
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correct list of all of Seller's "Subsidiaries" (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC"), each a "Seller Subsidiary" and collectively the "Seller
Subsidiaries"), and all outstanding Equity Securities (as defined in Section
2.03) of each, all of which are owned directly or indirectly by Seller. All
of the outstanding shares of capital stock of the Seller Subsidiaries owned
directly or indirectly by Seller are validly issued, fully paid and
nonassessable and 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 other entity duly incorporated or organized and validly
existing under the laws of its jurisdiction of incorporation or organization,
and has corporate power and authority to own or lease its properties and
assets and to carry on its business as it is now being conducted. Each of the
Seller Subsidiaries is duly qualified to do business in each jurisdiction
where its ownership or leasing of property or the conduct of its business
requires it so to be qualified, except where the failure to so qualify would
not have a material adverse effect on the financial condition, results of
operations or business (collectively, the "Condition") of Seller and the
Seller Subsidiaries, taken as a whole. Except as may be set forth on
Schedule 2.02, and except for shares of stock of the Federal Home Loan Bank,
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neither Seller nor any Seller Subsidiary owns beneficially, directly or
indirectly, any shares of any class of Equity Securities or similar interests
of any corporation, bank, business trust, association or organization or any
interest in a partnership or joint venture of any kind.
2.03 Capitalization. The authorized capital stock of Seller consists
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of 1,000,000 shares of Seller Common Stock of which, as of June 30, 1995,
10,324 shares were issued and outstanding. Since June 30, 1995, no Equity
Securities of Seller have been issued. "Equity Securities" of an issuer means
capital stock or other equity securities of such issuer, options, warrants,
scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, shares of
any capital stock or other Equity Securities of such issuer, or contracts,
commitments, understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock or other Equity
Securities of such issuer, or options, warrants, scrip or rights to purchase,
acquire, subscribe to, calls on or commitments for any shares of its capital
stock or other Equity Securities. 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 validly issued, fully paid, and
nonassessable, and have not been issued in violation of any preemptive right
of any shareholder of Seller. Attached hereto as Schedule 2.03 is a current
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and accurate list of Seller's shareholders dated May 31, 1995.
2.04 Authorization.
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(a) Seller has the corporate power and authority to enter
into this Agreement and, subject to the approval of this Agreement by the
shareholders of Seller and Regulatory Authorities (as defined in Section
2.06), to carry out its obligations hereunder. The only shareholder vote
required for Seller to approve this Agreement is the affirmative vote of
the holders of at least two-thirds (2/3) of the outstanding shares of
Seller Common Stock entitled to vote at a meeting called for such
purpose. The execution, delivery and performance of this Agreement by
Seller and the consummation by Seller of the transactions contemplated
hereby in accordance with and subject to the terms of this Agreement have
been duly authorized by the
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Board of Directors of Seller. Subject to the approval of Seller's
shareholders and subject to the receipt of such approvals of the Regulatory
Authorities as may be required by statute or regulation, this Agreement is
a valid and binding obligation of Seller enforceable against Seller in
accordance with its terms.
(b) Neither the execution nor delivery nor performance by
Seller of this Agreement, nor the consummation by Seller of the
transactions contemplated hereby, nor compliance by Seller with any of
the provisions hereof, will (i) violate, conflict with, or result in a
breach of any provisions of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration of, or result in
the creation of, any Lien upon any of the properties or assets of Seller
or any of the Seller Subsidiaries under any of the terms, conditions or
provisions of (x) its articles of incorporation or charter, as the case
may be, or bylaws or (y) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to
which Seller or any of the Seller Subsidiaries is a party or by which it
may be bound, or to which Seller or any of the Seller Subsidiaries or any
of the properties or assets of Seller or any of the Seller Subsidiaries
may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in subsection (c) of this Section 2.04 violate
any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Seller or any of the Seller Subsidiaries or any
of their respective properties or assets, other than violations,
conflicts, breaches, defaults, terminations, accelerations or Liens which
would not have a material adverse effect on the Condition of Seller and
the Seller Subsidiaries, taken as a whole.
(c) Other than in connection or in compliance with the
provisions of the United States Code and the rules and regulations
thereunder, the Securities Act of 1933 and the rules and regulations
thereunder (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, authorizations, approvals or exemptions required under the BHCA,
the HOLA, the Federal Deposit Insurance Act (the "FDI Act"), or any
required approvals of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), the OTS, the Office of the
Comptroller of the Currency (the "OCC"), the FDIC, the Arkansas State
Bank Commissioner (the "Commissioner"), or other governmental agencies
or governing boards having regulatory authority over Seller or any Seller
Subsidiary, 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.
---------------------------
(a) Attached hereto as Schedule 2.05(a) are
----------------
copies of the following financial statements:
(i) Consolidated balance sheets of Seller as of
December 31, 1994 and 1993, related consolidated statements of
income, changes in shareholders' equity and cash flows for each of
the three (3) years in the period ended December 31, 1994, together
with the notes thereto, audited by Seller's independent auditors;
- 8 -
13
(ii) Unaudited consolidated balance sheets of Seller
as of June 30, 1995 and 1994 and related consolidated statements of
income for the six-month period ended June 30, 1995; and
(iii) The Consolidated Reports of Condition and Income
of Seller as of and for the years ended December 31, 1994, 1993 and
1992, as filed by Seller with the OTS and the FDIC.
(b) The financial statements referenced in Schedule 2.05(a)
----------------
are referred to collectively as the "Seller Financial Statements." The
Seller Financial Statements have been prepared in accordance with (i)
generally accepted accounting principles ("GAAP") as to financial
statements referenced in subsection (a)(i) above, (ii) GAAP (except for
any footnotes which may otherwise be required thereunder) as to financial
statements referenced in subsection (a)(ii) above, or (iii) regulatory
accounting principles as to the financial statements referenced in
subsection (a)(iii) above, consistently applied during the periods
involved, and present fairly the consolidated financial position of
Seller and the Seller Subsidiaries at the dates thereof and the
consolidated results of operations, changes in shareholders' equity, and
cash flows of Seller and the Seller Subsidiaries for the periods stated
therein.
(c) Seller and the Seller Subsidiaries have each prepared,
kept and maintained through the date hereof true, materially correct and
complete financial and other books and records of their affairs which
fairly reflect their respective financial conditions and results of
operations.
2.06 Seller Reports. Since June 30, 1995, each of Seller and the
--------------
Seller Subsidiaries has filed all material reports, registrations and
statements, together with any required material amendments thereto, that it
was required to file with any federal, state, municipal, or local government,
securities, banking, savings and loan, insurance and other governmental or
regulatory authority, and the agencies and staffs thereof (such entities being
referred to herein collectively as the "Regulatory Authorities" and
individually as a "Regulatory Authority"), having jurisdiction over the
affairs of it. All such reports and statements filed with any such Regulatory
Authority are collectively referred to herein as the "Seller Reports." As of
each of their respective dates, the Seller Reports complied in all material
respects with all the rules and regulations promulgated by the applicable
Regulatory Authority. With respect to Seller Reports filed with the
Regulatory Authorities, there is no unresolved violation, criticism or
exception by any Regulatory Authority with respect to any report or statement
filed by, or any examinations of, Seller or any of the Seller Subsidiaries.
2.07 Title to and Condition of Assets.
--------------------------------
(a) Except as may be reflected in the Seller Financial
Statements and with the exception of all "Real Property" (which is the
subject of Section 2.08 hereof), Seller and the Seller Subsidiaries have,
and at the Closing Date will have, good and marketable title to its owned
properties and assets, including, without limitation, those reflected in
the Seller Financial Statements (except those disposed of since the date
thereof), free and clear of any (i) Lien, except for Liens for taxes,
assessments or other governmental charges not yet delinquent or contested
in good faith in appropriate proceedings and in respect of which adequate
reserves have been established on the Seller Financial Statements and as
set forth or described, in each case, in the Seller Financial Statements
or any subsequent Seller Financial Statements delivered to Buyers prior
to the Effective Time; and (ii) defects in title and liens, charges and
encumbrances, if any, as do not materially interfere with the present or
proposed use of the property or asset subject
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14
thereto or affected thereby, or as do not otherwise materially impair the
business operations of Seller.
(b) No material properties or assets that are reflected as
owned by Seller or any of the Seller Subsidiaries in the Seller Financial
Statements as of June 30, 1995, have been sold, leased, transferred,
assigned or otherwise disposed of since June 30, 1995, except in the
ordinary course of business.
(c) All furniture, fixtures, vehicles, machinery and
equipment and computer software owned or used by Seller or the Seller
Subsidiaries, including any such items leased as a lessee, (taken as a
whole as to each of the foregoing with no single item deemed to be of
material importance) are in good working order and free of known defects,
subject only to normal wear and tear. The operation by Seller or the
Seller Subsidiaries of such properties and assets is in compliance in all
material respects with all applicable laws, ordinances and rules and
regulations of any governmental authority having jurisdiction over such
use.
2.08 Real Property.
-------------
(a) The legal description of each parcel of real property
owned by Seller or any of the Seller Subsidiaries (other than real
property acquired in foreclosure or in lieu of foreclosure in the course
of the collection of loans and being held by Seller or a Seller
Subsidiary for disposition as required by law) is set forth in Schedule
--------
2.08(a) under the heading "Owned Real Property" (such real property being
-------
herein referred to as the "Owned Real Property"). The legal description
of each parcel of real property leased by Seller or any of the Seller
Subsidiaries is also set forth in Schedule 2.08(a) under the heading
----------------
"Leased Real Property" (such real property being herein referred to as
the "Leased Real Property"). Collectively, the Owned Real Property and
the Leased Real Property is herein referred to as the "Real Property."
(b) There is no pending dispute involving Seller or any of
the Seller Subsidiaries as to the title of or the right to use any of the
Real Property.
(c) Neither Seller nor any of the Seller Subsidiaries has
any interest in any other real property except interests as a mortgagee,
and except for any real property acquired in foreclosure or in lieu of
foreclosure and being held for disposition as required by law.
(d) To the best knowledge of Seller, none of the buildings,
structures or other improvements located on the Real Property encroaches
upon or over any adjoining parcel of real estate or any easement or
right-of-way or "setback" line in any material respect and all such
buildings, structures and improvements are in all material respects
located and constructed in conformity with all applicable zoning
ordinances and building codes.
(e) None of the buildings, structures or improvements
located on the Owned Real Property are the subject of any official
complaint or notice by any governmental authority of violation of any
applicable zoning ordinance or building code, and there is no zoning
ordinance, building code, use or occupancy restriction or condemnation
action or proceeding pending, or, to the best knowledge of Seller,
threatened, with respect to any such building, structure or improvement.
