AGREEMENT AND PLAN OF MERGER
by and between
BANTERRA CORP.
an Illinois corporation,
and
BANTERRA ACQUISITIONCO, INC.
an Illinois corporation,
and
HEARTLAND BANCSHARES, INC.
an Illinois corporation
Dated December 23, 1998
TABLE OF CONTENTS
Page
ARTICLE ONE. TERMS OF MERGER AND CLOSING. . . . . . . . . .1
Section 1.01 Merger . . . . . . . . . . . . . . . . . . . .1
Section 1.02 Merging Corporation. . . . . . . . . . . . . .1
Section 1.03 Surviving Corporation. . . . . . . . . . . . .1
Section 1.04 Effect of Merger . . . . . . . . . . . . . . .1
Section 1.05 Conversion of Heartland Common . . . . . . . .2
Section 1.06 Conversion of Heartland Options. . . . . . . .3
Section 1.07 Share and Option Adjustments . . . . . . . . .3
Section 1.08 Closing. . . . . . . . . . . . . . . . . . . .4
Section 1.09 Exchange Procedures; Surrender of
Certificates. . . . . . . . . . . . . . . . .4
Section 1.10 Closing Date . . . . . . . . . . . . . . . . .4
Section 1.11 Closing Deliveries . . . . . . . . . . . . . .5
Section 1.12 Disclosure Schedule; Standard. . . . . . . . .6
ARTICLE TWO. REPRESENTATIONS AND WARRANTIES OF HEARTLAND. .7
Section 2.01 Organization and Capital Stock . . . . . . . .7
Section 2.02 Authorization; No Defaults . . . . . . . . . .8
Section 2.03 Subsidiaries . . . . . . . . . . . . . . . . .8
Section 2.04 Financial Information. . . . . . . . . . . . .8
Section 2.05 Absence of Changes . . . . . . . . . . . . . .9
Section 2.06 Regulatory Enforcement Matters . . . . . . . .9
Section 2.07 Tax Matters. . . . . . . . . . . . . . . . . .9
Section 2.08 Litigation and Related Matters . . . . . . . 10
Section 2.09 Employment Agreements. . . . . . . . . . . . 10
Section 2.10 Reports. . . . . . . . . . . . . . . . . . . 11
Section 2.11 Employee Matters and ERISA . . . . . . . . . 11
Section 2.12 Title to Properties; Insurance . . . . . . . 12
Section 2.13 Environmental Matters. . . . . . . . . . . . 13
Section 2.14 Compliance with Law. . . . . . . . . . . . . 13
Section 2.15 Brokerage. . . . . . . . . . . . . . . . . . 14
Section 2.16 Non-Banking Activities of Heartland and
Subsidiaries. . . . . . . . . . . . . . . . 14
Section 2.17 Trust Administration . . . . . . . . . . . . 14
Section 2.18 Year 2000. . . . . . . . . . . . . . . . . . 14
Section 2.19 Material Contracts and Agreements. . . . . . 14
Section 2.20 No Undisclosed Liabilities . . . . . . . . . 14
Section 2.21 Statements True and Correct. . . . . . . . . 15
Section 2.22 State Takeover Laws. . . . . . . . . . . . . 15
Section 2.23 Fair Lending; Community Reinvestment Act . . 15
Section 2.24 Loan Portfolio . . . . . . . . . . . . . . . 15
Section 2.25 Interest Rate Risk Management Instruments. . 15
Section 2.26 Interim Events . . . . . . . . . . . . . . . 16
Section 2.27 Closing Matters. . . . . . . . . . . . . . . 16
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ARTICLE THREE. REPRESENTATIONS AND WARRANTIES OF BANTERRA
AND ACQUISITIONCO . . . . . . . . . . . . . 16
Section 3.01 Organization and Capital Stock . . . . . . . 16
Section 3.02 Authorization. . . . . . . . . . . . . . . . 16
Section 3.03 Subsidiaries . . . . . . . . . . . . . . . . 17
Section 3.04 Financial Information. . . . . . . . . . . . 17
Section 3.05 Absence of Changes . . . . . . . . . . . . . 17
Section 3.06 Litigation . . . . . . . . . . . . . . . . . 17
Section 3.07 Reports. . . . . . . . . . . . . . . . . . . 17
Section 3.08 Compliance With Law. . . . . . . . . . . . . 17
Section 3.09 Statements True and Correct. . . . . . . . . 18
Section 3.10 Regulatory Enforcement Matters . . . . . . . 18
Section 3.11 State Takeover Laws. . . . . . . . . . . . . 18
Section 3.12 No Undisclosed Liabilities . . . . . . . . . 18
Section 3.13 Community Reinvestment Act . . . . . . . . . 18
Section 3.14 Closing Matters. . . . . . . . . . . . . . . 18
Section 3.15 Fund Availability. . . . . . . . . . . . . . 18
Section 3.16 Compliance with Capital Adequacy Guidelines. 18
ARTICLE FOUR. AGREEMENTS OF HEARTLAND. . . . . . . . . . . 19
Section 4.01 Business in Ordinary Course. . . . . . . . . 19
Section 4.02 Breaches . . . . . . . . . . . . . . . . . . 21
Section 4.03 Submission to Shareholders . . . . . . . . . 21
Section 4.04 Consents to Contracts and Leases . . . . . . 21
Section 4.05 Consummation of Agreement. . . . . . . . . . 21
Section 4.06 Environmental Reports. . . . . . . . . . . . 22
Section 4.07 Access to Information. . . . . . . . . . . . 22
Section 4.08 Subsidiary Bank Merger . . . . . . . . . . . 22
Section 4.09 Plan of Merger . . . . . . . . . . . . . . . 23
Section 4.10 Voting Agreements. . . . . . . . . . . . . . 23
Section 4.11 Meeting with Heartland Auditors. . . . . . . 23
Section 4.12 Merger Expenses and Related Matters. . . . . 23
Section 4.13 Heartland Option Consideration Agreements. . 24
Section 4.14 Pending Legal Matters. . . . . . . . . . . . 24
Section 4.15 Recovery of Attorneys' Fees. . . . . . . . . 24
ARTICLE FIVE. AGREEMENTS OF BANTERRA AND ACQUISITIONCO . . 24
Section 5.01 Regulatory Approvals; Other Agreements . . . 24
Section 5.02 Breaches . . . . . . . . . . . . . . . . . . 24
Section 5.03 Consummation of Agreement. . . . . . . . . . 24
Section 5.04 Directors and Officers' Liability Insurance. 24
Section 5.05 Employee Benefits. . . . . . . . . . . . . . 26
Section 5.06 Contract of Xxxxx X. Xxxxxxx . . . . . . . . 27
ARTICLE SIX. CONDITIONS PRECEDENT TO MERGER . . . . . . . 27
Section 6.01 Conditions to Banterra's Obligations . . . . 27
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Section 6.02 Conditions to Heartland's Obligations. . . . 28
ARTICLE SEVEN. TERMINATION OR ABANDONMENT. . . . . . . . . 29
Section 7.01 Mutual Agreement . . . . . . . . . . . . . . 29
Section 7.02 Breach of Agreements . . . . . . . . . . . . 29
Section 7.03 Environmental Reports. . . . . . . . . . . . 29
Section 7.04 Failure of Conditions. . . . . . . . . . . . 29
Section 7.05 Regulatory Approval Denial; Burdensome
Condition . . . . . . . . . . . . . . . . . 29
Section 7.06 Shareholder Approval Denial; Withdrawal/
Modification of Board Recommendation. . . . 30
Section 7.07 Regulatory Enforcement Matters . . . . . . . 30
Section 7.08 Fall-Apart Date. . . . . . . . . . . . . . . 30
Section 7.09 Third Party Transactions . . . . . . . . . . 30
Section 7.10 Heartland Termination Fee. . . . . . . . . . 30
ARTICLE EIGHT. GENERAL . . . . . . . . . . . . . . . . . .31
Section 8.01 Confidential Information . . . . . . . . . . 31
Section 8.02 Publicity. . . . . . . . . . . . . . . . . . 31
Section 8.03 Return of Documents. . . . . . . . . . . . . 31
Section 8.04 Notices. . . . . . . . . . . . . . . . . . . 31
Section 8.05 Liabilities and Expenses . . . . . . . . . . 32
Section 8.06 Nonsurvival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . 33
Section 8.07 Entire Agreement . . . . . . . . . . . . . . 33
Section 8.08 Headings and Captions. . . . . . . . . . . . 33
Section 8.09 Waiver, Amendment or Modification. . . . . . 33
Section 8.10 Rules of Construction. . . . . . . . . . . . 33
Section 8.11 Counterparts . . . . . . . . . . . . . . . . 33
Section 8.12 Successors and Assigns . . . . . . . . . . . 34
Section 8.13 Severability . . . . . . . . . . . . . . . . 34
Section 8.14 Governing Law; Assignment. . . . . . . . . . 34
Section 8.15 Enforcement of Agreement . . . . . . . . . . 34
Section 8.16 Fees and Expenses. . . . . . . . . . . . . . 34
SCHEDULE 2.01(b)-1 - Heartland Options
SCHEDULE 2.01(b)-2 - Heartland MRP Shares
EXHIBIT 1.11(a) - Heartland's Legal Opinion Matters
EXHIBIT 1.11(b) - Banterra's Legal Opinion Matters
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of December 23, 1998, by and between BANTERRA CORP., an
Illinois corporation ("Banterra"), BANTERRA ACQUISITIONCO, INC., an
Illinois corporation ("AcquisitionCo"), and HEARTLAND BANCSHARES, INC.,
an Illinois corporation ("Heartland").
RECITALS
A. The Boards of Directors of Banterra, AcquisitionCo and
Heartland have approved and deem it advisable and in the best interests of
Banterra, AcquisitionCo and Heartland and their respective shareholders to
consummate the business combination transaction provided for herein in
which AcquisitionCo shall, subject to the terms and conditions set forth
herein, merge with and into Heartland (the "Merger").
B. The Boards of Directors of Banterra, AcquisitionCo and
Heartland have each determined that the Merger and the other transactions
contemplated by this Agreement are consistent with, and in furtherance of,
their respective business strategies and goals.
C. Banterra, AcquisitionCo and Heartland desire to make certain
representations, warranties and agreements in connection with the Merger
and also to prescribe certain conditions to the Merger.
D. In consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein,
Banterra, AcquisitionCo and Heartland hereby agree as follows:
ARTICLE ONE
TERMS OF MERGER AND CLOSING
SECTION 1.01. MERGER. Pursuant to the terms and provisions set
forth herein and the Illinois Business Corporation Act of 1983, as
amended (the "Illinois Corporate Law"), AcquisitionCo shall merge with
and into Heartland.
SECTION 1.02. MERGING CORPORATION. AcquisitionCo shall be the
merging corporation in the Merger and its corporate identity and
existence, separate and apart from Heartland, shall cease upon
consummation of the Merger.
SECTION 1.03. SURVIVING CORPORATION. Heartland shall be the
surviving corporation in the Merger. No changes in the Articles of
Incorporation of Heartland shall be effected by the Merger. All of the
officers and directors of Heartland immediately prior the Effective Time
(as defined in Section 1.10 hereof) shall resign as officers and
directors of Heartland as of the Effective Time, and all of the officers
and directors of AcquisitionCo immediately prior to the Effective Time
shall become the officers and directors of Heartland at the Effective
Time.
SECTION 1.04. EFFECT OF MERGER. The Merger shall have all of the
effects provided for herein and under the Illinois Corporate Law.
1
SECTION 1.05. CONVERSION OF HEARTLAND COMMON.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Banterra, AcquisitionCo, Heartland or their
respective shareholders, each share of common stock, par value $.01 per
share, of Heartland ("Heartland Common") issued and outstanding
immediately prior to the Effective Time (other than shares of Heartland
Common held in the treasury of Heartland or by any direct or indirect
subsidiary of Heartland or not vested, fully earned and nonforfeitable
or Dissenting Shares (as defined in Section 1.05(f) hereof)) shall be
converted into the right to receive $15.75 in cash (the "Stock
Consideration").
(b) For purposes of determining those shares of Heartland Common
that are issued and outstanding immediately prior to the Effective Time,
and not held in the treasury of Heartland or by any direct or indirect
subsidiary of Heartland or not vested, fully earned and nonforfeitable,
and entitled to the Stock Consideration, each share of Heartland Common
issued to any individual pursuant to the Heartland Bancshares, Inc.
Management Recognition Plan (the "Heartland MRP") and currently
scheduled to vest on January 28, 1999 pursuant to the Heartland MRP
shall be deemed to constitute an issued and outstanding share of
Heartland Common entitled to receive the Stock Consideration in the
event that the Effective Time occurs prior to January 28, 1999.
Notwithstanding anything to the contrary contained herein, all shares of
Heartland Common issued to any individual pursuant to the Heartland MRP
but not vested on or prior to January 28, 1999 shall not be entitled to
the Stock Consideration, and any shares of Heartland Common owned by the
Heartland MRP but unawarded under the Heartland MRP shall not be
entitled to the Stock Consideration.
(c) At the Effective Time, all of the shares of Heartland
Common, except for Dissenting Shares, by virtue of the Merger and
without any action on the part of the holders thereof, shall no longer
be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of any certificate or certificates which
immediately prior to the Effective Time represented outstanding shares
of Heartland Common (the "Stock Certificates") shall thereafter cease to
have any rights with respect to such shares, except the right of such
holders to receive, without interest, the Stock Consideration upon the
surrender of such Stock Certificate or Stock Certificates in accordance
with Section 1.09 hereof.
(d) At the Effective Time, each share of Heartland Common, if
any, held in the treasury of Heartland or by any direct or indirect
subsidiary of Heartland (other than shares held in trust accounts for
the benefit of others or in other fiduciary, nominee or similar
capacities and shares held by Heartland or any of its subsidiaries in
respect to a debt previously contracted or Dissenting Shares)
immediately prior to the Effective Time shall be canceled.
(e) Each share of common stock, par value $1.00 per share, of
AcquisitionCo ("AcquisitionCo Common") outstanding immediately prior to
the Effective Time shall be converted into and become one share of
Heartland Common.
(f) If any holder of shares of Heartland Common dissents from
this Agreement and the Merger in accordance with the Illinois Corporate
Law, any issued and outstanding shares of Heartland Common held by any
such dissenting holder ("Dissenting Shares") shall not be converted as
described in this Section 1.05 but from and after the Effective Time
shall represent only the right to receive such consideration as may be
determined to be due to such dissenting holder pursuant to the Illinois
Corporate Law; provided, however, that each share of Heartland Common
outstanding immediately prior to the Effective Time and held by a
dissenting holder who shall, after the Effective Time, either withdraw
his or her demand for appraisal or lose his or her right to dissent
shall have only such rights as are provided for under the Illinois
Corporate Law.
