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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
FIRST MANITOWOC BANCORP, INC.,
FMB INTERIM CORP.
AND
DAIRY STATE FINANCIAL SERVICES, INC.
AUGUST 19, 1999
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TABLE OF CONTENTS
ARTICLE I THE MERGER...............................................................................................................2
SECTION 1.01 The Merger............................................................................................2
SECTION 1.02 Effective Time........................................................................................2
SECTION 1.03 Effect of the Merger..................................................................................2
SECTION 1.04 Articles of Incorporation and Bylaws..................................................................3
SECTION 1.05 Directors and Officers................................................................................3
SECTION 1.06 Conversion of Securities..............................................................................3
SECTION 1.07 Payment...............................................................................................4
SECTION 1.08 Stock Transfer Books..................................................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF DAIRY STATE...........................................................................6
SECTION 2.01 Organization and Qualification of Dairy State, Subsidiaries...........................................6
SECTION 2.02 Articles of Incorporation and Bylaws..................................................................7
SECTION 2.03 Capitalization........................................................................................7
SECTION 2.04 Authority.............................................................................................8
SECTION 2.05 No Conflict, Required Filings and Concerns............................................................9
SECTION 2.06 Compliance, Permits..................................................................................10
SECTION 2.07 Banking Reports and Financial Statements.............................................................10
SECTION 2.08 Absence of Certain Changes or Events.................................................................11
SECTION 2.09 Absence of Litigation................................................................................11
SECTION 2.10 Employee Benefit Plans...............................................................................12
SECTION 2.11 Employment Contracts, Material Contracts.............................................................14
SECTION 2.12 Title to Property....................................................................................14
SECTION 2.13 Compliance with Environmental Laws...................................................................15
SECTION 2.14 Absence of Agreements................................................................................17
SECTION 2.15 Taxes................................................................................................17
SECTION 2.16 Insurance............................................................................................18
SECTION 2.17 Absence of Adverse Agreements........................................................................18
SECTION 2.18 Internal Controls and Records........................................................................18
SECTION 2.19 Loans................................................................................................19
SECTION 2.20 Labor Matters........................................................................................19
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SECTION 2.21 Brokers..............................................................................................19
SECTION 2.22 Full Disclosure......................................................................................19
SECTION 2.23 Vote Required........................................................................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FMB.................................................................................20
SECTION 3.01 Organization and Qualification.......................................................................20
SECTION 3.02 Authority............................................................................................20
SECTION 3.03 No Conflict, Required Filings and Consents...........................................................20
SECTION 3.04 Compliance, Permits..................................................................................21
SECTION 3.05 Securities Reports, Financial Statements.............................................................21
SECTION 3.06 Absence of Certain Changes or Events.................................................................22
SECTION 3.07 Absence of Litigation................................................................................22
SECTION 3.08 Absence of Agreements................................................................................23
SECTION 3.09 Brokers..............................................................................................23
SECTION 3.10 Full Disclosure......................................................................................23
SECTION 3.11 Regulatory Approval..................................................................................23
ARTICLE IV COVENANTS OF DAIRY STATE...............................................................................................23
SECTION 4.01 Affirmative Covenants................................................................................23
SECTION 4.02 Negative Covenants...................................................................................24
SECTION 4.03 Access and Information...............................................................................27
SECTION 4.04 Expenses.............................................................................................28
SECTION 4.05 Deliver of Shareholder List..........................................................................28
ARTICLE V COVENANTS OF FMB........................................................................................................28
SECTION 5.01 Affirmative Covenants................................................................................28
SECTION 5.02 Indemnification......................................................................................29
SECTION 5.03 Directors' and Officers' Insurance...................................................................29
ARTICLE VI ADDITIONAL AGREEMENTS..................................................................................................30
SECTION 6.01 Meeting of Shareholders..............................................................................30
SECTION 6.02 Appropriate Action, Consents, Filings................................................................30
SECTION 6.03 Notification of Certain Matters......................................................................31
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SECTION 6.04 Public Announcements.................................................................................31
SECTION 6.05 Environmental Matters................................................................................31
ARTICLE VII CONDITIONS OF MERGER..................................................................................................31
SECTION 7.01 Conditions to Obligation of Each Party to Effect the Merger..........................................31
SECTION 7.02 Additional Conditions to Obligations of FMB..........................................................32
SECTION 7.03 Additional Conditions to Obligations of Dairy State..................................................34
ARTICLE VIII TERMINATION, AMENDMENT and WAIVER....................................................................................34
SECTION 8.01 Termination..........................................................................................34
SECTION 8.02 Effect of Termination................................................................................36
SECTION 8.03 Amendment............................................................................................36
SECTION 8.04 Waiver...............................................................................................36
ARTICLE IX GENERAL PROVISIONS.....................................................................................................36
SECTION 9.01 Non-Survival of Representations, Warranties and Agreements...........................................36
SECTION 9.02 Disclosure Schedules.................................................................................36
SECTION 9.03 Notices..............................................................................................37
SECTION 9.04 Headings.............................................................................................38
SECTION 9.05 Severability.........................................................................................38
SECTION 9.06 Entire Agreement.....................................................................................38
SECTION 9.07 Assignment...........................................................................................39
SECTION 9.08 Parties in Interest..................................................................................39
SECTION 9.09 Governing Law........................................................................................39
SECTION 9.10 Counterparts.........................................................................................39
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 19, 1999 (the
"Agreement"), among FIRST MANITOWOC BANCORP, INC., a Wisconsin corporation
("FMB"), FMB INTERIM CORP., a Wisconsin corporation ("Interim") and DAIRY STATE
FINANCIAL SERVICES, INC., a Wisconsin corporation ("Dairy State").
W I T N E S S E T H:
WHEREAS, Dairy State is a bank holding company, the
wholly-owned subsidiary of which is Dairy State Bank, a Wisconsin banking
corporation located in Plymouth, Wisconsin (the "Bank"); and
WHEREAS, the Bank has only one wholly-owned subsidiary, Dairy
State Investments, Inc., a Delaware corporation ("Investments"). The Bank and
Investments are sometimes individually referred to herein as a "Subsidiary" and
collectively as the "Subsidiaries;" and
WHEREAS, Interim, a wholly-owned subsidiary of FMB upon the
terms and subject to the conditions of this Agreement and in accordance with the
Wisconsin Business Corporation Law ("Wisconsin Law"), will merge with and into
Dairy State (the "Merger"); and
WHEREAS, Dairy State and its Board of Directors have
determined the Merger will enhance the ability of the Bank to better serve its
existing depositors and customers in Plymouth, Wisconsin, and increase the
financial strength of the Bank; and
WHEREAS, the Board of Directors of Dairy State believes the
Merger will benefit the shareholders and the employees of Dairy State and the
Subsidiaries; and
WHEREAS, the respective Boards of Directors of FMB, Interim
and Dairy State have (i) determined that the Merger and the exchange of shares
of Dairy State's Common Stock for cash pursuant to the terms and conditions of
this Agreement are fair to and in the best interests of the respective
corporations and their shareholders, and (ii) approved and adopted this
Agreement and the transactions contemplated hereby; and
WHEREAS, the Board of Directors of Dairy State has, subject to
its fiduciary duties under applicable law, resolved to recommend approval of the
Merger by the shareholders of Dairy State; and
WHEREAS, as a condition and inducement to FMB's willingness to
enter into this Agreement, FMB and certain shareholders of Dairy State are
entering into concurrently with the execution and delivery hereof, a Voting
Agreement dated as of the date hereof and in the form attached hereto as Exhibit
A (the "Voting Agreement"), pursuant to which such shareholders shall make
certain agreements with respect to the voting of their shares of Dairy State
Common Stock.
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NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, FMB, Interim and Dairy State hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Wisconsin Law, at
the Effective Time (as defined in Section 1.02) Interim shall be merged with and
into Dairy State. As a result of the Merger, the separate corporate existence of
Dairy State shall cease and Interim shall continue as the surviving corporation
of the Merger (the "Surviving Corporation").
SECTION 1.02 Effective Time. The parties hereto shall cause
the Merger to be consummated by filing Articles of Merger (the "Articles of
Merger") with the Department of Financial Institutions of the State of
Wisconsin, in such form as required by, and executed in accordance with the
relevant provisions of Wisconsin Law (a) after the satisfaction, or if
permissible, waiver of conditions set forth in Article VII, and (b) as promptly
as possible after the latest of the following dates:
(i) The 30th calendar day after the date of
approval of the Merger by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board");
(ii) Such date as may be prescribed by the
Federal Reserve Board or any other agency or authority
pursuant to applicable law, rules or regulations, prior to
which consummation of the transaction described and referred
to herein may not be effected;
(iii) The date of the shareholders' meeting
of Dairy State to vote upon the Merger pursuant to Section
6.01; or
(iv) If the transaction contemplated by this
Agreement is being contested in any legal proceeding and FMB
or Dairy State has elected to contest the same, the date that
such legal proceeding has been brought to a conclusion
favorable, in the judgment of FMB or Dairy State, to the
consummation of the transaction contemplated hereby.
The date and time of the filing of the Articles of Merger is
hereinafter referred to as the "Effective Time".
SECTION 1.03 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Wisconsin Law. Without
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limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of Interim and Dairy State shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Interim and Dairy State
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.04 Articles of Incorporation and Bylaws. At the
Effective Time, the Articles of Incorporation and the Bylaws of Dairy State, as
in effect immediately prior to the Effective Time, shall be the Articles of
Incorporation and the Bylaws of the Surviving Corporation.
SECTION 10.5 Directors and Officers. The directors of Interim
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Interim immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of FMB, Interim,
Dairy State, or the holders of any of the following securities:
(a) each of the 2,900 shares of common stock, par
value $50 per share of Dairy State (the "Dairy State Common
Stock"), issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled pursuant to
Section 1.06(b) and other than any dissenting shares as
defined in Section 1.06(c)), shall be converted in accordance
with Section 1.07 into the right to receive cash at the rate
of $4,662.33 per share, all in accordance with the terms and
conditions hereof and of the Plan of Merger dated as of the
date hereof and in the form attached hereto as Exhibit B (the
"Plan of Merger"). As of the Effective Time, all shares of
Dairy State Common Stock shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease
to exist, and each certificate previously representing any
such shares of Dairy State Common Stock shall thereafter
represent the right to receive cash in the amount into which
such Dairy State Common Stock is convertible. Certificates
previously representing shares of Dairy State Common Stock
shall be exchanged for the cash representing the consideration
therefor upon the surrender of such certificates in accordance
with the provisions of Section 1.07, without interest.