The Owned Real Property is in generally good condition, ordinary wear and
tear excepted, and has been maintained in accordance with reasonable and
prudent business practices applicable to like facilities.
- 10 -
15
(f) Except as may be reflected in the Seller Financial
Statements or with respect to such easements, Liens, defects or
encumbrances as do not individually or in the aggregate materially
adversely affect the ordinary and customary use or value of the parcel of
Owned Real Property, Seller and the Seller Subsidiaries have, and at the
Closing Date will have, good and marketable title to their respective
Owned Real Properties.
2.09 Taxes. Seller and each Seller Subsidiary have timely filed or
-----
will timely file (including extensions) all material tax returns required to
be filed at or prior to the Closing Date ("Seller Returns"). Each of Seller
and the Seller 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 Seller Financial Statements 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 Seller Financial Statements. Neither Seller
nor any Seller Subsidiary has 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 or governmental charge are known to the
best knowledge of Seller to have been proposed, asserted or assessed
(tentatively or definitely) against any of Seller or any of the Seller
Subsidiaries which would not be covered by existing reserves. Neither Seller
nor any of the Seller Subsidiaries is materially delinquent in the payment of
any tax, assessment or governmental charge, nor 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 most recent federal and state income tax
returns of Seller and the Seller Subsidiaries that have been audited by the
Internal Revenue Service (the "IRS") or appropriate state tax authorities are
the returns filed prior to 1975, which audits have been completed and settled.
There is no present deficiency or refund litigation or, to the best knowledge
of Seller, matter in controversy with respect to Seller Returns. Neither
Seller nor any of the Seller Subsidiaries has extended or waived any statute
of limitations on the assessment of any tax due that is currently in effect.
2.10 Material Adverse Change. Since June 30, 1995, there has been no
-----------------------
material adverse change in the Condition of Seller and the Seller
Subsidiaries, taken as a whole, except as may have resulted or may result from
changes to laws and regulations, GAAP or regulatory accounting principles, or
interpretations thereof or changes in economic conditions (including interest
rates) applicable to Arkansas financial institutions generally.
2.11 Loans, Commitments and Contracts.
--------------------------------
(a) Schedule 2.11(a) contains a complete and accurate
----------------
listing as of the date hereof of all contracts entered into with respect
to deposits of $250,000 or more, by account, and all loan agreements and
commitments, notes, security agreements, repurchase agreements, bankers'
acceptances, outstanding letters of credit and commitments to issue
letters of credit, participation agreements, and other documents relating
to or involving extensions of credit and other commitments to extend
credit by Seller or any of the Seller Subsidiaries with respect to any
one entity or related group of entities in excess of $250,000, to which
any of the foregoing is a party or by which it is bound, by account, and,
where applicable, such other information as shall be necessary to
identify any related group of entities.
(b) Except for the contracts and agreements required to be
listed on Schedule 2.11(a) and the loans required to be listed on
----------------
Schedule 2.11(f), as of the date hereof neither Seller nor any of the
----------------
Seller Subsidiaries is a party to or is bound by any:
- 11 -
16
(i) agreement, contract, arrangement, understanding
or commitment with any labor union;
(ii) franchise or license agreement;
(iii) written employment, severance or termination
pay, agency, consulting or similar agreement or commitment in
respect of personal services;
(iv) any material agreement, arrangement or
commitment (A) not made in the ordinary course of business, or (B)
pursuant to which Seller or any of the Seller Subsidiaries is or
may become obligated to invest in or contribute capital to any
Seller Subsidiary other than pursuant to Seller Employee Plans (as
that term is defined in Section 2.19 hereof) and agreements
relating to joint ventures or partnerships set forth in Schedule
--------
2.02, true and complete copies of which have been furnished to
----
Buyers;
(v) any agreement, indenture or other instrument not
disclosed in the Seller Financial Statements relating to the
borrowing of money by Seller or any of the Seller Subsidiaries or
the guarantee by Seller or any of the Seller Subsidiaries of any
such obligation (other than trade payables or instruments related
to transactions entered into in the ordinary course of business by
Seller or any of the Seller Subsidiaries, such as deposits, Federal
Funds borrowings and repurchase and reverse repurchase agreements),
other than such agreements, indentures or instruments providing for
annual payments of less than $50,000;
(vi) any contract containing covenants which limit
the ability of Seller or any of the Seller Subsidiaries to compete
in any line of business or with any person or which involves any
restrictions on the geographical area in which, or method by which,
Seller or any of the Seller Subsidiaries may carry on their
respective businesses (other that as may be required by law or any
applicable Regulatory Authority);
(vii) any other contract or agreement which is a
"material contract" within the meaning of Item 601(b)(10) of
Regulation S-K as promulgated by the SEC to be performed after the
date of this Agreement that has not been filed or incorporated by
reference in the Seller Reports;
(viii) any lease with annual rental payments
aggregating $50,000 or more;
(ix) loans or other obligations payable or owing to
any officer, director or employee except (A) salaries, wages and
directors' fees incurred and accrued in the ordinary course of
business and (B) obligations due in respect of any depository
accounts maintained by any of the foregoing at the Seller or any of
the Seller Subsidiaries in the ordinary course of business;
(x) loans or debts payable or owing by any executive
officer or director of Seller or any of the Seller Subsidiaries or
any other person or entity deemed an "executive officer" or a
"related interest" of any of the foregoing, as such terms are
defined in Regulation O of the Federal Reserve Board;
- 12 -
17
(xi) other agreement, contract, arrangement,
understanding or commitment involving an obligation by Seller or
any of the Seller Subsidiaries of more than $50,000 and extending
beyond six months from the date hereof that cannot be cancelled
without cost or penalty upon notice of 30 days or less, other than
contracts entered into in respect of deposits, loan agreements, and
commitments, notes, security agreements, repurchase and reverse
repurchase agreements, bankers' acceptances, outstanding letters of
credit and commitments to issue letters of credit, participation
agreements and other documents relating to transactions entered
into by Seller or any of the Seller Subsidiaries in the ordinary
course of business and not involving extensions of credit with
respect to any one entity or related group of entities in excess of
$250,000.
(c) Seller and/or the Seller Subsidiaries carry property,
liability, products liability and other insurance coverage as set forth
in Schedule 2.11(c) under the heading "Insurance."
----------------
(d) True, correct and complete copies of the agreements,
contracts, leases, insurance policies and other documents referred to in
Schedules 2.11 (a), (b) and (c) have been or shall be furnished or made
-------------------------------
available to Buyers.
(e) To the best knowledge of Seller, each of the agreements,
contracts, leases, insurance policies and other documents referred to in
Schedules 2.11 (a), (b) and (c) is a valid, binding and enforceable
-------------------------------
obligation of the parties sought to be bound thereby, except as the
enforceability thereof against the parties thereto (other than Seller or
any of the Seller Subsidiaries) may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws now or hereafter in effect
relating to the enforcement of creditors' rights generally, and except
that equitable principles may limit the right to obtain specific
performance or other equitable remedies.
(f) Schedule 2.11(f) under the heading "Loans" contains a
----------------
true, correct and complete listing, as of the date of this Agreement, by
account, of (i) all loans in excess of $100,000 of the Seller or any of
the Seller Subsidiaries which have been accelerated during the past
twelve months; (ii) all loan commitments or lines of credit of Seller or
any of the Seller Subsidiaries in excess of $100,000 which have been
terminated by Seller or any of the Seller Subsidiaries during the past
twelve months by reason of default or adverse developments in the
condition of the borrower or other events or circumstances affecting the
credit of the borrower; (iii) all loans, lines of credit and loan
commitments in excess of $100,000 as to which Seller or any of the Seller
Subsidiaries has given written notice of its intent to terminate during
the past twelve months; (iv) with respect to all loans in excess of
$100,000 all notification letters and other written communications from
Seller or any of the Seller Subsidiaries to any of their respective
borrowers, customers or other parties during the past twelve months
wherein Seller or any of the Seller Subsidiaries has requested or
demanded that actions be taken to correct existing defaults or facts or
circumstances which may become defaults; (v) each borrower, customer, or
other party which has notified Seller or any of the Seller Subsidiaries
during the past twelve months of, or has asserted against Seller or any
of the Seller Subsidiaries, in writing, any "lender liability" or similar
claim, and, to the best knowledge of Seller, each borrower, customer or
other party which has given Seller or any of the Seller Subsidiaries any
oral notification of, or orally asserted against Seller or any of the
Seller Subsidiaries, any such claim; (vi) all loans in excess of $50,000
(A) that are contractually past due 90 days or more in the payment of
principal and/or interest, (B) that are on non-accrual status, (C) that
have been classified "doubtful," "substandard," "loss" or the equivalent
thereof by any Regulatory Authority, (D) for
- 13 -
18
which a reasonable doubt exists, in the reasonable judgment of Seller, as
to the timely future collectibility of principal and/or interest, whether
or not interest is still accruing or the loan is less than 90 days past
due, (E) for which 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, or (F) where a
specific reserve allocation exists in connection therewith; and (vii) all
loans or debts payable or owing by any executive officer or director of
Seller or any of the Seller Subsidiaries or any other person or entity
deemed an "executive officer" or a "related interest" of any of the
foregoing, as such terms are defined in Regulation O of the Federal
Reserve Board.
2.12 Absence of Defaults. Neither Seller nor any of the
-------------------
Seller Subsidiaries 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; to the best knowledge of Seller, 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 the Seller Subsidiaries, taken as a
whole; and to the best knowledge of Seller, all such agreements,
commitments, arrangements, leases, insurance policies and other
instruments will not be terminable by the other party solely as a
result of the consummation of the Transaction.
2.13 Litigation and Other Proceedings. Neither Seller
--------------------------------
nor any of the Seller Subsidiaries 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 the Seller
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 of the
Seller Subsidiaries or any of their respective officers or
directors by any shareholder of Seller or any of the Seller
Subsidiaries (or any former shareholder of Seller or any of the
Seller Subsidiaries) or involving claims under the Community
Reinvestment Act of 1977, as amended, the Bank Secrecy Act, the
fair lending laws or any other applicable laws.
2.14 Directors' and Officers' Insurance. Each of Seller
----------------------------------
and the Seller Subsidiaries has taken or will take all requisite
action (including without limitation the making of claims and the
giving of notices) pursuant to its directors' and officers'
liability insurance policy or policies in order to preserve all
rights thereunder with respect to all matters (other than matters
arising in connection with this Agreement and the transactions
contemplated hereby) occurring prior to the Effective Time that
are known to Seller, except for such matters which, individually
or in the aggregate, will not have and reasonably could not be
expected to have a material adverse effect on the Condition of
Seller and the Seller Subsidiaries, taken as a whole. Set forth
on Schedule 2.14 is a list of all insurance policies maintained
-------------
by or for the benefit of Seller or the Seller Subsidiaries as of
the date hereof for their directors, officers, employees or
agents.
