EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MERCHANTS AND MANUFACTURERS BANCORPORATION, INC.
MERCHANTS MERGER CORP.
AND
FORTRESS BANCSHARES, INC.
DATED AS OF MAY 31, 2002
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TABLE OF CONTENTS / PAGE
ARTICLE I
THE MERGER
SECTION 1.01. The Merger 6
SECTION 1.02. Effective Time 6
SECTION 1.03. Effect of the Merger 6
SECTION 1.04. Articles of Incorporation and Bylaws 6
SECTION 1.05. Directors and Officers 6
SECTION 1.06. Conversion of Securities 6
SECTION 1.07. Exchange of Certificates 8
SECTION 1.08. Stock Transfer Books 10
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization and Qualification of the Company;
Subsidiary 10
SECTION 2.02. Articles of Incorporation and Bylaws 11
SECTION 2.03. Capitalization 11
SECTION 2.04. Authority 13
SECTION 2.05. No Conflict; Required Filings and Consents 14
SECTION 2.06. Compliance; Permits 14
SECTION 2.07. Banking Reports and Financial Statements 15
SECTION 2.08. Absence of Certain Changes or Events 15
SECTION 2.09. Absence of Litigation 16
SECTION 2.10. Employee Benefit Plans 16
SECTION 2.11. Employment Contracts; Material Contracts 18
SECTION 2.12. Registration Statement; Proxy Statement 18
SECTION 2.13. Title to Property 18
SECTION 2.14. Compliance with Environmental Laws 19
SECTION 2.15. Absence of Agreements 20
SECTION 2.16. Taxes 20
SECTION 2.17. Insurance 21
SECTION 2.18. Absence of Adverse Agreements 21
SECTION 2.19. Internal Controls and Records 21
SECTION 2.20. Loans 21
SECTION 2.21. Labor Matters 22
SECTION 2.22. Brokers 22
SECTION 2.23. Accounting and Tax Matters 22
SECTION 2.24. Full Disclosure 22
SECTION 2.25. Vote Required 22
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MERCHANTS
SECTION 3.01. Organization and Qualification 23
SECTION 3.02. Articles of Incorporation and Bylaws 23
SECTION 3.03. Capitalization 23
SECTION 3.04. Authority 23
SECTION 3.05. No Conflict; Required Filings and Consents 24
SECTION 3.06. Compliance; Permits 24
SECTION 3.07. Securities Reports; Financial Statements 24
SECTION 3.08. Absence of Certain Changes or Events 25
SECTION 3.09. Absence of Litigation 25
SECTION 3.10. Registration Statement; Proxy Statement 25
SECTION 3.11. Absence of Agreements 26
SECTION 3.12. Taxes 26
SECTION 3.13. Brokers 26
SECTION 3.14. Accounting and Tax Matters 26
SECTION 3.15. Full Disclosure 27
SECTION 3.16 Vote Required 27
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Affirmative Covenants 27
SECTION 4.02. Negative Covenants 28
SECTION 4.03. Access and Information 30
SECTION 4.04. Affiliates; Accounting and Tax Treatment 30
SECTION 4.05. Expenses 31
SECTION 4.06. Delivery of Shareholder List 31
ARTICLE V
COVENANTS OF MERCHANTS
SECTION 5.01. Affirmative Covenants 31
SECTION 5.02. Access and Information 31
SECTION 5.03. Accounting and Tax Treatment 32
SECTION 5.04. Registration Statement 32
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement 32
SECTION 6.02. Meeting of the Shareholders 33
SECTION 6.03. Appropriate Action; Consents; Filings 33
SECTION 6.04. Notification of Certain Matters 33
SECTION 6.05. Public Announcements 33
SECTION 6.06. Environmental Matters 34
SECTION 6.07. Break-Up Fee 34
SECTION 6.08. Directors of Merchants 35
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ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect
the Merger 35
SECTION 7.02. Additional Conditions to Obligations of Merchants 35
SECTION 7.03. Additional Conditions to Obligations of the Company 37
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination 38
SECTION 8.02. Effect of Termination 39
SECTION 8.03. Amendment 39
SECTION 8.04. Waiver 39
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements 40
SECTION 9.02. Disclosure Schedules 40
SECTION 9.03. Notices 40
SECTION 9.04. Certain Definitions 40
SECTION 9.05. Headings 41
SECTION 9.06. Severability 42
SECTION 9.07. Entire Agreement 42
SECTION 9.08. Assignment 42
SECTION 9.09. Parties in Interest 42
SECTION 9.10. Governing Law 42
SECTION 9.11. Counterparts 42
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 31, 2002, (the
"Agreement"), among MERCHANTS AND MANUFACTURERS BANCORPORATION, INC., a
Wisconsin corporation ("Merchants"), Merchants Merger Corp., a Wisconsin
corporation, ("Merger Corp."), and FORTRESS BANCSHARES, INC., an Iowa
corporation, ("Company").
W I T N E S S E T H:
WHEREAS, the Company is a bank holding company, the wholly-owned
subsidiaries of which are the Fortress Bank of Cresco, a commercial bank
chartered under the laws of the State of Iowa, located in Cresco, Iowa
("Cresco") and Fortress Holdings, Inc. ("Holdings") a Wisconsin corporation; and
WHEREAS, Holdings is a bank holding company, the wholly owned
subsidiaries of which are the Fortress Bank of Westby, a commercial bank
chartered under the laws of the State of Wisconsin located in Xxxxxx, Wisconsin
("Westby"), and Fortress Bank, N.A., a commercial bank chartered under the
National Banking Laws, located in Houston, Minnesota ("Houston"). Cresco,
Westby, and Houston are sometimes collectively referred to as "Banks" in this
Agreement; and
WHEREAS, the Company upon the terms and subject to the conditions of
this Agreement and in accordance with the Wisconsin Business Corporation Act and
the Iowa Business Corporation Act, will merge with and into Merger Corp., a
wholly-owned subsidiary of Merchants (the "Merger"); and
WHEREAS, the Company and its Board of Directors have determined that
the Merger will enhance the ability of the Banks to better serve their customers
and increase the financial strength of the Banks; and
WHEREAS, the Board of Directors of the Company believes that the Merger
will benefit the shareholders of the Company and the employees and customers of
the Banks; and
WHEREAS, the respective Board of Directors of Merchants, Merger Corp.
and the Company have determined that the Merger pursuant and subject to the
terms and conditions of this Agreement is fair to and in the best interests of
the respective corporations and their shareholders, and have approved and
adopted this Agreement and the transactions contemplated hereby; and
WHEREAS, the Board of Directors of the Company has, subject to its
fiduciary duties under applicable law, resolved to recommend approval of the
Merger by the shareholders of the Company; and
WHEREAS, as a condition and inducement to Merchants' willingness to
enter into this Agreement, Merchants and certain shareholders of the Company are
concurrently with the execution and delivery hereof, entering into a Voting
Agreement dated as of the date hereof (the "Voting Agreement"), pursuant to
which such shareholders shall make certain agreements with respect to the voting
of their shares of Company Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Merchants, Merger Corp. and the Company hereby agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Wisconsin and Iowa Law, at
the Effective-Time (as defined in Section 1.02) the Company shall be merged with
and into Merger Corp. As a result of the Merger, the separate corporate
existence of the Company shall cease and Merger Corp. shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall cause the Merger to be consummated by filing
Articles of Merger (the "Articles of Merger") with the Department of Financial
Institutions of the State of Wisconsin and the Secretary of State of the State
of Iowa, in such form as required by, and executed in accordance with the
relevant provisions of Wisconsin and Iowa Law and shall take all such further
actions as may be required by law to make the Merger effective.
The later of the date and time of the filing of the Articles of Merger
or the effective date and time of the Merger as set forth in such Articles of
Merger is hereinafter referred to as the "Effective Time."
SECTION 1.03. EFFECT OF THE MERGER. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Wisconsin and
Iowa Law. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of Merger Corp. and the Company shall
vest in the Surviving Corporation, and all debts, liabilities and duties of
Merger Corp. and the Company shall become the debts, liabilities and duties of
the Surviving Corporation in accordance with applicable laws.
SECTION 1.04. ARTICLES OF INCORPORATION AND BYLAWS. At the Effective
Time, the Articles of Incorporation and the Bylaws of Merger Corp., as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the Bylaws of the Surviving Corporation.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Merger Corp.
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Merger Corp. immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
SECTION 1.06. CONVERSION OF SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of Merchants, Merger
Corp., the Company, or the holders of any of the following securities:
(a) Each share of the common stock $0.01 par value, of the Company
("Company Common Stock") (all issued and outstanding shares of the Company
Common Stock being hereinafter collectively referred to as the "Shares") issued
and outstanding immediately prior to the Effective Time (other than (i) Shares
owned by Merchants, Merger Corp. or the Company or any direct or indirect
subsidiary of Merchants, Merger Corp. or the Company and (ii) any Dissenting
Shares (as defined in Section 1.06 (e)) shall be canceled and extinguished and
be converted into and become a right to receive $30.00 per share (the "Merger
Consideration"), to be paid in the manner provided in Section 1.06 (c) below.
(b) Each share of the Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned by Merchants, Merger Corp. or
the Company or any direct or indirect
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subsidiary of Merchants, Merger Corp. or the Company shall be canceled and
extinguished and no payment shall be made with respect thereto.
(c) The Merger Consideration of $30.00 per share of Company Common
Stock shall be paid with a combination of cash and shares of $1.00 par value
common stock of Merchants ("Merchants Common Stock"). Each shareholder of the
Company will be entitled to elect the form of consideration to be received for
his or her shares of Company Common Stock; provided, however, that the aggregate
amount of cash to be paid to the shareholders of the Company will equal
forty-five percent (45%) of the aggregate Merger Consideration, and the
remaining fifty-five percent (55%) of the aggregate Merger Consideration (the
"Non-Cash Merger Consideration") will be paid with shares of Merchants Common
Stock. The number of shares of Merchants Common Stock to be received by
shareholders of the Company for each share of Company Common Stock for which
Non-Cash Merger Consideration is payable shall be determined as follows:
1. If the Daily Average Price (as defined below) is greater than
or equal to $26.00 and less than or equal to $34.00, each
share of Company Common Stock payable in Non-Cash Merger
Consideration will be exchanged for the number of shares of
Merchants Common Stock equal to $30.00 divided by the Daily
Average Price.
2. If the Daily Average Price is greater than $34.00 but less
than or equal to $36.00, the Daily Average Price will be
assumed to be $34.00. If the Daily Average Price is less than
$26.00 but greater than or equal to $24.00, the Daily Average
Price will be assumed to be $26.00.
3. If the Daily Average Price is less than $24.00 or greater than
$36.00, then Merchants and the Company will make a good faith
effort to renegotiate the Merger Consideration.
The Daily Average Price of a share of Merchants Common Stock
will be equal to the daily average of the "bid" and "ask"
quotations of Merchants Common Stock as published in the
Milwaukee Journal/Sentinel (or obtained from another source
acceptable to Merchants and the Company if such quotations are
not published in the Milwaukee Journal/Sentinel) on each of
the twenty (20) trading days preceding the fifth (5th) day
prior to the Effective Time. On each of the twenty (20)
trading days prior to the fifth (5th) day before the Effective
Time, all "bid" and "ask" quotations will be averaged to
calculate the market quotation for that day (the "Average
Quote"). The resulting twenty (20) Average Quotes will be used
to calculate an arithmetic, unweighted average. The twenty
(20) Average Quotes will be summed and the result divided by
twenty (20) to determine the Daily Average Price of Merchants
Common Stock to be used for purposes of the payment of the
Non-Cash Merger Consideration. In the event that "ask"
quotations are not available, or if the "ask" price exceeds
the "bid" price by more than $4.00 on any of the twenty (20)
trading days used to compute the Daily Average Price, then the
"bid" quotes shall be used on those days to calculate the
Daily Average Price.
(d) Upon approval of the Merger by the shareholders of the Company, the
Company will deliver a form of election to the shareholders of the Company
permitting them to elect the form of consideration to be received in payment of
the Merger Consideration. In the event that there is an over subscription of
Merchants Common Stock or cash (including cash to be received for Dissenting
Shares, as defined below), the Company will allocate such consideration in
proportion to the elections of the shareholders of the Company based upon the
number of shares of Company Common Stock owned by such shareholders, such that
forty-five percent (45%) of the aggregate Merger Consideration will be paid
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in cash and the remaining fifty-five percent (55%) of the Merger Consideration
will be paid in shares of Merchants Common Stock. Preference will be given to
shareholders electing to receive payment of the Merger Consideration in cash and
Merchants' Common Stock.
(e) No fractional shares of Merchants Common Stock and no certificates
or scrip certificates therefore shall be issued to represent any such fractional
interest, and any holder thereof shall be paid an amount pursuant to Section
1.08 hereof.