2
SECTION 1.06. CONVERSION OF HEARTLAND OPTIONS.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Banterra, Heartland or their respective
shareholders, each outstanding option to purchase a share of Heartland
Common (a "Heartland Option") granted pursuant to the Heartland
Bancshares, Inc. 1996 Stock Option and Incentive Plan (the "Heartland
Stock Option Plan") which is outstanding and vested immediately prior to
the Effective Time (a "Vested Heartland Option") shall be cancelled and
shall cease to represent a right to acquire a share of Heartland Common
and shall be converted automatically into the right to receive $1.75 in
cash (the "Option Consideration") pursuant to those certain agreements
entered into by and between Banterra and all of the holders of Vested
Heartland Options contemporaneously with the execution of this Agreement
(the "Heartland Option Consideration Agreements").
(b) For purposes of determining those Heartland Options that
constitute Vested Heartland Options entitled to the Option
Consideration, each outstanding Heartland Option granted to any
individual pursuant to the Heartland Stock Option Plan and currently
scheduled to vest on January 28, 1999 pursuant to the Heartland Stock
Option Plan shall be deemed to constitute a Vested Heartland Option
entitled to receive the Option Consideration in the event that the
Effective Time occurs prior to January 28, 1999.
(c) At the Effective Time, all of the Heartland Options, by
virtue of the Merger and without any action on the part of the holders
thereof and pursuant to the Heartland Option Consideration Agreements,
shall no longer be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of any document, agreement, grant,
award, certificate or other evidence which immediately prior to the
Effective Time represented Vested Heartland Options (the "Option
Certificates") shall thereafter cease to have any rights with respect to
such options, except the right of such holders to receive, without
interest, the Option Consideration upon the surrender of such Option
Certificate or Option Certificates in accordance with Section 1.09
hereof.
SECTION 1.07. SHARE AND OPTION ADJUSTMENTS. Between the date
hereof and the Effective Time, no shares of Heartland Common shall be
changed into a different number of shares of Heartland Common or a
different class of shares by reason of reclassification,
recapitalization, splitup, exchange of shares, readjustment, stock
dividend, stock split, exercise of Heartland Options or otherwise. If
between the date hereof and the Effective Time any Heartland Options
shall become vested for any reason whatsoever (an "Option Adjustment"),
then the Option Consideration into which a Vested Heartland Option shall
be converted pursuant to Section 1.06(a) hereof shall be appropriately
and proportionately adjusted so that each option holder of Heartland
shall be entitled to receive consideration as such option holder would
have received pursuant to such Option Adjustment had the vesting been
immediately following the Effective Time. In the event that the sum of
(i) the number of shares of Heartland Common (including those shares of
Heartland Common scheduled to vest on January 28, 1999 pursuant to the
Heartland MRP) presented for exchange pursuant to Section 1.09 hereof or
otherwise issued and outstanding at the Effective Time, or (ii) the
number of Vested Heartland Options (including those Heartland Options
scheduled to vest on January 28, 1999 pursuant to the Heartland Stock
Option Plan) presented for exchange pursuant to Section 1.09 hereof,
shall be greater than the sum of (x) the number of shares of Heartland
Common represented in Section 2.01(b) hereof as being outstanding as of
the date hereof and scheduled to vest on January 28, 1999, or (y) the
number of Vested Heartland Options represented in Section 2.01(b) hereof
as being outstanding as of the date hereof and scheduled to vest on
January 28, 1999, as the case may be, then the Stock Consideration or
the Option Consideration, as the case may be, shall be appropriately and
proportionately decreased to take into account such additional issued
and outstanding shares of Heartland Common or Vested Heartland Options.
3
SECTION 1.08. CLOSING. The closing of the Merger (the "Closing")
shall take place at a location mutually agreeable to the parties at
10:00 a.m., Central Time, on the Closing Date described in Section 1.10
hereof.
SECTION 1.09. EXCHANGE PROCEDURES; SURRENDER OF CERTIFICATES.
(a) Mercantile Bank shall act as Exchange Agent in the Merger
(the "Exchange Agent"). At or before the Effective Time, Banterra
shall deposit, or shall cause to be deposited, with the Exchange Agent a
sum of cash equal to the aggregate Stock Consideration and the aggregate
Option Consideration.
(b) As soon as reasonably practicable after the Effective Time,
but in no event later than five (5) business days after the Closing
Date, the Exchange Agent shall mail to each record holder of any Stock
Certificate or Option Certificate whose shares or options were converted
into the right to receive the Stock Consideration or the Option
Consideration, as the case may be, a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to
the Stock Certificates or Option Certificates shall pass, only upon
proper delivery of the Stock Certificates or Option Certificates to the
Exchange Agent and shall be in such form and have such other provisions
as Banterra may reasonably specify) (each such letter, the "Merger
Letter of Transmittal") and instructions for use in effecting the
surrender of the Stock Certificates or Option Certificates in exchange
for the Stock Consideration or Option Consideration, as the case may be.
Upon surrender to the Exchange Agent of a Stock Certificate or Option
Certificate, together with a Merger Letter of Transmittal duly executed
and any other required documents, the holder of such Stock Certificate
or Option Certificate shall be entitled to receive in exchange therefor
solely the Stock Consideration or the Option Consideration, as the case
may be. No interest on the Stock Consideration or Option Consideration
issuable upon the surrender of the Stock Certificates or Option
Certificates shall be paid or accrued for the benefit of holders of
Stock Certificates or Option Certificates. If the Stock Consideration
is to be issued to a person other than a person in whose name a
surrendered Stock Certificate is registered, it shall be a condition of
issuance that the surrendered Stock Certificate shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such issuance shall pay to the Exchange Agent any required
transfer taxes or other taxes or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
(c) In the event that any Stock Certificate or Option
Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Stock
Certificate or Option Certificate to be lost, stolen or destroyed and,
if required by Banterra in its sole discretion, the posting by such
person of a bond in such amount as Banterra may determine is reasonably
necessary as indemnity against any claim that may be made against it
with respect to such Stock Certificate or Option Certificate, the
Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificate the Stock Consideration or Option Consideration
deliverable in respect thereof pursuant hereto.
(d) At or after the Effective Time there shall be no transfers
on the stock transfer books of Heartland of any shares of Heartland
Common. If, after the Effective Time, Stock Certificates are presented
for transfer, they shall be cancelled and exchanged for the Stock
Consideration as provided in, and subject to the provisions of, this
Section 1.09.
SECTION 1.10. CLOSING DATE. Subject to Section 7.08 hereof, the
Closing shall take place on a date specified by Banterra within thirty
(30) days following the date after which each of the conditions in
Sections 6.01 and 6.02 hereof shall have been satisfied or waived by the
appropriate party (the "Closing Date"). The Merger shall be effective
upon the issuance of a Certificate of Merger by the Secretary of State
of the State of Illinois (the "Effective Time"), which the parties shall
use their best efforts to cause to occur on the Closing Date.
4
SECTION 1.11. CLOSING DELIVERIES.
(a) At the Closing, Heartland shall deliver to Banterra and
AcquisitionCo:
(i) a certified copy of the Articles of Incorporation and Bylaws
of Heartland, the Subsidiary Bank (as defined in Section 2.04 hereof)
and Xxxxxx First Service Corporation; and
(ii) a Certificate signed by an appropriate officer of Heartland
stating that, to the best knowledge and belief of such officer, (A) each
of the representations and warranties contained in Article Two hereof
(subject to the standard in Section 1.12 hereof) is true and correct at
the time of the Closing with the same force and effect as if such
representations and warranties had been made at Closing, and (B) all of
the conditions set forth in Section 6.01(b) hereof have been satisfied
or waived as provided therein; and
(iii) a certified copy of the resolutions of Heartland's Board of
Directors and shareholders as required for valid approval of the
execution of this Agreement and the consummation of the Merger and the
other transactions contemplated by this Agreement; and
(iv) a Certificate of the Secretary of State of the State of
Illinois, dated a recent date, stating that Heartland is in good
standing; and
(v) a Certificate of Merger executed by Heartland, reflecting
the terms and provisions hereof and in proper form for filing with the
Secretary of State of the State of Illinois in order to cause the Merger
to become effective pursuant to the Illinois Corporate Law; and
(vi) a legal opinion from counsel for Heartland, in form
reasonably acceptable to Banterra's and AcquisitionCo's counsel, opining
with respect to the matters listed on Exhibit 1.11(a) hereto.
(b) At the Closing, Banterra and AcquisitionCo shall deliver to
Heartland:
(i) a certified copy of the Articles of Incorporation and Bylaws
of each of Banterra and AcquisitionCo; and
(ii) a Certificate signed by an appropriate officer of each of
Banterra and AcquisitionCo stating that, to the best knowledge and
belief of such officer, (A) each of the representations and warranties
contained in Article Three hereof (subject to the standard in
Section 1.12 hereof) is true and correct at the time of the Closing with
the same force and effect as if such representations and warranties had
been made at Closing, and (B) all of the conditions set forth in
Section 6.02(b) and 6.02(d) hereof (but excluding the approval of
Heartland's shareholders) have been satisfied or waived as provided
therein; and
(iii) a certified copy of the resolutions of each of Banterra's
and AcquisitionCo's Board of Directors as required for valid approval of
the execution of this Agreement and the consummation of the transactions
contemplated by this Agreement; and
(iv) a Certificate of the Secretary of State of the State of
Illinois, dated a recent date, stating that Banterra is in good
standing; and
5
(v) a Certificate of the Secretary of State of the State of
Illinois, dated a recent date, stating that AcquisitionCo is in good
standing; and
(vi) a Certificate of Merger executed by AcquisitionCo,
reflecting the terms and provisions hereof and in proper form for filing
with the Secretary of State of the State of Illinois in order to cause
the Merger to become effective pursuant to the Illinois Corporate Law;
and
(vii) a legal opinion from counsel for Banterra and AcquisitionCo,
in form reasonable acceptable to Heartland's counsel, opining with
respect to the matters listed on Exhibit 1.11(b) hereto.
SECTION 1.12. DISCLOSURE SCHEDULE; STANDARD.
(a) Heartland has delivered to Banterra and AcquisitionCo a
confidential schedule (the "Disclosure Schedule"), executed by
Heartland, Banterra and AcquisitionCo concurrently with the delivery and
execution hereof, setting forth, among other things, items the
disclosure of which shall be necessary or appropriate either in response
to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained
in Article Two hereof; provided, that (a) no such item shall be required
to be set forth in the Disclosure Schedule as an exception to a
representation or warranty if its absence would not be reasonably likely
to result in the related representation or warranty being deemed untrue
or incorrect under the standard established by Section 1.12(b) hereof,
and (b) the mere inclusion of an item in the Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an
admission by Heartland that such item represents a material exception or
fact, event or circumstance or that such item is reasonably likely to
result in a Material Adverse Effect (as defined in Section 1.12(b)
herein).
(b) No representation or warranty of Heartland contained in
Article Two hereof or of Banterra or AcquisitionCo contained in Article
Three hereof shall be deemed untrue or incorrect, and Heartland,
Banterra or AcquisitionCo, as the case may be, shall not be deemed to
have breached a representation or warranty, as a consequence of the
existence of any fact, event or circumstance unless such fact,
circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or
warranty contained in Article Two hereof, in the case of Heartland, or
Article Three hereof, in the case of Banterra or AcquisitionCo, has had
or is reasonably likely to have a Material Adverse Effect on the party
making such representation or warranty. As used herein, the term
"Material Adverse Effect" means, with respect to Heartland, Banterra or
AcquisitionCo, any effect that (i) is, or is reasonably expected to be,
material and adverse to the financial position, results of operations or
business of Heartland and its subsidiaries taken as a whole, or Banterra
and its subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Heartland, Banterra or
AcquisitionCo to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of
the Merger and the other transactions contemplated by this Agreement;
provided, however, that Material Adverse Effect shall not be deemed to
include the impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks and their holding
companies generally and (c) changes in general economic conditions,
including changes in interest rates.
(c) Heartland shall be permitted to update and supplement the
Disclosure Schedule so as to disclose exceptions to one or more
representations or warranties contained in Article Two hereof which
shall have arisen between the date hereof and the Closing Date;
provided, however, that, anything herein to the contrary
notwithstanding, the exceptions and other information set forth on any
such updated or
6
supplemented Disclosure Schedule shall not be taken into consideration
in determining, for purposes of this Agreement, whether the condition
set forth in Section 6.01(a) hereof shall have been satisfied.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES OF HEARTLAND
Subject to Section 1.12 hereof and except as disclosed in a
Section of the Disclosure Schedule corresponding to the relevant Section
in this Article Two, Heartland hereby makes the following
representations and warranties:
SECTION 2.01. ORGANIZATION AND CAPITAL STOCK.
(a) Heartland is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois and has the
corporate power and authority to own all of its property and assets, to
incur all of its liabilities and to carry on its business as now being
conducted. Heartland is a bank holding company registered with the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") under the Bank Holding Company Act of 1956, as amended (the
"B.H.C.A."). Section 2.01(a) of the Disclosure Schedule contains true,
complete and correct copies of the Articles of Incorporation and Bylaws
of Heartland as in effect on the date of this Agreement.
(b) The issued and outstanding capital stock of Heartland
consists only of shares of Heartland Common, of which, as of the date
hereof, 832,833 shares are issued and outstanding. All of the issued
and outstanding shares of Heartland Common are duly and validly issued
and outstanding and are fully paid and non-assessable and free of
preemptive rights. None of the outstanding shares of Heartland Common
have been issued in violation of any preemptive rights of the current or
past shareholders of Heartland. As of the date hereof, Heartland had
outstanding Heartland Options representing the right to acquire not more
than 43,841 shares of Heartland Common. To the best knowledge of
Heartland, each Stock Certificate issued by Heartland in replacement of
any Stock Certificate theretofore issued by it which was claimed by the
record holder thereof to have been lost, stolen or destroyed was issued
by Heartland only upon receipt of an affidavit of lost stock certificate
and indemnity agreement of such shareholder indemnifying Heartland
against any claim that may be made against it on account of the alleged
loss, theft or destruction of any such Stock Certificate or the issuance
of such replacement Stock Certificate. Schedule 2.01(b) - 1 hereto sets
forth correct and accurate information concerning the Heartland Options.
Schedule 2.01(b) - 2 hereto sets forth correct and accurate information
concerning the shares of Heartland Common issued pursuant to the
Heartland MRP.