2.15 Compliance with Laws.
--------------------
(a) To the best knowledge of Seller, Seller and
each of the Seller Subsidiaries have all material 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 respective properties and assets and to carry on their
- 14 -
19
respective businesses as presently conducted; 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; in each
case except for permits, licenses, authorizations, orders,
approvals, filings, applications and registrations the failure to
have (or have made) would not have a material adverse effect on
the Condition of Seller and the Seller Subsidiaries, taken as a
whole.
(b)(i) Each of Seller and the Seller 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 including without
limitation, in the case of Seller or any Seller Subsidiary that is
a bank or savings association, banking organization, banking
corporation or trust company, all statutes, rules, regulations and
policy statements pertaining to the conduct of a banking,
deposit-taking, lending or related business, or to the exercise of
trust powers) and governing instruments applicable to it and to
the conduct of its business, except where such failure to comply
would not be reasonably expected to have a material adverse effect
on the Condition of Seller and the Seller Subsidiaries, taken as a
whole, and (ii) neither Seller nor any of the Seller Subsidiaries
is in default under, and no event has occurred which, with the
lapse of time or notice or both, could result in the default under
the terms of any judgment, order, writ, decree, permit, or license
of any Regulatory Authority or court, whether federal, state,
municipal or local, and whether at law or in equity, except where
such default would not be reasonably expected to have a material
adverse effect on the Condition of Seller and the Seller
Subsidiaries, taken as a whole. Neither Seller nor any of the
Seller Subsidiaries 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 of the Seller
Subsidiaries) (A) that is contaminated by or contains any
hazardous waste, toxic substance, or related materials, including
without limitation asbestos, PCBs, pesticides, herbicides, and any
other substance or waste that is hazardous to human health or the
environment (collectively, a "Toxic Substance"), or (B) on which
any Toxic Substance has been stored, disposed of, placed or used
in the construction thereof; and which, in each case, could be
reasonably expected to have a material adverse effect on the
Condition of Seller and the Seller Subsidiaries, taken as a whole.
"Property" shall include all property (real or personal, tangible
or intangible) owned or controlled by Seller or any of the Seller
Subsidiaries, including without limitation property under
foreclosure. No claim, action, suit or proceeding is pending
against Seller or any of the Seller Subsidiaries relating to
Property of Seller or any of the Seller Subsidiaries before any
court or other Regulatory Authority or arbitration tribunal
relating to Toxic Substances, pollution or the environment, and
there is no outstanding judgment, order, writ, injunction, decree
or award against or affecting Seller or any of the Seller
Subsidiaries 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 of the Seller Subsidiaries which reasonably could be expected
to have a material adverse effect on the Condition of Seller and
the Seller Subsidiaries, taken as a whole.
(c) Since December 31, 1991, neither Seller nor
any of the Seller Subsidiaries has received any notification or
communication which has not been resolved from any Regulatory
Authority (i) asserting that any Seller or any of the Seller
Subsidiaries is not in substantial compliance with any of the
statutes, regulations or ordinances that such Regulatory Authority
enforces, except with respect to matters which reasonably could
not be expected to have a
- 15 -
20
material adverse effect on the Condition of Seller and the Seller
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 the Seller Subsidiaries, taken as a whole,
including without limitation such company's status as an insured
depository institution under the FDI Act, (iii) requiring or threatening
to require Seller or any of the Seller Subsidiaries, or indicating
that Seller or any of the Seller 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 the
Seller 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 of the Seller
Subsidiaries is required by Section 32 of the FDI Act to give
prior notice to any federal banking agency of the proposed
addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
2.16 Labor. No work stoppage involving Seller or any of the Seller
-----
Subsidiaries is pending or, to the best knowledge of Seller, threatened.
Neither Seller nor any of the Seller Subsidiaries 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 the
Seller Subsidiaries, taken as a whole. None of the employees of Seller or the
Seller Subsidiaries are represented by any labor union or any collective
bargaining organization.
2.17 Material Interests of Certain Persons. No officer or director
-------------------------------------
of Seller or any of the Seller Subsidiaries, or any "associate" (as such term
is defined in Rule 14a-1 under the Exchange Act) of any such officer or
director, has any interest in any contract or property (real or personal,
tangible or intangible), used in, or pertaining to the business of, Seller or
any of the Seller Subsidiaries, which in the case of Seller and each of the
Seller Subsidiaries would be required to be disclosed by Item 404 of
Regulation S-K promulgated by the SEC if such entity had a class of securities
registered under Section 12 of the Exchange Act.
2.18 Allowance for Loan and Lease Losses; Non-Performing Assets.
----------------------------------------------------------
(a) All of the accounts, notes, and other
receivables which are reflected in the Seller Financial Statements
as of June 30, 1995 were acquired in the ordinary course of
business and, to the best knowledge of Seller, as of June 30, 1995
were collectible in full in the ordinary course of business,
except for possible loan and lease losses which are adequately
provided for in the allowance for loan and lease losses reflected
in such Seller Financial Statements, and the collection experience
of Seller and the Seller Subsidiaries since June 30, 1995 to the
date hereof has not deviated in any material and adverse manner
from the credit and collection experience of the Seller and the
Seller Subsidiaries, taken as a whole, in the six months ended
June 30, 1995.
(b) The allowances for loan losses contained in
the Seller Financial Statements were established in accordance
with the past practices and experiences of Seller and the Seller
Subsidiaries, and the allowance for loan and lease losses shown on
the consolidated condensed balance sheet of Seller and the Seller
Subsidiaries as of June 30, 1995 were, in the aggregate, adequate
in all material respects under the requirements of GAAP to provide
for possible losses
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21
on loans and leases (including without limitation accrued interest
receivable) and credit commitments (including without limitation
stand-by letters of credit) as of the date of such balance sheet.
(c) Schedule 2.18(c) sets forth as of the date
----------------
of this Agreement all assets classified by Seller as real estate
acquired through foreclosure or repossession, including impaired
loans.
(d) The aggregate amount of all Nonperforming
Assets (as defined below) on the books of Seller and the Seller
Subsidiaries on a consolidated basis does not exceed $400,000.
"Nonperforming Assets" shall mean (i) all loans (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) that have
been classified "doubtful," "substandard," "loss," or the
equivalent thereof by any Regulatory Agency, (D) where a
reasonable doubt exists, in the reasonable judgment of Seller, as
to the timely future collectibility of principal and/or interest,
whether or not interest is still accruing or the loan is less than
90 days past due, (E) 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, or (F) where a specific reserve
allocation exists in connection therewith, and (ii) all assets
classified by Seller as real estate acquired through foreclosure
or repossession and other assets acquired through foreclosure or
repossession.
2.19 Employee Benefit Plans.
----------------------
(a) Schedule 2.19(a) lists all pension,
----------------
retirement, supplemental retirement, stock option, stock purchase,
stock ownership, savings, stock appreciation right, profit
sharing, deferred compensation, consulting, bonus, medical,
disability, workers' compensation, vacation, group insurance,
severance and other employee benefit, incentive and welfare
policies, contracts, plans and arrangements, and all trust
agreements related thereto, maintained by or contributed to by
Seller or any of the Seller Subsidiaries in respect of any of the
present or former directors, officers, or other employees of
and/or consultants to Seller or any of the Seller Subsidiaries
(collectively, "Seller Employee Plans"). Included in Schedule
--------
2.19(a) attached hereto with respect to each Seller Employee Plan
-------
are: (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 recently filed 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 IRS determination letter, if any.
(b) All Seller Employee Plans have been
maintained and operated in all material respects in accordance
with their terms and the requirements of all applicable statutes,
orders, rules and final regulations, including without limitation,
to the extent applicable, ERISA and the 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 Code has been determined to be so qualified by the IRS and
such determination letter may still be relied upon, and each
related trust is exempt from taxation under Section 501(a) of the
Code; (ii) the present value of
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22
all benefits vested and all benefits accrued under each Pension Plan
which is subject to Title IV of ERISA did not, in each case, as of the
last applicable annual valuation date (as indicated on Schedule 2.19(a)),
----------------
the value of the assets of the Pension Plan allocable to such vested or
accrued benefits; (iii) there has been no "prohibited transaction," as
such term is defined in Section 4975 of the Code or Section 406 of
ERISA, which could subject any Pension Plan or associated trust, or the
Seller or any of the Seller Subsidiaries, to any tax or penalty; (iv) no
Pension Plan or any trust created thereunder has been terminated, nor
has there been any "reportable events" with respect to any Pension Plan,
as that term is defined in Section 4043 of ERISA since January 1, 1987;
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.
(d) Neither Seller nor any of the Seller
Subsidiaries 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 of the Seller
Subsidiaries has any material liability under ERISA or the Code as
a result of its being a member of a group described in Sections
414(b), (c), (m) or (o) of the Code.
(f) Neither the execution nor delivery of this
Agreement, nor the consummation of any of the transactions
contemplated hereby, will (i) result in any payment (including
without limitation severance, unemployment compensation or golden
parachute payment) becoming due to any director or employee of
Seller or any of the Seller Subsidiaries from any of such
entities, (ii) 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. Seller shall use its
best efforts to ensure that no amounts paid or payable by Seller,
the Seller Subsidiaries, any Assignee or Buyers to or with respect
to any employee or former employee of Seller or any of the Seller
Subsidiaries will fail to be deductible for federal income tax
purposes by reason of Section 280G of the Code.
2.20 Conduct of Seller to Date. From and after June 30,
-------------------------
1995 through the date of this Agreement, except as set forth in
the 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)
neither Seller nor any of the Seller Subsidiaries has issued,
sold, granted, conferred or awarded any of its Equity Securities,
or any corporate debt securities which would be classified under
GAAP as long-term debt on the balance sheets of Seller or the
Seller Subsidiaries; (iii) Seller has not effected any stock split
or adjusted, combined, reclassified or otherwise changed its
capitalization; (iv) Seller has not declared, set aside or paid
any dividend (other than its regular quarterly 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 of the Seller
Subsidiaries has incurred any obligation or liability (absolute or
contingent), except 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 of the Seller Subsidiaries
has discharged or satisfied any Lien or paid any obligation or
liability (absolute or contingent), other than in the ordinary
course of business; (vii) neither Seller nor any of the Seller
Subsidiaries 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
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23
Seller nor any of the Seller Subsidiaries has (A) increased the rate of
compensation of, or paid any bonus to, any of its directors,
officers, or other employees, except in accordance with existing
policy, (B) entered into any new, or amended or supplemented any
existing, employment, management, consulting, deferred
compensation, severance, or other similar contract, (C) entered
into, terminated, or substantially modified any of the Seller
Employee Plans or (D) agreed to do any of the foregoing; (ix)
neither Seller nor any Seller Subsidiary has suffered any material
damage, destruction, or loss, whether as the result of fire,
explosion, earthquake, accident, casualty, labor trouble,
requisition, or taking of property by any Regulatory Authority,
flood, windstorm, embargo, riot, act of God or the enemy, or other
casualty or event, and whether or not covered by insurance; (x)
neither Seller nor any of the Seller Subsidiaries has cancelled or
compromised any debt, except for debts charged off or compromised
in accordance with the past practice of Seller and the Seller
Subsidiaries, and (xi) neither Seller nor any of the Seller
Subsidiaries has entered into any material transaction, contract
or commitment outside the ordinary course of its business.
