EXHIBIT 2.7
AGREEMENT AND PLAN OF MERGER
dated as of November 6, 1997
among
COMMUNITY FIRST BANKSHARES, INC.
COMMUNITY FIRST NATIONAL BANK
and
PIONEER BANK OF LONGMONT
INDEX TO AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Calculation of Pioneer Value. . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT BANKS;
EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . 3
(a) Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Exchange Rate. . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Adjustments to Exchange Rate Based on CFB Trading Value. . . . 4
(d) Adjustments to Exchange Rate Based on Pioneer Value. . . . . . 4
(e) Shareholders' Right of Dissent . . . . . . . . . . . . . . . . 4
2.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . 5
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . 5
(c) Distributions with Respect to Unexchanged Shares; Voting . . . 5
(d) Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . 6
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . 6
(g) Lost or Destroyed Shares . . . . . . . . . . . . . . . . . . . 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 7
3.1 Representations and Warranties of Pioneer . . . . . . . . . . . . . 7
(a) Pioneer Organization . . . . . . . . . . . . . . . . . . . . . 7
(b) Enforceability . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Limitation of Pioneer's Powers . . . . . . . . . . . . . . . . 7
(d) Corporate Records. . . . . . . . . . . . . . . . . . . . . . . 7
(e) Insured Status of Pioneer. . . . . . . . . . . . . . . . . . . 7
(f) No Default; Creation of Liens. . . . . . . . . . . . . . . . . 8
(g) Financial Statements . . . . . . . . . . . . . . . . . . . . . 8
(h) Fidelity Insurance . . . . . . . . . . . . . . . . . . . . . . 9
(i) Employment Contracts . . . . . . . . . . . . . . . . . . . . . 9
(j) Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . 9
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(k) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(l) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(m) Title to Property. . . . . . . . . . . . . . . . . . . . . . . 10
(n) Insurance Policies . . . . . . . . . . . . . . . . . . . . . . 10
(o) Pioneer Property . . . . . . . . . . . . . . . . . . . . . . . 10
(p) Conduct of Business. . . . . . . . . . . . . . . . . . . . . . 10
(q) Loan Allowance and Documentation . . . . . . . . . . . . . . . 11
(r) Leases and Contracts . . . . . . . . . . . . . . . . . . . . . 11
(s) Shareholder List . . . . . . . . . . . . . . . . . . . . . . . 12
(t) Principals . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(u) Information Supplied . . . . . . . . . . . . . . . . . . . . . 12
(v) Agreements with Regulators . . . . . . . . . . . . . . . . . . 12
3.2 Representations and Warranties of CFB . . . . . . . . . . . . . . . 13
(a) CFB Organization. . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) No Default; Creation of Liens . . . . . . . . . . . . . . . . . 13
(e) Information Supplied. . . . . . . . . . . . . . . . . . . . . . 14
(f) No Plan to Transfer Assets. . . . . . . . . . . . . . . . . . . 14
ARTICLE 4 COVENANTS OF PIONEER AND CFB. . . . . . . . . . . . . . . . . . . 14
4.1 Covenants of Pioneer. . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Shareholder Meeting . . . . . . . . . . . . . . . . . . . . . . 15
(c) Registration Statement. . . . . . . . . . . . . . . . . . . . . 15
(d) Confidential Information. . . . . . . . . . . . . . . . . . . . 15
(e) Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 15
(f) No Solicitations. . . . . . . . . . . . . . . . . . . . . . . . 16
(g) No Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . 16
(h) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(i) Pooling Restrictions. . . . . . . . . . . . . . . . . . . . . . 17
(j) Financial Statements. . . . . . . . . . . . . . . . . . . . . . 17
(k) Additional Covenants of Pioneer . . . . . . . . . . . . . . . . 17
4.2 Covenants of CFB. . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Application . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Registration Statement. . . . . . . . . . . . . . . . . . . . . 20
(e) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) Shares to be Issued . . . . . . . . . . . . . . . . . . . . . . 21
(g) Blue Sky. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Confidential Information. . . . . . . . . . . . . . . . . . . . 21
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(i) Registration Statement. . . . . . . . . . . . . . . . . . . . . 21
4.3 Covenants of Pioneer and CFB. . . . . . . . . . . . . . . . . . . . 22
(a) Governing Documents . . . . . . . . . . . . . . . . . . . . . . 22
(b) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Advice of Changes; Government Filings . . . . . . . . . . . . . 22
(d) Title of Property . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Environmental Assessment. . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Letters of Financial Officers . . . . . . . . . . . . . . . . . . . 24
5.3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7 Additional Agreements; Best Efforts . . . . . . . . . . . . . . . . 25
ARTICLE 6 CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . 25
6.1 Conditions to Each Party's Obligation to Effect the Merger. . . . . 25
(a) Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . 25
(b) Nasdaq Market System Listing. . . . . . . . . . . . . . . . . . 25
(c) Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Registration Statement. . . . . . . . . . . . . . . . . . . . . 26
(e) No Injunctions or Restraints; Illegality. . . . . . . . . . . . 26