(f) The stock options which have been granted but are unexercised as of
the effective date of this Agreement under the Company's Stock Option Plan,
known as the "Fortress Bancshares, Inc. 1992 Stock Option Stock Plan", totaling
nineteen thousand five hundred (19,500) stock options, shall be converted
pursuant to the conversion ratio as defined by this Agreement into granted but
unexercised stock options under the Merchants' Incentive Stock Option Plan. The
provisions of this Section 1.06(f) shall be contingent upon approval by the
shareholders of Merchants to amend the Merchants' Incentive Stock Option Plan to
provide for additional shares, including but not limited to, shares sufficient
to allow for conversion of the stock options under the Company's stock option
plan to stock options under the Merchants' stock option plan.
(g) Each Share which shall be issued and outstanding as of the
Effective Time and held by a shareholder who has validly perfected dissenter's
rights in accordance with Iowa Law, shall not be converted into or represent a
right to receive the Merger Consideration pursuant to this Section 1.06 (all
such Shares are hereinafter called "Dissenting Shares"). The Company shall give
Merchants prompt notice upon receipt by the Company of any written notice from
any such shareholder of the Company ("Dissenting Shareholder"). The Company
agrees that prior to the Effective Time, it will not, except with prior written
consent of Merchants, voluntarily make any payment with respect to, or settle or
offer to settle, any request for withdrawal pursuant to the exercise of
dissenter's rights. Each Dissenting Shareholder who becomes entitled, pursuant
to the provisions of applicable law, to payment for his or her Shares shall
receive payment therefore from Merchants (but only after the amount thereof
shall be agreed upon or finally determined pursuant to the provisions of
applicable law). If any Dissenting Shareholder shall fail to perfect or shall
effectively withdraw or lose his or her right to receive the value of his or her
Shares, his or her Shares shall be thereupon be deemed to have been canceled as
of the Effective Time and converted into the right to receive the Merger
Consideration in accordance with the provisions of this Section 1.06.
SECTION 1.07. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. As of the Effective Time, Merchants shall deposit,
or shall cause to be deposited, with US Bank (the "Exchange Agent"), and such
deposit shall be solely for the benefit of the holders of Company Common Stock,
for exchange in accordance with this Article I through the Exchange Agent, the
aggregate Merger Consideration consisting of certificates representing the
shares of Merchants Common Stock and cash (such certificates for shares of
Merchants Common Stock, and cash, together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund")
issuable or payable, as the case may be, pursuant to Section 1.06 in exchange
for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail or personally deliver to each
holder of record (or his or her attorney-in-fact) of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted into the
right to receive the Merger Consideration pursuant to Section 1.06 and cash in
lieu of fractional shares (if any), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only
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upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Merchants may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the applicable amount and form of Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefore the applicable amount and form of
the Merger Consideration which such holder has the right to receive in respect
of the Certificate surrendered pursuant to the provisions of this Article I
(after taking into account all Shares then held by such holder) and cash in lieu
of fractional shares (if any), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares which
is not registered in the transfer records of the Company, a certificate
representing the proper Merger Consideration may be delivered (or cash may be
paid in lieu of fractional shares, if applicable), to a transferee if the
Certificate representing such shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid.
Certificates surrendered for exchange by any affiliate of the Company shall not
be exchanged for the Merger Consideration until Merchants has received a written
agreement from such person as provided in Section 4.04 hereof. Until surrendered
as contemplated by this Section 1.07, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the applicable amount and form of the Merger Consideration and cash in
lieu of any fractional shares of Merchants Common Stock as contemplated by
Section 1.07(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Merchants Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares of
Merchants Common Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 1.07(e),
until the holder of such Certificate shall surrender such Certificate. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing whole shares
of Merchants Common Stock issued in exchange therefore, without interest, (i)
promptly, the amount of any cash payable with respect to a fractional share of
Merchants Common Stock to which such holder is entitled pursuant to Section
1.07(e) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Merchants Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions, with a record date after the Effective Time
but prior to surrender and a payment date occurring after surrender, payable
with respect to such whole shares of Merchants Common Stock.
(d) No Further Rights in the Shares. All shares of Merchants Common
Stock issued and cash paid, as the case may be, upon conversion of the Shares in
accordance with the terms hereof (including any cash paid pursuant to Section
1.07(e)) shall be deemed to have been issued or paid in full satisfaction of all
rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of Merchants Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interest will not
entitle the owner thereof to vote or to any rights of a shareholder of
Merchants. Each holder of a fractional share interest shall be paid an amount in
cash equal to the product obtained by multiplying such fractional share interest
to which such holder (after taking into account all fractional share interests
then held by such holder) would otherwise be entitled by the Merger
Consideration.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of the Company for six (6)
months after the Effective Time shall be delivered to Merchants, upon demand,
and any shareholders of the Company who have not theretofore complied with this
Article I shall thereafter look only to Merchants for payment of their claim to
the
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applicable amount and form of the Merger Consideration, any cash in lieu of
fractional shares of Merchants Common Stock and any dividends or distributions
with respect to Merchants Common Stock.
(g) Liability. Neither Merchants, Merger Corp. nor the Company shall be
liable to any holder of Shares for any such shares (or dividends or
distributions with respect thereto) or cash delivered to a public official
pursuant to any abandoned property, escheat or similar law.
(h) Withholding Rights. Merchants shall be entitled to deduct and
withhold from any cash consideration payable pursuant to this Agreement to any
holder of Shares such amounts as Merchants is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Merchants, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Merchants.
SECTION 1.08. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company.
From and after the Effective Time, the holders of certificates evidencing
ownership of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Merchants for any reason shall be converted
into shares of Merchants Common Stock or cash, as the case may be, in accordance
with this Article I.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
For purposes of any representation, warranty, covenant, agreement or
statement of the Company or its subsidiaries in this Agreement, the term
"Company and Subsidiaries" or "Company or Subsidiaries" shall mean the Company,
the Banks, Holdings or any other subsidiary. A true and complete list of the
Company's directly and indirectly owned subsidiaries, together with the
jurisdiction of incorporation or organization of each subsidiary and the
percentage of each subsidiary's outstanding capital stock or other equity
interest owned by the Company or another subsidiary of the Company is set forth
on Schedule 2.03.
The term "Subsidiary" (or its plural) as used in this Agreement with
respect to the Company shall mean any corporation, partnership, joint venture or
other legal entity of which the Company, either alone or together with any other
subsidiary, owns directly or indirectly, twenty-five percent (25%) or more of
the stock or other equity interest the holders of which are generally entitled
to vote for the election of the directors or other governing body of such
corporation or other legal entity.
Except as set forth in the Disclosure Schedule attached hereto (the
"Company Disclosure Schedule"), the Company hereby represents and warrants to
Merchants and Merger Corp. as of the date of this Agreement, that:
SECTION 2.01. ORGANIZATION AND QUALIFICATION OF THE COMPANY;
SUBSIDIARIES. The Company is a corporation duly organized and validly existing
under the laws of the State of Iowa. Fortress Bank of Cresco is a duly organized
and validly existing Iowa bank. Holdings is a corporation duly organized and
validly existing under the laws of the State of Wisconsin. Westby is a duly
organized and validly existing Wisconsin Bank. Houston is a duly organized and
validly existing national banking association. The Company and Subsidiaries have
the requisite corporate power and authority and are in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates,
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approvals and orders ("Approvals") necessary to own, lease and operate their
respective properties and to carry on their business as it is now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority and Approvals would not, individually
or in the aggregate, have a Material Adverse Effect (as defined below) on the
Company and its Subsidiaries, taken as a whole. The term "Material Adverse
Effect" as used in this Agreement shall mean any change or effect that is or is
reasonably likely to be materially adverse to a party's business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets or liabilities (including contingent liabilities). Neither
the Company nor the Subsidiaries have received notice of proceedings relating to
the revocation or modification of any Approvals. The Company and its
Subsidiaries are duly qualified or licensed as foreign corporations to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned, leased or operated by them or the nature of their
activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
the Company and its Subsidiaries, taken as a whole. The Company is registered
with the Federal Reserve Board as a multi-bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA"). Holdings is registered
with the Federal Reserve Board as a multi-bank holding company under the BHCA.
In addition to the Banks and Holdings the Company holds interests, either
directly or indirectly, in other entities, all of which are duly organized and
validly existing under the laws of their respective state of organization and
each of which has the requisite corporate power and authority and is in
possession of all Approvals necessary to own, lease and operate its property and
to carry on its business as is now being conducted.
SECTION 2.02. ARTICLES OF INCORPORATION AND BYLAWS. The Company and
Subsidiaries have heretofore furnished to Merchants a complete and correct copy
of the Articles of Incorporation and the Bylaws, as amended or restated, of each
entity and such Articles of Incorporation and Bylaws are in full force and
effect and none of the entities is in violation of any of the provisions of its
Articles of Incorporation or Bylaws.
SECTION 2.03. CAPITALIZATION.
(a) Capitalization of the Company. The authorized capital stock of the
Company consists of 2,000,000 shares of Common Stock, par value $0.01 per share.
As of the date of this Agreement, (i)697,140 shares of the Company's Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and non-assessable (except as provided in the Iowa Business Corporation Law),
and all of which have been issued in compliance with applicable securities laws,
and (ii) no shares of the Company's Common Stock are held in the Company's
treasury. Except as set forth in the Company's Disclosure Schedule at Section
2.03(a), as of the date of this Agreement, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of the Company or obligating the Company
to issue or sell any shares of capital stock of, or other equity interests in
the Company. There are no obligations, contingent or otherwise, of the Company
to repurchase, redeem or otherwise acquire any shares of the Company's Common
Stock or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
(b) Capitalization of Holdings. The authorized capital stock of
Holdings consists of 9,000 shares of common stock, par value $0.01 per share. As
of the date of this Agreement, (i) 100 shares of Holdings' common stock are
issued and outstanding, all of which are validly issued, fully paid and
non-assessable, (except as provided in Section 180.0622(2)(b) of the Wisconsin
Statutes) and all of which have been issued in compliance with applicable
securities laws, and (ii) the Company owns all of Holdings' capital stock.
Except as set forth in the Company's Disclosure Schedule at Section 2.03(b), as
of the date of this Agreement, there are no options, warrants or other rights,
agreements, arrangements or
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commitments of any character relating to the issued or unissued capital stock of
Holdings or obligating Holdings to issue or sell any shares of capital stock of,
or other equity interests in Holdings. There are no obligations, contingent or
otherwise, of Holdings to repurchase, redeem or otherwise acquire any shares of
Holdings' capital stock or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity.
(c) Capitalization of the Banks. (1) Cresco. The authorized capital
stock of Cresco consists of 1,000 shares of common stock, par value $100.00 per
share. As of the date of this Agreement, (i) 1,000 shares of Cresco's common
stock are issued and outstanding, all of which are validly issued, fully paid
and non-assessable, (except as provided in the Iowa Statutes) and all of which
have been issued in compliance with applicable securities laws, and (ii) the
Company owns all of Cresco's capital stock. Except as set forth in the Company's
Disclosure Schedule at Section 2.03(c), as of the date of this Agreement, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
Cresco or obligating Cresco to issue or sell any shares of capital stock of, or
other equity interests in Cresco. There are no obligations, contingent or
otherwise, of Cresco to repurchase, redeem or otherwise acquire any shares of
Cresco's capital stock or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity.
(2) Westby. The authorized capital stock of Westby consists of
15 shares of common stock, par value $100.00 per share. As of the date of this
Agreement, (i) 15 shares of Xxxxxx'x common stock are issued and outstanding,
all of which are validly issued, fully paid and non-assessable, (except as
provided in Section 220.07 of the Wisconsin Statutes) and all of which have been
issued in compliance with applicable securities laws, and (ii) Holdings owns all
of Xxxxxx'x capital stock. Except as set forth in the Company's Disclosure
Schedule at Section 2.03(c), as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Westby or
obligating Westby to issue or sell any shares of capital stock of, or other
equity interests in Westby. There are no obligations, contingent or otherwise,
of Westby to repurchase, redeem or otherwise acquire any shares of Xxxxxx'x
capital stock or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
(3) Houston. The authorized capital stock of Houston consists
of 25,000 shares of common stock, par value $100.00 per share. As of the date of
this Agreement, (i) 7,000 shares of Houston's common stock are issued and
outstanding, all of which are validly issued, fully paid and non-assessable,
(except as provided in the Minnesota Statutes) and all of which have been issued
in compliance with applicable securities laws, and (ii) Holdings owns all of
Houston's capital stock. Except as set forth in the Company's Disclosure
Schedule at Section 2.03(c), as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Houston or
obligating Houston to issue or sell any shares of capital stock of, or other
equity interests in Houston. There are no obligations, contingent or otherwise,
of Houston to repurchase, redeem or otherwise acquire any shares of Houston's
capital stock or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
(d) Capitalization of other Subsidiaries. (1) Fortress Mortgage
Services Company ("FMSC"). The authorized capital stock of FMSC consists of
9,000 shares of common stock, par value $1.00 per share. As of the date of this
Agreement, (i) 1,000 shares of FMSC's common stock are issued and outstanding,
all of which are validly issued, fully paid and non-assessable, (except as
provided in Section 180.0622(2)(b) of the Wisconsin Statutes) and all of which
have been issued in compliance with applicable securities laws, and (ii) Westby
owns all of FMSC's capital stock. Except as set forth in the
15
Company's Disclosure Schedule at Section 2.03(c), as of the date of this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of FMSC or obligating FMSC to issue or sell any shares of capital
stock of, or other equity interests in FMSC. There are no obligations,
contingent or otherwise, of FMSC to repurchase, redeem or otherwise acquire any
shares of FMSC's capital stock or to provide funds to or make any investment (in
the form of a loan, capital contribution or otherwise) in any other entity.