2.21 Absence of Undisclosed Liabilities.
----------------------------------
(a) As of the date of this Agreement, neither
Seller nor any of the Seller Subsidiaries has any debts,
liabilities or obligations equal to or exceeding $25,000
individually or $50,000 in the aggregate, whether accrued,
absolute, contingent or otherwise and whether due or to become
due, which are required to be reflected in the Seller Financial
Statements or the notes thereto in accordance with GAAP except:
(i) liabilities and obligations
reflected on the Seller Financial Statements;
(ii) operating leases reflected on
Schedule 2.11; and
-------------
(iii) debts, liabilities or obligations
incurred since June 30, 1995 in the ordinary and usual course of
their respective businesses, none of which are for breach of
contract, breach of warranty, torts, infringements or lawsuits and
none of which have a material adverse effect on the Condition of
the Seller and the Seller Subsidiaries, taken as a whole.
(b) Neither Seller nor any of the Seller
Subsidiaries was as of June 30, 1995, and since such date to the
date hereof has become a party to, any contract or agreement which
affected, affects or may reasonably be expected to affect,
materially and adversely, the Condition of the Seller and the
Seller Subsidiaries, taken as a whole.
2.22 Proxy Statement, Etc. None of the information regarding Seller
---------------------
or any of the Seller Subsidiaries 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 Mercantile for the purpose of registering the shares of Mercantile
Common Stock to be issued in the liquidating distribution pursuant to the
provisions of this Agreement (the "Registration Statement"), (ii) the Proxy
Statement to be mailed to Seller's shareholders in connection with the meeting
to be called to consider the Transaction (the "Proxy Statement") or (iii) any
other documents to be filed with any Regulatory Authority in connection with
the transactions contemplated hereby will, at the respective times such
documents are filed with any Regulatory Authority and, in the case of the
Registration Statement, when it becomes effective and, with respect to the
Proxy Statement, when mailed, 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 in light of the circumstances in which they are made
not misleading or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto,
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24
at the time of the meeting of Seller's shareholders referred to in Section
5.03, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for such meeting.
All documents which Seller or any of the Seller Subsidiaries is responsible
for filing with any Regulatory Authority in connection with the Transaction
will comply as to form in all material respects with the provisions of
applicable law.
2.23 Registration Obligations. Neither Seller nor any of the Seller
------------------------
Subsidiaries is under any obligation, contingent or otherwise, which will
survive the Effective Time by reason of any agreement to register any
transaction involving any of its securities under the Securities Act.
2.24 Tax and Regulatory Matters. Neither Seller nor any of the
--------------------------
Seller Subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that could be reasonably expected to (i)
prevent the Transaction contemplated hereby from qualifying as a
reorganization within the meaning of Section 368 of the 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.
2.25 Brokers and Finders. Neither Seller nor any of the Seller
-------------------
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 Seller or any of the Seller
Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.
2.26 Interest Rate Risk Management Instruments. Neither Seller nor
-----------------------------------------
any of the Seller Subsidiaries are parties to, nor are any of their properties
or assets bound by, interest rate swaps, caps, floors and option agreements
and other interest rate risk management arrangements.
2.27 Accuracy of Information. The statements 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 as of the date hereof or as of the date delivered in all material
respects, and such statements and documents do not omit any material fact
necessary to make the statements contained therein not misleading.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYERS
---------------------------------------------------
As an inducement to Seller to enter into and perform its obligations
under this Agreement, and notwithstanding any examination, inspection, audit
or other investigation made by Seller, Buyers represent and warrant to and
covenant with Seller as follows:
3.01 Organization and Authority. Mercantile and Mercantile-Arkansas
--------------------------
each is a corporation duly organized, validly existing and in good standing
under the laws of the State of Missouri and Arkansas, respectively, qualified
to do business, and 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 each has corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted, except where
the failure to be so qualified would not have a material adverse effect on the
Condition of Mercantile and its Subsidiaries, taken as a whole. Mercantile is
registered as a savings and loan holding company with the OTS under the HOLA
and is registered as a bank holding company with the Federal Reserve Board
under the BHCA. Mercantile-Arkansas is registered as a bank holding
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25
company with the Federal Reserve Board under the BHCA. True and complete
copies of the Articles of Incorporation and Bylaws of Mercantile and
Mercantile-Arkansas, each in effect on the date of this Agreement, have been
provided to Seller.
3.02 Capitalization of Buyers. The authorized capital stock of
------------------------
Mercantile consists of (i) 100,000,000 shares of Mercantile Common Stock, of
which, as of August 31, 1995, 55,662,167 shares were outstanding and (ii)
5,000,000 shares of preferred stock, no par value ("Mercantile 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 and
outstanding. Mercantile has designated 1,000,000 shares of Mercantile
Preferred Stock as "Series A Junior Participating Preferred Stock" and has
reserved such shares under a Rights Agreement dated May 23, 1988 (the
"Mercantile Rights Agreement"), between Mercantile and Mercantile Bank of St.
Louis National Association, as Rights Agent. As of August 31, 1995,
Mercantile had reserved (i) 4,366,230 shares of Mercantile Common Stock for
issuance under the Mercantile stock option and incentive plans; (ii) 521,424
shares of Mercantile Common Stock for issuance upon the acquisition of First
Sterling Bancorp, Inc ("First Sterling") pursuant to the Agreement and Plan of
Merger dated July 24, 1995, by and between Mercantile, Mercantile
Bancorporation Incorporated of Illinois ("Mercantile-Illinois"), and First
Sterling; and (iii) 7,996,952 shares of Mercantile Common Stock for issuance
upon the acquisition of Hawkeye Bancorporation ("Hawkeye") pursuant to
Agreement and Plan of Merger dated as of August 4, 1995, by and between
Mercantile and Hawkeye. From August 31, 1995 through the date of this
Agreement, no Equity Securities of Mercantile have been issued (excluding the
number of shares disclosed in this Section 3.02 pursuant to the anticipated
consummation of the First Sterling, Metro, and Hawkeye acquisitions and any
shares of Mercantile Common Stock which may have been issued under Mercantile
stock option and incentive plans).
The authorized capital stock of Mercantile-Arkansas consists of 30,000
shares of common stock, $1.00 par value, of which, as of June 30, 1995, 30,000
shares were issued and outstanding.
Mercantile 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 them 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, Mercantile may, depending on market conditions
and other factors, otherwise determine to issue equity, equity-linked or other
securities for financing purposes. Notwithstanding the foregoing, Buyers will
not take any action that would (i) prevent the transactions contemplated
hereby from qualifying as a reorganization within the meaning of Section 368
of the 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, there are no other
Equity Securities of Buyers outstanding. All of the issued and outstanding
shares of Mercantile Common Stock are validly issued, fully paid, and
nonassessable, and have not been issued in violation of any preemptive right
of any shareholder of Mercantile. At the Effective Time, the Mercantile
Common Stock to be issued in the Transaction will be duly authorized, validly
issued, fully paid and nonassessable, and will not be issued in violation of
any preemptive right of any shareholder of Mercantile. No demand or
incidental registration rights exist, as of the date of this Agreement, that
would delay the filing or effectiveness of the Registration Statement.
3.03 Authorization.
-------------
(a) Buyers have the corporate power and
authority to enter into this Agreement and to carry out their
obligations hereunder. The execution, delivery and performance of
this Agreement by Buyers and the consummation by Buyers of the
transactions contemplated hereby have been duly authorized by all
requisite corporate action of Buyers. Subject to the receipt of
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26
such approvals of the Regulatory Authorities as may be required by
statute or regulation, this Agreement is a valid and binding
obligation of Buyers enforceable against Buyers in accordance with
its terms.
(b) Neither the execution, delivery and
performance by Buyers of this Agreement, nor the consummation by
Buyers of the transactions contemplated hereby, nor compliance by
Buyers 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 properties or assets of
Buyers under any of the terms, conditions or provisions of (x) its
Articles 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 Buyers, or
either of them, is a party or by which they, or either them, may
be bound, or to which Buyers or any of their respective properties
or assets may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in subsection (c) of this
Section 3.03, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to
Buyers or any of their respective properties or assets; other than
violations, conflicts, breaches, defaults, terminations,
accelerations or Liens which would not have a material adverse
effect on the Condition of Mercantile and its Subsidiaries, taken
as a whole.
(c) Other than in connection with or in
compliance with the provisions of the Title 12 of the United
States Code, the Securities Act, the Exchange Act, the securities
or blue sky laws of the various states or filings, consents,
reviews, authorizations, approvals or exemptions required under
the BHCA, the HOLA, the FDI 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 Buyers of
the transactions contemplated by this Agreement.
3.04 Mercantile Financial Statements. The supplemental consolidated
-------------------------------
balance sheets of Mercantile and its Subsidiaries as of December 31, 1994,
1993 and 1992 and related supplemental consolidated statements of income,
changes in shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1994, together with the notes thereto, audited
by KPMG Peat Marwick LLP, and the consolidated balance sheet of Mercantile and
its Subsidiaries as of June 30, 1995 and related consolidated statements of
income and cash flows for the six-month period ended June 30, 1995, as filed
with the SEC (collectively, the "Mercantile Financial Statements"), have been
prepared in accordance with GAAP, present fairly the consolidated financial
position of Mercantile and its Subsidiaries at the dates thereof and the
consolidated results of operations, changes in shareholders' equity and cash
flows of Mercantile and its Subsidiaries for the periods stated therein and
are derived from the books and records of Mercantile and its Subsidiaries,
which are complete and accurate in all material respects and have been
maintained in accordance with good business practices. Neither Mercantile nor
any of its Subsidiaries has any material contingent liabilities that are not
described in the Mercantile Financial Statements.