(b) each share of Dairy State Common Stock held in
the treasury of Dairy State, each share of 5% preferred stock,
par value $250 per share of Dairy State (the "Dairy State
Preferred Stock"), and each share of Dairy State Common Stock
owned by FMB or any direct or indirect wholly owned subsidiary
of FMB immediately prior to the Effective Time shall be
cancelled and extinguished without any conversion thereof and
no payment shall
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be made with respect thereto.
(c) each share of Dairy State Common Stock which
shall be issued and outstanding as of the Effective Time and
held by a shareholder who has validly perfected dissenter's
rights in accordance with Wisconsin Law, shall not be
converted into and shall not become cash in the amount
designated hereunder (all such shares of Dairy State Common
Stock are hereinafter called "Dissenting Shares of Dairy State
Common Stock"). Dairy State shall give FMB prompt notice upon
receipt by Dairy State of any written notice from any such
shareholder of Dairy State ("Dissenting Shareholder"). Dairy
State agrees that prior to the Effective Time, it will not,
except with prior written consent of FMB, voluntarily make any
payment with respect to, or settle or offer to settle, any
request for withdrawal pursuant to the exercise of dissenter's
rights. Each Dissenting Shareholder who becomes entitled,
pursuant to the provisions of applicable law, to payment for
his or her shares of Dairy State Common Stock shall receive
payment therefor from FMB (but only after the amount thereof
shall be agreed upon or finally determined pursuant to the
provisions of applicable law). If any Dissenting Shareholder
shall fail to perfect or shall effectively withdraw or lose
his or her right to receive the value of his or her shares of
Dairy State Common Stock, his or her shares shall be thereupon
converted into cash in accordance with the provisions of
Section 1.06(a).
SECTION 1.07 Payment.
(a) Payment Agent. As of the Effective Time, FMB
shall deposit, or shall cause to be deposited, with First
National Bank in Manitowoc (the "Payment Agent"), and such
deposit shall be solely for the benefit of the holders of
shares of Dairy State Common Stock, for payment in accordance
with this Article I through the Payment Agent, cash in the
aggregate amount of $13,520,757 (hereinafter referred to as
the "Payment Fund") issuable pursuant to Section 1.06 in
payment for outstanding shares of Dairy State Common Stock.
(b) Payment Procedures. Ten business days prior to
the Effective Time, the Payment Agent shall mail or personally
deliver to each holder of record (or his or her
attorney-in-fact) of a certificate or certificates which at
the time of such mailing represented outstanding shares of
Dairy State Common Stock (the "Certificates"), whose shares of
Dairy State Common Stock were converted into the right to
receive cash pursuant to Section 1.06, (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Payment
Agent and shall be in such form and have such other provisions
as FMB may reasonably specify) ("Letter of Transmittal") and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the cash consideration. As soon
as reasonably practicable after the Effective Time, the
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Payment Agent shall mail or personally deliver to each holder
of a Certificate or Certificates who was not previously sent a
Letter of Transmittal, (i) a Letter of Transmittal and (ii)
instructions for use in effecting the surrender of the
Certificates in exchange for the cash consideration. Upon
surrender of a Certificate for cancellation to the Payment
Agent, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to
receive in exchange therefor cash representing the
consideration for such shares of Dairy State Common Stock as
provided in Section 1.06(a), and the Certificate so
surrendered shall forthwith be cancelled and payment made
forthwith. Dairy State shareholders entitled to receive more
than $100,000 may specify payment by wire transfer. In the
event of a transfer of ownership of shares of Dairy State
Common Stock which are not registered in the transfer records
of Dairy State, cash representing the proper consideration may
be issued to a transferee if the Certificate representing such
shares of Dairy State Common Stock is presented to the Payment
Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.07, each Certificate shall be
deemed at any time after the Effective Time to represent only
the right to receive cash upon such surrender as contemplated
by Section 1.06(a).
(c) Distributions with Respect to Unexchanged shares
of Dairy State Common Stock. No cash payment for shares shall
be paid to any holder of any unsurrendered Certificates
pursuant to Section 1.06(a), until the holder of such
Certificate shall surrender such Certificate. Subject to the
effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder, without
interest, the amount of any cash to which such holder is
entitled pursuant to Section 1.06(a).
(d) No Further Rights in the shares of Dairy State
Common Stock. The cash paid pursuant to Section 1.06(a) shall
be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Dairy State Common Stock.
(e) Termination of Payment Fund. Any portion of the
Payment Fund which remains undistributed to the shareholders
of Dairy State for six months after the Effective Time shall
be delivered to FMB, upon demand, and any shareholders of
Dairy State who have not theretofore complied with this
Article I shall thereafter look only to FMB for payment of
their claim for cash as provided in Section 1.06(a).
(f) No Liability. Neither FMB, Interim or Dairy State
shall be liable to any holder of shares of Dairy State Common
Stock for any such shares of Dairy State Common Stock or cash
delivered to a public official pursuant to
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any abandoned property, escheat or similar law.
(g) Withholding Rights. FMB shall be entitled to
deduct and withhold from any cash consideration payable
pursuant to this Agreement to any holder of shares of Dairy
State Common Stock such amounts as FMB is required to deduct
and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or
any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by FMB, such withheld
amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Dairy State
Common Stock in respect of which such deduction and
withholding was made by FMB.
SECTION 1.08 Stock Transfer Books. At the Effective Time, the
stock transfer books of Dairy State shall be closed and there shall be no
further registration of transfers of shares of Dairy State Common Stock
thereafter on the records of Dairy State. From and after the Effective Time, the
holders of certificates evidencing ownership of shares of Dairy State Common
Stock outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such shares of Dairy State Common Stock except as
otherwise provided herein or by law. On or after the Effective Time, any
Certificates presented to the Payment Agent or FMB for any reason shall be
converted into cash in accordance with Section 1.06(a).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF DAIRY STATE
Except as set forth in the Disclosure Schedule attached hereto
(the "Dairy State Disclosure Schedule"), Dairy State hereby represents and
warrants to FMB and Interim that:
SECTION 2.01 Organization and Qualification of Dairy State,
Subsidiaries. Dairy State is a corporation duly organized and validly existing
under the laws of the State of Wisconsin. The Bank is a duly organized and
validly existing Wisconsin banking corporation. Investments is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Bank has been the only subsidiary of Dairy State. Investments has been the
only subsidiary of the Bank. Dairy State and Subsidiaries each has the requisite
corporate power and authority and is `in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("Dairy State Approvals") necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power, authority and Dairy State Approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below) on Dairy State
and the Subsidiaries, taken as a whole. The term "Material Adverse Effect" as
used in this Agreement shall mean any condition, event, change or occurrence
that has or may reasonably be expected to have a material adverse affect on the
condition (financial or
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otherwise), properties, assets, liabilities, business,
operations or results of operations, of Dairy State and the Subsidiaries, it
being understood that a Material Adverse Effect shall not include: (i) a change
with respect to, or effect on, Dairy State and the Subsidiaries resulting from a
change in law, rule, regulation, generally accepted accounting principles or
regulatory accounting principles, as such would apply to the financial
statements of Dairy State and the Subsidiaries; (ii) a change with respect to,
or effect on, Dairy State and the Subsidiaries, resulting from reasonable
expenses (such as legal, accounting and investment bankers' fees) incurred in
connection with this Agreement or reasonable expenses (such as legal, accounting
and investment bankers' fees) incurred in connection with the transactions
contemplated by this Agreement, or (iii) a change with respect to, or effect on,
Dairy State and the Subsidiaries resulting from any other matter affecting
depository institutions generally (including, without limitation, financial
institutions and their holding companies) including, without limitation, changes
in general economic conditions and changes in prevailing interest and deposit
rates. Neither Dairy State nor any Subsidiary has received notice of proceedings
relating to the revocation or modification of any Dairy State Approvals. Dairy
State, the Bank and Investments are duly qualified or licensed as a foreign
corporations to do business, and are in good standing, in each jurisdiction
where the character of their properties owned, leased or operated by them or the
nature of their activities makes such qualification or licensing necessary,
except for such failures to be so duly qualified or licensed and in good
standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on Dairy State or the Subsidiaries, taken as a whole.
Dairy State is registered with the Federal Reserve Board as a one bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHCA").
Except for the Subsidiaries and as set forth on Schedule 2.01, Dairy State holds
no interest, either directly or indirectly, in any other entity.
SECTION 2.02 Articles of Incorporation and Bylaws. Dairy State
has heretofore furnished to FMB a complete and correct copy of the Articles of
Incorporation and the Bylaws, as amended or restated, of Dairy State and the
Subsidiaries and such Articles of Incorporation and Bylaws of Dairy State and
the Subsidiaries are in full force and effect and neither Dairy State nor the
Subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws.
SECTION 2.03 Capitalization.
(a) Capitalization of Dairy State. The aggregate
number of shares which Dairy State is authorized to issue is
4,625, consisting of 3,000 shares of Dairy State Common Stock
and 1,625 shares of Preferred Stock. As of the date of this
Agreement, (i) 1,517 shares of Dairy State Preferred Stock and
2,900 shares of Dairy State Common Stock are issued and
outstanding, all of which are validly issued, fully paid and
nonassessable (except as provided in section 180.0622(2)(b) of
the Wisconsin Law and Section 220.07 of the Wisconsin
Statutes), and all of which have been issued in compliance
with applicable securities laws, and (ii) no shares of Dairy
State Preferred Stock or Dairy State Common Stock are held in
Dairy State's treasury. Except as set forth in Dairy State's
Disclosure Schedule at Section 2.03(a), as of the date of this
Agreement,
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there are no options, warrants or other rights,
agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of Dairy
State or obligating Dairy State to issue or sell any shares of
capital stock of, or other equity interests in Dairy State.