(c) Except as set forth in subsection 2.01(b) and
Section 2.01(c) of the Disclosure Schedule, (i) there are no shares of
capital stock or other equity securities of Heartland outstanding and no
outstanding options, warrants, rights to subscribe for, calls, or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of Heartland Common
or other capital stock of Heartland or contracts, commitments,
understandings or arrangements by which Heartland is or may be obligated
to issue additional shares of its capital stock or options, warrants or
rights to purchase or acquire any additional shares of its capital
stock, and (ii) there are no outstanding stock appreciation, phantom
stock or similar rights.
(d) The minute books of Heartland accurately reflect all
corporate actions held or taken by its shareholders and Board of
Directors (including committees of the Board of Directors) since its
incorporation. True, complete and correct copies of the minute book
have been made available to Banterra by Heartland.
7
SECTION 2.02. AUTHORIZATION; NO DEFAULTS. Heartland's Board of
Directors has, by all appropriate action, approved this Agreement and
the Merger and authorized the execution hereof and thereof on its behalf
by its duly authorized officers and the performance by Heartland of its
obligations hereunder. Heartland's Board of Directors has directed that
the plan of merger (within the meaning of the Illinois Corporate Law)
contained in this Agreement and the transactions contemplated by this
Agreement, including the Merger, be submitted to the shareholders of
Heartland for approval at the Heartland Shareholders' Meeting (as
defined in Section 4.03 hereof), and, except for the adoption and
approval of this Agreement by the affirmative vote of the holders of
two-thirds of the outstanding shares of Heartland Common, no other
corporate proceedings on the part of Heartland are necessary to approve
this Agreement or to consummate the transactions contemplated by this
Agreement, including the Merger. Nothing in the Articles of
Incorporation or Bylaws of Heartland, or any other agreement,
instrument, decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this Agreement including
certain laws and regulations of the Office of Thrift Supervision (the
"O.T.S.") by or to which it or any of its subsidiaries are bound or
subject would prohibit or inhibit Heartland from consummating this
Agreement and the Merger on the terms and conditions herein contained.
This Agreement has been duly and validly executed and delivered by
Heartland and constitutes a legal, valid and binding obligation of
Heartland, enforceable against Heartland in accordance with its
respective terms. Heartland and its subsidiaries are neither in default
under nor in violation of any provision of their Articles or Certificate
of Incorporation or Association, as the case may be, Bylaws, or any
promissory note, indenture or any evidence of indebtedness or security
therefor, lease, contract, insurance policy, purchase or other
commitment or any other agreement or arrangement (however evidenced),
whether written or oral, and there has not occurred any event that, with
the lapse of time or giving of notice or both, would constitute such a
default or violation.
SECTION 2.03. SUBSIDIARIES. Each of Heartland's banking
subsidiaries and its other direct or indirect subsidiaries, and each of
their predecessors (collectively, the "subsidiaries"), the name and
jurisdiction of incorporation of which is disclosed in Section 2.03 of
the Disclosure Schedule, is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has
the corporate power to own its respective properties and assets, to
incur its respective liabilities and to carry on its respective business
as now being conducted. The deposits of Subsidiary Bank are insured by
the Federal Deposit Insurance Corporation (the "F.D.I.C.") in accordance
with the Federal Deposit Insurance Act, as amended, up to applicable
limits. The number of issued and outstanding shares of capital stock of
each subsidiary is disclosed in Section 2.03 of the Disclosure Schedule,
all of which shares are owned by Heartland or Heartland's subsidiaries
free and clear of all liens, encumbrances, rights of first refusal,
options or other restrictions of any nature whatsoever, except for
directors' qualifying shares, accessibility under 12 U.S.C. Section 55
and comparable state laws, if applicable. There are no options,
warrants or rights outstanding to acquire any capital stock of
Subsidiary Bank, and no person or entity has any other right to purchase
or acquire any unissued shares of stock of Subsidiary Bank, nor does
Subsidiary Bank have any obligation of any nature with respect to its
unissued shares of stock. Except as set forth in Section 2.03 of the
Disclosure Schedule, neither Heartland nor any of its subsidiaries is a
party to any partnership or joint venture or owns an equity interest in
any other business or enterprise.
SECTION 2.04. FINANCIAL INFORMATION. The (i) audited
consolidated balance sheets of Heartland and its subsidiaries as of
December 31, 1997 and 1996, and related consolidated income statements
and statements of changes in shareholders' equity and of cash flows for
the three (3) years ended December 31, 1997, together with the notes
thereto, included in Heartland's Annual Report on Form 10-KSB for the
year ended December 31, 1997, as currently on file with the Securities
and Exchange Commission (the "S.E.C."), and the unaudited consolidated
balance sheets of Heartland and its subsidiaries as of September 30,
1998, and the related unaudited consolidated income statements and
8
statements of changes in shareholders' equity and cash flows for the
nine (9) months then ended included in Heartland's Quarterly Reports on
Form 10-QSB for the quarters then ended, as currently on file with the
Office of the Comptroller of the Currency ("O.C.C."), and (ii) the year-
end and quarterly Reports of Condition and Reports of Income of
Heartland National Bank (the "Subsidiary Bank") for 1997 and September
30, 1998, as currently on file with the F.D.I.C., (together, the
"Heartland Financial Statements"), have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
(except as may be disclosed therein and except for regulatory reporting
differences required by the Subsidiary Bank's reports) and fairly
present in all material respects the financial position and the results
of operations and changes in shareholders' equity of the respective
entity and its respective subsidiary as of the dates and for the persons
indicated (subject, in the case of interim financial statements, none of
which shall be material). The books and records of Heartland and its
subsidiaries have been, and are being, maintained in accordance with
generally accepted accounting principles and any other applicable legal
and accounting requirements and reflect only actual transactions.
SECTION 2.05. ABSENCE OF CHANGES. Since December 31, 1997, and
to the date hereof, there has not been any change in the financial
condition, the results of operations or the business of Heartland and
its subsidiaries taken as a whole which would have a Material Adverse
Effect on Heartland, except as disclosed by Heartland since December 31,
1997 in its periodic reports filed with the S.E.C. under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
SECTION 2.06. REGULATORY ENFORCEMENT MATTERS. Except as set
forth in Section 2.06 of the Disclosure Schedule, neither Heartland nor
any of its subsidiaries are subject or are party to, or have received
any notice or advice that it may become subject or party to, any
investigation with respect to, any cease-and-desist order, agreement,
consent agreement, memorandum of understanding or other regulatory
enforcement action, proceeding or order with or by, or is a party to any
commitment letter or similar undertaking to, or is subject to any
directive by, or has been a recipient of any supervisory letter from, or
has adopted any board resolutions at the request of, any Regulatory
Agency (as defined below in this Section 2.06) that currently restricts
the conduct of its business or that currently affects its capital
adequacy, its credit policies, its management or its business (each, a
"Regulatory Agreement"), nor has Heartland nor any of its subsidiaries
been advised by any Regulatory Agency that it is considering issuing or
requesting any such Regulatory Agreement. Except as set forth in
Section 2.06 of the Disclosure Schedule, there is no unresolved
violation, criticism or exception by any Regulatory Agency with respect
to any report or statement relating to any examinations of Heartland or
Subsidiary Bank. As used herein, the term "Regulatory Agency" means any
federal or state agency charged with the supervision or regulation of
banks or bank holding companies, or engaged in the insurance of bank
deposits, or any court, administrative agency or commission or other
governmental agency, authority or instrumentality having supervisory or
regulatory authority with respect to Heartland or any of its
subsidiaries.
SECTION 2.07. TAX MATTERS.
(a) Each of Heartland and its subsidiaries have filed with the
appropriate governmental agencies all foreign, federal, state and local
Tax (as defined below in this Section 2.07) returns, declarations,
estimates, information returns, statements and reports (collectively,
"Tax Returns") required to be filed by it. Except as set forth in
Section 2.07 of the Disclosure Schedule, neither Heartland nor its
subsidiaries are (a) delinquent in the payment of any Taxes shown on
such Tax Returns or on any assessments received by it for such Taxes,
(b) subject to any agreement extending the period for assessment or
9
collection of any Tax, or (c) a party to any action or proceeding with,
nor has any claim been asserted or threatened against any of them by,
any governmental authority for assessment or collection of Taxes or for
the refund of Taxes previously paid. The income Tax Returns of
Heartland and its subsidiaries, as applicable, have been audited by the
Internal Revenue Service (the "I.R.S.") and comparable state agencies
and any liability with respect thereto has been satisfied for all years
to and including 1994, and either no deficiencies were asserted as a
result of such examination for which Heartland does not have adequate
reserves or all such deficiencies have been satisfied. The reserve for
Taxes in the financial statements of Heartland for the year ended
December 31, 1997, is adequate to cover all of the liabilities for Taxes
of Heartland and its subsidiaries that may become payable in future
years with respect to any transactions consummated prior to December 31,
1997. As used herein, the term "Taxes" means any federal, state, local,
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or
undisputed.
(b) Any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer or
director of Heartland or any of its affiliates who is a "Disqualified
Individual" (as such term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or Heartland Employee Plan (as
defined in Section 2.11(c) hereof) currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined
in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) Heartland has not been subject to any disallowance of a
deduction under Section 162(m) of the Code nor does Heartland reasonably
believe that such a disallowance is reasonably likely to be applicable
for any tax year of Heartland ended on or before the Closing Date.
SECTION 2.08. LITIGATION AND RELATED MATTERS. Section 2.08 of
the Disclosure Schedule describes all litigation, claims or other
proceedings or investigations of any nature pending or, to the knowledge
of Heartland, threatened, against Heartland or any of its subsidiaries,
or of which the property of Heartland or any of its subsidiaries is or
would be subject. There is no injunction, order, judgment, decree or
regulatory restriction imposed upon Heartland or any of its subsidiaries
or the assets of Heartland or any of its subsidiaries. Since January 1,
1993, Heartland and its subsidiaries have continuously maintained
fidelity bonds insuring them against acts of dishonesty in such amounts
as are customary, usual and prudent for organizations of their size and
business. Except as set forth in Section 2.08 of the Disclosure
Schedule, there are no facts which would form the basis of a claim or
claims under such bonds. Neither Heartland nor any of its subsidiaries
has reason to believe that its respective fidelity coverage would not be
renewed by the carrier on substantially the same terms as the existing
coverage, except for possible premium increases unrelated to Heartland's
and its subsidiaries' past claim experience.
SECTION 2.09. EMPLOYMENT AGREEMENTS. Section 2.09 of the
Disclosure Schedule lists each agreement, arrangement, commitment or
contract (whether written or oral) for the employment, election,
retention or engagement, or with respect to the severance, of any
present or former officer, employee, agent, consultant or other person
or entity to which Heartland or any of its subsidiaries is a party to or
bound by and which, by its terms, is not terminable by Heartland or any
of its subsidiaries on thirty (30) days written notice or less without
the payment of any amount by reason of such termination. Copies of each
written (and summaries of each oral) agreement, arrangement, commitment
or contract listed in Section 2.09 of the Disclosure Schedule have been
previously made available to Banterra by Heartland.
10
SECTION 2.10. REPORTS. Except as set forth in Section 2.10 of
the Disclosure Schedule, since January 1, 1993, Heartland and its
subsidiaries have filed all reports and statements, together with any
amendments required to be made with respect thereto, if any, that it was
required to file with (i) the Federal Reserve Board, (ii) the O.C.C,
(iii) the O.T.S., (iv) the S.E.C., (v) any state securities authorities,
and (vi) any other Regulatory Agency with jurisdiction over Heartland or
its subsidiaries at such time, and have paid all fees and assessments
due and payable in connection therewith. As of their respective dates,
each of such reports and documents, as amended, including any financial
statements, exhibits and schedules thereto, complied with the relevant
statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed, and did not contain any
untrue statement of a material fact or omit to state any 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.
SECTION 2.11. EMPLOYEE MATTERS AND ERISA.
(a) Neither Heartland nor any of its subsidiaries has entered
into any collective bargaining agreement with any labor organization
with respect to any group of employees of Heartland or any of its
subsidiaries and to the knowledge of Heartland there is no present
effort nor existing proposal to attempt to unionize any group of
employees of Heartland or any of its subsidiaries.
(b) Except as set forth in Section 2.11(b) of the Disclosure
Schedule, (i) Heartland and its subsidiaries are and have been in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting employment
discrimination and occupational safety and health requirements, and
neither Heartland nor any of its subsidiaries is engaged in any unfair
labor practice, (ii) there is no unfair labor practice complaint against
Heartland or any of its subsidiaries pending or, to the knowledge of
Heartland, threatened before the National Labor Relations Board,
(iii) there is no labor dispute, strike, slowdown or stoppage actually
pending or, to the knowledge of Heartland, threatened against or
directly affecting Heartland or any of its subsidiaries, and
(iv) neither Heartland nor any of its subsidiaries has experienced any
work stoppage or other labor difficulty during the past five (5) years.
(c) Section 2.11(c) of the Disclosure Schedule describes each
employee benefit plan, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each
nonqualified employee benefit plan, deferred compensation, bonus, stock
and incentive plan, and each other employee benefit and fringe benefit
program for the benefit of former or current employees of Heartland or
its subsidiaries (the "Heartland Employee Plans") which Heartland and
its subsidiaries maintain, contribute to or participate in or have any
liability under. No present or former employee of Heartland or any of
its subsidiaries has been charged with breaching, or to the knowledge of
Heartland has breached, a fiduciary duty under any of the Heartland
Employee Plans. Except as set forth in Section 2.11(c) of the
Disclosure Schedule, neither Heartland nor any of its subsidiaries
participates in, nor has it in the past five (5) years participated in,
nor has it any present or future obligation or liability under, any
multiemployer plan (as defined at Section 3(37) of ERISA).
Section 2.11(c) of the Disclosure Schedule describes all plans that
provide health, major medical, disability or life insurance benefits to
former employees of Heartland or its subsidiaries that Heartland and its
subsidiaries maintain, contribute to, or participate in.
(d) Neither Heartland nor any of its subsidiaries maintain, nor
have any of them maintained for the past ten years, any Heartland
Employee Plans subject to Title IV of ERISA or Section 412 of the Code.
No reportable event (as defined in Section 4043 of ERISA) has occurred
with respect to any Heartland Employee Plans as to which a notice would
be required to be filed with the Pension Benefit Guaranty Corporation.