(f) No Unduly Burdensome Condition. . . . . . . . . . . . . . . . . 26
6.2 Conditions to Obligations of CFB. . . . . . . . . . . . . . . . . . 26
(a) Representations and Warranties. . . . . . . . . . . . . . . . . 26
(b) Performance of Obligations of Pioneer . . . . . . . . . . . . . 26
(c) Minimum Pioneer Value . . . . . . . . . . . . . . . . . . . . . 27
(d) Supplement to Loan Loss Reserve . . . . . . . . . . . . . . . . 27
(e) Pooling Letter. . . . . . . . . . . . . . . . . . . . . . . . . 27
(f) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Conditions to Obligations of Pioneer. . . . . . . . . . . . . . . . 27
(a) Representations and Warranties. . . . . . . . . . . . . . . . . 27
(b) Performance of Obligations of CFB . . . . . . . . . . . . . . . 27
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . 27
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(e) Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Employment Agreement. . . . . . . . . . . . . . . . . . . . . . 28
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ARTICLE 7 TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . 28
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 8 GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Non-Survival of Representations and Warranties. . . . . . . . . . . 30
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.5 Entire Agreement: Third Party Beneficiaries; Rights of Ownership. . 31
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.9 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . . 31
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 6, 1997 (the
"Agreement"), by and among Community First Bankshares, Inc., a Delaware
corporation ("CFB"), Community First National Bank, a de novo national
banking association ("Acquisition Subsidiary") and Pioneer Bank of Longmont,
a Colorado banking corporation ("Pioneer").
WHEREAS, the Boards of Directors of CFB, Acquisition Subsidiary and
Pioneer have approved, and deem it advisable and in the best interests of
their respective companies and their stockholders to consummate the business
combination transaction provided for herein in which Pioneer will be merged
with and into Acquisition Subsidiary (the "Merger");
WHEREAS, CFB and Pioneer desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to prescribe various conditions to the Merger; and
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, articles of merger (the "Articles of Merger") in substantially the
form as attached hereto as EXHIBIT A shall be duly prepared, executed and
acknowledged by Acquisition Subsidiary and Pioneer and thereafter delivered
for filing to the Office of the Comptroller of the Currency (the "OCC"), as
provided in the National Bank Act (the "Act"), on the Closing Date (as
defined in Section 1.2). The Merger shall become effective when so declared
by the OCC, upon the filing of the Articles of Merger (the "Effective Time").
Notwithstanding the immediately preceding sentence, however, the parties
intend that the effective date and time of the Closing, as defined in Section
1.2 below, for both financial and tax reporting purposes, shall be as of the
close of business on the Closing Date.
1.2 CLOSING. Subject to the terms and conditions hereof, the closing
of the Merger (the "Closing") will take place after the satisfaction or
waiver (subject to applicable law) of the latest to occur of the conditions
set forth in Article 6 hereof (the "Closing Date"), at the offices of
Xxxxxxxxx, Xxxxxx & Xxxxxxxxxxx P.L.L.P., in Denver, Colorado, unless another
time, date or place is agreed to in writing by the parties hereto. Each of
the parties agrees to use its best efforts
to cause the Merger to be completed within thirty (30) business days after
the satisfaction or waiver of the conditions set forth in Article 6 of this
Agreement.
1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time: (i) the separate existence of Pioneer
shall cease and Pioneer shall be merged with and into Acquisition Subsidiary;
(ii) the Articles of Association of the Acquisition Subsidiary, as in effect
immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Bank until duly amended in accordance with
applicable law; (iii) the Bylaws of the Acquisition Subsidiary, as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Bank until amended in accordance with applicable law; (iv) CFB, as the holder
of all of the outstanding common stock of the Acquisition Subsidiary, shall
continue as sole shareholder of the Surviving Bank, and (v) the holders of
certificates representing shares of Pioneer Common Stock (as defined in
Section 2.1(a) below) shall cease to have any rights as shareholders of
Pioneer, except such rights, if any, as they may Article 113 of the Colorado
Business Corporation (the "Colorado Act") Act, and their sole right shall be
the right to receive (A) the number of whole shares of CFB Common Stock (as
defined in Section 2.1(a) below) into which their shares of Pioneer Common
Stock have been converted in the Merger as provided herein (together with any
dividend payments with respect thereto, to the extent provided in Section
2.2(c) below), and (B) the cash value of any fraction of a share of CFB
Common Stock into which their shares of Pioneer Common Stock have been
converted as provided herein.
(b) As used in this Agreement, the term "Constituent Banks" shall
mean Pioneer and the Acquisition Subsidiary. The term "Surviving Bank" shall
mean the Acquisition Subsidiary, after giving effect to the Merger.
(c) At and after the Effective Time, the Merger will have the
effects set forth in Section 215a of the Act.