(2) Westby Investment Company ("WIC"). The authorized capital
stock of WIC consists of 1,000 shares of common stock, par value $1.00 per
share. As of the date of this Agreement, (i) 1,000 shares of WIC's common stock
are issued and outstanding, all of which are validly issued, fully paid and
non-assessable, (except as provided in Section 180.0622(2)(b) of the Wisconsin
Statutes) and all of which have been issued in compliance with applicable
securities laws, and (ii) Westby owns all of WIC's capital stock. Except as set
forth in the Company's Disclosure Schedule at Section 2.03(c), as of the date of
this Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of WIC or obligating WIC to issue or sell any shares of capital
stock of, or other equity interests in WIC. There are no obligations, contingent
or otherwise, of WIC to repurchase, redeem or otherwise acquire any shares of
WIC's capital stock or to provide funds to or make any investment (in the form
of a loan, capital contribution or otherwise) in any other entity.
(3) The Fortress Agency, Inc. ("Agency"). The authorized
capital stock of Agency consists of 1,000,000 shares of common stock, par value
$0.01 per share. As of the date of this Agreement, (i) 100 shares of Agency's
common stock are issued and outstanding, all of which are validly issued, fully
paid and non-assessable, (except as provided in the Minnesota Business
Corporation Law) and all of which have been issued in compliance with applicable
securities laws, and (ii) Houston owns all of Agency's capital stock. Except as
set forth in the Company's Disclosure Schedule at Section 2.03(c), as of the
date of this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of Agency or obligating Agency to issue or sell any
shares of capital stock of, or other equity interests in Agency. There are no
obligations, contingent or otherwise, of Agency to repurchase, redeem or
otherwise acquire any shares of Agency's capital stock or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any other entity.
(4) Heartland Financial Corporation ("Heartland"). The
authorized capital stock of Heartland consists of 9,000 shares of common stock,
par value $1.00 per share. As of the date of this Agreement, (i) 1,360 shares of
Heartland's common stock are issued and outstanding, all of which are validly
issued, fully paid and non-assessable, (except as provided in Section
180.0622(2)(b) of the Wisconsin Statutes) and all of which have been issued in
compliance with applicable securities laws, and (ii) Westby owns one third (1/3)
of Heartland's capital stock. Except as set forth in the Company's Disclosure
Schedule at Section 2.03(c), as of the date of this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Heartland or
obligating Heartland to issue or sell any shares of capital stock of, or other
equity interests in Heartland. There are no obligations, contingent or
otherwise, of Heartland to repurchase, redeem or otherwise acquire any shares of
Heartland's capital stock or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity.
SECTION 2.04. AUTHORITY. The Company has the requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the
16
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
outstanding shares of the Company's Common Stock in accordance with Iowa Law and
the Company's Articles of Incorporation and Bylaws). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Merchants, and Merger Corp.,
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms.
SECTION 2.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) To the best knowledge of the Company, after inquiry of its
executive officers, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company shall not, (i)
conflict with or violate the Articles of Incorporation or Bylaws of the Company
and its Subsidiaries, (ii) conflict with or violate any domestic (federal, state
or local) law, statute, ordinance, rule, regulation, order, judgment or decree
(collectively, "Laws") applicable to the Company and its Subsidiaries, or by
which their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company and its Subsidiaries pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company and its Subsidiaries is a party or by which the
Company and its Subsidiaries or its or any of their respective properties are
bound or affected, except for any such breaches, defaults or other occurrences
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole.
(b) To the best knowledge of the Company, after inquiry of its
executive officers, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company shall not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Securities Act of 1933,
as amended (the "Securities Act"), and the Securities Exchange of 1934, as
amended (the "Exchange Act"), state securities or blue sky laws ("Blue Sky
Laws"), BHCA, the state and federal banking laws and regulations, and the filing
and recordation of appropriate merger or other documents as required by Iowa and
Wisconsin Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent the Company
from performing its obligations under this Agreement, and would not have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole.
SECTION 2.06. COMPLIANCE; PERMITS. To the best knowledge of the Company
after inquiry of its executive officers, neither the Company nor the
Subsidiaries are in conflict with, or in default or violation of, (a) any law
applicable to the Company or its Subsidiaries or by which any of their
respective properties are bound or affected, or (b) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or the Subsidiaries is a party or
by which the Company or its Subsidiaries or any of their respective properties
are bound or affected, except for any such conflicts, defaults or violations
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.
17
SECTION 2.07. BANKING REPORTS AND FINANCIAL STATEMENTS.
(a) The Company and the Subsidiaries have timely filed all forms,
reports and documents required to be filed with the Federal Reserve Board, the
Office of the Comptroller of the Currency, the Wisconsin Department of Financial
Institutions, the Iowa Department of Commerce, Banking Division and any other
applicable federal or state securities or banking authorities (all such reports
and statements are collectively referred to as the "Company Reports"). The
Company Reports, including all Company Reports filed after the date of this
Agreement, (i) were or will be prepared in accordance with the requirements of
applicable law and (ii) did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements of the Company
(including, in each case, any related notes thereto) delivered to Merchants
whether or not contained in the Company Reports (the "Financial Statements"),
including, but not limited to, any Company Reports filed since the date of this
Agreement and prior to or at the Effective Time, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial position of the
Company and its Subsidiaries as of the respective dates thereof and the
consolidated results of its operations and changes in financial position for the
periods indicated, except that any unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
(c) Except as and to the extent set forth on the consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 2001 and March 31,
2002, including all notes thereto (the "Company Balance Sheet"), neither the
Company nor the Bank has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except (i) for liabilities or
obligations incurred in the ordinary course of business, that would not,
individually or in the aggregate have a Material Adverse Effect on the Company
or its Subsidiaries, taken as a whole, or (ii) as otherwise reflected in the
reports referred to in Section 2.07(a) hereof.
SECTION 2.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Financial Statements or in the Disclosure Schedules pursuant to this
Agreement, since December 31, 2001, to the date of this Agreement, the Company
and its Subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since December 31, 2001,
there has not been (a) any change in the financial condition, results of
operations or business of the Company or its Subsidiaries having a Material
Adverse Effect on the Company or its Subsidiaries, taken as a whole, (b) any
damage, destruction or loss (whether or not covered by insurance) with respect
to any assets of the Company or its Subsidiaries having a Material Adverse
Effect on the Company or its Subsidiaries, taken as a whole, (c) any change by
the Company or its Subsidiaries in their accounting methods, principles or
practices, except for compliance with applicable new requirements of the
Financial Accounting Standards Board, (d) any revaluation by the Company or its
Subsidiaries of any of their material assets in any material respect, (e) any
entry by the Company or its Subsidiaries into any commitment or transactions
material to the Company or its Subsidiaries, taken as a whole, other than in the
ordinary course and other than this Agreement, (f) any declaration, setting
aside or payment of any dividends (other than dividends paid in the ordinary
course, consistent with past practice) or distributions in respect of shares of
the Company's Common Stock or any redemption, purchase or other acquisition of
any of its securities or any of the securities of the Subsidiaries, or (g) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without
18
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in compensation payable or to
become payable to any officers or key employees of the Company or its
Subsidiaries, other than in the ordinary course consistent with past practice
and the employment agreement disclosed in Disclosure Schedule 2.11.
SECTION 2.09. ABSENCE OF LITIGATION. Except as disclosed in the
Company's Disclosure Schedule at Section 2.09, (a) neither the Company nor the
Subsidiaries is subject to any continuing order of, or written agreement or
memorandum of understanding with, or continuing material investigation by, any
federal or state banking authority or other governmental entity, or any
judgment, order, writ, injunction, decree or award of any governmental entity or
arbitrator, including, without limitation, cease-and-desist or other orders of
any bank regulatory authority, (b) there is no claim of any kind, action, suit,
litigation, proceeding, arbitration, investigation, or controversy affecting the
Company or its Subsidiaries pending or, to the knowledge of the Company,
threatened, and (c) there are no uncured material violations, or violations with
respect to which material refunds or restitutions may be required, cited in any
compliance report to the Company or its Subsidiaries as a result of the
examination by any regulatory authority.
SECTION 2.10. EMPLOYEE BENEFIT PLANS.
(a) The Company Disclosure Schedule at Section 2.10 lists all "employee
pension benefit plans," as such term is defined in section 3(2) of the Employee
Retirement Income Security Act of 1974 (ERISA) without regard to any exemptions
from any requirements there under issued by the United States Department of
Labor in regulations or otherwise, maintained, sponsored or contributed to by
the Company or its Subsidiaries (the "Pension Plans"). The term "Pension Plan"
shall also include any terminated "employee pension benefit plan" previously
maintained, sponsored or contributed to by the Company or its Subsidiaries
which, as of the Effective Time, has not distributed all of its assets in full
satisfaction of accrued benefits and/or obligations.
(b) The Company Disclosure Schedule at Section 2.10 lists all "employee
welfare benefit plans," as defined in ERISA section 3(1) without regard to any
exemptions from any requirements there under issued by the United States
Department of Labor in regulations or otherwise, maintained, sponsored or
contributed to by the Company or its Subsidiaries (the "Welfare Plans"). The
term "Welfare Plans" shall also include any terminated employee welfare benefit
plan previously maintained, sponsored or contributed to by the Company or its
Subsidiaries which, as of the Effective Time, has not distributed all of its
assets and/or satisfied all of its obligations.
(c) The Company has made available to Merchants true and complete
copies of the documents governing each of the Pension Plans and Welfare Plans as
in effect at the Effective Time.
(d) The Company Disclosure Schedule at Section 2.10 lists all plans or
programs to provide fringe benefits to the Company's and its Subsidiaries'
employees (other than Pension Plans and Welfare Plans) including, but not
limited to vacation, sick leave, disability, medical, hospitalization, life
insurance and other insurance plans or related benefits (the "Fringe Benefit
Plans").
(e) The Company has made available to Merchants true and complete
copies of the documents governing each Fringe Benefit Plan.
(f) The Company has no direct or indirect, formal or informal, plan,
fund or program to change any Pension Plan, Welfare Plan or Fringe Benefit Plan
that would affect any of the Company's or its Subsidiaries' employees. Neither
the Company nor its Subsidiaries has made a material modification,
19
within the meaning of ERISA Section 102 and the regulations there under, to any
existing Pension Plan, Welfare Plan or Fringe Benefit Plan which is not set
forth in the Pension Plan, Welfare Plan or Fringe Benefit Plan documents
provided to Merchants.
(g) For purposes of this Section 2.10, "Company" shall include the
Company, the Banks and all members of any controlled group of corporations
(within the meaning of Code section 414(b), relevant Treasury Regulations and
Pension Benefit Guaranty Corporation regulations issued pursuant to ERISA
Section 4001), any group of trades or businesses under common control (within
the meaning of Code Section 414(c), relevant Treasury Regulations and Pension
Benefit Guaranty Corporation regulations issued pursuant to ERISA Section 4001)
and any affiliated service group (within the meaning of Code Section 414(m) and
relevant Treasury Regulations and proposed Treasury Regulations) of which the
Company or any Subsidiary is a member.
(h) Neither the Company nor its Subsidiaries has ever been obligated to
contribute to any multi-employer plan within the meaning of ERISA Section 3(37).
(i) To the Company's knowledge, the Pension Plans, Welfare Plans and
Fringe Benefit Plans and the trusts and other funding vehicles related to the
Pension Plans, Welfare Plans and Fringe Benefit Plans have been administered in
all material respects in compliance with the applicable requirements of ERISA,
the Code, the plan documents and all other applicable rules, regulations and
laws. To the Company's knowledge, the Pension Plans, Welfare Plans and Fringe
Benefit Plans and the trusts or other funding vehicles related to the Pension
Plans, Welfare Plans and Fringe Benefit Plans meet all applicable requirements,
in form and in operation required for favorable tax treatment under the Code.