No claim is pending, and Heartland has not received notice of any
threatened or
11
imminent claim with respect to any Heartland Employee Plan (other than a
routine claim for benefits for which plan administrative review
procedures have not been exhausted) for which Heartland or its
subsidiaries would be liable after December 31, 1997, except as
reflected on the Heartland Financial Statements. All liabilities of the
Heartland Employee Plans have been funded on the basis of consistent
methods in accordance with sound actuarial assumptions and practices,
and no Heartland Employee Plan, at the end of any plan year, or at
December 31, 1997, had or has had an accumulated funding deficiency. No
actuarial assumptions have been changed since the last written report of
actuaries on such Heartland Employee Plans. All insurance premiums
(including premiums to the Pension Benefit Guaranty Corporation) have
been paid in full, subject only to normal retrospective adjustments in
the ordinary course. Heartland and its subsidiaries have no contingent
or actual liabilities under Title IV of ERISA. No accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Code) has been incurred with respect to any of the Heartland
Employee Plans, whether or not waived. After December 31, 1997,
Heartland and its subsidiaries do not have any liabilities for excise
taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of the Code
or for a fine under Section 502 of ERISA with respect to any Heartland
Employee Plan. Except as set forth in Section 2.11(d) of the Disclosure
Schedule, all Heartland Employee Plans have been operated, administered
and maintained in accordance with the terms thereof and in compliance
with the requirements of all applicable laws, including, without
limitation, ERISA and the Code.
(e) Except as set forth in Section 2.11(e) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement (either
alone or upon the occurrence of any additional acts or events) would
(i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due
to any director, officer or employee of Heartland or any of its
affiliates from Heartland or any of its affiliates under any Heartland
Employee Plan or otherwise, (ii) increase any benefits otherwise payable
under any Heartland Employee Plan, or (iii) result in any acceleration
of the time of payment or vesting of any such benefits.
(f) Copies of each Heartland Employee Plan described in
Section 2.11(c) of the Disclosure Schedule, and all amendments or
supplements thereto, have been previously made available to Banterra by
Heartland. Section 2.11(f) of the Disclosure Schedule lists, for each
Heartland Employee Plan, all of the following with respect thereto:
(i) summary plan descriptions, (ii) lists of all current participants
and all participants with benefit entitlements, (iii) contracts relating
to plan documents, (iv) actuarial valuations for any defined benefit
plan, (v) valuations for any plan as of the most recent date,
(vi) determination letters from the I.R.S., (vii) the most recent annual
report filed with the I.R.S., (viii) registration statements and
prospectuses, and (ix) trust agreements. Copies of each of the
documents described in the preceding sentence have been previously made
available to Banterra by Heartland.
SECTION 2.12. TITLE TO PROPERTIES; INSURANCE. (i) Heartland and
its subsidiaries have marketable title, insurable at standard rates,
free and clear of all liens, charges and encumbrances (except Taxes
which are a lien but not yet payable and liens, charges or encumbrances
reflected in the Heartland Financial Statements and easements, rights-
of-way, and other restrictions and imperfections not material in nature,
and further excepting in the case of Other Real Estate Owned (as such
real estate is internally classified on the books of Heartland or its
subsidiaries) rights of redemption under applicable law) to all of their
owned real properties, (ii) all leasehold interests for real property
and personal property used by Heartland and its subsidiaries in their
businesses are held pursuant to lease agreements which are valid and
enforceable in accordance with their terms, (iii) all such properties
comply with all applicable private agreements, zoning requirements and
other governmental laws and regulations relating thereto and there are
no condemnation proceedings pending or, to the knowledge of Heartland,
threatened with respect to
12
such properties, (iv) Heartland and its subsidiaries have valid title or
other ownership rights under licenses to all intangible personal or
intellectual property necessary to conduct the business and operations
of Heartland and its subsidiaries as presently conducted, free and clear
of any claim, defense or right of any other person or entity, subject
only to rights of the licensors pursuant to applicable license
agreements, which rights do not adversely interfere with the use of such
property, (v) all insurable properties owned or held by Heartland and
its subsidiaries are adequately insured by financially sound and
reputable insurers in such amounts and against fire and other risks
insured against by extended coverage and public liability insurance, as
is customary with bank holding companies of similar size, and there are
presently no claims pending under such policies of insurance and no
notices have been given by Heartland or any of its subsidiaries under
such policies, and (vi) all tangible properties used in the businesses
of Heartland and its subsidiaries are in good condition, reasonable wear
and tear excepted, and are useable in the ordinary course of business
consistent with past practices. Section 2.12 of the Disclosure Schedule
sets forth, for each policy of insurance maintained by Heartland and its
subsidiaries, the amount and type of insurance, the name of the insurer
and the amount of the annual premium.
SECTION 2.13. ENVIRONMENTAL MATTERS.
(a) As used herein, the term "Environmental Laws" shall mean all
local, state and federal environmental, health and safety laws and
regulations and common law standards in all jurisdictions in which
Heartland and its subsidiaries have done business or owned, leased or
operated property, including, without limitation, the Federal Resource
Conservation and Recovery Act, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Clean Water Act,
the Federal Clean Air Act, and the Federal Occupational Safety and
Health Act.
(b) Neither the conduct nor operation of Heartland or its
subsidiaries nor any condition of any property presently or previously
owned, leased or operated by any of them violates or violated or, to the
knowledge of Heartland, may violate, Environmental Laws in a manner or
to any extent exposing Heartland or its subsidiaries to liability or
potential liability, and, to the knowledge of Heartland, no condition
has existed or event has occurred with respect to any of them or any
such property that, with notice or the passage of time, or both, would
constitute or, to the knowledge of Heartland, may constitute, a
violation of Environmental Laws in a manner or to any extent that would
obligate (or potentially obligate) Heartland or its subsidiaries to
remedy, stabilize, neutralize or otherwise alter the environmental
condition of any such property. Neither Heartland nor its subsidiaries
has received any notice from any person or entity that Heartland or its
subsidiaries or the operation or condition of any property ever owned,
leased or operated by any of them are or were in violation of any
Environmental Laws in a manner or to any extent exposing Heartland or
its subsidiaries to liability or potential liability or that any of them
are responsible (or potentially responsible) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic
wastes, substances or materials at, on or beneath any such property and,
to the knowledge of Heartland, Heartland and its subsidiaries and the
operation and condition of any property ever owned, leased or operated
by any of them are not and were not in violation of any Environmental
Laws in a manner or to any extent exposing Heartland or its subsidiaries
to liability or potential liability and none of them are responsible (or
potentially responsible) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or
materials at, on or beneath any such property. Section 2.13(b) of the
Disclosure Schedule lists each property presently owned, leased or
operated by Heartland or its subsidiaries which, to the knowledge of
Heartland, contains any pollutants, contaminants, or hazardous or toxic
wastes, substances or materials at, on or beneath any such property or
which otherwise violates any Environmental Laws.
SECTION 2.14. COMPLIANCE WITH LAW. Except as set forth in
Section 2.14 of the Disclosure Schedule with respect to certain
regulatory actions of the O.C.C. and the Federal Reserve Board,
13
Heartland and its subsidiaries have all licenses, franchises, permits
and other governmental authorizations that are legally required to
enable them to conduct their respective businesses and are in compliance
with all applicable laws and regulations.
SECTION 2.15. BROKERAGE. Except as set forth in Section 2.15 of
the Disclosure Schedule, there are no existing claims or agreements for
brokerage commissions, finders' fees, or similar compensation in
connection with the transactions contemplated by this Agreement payable
by Heartland or its subsidiaries.
SECTION 2.16. NON-BANKING ACTIVITIES OF HEARTLAND AND
SUBSIDIARIES. Neither Heartland nor its subsidiaries that are neither a
bank, a bank operating subsidiary or a bank service corporation,
directly or indirectly, engages in any activity prohibited by the
Federal Reserve Board or the B.H.C.A. or which is not listed at 12
C.F.R. Section 225.25. Without limiting the generality of the
foregoing, any equity investment of Heartland and each of its
subsidiaries is not prohibited by the Federal Reserve Board, the
B.H.C.A. or the O.C.C.
SECTION 2.17. TRUST ADMINISTRATION. Neither Heartland nor any of
it subsidiaries acts or serves as a trust company or otherwise acts or
serves in a fiduciary capacity, whether as trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor.
SECTION 2.18. YEAR 2000. Section 2.18 of the Disclosure Schedule
contains a complete and accurate copy of Heartland's plan, including an
estimate of the anticipated costs, for implementing modifications to
Heartland's and its subsidiaries' hardware, software and computer
systems, chips and microprocessors, to ensure proper execution and
accurate processing of all date-related data, whether from years in the
same century or in different centuries.
SECTION 2.19. MATERIAL CONTRACTS AND AGREEMENTS. Neither
Heartland nor any subsidiary of Heartland is a party to, or is bound by,
any material contract (as defined in Item 601(b)(10) of Regulation S-K
of the S.E.C.) or any other material contract or similar arrangement
whether or not made in the ordinary course of business (other than loans
or loan commitments and funding transactions in the ordinary course of
business of Subsidiary Bank) that has not been filed or incorporated by
reference in periodic reports filed by Heartland with the S.E.C. under
the Exchange Act or is not otherwise listed in Section 2.19 of the
Disclosure Schedule. Section 2.19 of the Disclosure Schedule lists
(i) each agreement restricting the nature or geographic scope of any
line of business or activity of Heartland or its subsidiaries, and
(ii) each agreement, indenture or other instrument relating to the
borrowing of money by Heartland or its subsidiaries or the guarantee by
Heartland or its subsidiaries of any such obligation, other than
instruments relating to transactions entered into in the ordinary course
of business. Copies of each of the contracts and agreements listed in
Section 2.19 of the Disclosure Schedule have been previously furnished
to Banterra by Heartland.
SECTION 2.20. NO UNDISCLOSED LIABILITIES. Except as set forth in
Section 2.20 of the Disclosure Schedule, Heartland and its subsidiaries
do not have any liability, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due, including any liability for Taxes (and there is no
past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit or proceeding, hearing, charge,
complaint, claim or demand against Heartland or its subsidiaries giving
rise to any such liability), except (i) for liabilities set forth in the
Heartland Financial Statements, and (ii) normal fluctuation in the
amount of the liabilities referred to in clause (i) above occurring in
the ordinary course of business of Heartland and its subsidiaries since
the date of the September 30, 1998 balance sheet included in the
Heartland Financial Statements.
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SECTION 2.21. STATEMENTS TRUE AND CORRECT. None of the
information supplied or to be supplied by Heartland or its subsidiaries
for inclusion in (i) the Proxy Statement (as defined in Section 4.03
hereof), and (ii) any other documents to be filed with the S.E.C. or any
other Regulatory Agency in connection with the transactions contemplated
by this Agreement shall, at the respective times such documents are
filed, and, with respect to the Proxy Statement, when first mailed to
the shareholders of Heartland and at the time of the Heartland
Shareholders' Meeting, contain any untrue statement of a material fact,
or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they
are made, not misleading. All documents that Heartland shall be
responsible for filing with the S.E.C. or any other Regulatory Agency in
connection with the transactions contemplated by this Agreement shall
comply as to form in all material respects with the provisions of
applicable law and the applicable rules and regulations thereunder.
SECTION 2.22. STATE TAKEOVER LAWS. The Board of Directors of
Heartland has taken all such action required to be taken by it to
provide that this Agreement and the transactions contemplated by this
Agreement shall be exempt from the requirements of any "moratorium,"
"control share," "fair price" or other anti-takeover laws or regulations
of any state.
SECTION 2.23. FAIR LENDING; COMMUNITY REINVESTMENT ACT. With the
exception of routine investigation of consumer complaints, neither
Heartland nor any of its subsidiaries have been advised by any
Regulatory Agency that it is or may be in violation of the Equal Credit
Opportunity Act or the Fair Housing Act or any similar federal or state
statute. Subsidiary Bank received a Community Reinvestment Act ("CRA")
rating of "Outstanding" or "Satisfactory" in its most recent CRA
examination.
SECTION 2.24. LOAN PORTFOLIO. Except as disclosed in
Section 2.24 of the Disclosure Schedule, (i) all loans and discounts
shown on the Heartland Financial Statements or which were entered into
after the date of the most recent balance sheet included in the
Heartland Financial Statements were and shall be made in all material
respects for good, valuable and adequate consideration in the ordinary
course of the business of Heartland and its subsidiaries, and are not
subject to any material known defenses, setoffs or counterclaims,
including without limitation any such as are afforded by usury or truth
in lending laws, except as may be provided by bankruptcy, insolvency or
similar laws or by general principles of equity, (ii) the notes or other
evidences of indebtedness evidencing such loans and all forms of
pledges, mortgages and other collateral documents and security
agreements are and shall be, in all material respects, enforceable,
valid, true and genuine and what they purport to be, and (iii) Heartland
and its subsidiaries have complied and shall prior to the Closing Date
comply in all material respects with all laws and regulations relating
to such loans, or to the extent there has not been such compliance, such
failure to comply shall not materially interfere with the collection of
any such loan. The reserve for possible loan losses shown on the most
recent consolidated balance sheet included in the Heartland Financial
Statements is adequate, and the reserve for possible loan losses shown
on the consolidated balance sheet as of the end of the Heartland fiscal
quarter immediately preceding the Effective Time shall be adequate, in
all material respects under the requirements of generally accepted
accounting principles to provide for possible losses, net of recoveries
relating to loans previously charged-off, on loans outstanding
(including, without limitation, accrued interest receivable) as of the
date of each such consolidated balance sheet.
SECTION 2.25. INTEREST RATE RISK MANAGEMENT INSTRUMENTS. Except
with respect to adjustable rate mortgage loans made by Subsidiary Bank
or as may be otherwise specifically disclosed in Section 2.25 of the
Disclosure Schedule, there are no interest rate swaps, caps, floors,
option agreements or other interest rate risk management arrangements or
agreements, whether entered into for the account of Heartland or its
subsidiaries or for the account of a customer of Heartland or one of its
subsidiaries.
15
SECTION 2.26. INTERIM EVENTS. Except as may be disclosed in
Section 2.26 of the Disclosure Schedule, since September 30, 1998,
neither Heartland nor its subsidiaries has paid or declared any dividend
or made any other distribution to their shareholders.
SECTION 2.27. CLOSING MATTERS. As of the date hereof and as of
the Closing Date, Heartland has no knowledge of any fact or circumstance
that is reasonably likely to prevent any of the transactions
contemplated herein, including the Merger, from being consummated
pursuant to the terms hereof.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF BANTERRA AND ACQUISITIONCO
Subject to Section 1.12 hereof, Banterra and AcquisitionCo hereby
make the following representations and warranties:
SECTION 3.01. ORGANIZATION AND CAPITAL STOCK.
(a) Banterra is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois and has the
corporate power and authority to own all of its property and assets, to
incur all of its liabilities and to carry on its business as now being
conducted. Banterra is a bank holding company registered with the
Federal Reserve Board under the B.H.C.A. AcquisitionCo is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Illinois with full corporate power and authority to carry
on its business as now being conducted.