1.4 CALCULATION OF PIONEER VALUE. As of the last day of the month
immediately preceding the Effective Time (the "Determination Date"), Pioneer
shall prepare a consolidated balance sheet of Pioneer in accordance with
generally accepted accounting principles, but excluding the effects of any
adjustments otherwise required by FASB 115 and excluding any footnotes that
might be required to be included with such financial statements (the
"Determination Date Balance Sheet"), together with a consolidated statement
of income (the "Interim Income") for the period from January 1, 1997 to the
Determination Date (the "Interim Income Statement"), such consolidated
statement of income shall be prepared in accordance with generally accepted
accounting principles, but excluding the effects of any adjustments otherwise
required by FASB 115 and excluding any footnotes that might be required to be
included with such statements (the "Determination Date Balance Sheet and
Interim Income Statement are herein referred to as the "Determination Date
Financial Statements"). The Determination Date Financial Statements shall be
delivered to CFB as soon as they are prepared so that CFB and its accountants
may review and confirm their accuracy. For purposes of this Agreement, the
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"Pioneer Value" shall be equal to the total consolidated assets of Pioneer
minus the total consolidated liabilities of Pioneer, all as reflected on the
Determination Date Balance Sheet, prepared in accordance with this Section
1.4. Total consolidated liabilities of Pioneer shall include, without
limitation, provision for taxes and the expenses of the preparation of the
final tax return for Pioneer.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT BANKS; EXCHANGE OF CERTIFICATES
2.1 EFFECT ON CAPITAL STOCK.
(a) CONVERSION. At the Effective Time, by virtue of the Merger
and without any action on the part of any holder of shares of common stock,
par value $10.00 per share, of Pioneer ("Pioneer Common Stock"), subject to
Section 2.2(e), each issued and outstanding share of Pioneer Common Stock,
other than shares of Pioneer Common Stock held by persons who have taken all
steps required to perfect their right to be paid the fair value of such
shares under Article 113 of the Colorado Act, shall be converted into validly
issued, fully paid and nonassessable shares of common stock of CFB, $.01 par
value ("CFB Common Stock"). The number of shares of CFB Common Stock
exchanged for shares of Pioneer Common Stock shall be calculated in
accordance with Section 2.1(b). All such shares of Pioneer Common Stock
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist. Each Pioneer shareholder's certificate or
certificates previously representing shares of Pioneer Common Stock (each a
"Pioneer Certificate") shall be aggregated (if a single stockholder holds
more than one Pioneer Certificate) and exchanged for a certificate
representing whole shares of CFB Common Stock and cash in lieu of any
fractional share issued in consideration therefor upon the surrender of such
Pioneer Certificates in accordance with Section 2.2, without any interest
thereon. In the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the outstanding shares of CFB Common Stock shall
have been increased, decreased, changed into or exchanged for a different
number or kind of shares or securities through a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar change in CFB's capitalization, then an
appropriate and proportionate adjustment shall be made to the "Exchange
Rate", as hereinafter defined, so that the number of shares of CFB Common
Stock into which a share of Pioneer Common Stock shall be converted will
equal the number of shares of CFB Common Stock that the holders of shares of
Pioneer Common Stock would have received pursuant to such reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other similar change had the record date therefor been
immediately following the Closing Date.
(b) EXCHANGE RATE. Subject to the adjustments provided in Section
2.1(c) hereof, all of the issued and outstanding shares of Pioneer Common
Stock and any outstanding options, warrants or other rights to Pioneer Common
Stock shall be exchanged for Seven Hundred Thousand (700,000) shares of CFB
Common Stock (the aforementioned exchange rate is
3
hereinafter referred to as the "Exchange Rate"). On or before the Effective
Time, all stock options and other rights with respect to Pioneer Common Stock
shall be (i) accelerated and exercised by the holder thereof, in accordance
with the terms of the stock option plan or agreement, or (ii) released and
terminated by written acknowledgment and agreement by the holder thereof,
obtained by Pioneer less than ten (10) business days prior to the Closing
Date.
(c) ADJUSTMENTS TO EXCHANGE RATE BASED ON CFB TRADING VALUE.
Notwithstanding anything to the contrary in this Article 2, the Exchange Rate
shall be subject to modification as set forth below:
(i) If the CFB Trading Value is less than $46.00 per share, then
Pioneer shall have the right to terminate the transaction pursuant to
Section 7.1 hereof;
(ii) If the CFB Trading Value is greater than $50.50 per share,
then the Exchange Rate shall be reduced so that the product of the CFB
Trading Value multiplied by the Exchange Rate shall be $35,350,000.
For purposes of this Agreement, the "CFB Trading Value" of the CFB
Common Stock shall be the average of the per share closing price for the CFB
Common Stock as reported by the Nasdaq Market System National Market System
for the 20 trading days ending at the end of the fourth trading day
immediately preceding the Closing Date (as appropriately and proportionately
adjusted in the event that, between the date hereof and the termination of
such twenty trading day period, shares of CFB Common Stock shall be changed
into a different number of shares or a different class of shares by reason of
any reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment or stock dividend). Calculations will be rounded to
three decimal places. Any fractional share of CFB Common Stock will be paid
in cash in accordance with Section 2.2(e). Illustrations of the above
Exchange Rate calculations are attached as EXHIBIT 2.1(C) hereto and
incorporated herein by reference.