All required contributions pursuant to the Pension Plans, Welfare Plans and
Fringe Benefit Plans for all periods prior to the Effective Time have been made
or will be made prior to the Effective Time. There are no pending or, to the
Company's knowledge, threatened claims, lawsuits or arbitrations which have been
asserted or instituted against the Pension Plans, Welfare Plans or Fringe
Benefit Plans or any fiduciaries thereof with respect to their duties to the
Pension Plans, Welfare Plans or Fringe Benefit Plans or the assets of any of the
trusts under any Pension Plans, Welfare Plans or Fringe Benefit Plans. To the
Company's knowledge, no representations or communications with respect to
participation, eligibility for benefits, vesting, benefit accrual or coverage
under the Pension Plans, Welfare Plans or Fringe Benefit Plans have been made to
the Company's or its Subsidiaries' employees other than those which are in
accordance with the terms of such Pension Plans, Welfare Plans or Fringe Benefit
Plans in effect immediately prior to the Effective Time.
(j) With respect to any Welfare Plan which is a "group health plan" as
defined in Code Section 4980B, the Company and its Subsidiaries have complied
with the continuation coverage requirements of Code Section 4980B for any
periods prior to the Effective Time.
(k) The Company has furnished to Merchants copies of all documents
relating to the Pension Plans, Welfare Plans or Fringe Benefit Plans, including,
but not limited to, the following: any service provider agreements, any
investment management agreements, fiduciary insurance policies, fidelity bonds,
rules, regulations or policies of the trustees or any committee there under, all
of which are true and complete.
(1) To the Company's knowledge, no fiduciary of the Pension Plans or
Welfare Plans has engaged in any "prohibited transaction" (as defined in ERISA
Section 406 or Code Section 4975) nor has any fiduciary breached any fiduciary
responsibility, as described in Part 4 of Title I of ERISA with respect to such
Pension Plans or Welfare Plans.
20
(m) The Company has no knowledge of the occurrence of any event with
respect to any Pension Plan which could result in a liability of the Company,
any Subsidiary or any member of the Company's controlled group to the Pension
Benefit Guaranty Corporation ("PBGC"), other than the timely payment of premiums
pursuant to Section 4007 of ERISA. All required PBGC premiums have been paid for
the periods through the Effective Time.
(n) Except as set forth in the Company's Disclosure Schedule at Section
2.10, no Welfare Plan or Fringe Benefit Plan provides any form of
post-retirement health benefits to retired employees of the Company or its
Subsidiaries, other than benefits required to be provided pursuant to Code
Section 4980B.
SECTION 2.11. EMPLOYMENT CONTRACTS; MATERIAL CONTRACTS. Except as set
forth in the Company Disclosure Schedule at Section 2.11, neither the Company
nor its Subsidiaries is a party to or bound by (a) any employment or consulting
contract; (b) any contract or commitment for capital expenditures in excess of
$10,000.00 for any one (1) project, or (c) contracts or commitments for the
purchase of materials or supplies or for the performance of services over a
period of more than sixty (60) days from the date of this Agreement.
SECTION 2.12. REGISTRATION STATEMENT; PROXY STATEMENT. None of the
information supplied or to be supplied by the Company for inclusion in (a) the
Registration Statement (as defined in Section 6.01), (b) the Proxy Statement/
Prospectus (as defined in Section 6.01), or (c) any other document to be filed
with the Securities and Exchange Commission (the "SEC") or other regulatory
authority in connection with the transactions contemplated hereby, at the
respective times such documents are filed and, in the case of the Registration
Statement, when it becomes effective and at the Effective Time, and with respect
to the Proxy Statement/Prospectus, when mailed, shall 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. In the case of the Proxy
Statement/Prospectus or any amendment thereof or supplement thereto, none of
such information at the time of the Company's shareholders meeting (pursuant to
Section 6.02) (the "Meeting") shall be false or misleading with respect to any
material fact or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Meeting.
SECTION 2.13. TITLE TO PROPERTY. The Company Disclosure Schedule at
Section 2.13 correctly identifies all real property owned and leased by the
Company and its Subsidiaries. The Company and its Subsidiaries each has good and
defensible title to all of their properties and assets, real and personal,
tangible and intangible free and clear of all mortgage liens, and free and clear
of all other liens, charges and encumbrances except liens for taxes not yet due
and payable, pledges to secure deposits and borrowings from the Federal Home
Loan Bank and such minor imperfections of title, if any, as to not materially
detract from the value of or interfere with the present use of the property
affected thereby or which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company or its Subsidiaries, taken as a whole;
and all leases pursuant to which the Company or its Subsidiaries leases from
others real or personal property including, without limitation, leases for
branch offices are in good standing, valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
material default or event of default (or event which with notice or lapse of
time, or both, would constitute a material default and in respect of which the
Company or its Subsidiaries has not taken adequate steps to prevent such a
default from occurring). The Company's and its Subsidiaries' buildings and
equipment in regular use have been reasonably maintained and are in good and
serviceable condition, reasonable wear and tear excepted. To the Company's
knowledge, none of the buildings, structures or appurtenances owned or leased by
the Company or its Subsidiaries for their operation or maintenance as now
operated or maintained, contravenes any zoning ordinances or other
administrative regulations (whether or not permitted because of prior
non-conforming use) or violates any restrictive
21
covenant or any provision of law, the effect of which would materially interfere
with or prevent the continued use of such properties for the purposes for which
they are now being used or would materially and adversely affect the value
thereof.
SECTION 2.14. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) The term "Company's Property" shall mean any real property and
improvements currently owned, leased, used, operated or occupied by the Company
or its Subsidiaries, including properties acquired by foreclosure, properties
which the Banks have a present right to acquire upon foreclosure and which are
owned by customers of the Banks who have received written notification of
default, or properties held or operated in a fiduciary or managerial capacity;
(b) The term "Environmental Claims" shall mean any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or Environmental
Permit;
(c) The term "Environmental Laws" shall mean all federal, state and
local laws including statutes, regulations and other governmental restrictions
and requirements relating to the discharge of air pollutants, water pollutants
or process wastewater or the disposal of solid or hazardous waste or otherwise
relating to the environment or hazardous substances or employee health and
safety.
(d) The term "Environmental Permits" shall mean all permits, approvals,
identification numbers, licenses and other authorizations required under any
applicable Environmental Law.
(e) The term "Hazardous Substances" shall mean all hazardous and toxic
substances, wastes and materials; any pollutants or contaminants (including,
without limitation, petroleum products, asbestos and raw materials which include
hazardous constituents); and any other similar substances or materials which are
regulated under Environmental Laws.
(f) The Environmental Permits (if any) are in full force and effect
and, to the Company's knowledge, constitute all permits, licenses, approvals and
consents relating to Environmental Laws or Hazardous Substances required for the
conduct of the Company's and its Subsidiaries' businesses and the use of the
Company's Property (as presently conducted and used) in compliance with
Environmental Laws.
(g) The Company and its Subsidiaries have filed all reports, returns
and other filings required to be filed with respect to the Company's Property
under Environmental Laws and the Environmental Permits except where the failure
to do so would not have a material adverse effect on the Company's or
Subsidiaries' businesses or financial condition, taken as a whole.
(h) Except as set forth in the Company's Disclosure Schedule at Section
2.14(h), to the Company's knowledge, the business of the Company and its
Subsidiaries and the Company's Property have been and are being operated by the
Company and its Subsidiaries in accordance with all Environmental Laws and
Environmental Permits and neither the Company nor its Subsidiaries has received
any written notice nor does the Company or its Subsidiaries have knowledge that
the Company's Property is not in material compliance with all Environmental Laws
and Environmental Permits and no proceeding for the suspension, revocation or
cancellation of any Environmental Permit is pending or, to the Company's
knowledge, threatened.
(i) Except as set forth in the Company's Disclosure Schedule at Section
2.14(i), there are no actions pending, or to the Company's knowledge, threatened
against the Company or any of the
22
Subsidiaries (naming the Company or its Subsidiaries), which in any case assert
or allege (i) the Company or its Subsidiaries (naming the Company or its
Subsidiaries) violated any Environmental Law or Environmental Permit or are in
default with respect to any Environmental Permit or any order, writ, judgment,
variance, award or decree of any government authority; (ii) the Company or its
Subsidiaries is required to clean up or take remedial or other response action
due to the disposal, discharge or other release of any Hazardous Substance on
the Company's Property or elsewhere; or (iii) the Company or its Subsidiaries is
required to contribute to the cost of any past, present or future cleanup or
remedial or other response action which arises out of or is related to the
disposal, discharge or other release of any Hazardous Substance by the Company,
its Subsidiaries or others. The Company, its Subsidiaries, and the Company's
Property are not subject to any judgment, stipulation, order, decree or
agreement arising under Environmental Laws.
(j) Except as set forth in the Company's Disclosure Schedule at Section
2.14(j), with respect to the period during which the Company or its Subsidiaries
occupied the Company's Property (i) no Hazardous Substances have been treated,
recycled or disposed of by the Company or its Subsidiaries (intentionally or
unintentionally) on, under or at the Company's Property; (ii) there has been no
release or threatened release by the Company or the Subsidiaries of any
Hazardous Substance from the Company's Property; (iii) to the Company's
knowledge, there have been no activities on the Company's or its Subsidiaries
Property which would subject Merchants, its subsidiaries, or any subsequent
occupier of the Company's Property to damages, penalties, injunctive relief or
cleanup costs under any Environmental Laws or common law theory of liability.
SECTION 2.15. ABSENCE OF AGREEMENTS. Neither the Company nor its
Subsidiaries is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter which restricts materially the conduct of its business
(including any contract containing covenants which limit the ability of the
Company or its Subsidiaries to compete in any line of business or with any
person or which involve any restriction of the geographical area in which, or
method by which, the Company or its Subsidiaries may carry on its business), or
in any manner relates to its capital adequacy, its credit policies or its
management nor has the Company or its Subsidiaries been advised that any
federal, state or governmental agency is contemplating issuing or requesting (or
is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission.
SECTION 2.16. TAXES. The Company and its Subsidiaries have timely
filed all Tax Returns (as defined below) required to be filed by them, and the
Company and its Subsidiaries have timely paid and discharged all Taxes (as
defined below) due in connection with or with respect to the filing of such Tax
Returns and have timely paid all other Taxes as are due, except such as are
being contested in good faith by appropriate proceedings and with respect to
which the Company is maintaining reserves adequate for their payment. To the
best knowledge of the Company, the liability for Taxes set forth on each such
Tax Return adequately reflects the Taxes required to be reflected on such Tax
Return. For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
charges, fees levies, and other governmental assessments and impositions of any
kind, payable to any federal, state, local or foreign governmental entity or
taxing authority or agency, including, without limitation, (a) income,
franchise, profits, gross receipts, estimated, ad valorem, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, (b) customs
duties, imposts, charges, levies or other similar assessments of any kind, and
(c) interest, penalties and additions to tax imposed with respect thereto, and
"Tax Returns" shall mean returns, reports, and information statements with
respect to Taxes required to be filed with the United States Internal Revenue
Service (the "IRS") or any other governmental entity or taxing authority
23
or agency, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns. Neither the IRS nor any other governmental
entity or taxing authority or agency is now asserting, either through audits,
administrative proceedings, court proceedings or otherwise, or, to the best of
the Company's knowledge, threatening to assert against the Company or its
Subsidiaries any deficiency or claim for additional Taxes. Neither the Company
nor its Subsidiaries has granted any waiver of any statute of limitation with
respect to, or any extension of a period for the assessment of any tax. There
are no tax liens on any assets of the Company or its Subsidiaries. Neither the
Company nor its Subsidiaries has received a ruling or entered into an agreement
with the IRS or any other governmental entity or taxing authority or agency that
would have a Material Adverse Effect on the Company or its Subsidiaries, taken
as a whole, after the Effective Time. The accruals and reserves for taxes
reflected in the Company's Balance Sheet are adequate to cover all Taxes
accruable by the Company and its Subsidiaries on a consolidated basis through
the date thereof (including Taxes being contested) in accordance with generally
accepted accounting principles. Except as may be set forth in the Company
Disclosure Schedule at Section 2.16, no agreements relating to allocating or
sharing of Taxes exist between the Company and its Subsidiaries.
SECTION 2.17. INSURANCE. Complete and correct copies of all material
policies of fire, product or other liability, workers' compensation and other
similar forms of insurance owned or held by the Company and its Subsidiaries
have been delivered to Merchants. Subject to expirations and renewals of
insurance policies in the ordinary course of business, all such policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date as of which this representation is being made have
been paid (other-than retrospective premiums which may be payable with respect
to workers' compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
and shall remain valid, outstanding and enforceable policies, and will not be
terminated prior to the Effective Time. To the best knowledge of the Company,
the insurance policies to which the Company or its Subsidiaries are parties are
sufficient for compliance with all material requirements of law and all material
agreements to which the Company or its Subsidiaries are parties and will be
maintained by the Company and its Subsidiaries until the Effective Time. Neither
the Company nor its Subsidiaries has been refused any insurance with respect to
any material assets or operations, nor has coverage been limited in any respect
material to their operations by any insurance carrier to which they have applied
for any such insurance or with which they have carried insurance during the last
five (5) years.