3.05 Mercantile Reports. Since January 1, 1992, each of Buyers and
------------------
their Subsidiaries has filed all reports, registrations and statements,
together with any required 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
"Mercantile Reports." As of its respective date, each Mercantile Report
complied in all material respects with all the rules and regulations
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27
promulgated by the applicable Regulatory Authority and did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.06 Material Adverse Change. Since June 30, 1995, there has been no
-----------------------
material adverse change in the Condition of Mercantile and its Subsidiaries,
taken as a whole, except as may have resulted or may result from changes to
laws and regulations, or interpretations thereto, or changes in economic
conditions, including interest rates, applicable to depository institutions
generally.
3.07 Legal Proceedings or Other Adverse Facts. There is no legal
----------------------------------------
action or other governmental proceeding or investigation pending or, to the
best knowledge of Buyers, threatened against Buyers or any of their
Subsidiaries that could prevent or adversely affect in a material manner or
seeks to prohibit the consummation of the transactions contemplated herein,
nor are Buyers or any of their Subsidiaries subject to any order of a court or
governmental authority having any such effect. To the best knowledge of
Buyers, there is no other fact that could prevent or adversely affect the
consummation of the transactions contemplated herein.
3.08 Registration Statement, Etc. None of the information regarding
----------------------------
Buyers or any of their Subsidiaries to be supplied by Buyers for inclusion or
included in (i) the Registration Statement, (ii) the Proxy Statement, or (iii)
any other documents to be filed with any Regulatory Authority in connection
with the transactions contemplated hereby will, at the respective times such
documents are filed with any Regulatory Authority and, in the case of the
Registration Statement, when it becomes effective and, with respect to the
Proxy Statement, when mailed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein not misleading or, in the case of the Proxy Statement
or any amendment thereof or supplement thereto, at the time of the meeting of
shareholders referred to in Section 5.03, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for such meeting. All documents which Buyers are is responsible for
filing with any Regulatory Authority in connection with the Transaction will
comply as to form in all material respects with the provisions of applicable
law.
3.09 Brokers and Finders. Neither Buyers 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
Buyers in connection with this Agreement or the transactions contemplated
hereby.
3.10 Accuracy of Information. The statements contained in this
-----------------------
Agreement, the Schedules and in any other written document executed and
delivered by or on behalf of Buyers pursuant to the terms of this Agreement
are true and correct in all material respects, and such statements and
documents do not omit any material fact necessary to make the statements
contained herein or therein not misleading.
3.11 Tax and Regulatory Matters. Neither Buyers nor any of their
--------------------------
Subsidiaries have taken or agreed to take any action or has any knowledge of
any fact or circumstance that would be reasonably expected to (i) prevent the
transactions contemplated hereby from qualifying as a reorganization within
the meaning of Section 368 of the 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.
3.12 Compliance with Laws. To the best knowledge of Buyers, Buyers
--------------------
and each of their Subsidiaries have all material 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
- 23 -
28
permit them to own or lease their respective properties and assets and to
carry on their respective businesses as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force
and effect and to the best knowledge of Buyers no suspension or cancellation
of any of them is threatened; and all such filings, applications and
registrations are current; in each case except for permits, licenses,
authorizations, orders, approvals, filings, applications and registrations the
failure to have (or have made) would not have a material adverse effect on the
Condition of Mercantile nor any of its Subsidiaries, taken as a whole.
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, Seller shall,
and shall cause each of the Seller Subsidiaries to, conduct their respective
businesses according to the ordinary and usual course consistent with past
practices and shall, and shall cause each such Seller 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 of Seller. Except as set forth in Schedule 4.02
---------------------- -------------
and except to the extent required by law, regulation or Regulatory Authority,
or with the prior written consent of Buyers, during the period from the date
of this Agreement to the Effective Time, Seller shall not and shall not permit
any of the Seller Subsidiaries to:
(a) declare, set aside or pay any dividends or
other distributions, directly or indirectly, in respect of its
capital stock (other than dividends from any of the Seller
Subsidiaries to Seller or to another of the Seller Subsidiaries),
except that Seller may declare and pay its regular annual cash
dividends of not more than $6.00 per share on the Seller Common
Stock. For any partial year after 1995, Seller shall be permitted
to declare and pay dividends equal to $1.50 per share on the
Seller Common Stock for each full calendar quarter ending prior to
the Effective Time;
(b) enter into or amend any employment,
severance or similar agreement or arrangement with any director,
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 (i) normal individual increases in compensation
(including bonus payments) to employees consistent with past
practice, (ii) as required by law or contract and (iii) such
increases of which Seller notifies Buyers in writing and which
Buyers do not disapprove within 10 days of the receipt of such
notice;
(c) authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter into an
agreement in principle with respect to, any merger, consolidation
or business combination, any acquisition of a material amount of
assets or securities, any disposition of a material amount of
assets or securities (other than the Transaction) or any release
or relinquishment of any material contract rights;
(d) propose or adopt any amendments to its
articles of incorporation, association or other charter document
or bylaws;
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29
(e) issue, sell, grant, confer or award any of
its Equity Securities or effect any stock split or adjust,
combine, reclassify or otherwise change its capitalization as it
existed on the date of this Agreement;
(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;
(g)(i) without first consulting with Buyers, 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 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 $400,000 with respect to commercial transactions
(including commercial construction transactions), $350,000 with
respect to residential transactions, or in any amount which, when
aggregated with any and all loans or credit commitments of Seller
and the Seller Subsidiaries to such person or entity, would be in
excess of $350,000; (ii) without first obtaining the written
consent of Buyers, Lend to any person or entity in an amount in
excess of $500,000 or in any amount which, or when aggregated with
any and all loans or credit commitments of Seller and the Seller
Subsidiaries to such person or entity, would be in excess of
$750,000; (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 (i) and (iii) Seller or any of the Seller
Subsidiaries may make any such loan in the event (A) Seller or any
Seller Subsidiary has delivered to Buyers or their designated
representative a notice of Seller's or Seller Subsidiaries'
intention to make such loan and such information as Buyers or
their designated representative may reasonably require in respect
thereof, and (B) Buyers or their 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 Buyers or their designated
representative of the notice of intention and information as
aforesaid; or (iv) Lend to any 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 of
the Seller Subsidiaries (except those denoted "pass" thereon), in
an amount in excess of $100,000; 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 or, with respect to loans described
in clause (i) above, making such loans after consulting with
Buyers. Notwithstanding clauses (i) and (ii) of this Section
4.02(g), Seller shall be authorized without first consulting with
Buyers or obtaining Buyers' 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
shall not be in excess of the lesser of five percent (5%) of such
Pre-Existing Facilities or $25,000;
(h) directly or indirectly (including through
its officers, directors, employees or other representatives) (i)
initiate, solicit or encourage any discussions, inquiries or
proposals with any third party (other than Buyers) relating to the
disposition of any significant portion of the business or assets
of Seller or any of the Seller Subsidiaries or the acquisition of
Equity Securities of Seller or any of the Seller Subsidiaries or
the merger of Seller or any of the Seller Subsidiaries with any
person (other than Buyers) or any similar transaction (each such
transaction being referred to herein as an "Acquisition
Transaction"), or (ii) 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 Buyers
orally of all the relevant details relating to
- 25 -
30
all inquiries, indications of interest and proposals which it may receive
with respect to any Acquisition Transaction;
(i) take any action that would (A) materially
impede or delay the consummation of the transactions contemplated
by this Agreement or the ability of Buyers 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 or impede the
transactions contemplated hereby from qualifying as a
reorganization within the meaning of Section 368 of the Code;
(j) other than in the ordinary course of
business consistent with past practice, incur any indebtedness for
borrowed money or assume, guarantee, endorse or otherwise as an
accommodation become responsible or liable for the obligations of
any other individual, corporation or other entity;
(k) materially restructure or change its
investment securities portfolio, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or
reported;
(l) agree in writing or otherwise to take any of
the foregoing actions or engage in any activity, enter into any
transaction or intentionally 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; or
(m) enter into, increase or renew any loan or
credit commitment (including standby letters of credit) to any
executive officer or director of Seller or any of the Seller
Subsidiaries, any Seller shareholder, or any entity controlled,
directly or indirectly, by any of the foregoing or engage in any
transaction with any of the foregoing which is of the type or
nature sought to be regulated in 12 U.S.C. Sec. 371c and 12 U.S.C.
Sec. 371c-1, without first obtaining the prior written consent of
Buyers, which consent shall not be unreasonably withheld. For
purposes of this subsection (m), "control" shall have the meaning
associated with that term under 12 U.S.C. Sec. 371c.
4.03 Forbearances of Buyers. During the period from the date of this
----------------------
Agreement to the Closing Date, Buyers shall not, and shall not permit any of
their respective Subsidiaries to, without the prior written consent of Seller,
agree in writing or otherwise engage in any activity, enter into any
transaction or take or omit to take any other action:
(a) that would (i) materially impede or delay
the consummation of the transactions contemplated by this
Agreement or the ability of Buyers 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 (ii) prevent the transactions
contemplated hereby from qualifying as a reorganization within the
meaning of Section 368 of the Code; or
(b) which would make any of the representations
and warranties of Article III 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 action.
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31
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
5.01 Access and Information. Buyers and Seller shall each afford to
----------------------
the 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 the other may reasonably request. Each party
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 and its Subsidiaries which
is not otherwise public knowledge, (B) in the event of a termination of this
Agreement, return all documents (including copies thereof) obtained hereunder
from the other party or any of its Subsidiaries to it and (C) use their
respective best efforts to cause all of such party's confidential information
obtained pursuant to this Agreement or in connection with the negotiation of
this Agreement to be treated as confidential and not use, or knowingly permit
others to use, any such information unless such information becomes generally
available to the public.
5.02 Registration Statement; Regulatory Matters.
------------------------------------------
(a) Mercantile 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 with respect to the shares of Mercantile
Common Stock to be issued in the Transaction and shall use their
best efforts to cause the Registration Statement to become
effective as soon as reasonably practicable, consistent with the
date of the meeting of the Seller's shareholder referenced in
Section 5.03 hereof. Buyers shall prepare and, subject to the
review and consent of Seller with respect to matters relating to
Seller, file as soon as is reasonably practicable an application
for approval of the Transaction with the Federal Reserve Board,
the OCC, the OTS, FDIC, the Commissioner, and such other
Regulatory Authorities as may be required by applicable law.
Buyers 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 the Seller
Subsidiaries shall furnish Buyers all information concerning
Seller and the Seller Subsidiaries and the shareholders thereof as
Buyers may reasonably request in connection with any such action.
As soon as is reasonably practicable under applicable regulations,
Mercantile will apply to list on the NYSE the shares of Mercantile
Common Stock to be issued in the Transaction.
(b) Seller and Buyers 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 Buyers, to consummate such
other transactions by and among Buyers' Subsidiaries and the
Seller or the Seller Subsidiaries concurrently with or following
the Effective Time, provided that such actions do not materially
--------
impede or delay (i) the receipt of any approval referred to in
Section 6.01(b) or (ii) the consummation of the transactions
contemplated by this Agreement.