(d) ADJUSTMENTS TO EXCHANGE RATE BASED ON PIONEER VALUE. In the
event that the Pioneer Value, calculated in accordance with Section 1.4,
above, shall be greater than $8,100,000, then, at the election of Pioneer and
subject to the requirements of Section 6.2(e) hereof, either (i) the
difference shall be paid by special dividend to Pioneer shareholders
immediately prior to the Determination Date or (ii) the Exchange Rate
determined in accordance with Section 2.1(c) shall be subject to increase.
The amount of increase shall be determined by (i) subtracting the difference
between the Pioneer Value and $8,100,000, and then (ii) dividing such
difference by the CFB Trading Value.
(e) SHAREHOLDERS' RIGHT OF DISSENT. Any holder of shares of Pioneer
Common Stock who does not vote in favor of the Merger at the meeting of
shareholders of Pioneer and has given notice in writing to the presiding officer
prior to the Merger vote that he or she intends to demand payment for his or her
shares of Pioneer Common Stock if the Merger is effectuated,
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shall be entitled to receive the value of the Pioneer Common Stock so held by
him or her in accordance with Article 113 of the Colorado Act.
2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At the Closing, CFB shall deposit with
Norwest Bank Minnesota, N.A. or such other bank or trust company acceptable
to the parties (the "Exchange Agent"), for the benefit of the holders of
shares of Pioneer Common Stock, certificates dated the Closing Date
representing the shares of CFB Common Stock and the cash to be paid in lieu
of fractional shares (such cash and certificates for shares of CFB Common
Stock together with any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") to be issued and paid
pursuant to Section 2.1 in exchange for the outstanding shares of Pioneer
Common Stock.
(b) EXCHANGE PROCEDURES. Within five (5) business days after the
Closing Date, CFB shall cause the Exchange Agent to mail to each holder of
record of a Pioneer Certificate or Pioneer Certificates (i) a letter of
transmittal which shall specify that delivery shall be effective, and risk of
loss and title to the Pioneer Certificate(s) shall pass, only upon delivery
of the Pioneer Certificate(s) to the Exchange Agent and which shall be in
such form and have such other provisions as CFB and Pioneer may reasonably
specify not later than five business days before the Closing Date and (ii)
instructions for use in effecting the surrender of the Pioneer Certificate(s)
in exchange for a certificate representing shares of CFB Common Stock and the
cash to be paid in lieu of any fractional share. Upon surrender of a
shareholder's Pioneer Certificate or Pioneer Certificates for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed,
the holder of such Pioneer Certificate(s) shall be entitled to receive in
exchange therefor (1) a certificate representing the number of whole shares
of CFB Common Stock and (2) a check representing the amount of the cash to be
paid in lieu of a fractional share, if any, and unpaid dividends and
distributions, if any, which such holder has the right to receive in respect
of the Pioneer Certificate(s) surrendered, as provided in Section 2.2(c)
below, and the Pioneer Certificate(s) so surrendered shall forthwith be
canceled. No interest will be paid on the cash in lieu of fractional shares
and unpaid dividends and distributions, if any, payable to holders of Pioneer
Certificates. In the event of a transfer of ownership of Pioneer Common
Stock which is not registered in the transfer records of Pioneer, a CFB
Certificate representing the proper number of shares of CFB Common Stock,
together with a check for the cash to be paid in lieu of a fractional share,
may be issued to such a transferee if the Pioneer Certificate representing
such Pioneer Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer. Any applicable
stock transfer taxes shall be paid by CFB.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING. The
Exchange Agent shall receive and hold, for distribution without interest to
the first record holder of the certificate or certificates representing
shares of Pioneer Common Stock, all dividends and other distributions paid on
shares of CFB Common Stock held in the Exchange Agent's name as agent.
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Holders of unsurrendered Pioneer Certificates shall not be entitled to vote
after the Closing Date at any meeting of CFB shareholders until they have
exchanged their Pioneer Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no
transfers on the stock transfer books of Pioneer of the shares of Pioneer
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Pioneer Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for the shares of
CFB Common Stock and cash, in an amount as determined in accordance with the
provisions of Section 2.1(a) and this Section 2.2, deliverable in respect
thereof pursuant to this Agreement. Pioneer Certificates surrendered for
exchange by any person constituting an "affiliate" of Pioneer for purposes of
Rule 145(c) under the Securities Act of 1933, as amended (the "Securities
Act"), shall not be exchanged until CFB has received a written agreement from
such person as provided in Section 5.4.