There are no obligations, contingent or otherwise, of Dairy
State to repurchase, redeem or otherwise acquire any shares of
Dairy State Preferred Stock or Dairy State Common Stock or to
provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
(b) Capitalization of the Bank. The authorized
capital stock of the Bank consists of 40 shares of common
stock, par value $7,500 per share. As of the date of this
Agreement, (i) 40 shares of the Bank's common stock are issued
and outstanding, all of which are validly issued, fully paid
and nonassessable (except as provided in section
180.0622(2)(b) of the Wisconsin Law and Section 220.07 of the
Wisconsin Statutes), and all of which have been issued in
compliance with applicable securities laws, and (ii) Dairy
State owns all of the Bank's capital stock. Except as set
forth in Dairy State's Disclosure Schedule at Section 2.03(b),
as of the date of this Agreement, there are no options,
warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or
unissued capital stock of the Bank or obligating the Bank to
issue or sell any shares of capital stock of, or other equity
interests in the Bank. There are no obligations, contingent or
otherwise, of the Bank to repurchase, redeem or otherwise
acquire any shares of the Bank's capital stock or to provide
funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
(c) Capitalization of Investments. The authorized
capital stock of Investments consists of 100 shares of common
stock, par value $1.00 per share. As of the date of this
Agreement, (i) 100 shares of Investments' common stock are
issued and outstanding, all of which arevalidly issued, fully
paid and nonassessable, and all of which have been issued in
compliance with applicable securities laws, and (ii) the Bank
owns all of Investments' capital stock. Except as set forth in
Dairy State's Disclosure Schedule at Section 2.03(c), as of
the date of this Agreement, there are no options, warrants or
other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of
Investments or obligating Investments to issue or sell any
shares of capital stock of, or other equity interests in
Investments. There are no obligations, contingent or
otherwise, of Investments to repurchase, redeem or otherwise
acquire any shares of Investments' capital stock or to provide
funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity.
SECTION 2.04 Authority. Dairy State has the requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this
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Agreement by Dairy State and the consummation by Dairy State of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Dairy State
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the outstanding
shares of Dairy State's Common Stock in accordance with Wisconsin Law and Dairy
State's Articles of Incorporation and Bylaws). This Agreement has been duly and
validly executed and delivered by Dairy State and, assuming the due
authorization, execution and delivery by FMB and Interim, constitutes the legal,
valid and binding obligation of Dairy State enforceable in accordance with its
terms.
SECTION 2.05 No Conflict, Required Filings and Consents.
(a) To the best knowledge of Dairy State, the
execution and delivery of this Agreement by Dairy State does
not, and the performance of this Agreement by Dairy State
shall not, (i) conflict with or violate the Articles of
Incorporation or Bylaws of Dairy State or the Subsidiaries,
(ii) conflict with or violate any domestic (federal, state or
local) or foreign law, statute, ordinance, rule, regulation,
order, judgment or decree (collectively, "Laws") applicable to
Dairy State or the Subsidiaries, or by which their respective
properties are bound or affected, or (iii) result `in any
breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of
a lien or encumbrance on any of the properties or assets of
Dairy State or the Subsidiaries pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
Dairy State or any Subsidiary is a party or by which Dairy
State or any Subsidiary or its or any of their respective
properties are bound or affected, except for any such
breaches, defaults or other occurrences that would not,
individually or in the aggregate, have a Material Adverse
Effect on Dairy State or the Subsidiaries, taken as a whole.
The transactions contemplated herein (i) will not require a
shareholder vote under section 180.1131 of the Wisconsin Law,
(ii) are not subject to the restrictions on business
combinations set forth in section 180.1141 of the Wisconsin
Law and (iii) are not subject to the control share voting
restrictions set forth in section 180.1150 of the Wisconsin
Law.
(b) To the best knowledge of Dairy State, the
execution and delivery of this Agreement by Dairy State does
not, and the performance of this Agreement by Dairy State
shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities
Exchange of 1934, as amended (the "Exchange Act"), state
securities or blue sky laws ("Blue Sky Laws"), BHCA, the
banking laws
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and regulations of the State of Wisconsin (the "WBL"), and the
filing and recordation of appropriate merger or other
documents as required by Wisconsin Law and (ii) where the
failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would
not prevent or delay consummation of the Merger, or otherwise
prevent Dairy State from performing its obligations under this
Agreement, and would not have a Material Adverse Effect on
Dairy State or the Subsidiaries, taken as a whole.
SECTION 2.06 Compliance, Permits. To the best knowledge
of Dairy State, neither Dairy State nor any Subsidiary is in
conflict with, or in default or violation of, (a) any law
applicable to Dairy State or any Subsidiary or by which any of
their respective properties are bound or affected, or (b) any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation
to which Dairy State or any Subsidiary is a party or by which
Dairy State or any Subsidiary or any of their respective
properties are bound or affected, except for any such
conflicts, defaults or violations which would not,
individually or in the aggregate, have a Material Adverse
Effect on Dairy State or the Subsidiaries, taken as a whole.
SECTION 2.07 Banking Reports and Financial Statements.
(a) During the five year period prior to the
Effective Time, Dairy State and the Subsidiaries have timely
filed all forms, reports and documents required to be filed
with the Federal Reserve Board, the administrator for the
Division of Banking of the Wisconsin Department of Financial
Institutions and any other applicable federal or state
securities or banking authorities (all such reports and
statements are collectively referred to as the "Dairy State
Reports"). Dairy State Reports, including all Dairy State
Reports filed after the date of this Agreement, (i) were or
will be prepared in accordance with the requirements of
applicable law and (ii) did not at the time they were filed,
or will not at the time they are filed, contain any untrue
statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements of
Dairy State (including, in each case, any related notes
thereto) delivered to FMB whether or not contained in Dairy
State Reports (the "Financial Statements"), including, but not
limited to, any Dairy State Reports filed since the date of
this Agreement and prior to or at the Effective Time, have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial
position of Dairy State and the Subsidiaries as of the
respective dates thereof and the consolidated results of its
operations and changes in financial position for the periods
indicated, except that any unaudited interim financial
statements were or are
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subject to normal and recurring yearend adjustments which were
not or are not expected to be material in amount.
(c) Except as and to the extent set forth on the
consolidated balance sheet of Dairy State and the Subsidiaries
as of December 31, 1998, including all notes thereto (the
"Dairy State Balance Sheet"), neither Dairy State nor any of
the Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on a balance sheet, or
in the notes thereto, prepared in accordance with generally
accepted accounting principles, except (i) for liabilities or
obligations incurred in the ordinary course of business since
December 31, 1998, that would not, individually or in the
aggregate have a Material Adverse Effect on Dairy State or the
Subsidiaries, taken as a whole, or (ii) as otherwise reflected
in the reports referred to in Section 2.07(a) hereof.
SECTION 2.08 Absence of Certain Changes or Events. Except as
disclosed in the Financial Statements or the Dairy State Disclosure Statement at
Section 2.08, since December 31, 1998, to the date of this Agreement, Dairy
State and the Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice and, since December 31,
1998, there has not been (a) any change in the financial condition, results of
operations or business of Dairy State or the Subsidiaries having a Material
Adverse Effect on Dairy State or the Subsidiaries, taken as a whole, (b) any
damage, destruction or loss with respect to any assets of Dairy State or the
Subsidiaries having a Material Adverse Effect on Dairy State or the
Subsidiaries, taken as a whole, (c) any change by Dairy State or the
Subsidiaries in their accounting methods, principles or practices, except for
compliance with any applicable new requirements of the Financial Accounting
Standards Board, (d) any revaluation by Dairy State or the Subsidiaries of any
of their material assets in any material respect, (e) except in the ordinary
course of business or as contemplated herein, any entry by Dairy State or any
Subsidiary into any commitment or transactions material to Dairy State or the
Subsidiaries, taken as a whole, (f) any declaration, setting aside or payment of
any dividends or distributions in respect of shares of Dairy State Common Stock
or except for the redemption of the Preferred Stock, any redemption, purchase or
other acquisition of any of its securities or any of the securities of any
Subsidiary, or (g) except for salary increases, bonuses or severance consistent
with past practice, in the ordinary course of business or as contemplated
herein, any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in compensation
payable or to become payable to any officers or key employees of Dairy State or
any of the Subsidiaries.
SECTION 2.09 Absence of Litigation. Except as disclosed in
Dairy State Disclosure Statement at Section 2.09 or the Dairy State Reports
filed prior to the date of this Agreement: (a) neither Dairy State nor any
Subsidiary is subject to any continuing order of, or written agreement or
memorandum of understanding with, or continuing material investigation
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by, any federal or state banking authority or other governmental entity, or any
judgment, order, writ, injunction, decree or award of any governmental entity or
arbitrator, including, without limitation, cease-and-desist or other orders of
any bank regulatory authority, (b) there is no claim of any kind, action, suit,
litigation, proceeding, arbitration, investigation, or controversy affecting
Dairy State or any Subsidiary pending or, to the knowledge of Dairy State,
threatened, except for matters which individually seek damages not in excess of
$20,000 and which otherwise will not have, and cannot reasonably be expected to
have, a Material Adverse Effect on Dairy State or the Subsidiaries taken as a
whole, and (c) there are no uncured material violations, or violations with
respect to which material refunds or restitutions may be required, cited in any
compliance report to Dairy State or any Subsidiary as a result of the
examination by any regulatory authority.
SECTION 2.10 Employee Benefit Plans.
(a) The Dairy State Disclosure Schedule at Section 2.
10 lists all "employee pension benefit plans," as such term is
defined in section 3(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), maintained, sponsored or
contributed to by Dairy State or any Subsidiary (the "Pension
Plans"). The term "Pension Plan" shall also include any
terminated "employee pension benefit plan" previously
maintained, sponsored or contributed to by Dairy State or any
Subsidiary which, as of the Effective Time, has not
distributed all of its assets in full satisfaction of accrued
benefits and/or obligations.
(b) Dairy State Disclosure Schedule at Section 2.10
lists all "employee welfare benefit plans," as defined in
ERISA section 3(l), maintained, sponsored or contributed to by
Dairy State or any Subsidiary (the "Welfare Plans"). The term
"Welfare Plans" shall also include any terminated employee
welfare benefit plan previously maintained, sponsored or
contributed to by Dairy State or any Subsidiary which, as of
the Effective Time, has not distributed all of its assets
and/or satisfied all of its obligations.
(c) Dairy State has made available to FMB true and
complete copies of the documents governing each of the Pension
Plans and Welfare Plans as in effect at the Effective Time.
(d) Dairy State Disclosure Schedule at Section 2.10
lists all plans or programs to provide material fringe
benefits to Dairy State's and Subsidiaries' employees (other
than Pension Plans and Welfare Plans) including, but not
limited to, vacation, sick leave, disability, medical,
hospitalization, life insurance and other insurance plans or
related benefits (the "Fringe Benefit Plans").