5.03 Shareholder Approval. Seller shall call a meeting of its
--------------------
shareholders to be held as soon as practicable after the date that the
Registration Statement is declared effective by the SEC for the
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32
purpose of voting upon the Transaction. In connection with such meeting,
Mercantile shall prepare, subject to the review and consent of Seller, the
Proxy Statement (which shall be part of the Registration Statement to be filed
with the SEC by Mercantile) and mail the same to the shareholders of Seller.
The Board of Directors of Seller shall submit for approval of Seller's
shareholders the matters to be voted upon at such meeting. The Board of
Directors of Seller hereby does and will recommend this Agreement and the
transactions contemplated hereby to shareholders of Seller and use its
reasonable best efforts to obtain any vote of Seller's shareholders necessary
for the approval and adoption of this Agreement.
5.04 Current Information. During the period from the date of this
-------------------
Agreement to the Effective Time, Mercantile and Seller shall promptly furnish
the other with copies of all interim financial statements as the same become
available and shall cause one or more of its designated representatives to
confer on a regular and frequent basis with representatives of the other
party. Mercantile and Seller shall promptly notify the other party of the
following events immediately upon learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken by the affected
party with respect thereto: (a) an event which would cause any representation
or warranty of such party or any Schedule, statement, report, notice,
certificate or other writing furnished by such party to be untrue or
misleading in any material respect, (b) any material adverse change in the
Condition of it and its Subsidiaries, taken as a whole, (c) the issuance or
commencement of any governmental complaint, investigation or hearing (or any
communication indicating that the same may be contemplated), or (d) the
institution or threat of material litigation involving such party, and shall
keep the other party fully informed of such events.
5.05 Conforming Entries.
------------------
(a) Notwithstanding that Seller believes that
Seller and Seller Subsidiaries have established all reserves and
taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, Seller recognizes that
Mercantile 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 Mercantile shall
consult and cooperate in good faith with each other with respect
to conforming the loan, accrual and reserve policies of Seller and
the Seller Subsidiaries to those policies of Mercantile, 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 Mercantile shall
consult and cooperate in good faith 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 Transaction, as specified in each case in
writing to Seller, based upon such consultation and as hereinafter
provided.
(c) Seller and Mercantile shall consult and
cooperate in good faith with each other with respect to
determining, as specified in a written notice from Mercantile 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 Transaction and the
restructuring charges related to or to be incurred in connection
with the Transaction.
(d) Subject to the language contained in the
second sentence hereof, at the request of Mercantile-Arkansas,
Seller shall (i) establish and take such reserves and accruals to
conform Seller's loan, accrual and reserve policies to
Mercantile's policies, and (ii) establish and
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33
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 Transaction and
restructuring charges related to or to be incurred in connection with the
Transaction, in each case at such times as are reasonably requested by
Mercantile-Arkansas in a written notice to Seller. It is the objective
of Mercantile-Arkansas and Seller that such reserves, accruals and
charges referred to in this Section 5.05 shall be taken as of or
immediately prior to December 31, 1995, and, in all events not later than
as of immediately prior to the Closing Date, provided, however, that
-------- -------
if such reserves, accruals, and charges are to be taken as of or
immediately prior to December 31, 1995 and the Closing Date is to
occur thereafter, Mercantile-Arkansas shall certify to Seller on
or prior to December 31, 1995 that the Regulatory Authority
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 Mercantile 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.
5.06 Environmental Reports. Seller shall provide to Mercantile, as
---------------------
soon as reasonably practical, but not later than sixty (60) 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 Seller Subsidiaries as
of the date hereof (but excluding space in retail and similar establishments
leased by Seller 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 Seller
Subsidiaries after the date hereof (but excluding space in retail and similar
establishments leased by Seller for automatic teller machines or bank branch
facilities where the space leased comprises less that 20% of the total space
leased to all tenants of such property). If required by the phase one
investigation, in Mercantile's reasonable opinion, Seller shall provide to
Mercantile a report of a phase two investigation on properties requiring such
additional study. Mercantile 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. Should the cost of taking
all remedial or other corrective actions and measures (i) required by
applicable law, or (ii) recommended or suggested by such report or reports or
prudent in light of serious life, health or safety concerns, in the aggregate,
exceed the sum of $250,000, as reasonably estimated by an environmental expert
retained for such purpose by Mercantile, or if the cost of such actions and
measures cannot be so reasonably estimated by such expert to be such amount or
less with any reasonable degree of certainty, Buyers, after providing written
notice of its 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
Buyers, all such remedial or other corrective actions and measures (the cost
of which shall not exceed $250,000), shall have the right pursuant to Section
8.01(f) hereof to terminate this Agreement, which shall be Buyers' sole remedy
in such event.
5.07 Agreements of Affiliates. Set forth as Schedule 5.07 is a
------------------------ -------------
list (which includes individual and beneficial ownership) of all persons whom
Seller believes to be "affiliates" of Seller for purposes of Rule 145 under
the Securities Act. Seller shall cause each person who is identified as an
"affiliate" to deliver to Buyers, as of the date hereof, or as soon as
practicable hereafter, a written agreement in substantially the form set forth
as Exhibit D to this Agreement providing that each such person will agree
---------
not to sell, pledge, transfer or otherwise dispose of any shares of Mercantile
Common Stock to be received by such person in the Transaction except in
compliance with the applicable provisions of the Securities Act and until such
time as financial results covering at least thirty (30) days of combined
operations of Mercantile and Seller shall have been published. Prior to the
Effective Time, and via letter,
- 29 -
34
Seller shall amend and supplement Schedule 5.07 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 5.07.
5.08 Expenses. Each party hereto shall bear its own expenses
--------
incident to preparing, entering into and carrying out this Agreement and to
consummating the Transaction; provided, however, that any and all fees and
-------- -------
expenses paid by Seller to the Rose Law Firm and/or other legal counsel
representing Seller in the transactions contemplated by this Agreement shall
not exceed in the aggregate the amount of $100,000; provided further,
-------- -------
however that Mercantile-Arkansas shall pay all printing and mailing expenses
and filing fees associated with the Registration Statement, the Proxy
Statement and regulatory applications.
5.09 Miscellaneous Agreements.
------------------------
(a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously
as possible, including without limitation using its respective
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 Subsidiaries to, use its
best efforts to obtain consents of all third parties and
Regulatory Authorities necessary or, in the opinion of Mercantile,
desirable for the consummation of the transactions contemplated by
this Agreement.
(b) Seller, prior to the Effective Time, shall
(i) consult and cooperate with Mercantile regarding the
implementation of those policies and procedures established by
Mercantile for its governance and that of its Subsidiaries and not
otherwise referenced in Section 5.05 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
Mercantile, conform Seller's existing policies and procedures in
respect of such matters to Mercantile's policies and procedures
or, in the absence of any existing Seller policy or procedure
regarding any such function, introduce Mercantile'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.
5.10 Employee Agreements and Benefits.
--------------------------------
(a) As soon as practicable following the
Effective Time, Mercantile-Arkansas shall (i) afford to Seller's
employees employee benefits substantially similar to those
presently afforded the employees of Mercantile and its
Subsidiaries who are similarly situated, and (ii) honor in
accordance with their terms all employment, severance and other
compensation contracts set forth on Schedule 5.10 between
-------------
Seller, any of the Seller Subsidiaries, and any current or former
director, officer, employee or agent thereof, and all provisions
for vested benefits or other vested amounts earned or accrued
through the Effective Time under the Seller Employee Plans.
(b) The provisions of any plan, program or
arrangement providing for the issuance or grant of any other
interest in respect of the Equity Securities of Seller or any of
the Seller Subsidiaries shall be deleted and terminated as of the
Effective Time.
- 30 -
35
(c) Except as set forth in Section 5.10(b)
hereof, the Seller Employee Plans shall not be terminated by
reason of the Transaction but shall continue thereafter as plans
of Mercantile-Arkansas until such time as the employees of the
Seller and the Seller Subsidiaries are integrated into
Mercantile's employee benefit plans that are available to other
employees of Mercantile and its Subsidiaries, subject to the terms
and conditions specified in such plans and to such changes therein
as may be necessary to reflect the consummation of the
Transaction. Mercantile-Arkansas shall take such steps as are
necessary or required to integrate the employees of Seller and the
Seller Subsidiaries in Mercantile's employee benefit plans
available to other employees of Mercantile and its 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. Mercantile also
shall execute the letter agreements listed on Schedule 5.10(c) hereof.
----------------
5.11 Press Releases. Except as may be required by law, Seller and
--------------
Buyers 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.
5.12 State Takeover Statutes. Seller will take all steps necessary
-----------------------
to exempt the transactions contemplated by this Agreement and any agreement
contemplated hereby from, and if necessary challenge the validity of, any
applicable state takeover law.
5.13 Directors' and Officers' Indemnification. Buyers agree that the
----------------------------------------
Transaction shall not affect or diminish any of the duties and obligations of
indemnification of the Seller or any of the Seller Subsidiaries existing as of
the Effective Time in favor of employees, agents, directors or officers of
Seller or any of the Seller Subsidiaries arising by virtue of its Charter 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 Transaction) otherwise survive and continue in full force
and effect. To the extent that Seller's existing directors' and officers'
liability insurance policy would provide coverage for any action or omission
occurring prior to the Effective Time, Seller agrees to give proper notice to
the insurance carrier and to Mercantile of a potential claim thereunder so as
to preserve Seller's rights to such insurance coverage. Mercantile represents
that the directors' and officers' liability insurance policy maintained by it
provides for coverage of "prior acts" for directors and officers of entities
acquired by Mercantile including Seller and the Seller Subsidiaries on and
after the Effective Time.
5.14 Tax Opinion Certificates. Seller shall cause such of its
------------------------
executive officers, directors and/or holders of one percent (1%) or more of
the Seller Common Stock (including shares beneficially held) as may be
requested by Xxxxxxxx & Xxxxxxxx to timely execute and deliver to Xxxxxxxx &
Xxxxxxxx certificates substantially in the form of Exhibit C or Exhibit D
--------- ---------
hereto, as the case may be.
5.15 Best Efforts to Insure Pooling. Each of Buyers and Seller
------------------------------
undertakes and agrees to use its best efforts to cause the Transaction to
qualify for pooling-of-interests accounting treatment.
5.16 Surrender of Charter. As soon as practicable following
--------------------
consummation of the Transaction, an appropriate representative of Seller shall
surrender the charter of Seller to the OTS.