(e) FRACTIONAL SHARES. No fractional shares of CFB Common Stock
shall be issued pursuant hereto. In lieu of the issuance of any fractional
share, cash adjustments will be paid to holders in respect of any fractional
share of CFB Common Stock that would otherwise be issuable, and the amount of
such cash adjustment shall be equal to such fractional proportion of the
Trading Value of a share of CFB Common Stock. For purposes of calculating
fractional shares, a holder of Pioneer Common Stock with more than one
Pioneer Certificate shall receive cash only for the fractional share
remaining after aggregating all of its, his or her Pioneer Common Stock to be
exchanged.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund (including the proceeds of any investments thereof and any CFB Common
Stock) that remains unclaimed by the shareholders of Pioneer for twelve
months after the Closing Date shall be paid to CFB. Any shareholders of
Pioneer who have not theretofore complied with this Article 2 shall
thereafter look only to CFB for payment of their shares of CFB Common Stock,
and cash in an amount as determined in accordance with the provisions of
Section 2.1(a) and this Section 2.2, without any interest thereon.
Notwithstanding the foregoing, none of CFB, the Exchange Agent nor any other
person shall be liable to any former holder of shares of Pioneer Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) LOST OR DESTROYED SHARES. In the event any Pioneer
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Pioneer Certificate to be
lost, stolen or destroyed and, if required by the Exchange Agent, the posting
by such person of a bond in such amount as CFB may direct as indemnity
against any claim that may be made against it with respect to such Pioneer
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Pioneer Certificate the shares of CFB Common Stock, and cash in
an amount as determined in accordance with the provisions of Section 2.1(a)
and this Section 2.2, deliverable in respect thereof pursuant to this
Agreement.
6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF PIONEER. In order to induce CFB
to enter into this Agreement, Pioneer represents and warrants to CFB, in all
material respects, as of the date of this Agreement (except as otherwise
expressly provided), as follows, except as disclosed on the attached EXHIBIT B
(the "Pioneer Disclosure Schedule") and the schedules thereunder which are
numbered to correspond to the representations set forth below:
(a) PIONEER ORGANIZATION. Pioneer is a Colorado banking
corporation duly organized and validly existing and in good standing under
the laws of the State of Colorado with an authorized capital of $500,000,
consisting of 50,000 shares of one class of common stock, par value $10.00
per share. All of the shares of stock of Pioneer which are presently issued
and outstanding, have been validly issued, fully paid and non-assessable, and
there are no stock options or other commitments outstanding pursuant to which
Pioneer is obligated to issue additional shares of such stock or purchase or
redeem any outstanding shares of such stock. Pioneer has all requisite power,
authority, charters, licenses and franchises necessary or required by law to
carry on the business activity in which it is presently engaged, except where
the failure to have any such power, authority, charters, licenses or
franchises would not reasonably be expected to have a material adverse effect
on Pioneer. Pioneer has no direct or indirect subsidiaries and is not a
partner to any partnership.
(b) ENFORCEABILITY. Subject to the required approval of the
Merger by the shareholders of Pioneer, Pioneer has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by
Pioneer and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors of Pioneer. Subject to
approval by the Pioneer shareholders and of government agencies and other
governing bodies having regulatory authority over Pioneer as may be required
by statute or regulation, this Agreement constitutes a valid and binding
obligation of Pioneer, enforceable against it in accordance with its terms.
(c) LIMITATION OF PIONEER'S POWERS. There are no proceedings or
actions pending by any federal or state regulatory body having authority over
Pioneer to limit or impair any of Pioneer's powers, rights and privileges, to
terminate deposit insurance or to dissolve Pioneer.
(d) CORPORATE RECORDS. Pioneer's Articles of Incorporation and
Bylaws are each unchanged from the form in which they were delivered to CFB
on or before the date of this Agreement. The minute books of Pioneer contain
reasonably complete and accurate records of all meetings and corporate
actions of each of their respective shareholders and Boards of Directors
(including committees of the Boards of Directors).
(e) INSURED STATUS OF PIONEER. Pioneer is an insured bank under
the provisions of Chapter 16 of Title 12, United States Code Annotated, known
as the "Federal Deposit Insurance
7
Act," and no act or default on the part of Pioneer exists that could
reasonably be expected to have a material adverse effect on its status as an
insured bank thereunder. Pioneer possesses and is in full compliance with
all licenses, franchises, permits and other governmental authorizations that
are legally required to hold its properties or conduct its business, except
where the failure to possess any such licenses, franchises, permits or other
governmental authorizations would not reasonably be expected to have a
material adverse effect on Pioneer.
(f) NO DEFAULT; CREATION OF LIENS. Neither the execution and
delivery of this Agreement, nor the consummation of the Merger will (i)
conflict with, result in the breach of, constitute a default under or
accelerate the performance provided by the terms of (A) any judgment, order
or decree of any court or other governmental agency to which Pioneer may be
subject, (B) any of the "Material Contracts," as hereinafter defined, or (C)
the Articles of Incorporation or Bylaws of Pioneer, or (ii) constitute an
event that, with the lapse of time or action by a third party, would result
in a default under any of the foregoing or result in the creation of any
lien, charge or encumbrance upon Pioneer Common Stock.