(b) The authorized capital stock of Banterra consists of 500,000
shares of common stock, par value $.25 per share ("Banterra Common"), of
which, as of November 30, 1998, 259,686 shares were issued and
outstanding. All of the issued and outstanding shares of Banterra
Common are duly and validly issued and outstanding and are fully paid
and non-assessable and free of preemptive rights.
(c) The authorized capital stock of AcquisitionCo consists of
100 shares of AcquisitionCo Common, of which, as of the date hereof, 100
shares were issued and outstanding. All of the issued and outstanding
shares of AcquisitionCo Common are duly and validly issued and
outstanding and are fully paid and non-assessable and free of preemptive
rights.
SECTION 3.02. AUTHORIZATION. The Board of Directors of Banterra
and the Board of Directors of AcquisitionCo have, by all appropriate
action, approved this Agreement and the Merger and authorized the
execution hereof on their behalf by their duly authorized officers and
the performance by Banterra and AcquisitionCo of their obligations
hereunder. Nothing in the Articles of Incorporation or Bylaws of
Banterra or AcquisitionCo or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to in or
contemplated by this Agreement) by or to which Banterra or AcquisitionCo
or any of their subsidiaries are bound or subject would prohibit or
inhibit Banterra or AcquisitionCo from entering into and consummating
this Agreement and the Merger on the terms and conditions herein
contained. This Agreement has been duly and validly executed and
delivered by Banterra and AcquisitionCo and constitutes a legal, valid
and binding obligation of Banterra and AcquisitionCo, enforceable
against Banterra and AcquisitionCo in accordance with its terms, and no
other corporate acts or proceedings are required to be taken by Banterra
or AcquisitionCo to authorize the execution, delivery and performance of
this Agreement.
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SECTION 3.03. SUBSIDIARIES. Each of Banterra's subsidiaries is
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has the corporate power to own
its respective properties and assets, to incur its respective
liabilities and to carry on its respective business as now being
conducted.
SECTION 3.04. FINANCIAL INFORMATION. The consolidated balance
sheets of Banterra and its subsidiaries as of December 31, 1997 and
1996, and related consolidated statements of income, changes in
shareholders' equity and cash flows for the three (3) years ended
December 31, 1997, together with the notes thereto, as currently on
file with the applicable Regulatory Agency, and the unaudited
consolidated balance sheets of Banterra and its subsidiaries as of
September 30, 1998, and the related unaudited consolidated income
statements and statement of changes in shareholders' equity for the
nine (9) months then ended, as currently on file with the applicable
Regulatory Agency (together, the "Banterra Financial Statements"), have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be disclosed
therein and except for regulatory reporting differences required by the
reports) and fairly present in all material respects the consolidated
financial position and the consolidated results of operations, changes
in shareholders' equity and cash flows of Banterra and its consolidated
subsidiaries as of the dates and for the periods indicated (subject, in
the case of interim financial statements, to normal recurring year-end
adjustments, none of which shall be material). The deposits of
Banterra's depository institution subsidiaries are insured by the
F.D.I.C. in accordance with the Federal Deposit Insurance Act, as
amended, up to applicable limits. The books and records of Banterra and
its subsidiaries have been, and are being, maintained in accordance with
generally accepted accounting principles and any other applicable legal
and accounting requirements and reflect only actual transactions.
SECTION 3.05. ABSENCE OF CHANGES. Since December 31, 1997, there
has not been any change in the financial condition, the results of
operations or the business of Banterra and its subsidiaries which would
have a Material Adverse Effect on Banterra, except as disclosed by
Banterra since December 31, 1997 in its periodic reports filed with the
appropriate Regulatory Agency.
SECTION 3.06. LITIGATION. There is no litigation, claim or other
proceeding pending or, to the knowledge of Banterra, threatened, against
Banterra or any of its subsidiaries, or of which the property of
Banterra or any of its subsidiaries is or would be subject, and there is
no injunction, order, judgment, decree or regulatory restriction imposed
upon Banterra, or any of its subsidiaries or the assets of Banterra of
any of its subsidiaries, which would have a Material Adverse Effect on
Banterra.
SECTION 3.07. REPORTS. Banterra and each of its subsidiaries has
filed all material reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file
with (i) the Federal Reserve Board, (ii) the F.D.I.C. and (iii) any
other Regulatory Agency with jurisdiction over Banterra or any of its
significant subsidiaries, and have paid all fees and assessments due and
payable in connection therewith. As of their respective dates, each of
such reports and documents, as amended, including any financial
statements, exhibits and schedules thereto, complied with the relevant
statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed and did not contain any
untrue statement of a material fact or omit to state any 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.
SECTION 3.08. COMPLIANCE WITH LAW. Banterra and its subsidiaries
have all licenses, franchises, permits and other governmental
authorizations that are legally required to enable them to conduct their
respective businesses and are in compliance with all applicable laws and
regulations.
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SECTION 3.09. STATEMENTS TRUE AND CORRECT. None of the
information supplied or to be supplied by Banterra or AcquisitionCo for
inclusion in (i) the Proxy Statement, and (ii) any other documents to be
filed with the S.E.C. or any other Regulatory Agency in connection with
the transactions contemplated by this Agreement shall, at the respective
times such documents are filed, and with respect to the Proxy Statement,
when first mailed to the shareholders of Heartland and at the time of
the Heartland Shareholders' Meeting, contain any untrue statement of a
material fact, or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under
which they are made, not misleading. All documents that Banterra or
AcquisitionCo shall be responsible for filing with any Regulatory Agency
in connection with the transactions contemplated by this Agreement shall
comply as to form in all material respects with the provisions of
applicable law and the applicable rules and regulations thereunder.
SECTION 3.10. REGULATORY ENFORCEMENT MATTERS. Neither Banterra
nor any of its subsidiaries is subject or is party to, or has received
any notice or advice that it may become subject or party to, any
Regulatory Agreement, nor has Banterra or any of its subsidiaries been
advised by any Regulatory Agency that it is considering issuing or
requesting any such Regulatory Agreement.
SECTION 3.11. STATE TAKEOVER LAWS. The Board of Directors of
AcquisitionCo has taken all such action required to be taken by it to
provide that this Agreement and the transactions contemplated by this
Agreement shall be exempt from the requirements of any "moratorium,"
"control share," "fair price" or other anti-takeover laws or regulations
of any state.
SECTION 3.12. NO UNDISCLOSED LIABILITIES. As of the date hereof,
Banterra and its subsidiaries do not have any liability, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due, including any
liability for Taxes (and there is no past or present fact, situation,
circumstance, condition or other basis for any present or future action,
suit or proceeding, hearing, charge, complaint, claim or demand against
Banterra or its subsidiaries giving rise to any such liability) which
would have a material adverse effect on Banterra's ability to consummate
the Merger, except (i) for liabilities set forth in the Banterra
Financial Statements, and (ii) normal fluctuation in the amount of the
liabilities referred to in clause (i) above occurring in the ordinary
course of business of Banterra and its subsidiaries since the date of
the September 30, 1998 balance sheet included in the Banterra Financial
Statements.
SECTION 3.13. COMMUNITY REINVESTMENT ACT. Prior to December 15,
1998, each of Banterra's depository institution subsidiaries received a
CRA rating of "Outstanding" or "Satisfactory" in its most recent CRA
examination.
SECTION 3.14. CLOSING MATTERS. As of the date hereof and as of
the Closing Date, Banterra has no knowledge of any fact or circumstance
that is reasonably likely to prevent any of the transactions
contemplated herein, including the Merger, from being consummated
pursuant to the terms hereof.
SECTION 3.15. FUND AVAILABILITY. Banterra has sufficient funds
to pay the Stock Consideration and the Option Consideration.
SECTION 3.16. COMPLIANCE WITH CAPITAL ADEQUACY GUIDELINES.
Banterra meets or exceeds all applicable capital adequacy regulatory
standards as of September 30, 1998 and as of the date hereof, and
Banterra meets or exceeds all applicable capital adequacy regulatory
standards on a pro forma basis reflecting the Merger (including payment
of the Stock Consideration and the Option Consideration) as of the date
hereof and (on a pro forma basis) at the Effective Time.
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ARTICLE FOUR
AGREEMENTS OF HEARTLAND
SECTION 4.01. BUSINESS IN ORDINARY COURSE.
(a) Heartland shall not declare or pay any dividend or make any
other distribution to shareholders, whether in cash, stock or other
property, after the date hereof.
(b) Heartland shall, and shall cause each of its subsidiaries
to, (1) continue to carry on after the date hereof its respective
business and the discharge or incurrence of obligations and liabilities,
only in the usual, regular and ordinary course of business, as
heretofore conducted, (2) use reasonable best efforts to maintain and
preserve intact its respective business organization, employees and
advantageous business relationships and retain the services of its
officers and key employees, and (3) by way of amplification and not
limitation, Heartland and each of its subsidiaries shall not, except
with respect to the exercise of vested stock options as disclosed in
Schedule 2.01(b)-1, without the prior written consent of Banterra:
(i) issue any shares of Heartland Common or other capital
stock or any options, warrants, or other rights to subscribe for
or purchase shares of Heartland Common or any other capital stock
or any securities convertible into or exchangeable for any capital
stock of Heartland or any of its subsidiaries; or
(ii) directly or indirectly redeem, purchase or otherwise
acquire any shares of Heartland Common or any other capital stock
of Heartland or effect a reclassification, recapitalization,
splitup, exchange of shares, readjustment or other similar change
in or to any capital stock or otherwise reorganize or recapitalize
Heartland; or
(iii) directly or indirectly redeem, purchase or otherwise
acquire any shares of capital stock of or effect a reclassification,
recapitalization, splitup, exchange of shares, readjustment or other
similar change in or to any capital stock or otherwise reorganize or
recapitalize any subsidiary of Heartland; or
(iv) change its Articles of Incorporation or Bylaws; or
(v) grant any increase, other than ordinary and normal
increases consistent with past practices, in the compensation
payable or to become payable to officers or salaried employees,
grant any Heartland Options or, except as required by law or as
required by existing contractual obligations which shall have been
described in Section 2.11 of the Disclosure Schedule, adopt or
make any change in any bonus, insurance, pension, or other
Heartland Employee Plan, agreement, payment or arrangement made
to, for or with any of such officers or employees; or
(vi) borrow or agree to borrow any amount of funds except
in the ordinary course of business, or directly or indirectly
guarantee or agree to guarantee any obligations of others, except
in the ordinary course of business; or
(vii) make or commit to make any new loan or letter of
credit or any new or additional discretionary advance under any
existing line of credit in principal amounts in excess of $150,000
or that would increase the aggregate credit outstanding to any one
borrower (or group of affiliated borrowers) to more than $150,000
(excluding for this purpose any accrued interest or overdrafts)
unless the amount of any additional loan, letter of credit or
advance is no greater than
19
$50,000, and is made to an existing borrower whose indebtedness
currently exceeds $150,000, provided that such borrower is not on
a watchlist of Heartland or its subsidiaries or has any credit
classified for regulatory purposes, without the prior written
consent of Banterra; or
(viii) purchase or otherwise acquire any investment
security for its own account, except in a manner and pursuant to
policies consistent with past practice; or
(ix) increase or decrease the rate of interest paid on time
deposits, or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practices; or
(x) enter into any agreement, contract or commitment out
of the ordinary course of business that requires an annual payment
in excess of Ten Thousand Dollars ($10,000); or
(xi) except in the ordinary course of business, place on
any of its assets or properties any mortgage, pledge, lien,
charge, or other encumbrance; or
(xii) except in the ordinary course of business, cancel or
accelerate any material indebtedness owing to Heartland or any of
its subsidiaries or any claims which Heartland or any of its
subsidiaries may possess or waive any material rights with respect
thereto; or
(xiii) sell or otherwise dispose of any real property or any
material amount of any tangible or intangible personal property
other than in the ordinary course of business and other than
properties acquired in foreclosure or otherwise in the ordinary
collection of indebtedness to Heartland or any of its
subsidiaries; or
(xiv) foreclose upon or otherwise take title to or
possession or control of any real property without first obtaining
a phase one environmental report thereon which indicates that the
property is free of pollutants, contaminants or hazardous or toxic
waste materials; provided, however, that Heartland and its
subsidiaries shall not be required to obtain such a report with
respect to single family, non-agricultural residential property of
one acre or less to be foreclosed upon unless it has reason to
believe that such property might contain any such waste materials
or otherwise might be contaminated; or
(xv) commit any act or fail to do any act which would cause
a breach of any agreement, contract or commitment and which would
have a Material Adverse Effect on Heartland; or
(xvi) except as may be necessary to comply with Year 2000
requirements in an amount not to exceed Ten Thousand Dollars
($10,000) or as may otherwise be approved in writing by Banterra,
purchase any real or personal property or make any other capital
expenditure, except in a manner and pursuant to policies
consistent with past practice; or
(xvii) take any action which would materially and adversely
effect or delay the ability of either Banterra or Heartland to
obtain any necessary approvals of any Regulatory Agency or other
governmental authority required for the transactions contemplated
by this Agreement or to perform its covenants and agreements under
this Agreement; or
(xviii) violate any law, statute, rule, governmental
regulation or order, which violation would have a Material Adverse
Effect on Heartland; or
20
(xix) change accounting principles or practices, or the
method of applying such principles or practices, except as
required by generally accepted accounting principles.
(c) Heartland and its subsidiaries shall not engage in any
transaction or take any action that would render untrue (under the
standard of Section 1.12 hereof) any of the representations and
warranties of Heartland contained in Article Two hereof, except as
otherwise required herein, if such representations and warranties were
given as of the date of such transaction or action.
(d) Heartland shall promptly notify Banterra in writing of the
occurrence of any matter or event known to and directly involving
Heartland, which would not include any changes in conditions that affect
the banking industry generally, that would have, either individually or
in the aggregate, a Material Adverse Effect on Heartland.
(e) Heartland and its subsidiaries shall not, and shall not
authorize or permit any of their respective officers, directors,
employees or agents to, on or before the earlier of the Closing Date or
the date of termination of this Agreement, directly or indirectly
solicit, initiate or encourage or (subject to the fiduciary duties of
its directors as advised by counsel) hold discussions or negotiations
with or provide any information to any person in connection with any
proposal from any person for the acquisition of all or any substantial
portion of the business, assets, shares of Heartland Common or other
securities of Heartland or Subsidiary Bank or any merger of Heartland or
Subsidiary Bank with any person. Heartland shall promptly (which for
this purpose shall mean within twenty-four (24) hours) advise Banterra
of its receipt of any such proposal or inquiry concerning any possible
such proposal, the substance of such proposal or inquiry, and the
identity of such person.