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36
5.17 Escrow Account. Contemporaneously with the Closing, Seller
--------------
shall deposit with an escrow agent (the "Escrow Agent"), which shall be
selected by Mercantile, such funds as Mercantile shall reasonably determine
are necessary to provide for (i) any payments to dissenters pursuant to
Section 1.07 hereof and (ii) any and all claims incurred in connection with
preparing for, entering into and carrying out this Agreement or the
consummation of the Transaction (collectively, the "Obligations"). Upon
payment of the Obligations, the Escrow Agent shall remit to
Mercantile-Arkansas or an Assignee any funds remaining in the escrow account.
Seller hereby agrees to execute an escrow agreement in a form approved by
Buyers and that Seller, upon transfer of the funds to the Escrow Agent, shall
have no further claim or right to or interest in such funds.
ARTICLE VI
CONDITIONS
----------
6.01 Conditions to Each Party's Obligation To Effect the Transaction.
---------------------------------------------------------------
The respective obligations of each party to effect the Transaction 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 shareholders of Seller at the meeting of
shareholders called pursuant to Section 5.03 of this Agreement,
and fewer than 8% of the total number of shares of Seller Common
Stock that were issued and outstanding on the date of this
Agreement shall have exercised their rights pursuant to 12 C.F.R.
Section 552.14.
(b) All requisite approvals of this Agreement
and the transactions contemplated hereby shall have been received
from the Regulatory Authorities, and all waiting periods after
such approvals required by law or regulation shall have been
satisfied.
(c) The Registration Statement shall have been
declared effective and shall not be subject to a stop order or any
threatened stop order. The shares of Mercantile Common Stock to
be issued in the Transaction shall have been listed on the NYSE.
(d) Neither Seller nor Buyers shall be subject
to any order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the consummation
of the Transaction.
(e) Each of Buyers and Seller shall have
received from Xxxxxxxx & Xxxxxxxx an opinion (which opinion shall
not have been withdrawn at or prior to the Effective Time)
reasonably satisfactory in form and substance to it to the effect
that the Transaction will constitute a reorganization within the
meaning of Section 368 of the Code and to the effect that, as a
result of the Transaction, except with respect to fractional share
interests, holders of Seller Common Stock who receive Mercantile
Common Stock in the Transaction will not recognize gain or loss
for federal income tax purposes, the basis of such Mercantile
Common Stock will equal the basis of the Seller Common Stock for
which it is exchanged, and the holding period of such Mercantile
Common Stock will include the holding period of the Seller Common
Stock for which it is exchanged, assuming that such Seller Common
Stock is a capital asset in the hands of the holder thereof at the
Effective Time.
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37
6.02 Conditions to Obligations of Seller To Effect the Transaction.
-------------------------------------------------------------
The obligations of Seller to effect the Transaction 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 Buyers 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, (ii) where the
facts which caused the failure of any representation or warranty
to be so true and correct have not resulted, and are not likely to
result, in a material adverse effect on the Condition of
Mercantile and its Subsidiaries, taken as a whole (for purposes
hereof changes to laws and regulations, generally accepted or
regulatory accounting principles, or interpretations thereof, or
changes in economic conditions, including interest rates
applicable to commercial banking institutions generally shall not
be taken into account) and (iii) for the effect of transactions
contemplated by this Agreement), and Seller shall have received a
certificate of the Group President-Emerging Markets of Mercantile,
signing solely in his capacity as an officer of Mercantile, to
that effect.
(b) Performance of Obligations. Buyers 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 Group
President-Emerging Markets of Mercantile, signing solely in his
capacity as an officer of Mercantile, to that effect.
(c) Permits, Authorizations, Etc. Buyers
-----------------------------
shall have obtained any and all material permits, authorizations,
consents, waivers and approvals required for the lawful
consummation of the Transaction.
(d) No Material Adverse Change. Since the
--------------------------
date of this Agreement, there shall have been no material adverse
change to the Condition of Mercantile and its Subsidiaries, taken
as a whole, except as may have resulted from changes to laws and
regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in economic
conditions, including interest rates, applicable to financial
institutions generally.
(e) Opinion of Counsel. Buyers shall have
------------------
delivered to Seller an opinion of Buyers' counsel dated as of the
Closing Date or a mutually agreeable earlier date in substantially
the form set forth as Exhibit E to this Agreement.
---------
6.03 Conditions to Obligations of Buyers To Effect the Transaction.
-------------------------------------------------------------
The obligations of Buyers to effect the Transaction 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 in respect of a
specific period of time, as in the case of the representations and
warranties contained in Sections 2.20 and 2.21 hereof, (ii) where
the facts which caused the failure of any representation or
warranty to be so true and correct have not resulted, and are not
reasonably likely to result, in a material adverse effect on the
Condition of Seller and the Seller Subsidiaries, taken as a whole
(for purposes hereof changes to laws and
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38
regulations, generally accepted or regulatory accounting principles, or
interpretations thereof, or changes in economic conditions (including
interest rates) applicable to Arkansas financial institutions generally
shall not be taken into account) and (iii) for the effect of
transactions contemplated by this Agreement), and Buyers shall
have received a certificate of the President and the Chief
Financial Officer of Seller, acting solely in their capacities as
officers 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 Buyers shall have received a certificate of the
President and the Chief Financial Officer of Seller, acting solely
in their capacities as officers of Seller, to that effect.
(c) Permits, Authorizations, Etc. Seller
-----------------------------
shall have obtained any and all material permits, authorizations,
consents, waivers and approvals required for the lawful
consummation by it of the Transaction.
(d) No Material Adverse Change. Since the
--------------------------
date of this Agreement, there shall have been no material adverse
change to the Condition of Seller and the Seller Subsidiaries,
taken as a whole, except as may have resulted from changes to laws
and regulations, generally accepted or regulatory accounting
principles, or interpretations thereof, or changes in economic
conditions, including interest rates, applicable to financial
institutions generally.
(e) Opinion of Counsel. Seller shall have
------------------
delivered to Buyers an opinion of the Rose Law Firm, Seller's
counsel, dated as of the Closing Date or a mutually agreeable
earlier date in substantially the form set forth as Exhibit F to
---------
this Agreement.
(f) Opinion of KPMG Peat Marwick LLP. Buyers
--------------------------------
shall have received an opinion of KPMG Peat Marwick LLP,
satisfactory in form and substance to Buyers, that the Transaction
will qualify for pooling of interests accounting treatment, which
opinion shall not have been withdrawn at or prior to the Effective
Time.
(g) Affiliate Agreements. Buyers shall have
---------------------
received from each of the affiliates of Seller an executed
Affiliate Agreement substantially in the form set forth as
Exhibit A to this Agreement.
---------
(h) Other Documents. Buyers shall have
----------------
received from Seller all additional documents as shall be
necessary, in the reasonable opinion of Buyers, to consummate the
Transaction and carry out the intent and purposes of this
Agreement, including, but not limited to, those additional
documents specified in Article VII hereof.
ARTICLE VII
CLOSING
-------
7.01 Closing. Unless this Agreement shall have been terminated or
-------
abandoned pursuant to the provisions of Section 8.01 hereof, the Closing shall
be held at the time and the place set forth in Section 1.02 hereof, or such
other place as Buyers and Seller shall agree.
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39
7.02 Deliveries at Closing.
---------------------
(a) At the Closing, all documents and instruments to be
executed and delivered hereunder by Buyers shall be duly and validly
executed and delivered by Buyers to Seller.
(b) At the Closing, Seller shall transfer and assign to
Mercantile-Arkansas, and Mercantile-Arkansas or an Assignee shall purchase
and assume, all of the assets, liabilities, obligations,
responsibilities, duties, rights, properties, privileges, powers or
franchises as referred to herein, and the other agreements to be executed
and delivered hereunder by Seller shall be duly and validly executed and
delivered by Seller to Mercantile-Arkansas or an Assignee.
(c) At the Closing, Seller shall deliver to
Mercantile-Arkansas or an Assignee, as Mercantile-Arkansas may direct, in
form reasonably satisfactory to counsel for Mercantile-Arkansas:
(i) a separate warranty deed for each of
the owned bank premises being purchased hereunder;
(ii) commitments for owners title
insurance for the owned bank premises being purchased hereunder;
(iii) a separate assignment of all leases,
contracts and agreements relating to each Property;
(iv) a separate assignment of each of the
leased bank premises being assigned hereunder;
(v) a Xxxx of Sale with respect to the
fixtures, furniture and equipment being purchased hereunder;
(vi) a Xxxx of Sale with respect to the
promissory notes constituting a part of the Loans and of all liens
and security interests securing such promissory notes;
(vii) duly executed security agreements
and such financing statements, deeds of trust, mortgages and such
other documents as may be necessary or desirable for
Mercantile-Arkansas or an Assignee to perfect any security
interest being assigned hereunder;
(viii) each note and known original
Collateral Document in its possession affecting a Loan in the
Transaction, together with the contents of each Credit File
affecting a Loan in the Transaction;
(ix) a separate endorsement thereon of
each of the promissory notes constituting a part of the Loans and
an assignment of all documents related to such assigned promissory
notes and of all liens and security interests securing such
promissory notes;
(x) for each Loan, letters (or copies
thereof) addressed to the Debtor, or its successors or assigns,
duly executed, notifying them of the sale of such Loan to
Mercantile-Arkansas or an Assignee and directing them to make all
future payments
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40
thereunder and deliver any future notices to the order of
Mercantile-Arkansas or an Assignee;
(xi) for each Property, an assignment and
assumption of leases, duly executed and acknowledged in recordable
form, assigning to Mercantile-Arkansas or an Assignee all of
Seller's right, title and interest in and to the applicable Lease
and tenant deposits, whereunder Mercantile-Arkansas or an Assignee
shall assume the liabilities and obligations of the landlord
accruing after the Closing under such Leases and tenant deposits;
(xii) for each Property, duly executed by
Seller, assigning to Mercantile-Arkansas or an Assignee all of
Seller's right, title and interest in and to the related
contracts, permits, and other documents to be assigned by Seller
in accordance with this Agreement, whereunder Mercantile-Arkansas
or an Assignee shall assume the liabilities and obligations of
Seller accruing after the Closing under such contracts and
permits;
(xiii) for each Property, to the extent in
Seller's possession or control, originals (or copies to the extent
originals are not in Seller's possession or control) of each Lease
related thereto;
(xiv) for each Property, to the extent in
Seller's possession or control, originals (or copies to the extent
originals are not in Seller's possession or control) of each
Contract related thereof;
(xv) for each Property, all keys to doors
and locks in the related improvements and Personal Property to the
extent such keys are in Seller's possession or control;
(xvi) for each Property, to the extent in
Seller's possession or control, an original (or a copy if the
original is not Seller's possession or control) of all permits
related to such Property;
(xvii) for each Property, letters (or
copies thereof) addressed to the tenants thereof, duly executed,
notifying them of the sale of such Property to Mercantile-Arkansas
or an Assignee and directing them to make all future payments of
rent and deliver any future notices to Mercantile-Arkansas or an
Assignee (or as Mercantile-Arkansas or an Assignee may direct in
writing);
(xviii) such other endorsements, assignments
or other conveyances as may be appropriate or necessary to effect
the transfer to Mercantile-Arkansas or an Assignee of the assets,
rights, properties, privileges, powers or franchises as referred
to herein;
(xix) an assignment of all mortgage
servicing rights;
(xx) an assignment to Mercantile-Arkansas
or an Assignee, as Mercantile-Arkansas may direct, of all rights,
obligations, properties, assets, investments, deposits and
agreements that Seller has as a corporate fiduciary; and
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41
(xxi) any other incidental documents
required on the part of Seller, but not expressly provided for
herein, reasonably required by Mercantile-Arkansas or an Assignee
to consummate the transactions contemplated hereby.