SECTION 2.18. ABSENCE OF ADVERSE AGREEMENTS. Neither the Company nor
its Subsidiaries is a party to any agreement or instrument or any judgment,
order or decree or any rule or regulation of any court which materially and
adversely affects or in the future may have a Material Adverse Effect on the
financial condition, results or operations, assets, business or prospects of the
Company or its Subsidiaries, taken as a whole.
SECTION 2.19. INTERNAL CONTROLS AND RECORDS. The Company and its
Subsidiaries maintain books of account which accurately and validly reflect, in
all material respects, all loans, mortgages, collateral and other business
transactions and maintain accounting controls sufficient to ensure that all such
transactions are (a) in all material respects, executed in accordance with its
management's general or specific authorization, and (b) recorded in conformity
with generally accepted accounting principles. There is no amendment to any
agreement, collateral document or security which is not fully reflected in the
books and records of the Company or its Subsidiaries.
SECTION 2.20. LOANS. Except as disclosed in the Company Disclosure
Schedule at Section 2.20, (a) its Subsidiaries are not a party to any written or
oral loan agreement, note or borrowing arrangement which has been classified as
"substandard," "doubtful," "loss," "other loans especially mentioned" or any
comparable classifications by the Company or its Subsidiaries or banking
regulators;
24
(b) neither the Company nor its Subsidiaries is a party to any written or oral
loan agreement, note, or borrowing arrangement, including any loan guaranty,
with any director or executive officer of the Company or its Subsidiaries, or
any person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing; or (c) to the Company's knowledge, neither
the Company nor its Subsidiaries is a party to any written or oral loan
agreement, note or borrowing arrangement in violation of any law, regulation or
rule of any governmental authority and which violation could have a Material
Adverse Effect on the Company or its Subsidiaries, taken as a whole.
SECTION 2.21. LABOR MATTERS.
(a) To the Company's knowledge, the Company and its Subsidiaries are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and are not
engaged in any unfair labor practice; (b) there is no unfair labor practice
complaint against the Company or its Subsidiaries pending before the National
Labor Relations Board; (c) there is no labor strike, dispute, slowdown,
representation campaign or work stoppage actually pending or threatened against
or affecting the Company or its Subsidiaries; (d) no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claim therefore has been asserted against the Company or its
Subsidiaries; and (e) neither the Company nor its Subsidiaries is experiencing
any material work stoppage.
SECTION 2.22. BROKERS. Except as set forth in the Company's Disclosure
Schedule at Section 2.22, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement or in connection with any other
transaction, whether consummated or not, based upon arrangements made by or on
behalf of the Company or its Subsidiaries.
SECTION 2.23. ACCOUNTING AND TAX MATTERS.
(a) To the best knowledge of the Company, neither the Company nor its
Subsidiaries has through the date of this Agreement taken or agreed to take any
action that would prevent Merchants from accounting for the business combination
to be effected by the Merger as a purchase transaction or would prevent the
Merger from qualifying as a reorganization under Section 368(a)(1) of the Code.
(b) To the best knowledge of the Company, there is no plan or intention
on the part of shareholders of the Company who will receive Merchants Common
Stock to sell or otherwise dispose of an amount of Merchants Common Stock to be
received in the Merger which would reduce their ownership of Merchants Common
Stock to a number of shares having in the aggregate a value at the time of the
Merger of less than fifty percent (50%) of the total value of the Company's
Common Stock outstanding immediately prior to the Merger.
SECTION 2.24. FULL DISCLOSURE. No statement contained in any document,
certificate, or other writing furnished or to be furnished by or at the
direction of the Company to Merchants in, or pursuant to the provisions of, this
Agreement contains or shall contain any untrue statement of a material fact or
omits or shall omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
SECTION 2.25. VOTE REQUIRED. The affirmative vote of a majority of the
votes that holders of the outstanding shares of the Company's Common Stock are
entitled to cast is the only vote of the holders of any class or series of the
Company's or its Subsidiaries' capital stock necessary to approve the Merger and
the transactions contemplated thereby.
25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MERCHANTS
AND MERGER CORP.
Except as set forth in the Disclosure Schedule attached hereto (the
"Merchants Disclosure Schedule"), Merchants and Merger Corp. hereby represent
and warrant to the Company that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION. Merchants and Merger
Corp. are financial holding companies duly organized and validly existing under
the laws of the State of Wisconsin. Merchants and Merger Corp. are registered
with the Federal Reserve Board as financial holding companies under the BHCA.
Merchants and Merger Corp. have the requisite corporate power and authority and
are in possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders (the "Merchants
Approvals") necessary to own, lease and operate their properties and to carry on
their businesses as they are now being conducted, including appropriate
authorizations from the Federal Reserve Board, except where the failure to be so
organized and existing or to have such power, authority and Merchants Approvals
would not, individually or in the aggregate, have a Material Adverse Effect on
Merchants or Merger Corp. taken as a whole. Merchants or Merger Corp. have not
received any notice of proceedings relating to the revocation or modification of
any such Merchants Approvals. Merchants and Merger Corp. are duly qualified or
licensed as foreign corporations to do business, and are in good standing, in
each jurisdiction where the character of properties owned, leased or operated by
them or the nature of their activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on Merchants or Merger Corp.
SECTION 3.02. ARTICLES OF INCORPORATION AND BYLAWS. Merchants and
Merger Corp. have heretofore made available to the Company a complete and
correct copy of their Articles of Incorporation and Bylaws, as amended or
restated. Such Articles of Incorporation and Bylaws are in full force and
effect. Merchants and Merger Corp. are not in violation of any of the provisions
of their Articles of Incorporation or Bylaws.
SECTION 3.03. CAPITALIZATION. The outstanding capital stock of
Merchants is, and the shares of Merchant's Common Stock to be issued pursuant to
the Merger, when so issued, will be, duly authorized, validly issued, fully paid
and non-assessable, (except as provided in Section 180.0622(2)(b) of Wisconsin
Business Corporation Law) fully registered under the Securities Act and have
not, and will not have, been issued in violation of the preemptive rights of any
person. As of April 15, 2002 the issued and outstanding shares of Merchants
totaled 2,542,387 C.S. Stock.
SECTION 3.04. AUTHORITY. Merchants and Merger Corp. have the requisite
corporate power and authority to execute and deliver this Agreement and to
perform their obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Merchants
and Merger Corp. and the consummation by Merchants and Merger Corp. of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Merchants and Merger Corp. and no
other corporate proceedings on the part of Merchants or Merger Corp. are
necessary to authorize this Agreement or to consummate the transactions so
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Merchants and Merger Corp. and, assuming the due authorization,
execution and delivery by the Company, constitutes the legal, valid and binding
obligation of Merchants and Merger Corp.
26
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) To the best knowledge of Merchants and Merger Corp., the execution
and delivery of this Agreement by Merchants and Merger Corp. does not, and the
performance of this Agreement by Merchants and Merger Corp. shall not, (i)
conflict with or violate the Articles of Incorporation or Bylaws of Merchants or
Merger Corp., (ii) conflict with or violate any laws applicable to Merchants and
Merger Corp. or by which their properties are bound or affected, or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Merchants or Merger Corp. pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Merchants or Merger Corp. is a party or by which Merchants
or Merger Corp. or their properties are bound or affected, except for any such
breaches, defaults or other occurrences that would not, individually or in the
aggregate, have a Material Adverse Effect on Merchants and/or Merger Corp.
(b) To the best knowledge of Merchants and Merger Corp., the execution
and delivery of this Agreement by Merchants and Merger Corp. does not, and the
performance of this Agreement by Merchants or Merger Corp. shall not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements of the Securities Act, the Exchange Act,
Blue Sky Laws, the BHCA, the federal and state banking laws and the filing and
recordation of appropriate merger or other documents as required by Iowa and
Wisconsin Law, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent Merchants and
Merger Corp. from performing their obligations under this Agreement, and would
not have a Material Adverse Effect on Merchants and/or Merger Corp.
SECTION 3.06. COMPLIANCE; PERMITS. To the best knowledge of Merchants
and Merger Corp., Merchants and Merger Corp. are not in conflict with, or in
default or violation of (a) any Law applicable to Merchants or Merger Corp. or
by which their property is bound or affected, or (b) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Merchants or Merger Corp. is a party or by
which Merchants or Merger Corp. or any of their properties are bound or
affected, except for any such conflicts, defaults or violations which would not,
individually or in the aggregate, have a Material Adverse Effect on Merchants
and/or Merger Corp.
SECTION 3.07. SECURITIES REPORTS; FINANCIAL STATEMENTS.
(a) As of the date of this Agreement, Merchants has made available to
the Company in the form filed with the SEC(i) its Annual Reports on Form 10-K
for the fiscal years ended December 31, 2001, 2000, 1999 and 1998, respectively,
(ii) Quarterly Report on Form 10-Q for the period ended Xxxxx 00, 0000, (xxx)
all definitive proxy statements relating to Merchants meetings of shareholders
(whether annual or special) held since December 31, 1998, (iv) all Reports on
Form 8-K filed by Merchants with the SEC since December 31, 1998, (v) all other
reports or registration statements filed by Merchants with the SEC since
December 31, 1998, and (vi) all amendments and supplements to all such reports
and registration statements filed by Merchants with the SEC since December 31,
1998, (collectively, the "Merchants SEC Reports"). The Merchants' SEC Reports,
including all Merchants SEC Reports filed after the date of this Agreement, (i)
were or will be prepared in accordance with the requirements of applicable law
and (ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of 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.
27
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Merchants SEC Reports,
including any SEC Reports filed since the date of this Agreement and prior to or
on the Effective Time, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Merchants and its subsidiaries
as of the respective dates thereof and the consolidated results of its
operations and changes in financial position for the periods indicated, except
that any unaudited interim financial statements were or are subject to normal
and recurring year-end adjustments which were not or are not expected to be
material in amount.
(c) Except as set forth on the consolidated balance sheet of Merchants
and its subsidiaries as of December 31, 2001, including all notes thereto,
neither Merchants nor its subsidiaries have any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with generally accepted accounting principles, except for
liabilities or obligations incurred in the ordinary course of business since
December 31, 2001, that would not have a Material Adverse Effect on Merchants.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Merchants SEC Reports filed prior to the date of this Agreement, since
December 31, 2001, to the date of this Agreement, Merchants and its subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 2001, there has not been
(a) any change in the financial condition, results of operations or business of
Merchants or its subsidiaries having a Material Adverse Effect on Merchants or
its subsidiaries, taken as a whole, (b) any damage, destruction or loss (whether
or not covered by insurance) with respect to any assets of Merchants or its
subsidiaries having a Material Adverse Effect on Merchants or its subsidiaries,
taken as a whole, (c) any change by Merchants in its accounting methods,
principles or practices, (d) any revaluation by Merchants of any of its material
assets in any material respect, or (e) to the date of this Agreement, any entry
by Merchants or any of its subsidiaries into any commitment or transactions
material to Merchants or its subsidiaries, taken as a whole.
SECTION 3.09. ABSENCE OF LITIGATION. Except as disclosed in the
Merchants Disclosure Schedule at Section 3.09, there is no claim, action, suit,
litigation, proceeding, arbitration, investigation, or controversy of any kind
affecting Merchants or any of Merchants' subsidiaries pending or, to the
knowledge of Merchants, threatened, except for matters which will not have, and
cannot reasonably be expected to have, a Material Adverse Effect on Merchants or
its subsidiaries taken as a whole, and there are no uncured material violations,
or violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to Merchants or any of Merchants'
subsidiaries as a result of an examination by any regulatory authority.
SECTION 3.10. REGISTRATION STATEMENT; PROXY STATEMENT. None of the
information supplied or to be supplied by Merchants for inclusion in (a) the
Registration Statement (as defined in Section 6.01) (b) the Proxy
Statement/Prospectus (as defined in Section 6.01), or (c) any other document to
be filed with the SEC or other regulatory authority in connection with the
transactions contemplated hereby, at the respective time such documents are
filed and, in the case of the Registration Statement, when it becomes effective
and at the Effective Time, and with respect to the Proxy Statement/Prospectus,
when mailed, shall 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. In the case of the Proxy Statement/Prospectus or any
amendment thereof or supplement thereto, none of such information at the time of
the shareholder meeting (as provided for in Section 6.02) shall 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
28
respect to the solicitation of any proxy for the shareholder meeting (as
provided for in Section 6.02). All documents filed with the SEC or other
regulatory authority by Merchants in connection with the Merger shall comply as
to form in all material respects with the provisions of applicable law.