(g) FINANCIAL STATEMENTS. The following financial statements of
Pioneer (the "Financial Statements") have been delivered to CFB and are
incorporated by reference herein:
(i) The Consolidated Reports of Condition and Income as of
December 31 for each of the years 1994, 1995 and 1996 and the period ending
September 30, 1997; and
(ii) The financial statements of Pioneer, prepared in the
ordinary course of business for each of the years ended December 31,
1994, 1995 and 1996.
Each of the aforementioned Financial Statements is, and the Determination
Date Financial Statements will be (when delivered pursuant to Section 1.4),
true and correct in all material respects, and together they fairly present,
in accordance with generally accepted accounting principles (applied on a
consistent basis except as disclosed in the footnotes thereto and except that
the unaudited financial statements are subject to any adjustments which might
be required as a result of an examination of independent accountants) the
financial position and results of operation of Pioneer as of the dates and
for the periods therein set forth. To the knowledge of Pioneer, such
Financial Statements did not, as of the date of the preparation thereof,
include any material assets or omit to state any material liability, absolute
or contingent, the inclusion or omission of which renders such Financial
Statements, in light of the circumstances in which they were made, misleading
in any material respect. Since December 31, 1996, there has been no material
adverse change in the financial condition, results of operation or business
of Pioneer, taken as a whole (other than changes in banking laws or
regulations, changes in generally accepted accounting principles or
interpretations thereof that affect the banking industry generally, or
changes in general economic conditions that affect the banking industry on a
nationwide basis, including changes in the general level of interest rates).
8
(h) FIDELITY INSURANCE. Pioneer is insured under a Banker's
Blanket Bond which is in full force and effect and Pioneer has not received
notice of cancellation or non-renewal thereof, or filed any claim thereunder
during the past five years. There are no unresolved claims.
(i) EMPLOYMENT CONTRACTS. Except as set forth in Section 3.1(i)
of the Pioneer Disclosure Schedule, Pioneer is not a party to or bound by any
written or oral (i) employment or consulting contract that is not terminable
without penalty by Pioneer on 30 days' or less notice or (ii) any collective
bargaining agreement covering employees.
(j) EMPLOYEE BENEFITS. Section 3.1(j) of the Pioneer Disclosure
Schedule lists every employee benefit plan within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
which Pioneer maintains or to which Pioneer contributes on behalf of current
or former employees of Pioneer. All of the plans and programs listed in
Section 3.1(j) of the Pioneer Disclosure Schedule (hereinafter referred to as
the "Plans") are in compliance in all material respects with all applicable
requirements of ERISA and all other applicable federal and state laws. Each
of the Plans that is a defined benefit pension plan has assets with an
aggregate value that exceeds the present value of its liability for accrued
benefits, all as determined on a termination basis. None of the Plans has
engaged in a "prohibited transaction", within the meaning of Section 4975 of
the Code or Section 406 of ERISA, none of the Plans which is subject to Title
IV of ERISA or any trust created thereunder has been terminated nor have
there been any "reportable events" as that term is defined in Section 4043 of
ERISA with respect to any Plan and none of the Plans has incurred an
accumulated funding deficiency within the meaning of Section 412(a) of the
Code.
(k) LITIGATION. Except as described in Section 3.1(k) of the
Pioneer Disclosure Schedule, no claims have been asserted by written notice
to Pioneer and no relief has been sought against Pioneer or any of the Plans
in any pending litigation or governmental proceedings or otherwise. Pioneer
is not a party to any unsatisfied order, judgment or decree which is adverse
to Pioneer and Pioneer (i) is not the subject of any cease and desist order,
or other formal or informal enforcement action by any regulatory authority;
or (ii) has not made any commitment to or entered into any agreement with any
regulatory authority that restricts or adversely affects its operations or
financial condition. To the knowledge of Pioneer, there do not exist facts
that would reasonably be expected to give rise to a material claim against
Pioneer after the Closing Date.
(l) TAXES. Pioneer has filed all federal and state income tax
returns and all other returns with respect to any taxes, either federal,
state or local, which it is required to have filed; said returns have been
correctly and accurately prepared; all taxes reflected thereon have been paid
or adequately accrued for; no notice of any deficiency, assessments or
additions to tax have been received by Pioneer; Pioneer has not waived any
statute of limitations with respect to any taxes reflected on said returns;
and deferred taxes have been properly reflected on the Pioneer Statements.
Except as set forth in Section 3.1(l) of the Pioneer Disclosure Schedule,
there are no other taxes of any kind or character for which Pioneer is or may
be liable which are now past due, delinquent and/or unpaid.