(e) Dairy State has not communicated to employees any
direct or indirect, formal or informal, plan, fund or program
to change any Pension Plan, Welfare Plan or Fringe Benefit
Plan that would affect any of Dairy State's or
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any Subsidiary's employees, except changes required by law.
Neither Dairy State nor any Subsidiary has made a material
modification, within the meaning of ERISA section 102 and the
regulations thereunder, to any existing Pension Plan, Welfare
Plan or Fringe Benefit Plan which is not set forth in the
Pension Plan or Welfare Plan documents provided to FMB.
(f) Neither Dairy State nor any Subsidiary has been
obligated to contribute to any multi-employer plan within the
meaning of ERISA section 3(37) within the six (6) years
preceding the date of this Agreement.
(g) To Dairy State's knowledge, the Pension Plans,
Welfare Plans and Fringe Benefit Plans and the trusts and
other funding vehicles related to the Pension Plans, Welfare
Plans and Fringe Benefit Plans have been administered in all
respects in compliance with the applicable requirements of
ERISA, the Code, the plan documents and all other applicable
rules, regulations and laws. The Pension Plans, Welfare Plans
and Fringe Benefit Plans and the trusts or other funding
vehicles related to the Pension Plans, Welfare Plans and
Fringe Benefit Plans meet all applicable requirements, in form
and in operation, for favorable tax treatment under the Code.
All required contributions pursuant to the Pension Plans,
Welfare Plans and Fringe Benefit Plans for all periods prior
to the Effective Time have been made or will be made prior to
the Effective Time. There are no pending or, to Dairy State's
knowledge, threatened claims, lawsuits or arbitrations which
have been asserted or instituted against the Pension Plans,
Welfare Plans or Fringe Benefit Plans or any fiduciaries
thereof with respect to their duties to the Pension Plans,
Welfare Plans or Fringe Benefit Plans or the assets of any of
the trusts under any Pension Plans, Welfare Plans or Fringe
Benefit Plans, other than routine claims for benefits
thereunder. No representations or communications with respect
to participation, eligibility for benefits, vesting, benefit
accrual or coverage under the Pension Plans, Welfare Plans or
Fringe Benefit Plans have been made to the Dairy State's or
Subsidiaries employees other than those which are in
accordance with the terms of such Pension Plans, Welfare Plans
or Fringe Benefit Plans in effect immediately prior to the
Effective Time.
(h) With respect to any Welfare Plan which is a
"group health plan" as defined in Code section 4980B, Dairy
State or Subsidiary in question has complied with the
continuation coverage requirements of Code section 4980B for
any periods prior to the Effective Time.
(i) Dairy State has furnished to FMB copies of the
governing investment prospectuses and all documents relating
to the Pension Plans, Welfare Plans or Fringe Benefit Plans,
including, but not limited to, the following: any service
provider agreements, any investment management agreements,
fiduciary insurance policies, fidelity bonds, rules,
regulations or policies of the trustees or any committee
thereunder, all of which are true and
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complete.
(j) To Dairy State's knowledge, since December 31,
1974, no fiduciary of the Pension Plans or Welfare Plans has
engaged in any "prohibited transaction" (as defined in ERISA
section 406 or Code section 4975) nor has any fiduciary
breached any fiduciary responsibility, as described in Part 4
of Title I of ERISA with respect to such Pension Plans or
Welfare Plans, for which exemption exists.
(k) Dairy State has no knowledge of the occurrence of
any event with respect to any Pension Plan which could result
in a liability of Dairy State, any Subsidiary or any member of
Dairy State's controlled group (within the meaning of Code
section 414(b), (c) or (n)) to the Pension Benefit Guaranty
Corporation ("PBGC"), other than the timely payment of
premiums pursuant to section 4007 of ERISA. All required PBGC
premiums have been paid for the periods through the Effective
Time.
(l) No Welfare Plan or Fringe Benefit Plan provides
any form of postretirement health benefits to retired
employees of Dairy State or any Subsidiary, other than
benefits required to be provided pursuant to Code section
4980B.
SECTION 2.11 Employment Contracts, Material Contracts. Except
as set forth in Dairy State's Disclosure Schedule at Section 2.11, neither Dairy
State nor any Subsidiary is a party to or bound by (a) any employment or
consulting contract that is not terminable without penalty by Dairy State or
such Subsidiary on 60 days' or less notice, (b) any contract or commitment for
capital expenditures in excess of $10,000.00 for any one (1) project, or (c)
contracts or commitments for the purchase of materials or supplies or for the
performance of services over a period of more than 60 days from the date of this
Agreement.
SECTION 2.12 Title to Property. Dairy State's Disclosure
Schedule at Section 2.12 correctly identifies all real property owned or leased
by Dairy State and the Subsidiaries. Dairy State and each of the Subsidiaries
has good and defensible title to all of their properties and assets, real and
personal, tangible and intangible free and clear of all mortgage liens, and free
and clear of all other liens, charges and encumbrances except liens for taxes
not yet due and payable, pledges to secure deposits and such Minor imperfections
of title, if any, as to not materially detract from the value of or interfere
with the present use of the property affected thereby or which, individually or
in the aggregate, would not have a Material Adverse Effect on Dairy State or the
Subsidiaries, taken as a whole; and all leases pursuant to which Dairy State or
any Subsidiary leases from others real or personal property including, without
limitation, leases for branch offices are in good standing, valid and effective
in accordance with their respective terms, and there is not, under any of such
leases, any existing material default by Dairy State or any Subsidiary or to the
knowledge of Dairy State, by any other party thereto or any event of default by
Dairy State or any Subsidiary or, to the knowledge of Dairy State by any other
party thereto (or event which with notice or lapse
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of time, or both, would constitute a material default by Dairy State or any
Subsidiary and in respect of which Dairy State or any Subsidiary has not taken
adequate steps to prevent such a default from occurring). Dairy State's and each
Subsidiary's buildings and equipment in regular use have been reasonably
maintained and are in good and serviceable condition, reasonable wear and tear
excepted. None of the buildings, structures or appurtenances owned or leased by
Dairy State or any Subsidiary for their operation or maintenance as now operated
or maintained, contravenes any zoning ordinances or other administrative
regulations (whether or not permitted because of prior nonconforming use) or
violates any restrictive covenant or any provision of law, the effect of which
would materially interfere with or prevent the continued use of such properties
for the purposes for which they are now being used or would materially and
adversely affect the value thereof.
SECTION 2.13 Compliance with Environmental Laws.
(a) Definitions. For purposes of this Section 2.13,
certain terms used in this Section are defined as follows:
(1) The term "Dairy State's Property" shall mean any
real property and improvements currently owned, leased or
operated by Dairy State or any Subsidiary, including
properties acquired by foreclosure, properties which the Bank
has a present right to acquire upon foreclosure and which are
owned by customers of the Bank who have received written
notification of default, or properties held or operated in a
fiduciary or managerial capacity.
(2) The term "Environmental Claims" shall mean any
and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law or Environmental
Permit.
(3) The term "Environmental Laws" shall mean all
currently applicable federal, state and local laws including
statutes, regulations and other governmental restrictions and
requirements relating to the discharge of air pollutants,
water pollutants or process wastewater or the disposal of
solid or hazardous waste or otherwise relating to the
environment or hazardous substances or employee health and
safety.
(4) The term "Environmental Permits" shall mean all
permits, approvals, identification numbers, licenses and other
authorizations required under any currently applicable
Environmental Law.
(5) The term "Hazardous Substances" shall mean all
hazardous and toxic substances, wastes and material , any
pollutants or contaminants (including, without limitation,
petroleum products, asbestos and raw materials which include
hazardous constituents); and any other similar substances or
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materials which are regulated under Environmental Laws.
(b) To Dairy State's knowledge and except as listed
on Schedule 2.13(b):
(1) All Environmental Permits (if any) required for
the conduct of Dairy State's and Subsidiaries' businesses and
the use of Dairy State's Property (as presently conducted and
used) in compliance with Environmental Laws are in full force
and effect.
(2) Dairy State and the Subsidiaries have filed all
reports, returns and other filings required to be filed with
respect to Dairy State's Property under Environmental Laws and
the Environmental Permits except where the failure to do so
would not have a material adverse effect on Dairy State's or
Subsidiaries' businesses or financial condition, taken as a
whole. Dairy State and/or the Subsidiaries have made no
environmental filings after January 1, 1995.
(3) The business of Dairy State and the Subsidiaries
and Dairy State's Property have been and are being operated by
Dairy State in accordance with all Environmental Laws and
Environmental Permits. Neither Dairy State nor any of the
Subsidiaries has received any written notice nor does Dairy
State or any of the Subsidiaries have knowledge that Dairy
State's Property is not in material compliance with all
Environmental Laws and Environmental Permits and no proceeding
for the suspension, revocation or cancellation of any
Environmental Permit is pending or, to Dairy State's
knowledge, threatened.
(4) There are no actions pending, or threatened
against Dairy State or any of the Subsidiaries (naming Dairy
State or any Subsidiary), which in any case assert or allege
(i) Dairy State or any Subsidiary (naming Dairy State or any
Subsidiary) violated any Environmental Law or Environmental
Permit or are in default with respect to any Environmental
Permit or any order, writ, judgment, variance, award or decree
of any government authority; (ii) Dairy State or any of the
Subsidiaries is required to clean up or take remedial or other
response action due to the disposal, discharge or other
release of any Hazardous Substance on Dairy State's Property
or elsewhere; or (iii) Dairy State or any of the Subsidiaries
is required to contribute to the cost of any past, present or
future cleanup or remedial or other response action which
arises out of or is related to the disposal, discharge or
other release or any Hazardous Substance by Dairy State, the
Subsidiaries or others. Dairy State, the Subsidiaries and
Dairy State's Property are not subject to any judgment,
stipulation, order, decree or agreement arising under
Environmental Laws.
(5)With respect to the period during which Dairy
State or any of the Subsidiaries occupied Dairy State's
Property (i) no Hazardous Substances have been treated,
recycled or disposed of by Dairy State or any of the
Subsidiaries (intentionally or unintentionally) on, under or
at Dairy State's Property; (ii)
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there has been no release or threatened release by Dairy
State or any of the Subsidiaries of any Hazardous Substance
from Dairy State's Property; (iii) there have been no
activities on Dairy State's Property which would subject FMB,
Interim, the Subsidiaries, or any subsequent occupier of the
Dairy State Property to damages, penalties, injunctive relief
or cleanup costs under any Environmental Laws or common law
theory of liability.