(d) The sale of the Property hereunder shall
include Seller's right, title and interest in and to the
following:
(i) All easements, covenants and other
rights pertinent to said Property, and all right and interest of
Seller, if any, in and to any land lying in the bed of any street,
road, avenue or alley, open or closed, in front of or adjoining
said Property, and to the center line thereof;
(ii) All furniture, fixtures, equipment
and other personal property (except items owned by tenants or
which are leased) which are now, or may hereafter prior to the
Closing Date, be, placed in or attached to the Property;
(iii) To the extent they may be
transferred under applicable law, licenses, permits and
authorizations presently issued in connection with the operation
of all or any part of the Property are necessary to operate the
Property as presented being operated; and
(iv) All rights, privileges and
appurtenances to each Property to which Mercantile-Arkansas or an
Assignee may be entitled, including, but not limited to, utility
capacity, utility reservation deposits and refunds in connection
therewith.
(e) After Closing, Seller shall, upon request,
execute and deliver to Mercantile-Arkansas or the Assignee
instruments reasonably necessary to transfer to
Mercantile-Arkansas or the Assignee all of Seller's interest in
the Loans, Collateral, Collateral Documents and Properties as
herein provided. Unless otherwise specifically provided for
herein, Mercantile-Arkansas or the Assignee shall, at its own
expense, prepare and furnish Seller with such instruments, and
Seller shall, within seven (7) days from receipt of such
instruments, execute and return written objections to any
instrument not so executed. Mercantile-Arkansas or the Assignee
shall be responsible for the filing or recording of documents
incident to this transaction and for any fees or expenses incident
thereto.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
8.01 Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time, whether before or after approval by Seller's
shareholders:
(a) by mutual consent by the Executive Committee
of the Board of Directors of Mercantile, the Board of Directors of
Mercantile-Arkansas, and by the Board of Directors of Seller;
(b) by the Executive Committee of the Board of
Directors of Mercantile, the Board of Directors of
Mercantile-Arkansas or the Board of Directors of Seller at any
time after June 30, 1996, if the Transaction shall not theretofore
have been consummated (provided that the
- 37 -
42
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 Mercantile, the Board of Directors of
Mercantile-Arkansas or the Board of Directors of Seller if (i) the
Federal Reserve Board or any other federal and/or state regulatory
agency whose approval is required for the consummation of the
transactions contemplated hereby has denied approval of the
Transaction and such denial has become final and nonappealable or
(ii) the shareholders of Seller shall not have approved this
Agreement at the meeting referred to in Section 5.03;
(d) [Intentionally Omitted];
(e) by the Executive Committee of the Board of
Directors of Mercantile, the Board of Directors of
Mercantile-Arkansas or by the Board of Directors of Seller in the
event of a breach by the other party to this Agreement of any
representation, warranty or agreement contained herein, which
breach is not cured within 30 days after written notice thereof is
given to the breaching party by the non-breaching party or is not
waived by the non-breaching party during such period;
(f) by the Executive Committee of the Board of
Directors of Mercantile or the Board of Directors of
Mercantile-Arkansas pursuant to and in accordance with the
provisions of Section 5.06 hereof; or
(g) [Intentionally Omitted].
8.02 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 8.01 hereof, this Agreement shall forthwith
become void and there shall be no liability on the part of Buyers or Seller or
their respective officers or directors except as set forth in the second
sentence of Section 5.01(a) and in Sections 5.08 and 9.02, and except that no
termination of this Agreement pursuant to Section 8.01(e) shall relieve the
breaching party of any liability to the non-breaching party hereto arising
from the intentional, deliberate and willful non-performance of any covenant
contained herein, after giving notice to such breaching party and an
opportunity to cure as set forth in Section 8.01(e).
8.03 Amendment. This Agreement, the Exhibits and the Schedules
---------
hereto may be amended by the parties hereto, by action taken by or on behalf
of the Executive Committee of the Board of Directors of Mercantile, the Board
of Directors of Mercantile-Arkansas, and the Board of Directors of Seller, at
any time before or after approval of this Agreement by the shareholders of
Seller; provided, however, that after any such approval by the
-------- -------
shareholders of Seller no such modification shall (a) alter or change the
amount or kind of consideration to be received by holders of Seller Common
Stock as provided in this Agreement or (b) adversely affect the tax treatment
to Seller shareholders as a result of receiving the shares of Mercantile
Common Stock in the Transaction. This Agreement, the Exhibits and the
Schedules hereto may not be amended except by an instrument in writing signed
on behalf of each of Buyers and Seller.
8.04 Waiver. Any term, condition or provision of this Agreement may
------
be waived in writing at any time by the party which is, or whose shareholders
are, entitled to the benefits thereof.
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43
ARTICLE IX
GENERAL PROVISIONS
------------------
9.01 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 9.01, all representations,
warranties and agreements in this Agreement of Buyers and Seller or in any
instrument delivered by Buyers 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. In the event of consummation of the
Transaction, the agreements and representations contained in or referred to in
Sections 5.02(b), 5.07, 5.08, 5.10, 5.11, 5.14, 5.16, 5.17 and 9.02 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, Section 5.08, Section 8.02 and Section 9.02
shall survive such termination.
9.02 Indemnification. Buyers and Seller (hereinafter, in such
---------------
capacity being referred to as the "Indemnifying Party") agree to indemnify and
hold harmless each other and their officers, directors and controlling persons
(each such other party being hereinafter referred to, individually and/or
collectively, as the "Indemnified Party") against any and all losses, claims,
damages or liabilities, joint or several, to which the Indemnified Party may
become subject under the Securities Act, the Exchange Act or other federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof): (a) arise
primarily out of any information furnished to the Indemnified Party by the
Indemnifying Party or are based primarily upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in the Proxy Statement, or in
any amendment thereof or supplement thereto, and provided for inclusion
thereof by the Indemnifying Party or (b) arise primarily out of or are based
primarily upon the omission or alleged omission by the Indemnifying Party to
state therein a material fact required to be stated therein or necessary to
make the statements made therein not misleading, and agrees to reimburse each
such Indemnified Party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action.
9.03 No Assignment; Successors and Assigns. This Agreement shall be
-------------------------------------
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Except as otherwise provided in Section
1.01 hereof, neither this Agreement nor any right or obligation set forth in
any provision hereof may be transferred or assigned by any party hereto
without the prior written consent of the other party, and any purported
transfer or assignment in violation of this Section 9.03 shall be void and of
no effect. There shall not be any third party beneficiaries of any provisions
hereof except for Sections 1.01, 1.06, 5.10, and 9.02, which may be enforced
against Buyers or Seller by the parties therein identified.
9.04 No Implied Waiver. No failure or delay on the part of either
-----------------
party hereto to exercise any right, power or privilege hereunder or under any
instrument executed pursuant hereto shall operate as a waiver nor shall any
single or partial exercise of any right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.
9.05 Headings. Article, section, subsection and paragraph titles,
--------
captions and headings herein are inserted only as a matter of convenience and
for reference, and in no way define, limit, extend or describe the scope of
this Agreement or the intent or meaning of any provision hereof.
- 39 -
44
9.06 Entire Agreement. This Agreement, the Exhibits, and the
----------------
Schedules hereto constitute the entire agreement between the parties with
respect to the subject matter hereof, and supersede all prior negotiations,
representations, warranties, commitments, offers, letters of interest or
intent, proposal letters, contracts, writings or other agreements or
understandings, whether written or oral, with respect thereto, including, but
not limited to, that certain Agreement and Plan of Reorganization by and
between Buyers and Sellers, dated July 7, 1995.
9.07 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and any party to this Agreement may execute and deliver this
Agreement by executing and delivering any of such counterparts, each of which
when executed and delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.
9.08 Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed to be duly received (i) on the date given if
delivered personally or (ii) upon confirmation of receipt, if by facsimile
transmission or (iii) on the date received if mailed by registered or
certified mail (return receipt requested), 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 Buyers:
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
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Copies to:
Mercantile Bancorporation Inc.
Xxxxxxxxxx Xxxxx
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxx X. Xxxxxxxx, Esq.
General Counsel and Secretary
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
and
Xxxxxxxx & Xxxxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
- 40 -
45
(ii) if to Seller:
Security Bank of Conway, F.S.B.
0000 Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
President and Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Copies to:
Rose Law Firm
000 Xxxx Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention:Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
9.09 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.
9.10 Governing Law. This Agreement shall be governed by and
-------------
controlled as to validity, enforcement, interpretation, effect and in all
other respects by the internal laws of the State of Missouri.
IN WITNESS WHEREOF, Buyers 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 above
written.
"BUYERS"
MERCANTILE BANCORPORATION INC. OF ARKANSAS
By: /s/ Xxxx X. XxXxxxx
-----------------------------------------
Xxxx X. XxXxxxx
President and Chairman
Mercantile Bancorporation Inc. of
Arkansas
Attest:
/s/ Xxx X. Xxxxxxxx
------------------------------------------
Xxx X. Xxxxxxxx, Secretary
Mercantile Bancorporation Inc. of Arkansas
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46
MERCANTILE BANCORPORATION INC.
By: /s/ Xxxx X. Xxxx
------------------------------------------
Xxxx X. Xxxx
Executive Vice President
Mercantile Bank of St. Louis National
Association
Attest:
/s/ Xxx X. Xxxxxxxx
--------------------------------------
Xxx X. Xxxxxxxx,
General Counsel and Secretary
Mercantile Bancorporation Inc.
"SELLERS"
SECURITY BANK OF XXXXXX, F.S.B.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Xxxx X. Xxxxxxx
President/CEO
Security Bank of Xxxxxx, F.S.B.
Attest:
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
Secretary
Security Bank of Xxxxxx, F.S.B.
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