SECTION 4.02. BREACHES. Heartland shall, in the event it has
knowledge of the occurrence, or impending or threatened occurrence, of
any event or condition which would cause or constitute a breach (or
would have caused or constituted a breach had such event occurred or
been known prior to the date hereof) of any of its representations or
agreements contained or referred to herein, give prompt written notice
thereof to Banterra and use its best efforts to prevent or promptly
remedy the same.
SECTION 4.03. SUBMISSION TO SHAREHOLDERS. Heartland shall cause
to be duly called and held, on a date selected by Heartland with the
approval of Banterra, a special meeting of its shareholders (the
"Heartland Shareholders' Meeting") for submission of this Agreement and
the Merger for approval of such Heartland shareholders as required by
the Illinois Corporate Law. In connection with the Heartland
Shareholders' Meeting, (i) Banterra and AcquisitionCo shall cooperate
and assist Heartland in preparing and filing a Proxy Statement (the
"Proxy Statement") with the S.E.C., and Heartland shall mail the Proxy
Statement to its shareholders, (ii) Banterra and AcquisitionCo shall
furnish Heartland all information concerning themselves that Heartland
may reasonably request in connection with such Proxy Statement, and
(iii) the Board of Directors of Heartland (subject to compliance with
its fiduciary duties as advised by counsel) shall recommend to its
shareholders the approval of this Agreement and the Merger contemplated
by this Agreement and use its best efforts to obtain such shareholder
approval.
SECTION 4.04. CONSENTS TO CONTRACTS AND LEASES. Heartland shall
use its best efforts to obtain all necessary consents with respect to
all interests of Heartland and its subsidiaries in any material leases,
licenses, contracts, instruments and rights which require the consent of
another person for their transfer or assumption pursuant to the Merger,
if any.
SECTION 4.05. CONSUMMATION OF AGREEMENT. Heartland shall use its
best efforts to perform and fulfill all conditions and obligations on
its part to be performed or fulfilled under this Agreement and to effect
the Merger and the other transactions contemplated hereby in accordance
with the terms and
21
provisions hereof and to effect the transition and integration of the
business and operations of Heartland and its subsidiaries with the
business and operations of Banterra and its subsidiaries. Heartland
shall furnish to Banterra in a timely manner all information, data and
documents in the possession of Heartland or its subsidiaries requested
by Banterra as may be required to obtain any necessary regulatory or
other approvals of the Merger and shall otherwise cooperate fully with
Banterra to carry out the purpose and intent of this Agreement.
SECTION 4.06. ENVIRONMENTAL REPORTS. Heartland shall provide to
Banterra, as soon as reasonably practical, but not later than sixty (60)
days after the date hereof, a report of a phase one environmental
investigation on all real property owned (including, without limitation,
Other Real Estate Owned and property leased or operated by Heartland or
any of its subsidiaries as of the date hereof (other than space in
retail and similar establishments leased by Heartland or any of its
subsidiaries for automatic teller machines)) and within ten (10) days
after the acquisition or lease of any real property acquired or leased
by Heartland or its subsidiaries after the date hereof (but excluding
space in office or retail and similar establishments leased by Heartland
or its subsidiaries for automatic teller machines), except as otherwise
provided in Section 4.01(b)(xiv) hereof. If required by the phase one
investigation in Banterra's reasonable opinion, Heartland shall provide
to Banterra, within sixty (60) days of the receipt by Heartland of the
request of Banterra therefor, a report of a phase two investigation on
properties requiring such additional study. Banterra shall have fifteen
(15) business days from the receipt of any such phase two investigation
report to notify Heartland of any dissatisfaction with the contents of
such report. Should the cost of taking all remedial or other corrective
actions and measures (i) required by applicable law or reasonably likely
to be required by applicable law, or (ii) recommended or suggested by
such report or reports or prudent in light of serious life, health or
safety concerns, in the aggregate, exceed the sum of One Hundred
Thousand Dollars ($100,000) as reasonably estimated by an environmental
expert retained for such purpose by Banterra and reasonably acceptable
to Heartland, or if the cost of such actions and measures cannot be so
reasonably estimated by such expert to be such amount or less with any
reasonable degree of certainty, then Banterra shall have the right
pursuant to Section 7.03 hereof, for a period of fifteen (15) business
days following receipt of such estimate or indication that the cost of
such actions and measures can not be so reasonably estimated, to
terminate this Agreement, which shall be Banterra's sole remedy in such
event.
SECTION 4.07. ACCESS TO INFORMATION. Heartland shall permit
Banterra and its accountants, attorneys and other representatives
reasonable access in a manner which shall avoid undue disruption or
interference with Heartland's normal operations to its properties and
shall disclose and make available to Banterra all books, documents,
papers, records and computer systems documentation and files relating to
its assets, stock ownership, properties, operations, obligations and
liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors'
and shareholders' meetings, organizational documents, material contracts
and agreements, loan files, filings with any regulatory authority,
accountants' workpapers (if available and subject to the respective
independent accountants' consent), litigation files (but only to the
extent that such review would not result in a waiver of the attorney-
client or attorney work product privileges under the rules of evidence),
Employee Benefit Plans, and any other business activities or prospects
in which Banterra may have a reasonable and legitimate interest in
furtherance of the transactions contemplated by this Agreement.
Banterra shall hold any such information which is nonpublic in
confidence in accordance with the provisions of Section 8.01 hereof.
SECTION 4.08. SUBSIDIARY BANK MERGER. Upon the request of
Banterra, Heartland shall cause the Subsidiary Bank to enter into a
merger agreement, subject to the conditions of this Agreement with
Banterra Bank and take all other actions and cooperate with Banterra in
causing such merger (the "Subsidiary Bank Merger") to be effected. Such
subsidiary bank merger agreement shall provide, in
22
addition to customary terms for the combination of subsidiary bank
operations in transactions such as this: (i) for consummation of any
such merger on a date on or after the Closing Date, as may be selected
by Banterra, and (ii) that the obligations of the Subsidiary Bank
thereunder are conditioned on the prior or simultaneous consummation of
the Merger pursuant to this Agreement.
SECTION 4.09. PLAN OF MERGER. At the request of Banterra,
Heartland shall enter into a separate plan of merger or certificate of
merger reflecting the terms hereof for purposes of any filing
requirement of the Illinois Corporate Law.
SECTION 4.10. VOTING AGREEMENTS. Heartland shall cause all of
the directors of Heartland as of the date hereof and each of their
respective spouses, except for Xxxxxxx X. Xxxxxx, to enter into voting
agreements as of the date hereof obligating all of the directors of
Heartland and each of their respective spouses to vote all shares of
Heartland Common beneficially owned or controlled by them in favor of
the Agreement and the Merger.
SECTION 4.11. MEETING WITH HEARTLAND AUDITORS. If requested by
Banterra, Heartland shall arrange for a meeting between Banterra and
Xxxx Xxxxxx Xxxxx LLP, Heartland's independent auditors, to review and
discuss the Heartland Financial Statements.
SECTION 4.12. MERGER EXPENSES AND RELATED MATTERS.
(a) Banterra and Heartland shall consult and reasonably
cooperate with each other with respect to determining, as specified in a
written notice from Banterra to Heartland, based upon such consultation
and as hereinafter provided, the amount of, and timing for recognizing
for financial accounting purposes the expenses of the Merger and the
restructuring charges related to or to be incurred in connection with
the Merger provided that in no event shall such adjustments be made any
earlier than the day prior to Closing and provided further that
Heartland shall be under no obligation to take any such action unless
Banterra and AcquisitionCo provide a written waiver of any right they
may have to terminate this Agreement and acknowledge and agree that all
conditions precedent to the obligations of Banterra and AcquisitionCo in
this Agreement have either been satisfied or waived. No such
recognition of expenses or restructuring charges shall be deemed to be a
breach or violation of any representation, warranty, covenant,
condition or other provision of this Agreement.
(b) From and after the date of this Agreement to the Effective
Time, Heartland and its subsidiaries shall maintain and keep all of the
Heartland Employee Plans fully funded, and shall, to the extent any such
benefit plan may not be fully or adequately funded, make such
contributions as are necessary to fully fund any such inadequately
funded benefit plan, including payments to Heartland's Employee Stock
Ownership Plan, as may be required.
(c) From December 1, 1998 forward, Heartland's attorneys' fees
incurred in connection with this Agreement and the transactions
contemplated herein shall not exceed the sum of $80,000. Heartland's
investment bankers' fees incurred in connection with this Agreement and
the transactions contemplated herein shall not exceed the sum of
$275,000. Heartland's accountants' fees incurred in connection with
this Agreement and the transactions contemplated herein shall not exceed
the sum of $100,000. In the event that Heartland's attorneys' fees,
investment bankers' fees and/or accountants' fees in the aggregate
exceed the sum of $455,000, the aggregate amount of the Stock
Consideration payable by Banterra hereunder shall be reduced on a dollar
for dollar basis by the amount by which such attorneys' fees, investment
bankers' fees and/or accountants' fees in the aggregate exceed the sum
of $455,000.
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SECTION 4.13. HEARTLAND OPTION CONSIDERATION AGREEMENTS.
Heartland shall cause all of the holders of Vested Heartland Options to
enter into the Heartland Option Consideration Agreements.
SECTION 4.14. PENDING LEGAL MATTERS. Heartland shall pursue
resolution or settlement of the lawsuits styled Xxxxxxx Xxxxxx v.
Heartland National Bank and Xxxxxx X. Xxxxxx v. Heartland National Bank,
each currently pending in the Illinois Circuit Court of the First
Judicial Circuit, Xxxxxxxxxx County, Illinois, on terms most favorable
to Heartland, and shall fully inform Banterra as to the ongoing status
of these lawsuits. Resolution or settlement of either of these lawsuits
shall only occur, or be made, after full consultation with Banterra, and
only after consent is obtained from Banterra, which consent shall not be
unreasonably withheld.
SECTION 4.15. RECOVERY OF ATTORNEYS' FEES. From and after the date
hereof, Heartland shall use its best efforts to promptly recover the
maximum amount that it can recover from its insurer for any legal fees
and expenses or other fees and expenses incurred in connection with the
lawsuit styled Xxxxxxx v. Heartland Bancshares, Inc. et al., Cause No.
98-CH-32, filed in the Illinois Circuit Court of the First Judicial
Circuit, Xxxxxxxxxx County, Illinois.
ARTICLE FIVE
AGREEMENTS OF BANTERRA AND ACQUISITIONCO
SECTION 5.01. REGULATORY APPROVALS; OTHER AGREEMENTS.
(a) Within sixty (60) days after the date hereof, Banterra shall
file all regulatory applications required in order to consummate the
Merger, including but not limited to the necessary applications for the
prior approval of the Federal Reserve Board and the O.T.S. Banterra
shall keep Heartland reasonably informed as to the status of such
applications. At least five (5) business days prior to filing, Banterra
shall provide copies of such applications to Heartland and its counsel
for review and comment.
(b) Banterra shall not, without the prior written consent of
Heartland, engage in any transaction or take any action that would
render untrue (under the standard of Section 1.12 hereof) any of the
representations and warranties of Banterra contained in Article Three
hereof (except for any such representations and warranties made only as
of a specified date), if such representations and warranties were given
as of the date of such transaction or action.
SECTION 5.02. BREACHES. Banterra shall, in the event it has
knowledge of the occurrence, or impending or threatened occurrence, of
any event or condition which would cause or constitute a breach (or
would have caused or constituted a breach had such event occurred or
been known prior to the date hereof) of any of its representations or
agreements contained or referred to herein, give prompt written notice
thereof to Heartland and use its best efforts to prevent or promptly
remedy the same.
SECTION 5.03. CONSUMMATION OF AGREEMENT. Banterra and
AcquisitionCo shall use their best efforts to perform and fulfill all
conditions and obligations on their part to be performed or fulfilled
under this Agreement and to effect the Merger in accordance with the
terms and conditions of this Agreement.
SECTION 5.04. DIRECTORS AND OFFICERS' LIABILITY INSURANCE.
(a) For a period of three (3) years after the Effective Time,
Banterra shall use its reasonable best efforts to cause to be maintained
in effect the current policies of directors' and officers' liability
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insurance maintained by Heartland (provided that Banterra may
substitute therefor policies of comparable coverage with respect to
claims arising from facts or events which occurred before the Effective
Time); provided, however, that in no event shall Banterra be obligated
to expend a total amount in excess of $53,100 in order to maintain or
provide insurance coverage pursuant to this Section 5.04 (the "Maximum
Amount"). If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Banterra
shall use all reasonable efforts to maintain the most advantageous
policies of directors' and officers' insurance obtainable but in no
event shall the cost of such insurance exceed the Maximum Amount.
Notwithstanding the foregoing, prior to the Effective Time, Banterra may
request Heartland to, and Heartland shall, purchase insurance coverage,
on such terms and conditions as shall be acceptable to Banterra,
extending for a period of three (3) years Heartland's directors' and
officers' liability insurance coverage in effect as of the date hereof
(covering past or future claims with respect to periods before the
Effective Time) and such coverage shall satisfy Banterra's obligations
under this Section 5.04.
(b) For a period of six (6) years after the Effective Time,
Banterra shall, or shall cause Banterra Bank to, indemnify, defend and
hold harmless each person who is now, or who has been at any time before
the date hereof or who becomes before the Effective Time, an officer or
director of Heartland, Heartland National Bank or any of their
respective subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses (including attorney's fees),
liabilities or judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of Banterra, which
consent shall not be unreasonably withheld) of or in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, or administrative (each a "Claim"), in which an Indemnified
Party is, or is threatened to be made, a party or witness in whole or in
part on or arising in whole or in part out of the fact that such person
is or was a director, officer or employee of Heartland, Heartland
National Bank or any of their subsidiaries if such Claim pertains to any
matter of fact arising, existing or occurring before the Effective Time
(including, without limitation, the Merger and the other transactions
contemplated hereby), regardless of whether such Claim is asserted or
claimed before, or at or after, the Effective Time (the "Indemnified
Liabilities"), to the fullest extent permitted under applicable state or
federal law in effect as of the date hereof or as amended applicable to
a time before the Effective Time and under Heartland's and Heartland
National Bank's Articles or Articles and By-Laws. Banterra shall pay
expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by
applicable state or federal law in effect as of the date hereof or as
amended applicable to a time before the Effective Time upon receipt of
an undertaking to repay such advance payments if he shall be adjudicated
or determined to be not entitled to indemnification in the manner set
forth below. Any Indemnified Party wishing to claim indemnification
under this Section 5.04(b) upon learning of any Claim, shall notify
Banterra (but the failure so to notify Banterra shall not relieve it
from any liability which it may have under this Section 5.04(b), except
to the extent such failure materially prejudices Banterra) and shall
deliver to Banterra the undertaking referred to in the previous
sentence. In the event of any such Claim (whether arising before or
after the Effective Time) (1) Banterra shall have the right to assume
the defense thereof (in which event the Indemnified Parties will
cooperate in the defense of any such matter) and upon such assumption
Banterra shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by
any Indemnified Party in connection with the defense thereof, except
that if Banterra elects not to assume such defense, or counsel for the
Indemnified Parties reasonably advises the Indemnified Parties that
there are or may be (whether or not any have yet actually arisen) issues
which raise conflicts of interest between Banterra and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them, and Banterra shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (2) Banterra shall
be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties whose reasonable fees and expenses
shall be paid promptly as statements are received, (3) Banterra shall
not be liable for any settlement effected without
25
its prior written consent (which consent shall not be unreasonably
withheld) and (4) no Indemnified Party shall be entitled to
indemnification hereunder with respect to a matter as to which (x) he
shall have been adjudicated in any proceeding not to have acted in good
faith in the reasonable belief that his action was in the best interests
of Heartland, Heartland National Bank or any Subsidiary, or (y) in the
event that a proceeding is compromised or settled so as to impose any
liability or obligation upon an Indemnified Party, if there is a
determination that with respect to said matter said Indemnified Party
did not act in good faith in the reasonable belief that his action was
in the best interests of Heartland, Heartland National Bank or any
Subsidiary. In the event that either Banterra or Banterra Bank or any
of its successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving bank or entity
of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such
case, proper provision shall be made so that the successors and assigns
of Banterra shall assume the obligations set forth in this Section 5.04(b).