SECTION 2.14 Absence of Agreements. Neither Dairy State nor
any Subsidiary is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter which restricts materially the conduct of its
business (including any contract containing covenants which limit the ability of
Dairy State or any Subsidiary to compete in any line of business or with any
person or which involve any restriction of the geographical area in which, or
method by which, Dairy State or any Subsidiary may carry on its business), or in
any manner relates to its capital adequacy, its credit policies or its
management nor has Dairy State or any Subsidiary been advised that any federal,
state or governmental agency is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission.
SECTION 2.15 Taxes. During the six year period prior to the
Effective Time, Dairy State and the Subsidiaries have timely filed all Tax
Returns (as defined below) required to be filed by them, and Dairy State and the
Subsidiaries have timely paid and discharged all Taxes (as defined below) due in
connection with or with respect to the filing of such Tax Returns and have
timely paid all other Taxes as are due, except such as are being contested in
good faith by appropriate proceedings and with respect to which Dairy State is
maintaining reservesadequate for their payment. To the best knowledge of Dairy
State, the liability for Taxes set forth on each such Tax Return adequately
reflects the Taxes required to be reflected on such Tax Return. For purposes of
this Agreement, "Tax" or "Taxes" shall mean taxes, charges, fees levies, and
other governmental assessments and impositions of any kind, payable to any
federal, state, local or foreign governmental entity or taxing authority or
agency, including, without limitation, (a) income, franchise, profits, gross
receipts, estimated, ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding, disability,
employment, social security, workers compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, (b) customs duties, imposts, charges, levies
or other similar assessments of any kind, and (c) interest, penalties and
additions to tax imposed with respect thereto, and "Tax Returns" shall mean
returns, reports, and information statements with respect to Taxes required to
be filed with the United States Internal Revenue Service (the "IRS") or any
other governmental entity or taxing authority or agency, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns.
Neither the IRS nor any other governmental entity or taxing authority or agency
is now asserting, either through audits, administrative proceedings, court
proceedings or otherwise, or, to the best of Dairy State's knowledge,
threatening to assert against Dairy State or any Subsidiary any deficiency or
claim for additional Taxes. Neither Dairy State nor any
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Subsidiary has granted any waiver of any statute of limitations with respect to,
or any extension of a period for the assessment of, any Tax. There are no tax
liens on any assets of Dairy State or any Subsidiary. Neither Dairy State nor
any Subsidiary has received a ruling or entered into an agreement with the IRS
or any other governmental entity or taxing authority or agency that would have a
Material Adverse Effect on Dairy State or the Subsidiaries, taken as a whole.
The accruals and reserves for taxes reflected in Dairy State's Balance Sheet are
adequate to cover all Taxes accruable by Dairy State and the Subsidiaries on a
consolidated basis through the date thereof (Including Taxes being contested) in
accordance with generally accepted accounting principles. Except as may be set
forth in Dairy State Disclosure Schedule at Section 2.15, no agreements relating
to allocating or sharing of Taxes exist between Dairy State and the
Subsidiaries.
SECTION 2.16 Insurance. Complete and correct copies of all
material policies of fire, product or other liability, workers' compensation and
other similar forms of insurance owned or held by Dairy State and the
Subsidiaries have been delivered to FMB. Subject to expirations and renewals of
insurance policies in the ordinary course of business, all such policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date as of which this representation is being made have
been paid (other than retrospective premiums which may be payable with respect
to workers' compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
and shall remain valid, outstanding and enforceable policies, and will not be
terminated prior to the Effective Time. To the best knowledge of Dairy State,
the insurance policies to which Dairy State or the Subsidiaries are parties are
sufficient for compliance with all material requirements of law and all material
agreements to which Dairy State or the Subsidiaries are parties and will be
maintained by Dairy State and the Subsidiaries until the Effective Time. Neither
Dairy State nor any Subsidiary has been refused any insurance with respect to
any material assets or operations, nor has coverage been limited in any respect
material to their operations by any insurance carrier to which they have applied
for any such insurance or with which they have carried insurance during the last
five (5) years.
SECTION 2.17 Absence of Adverse Agreements. Neither Dairy
State nor any Subsidiary is a party to any agreement or instrument or any
judgment, order or decree or any rule or regulation of any court or other
governmental agency or authority which materially and adversely affects or in
the future may have a Material Adverse Effect on the financial condition,
results or operations, assets, business or prospects of Dairy State or the
Subsidiaries, taken as a whole.
SECTION 2.18 Internal Controls and Records. Dairy State and
each Subsidiary maintain books of account which accurately and validly reflect,
in all material respects, all loans, mortgages, collateral and other business
transactions and maintain accounting controls sufficient to ensure that all such
transactions are (a) in all material respects, executed in accordance with its
management's general or specific authorization, and (b) recorded in conformity
with generally accepted accounting principles. There is no amendment to any
lending agreement, collateral document or security which is not fully
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reflected in the books and records of Dairy State or the Subsidiaries.
SECTION 2.19 Loans. Except as disclosed in Dairy State
Disclosure Schedule at Section 2.19, (a) the Bank is not a party to any written
or oral loan agreement, note or borrowing arrangement which has been classified
as "substandard", "doubtful", "loss", "other loans especially mentioned" or any
comparable classifications by Dairy State or the Subsidiaries or banking
regulators; (b) neither Dairy State nor any Subsidiary is a party to any written
or oral loan agreement, note, or borrowing arrangement, including any loan
guaranty, with any director or executive officer of Dairy State or any
Subsidiary, or any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing; or (c) neither Dairy State
nor any Subsidiary is a party to any written or oral loan agreement, vote or
borrowing arrangement in violation of any law, regulation or rule of any
governmental authority and which violation could have a Material Adverse Effect
on Dairy State or the Subsidiaries, taken as a whole.
SECTION 2.20 Labor Matters. Except as will not cause a
Material Adverse Effect to Dairy State or the Subsidiaries, (a) Dairy State and
the Subsidiaries are in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and are not engaged in any unfair labor practice; (b) there is
no unfair labor practice complaint against Dairy State or any Subsidiary pending
before the National Labor Relations Board, (c) there is no labor strike,
dispute, slowdown, representation campaign or work stoppage actually pending or
to the knowledge of Dairy State, threatened against or affecting Dairy State or
any Subsidiary; (d) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claim therefor has been
asserted against Dairy State or any Subsidiary; and (e) neither Dairy State nor
any Subsidiary is experiencing any material work stoppage.
SECTION 2.21 Brokers. Except as set forth in the Dairy State
Disclosure Statement at Section 2.21, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Dairy State or the Subsidiaries.
SECTION 2.22 Full Disclosure. No statement contained in any
document, certificate, or other writing furnished or to be furnished by or at
the direction of Dairy State to FMB in, or pursuant to the provisions of, this
Agreement contains or shall contain any untrue statement of a material fact or
omits or shall omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
SECTION 2.23 Vote Required. The affirmative vote of a majority
of the votes that holders of the outstanding shares of Dairy State's Common
Stock are entitled to cast is the only vote of the holders of any class or
series of Dairy State's capital stock necessary to approve the Merger.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FMB
Except as set forth in the Disclosure Schedule attached hereto
(the "FMB Disclosure Schedule"), FMB hereby represents and warrants to Dairy
State that:
SECTION 3.01 Organization and Qualification. FMB is a
bank holding company duly organized and validly existing under the laws of the
State of Wisconsin and is registered with the Federal Reserve Board as bank
holding company under the BHCA. FMB and Interim have the requisite corporate
power and authority and are in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders (the "FMB Approvals") necessary to own, lease and operate their
properties and to carry on their businesses as they are now being conducted,
including appropriate authorizations from the Federal Reserve Board, except
where the failure to be so organized and existing or to have such power,
authority and FMB Approvals would not, individually or in the aggregate, have a
Material Adverse Effect on FMB or Interim, taken as a whole. FMB has not
received any notice of proceedings relating to the revocation or modification of
any such FMB Approvals. FMB and Interim are duly qualified or licensed as
foreign corporations to do business, and are in good standing, in each
jurisdiction where the character of properties owned, leased or operated by them
or the nature of their activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on FMB or Interim taken as a whole.
SECTION 3.02 Authority. FMB and Interim have the
requisite corporate power and authority to execute and deliver this Agreement
and to perform their obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by FMB and
Interim and the consummation by FMB and Interim of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of FMB and Interim and no other corporate proceedings on the part of
FMB or Interim are necessary to authorize this Agreement or to consummate the
transactions so contemplated hereby. This Agreement has been duly and validly
executed and delivered by FMB and Interim and, assuming the due authorization,
execution and delivery by Dairy State, constitutes the legal, valid and binding
obligation of FMB and Interim.
SECTION 3.03 No Conflict, Required Filings and Consents.
(a) To the best knowledge of FMB, the execution and
delivery of this Agreement by FMB and Interim does not, and
the performance of this Agreement by FMB and Interim shall
not, (i) conflict with or violate the Articles of
Incorporation or Bylaws of FMB or Interim, (ii) conflict with
or violate any Laws applicable to FMB or Interim or by which
their properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under,
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or give to others any nights of termination, amendment,
acceleration or cancellation of, or result in the creation of
a lien or encumbrance on any of the properties or assets of
FMB or Interim pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which FMB or
Interim is a party or by which FMB, Interim or their
properties are bound or affected, except for any such
breaches, defaults or other occurrences that would not,
individually or in the aggregate, have a Material Adverse
Effect on FMB or Interim, taken as a whole.
(b) To the best knowledge of FMB, the execution and
delivery of this Agreement by FMB and Interim do not, and the
performance of this Agreement by FMB and Interim shall not,
require any consent, approval, authorization or permit of, or
filming with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for
applicable requirements of the BHCA, the WBL, and the filing
and recordation of appropriate merger or other documents as
required by Wisconsin Law, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or
delay consummation of the Merger, or otherwise prevent FMB and
Interim from performing their obligations under this
agreement, and would not have a Material Adverse Effect on FMB
or Interim, taken as a whole.
SECTION 3.04 Compliance, Permits. To the best knowledge
of FMB, neither FMB nor Interim is in conflict with, or in default or violation
of (a) any Law applicable to FMB or Interim or by which their property is bound
or affected, or (b) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which FMB
or Interim is a party or by which FMB or Interim or any of their properties are
bound or affected, except for any such conflicts, defaults or violations which
would not, individually or in the aggregate, have a Material Adverse Effect on
FMB or Interim, taken as a whole.