9
(m) TITLE TO PROPERTY. Pioneer has good and marketable title to
all material assets and properties, whether real or personal, that it
purports to own, including without limitation all real and personal assets
and properties reflected in its Financial Statement as of December 31, 1996,
or acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value in the ordinary course of
business since December 31, 1996) subject to no liens, mortgages, security
interests, encumbrances or charges of any kind, except (i) as noted in
subsequent Consolidated Reports of Income and Condition of Pioneer or the
Schedules thereto; (ii) statutory liens for taxes not yet delinquent; (iii)
security interests granted to secure deposits of funds by federal, state or
other governmental agencies; (iv) minor defects and irregularities in title
and encumbrances that do not materially impair the use thereof for the
purposes for which they are held by Pioneer as of the date hereof; and (v)
such liens, mortgages, security interests, encumbrances and charges that are
not in the aggregate material to the assets and properties of Pioneer.
(n) INSURANCE POLICIES. Pioneer has delivered to CFB true,
accurate and complete copies of all insurance policies of Pioneer as of the
date of this Agreement. Each such policy is in full force and effect, with
all premiums due thereon on or prior to the date of this Agreement having
been paid as and when due.
(o) PIONEER PROPERTY. All buildings, structures, fixtures, and
appurtenances comprising the premises of Pioneer are in good condition
subject to ordinary wear and tear. Except for the facts set forth in the
Assessment (as hereinafter defined), Pioneer is, and has been at all times,
in substantial compliance with all applicable Environmental Laws (as defined
below), and have not engaged in any activity resulting in a material
violation of any applicable Environmental Law. To the best knowledge of
Pioneer, there is no legal, administrative, or other proceeding, claim,
investigation (with respect to which Pioneer is aware), inquiry, order,
hearing or action of any nature seeking to impose, or that would reasonably
be expected to result in the imposition on Pioneer of any liability arising
from any violation of or obligation under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("Environmental Laws"), pending or, to the knowledge of
Pioneer, threatened against Pioneer; and there is no reasonable basis for any
such proceeding, claim, investigation, inquiry, order, hearing or action; and
Pioneer is not subject to any agreement, order, judgment, or decree by or
with court, governmental authority or third party imposing any such
environmental liability. No claims have been made by any governmental
authority or third party against Pioneer during the past ten (10) years
relating to damage, contribution, cost recovery, compensation, loss or
inquiry resulting from any violation of or obligation under any Environmental
Laws.
(p) CONDUCT OF BUSINESS. Pioneer is in compliance in all material
respects with all laws, regulations and orders (including zoning ordinances)
applicable to it and to the conduct of its business, including without
limitation, all statutes, rules and regulations pertaining to the conduct of
its banking activities (including the exercise of fiduciary and trust
powers), except where the failure to comply would not reasonably be expected
to have a material adverse effect on Pioneer.
10
(q) LOAN ALLOWANCE AND DOCUMENTATION. Pioneer's consolidated
allowance for losses on loans included in the Financial Statement as of June
30, 1997 was $510,000, representing .6% of its total consolidated loans held
in portfolio. The amount of such allowance for losses on loans was adequate
to absorb reasonably expectable losses in the loan portfolio of Pioneer. To
the knowledge of Pioneer, there are no facts which would cause it to increase
the level of such allowance for losses on loans. The loan portfolio of
Pioneer, as of June 30, 1997 in excess of such reserves is, to the best
knowledge and belief of the executive officers of Pioneer, after due inquiry
as to potential losses, and based on past loan loss experience, fully
collectible in accordance with the terms of the documentation relating to the
loans in such portfolio. The documentation relating to loans made by Pioneer
and relating to all security interests, mortgages and other liens with
respect to all collateral for such loans, taken as a whole, is adequate for
the enforcement of the material terms of such loans and of the related
security interests, mortgages and other liens. The terms of such loans and of
the related security interests, mortgages and other liens comply in all
material respects with all applicable laws, rules and regulations (including
laws, rules and regulations relating to the extension of credit). There are
no loans, leases, other extensions of credit or commitments to extend credit
of Pioneer that have been or should in accordance with generally acceptable
accounting principles, have been classified by Pioneer as nonaccrual, as
restructured, as 90 days past due, as still accruing and doubtful of
collection or any comparable classification. Pioneer has provided to CFB
true, correct and complete in all material respects such written information
concerning the its loan portfolio as CFB has requested.
(r) LEASES AND CONTRACTS. Except as described on Section 3.1(r)
of the Pioneer Disclosure Schedule, Pioneer is not a party to or bound by any
written or oral (i) lease or license with respect to any property, real or
personal, with a value in excess of $20,000, whether as a lessor, lessee,
licensor or licensee; (ii) contract or commitment for capital expenditures in
excess of $20,000 for any one project or $50,000 in the aggregate; (iii)
contract or commitment for total expenses in excess of $20,000 made in the
ordinary course of business for the purchase of materials, supplies, or for
the performance of services for a period of more than 180 days from the date
of this Agreement; or (iv) contract or option for the purchase or sale of any
real or personal property other than in the ordinary course of business (all
such agreements, contracts, and commitments collectively are herein referred
to as the "Material Contracts"). Neither Pioneer nor any affiliate has
entered into any written or oral broker agreement or understanding regarding
fees or commissions due upon a sale or transfer of control of Pioneer.