SECTION 3.11. ABSENCE OF AGREEMENTS. Neither Merchants nor any of its
subsidiaries is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter which restricts materially the conduct of its business
(including any contract containing covenants which limit the ability of
Merchants or its subsidiaries to compete in any line of business or with any
person or which involve any restriction of the geographical area in which, or
any method by which, Merchants or its subsidiaries may carry on their business
(other than as may be required by Law or applicable regulatory authorities)), or
in any manner relates to their capital adequacy, their credit policies or
management, except for those the existence of which has been disclosed to the
Company prior to the date of this Agreement, nor has Merchants or any of its
subsidiaries been advised that any federal, state or governmental agency is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission.
SECTION 3.12. TAXES. Merchants and its subsidiaries have timely filed
all Tax Returns required to be filed by them, and Merchants and its subsidiaries
have timely paid and discharged all Taxes due in connection with or with respect
to the filing of such Tax Returns and have timely paid all other Taxes as are
due, except such as are being contested in good faith by appropriate proceedings
and with respect to which Merchants is maintaining reserves adequate for their
payment. To the best knowledge of Merchants, the liability for Taxes set forth
on each such Tax Return adequately reflects the Taxes required to be reflected
on such Tax Return. Neither the IRS nor any other governmental entity or taxing
authority or agency is now asserting, either through audits or administrative
proceedings, court proceedings or otherwise, or, to the best of Merchants'
knowledge, threatening to assert against Merchants or any of its subsidiaries
any deficiency or claim for additional Taxes. Neither Merchants nor any of its
subsidiaries has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any Tax. There are no
tax liens on any assets of Merchants or any of its subsidiaries. Neither
Merchants nor any of its subsidiaries has received a ruling or entered into an
agreement with the IRS or any other governmental entity or taxing authority or
agency that would have a Material Adverse Effect on Merchants or its
subsidiaries, taken as a whole, after the Effective Time. The accruals and
reserves for taxes reflected in the Merchants Balance Sheet are adequate to
cover all Taxes accruable through the date thereof (including Taxes being
contested) in accordance with generally accepted accounting principles. Except
as set forth in Merchants Disclosure Schedule, at Section 3.12, no agreements
relating to allocating or sharing of Taxes exist among Merchants and its
subsidiaries and no tax indemnities given by Merchants or its subsidiaries in
connection with a sale of stock or assets remain in effect. Except as disclosed
in the Merchants Disclosure Schedule at Section 3.12, neither Merchants nor any
of its subsidiaries is required to include in income either (i) any amount in
respect of any adjustment under Section 481 of the Code, or (ii) any installment
sale gain. Neither Merchants nor any of its subsidiaries has made an election
under Section 341(f) of the Code.
SECTION 3.13. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finders or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Merchants or Merger Corp.
SECTION 3.14. ACCOUNTING AND TAX MATTERS. To the best knowledge of
Merchants, neither Merchants nor any of its affiliates has through the date of
this Agreement taken or agreed to take any action that would prevent Merchants
from accounting for the business combination to be effected by the
29
Merger as a purchase transaction or would prevent the Merger from qualifying as
a reorganization under Section 368(a)(1) of the Code.
SECTION 3.15. FULL DISCLOSURE. No statement contained in any document,
certificate, or other writing furnished or to be furnished by or at the
direction of Merchants to the Company in, or pursuant to the provisions of, this
Agreement contains or shall contain any untrue statement of a material fact or
omits or shall omit to state any material fact necessary, in the light of the
circumstances under which it has been made, in order to make the statements
herein or therein not misleading.
SECTION 3.16. VOTE REQUIRED. Pursuant to applicable provisions of
Wisconsin law, no vote of the shareholders of Merchants is required to approve
the Merger.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. AFFIRMATIVE COVENANTS. The Company hereby covenants and
agrees with Merchants and Merger Corp. that prior to the Effective Time, unless
the prior written consent of Merchants shall have been obtained and except as
otherwise contemplated herein, it will and/or it will cause each of its
Subsidiaries to:
(a) Operate its/their business only in the usual, regular and ordinary
course consistent with past practices;
(b) Use reasonable efforts to preserve intact its/their business
organization and assets, to maintain its/their rights and franchises, to retain
the services of its/their officers and key employees and to maintain its
relationships with customers;
(c) Use reasonable efforts to maintain and keep its/their properties in
as good repair and condition as at present, ordinary wear and tear excepted;
(d) Use reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that now maintained by
it/them;
(e) Perform in all material respects all obligations required to be
performed by it/them under all material contracts, leases, and documents
relating to or affecting its/their assets, properties, and business;
(f) Purchase and sell securities and make loans in accordance with past
practices and in accordance with paragraph 4.02(j);
(g) With respect to the Banks, maintain as of the date on which all of
the conditions set forth in Article VII have been satisfied or waived and
thereafter a loan loss reserve of not less than 1.3 percent of loans and leases
after certain loans have been charged-off pursuant to mutual agreement of the
Company and Merchants;
(h) Use reasonable efforts to comply with and perform in all material
respects all obligations and duties imposed upon it by all applicable laws;
(i) Obtain an independent audit of its financial statements for the
year ended December 31, 2001 and for such additional years as may be required by
governmental agencies;
30
(j) Fully expense as of the date on which all conditions set forth in
Article VII have been satisfied or waived all expenses (including fees) incurred
in connection with the consummation of the transaction contemplated hereby.
(k) Confer with Merchants to report on operational matters of a
material nature and report on the general status of the ongoing operations of
the business of the Company and its subsidiaries.
SECTION 4.02. NEGATIVE COVENANTS. Except as specifically contemplated
by this Agreement, from the date of this Agreement until the Effective Time, the
Company shall not do, or permit its Subsidiaries to do, without the prior
written consent of Merchants, any of the following:
(a) (i) Except as set forth on Schedule 4.02, grant any increase in
compensation or grant any bonuses (incentive or special) to its employees as a
class, or to its officers or directors, (ii) effect any change in retirement
benefits to any class of employees or officers (unless any such change shall be
required by applicable law) which would increase its retirement benefit
liabilities, (iii) adopt, enter into, amend or modify any employee benefit plan
or make any adjustments pursuant to any employee benefit plan, or (iv) enter
into or amend any employment, severance or similar agreements or arrangements
with any directors or officers.
(b) Except as set forth on Schedule 4.02, declare or pay any dividend
on, or make any other distribution in respect of, its outstanding shares of
capital stock;
(c) (i) Redeem, purchase or otherwise acquire any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or any options, warrants, conversion or other
rights to acquire any shares of its capital stock or any such securities or
obligations; (ii) merge with or into any other corporation or bank, permit any
other corporation or bank to merge into it or consolidate with any other
corporation or bank, or effect any reorganization or recapitalization; (iii)
purchase or otherwise acquire any assets or stock of any corporation, bank or
other business; (iv) liquidate, sell, dispose of, or encumber any assets or
acquire any assets, other than in the ordinary course of its business consistent
with past practice; or (v) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock;
(d) Issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of any class of its
capital stock (including shares held in treasury) or any rights, warrants or
options to acquire, any such shares;
(e) Initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Competing Transaction (as such term is defined below),
or negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or its Subsidiaries to take any such action, and
the Company shall promptly notify Merchants orally and in writing of all of the
relevant details relating to all inquiries and proposals which it may receive
relating to any of such matters; provided, however, that nothing contained in
this subsection (e) shall prohibit the Board of Directors of the Company from
furnishing or permitting any of its officers, directors, employees, investment
bankers, financial advisors, attorneys, accountants or other representative to
furnish information to any party that requests information as to the Company and
its Subsidiaries or taking any other action if the Board of Directors of the
Company, after consultation with
31
and based upon the written advice of independent legal counsel, determines in
good faith that such action is required for the Board of Directors of the
Company to comply with its fiduciary duties to shareholders imposed by law. For
purposes of this Agreement, "Competing Transaction" shall mean any of the
following involving the Company or its Subsidiaries: (i) any merger,
consolidation, share exchange, business combination, or other similar
transactions; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of ten percent or more of assets in a single transaction or
series of transactions, excluding from the calculation of the percentage
hereunder any such transactions undertaken in the ordinary course of business
and consistent with past practice; (iii) any sale of ten percent or more of
shares of capital stock (or securities convertible or exchangeable into or
otherwise evidencing, or any agreement or instrument evidencing, the right to
acquire capital stock); (iv) any tender offer or exchange offer for ten percent
or more of outstanding shares of capital stock; (v) any solicitation of proxies
in opposition to approval by the Company's shareholders of the Merger; (vi) the
filing of an acquisition application (or the giving of acquisition notice)
whether in draft or final form under the BHCA or the Change in Bank Control Act
with respect to the Company or its Subsidiaries; (vii) any person shall have
acquired beneficial ownership or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under Section 13(d) of the Exchange Act
and the rules and regulations promulgated there under) shall have been formed
which beneficially owns or has the right to acquire beneficial ownership of, ten
percent (10%) or more of the then outstanding shares of capital stock of the
Company or any of its Subsidiaries; or (viii) any public announcement of a
proposal, plan or intention to do any of the foregoing;
(f) Propose or adopt any amendments to the corporate charter or Bylaws
in any way materially adverse to Merchants;
(g) Except in their fiduciary capacities for the account of customers,
purchase any shares of Merchants Common Stock;
(h) Change any of its methods of accounting in effect at December 31,
2001, or change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 2001, except as may be
required by law or generally accepted accounting principles;
(i) Change any lending, investment, liability management or other
material policies concerning the business or operations of the Company or its
Subsidiaries in any material respect; organize any new subsidiaries or enter
into any new non-banking line of business whether or not permissible under
applicable Federal or state law, or make any material changes in its operations;
(j) (i) Incur or assume any material obligation or liability, including
without limitation any obligation for borrowed money, except for borrowings from
the Federal Home Loan Bank in accordance with the Banks' line of credit,
disclosed in Schedule 4.02, whether or not evidenced by a note, bond, debenture
or similar instrument and whether or not being incurred to reduce other existing
liabilities, or make any loan (not including any loan renewal of a loan not then
classified as "substandard," "doubtful," "loss," "other loans especially
mentioned" or any comparable classifications by the Company, the Bank or banking
regulators) which shall not meet the requirements of the Bank's loan policy in
effect as of March 31, 2002 or investment (excluding U.S. Treasury Securities
and municipal loans) in an amount greater than $100,000.00 per investment, (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingent or otherwise) for the obligations of any other person or
entity; (iii) mortgage, license, pledge or grant a security interest in any of
its material assets or allow to exist any material lien thereon; except (A) for
liabilities and obligations (including corporate debt issuances) incurred in the
ordinary course of business consistent with past practices and in amounts not
material to the Company or its Subsidiaries; and (B) as may be required under
existing agreements to
32
which the Company or its Subsidiaries is a party; (iv) acquire assets (including
equipment) or securities in excess of $25,000.00 in the aggregate (excluding
loans to customers and investments permitted in (i) above; (v) enter into any
other contract or agreement involving annual payments by the Company or its
Subsidiaries or the other party or parties thereto in excess of $20,000.00; (vi)
pay, discharge, or satisfy any debts or claims not in the ordinary course of
business and consistent with past practices and in no event with a value in
excess of $20,000.00 individually; (vii) settle any claim, action, suit,
litigation, proceeding, arbitration, investigation or controversy of any kind,
for any amount in excess of $25,000.00 or in any manner which would restrict in
any material respect the operations or business of the Company or its
Subsidiaries; (viii) purchase any new financial product or instrument which
involves entering into a contract with a term of six months or longer; or (ix)
take any action or fail to take any action which individually or in the
aggregate can be expected to have a Material Adverse Effect on the Company or
its Subsidiaries, taken as a whole; or
(k) Agree in writing or otherwise to do any of the foregoing.
SECTION 4.03. ACCESS AND INFORMATION.
(a) Upon reasonable notice, and without unreasonable disruption to the
business carried on by the Company or its Subsidiaries, the Company shall (and
shall cause its Subsidiaries to) afford to Merchants' officers, employees,
accountants, legal counsel and other representatives access, during normal
business hours, to all its properties, books, contracts, commitments and
records. Prior to the Effective Time, the Company shall (and shall cause its
Subsidiaries to) furnish promptly to Merchants (i) a copy of each Company Report
filed by it (to the extent permitted by law) after the date of this Agreement
and prior to the Effective Time pursuant to the requirements of the BHCA, any
other federal or state banking laws or any other applicable laws promptly after
such documents are available; (ii) the monthly financial statements of the
Banks; (iii) the audited financial statements of the Company and its
Subsidiaries for the year ended December 31, 2001, if required by the SEC; (iv)
a summary of any action taken by the Board of Directors, or any committee
thereof, of the Company and its Subsidiaries; (v) all other information
concerning the business, properties and personnel of the Company or its
Subsidiaries as Merchants may reasonably request.