SECTION 3.05 Securities Reports, Financial Statements.
(a) As of the date of this Agreement, FMB has
delivered to Dairy State in the form filed with the SEC its
Annual Report on Form 10K for the fiscal years ended December
31, 1998, (the "FMB SEC Report"). The SEC Reports, including
all FMB SEC Reports filed after the date of this Agreement,
(i) were or will be prepared in accordance with the
requirements of applicable law and (ii) did not at the time
they were filed, or will not at the time they are filed,
contain any untrue statement of material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The consolidated financial statements
(including, in each case,
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any related notes thereto) contained in the FMB SEC Report,
including any FMB SEC Reports filed since the date of this
Agreement and prior to or on the Effective Time, have been or
will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial
position of FMB and its subsidiaries as of the respective
dates thereof and the consolidated results of its operations
and changes in financial position for the periods indicated,
except that any unaudited interim financial statements were
or are subject to normal and recurring yearend adjustments
which were not or are not expected to be material in amount.
(c) Except as and to the extent set forth on the
consolidated balance sheet of FMB and its subsidiaries as of
December 31, 1998, including all notes thereto (the "FMB
Balance Sheet"), neither FMB nor its subsidiaries have any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to
be reflected on a balance sheet, or in the notes thereto,
prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred in
the ordinary course of business since December 31, 1998, which
would not, individually or in the aggregate, have a Material
Adverse Effect on FMB or its subsidiaries, taken as a whole.
SECTION 3.06 Absence of Certain Changes or Events. Since
December 31, 1998, to the date of this Agreement, FMB and its subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 1998, there has not been
(a) any change in the financial condition, results of operations or business of
FMB or its subsidiaries having a Material Adverse Effect on FMB or its
subsidiaries, taken as a whole, (b) any damage, destruction or loss (whether or
not covered by insurance) with respect to any assets of FMB or its subsidiaries
having a Material Adverse Effect on FMB or its subsidiaries, taken as a whole,
(c) any change by FMB in its accounting methods, principles or practices, (d)
any revaluation by FMB of any of its material assets in any material respect, or
(e) to the date of this Agreement, any entry by FMB or any of its subsidiaries
into any commitment or transactions material to FMB or its subsidiaries, taken
as a whole.
SECTION 3.07 Absence of Litigation. Except as disclosed in the
FMB Disclosure Schedule at Section 3.07 and in the FMB SEC Reports filed prior
to the date of this Agreement, there is no claim, action, suit, litigation,
proceeding, arbitration, investigation, or controversy of any kind affecting FMB
or any of FMB's subsidiaries pending or, to the knowledge of FMB, threatened,
except for matters which individually seek damages not in excess of $100,000 and
which otherwise will not have, and cannot reasonably be expected to have, a
Material Adverse Effect on FMB or its subsidiaries taken as a whole, and there
are no uncured material violations, or violations with respect to which material
refunds or restitutions may be required, cited in any compliance report to FMB
or any of FMB's subsidiaries as a
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result of an examination by any bank regulatory authority.
SECTION 3.08 Absence of Agreements. Neither FMB nor Interim is
a party to any written agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letter which
restricts materially the conduct of its business (including any contract
containing covenants which limit the ability of FMB or Interim to compete in any
line of business or with any person or which involve any restriction of the
geographical area in which, or any method by which, FMB or Interim may carry on
its business (other than as may be required by Law or applicable regulatory
authorities)), or in any manner relates to its capital adequacy, its credit
policies or its management, except for those the existence of which has been
disclosed to Dairy State prior to the date of this Agreement, nor has FMB or
Interim been advised that any federal, state or governmental agency is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or similar
submission, except as may be disclosed by FMB in the FMB Disclosure Schedule at
Section 3.08.
SECTION 3.09 Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of FMB.
SECTION 3.10 Full Disclosure. No statement contained in any
document, certificate, or other writing furnished or to be furnished by or at
the direction of FMB to Dairy State, in or pursuant to the provisions of, this
Agreement contains or shall contain any untrue statement of a material fact or
omits or shall omit to state any material fact necessary, in the light of the
circumstances under which it has been made, in order to make the statements
herein or therein not misleading.
SECTION 3.11 Regulatory Approval. FMB knows of no reason or
condition that would prevent the Merger from being approved by any regulatory
agency.
ARTICLE IV
COVENANTS OF DAIRY STATE
SECTION 4.01 Affirmative Covenants. Dairy State hereby
covenants and agrees with FMB and Interim that prior to the Effective Time,
unless the prior written consent of FMB shall have been obtained and except as
otherwise contemplated herein, it will and/or it will cause each Subsidiary to:
(a) operate its business only in the usual, regular
and ordinary course consistent with past practices;
(b) use reasonable efforts to preserve intact its
business organization
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and assets, maintain its rights and franchises, retain the
services of its officers and key employees and maintain its
relationships with customers;
(c) use reasonable efforts to maintain and keep its
properties in as good repair and condition as at present,
ordinary wear and tear excepted;
(d) use reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of
coverage to that now maintained by it;
(e) perform in all material respects all obligations
required to be performed by it under all material contracts,
leases, and documents relating to or affecting its assets,
properties, and business;
(f) purchase and sell securities in accordance with
the guidelines set forth on the Dairy State Disclosure
Schedule at Section 4.01;
(g) with respect to the Bank, maintain as of July
30, 1999 and thereafter a loan loss reserve of not less than
.894 percent of period ending loans;
(h) comply with and perform in all material respects
all obligations and duties imposed upon it by all applicable
laws;
(i) comply with the capital requirements set forth
on the Dairy State Disclosure Schedule to Section 4.01; and
(j) fully expense as the end of the month prior to
the Effective Time all expenses (including fees) incurred by
Dairy State or the Bank in connection with the consummation of
the transaction contemplated hereby (except for fees for
services actually rendered after the end of the month prior to
the Effective Time).
SECTION 4.02 Negative Covenants. Except as
specifically contemplated by this Agreement, from the date of this Agreement
until the Effective Time, Dairy State shall not do, or permit the Subsidiaries
to do, without the prior written consent of FMB, any of the following:
(a) (i) grant any increase in compensation or grant
any bonuses (incentive or special) to its employees as a
class, or to its officers or directors, except in accordance
with past practice or as required by law or increases which
are not material, (ii) effect any change in retirement
benefits to any class of employees or officers (unless any
such change shall be required by applicable law) which would
increase its retirement benefit liabilities, (iii) adopt,
enter into, amend or modify any employee benefit plan or make
any adjustments pursuant to any employee benefit plan, or (iv)
enter into or amend any
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employment, severance or similar agreements or arrangements
with any directors or officers, other than as is consistent
with the normal severance policies of Dairy State and the
Subsidiaries in effect on the date of this Agreement;
(b) except as set forth on Schedule 4.02, declare or
pay any dividend on, or make any other distribution in respect
of, its outstanding shares of capital stock; provided,
however, that, prior to the Effective Time, Dairy State may
pay aggregate dividends on the Dairy State Preferred Stock and
the Dairy State Common stock equivalent to net earnings during
the period from January 1 through the end of the month prior
to the Effective Time as determined by the assurante practice
of KPMG, LLP; after accruing the liabilities for any increase
in the loan loss reserve required by Section 4.01(g), and the
liability for expenses of the transaction as required by
Section 4.01(j);
(c) (i) except as set forth on Schedule 4.02,
redeem, purchase or otherwise acquire any shares of its
capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock, or
any options, warrants, conversion or other rights to acquire
any shares of its capital stock or any such securities or
obligations; (ii) merge with or into any other corporation or
bank, permit any other corporation or bank to merge into it or
consolidate with any other corporation or bank, or effect any
reorganization or recapitalization; (iii) purchase or
otherwise acquire any assets or stock of any corporation, bank
or other business; (iv) liquidate, sell, dispose of, or
encumber any assets or acquire any assets, other than in the
ordinary course of its business consistent with past practice;
or (v) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for
shares of its capital stock;
(d) issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or
sale of, any shares of any class of its capital stock
(including shares held in treasury) or any rights, warrants or
options to acquire, any such shares;
(e) initiate, solicit or encourage (including by way
of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to
lead to, any Competing Transaction (as such term is defined
below), or negotiate with any person in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or
endorse any Competing Transaction, or authorize or permit any
of its officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other
representative retained by it or any Subsidiary to take any
such action, and Dairy State shall promptly notify FMB orally
and in writing of all of the relevant details relating to all
inquiries and proposals which it may receive relating to any
of such matters;
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provided, however, that nothing contained in this subsection
(e) shall prohibit the Board of Directors of Dairy State from
furnishing or permitting any of its officers, directors,
employees, investment bankers, financial advisors, attorneys,
accountants or other representative to furnish information to
any party which requests information as to Dairy State and the
Subsidiaries if (i) the Board of Directors of Dairy State,
after consultation with and based upon the written advice of
independent legal counsel, determines in good faith that such
action is required for the Board of Directors of Dairy State
to comply with its fiduciary duties to shareholders imposed by
law and (ii) prior to furnishing such information to such
party, Dairy State receives from such party an executed
confidentiality agreement in reasonably customary form. For
purposes of this Agreement, "Competing Transaction" shall mean
any of the following involving Dairy State or any Subsidiary:
(i) any merger, consolidation, share exchange, business
combination, or other similar transactions; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other
disposition of ten percent or more of assets in a single
transaction or series of transactions, excluding from the
calculation of the percentage hereunder any such transactions
undertaken in the ordinary course of business and consistent
with past practice; (iii) any sale of ten percent or more of
shares of capital stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock);
(iv) any tender offer or exchange offer for ten percent or
more of outstanding shares of capital stock; (v) any
solicitation of proxies in opposition to approval by Dairy
State's shareholders of the Merger; (vi) the filing of an
acquisition application (or the giving of acquisition notice)
whether in draft or final form under the BHCA or the Change in
Bank Control Act with respect to Dairy State or the
Subsidiaries; or (vii) any person shall have acquired
beneficial ownership or the right to acquire beneficial
ownership of, or any to "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of
capital stock;
(f) change any lending, investment, liability
management or other material policies concerning the business
or operations of Dairy State or any Subsidiary in any material
respect; organize any new subsidiaries or enter into any new
nonbanking line of business whether or not permissible under
applicable Federal or state law, or make any material changes
in its operations;
(g) (i) incur or assume any material obligation or
liability, including without limitation any obligation for
borrowed money, whether or not evidenced by a note, bond,
debenture or similar instrument and whether or not being
incurred to reduce other existing liabilities, or make any
loan (not including any loan renewal of a loan not then
classified as "substandard," "doubtful," "loss," "other loans
especially mentioned" or any comparable
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classifications by Dairy State, the Subsidiaries or banking
regulators) in an amount greater than $500,000.00 (except for
loans for which applications have been made prior to the date
hereof) or investment (including U.S. Treasury Securities) in
an amount greater than $100,000.00, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingent or otherwise) for the obligations of any
other person or entity; (iii) mortgage, license, pledge or
grant a security interest in any of its material assets or
allow to exist any material lien thereon; except (A) for
liabilities and obligations (including corporate debt
issuances) incurred in the ordinary course of business
consistent with past practices and in amounts not material to
Dairy State or the Subsidiaries; and (B) as may be required
under existing agreements to which Dairy State or any
Subsidiary is a party; (iv) acquire assets (including
equipment) or securities in excess of $25,000 in the aggregate
(excluding loans to customers and investments permitted in (i)
above; (v) enter into any other contract or agreement
involving annual payments by Dairy State or any Subsidiary or
the other party or parties thereto in excess of $25,000; (vi)
pay, discharge, or satisfy any debts or claims not in the
ordinary course of business and consistent with past
practices; (vii) settle any claim, action, suit, litigation,
proceeding, arbitration, investigation or controversy of any
kind, for any amount in excess of $25,000 or in any manner
which would restrict in any material respect the operations or
business of Dairy State or the Subsidiaries; (viii) purchase
any new financial product or instrument which involves
entering into a contract with a term of six months or longer;
or (ix) take any action or fall to take any action which
individually or in the aggregate can be expected to have a
Material Adverse Effect on Dairy State or the Subsidiaries,
taken as a whole; or
(h) agree in writing or otherwise to do any of the
foregoing.