The obligations of Banterra provided under this Section 5.04(b) are
intended to be enforceable against Banterra directly by the Indemnified
Parties and shall be binding on all respective successors and permitted
assigns of Banterra.
SECTION 5.05. EMPLOYEE BENEFITS.
(a) Banterra shall, with respect to each employee of Heartland
or its subsidiaries at the Effective Time who shall continue in
employment with Banterra or its subsidiaries (each a "Continued
Employee"), provide the benefits described in this Section 5.05.
Subject to the right of subsequent amendment, modification or
termination of Banterra's Employee Plans, as defined below, in
Banterra's sole discretion which applies to all employees of Banterra or
its subsidiaries, each Continued Employee shall be entitled, as a new
employee of a subsidiary of Banterra, to participate in such employee
benefit plans, as defined in Section 3(3) of ERISA, or any non-qualified
employee benefit plans or deferred compensation, stock option, bonus or
incentive plans, or other employee benefit or fringe benefit programs
that may be in effect generally for employees of all of Banterra's
subsidiaries (the "Banterra Employee Plans"), if and as a Continued
Employee shall be eligible and, if required, selected for participation
therein under the terms thereof. Continued Employees shall be eligible
to participate on the same basis as similarly situated employees of
other Banterra subsidiaries. All such participation shall be subject to
such terms of such Banterra Employee Plans as may be in effect from time
to time and this Section 5.05 is not intended to give Continued
Employees any rights or privileges superior to those of other employees
of Banterra's subsidiaries (except as provided in the following sentence
with respect to credit for past service). For purposes of determining
credit for past service, and eligibility for and vesting of such
employee benefits with respect to the Banterra Employee Plans, service
with Heartland, Heartland National Bank, or any subsidiary thereof prior
to the Effective Time shall be treated as service with an "employer" as
if such persons had been employees of Banterra, or its subsidiaries.
The Banterra Employee Plans shall cover pre-existing medical conditions
to the extent provided therein. Upon request, Banterra shall provide a
copy of the Banterra Employee Plans to those Continued Employees
entitled to participate thereunder.
(b) At the Effective Time, the Heartland Employee Plans shall
terminate and be of no further force and effect, and all employees of
Heartland or its subsidiaries shall receive all benefits to which they
are entitled to thereunder. Banterra shall provide customary out
placement assistance, in an amount not to exceed $500 per employee, and
continued health insurance (as required by COBRA) to any employee of
Heartland or its subsidiaries who shall not be a Continued Employee.
Banterra shall pay severance pay in an amount equal to one week's salary
for each full year of employment by Heartland or its subsidiaries, with
a minimum of four (4) weeks severance pay and a maximum of ten (10)
weeks severance pay, plus any accrued vacation pay, to any employee of
Heartland or its subsidiaries who (i) shall not be a Continued Employee,
provided that such employee was never offered employment by
26
Banterra or its subsidiaries or such employee was offered employment
with Banterra or its subsidiaries but such employment involved such
employee changing his or her place of employment to a location other
than Marion, Illinois or Carbondale, Illinois, or (ii) shall be a
Continued Employee but shall be terminated by Banterra or its
subsidiaries within six (6) months of becoming a Continued Employee.
Banterra shall not pay any severance pay to any employee of Heartland
or its subsidiaries who shall not be a Continued Employee if such
employee, other than Xxxxx X. Xxxxxxx, was offered employment by
Banterra or its subsidiaries that involved such employee's place of
employment being their current place of employment, Marion, Illinois, or
Carbondale, Illinois, and that is at a comparable compensation level and
level of responsibility to their previous position with Heartland or its
subsidiaries.
SECTION 5.06. CONTRACT OF XXXXX X. XXXXXXX. Banterra agrees that
(i) the consummation of the transactions contemplated hereby constitutes
a "Change in Control" as defined in the Employment Agreements of
Xxxxx X. Xxxxxxx with both Heartland and Heartland National Bank, and
that Xx. Xxxxxxx will be deemed to have suffered a material change in
his responsibilities and supervision as of the Effective Time, it being
understood that Xx. Xxxxxxx'x employment with both Heartland and
Heartland National Bank shall terminate as of the Effective Time, and
that Xx. Xxxxxxx shall receive, without duplication, the payments called
for under Section 11(a) of his Employment Agreements at such time.
ARTICLE SIX
CONDITIONS PRECEDENT TO MERGER
SECTION 6.01. CONDITIONS TO BANTERRA'S OBLIGATIONS. The
obligations of Banterra and AcquisitionCo to effect the Merger shall be
subject to the satisfaction (or waiver by Banterra) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made by Heartland in this
Agreement shall be true and correct (subject to the standard in
Section 1.12 hereof) on and as of the Closing Date with the same effect
as though such representations and warranties had been made or given on
and as of the Closing Date (except for any such representations and
warranties made only as of a specified date which shall be true and
correct (subject to the standard in Section 1.12 hereof) as of such
date); and
(b) Heartland shall have performed and complied in all material
respects with all of its obligations and agreements required to be
performed on or prior to the Closing Date under this Agreement; and
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger shall be in effect, nor shall any proceeding
by any Regulatory Agency or other person seeking any of the foregoing be
pending. There shall not be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to
the Merger which makes the consummation of the Merger illegal; and
(d) All necessary regulatory approvals, consents, authorizations
and other approvals, including the requisite approval of this Agreement
and the Merger by the shareholders of Heartland, required by law for
consummation of the Merger shall have been obtained and all waiting
periods required by law shall have expired, and no regulatory approval
shall have imposed any condition, requirement or restriction that the
Board of Directors of Banterra reasonably determines in good faith would
so materially adversely impact the economic or business benefits of the
transactions contemplated
27
by this Agreement to Banterra and its shareholders as to render
inadvisable the consummation of the Merger (any such condition,
requirement or restriction, a "Burdensome Condition"); and
(e) Banterra shall have received the environmental reports
required by Section 4.06 hereof, and shall not have elected, pursuant to
Section 4.06 hereof, to terminate and cancel this Agreement; and
(f) Banterra shall have received all documents required to be
received from Heartland on or prior to the Closing Date, all in form and
substance reasonably satisfactory to Banterra; and
(g) Banterra shall have received a legal opinion substantially
in the form of Exhibit 1.11(a) hereto; and
(h) The Subsidiary Bank Merger shall be consummated if the
subsidiary bank merger agreement, if any, provides for consummation of
the Subsidiary Bank Merger on the Closing Date; and
(i) Banterra shall have reasonably determined, in good faith,
that there has not been any change in the financial condition, the
results of operations or the business of Heartland and its subsidiaries
that would have, or has had, since the date of this Agreement, a
Material Adverse Effect on Heartland; and
(j) All of the Heartland Option Consideration Agreements shall
be in full force and effect; and
(k) Banterra shall have received information from Xxxxx &
Xxxxxxx concerning the matters upon which Xxxxx & Lardner currently
represents Heartland in form and substance acceptable to Banterra, which
information shall be included in Section 2.24 of the Disclosure
Schedule.
SECTION 6.02. CONDITIONS TO HEARTLAND'S OBLIGATIONS. The
obligations of Heartland to effect the Merger shall be subject to the
satisfaction (or waiver by Heartland) prior to or on the Closing Date of
the following conditions:
(a) The representations and warranties made by Banterra and
AcquisitionCo in this Agreement shall be true and correct (subject to
the standard in Section 1.12 hereof) on and as of the Closing Date with
the same effect as though such representations and warranties had been
made or given on and as of the Closing Date (except for any such
representations and warranties made only as of a specified date which
shall be true and correct (subject to the standard in Section 1.12
hereof) as of such date); and
(b) Banterra and AcquisitionCo shall have performed and complied
in all material respects with all of their obligations and agreements
hereunder required to be performed on or prior to the Closing Date under
this Agreement; and
(c) No Injunction preventing the consummation of the Merger
shall be in effect, nor shall any proceeding by any Regulatory Agency or
any other person seeking any of the foregoing be pending. There shall
not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal; and
(d) All necessary regulatory approvals, consents, authorizations
and other approvals, including the requisite approval of this Agreement
and the Merger by the shareholders of Heartland,
28
required by law for consummation of the Merger shall have been obtained
and all waiting periods required by law shall have expired; and
(e) Heartland shall have received all documents required to be
received from Banterra or AcquisitionCo on or prior to the Closing Date,
all in form and substance reasonably satisfactory to Heartland; and
(f) Heartland shall have received, on or before the date of the
mailing of the Proxy Statement, from its investment banker, Trident
Securities, Inc., the reaffirmation of the opinion of such investment
banker, originally rendered and delivered to Heartland at the meeting of
the Board of Directors of Heartland at which this Agreement was approved
by such Board of Directors, to the effect that the transactions
contemplated by this Agreement, including the Merger, are fair to
Heartland and its shareholders from a financial point of view; and
(g) Heartland shall have received a legal opinion substantially
in the form of Exhibit 1.11(b) hereto; and
(h) Banterra shall have deposited, or cause to be deposited, the
Stock Consideration and the Option Consideration with the Exchange
Agent.
ARTICLE SEVEN
TERMINATION OR ABANDONMENT
SECTION 7.01. MUTUAL AGREEMENT. This Agreement may be terminated
by the mutual written agreement of Banterra and Heartland at any time
prior to the Closing Date, regardless of whether approval of this
Agreement and the Merger by the shareholders of Heartland shall have
been previously obtained.
SECTION 7.02. BREACH OF AGREEMENTS. In the event that there is a
breach in any of the representations and warranties (subject to the
standard in Section 1.12 hereof) or a material breach of any of the
agreements of Banterra or Heartland, which breach is not cured within
thirty (30) days after written notice to cure such breach is given to
the breaching party by the non-breaching party, then the non-breaching
party, regardless of whether shareholder approval of this Agreement and
the Merger shall have been previously obtained, may terminate and cancel
this Agreement by providing written notice of such action to the other
party hereto.
SECTION 7.03. ENVIRONMENTAL REPORTS. Banterra may terminate this
Agreement to the extent provided by Section 4.06 hereof and this
Section 7.03 by giving timely written notice thereof to Heartland.
SECTION 7.04. FAILURE OF CONDITIONS. In the event any of the
conditions to the obligations of either party are not satisfied or
waived on or prior to the Closing Date, and if any applicable cure
period provided in Section 7.02 hereof has lapsed, then such party may,
regardless of whether approval of this Agreement and the Merger by the
shareholders of Heartland has been previously obtained, terminate and
cancel this Agreement by delivery of written notice of such action to
the other party on such date.
SECTION 7.05. REGULATORY APPROVAL DENIAL; BURDENSOME CONDITION.
If any regulatory application filed pursuant to Section 5.01(a) hereof
should be finally denied or disapproved by the respective regulatory
authority, or not obtained from the respective regulatory authority on
or before the
29
date which is nine (9) months following the date hereof, then this
Agreement thereupon shall be deemed terminated and canceled; provided,
however, that a request for additional information or undertaking by
Banterra, as a condition for approval, shall not be deemed to be a
denial or disapproval so long as Banterra diligently provides the
requested information or undertaking. In the event that an application
is denied pending an appeal, petition for review, or similar such act on
the part of Banterra (hereinafter referred to as the "appeal") then the
application shall be deemed denied unless Banterra prepares and timely
files such appeal and continues the appellate process for purposes of
obtaining the necessary approval. Banterra may terminate this Agreement
if its Board of Directors shall have reasonably determined in good faith
that any of the requisite regulatory approvals imposes a Burdensome
Condition, and Banterra shall deliver written notice of such determination
to Heartland not later than five (5) days after receipt by Banterra of
notice of the imposition of such Burdensome Condition from the applicable
Regulatory Agency (unless an appeal of such determination is being pursued
by Banterra, in which event the foregoing notice shall be given within
thirty (30) days of the termination of any such appeal by Banterra or the
denial of such appeal by the appropriate Regulatory Agency).
SECTION 7.06. SHAREHOLDER APPROVAL DENIAL; WITHDRAWAL/MODIFICATION
OF BOARD RECOMMENDATION. If this Agreement and the relevant transactions
contemplated by this Agreement, including the Merger, are not approved by
the requisite vote of the shareholders of Heartland at the Heartland
Shareholders' Meeting, then either party may terminate this Agreement.
Banterra may terminate this Agreement if Heartland's Board of Directors
shall have failed to approve or recommend this Agreement or the Merger, or
shall have withdrawn or modified in any manner adverse to Banterra its
approval or recommendation of this Agreement or the Merger, or shall have
resolved or publicly announced an intention to do either of the foregoing.
SECTION 7.07. REGULATORY ENFORCEMENT MATTERS. In the event that
Heartland or any of its subsidiaries shall, after the date hereof,
become a party or subject to any new or amended written agreement,
memorandum of understanding, cease and desist order, imposition of civil
money penalties or other regulatory enforcement action or proceeding
with a Regulatory Agency, which would have a Material Adverse Effect on
Heartland, then Banterra may terminate this Agreement. In the event
that Banterra or any of its subsidiaries shall, after the date hereof,
become a party or subject to any new or amended written agreement,
memorandum of understanding, cease and desist order, imposition of civil
money penalties or other regulatory enforcement action or proceeding
with a Regulatory Agency, which would have a Material Adverse Effect on
Banterra, then Heartland may terminate this Agreement.