(b) Any information provided to the Company by Merchants whether prior
to or subsequent to the date of this Agreement shall be kept confidential by the
representatives of the Company and its Subsidiaries (and shall be used by them
only in connection with this Agreement and the transactions contemplated hereby)
except to the extent that (i) it was already known to such representatives when
received, (ii) it hereafter becomes lawfully obtainable from other sources, or
(iii) it is required to be disclosed by the Company in any document required to
be filed with any government authority or agency.
SECTION 4.04. AFFILIATES; ACCOUNTING AND TAX TREATMENT. Within thirty
(30) days after the date of this Agreement, (a) the Company shall deliver to
Merchants a letter identifying all persons who are then "affiliates" of the
Company, including, without limitation, all directors and executive officers of
the Company for purposes of Rule 145 promulgated under the Securities Act and
(b). the Company shall advise the persons identified in such letter of the
resale restrictions imposed by applicable securities laws, and shall obtain from
each person identified in such letter a written agreement, substantially in the
form attached hereto as Exhibit 4.04. The Company shall obtain from any person
who becomes an affiliate of the Company after the Company's delivery of the
letter referred to above, and on or prior to the Effective Time, a written
agreement substantially in the form attached hereto as Exhibit 4.04 as soon as
practicable after attaining such status. The Company will use its reasonable
best efforts to cause the Merger to qualify as a reorganization under Section
368(a)(1) of the Code.
33
SECTION 4.05. EXPENSES.
(a) Except as provided in Section 8.02, below, all Expenses (as
described below) incurred by Merchants and the Company shall be borne solely and
entirely by the party which has incurred the same. Without limiting the
Company's obligations pursuant to the preceding sentence, the Company shall be
responsible for expenses in connection with the preparation of audited financial
statements as of the year ended December 31, 2001, and related schedules for the
Company and its Subsidiaries. Merchants and the Company shall share equally in
the expense of preparing, printing, mailing and filing the Registration
Statement and the Proxy Statement/Prospectus and all SEC regulatory filing fees
incurred in connection therewith. However, should the Merger not be completed,
the expense of preparing, printing, and mailing the Registration Statement shall
be borne by Merchants and the expense of preparing, printing, mailing and filing
the Proxy Statement/Prospectus shall be borne by the Company.
(b) "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to the party
and its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation and execution of this Agreement, the
preparation of the Registration Statement and Proxy Statement/Prospectus, the
solicitation of shareholder approvals and all other matters related to the
closing of the transactions contemplated hereby.
SECTION 4.06. DELIVERY OF SHAREHOLDER LIST. The Company shall or shall
arrange to have its transfer agent deliver to Merchants or its designee, from
time to time prior to the Effective Time, a true and complete list setting forth
the names and addresses of the shareholders of the Company, their holdings of
stock as of the latest practicable date, and such other shareholder information
as Merchants may reasonably request.
ARTICLE V
COVENANTS OF MERCHANTS
SECTION 5.01. AFFIRMATIVE COVENANTS. Merchants hereby covenants and
agrees with the Company that prior to the Effective Time, unless the prior
written consent of the Company shall have been obtained, and except as otherwise
contemplated herein it will and will cause Merger Corp. to:
(a) Maintain its corporate existence in good standing and maintain all
books and records in accordance with accounting principles and practices as
utilized in Merchants' financial Statements applied on a consistent basis;
(b) Conduct its business in a manner that does not violate any law,
except for possible violations which individually or in the aggregate do not,
and insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on Merchants or its subsidiaries, taken as a whole; and
(c) Will, to the best of its ability and in all material respects, (i)
comply with applicable Blue Sky Laws and regulations, the Securities Act, and
the Exchange Act, and (ii) remain qualified under the Exchange Act and the rules
and regulations there under.
SECTION 5.02. ACCESS AND INFORMATION.
(a) After the date of this Agreement and prior to the Effective Time,
Merchants shall (and shall cause each of its subsidiaries to) furnish promptly
to the Company (i) a copy of each Merchants SEC
34
Report filed by it or received by it (to the extent permitted by law) after the
date of this Agreement and prior to the Effective Time pursuant to the
requirements of federal or state securities laws, the BHCA, any other federal or
state banking laws or any other applicable laws promptly after such documents
are available, and (ii) all other information concerning the business,
properties and personnel of Merchants or its subsidiaries as the Company may
reasonably request.
(b) Any information provided to Merchants by the Company or its Subsidiaries,
whether prior to or subsequent to the date of this Agreement, shall be kept
confidential by the representatives of Merchants (and shall be used by them only
in connection with this Agreement and the transactions contemplated hereby)
except to the extent that (i) it was already known to such representatives when
received, (ii) it hereafter becomes lawfully obtainable from other sources, or
(iii) it is required to be disclosed by Merchants in any document required to be
filed with any government agency. Upon any termination of this Agreement
pursuant to Article VIII hereof, Merchants agrees to promptly return all
information and documents that it has obtained from the Company in connection
herewith.
SECTION 5.03. ACCOUNTING AND TAX TREATMENT. Merchants will use its best
efforts to cause the Merger to qualify as a reorganization under Section 368
(a)(1) of the Code.
SECTION 5.04. REGISTRATION STATEMENT. Merchants will use its best
efforts to cause the Registration Statement to be declared effective by the SEC
under the Securities Act and to obtain all other federal and state securities
permits and other authorizations necessary to issue Merchants Common Stock in
exchange for the Company Common Stock and to consummate the Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. REGISTRATION STATEMENT. As promptly as practicable after
the execution of this Agreement, Merchants shall prepare and file a registration
statement on Form S-4 (the registration statement together with the amendments
thereto are defined as the "Registration Statement" and the prospectus and proxy
materials contained therein are defined as the "Proxy Statement/Prospectus")
with the SEC covering the Merchants Common Stock to be issued in the Merger
(subject to the immediately following sentence), with a view toward permitting
the Registration Statement to become effective as soon as reasonably
practicable. Merchants does not undertake to file post-effective amendments to
Form S-4 or to file a separate registration statement to register the sale of
Merchants Common Stock by affiliates of the Company pursuant to Rule 145
promulgated under the Securities Act. The Company will furnish to Merchants all
information concerning the Company and its Subsidiaries required to be set forth
in the Registration Statement and Merchants will provide the Company and its
counsel the opportunity to review and approve such information as set forth in
the Registration Statement and Proxy Statement/Prospectus. Merchants and the
Company will each render to the other its full cooperation in preparing, filing,
prosecuting the filing of, and amending the Registration Statement such that it
comports at all times with the requirements of the Securities Act and the
Exchange Act. Specifically, but without limitation, each will promptly advise
the other if at any time before the Effective Time any information provided by
it for inclusion in the Registration Statement appears to have been, or shall
have become, incorrect or incomplete and will furnish the information necessary
to correct such misstatement or omission. As promptly as practicable after the
effective date of the Registration Statement, the Company will mail to its
shareholders (a) the Proxy Statement/Prospectus, and (b) as promptly as
practicable after approval thereof by Merchants and the Company, such other
supplementary proxy materials as may be necessary to make the Proxy
Statement/Prospectus comply with the applicable requirements of the Securities
Act and the Exchange Act. Except as provided above and except with the prior
written consent of Merchants, the Company will not mail or otherwise furnish or
publish to shareholders of the Company
35
any proxy solicitation material or other material relating to the Merger that
constitute a "prospectus" within the meaning of the Securities Act. Merchants
shall also take any action required to be taken under any applicable Blue Sky
Law in connection with the issuance of the shares of Merchants Common Stock to
be issued as set forth in this Agreement and the Company and its Subsidiaries
shall furnish all information concerning the Company and its Subsidiaries, and
the holders of the Company's Common Stock and other assistance as Merchants may
reasonably request in connection with such action.
SECTION 6.02. MEETING OF THE SHAREHOLDERS. The Company shall: (a) cause
a shareholders meeting to be duly called and held as soon as practicable to
consider and vote upon the Merger and any related matters in accordance with the
applicable provision of applicable law, (b) subject to the exception for the
exercise of its fiduciary duties in Section 4.02(e) submit this Agreement to the
shareholders together with a majority recommendation for approval by the Board
of Directors of the Company, solicit the approval thereof by the shareholders of
the Company by mailing or delivering to each shareholder a combined Proxy
Statement/Prospectus, and use its best efforts to obtain the approval and
adoption of the Merger by the requisite percentage of the Company's
shareholders.
SECTION 6.03. APPROPRIATE ACTION; CONSENTS; FILINGS. The Company and
Merchants and Merger Corp. shall use all reasonable efforts to (a) take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper or advisable under applicable law to consummate and
make effective the transactions contemplated by this Agreement; (b) obtain all
consents, licenses, permits, waivers, approvals, authorizations or orders
required under Law (including, without limitation, all foreign and domestic
(federal, state and local) governmental and regulatory rulings and approvals and
parties to contracts) in connection with the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby and thereby, including, without limitation, the Merger; and
(c) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (i)
the Securities Act and the Exchange Act and the rules and regulations there
under, and any other applicable federal and state securities law, (ii) any
applicable federal or state banking laws and (iii) any other applicable law;
provided that Merchants, Merger Corp. and the Company shall cooperate with each
other in connection with the making of all such filings, including providing
copies of all such documents to the non-filing party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. The Company and Merchants shall
furnish all information required on any application or other filing to be made
pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Proxy Statement/Prospectus and the
Registration statement) in connection with the transactions contemplated by this
Agreement. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall use all reasonable
efforts to take all such necessary action.
SECTION 6.04. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Merchants, and Merchants shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate, and (b) any
failure of the Company or Merchants, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.04 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.05. PUBLIC ANNOUNCEMENTS. Merchants and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the
36
Merger and shall not issue any such press release or make any such public
statement prior to such consultation and without mutual consent of both parties,
except as may be required by law.
SECTION 6.06. ENVIRONMENTAL MATTERS. In the event Merchants or its
environmental consultants discover or determine the existence of any
environmental condition (including, without limitation, a spill, discharge or
contamination) the result of which may require investigative or remedial action
pursuant to any federal, state, or local law, statute or regulation or may be
the basis for the assertion of any third-party claims, including the claims of
governmental entities, Merchants shall promptly notify the Company thereof and
the Company shall, at its sole cost and expense, proceed with due diligence to
take reasonably appropriate action in response thereto.
SECTION 6.07. BREAK-UP FEE.
(a) Provided that neither party has breached in any material
respect its obligations under this Agreement, as a condition
and inducement to both parties' willingness to enter into and
perform this Agreement, a fee ("Break-Up Fee") equal to two
percent (2%) of the aggregate Merger Consideration as defined
in Section 1.06 of this Agreement shall be payable as outlined
in Section 6.07 (b), (c) and (d) below.
(b) The Break-Up Fee shall be payable by the Company to Merchants
only if:
(i) (A) The Board of Directors of the Company (1) shall have
withdrawn, modified or amended in any respect its approval or
recommendation of this Agreement or the transactions
contemplated thereby, or (2) shall not at the appropriate time
have recommended or shall have withdrawn, modified or amended
in any respect its recommendation that its shareholders vote
in favor of this Agreement, or (3) shall not have included
such recommendation in the Proxy Statement/Prospectus or (B)
the Board of Directors of the Company shall have resolved to
do any of the foregoing; or
(ii) The Company violates Section 4.02(e) hereof.
(c) The Break-Up Fee shall be payable by Merchants to the Company
only if:
(i) Merchants is unable to obtain the regulatory approvals
from the Federal Reserve Bank necessary to complete the
Merger, unless such inability to obtain said approval is due
to new regulatory requirements imposed by the Federal Reserve
Bank which up to the date of this Agreement had not been in
effect; or
(ii) The SEC does not declare the Registration Statement to be
effective or the SEC issues a stop order suspending the
effectiveness of the Registration Statement under the
Securities Act, unless such action by the SEC is due to new
regulatory requirements imposed by the SEC which up to the
date of this Agreement had not been in effect.
(d) The Break-Up Fee shall be paid within three (3) days
subsequent to a termination of this Agreement and shall be
considered liquidated damages and shall be payable in addition
to any other damages, fees or
37
expenses to which Merchants may be entitled pursuant to the
terms of this Agreement or remedies at law or equity.