SECTION 4.03 Access and Information.
(a) Prior to the Effective Time and upon reasonable
notice, and without unreasonable disruption to the business
carried on by Dairy State or the Subsidiaries, Dairy State
shall (and shall cause the Subsidiaries to) afford to FMB's
officers, employees, accountants, legal counsel and other
representatives access, during normal business hours, to all
its properties, books, contracts, commitments and records
(other than the portions of Dairy State board of director
minutes which discuss merger proposals and other than any
records which, in the reasonable judgment of Dairy State
would, if disclosed, cause Dairy State or any Subsidiary to
waive its attorney-client privilege with respect to the
content of such records.) Prior to the Effective Time, Dairy
State shall (and shall cause each Subsidiary to) furnish
promptly to FMB (i) a copy of each Dairy State Report filed by
it (to the extent permitted by Law) after the date of this
Agreement and prior to the Effective Time pursuant to the
requirements of the BHCA, any other federal or state banking
laws or any other applicable laws
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promptly after such documents are available; (ii) the monthly
consolidated financial statements of Dairy State and the
Subsidiaries; (iii) a summary of any action taken by the Board
of Directors, or any committee thereof, of Dairy State and the
Subsidiaries; and (iv) all other information concerning the
business, properties and personnel of Dairy State or the
Subsidiaries as FMB may reasonably request.
(b) Any information provided to FMB by Dairy State
or the Subsidiaries, whether prior to or subsequent to the
date of this Agreement, shall be kept confidential by the
representatives of FMB (and shall be used by them only in
connection with this Agreement and the transactions
contemplated hereby) except to the extent that (i) it was
already known to such representatives when received, (ii) it
hereafter becomes lawfully obtainable from other sources, or
(iii) it is required to be disclosed by FMB in any document
required to be filed with any government agency. Upon any
termination of this Agreement pursuant to Section 8 hereof,
FMB agrees to promptly return all information and documents
that it has obtained from Dairy State in connection herewith.
To the extent that the terms of this Section 4.03(b) are
inconsistent with the terms of the Confidentiality Agreement
dated April 15, 1999 between Dairy State and FMB, the terms of
the Confidentiality Agreement shall control.
SECTION 4.04 Expenses.
(a) Except as provided in Section 8.02, below,
all Expenses (as described below) incurred by FMB and Dairy
State shall be borne solely and entirely by the party which
has incurred the same.
(b) "Expenses" as used in this Agreement shall
include all reasonable out-of-pocket expenses (including
without limitation, all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to
the party and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization,
preparation and execution of this Agreement, the solicitation
of shareholder approvals and all other matters related to the
closing of the transactions contemplated hereby.
SECTION 4.05 Delivery of Shareholder List. Dairy State
shall deliver to FMB or its designee, from time to time prior to the Effective
Time, a true and complete list setting forth the names and addresses of the
shareholders of Dairy State, their holdings of stock as of the latest
practicable date, and such other shareholder information as FMB may reasonably
request.
ARTICLE V
COVENANTS OF FMB
SECTION 5.01 Affirmative Covenants. FMB hereby covenants
and
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agrees with Dairy State that prior to the Effective Time Unless the prior
written consent of Dairy State shall have been obtained, and except as otherwise
contemplated herein it will and will cause Interim to:
(a) maintain its corporate existence in good
standing and maintain all books and records in accordance with
accounting principles and practices as utilized in FMB's
financial Statements applied on consistent basis; and
(b) conduct its business in a manner that does not
violate any law, except for possible violations which
individually or in the aggregate do not, and insofar as
reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on FMB or its subsidiaries, taken as a
whole.
SECTION 5.02 Indemnification. In the event of any threatened
or actual claim, action, suit, proceeding or investigation, whether civil,
criminal or administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any individual who is now, or
has been at any time prior to the date of this Agreement, or who becomes prior
to the Effective Time, a director or officer or employee of Dairy State or any
Subsidiary (the "Indemnified Parties"), is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he or she is or was a director, officer or
employee of Dairy State or any Subsidiary or any of their respective
predecessors, or (ii) this Agreement or the Plan of Merger or any of the
transactions contemplated hereby or thereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use reasonable efforts to defend against and respond thereto. It
is understood and agreed that after the Effective Time, FMB shall indemnify and
hold harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses and in advance of
the final disposition of any claim, suit, proceeding or investigation incurred
by each Indemnified Party to the fullest extent permitted by law upon receipt of
any undertaking required by applicable law), judgments, fines and amounts paid
in settlement in connection with any such threatened or actual claim, action,
suit, proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted or
arising before or after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with the Surviving
Corporation. The Surviving Corporation's obligations under this Section 5.02
shall continue in full force and effect for a period of three years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the final
disposition of such claim.
SECTION 5.03 Directors' and Officers' Insurance. The Surviving
Corporation shall use reasonable efforts (i) to obtain, after the Effective
Time, directors' and officers' liability insurance coverage for the officers and
directors of Dairy State and any Subsidiary, to the extent that the same is
economically practicable, and (ii) either (A) to cause the individuals serving
as officers and directors of Dairy State or any Subsidiary immediately
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prior to the Effective Time to be covered for a period of three years from the
Effective Time by the directors' and officers' liability insurance policies
maintained by the Surviving Corporation, or to (B) substitute therefor policies
of at least the same coverage and amounts containing terms and conditions which
are not less advantageous than the policies previously maintained by Dairy State
with respect to acts or omissions prior to the Effective Time which were
committed by such officers and directors in their capacity as such.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Meeting of Shareholders. Dairy State and its
officers and directors shall: (a) cause Dairy State's shareholders meeting to be
duly called and held as soon as practicable to consider and vote upon the Merger
and any related matters in accordance with the applicable provisions of
applicable law, (b) submit this Agreement to Dairy State's shareholders together
with a recommendation for approval by the Board of Directors of Dairy State, (c)
solicit the approval thereof by Dairy State's shareholders by mailing or
delivering to each shareholder a Proxy Statement, and (d) use their best efforts
to obtain the approval and adoption of the Merger by the requisite percentage of
Dairy State's shareholders.
SECTION 6.02 Appropriate Action, Consents, Filings. Dairy
State and FMB and Interim shall use all reasonable efforts to (a) take, or cause
to be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated by this Agreement, (b) obtain all
consents, licenses, permits, waivers, approvals, authorizations or orders
required under Law (including, without limitation, all foreign and domestic
(federal, state and local) governmental and regulatory rulings and approvals and
parties to contracts) in connection with the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby and thereby, including, without limitation, the Merger; and
(c) make all necessary filings, and thereafter make any other required
submissions, with respect to the Agreement and the Merger required under (i) any
applicable federal or state banking laws and (ii) any other applicable law;
provided that FMB and Dairy State shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the nonfiling party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes suggested in
connection therewith. Dairy State and FMB shall furnish all information required
for any application or other filing to be made pursuant to the rules and
regulations of any applicable law (including all information required to be
included in the Proxy Statement in connection with the transactions contemplated
by this Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use all
reasonable efforts to take all such necessary action.
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SECTION 6.03 Notification of Certain Matters. Dairy State
shall give prompt notice to FMB, and FMB shall give prompt notice to Dairy
State, of (a) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate, and (b) any failure of
Dairy State or FMB, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.03
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.04 Public Announcements. FMB and Dairy State shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation and with
mutual consent of both parties, except as may be required by law.
SECTION 6.05 Environmental Matters. In the event an
environmental consultant (the "Environmental Consultant") retained by FMB
discovers or determines the existence of any environmental condition (including,
without limitation, a spill, discharge, or contamination) the result of which,
in the opinion of the Environmental Consultant, requires investigative or
remedial action pursuant to any federal, state, or local law, statute or
regulation or may be the basis for the assertion of any third-party claims,
including the claims of governmental entities, FMB shall promptly notify Dairy
State not later than thirty (30) days from the date of this Agreement . Upon
receipt of such notice, Dairy State shall, (i) at its sole cost and expense,
proceed with due diligence to take reasonably appropriate action in response
thereto (the "Environmental Expense"), or (ii) have the option to terminate this
Agreement with the effect set forth in Section 8.02(a) if the Environmental
Expense exceeds $250,000; provided, however, Dairy State shall not have the
option to terminate if FMB agrees to pay the amount of Environmental Expense
that exceeds $250,000.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.01 Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. This Agreement and the
Merger shall have been approved and adopted by the requisite
vote of the shareholders of Dairy State.