SECTION 7.08. FALL-APART DATE. If the Closing Date does not
occur on or prior to nine (9) months from the date hereof, then this
Agreement may be terminated by either party by giving written notice
thereof to the other, unless the failure of the Closing to occur by such
date shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such
party set forth in this Agreement.
SECTION 7.09 THIRD PARTY TRANSACTIONS. Banterra may terminate
this Agreement in the event that any of the events set forth in Section
7.10(b) hereof occur.
SECTION 7.10. HEARTLAND TERMINATION FEE. (a) Heartland shall pay
to Banterra, within ten (10) business days of Heartland's receipt of
written demand thereof, the sum of One Hundred Fifty Thousand Dollars
($150,000) as an agreed upon termination fee and as liquidated damages,
in lieu of all remedies at law or in equity and in full satisfaction of
all obligations or liabilities of Heartland hereunder, upon the
termination of this Agreement by Banterra due to (i) a material breach
of this Agreement by Heartland that has not been cured as provided in
Section 7.02 hereof; or (ii) the failure of the shareholders of
Heartland to approve this Agreement and the Merger at the Heartland
Shareholders' Meeting.
30
(b) Heartland shall pay to Banterra, within ten (10) business
days of Heartland's receipt of written demand thereof, the sum of Four
Hundred Fifty Thousand Dollars ($450,000) as an agreed upon termination
fee and as liquidated damages, in lieu of all remedies at law or in
equity and in full satisfaction of all obligations or liability of
Heartland hereunder, upon termination of this Agreement by Banterra due
to the following events: (i) any person or group of persons (other than
Banterra and/or its affiliates) shall acquire, or have the right to
acquire, thirty-five percent (35%) or more of the outstanding shares of
Heartland Common; (ii) the expiration date of a tender or exchange offer
by any person or group of persons (other than Banterra and/or its
affiliates) to purchase or acquire securities of Heartland if upon
consummation of such offer, such person or group of person would own,
control or acquire the right to acquire more than thirty-five percent
(35%) of the issued and outstanding shares of Heartland Common; or
(iii) the entry by Heartland into a definitive agreement with a person
or group of persons (other than Banterra and/or its affiliates) for such
person or group of persons to acquire, merge or consolidate with
Heartland or to acquire all or substantially all of Heartland's assets
or more than thirty-five percent (35%) of the outstanding shares of
Heartland Common.
ARTICLE EIGHT
GENERAL
SECTION 8.01. CONFIDENTIAL INFORMATION. The parties acknowledge
the confidential and proprietary nature of the "Information" (as described
below in this Section 8.01) which has heretofore been exchanged and which
shall be received from each other hereunder and agree to hold and keep the
same confidential. Such Information shall include any and all financial,
technical, commercial, marketing, customer or other information concerning
the business, operations and affairs of a party that may be provided to the
other, irrespective of the form of the communications, by such party's
employees or agents. Such Information shall not include information which is
or becomes generally available to the public other than as a result of a
disclosure by a party or its representatives in violation of this Agreement.
The parties agree that the Information shall be used solely for the purposes
contemplated by this Agreement and that such Information shall not be
disclosed to any person other than employees and agents of a party who
are directly involved in evaluating the transaction. The Information
shall not be used in any way detrimental to a party, including use
directly or indirectly in the conduct of the other party's business or
any business or enterprise in which such party may have an interest, now
or in the future, and whether or not now in competition with such other
party.
SECTION 8.02. PUBLICITY. Banterra and Heartland shall cooperate
with each other in the development and distribution of all news releases
and other public disclosures concerning this Agreement and the Merger
and shall not issue any news release or make any other public disclosure
without the prior consent of the other party, unless it reasonably
believes such is required by law upon the advice of counsel or is in
response to published newspaper or other mass media reports regarding
the transactions contemplated by this Agreement, in which such latter
event the parties shall give reasonable notice, and to the extent
practicable, consult with each other regarding such responsive public
disclosure.
SECTION 8.03. RETURN OF DOCUMENTS. Upon termination of this
Agreement without the Merger becoming effective, each party (i) shall
deliver to the other originals and all copies of all Information made
available to such party, (ii) shall not retain any copies, extracts or
other reproductions in whole or in part of such Information, and
(iii) shall destroy all memoranda, notes and other writings prepared by
any party based on the Information.
SECTION 8.04. NOTICES. Any notice or other communication shall
be in writing and shall be deemed to have been given or made on the date
of delivery, in the case of hand delivery, or three (3)
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business days after deposit in the United States Registered Mail,
postage prepaid, or upon receipt if transmitted by facsimile telecopy or
any other means, addressed (in any case) as follows:
(a) if to Banterra:
Xxxxxxx X. Xxxxxx
Chairman
Banterra Corp.
0000 Xxxxx X.X. Xxxxx 00
P. O. Xxx 000
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
(b) with a copy to:
Xxxx X. Xxxxxxxxx, Esq.
Xxxxx, Xxxx & Xxxxxxxx, X.X.
000 X. Xxxxxxxx, Xxx. 0000
Xx. Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
and
(c) if to Heartland:
Xxxxxxx X. Xxxxxxxxxx
Heartland Bancshares, Inc.
000 X. 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Housely Kantarian & Xxxxxxxxx, X.X.
Xxxxx 000
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
or to such other address as any party may from time to time designate by
notice to the others.
SECTION 8.05. LIABILITIES AND EXPENSES. Except as provided in
Section 7.10 hereof, in the event that this Agreement is terminated
pursuant to the provisions of Article Seven hereof, no party hereto
shall have any liability to any other party for costs, expenses, damages
or otherwise; provided, however, that, notwithstanding the foregoing, in
the event that this Agreement is terminated pursuant to Article Seven
hereof on account of a willful breach of any of the representations and
warranties set forth herein or any willful breach of any of the
agreements set forth herein, then the non-breaching party shall be
entitled to recover appropriate damages from the breaching party,
including, without limitation, reimbursement to
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the non-breaching party of its costs, fees and expenses (including
attorneys', accountants' and advisors' fees and expenses) incident to
the negotiation, preparation, execution and performance of this
Agreement and related documentation; provided, however, that nothing in
this proviso shall be deemed to constitute liquidated damages for the
willful breach by a party of the terms of this Agreement or otherwise
limit the rights of the non-breaching party.
SECTION 8.06. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except for as provided in this Section 8.06, no
representation, warranty or agreement contained herein shall survive the
Effective Time or the earlier termination of this Agreement; provided,
however, that no such representation, warranty or covenant shall be
deemed to be terminated or extinguished so as to deprive Banterra or
Heartland (or any director, officer or controlling person thereof) of
any defense in law or equity which otherwise would be available against
the claims of any person, including, without limitation, any shareholder
or former shareholder of either Banterra or Heartland, the aforesaid
representations, warranties and covenants being material inducements to
the consummation by Banterra and Heartland of the transactions
contemplated herein. The agreements set forth in Sections 5.04, 5.05,
and 5.06 hereof shall survive the Effective Time and the agreements set
forth in Sections 7.10, 8.01, 8.02, 8.03 and 8.05 hereof and this
Section 8.06 shall survive the Effective Time or the earlier termination
of this Agreement.
SECTION 8.07. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties and supersede and cancel any and
all prior discussions, negotiations, undertakings, agreements in
principle or other agreements between the parties relating to the
subject matter hereof.
SECTION 8.08. HEADINGS AND CAPTIONS. The captions of Articles
and Sections hereof are for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this
Agreement.
SECTION 8.09. WAIVER, AMENDMENT OR MODIFICATION. The conditions
of this Agreement which may be waived may only be waived by notice to
the other party waiving such condition. The failure of any party at any
time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. This
Agreement may be amended or modified by the parties hereto, at any time
before or after shareholder approval of the Agreement; provided,
however, that after any such approval no such amendment or modification
shall alter the amount or change the form of the Stock Consideration or
Option Consideration contemplated by this Agreement to be received by
shareholders and option holders of Heartland. This Agreement not be
amended or modified except by a written document duly executed by the
parties hereto.
SECTION 8.10. RULES OF CONSTRUCTION. Unless the context
otherwise requires: (i) a term has the meaning assigned to it, (ii) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles, (iii) "or" is
not exclusive, (iv) words in the singular may include the plural and in
the plural include the singular, and (v) "knowledge" of a party means
the actual or constructive knowledge of any director or executive
officer of such party or any of its subsidiaries.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original and
all of which shall be deemed one and the same instrument. For purposes
of executing this Agreement, a document (or signature page thereto)
signed and transmitted by facsimile machine or telecopier is to be
treated as an original document. The signature of any party thereon,
for purposes hereof, is to be considered as an original signature, and
the document transmitted is to be considered to have the same binding
effect as an original signature on an original document. At the
33
request of any party, any facsimile or telecopy document shall be re-
executed in original form by the parties who executed the facsimile or
telecopy document. No party may raise the use of a facsimile machine or
telecopier or the fact that any signature was transmitted through the
use of a facsimile or telecopier machine as a defense to the enforcement
of this Agreement or any amendment or other document executed in
compliance with this Section 8.11.
SECTION 8.12. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors. There shall be no third party beneficiaries
hereof, except as provided for herein.
SECTION 8.13. SEVERABILITY. In the event that any provisions of
this Agreement or any portion thereof shall be finally determined to be
unlawful or unenforceable, such provision or portion thereof shall be
deemed to be severed from this Agreement, and every other provision, and
any portion of a provision, that is not invalidated by such
determination, shall remain in full force and effect. To the extent
that a provision is deemed unenforceable by virtue of its scope but may
be made enforceable by limitation thereof, such provision shall be
enforceable to the fullest extent permitted under the laws and public
policies of the State whose laws are deemed to govern enforceability.
It is declared to be the intention of the parties that they would have
executed the remaining provisions without including any that may be
declared unenforceable.
SECTION 8.14. GOVERNING LAW; ASSIGNMENT. This Agreement shall be
governed by the laws of the State of Illinois and applicable federal
laws and regulations. This Agreement may not be assigned by either of
the parties hereto.
SECTION 8.15. ENFORCEMENT OF AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction and such right shall be in
addition to any other remedy to which they shall be entitled at law or
in equity.
SECTION 8.16. FEES AND EXPENSES. Except as provided in to
Section 8.05 hereof, each of the parties to this Agreement shall bear
their respective costs, fees and expenses incurred in connection with
this Agreement, the Merger and any other transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BANTERRA CORP.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
BANTERRA ACQUISITIONCO, INC.
34
By:
--------------------------
Name:
------------------------
Title:
-----------------------
HEARTLAND BANCSHARES, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
35
EXHIBIT 1.11(a)
HEARTLAND'S LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of
Heartland under the laws of the State of Illinois, its power and
authority to own and operate its properties and to carry on its business
as now conducted and as described in Heartland's Form 10-KSB, and its
power and authority to enter into the Agreement, to merge with
AcquisitionCo in accordance with the terms of the Agreement and to
consummate the transactions contemplated by the Agreement.
2. The due incorporation or organization, valid existence and
good standing of the Subsidiary Bank and its power and authority to own
and operate its properties.
3. The due and proper performance of all corporate acts and
other proceedings necessary or required to be taken by Heartland to
authorize the execution, delivery and performance of the Agreement, the
due execution and delivery of the Agreement by Heartland, and the
Agreement as a valid and binding obligation of Heartland, enforceable
against Heartland in accordance with its terms (subject to the
provisions of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforceability
of creditors' rights generally from time to time in effect, and
equitable principles relating to the granting of specific performance
and other equitable remedies as a matter of judicial discretion).
4. The execution of the Agreement by Heartland, and the
consummation of the Merger, does not violate or cause a default under
Heartland's Articles of Incorporation or Bylaws, or, to the actual
knowledge of counsel, any federal banking or Illinois banking statute,
regulation or rule or any judgment, order or decree.
5. To the actual knowledge of such counsel, the receipt of all
required consents, approvals (including the requisite approval of the
shareholders of Heartland), orders or authorizations of, or
registrations, declarations or filings with or notices to, any court,
administrative agency or commission or other federal banking
governmental authority or instrumentality, domestic or foreign, or any
other person or entity required to be obtained or made by Heartland or
its subsidiaries in connection with the execution and delivery of the
Agreement or the consummation of the transactions contemplated therein.
6. To the actual knowledge of counsel, the nonexistence of any
material actions, suits, proceedings, orders, or investigations or
claims pending against Heartland or its subsidiaries which, if adversely
determined, would have a material adverse effect upon their respective
properties or assets or the transactions contemplated by the Agreement.
EXHIBIT 1.11(b)
BANTERRA'S LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of
Banterra and AcquisitionCo under the laws of the State of Illinois,
their power and authority to own and operate their properties and to
carry on their businesses presently conducted and their power and
authority to enter into the Agreement, to merge with Heartland in
accordance with the terms of the Agreement and to consummate the
transactions contemplated by the Agreement.
2. The due and proper performance of all corporate acts and
other proceedings necessary or required to be taken by Banterra and
AcquisitionCo to authorize the execution, delivery and performance of
the Agreement, the due execution and delivery of the Agreement by
Banterra and AcquisitionCo, and the Agreement as a valid and binding
obligation of Banterra and AcquisitionCo, enforceable against Banterra
and AcquisitionCo in accordance with its terms (subject to the
provisions of bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally
from time to time in effect, and equitable principles relating to the
granting of specific performance and other equitable remedies as a
matter of judicial discretion).
3. The execution and delivery of the Agreement by Banterra and
AcquisitionCo and the consummation of the transactions contemplated
therein, as neither conflicting with, in breach of or in default under,
resulting in the acceleration of, creating in any party the right to
accelerate, terminate, modify or cancel, or violate, any provision of
Banterra's or AcquisitionCo's Articles of Incorporation or Bylaws, or
any federal banking or Illinois banking statute, regulation, rule,
judgment, order or decree binding upon Banterra or AcquisitionCo which
would be materially adverse to the business of Banterra or AcquisitionCo
and their subsidiaries taken as a whole.
4. To the actual knowledge of such counsel, the receipt of all
required consents, approvals, orders or authorizations of, or
registrations, declarations or filings with or without notices to, any
court, administrative agency or commission or other federal banking
governmental authority or instrumentality, domestic or foreign, or any
other person or entity required to be obtained or made by or with
respect to Banterra or AcquisitionCo in connection with the execution
and delivery of the Agreement or the consummation of the transactions
contemplated therein.
5. To the actual knowledge of counsel, the nonexistence of any
material actions, suits, proceedings, orders, or investigations or
claims pending against Banterra or AcquisitionCo or any of their
significant subsidiaries which, if adversely determined, would have a
material adverse effect upon their respective properties or assets or
the transactions contemplated by the Agreement.