SECTION 6.08. DIRECTORS OF MERCHANTS. Merchants shall recommend to its
shareholders the election of two (2) directors from the Company to the
Merchants' Board of Directors at the annual shareholder meeting of Merchants
following the date of this Agreement, or the immediately following shareholders
meeting if inclusion of such directors' nominations in the proxy statement is
not practical due to time constraints. Until such shareholder meeting, the Board
of Directors of Merchants shall appoint these persons to the Merchants' Board of
Directors. The Directors from the Company to be so appointed are Xxxxxx Xxxxxxx
and Xxxxx Xxxxxxx.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall, on
or prior to the Effective Time, have been initiated or, to the knowledge of
Merchants or the Company, threatened by the SEC. Merchants shall have received
all other federal or state securities permits and other authorizations necessary
to issue Merchants Common Stock in exchange for the Company Common Stock and to
consummate the Merger.
(b) Shareholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the shareholders of the Company.
(c) Regulatory Approvals. The Agreement and the transactions
contemplated therein shall have been approved by the Federal Reserve Board and
other appropriate banking agencies having jurisdiction over the transaction,
which approval shall not contain any conditions which are not reasonably
satisfactory to Merchants, Merger Corp. or the Company, all conditions required
to be satisfied prior to the Effective Time imposed by the terms of such
approvals shall have been satisfied and all waiting periods relating to such
approvals shall have expired.
(d) No Order. No federal or state governmental or regulatory authority
or other agency or commission, or federal or state court of competent
jurisdiction, shall have enacted, issued promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect restricting,
preventing or prohibiting consummation of the transactions contemplated by this
Agreement.
SECTION 7.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF MERCHANTS AND
MERGER CORP. The obligation of Merchants and Merger Corp. to effect the Merger
are also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be complete and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects) as of the Effective Time as
though made at the
38
Effective Time with the same force and effect as if made on and as of the
Effective Time. Merchants shall have received a certificate of the Chief
Executive Officer of the Company to that effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by the Company and its Subsidiaries for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company and its
Subsidiaries.
(d) No Challenge. There shall not be pending any action, proceeding or
investigation before any court or administrative agency or by any governmental
agency or any other person (i) challenging or seeking material damages in
connection with the Merger or the conversion of the Company Common Stock into
Merchants Common Stock or cash pursuant to the Merger, or (ii) seeking to
restrain, prohibit or limit the exercise of full rights of ownership or
operation by Merchants or its subsidiaries of all or any portion of the business
or assets of the Company or its Subsidiaries, which in either case is reasonably
likely to have a Material Adverse Effect on either the Company or its
Subsidiaries, taken as a whole, or Merchants or its subsidiaries, taken as a
whole.
(e) Opinion of Counsel. Merchants shall have received from counsel for
the Company reasonably satisfactory to Merchants, an opinion dated the Effective
Time, in form and substance reasonably satisfactory to Merchants which opinion
shall be based on such assumptions and containing such qualifications and
limitations as are appropriate and reasonably satisfactory to Merchants. Without
limiting the provisions and requirements of this paragraph, the opinion of
counsel for the Company pursuant to this paragraph shall include an opinion that
Article VIII of the Articles of Incorporation of the Company, as amended and
restated, titled "Anti-Takeover Provisions" shall not operate to preclude or
prevent the consummation of the Merger as contemplated by this Agreement.
(f) Tax Opinion. An opinion of independent counsel for Merchants, to
the effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
Merchants, Merger Corp. and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code, dated on or
about the date that is two business days prior to the date the Proxy
Statement/Prospectus is first mailed to shareholders of the Company, shall have
been delivered and shall not have been withdrawn or modified in any material
respect.
(g) No Material Adverse Change. Since the date of this Agreement (i) no
event shall have occurred which has a Material Adverse Effect on the Company or
its Subsidiaries, and (ii) no condition, event, fact, circumstances or other
occurrence shall have occurred that may reasonably be expected to have or result
in such a Material Adverse Effect on the Company or its Subsidiaries.
(h) Affiliate Agreements. Merchants shall have received from each
person who is identified in the affiliate letter as an "affiliate" of the
Company a signed affiliate agreement in the form attached hereto as Exhibit
4.04.
(i) Burdensome Condition. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable, to the Merger, by any federal or state governmental entity which, in
connection with the grant of any regulatory approval, imposes any condition or
restriction upon the Company, or Merchants or their respective subsidiaries (or
the Surviving
39
Corporation or its subsidiaries after the Effective Time), including, without
limitation, any requirement to raise additional capital, which would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(j) Voting Agreement. Concurrently with the execution and delivery of
this Agreement, Merchants and certain shareholders of the Company shall have
executed and delivered the Voting Agreement in the form of Exhibit 7.02(j).
(k) Comfort Letters. Merchants shall have received from McGladrey &
Xxxxxx, LLP "comfort letters" dated as of the date of mailing of the Proxy
Statement/Prospectus and the Effective Time, covering matters customary in
transactions such as the Merger and in form and substance reasonably
satisfactory to Merchants.
(l) Loan Losses. Anticipated losses from outstanding loans on the books
of the Banks or charged-off loans pursuant to the mutual agreement of the
Company and Merchants shall not cause the respective reserve for losses on loans
and leases to be reduced to less than 1.3% of outstanding loans and leases.
SECTION 7.03. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Merchants and Merger Corp. contained in this Agreement shall be
complete and correct in all material respects (except that where any statement
in a representation or warranty expressly includes a statement of materiality,
such statement shall be true and correct in all respects) as of the Effective
Time as though made on and as of the Effective Time with the same force and
effect as if made on and as of the Effective Time. The Company shall have
received a certificate of the Chairman of the Board of Merchants to that effect.
(b) Agreements and Covenants. Merchants and Merger Corp. shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by Merchants and Merger Corp. for the authorization, execution and delivery
of this Agreement and the consummation by them of the transactions contemplated
hereby shall have been obtained and made by Merchants and Merger Corp.
(d) Opinion of Counsel. The Company shall have received from Xxxxx &
Kuelthau, s.c. or other independent counsel for Merchants reasonably
satisfactory to the Company, an opinion dated the Effective Time, in form and
substance reasonably satisfactory to the Company which opinion shall be based on
such assumptions and contains such qualifications and limitations as are
appropriate and reasonably satisfactory to the Company.
(e) Tax Opinion. An opinion of independent counsel for the Company, to
the effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
Merchants, Merger Corp. and the Company will each be a party to that
reorganization within the meaning of Section 368(b) of the Code, dated on or
about the date that is two business days prior to the date the Proxy
Statement/Prospectus is first mailed to shareholders of the Company, shall have
been delivered and shall not have been withdrawn or modified in any material
respect.
40
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION.
(a) This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the shareholders of the Company:
(i) By mutual written consent of Merchants, Merger Corp. and
the Company;
(ii) By Merchants, Merger Corp. or the Company (A) if there
has been a breach in any material respect (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall have been breached in any respect) of any representation,
warranty, covenant or agreement on the part of the Company, on the one hand, or
Merchants or Merger Corp., on the other hand, respectively, set forth in this
Agreement, or (B) if any representation or warranty of the Company, on the one
hand, or Merchants, or Merger Corp. on the other hand, respectively, shall be
discovered to have become untrue in any material respect (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall have become untrue in any respect), in either
case which breach or other condition has not been cured within 10 business days
following receipt by the non-terminating party of notice of such breach or other
condition, provided, however, this Agreement may not be terminated pursuant to
this clause (ii) by the breaching party or party making any representation or
warranty which shall have become untrue in any material respect.
(iii) By either Merchants, Merger Corp. or the Company if any
permanent injunction preventing the consummation of the Merger shall have become
final and non-appealable;
(iv) By either Merchants, Merger Corp. or the Company if the
merger shall not have been consummated before December 31, 2002, for a reason
other than the failure of the terminating party to comply with its obligations
under this Agreement.
(v) By either Merchants, Merger Corp. or the Company if the
Federal Reserve Board or any other government agency authorized to act in the
matter has denied approval of the Merger and neither Merchants, Merger Corp. nor
the Company has, within thirty (30) days after the entry of such order denying
approval, filed a petition seeking review of such order as provided by
applicable law;
(vi) By either Merchants, Merger Corp. or the Company if any
approval of the shareholders of the Company required for the consummation of the
Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of shareholders or at any adjournment
thereof.
(vii) By either Merchants or Merger Corp. if any condition set
forth in Section 7.01 or 7.02 has not been satisfied or waived in writing by
December 31, 2002;
(viii) By the Company if any of the conditions set forth in
Section 7.01 or 7.03 has not been satisfied or waived in writing by December 31,
2002.
41
(ix) By either Merchants or the Company should the parties
fail to renegotiate the Merger Consideration pursuant to Section 1.06(c)(3),
after making a good faith effort to do so.
(b) In the event of termination and abandonment by any party as
provided above, written notice shall forthwith be given to other party, which
notice shall specifically describe the basis for such termination.
SECTION 8.02. EFFECT OF TERMINATION.
(a) If the merger is not consummated as the result of termination of
this Agreement caused otherwise than by breach of a party hereto, the Company
and Merchants each shall pay its Expenses in accordance with the terms and
conditions under paragraph 4.05(a) and as the term "Expenses" is defined in
paragraph 4.05(b) above and this Agreement shall immediately terminate, except
as set forth in Section 9.01 hereof, and neither the Company nor Merchants shall
have any liability under this Agreement for damages or otherwise, or for payment
of the Break-up Fee under Section 6.07.
(b) If termination of this Agreement shall have been caused by breach
of this Agreement by any party hereto, then, in addition to other remedies at
law or equity for breach of this Agreement, the party so found to have breached
this Agreement shall promptly (but not later than five (5) business days after
receipt of notice from the non-breaching party) pay the non-breaching party for
its documented out-of-pocket expenses and fees incurred in connection with or
related to the Merger.
The foregoing subsections (a) and (b) of this Section 8.02 are in
addition to and shall not limit the obligations of the Company pursuant to
Section 6.07 of this Agreement.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the shareholders of the Company, no amendment may be made which
would change the amount or type of consideration into which each Share of
Company Common Stock shall be converted pursuant to this Agreement upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. WAIVER. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) to the extent permitted by law, waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VIII, except that the agreements set forth in Article I
shall survive the Effective Time indefinitely and those set forth in Sections
4.03(b), 4.05, 5.02(b), 8.02 and Article IX hereof shall survive termination
indefinitely.
42
SECTION 9.02. DISCLOSURE SCHEDULES. The schedules and information set
forth in the Disclosure Schedules specifically refer to the Section (and
paragraph, if applicable) of this Agreement to which such schedule and
information is responsive. The Disclosure Schedules shall not vary, change or
alter the literal meaning of the representations and warranties of the parties
contained in this Agreement, other than creating exceptions thereto which are
directly responsive to the language of the representations and warranties
contained in this Agreement.
SECTION 9.03. NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following address (or at such other address for
a party as shall be specified by like changes of address) and shall be effective
upon receipt:
(a) If to Merchants or Merger Corp.:
Merchants & Manufacturers Bancorporation, Inc.
00000 Xxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxx
With a copy to:
Xxxxx & Kuelthau, S.C.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxx
(b) If to Company:
Fortress Bancshares, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxxx
With a copy to:
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
SECTION 9.04. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "Affiliate" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which the Company (either alone, or through or together with
any subsidiary) has, directly or indirectly, an interest of five (5%) or more;
43
(b) "Beneficial owner" with respect to any Shares, means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such person
or any of its affiliates or associates beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates (as
such term defined in Rule 12b-2 of the Exchange Act) has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warranties or options, or otherwise, or (B) the right to vote
pursuant to any agreement , arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purposes of acquiring, holding, voting or disposing of any
Shares or (iv) pursuant to Section 13(d) of the Exchange Act and any rules or
regulations promulgated there under;
(c) `Business day" means any day other than a day on which banks in
Wisconsin are required or authorized to be closed;
(d) "Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise; and
(e) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the "Exchange Act).
SECTION 9.05. HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.07. ENTIRE AGREEMENT. This Agreement together with the
Disclosure Schedules and Exhibits hereto constitutes the entire agreement of the
parties and supersedes all prior agreements and undertakings, both written and
oral, between the parties, or any of them, with respect to the subject matter
hereof and, except as otherwise expressly provided herein, are not intended to
confer upon any other person any rights or remedies hereunder.
SECTION 9.08. ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise, except that Merchants may assign all or any of
its rights hereunder to any affiliate with the prior written consent of the
Company, which consent shall not be unreasonably withheld provided that no such
assignment shall relieve the assigning party of its obligations hereunder, and
the assignee agrees to be bound by the terms and conditions of this Agreement
including the requirement of conversion and delivery of the Merger Consideration
pursuant to Section 1.06 hereof.
SECTION 9.09. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall
44
confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under the applicable principles of
conflicts of law.
SECTION 9.11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Merchants, Merger Corp. and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
MERCHANTS & MANUFACTURERS
BANCORPORATION, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board of Directors
MERCHANTS MERGER CORP.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board of Directors
FORTRESS BANCSHARES, INC.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman of the Board of Directors
45
