EXHIBIT 2.2
February 2, 1999
Midwest Bancshares, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
This letter is intended to supplement the Agreement and Plan of Merger by
and between Mahaska Investment Company ("Mahaska") and Midwest Bancshares, Inc.
("Company") dated of even date herewith (the "Merger Agreement") and sets out
the agreements of the parties relating to various issues not fully addressed in
the Merger Agreement. The provisions of this letter agreement are hereby
incorporated into and made part of Section 4.18(c) of the Merger Agreement as if
set forth therein. Capitalized terms used in this letter agreement, not
otherwise defined in this letter agreement, shall have the meanings ascribed to
them in the Merger Agreement. The provisions of this letter agreement shall
survive consummation of the transactions under the Merger Agreement.
(1) Directors of Bank. The directors of the Bank immediately prior to the
Effective Time together with two members of Xxxxxxx's then current board of
directors, who shall be selected by the Directors of Mahaska, shall be the
directors of the Bank at and after the Effective Time. Each such director of the
Bank will be eligible during his or her term of service as a director of the
Bank to participate in all director compensation plans, including any
non-qualified stock option awards, on the same basis as nonemployee directors of
Mahaska or a Mahaska Subsidiary generally. Xxxxxxx further agrees that such
directors shall be given full credit for their past service with the Bank in
determining participation in, eligibility for and vesting in benefits under the
director compensation plans. Mahaska shall use its best efforts to cause each
such director of the Bank (other than a current member of the Mahaska Board of
Directors) to be re-elected for successive terms so that each such director will
serve for a minimum of three years after the Effective Time.
(2) Compensation and Benefits for Current Company CEO and CFO. To maximize
the value to be received by Xxxxxxx in the Merger, Xxxxxxx believes it is
essential to retain the services of the current Company CEO and CFO on a
long-term basis in order to integrate operations, to assure customer retention
and customer development, facilitate long-term strategic planning in Burlington,
Iowa and surrounding market area, and to otherwise enhance the acquired
franchise. Accordingly, Xxxxxxx and each of the current Company CEO and CFO
shall on the date hereof enter into employment agreements in the form of Exhibit
D-1 (for the CEO) and Exhibit D-2 (for the CFO) to the Merger Agreement (the
"New Employment Agreements"). The New Employment Agreements shall become
effective at the Effective Time. The Bank shall pay to each of the current
Company CEO and CFO a lump sum cash payment immediately prior to the Effective
Time in the amount of $120,000 and $90,000, respectively, in exchange for such
executives entering into the New Employment Agreements and thereby relinquishing
their economic rights and benefits under their existing employment agreements
with the Bank.
(3) Salary Continuation Plans. At the Effective Time, or as soon as
thereafter as practicable, Xxxxxxx agrees to establish Salary Continuation Plans
for the current Company CEO and CFO. Such plans will be consistent with and
substantially similar to those currently provided or to be provided to certain
of Xxxxxxx's senior officers. Such plans will provide for full credit for past
service with the Company and the Bank for purposes of participation,
eligibility, vesting and accrual of benefits under the plans, including but not
limited to upon death of the executive the benefits payable shall be paid to the
executive's designated beneficiary. In no event will the annual benefit
commencing at age 55 be no less than $20,000 or at age 65 no less than $50,000
for a period of 10 years for the current CEO, and the annual benefit commencing
at age 65 be no less than $40,000 for a period of 10 years for the current CFO.
(4) Group Health Plan. At or after the Effective Time, the Company Employees
shall be integrated into the group health plans and cafeteria plan of Mahaska
and the Mahaska Subsidiaries in a manner whereby no Company Employee shall be
subject to any gap in coverage or a pre-existing condition exclusion for which
coverage is available to him or her under the group health plan of the Company
or the Bank immediately prior to the Effective Time. Consistent herewith,
Xxxxxxx shall continue the group health plan of the Company or the Bank after
the Effective Time for those Company Employees who would be subject to any gap
in coverage or pre-existing condition exclusion as described above until such
time as they are not subject to such conditions under the group health plan to
be provided to them by Xxxxxxx or a Mahaska Subsidiary.
(5) Qualified Plans. (a) Company ESOP. The Company ESOP will be merged into
the Mahaska ESOP at or as soon as practicable after the Effective Time. Pending
the merger of such plans, the Company ESOP shall be maintained, operated and
administered for the exclusive benefit of those participants in the Company ESOP
as of the Effective Time and those former participants or their beneficiaries
who have undistributed account balances in the Company ESOP as of the Effective
Time, in all cases in compliance with ERISA, the Code and all other applicable
laws and regulations. No amendment or change will be made by Mahaska to the
Company ESOP which would adversely affect the rights of participants and/or
their beneficiaries and after the merger of the plans the vesting schedule
currently contained in the Company ESOP shall continue to apply to the unvested
account balances of each participant as of the Effective Time.
(b) Bank Defined Benefit Pension Plan. This plan shall at the election of
the Company either be (a) frozen as to participation as of the Effective Time
and terminated at or as soon as practicable after the Effective Time; or (b)
continued for a period consisting of the tax year in which the Merger is
consummated and one tax year thereafter for the exclusive benefit of Company
Employees and persons having rights under the plan immediately prior to the
Effective Time, in which case the plan shall be frozen as to participation at
the expiration of the second tax period stated herein and terminated on such
date or as soon thereafter as is practicable. The Company shall exercise its
election by written notice to Mahaska prior to the Effective Time. Prior to any
termination of the plan, either the Bank or Mahaska, whichever is applicable,
shall cause the plan to be amended to allocate excess assets on a plan
termination basis to those participants in the plan on the date it is frozen;
and in the case where the plan is frozen after the Effective Time, excess assets
shall also be allocated to those persons who were participants in the plan
immediately prior to the Effective Time who are no longer participants in the
plan as of its freeze date, to the extent permitted by the plan and applicable
laws and regulations, including but not limited to, ERISA and the Code. As soon
as practicable after the receipt of a determination letter for termination from
the Internal Revenue Service relating to the termination of the plan, benefits
will be distributed in accordance with the plan and, to the extent permitted by
law, participants or beneficiaries will be offered the right to roll over their
benefits to another qualified plan of Mahaska or to an eligible individual
retirement account.
(6) Other Benefit Plans. Ninety days after the Effective Time, all Company
Employees will become participants in Mahaska's short-term and long-term
disability plan, group term life insurance plan, and 401(k) plan on a uniform
and nondiscriminatory basis. Company Employees will be given full credit for
prior years of service with the Company and the Company Subsidiaries in
determining participation in, eligibility for and vesting in benefits, to the
extent applicable, in such Mahaska plans.
Please indicate your agreement with the foregoing by signing one copy of
this letter in the space set forth below.
MAHASKA INVESTMENT COMPANY
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its President and Chief Executive Officer
Acknowledged and agreed to this 2nd day of February, 1999.
MIDWEST BANCSHARES, INC.
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its President and CEO
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The undersigned have executed this Letter Agreement for the purpose of
agreeing in their individual capacities to provisions of items 2 and 3 above.
Xxxxxxx X. Xxxxxx, individually
/s/ Xxxxxxx X. Xxxxxx
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Dated: February 2, 1999
Xxxxxx X. Xxxxxxxxx, individually
/s/ Xxxxxx X. Xxxxxxxxx
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Dated: February 2, 1999
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