(b) Regulatory Approvals. The Merger shall have been
approved by the Federal Reserve Board, the Division of Banking
of the Wisconsin Department of Financial Institutions and all
other required regulatory approvals, which approvals shall not
contain any condition which is not reasonably
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satisfactory to FMB or Dairy State, all conditions required to
be satisfied prior to the Effective Time imposed by the terms
of such approvals shall have been satisfied and all waiting
periods relating to such approvals shall have expired.
(c) No Order. No federal or state governmental or
regulatory authority or other agency or commission, or federal
or state court of competent jurisdiction, shall have enacted,
issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in
effect restricting, preventing or prohibiting consummation of
the transactions contemplated by this Agreement.
SECTION 7.02 Additional Conditions to Obligations of FMB. The
obligations of FMB to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Dairy State contained in
this Agreement shall be complete and correct in all material
respects (except that where any statement in a representation
or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects) as of the
Effective Time as though made at the Effective Time with the
same force and effect as if made on and as of the Effective
Time. FMB shall have received a certificate of the Chief
Executive Officer of Dairy State to that effect.
(b) Agreements and Covenants. Dairy State shall have
performed or complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective
Time.
(c) Consents Obtained. All material consents,
waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made by Dairy State
for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by Dairy
State.
(d) No Challenge. There shall not be pending any
action, proceeding or investigation before any court or
administrative agency or by any government agency or any other
person (i) challenging or seeking material damages in
connection with the Merger or (ii) seeking to restrain,
prohibit or limit the exercise of full rights of ownership or
operation by FMB or its subsidiaries of all or any portion of
the business or assets of Dairy State or any of the
Subsidiaries, which in either case is reasonably likely to
have a Material Adverse Effect on either Dairy State or the
Subsidiaries, taken as a whole, or FMB or its subsidiaries,
taken as a whole.
(e) Opinion of Counsel. FMB shall have received from
Xxxxx and
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Lardner or other independent counsel for Dairy State
reasonably satisfactory to FMB, an opinion dated the Effective
Time, in form and substance reasonably satisfactory to FMB,
covering the matters set forth in Exhibit C hereto, which
opinion shall be based on such assumptions and containing such
qualifications and limitations as are appropriate and
reasonably satisfactory to FMB.
(f) Non-Competition Agreement. FMB shall have
entered into Non-Competition Agreements with Xxxxxx X. Chiples
and Xxxxxx X. Xxxxxx in substantially the form of Exhibit D.
(g) Burdensome Condition. There shall not be any
action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger,
by any federal or state governmental entity which, in
connection with the grant of any regulatory approval, imposes
any condition or restriction upon Dairy State or FMB or their
respective subsidiaries (or the Surviving Corporation or its
subsidiaries after the Effective Time), including, without
limitation, any requirement to raise additional capital, which
would so materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement as
to render inadvisable the consummation of the Merger.
(h) Environmental Report. FMB shall have received
from its Environmental Consultant a written environmental
evaluation of Dairy State's Property evidencing that:
i) Dairy State's Property complies with
all Environmental Laws;
ii) no capital improvements should be
reasonably required to maintain compliance with all
Environmental Laws; and
iii) there are no material contingent
liabilities affecting Dairy State's Property arising under
Environmental Laws or under Environmental Permits; or Dairy
State shall have complied with all of its obligations under
Section 6.05.
(i) Equity. Dairy State's consolidated equity as of
the Effective Time shall be not less than $5,660,750.00
(excluding the amount of any additions to the loan loss
reserve (net tax effect) required to meet the condition of
Section 7.02(k) compared to the covenant of Section 4.01(g)).
(j) Redemption of Preferred Stock. Dairy State shall
have furnished FMB evidence reasonably satisfactory to FMB's
counsel that the Preferred Stock has been redeemed.
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(k) Loan Loss Reserve. The Bank shall have a loan
loss reserve of not less than 1% as the end of the month prior
to the Effective Time.
SECTION 7.03 Additional Conditions to Obligations of
Dairy State. The obligation of Dairy State to effect the Merger is also subject
to the following conditions:
(a) Representations and Warranties. Each of the
representations and warranties of FMB contained in this
Agreement shall be complete and correct in all material
respects (except that where any statement in a representation
or warranty expressly includes a statement of materiality,
such statement shall be true and correct in all respects) as
of the Effective Time as though made on and as of the
Effective Time with the same force and effect as if made on
and as of the Effective Time. Dairy State shall have received
a certificate of the President of FMB to that effect.
(b) Agreements and Covenants. FMB and Interim
shall have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be
performed or complied with by them on or prior to the
Effective Time.
(c) Consents Obtained. All material consents,
waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made by FMB and
Interim for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by FMB.
(d) Opinion of Counsel. Dairy State shall have
received from Xxxxxxx Xxxx & Xxxxxxxxx LLP, or other
independent counsel for FMB reasonably satisfactory to Dairy
State, an opinion dated the Effective Time, in form and
substance reasonably satisfactory to Dairy State, covering the
matters set forth in Exhibit E, which opinions shall be based
on such assumptions and contain such qualifications and
limitations as are appropriate and reasonably satisfactory to
Dairy State.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination.
(a) This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval
of the matters presented in connection with the Merger by the
shareholders of Dairy State:
i) by mutual written consent of FMB and
Dairy State;
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ii) by Dairy State or FMB (A) if there has
been a breach in any material respect (except that where any
statement in a representation or warranty expressly includes a
standard of materiality, such statement shall have been
breached in any respect) of any representation, warranty,
covenant or agreement on the part of Dairy State, on the one
hand, or FMB, on the other hand, respectively, set forth in
this Agreement, or (B) if any representation or warranty of
Dairy State, on the one hand, or FMB, on the other hand,
respectively, shall be discovered to have become untrue in any
material respect (except that where any statement in a
representation or warranty expressly includes a standard of
materiality, such statement shall have become untrue `in any
respect), in either case which breach or other condition has
not been cured within 10 business days following receipt by
the non-terminating party of notice of such breach or other
condition; provided, however, this Agreement may not be
terminated pursuant to this clause (ii) by the breaching party
or party making any representation or warranty which shall
have become untrue in any material respect;
iii) by either FMB or Dairy State if any
permanent injunction preventing the consummation of the Merger
shall have become final and nonappealable,
iv) by either FMB or Dairy State if the
Merger shall not have been consummated before April 30, 2000,
for a reason other than the failure of the terminating party
to comply with its obligations under this Agreement;,
v) by either FMB or Dairy State if the
Federal Reserve Board or the Division of Banking of the
Wisconsin Department of Financial Institutions has denied
approval of the Merger and neither FMB nor Dairy State has,
within thirty (30) days after the entry of such order denying
approval, filed a petition seeking review of such order as
provided by applicable law;
vi) by FMB if Dairy State fails to perform
all of its obligations under Section 6.05;
vii) by FMB if all of the conditions set
forth in Section 7.02 are not satisfied on or before April 30,
2000;
viii) by Dairy State if all of the
conditions set forth in Section 7.03 are not satisfied on or
before April 30, 2000; and
ix) by either FMB or Dairy State if all of
the conditions set forth in Section 7.01 are not satisfied on
or before April 30, 2000.
x) by either FMB or Dairy State if the
Merger shall not have been consumated by July 31, 2000
regardless of fault.
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(b) In the event of termination and abandonment by
any party as provided above, written notice shall forthwith be
given to the other parties, which notice shall specifically
describe the basis for such termination.
SECTION 8.02 Effect of Termination.
(a) If the Merger is not consummated as the result
of termination of this Agreement caused otherwise than by
breach of a party hereto, Dairy State and FMB each shall pay
its own Expenses (as defined in Section 4.04 above) and this
Agreement shall immediately terminate, except as set forth in
Section 9.01 hereof, and neither Dairy State nor FMB shall
have any liability under this Agreement for damages or
otherwise.
(b) If termination of this Agreement shall have been
caused by breach of this Agreement by any party hereto, then,
in addition to other remedies at law or equity for breach of
this Agreement, the party so found to have breached this
Agreement shall indemnify and reimburse the other parties for
their respective expenses.
SECTION 8.03 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the shareholders of Dairy State, no amendment
may be made which would reduce the amount or change the type of consideration
into which each share of Dairy State Common Stock shall be converted pursuant to
this Agreement upon consummation of the Merger. This Agreement may not be
amended except by an instrument in writing signed by the parties hereto.
SECTION 8.04 Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 NonSurvival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VIII, except that the agreements set forth in Sections
4.03(b), 4.04, 8.02 and Article IX hereof shall survive termination
indefinitely.
SECTION 9.02 Disclosure Schedules. The schedules and
information set forth in the Disclosure Schedules specifically refer to the
Section (and paragraph, if applicable)
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of this Agreement to which such schedule and information is responsive. The
Disclosure Schedules shall not vary, change or alter the literal meaning of the
representations and warranties of the parties contained in this Agreement, other
than creating exceptions thereto which are directly responsive to the language
of the representations and warranties contained in this Agreement.
SECTION 9.03 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date delivered or mailed if delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be if specified by like changes of address) and
shall be effective upon receipt.
(a) If to Dairy State:
Dairy State Financial Services, Inc.
0000 Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Chiples
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with a copy to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxx
If to FBM or Interim:
First Manitowoc Bancorp, Inc.
000 Xxxxx 0xx Xxxxxx
X.X. Xxx 00
Xxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxx
With a copy to:
Xxxxxxx, Best & Friedrich
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telecopier: (000) 0000000
Attention: Xxxxx X. Xxxxxxx
SECTION 9.04 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.05 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.06 Entire Agreement. This Agreement together with
the Disclosure Schedules and Exhibits hereto constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies
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hereunder.
SECTION 9.07 Assignment. This Agreement shall not be assigned
by operation of law or otherwise, except that FMB may assign all or any of its
rights hereunder to any affiliate provided that no such assignment shall relieve
the assigning party of its obligations hereunder, and the assignee agrees to be
bound by the terms and conditions of this Agreement including the requirement of
conversion and delivery of cash pursuant to Section 1.06 hereof
SECTION 9.08 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.09 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Wisconsin,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
SECTION 9.10 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, FMB, Interim and Dairy State have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
FIRST MANITOWOC BANCORP, INC.
By:
-------------------------------------------
Xxxxxx X. Xxxx, President
FMB INTERIM CORP.
By:
-------------------------------------------
Xxxxxx X. Xxxx, President
DAIRY STATE FINANCIAL SERVICES, INC.
By:
-------------------------------------------
Xxxxxx X. Chiples, Chairman
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