Pioneer has performed in all material respects all obligations required to be
performed by it to date, and is not in material default under, and no event
has occurred which, with the lapse of time or action by a third party, could
result in a material default under any of the Material Contracts to which
Pioneer is a party or by which Pioneer is bound. Each of the Material
Contracts is a valid and legally binding obligation of Pioneer and the other
party or parties thereto, subject to (i) all applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and (ii) the application of equitable principles
if equitable remedies are sought.
11
(s) SHAREHOLDER LIST. Pioneer has furnished to CFB a current
shareholder list as of the date set forth therein that (i) sets forth the
record name and number of shares held by each holder of common stock of
Pioneer and (ii) identifies each shareholder who is an officer or director of
Pioneer.
(t) PRINCIPALS. No director or executive officer of Pioneer, nor
any holder of ten percent or more of the outstanding capital stock of
Pioneer, nor any affiliate of such person as that term is defined under 12
USC 371(c) ("Principal") (i) is or has during the period subsequent to
December 31, 1994, been a party (other than as a depositor) to any
transaction with Pioneer, whether as a borrower or otherwise, which (a) was
made other than in the ordinary course of business; (b) was made on other
than substantially the same terms, including interest rate and collateral, as
those prevailing at the time for comparable transactions for other persons;
or (c) involves more than the normal risk of collectibility or presents other
unfavorable features; or (ii) is a party to any loan or loan commitment,
whether written or oral, from Pioneer involving an amount in excess of
$10,000. Except as set forth in Section 3.1(t) of the Pioneer Disclosure
Schedule, no Principal holds any position with any depository organization
other than Pioneer. For the purposes of this provision, the term "depository
organization" means a commercial bank (including a private bank), a savings
bank, a trust company, a savings and loan association, a homestead
association, a cooperative bank, an industrial bank, a credit union, or a
depository holding company.
(u) INFORMATION SUPPLIED. None of the information supplied or to
be supplied by Pioneer for inclusion or incorporation by reference in (i) the
"Registration Statement" (as hereinafter defined) will, at the time the
Registration Statement becomes effective under the Securities Act of 1993, as
amended (the "Securities Act"), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading and (ii) the "Prospectus-Proxy Statement"
(as hereinafter defined) and any amendment or supplement thereto will, at the
date of mailing to the Pioneer stockholders and at the times of the meeting
of stockholders of Pioneer to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. Pioneer will use its reasonable best efforts to cause
those portions of the Registration Statement supplied by Pioneer to comply in
all material respects with applicable law.
(v) AGREEMENTS WITH REGULATORS. Except as set forth in Section
3.1(v) of the Pioneer Disclosure Schedule, Pioneer: (i) is not a party to
any written agreement or memorandum of understanding with; (ii) is subject to
any order or directive by; (iii) is not subject to any extraordinary
supervisory letter from; or (iii) has not adopted any board resolutions at
the request of, federal or state governmental entities charged with the
supervision or regulation of banks or engaged in the insurance of bank
deposits ("Regulators"), nor has Pioneer been advised by any Regulator that
it is contemplating issuing or requesting any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
12
3.2 REPRESENTATIONS AND WARRANTIES OF CFB. CFB represents and warrants to
Pioneer, in all material respects, as of the date of this Agreement (except as
otherwise expressly provided) as follows, except as disclosed on the attached
EXHIBIT C (the "CFB Disclosure Schedule") and the schedules thereunder which are
numbered to correspond to the representations set forth below:
(a) CFB ORGANIZATION. CFB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with
authorized capital stock consisting of 30,000,000 shares of common stock, par
value of $.01 per share, of which 18,672,914 shares were issued and outstanding
as of June 30, 1997 and 2,000,000 shares of preferred stock, none of which were
issued and outstanding as of June 30, 1997. CFB has all requisite power,
authority, charters, licenses and franchises necessary or required by law to
carry on the business activity in which it is presently engaged. CFB is
registered as a corporation under Section 1841 of Title 12, United States Code,
as amended (the "Bank Holding Company Act").
(b) REPORTS. CFB and each of its subsidiary banks and nonbanking
corporations (the "CFB Subsidiaries") have filed all reports, registrations and
statements, together with any required amendments thereto, that they were
required to file with (i) the Securities and Exchange Commission ("SEC"),
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements,
(ii) the Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v) any
applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "CFB Reports." As of their respective dates, the
CFB Reports complied in all material respects with all the rules and regulations
promulgated by the SEC, the Federal Reserve Board, the FDIC, the Comptroller and
any applicable state securities or banking authorities, as the case may be, and
did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. CFB has timely filed with the SEC all reports, statements and forms
required to be filed pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(c) ENFORCEABILITY. The execution, delivery and performance of this
Agreement by CFB and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of CFB. Subject to approval
by the government agencies and other governing bodies having regulatory
authority over CFB as may be required by statute or regulation, this Agreement
constitutes a valid and binding obligation of CFB, enforceable against it in
accordance with its terms. This Agreement does not require the approval of CFB
shareholders.
(d) NO DEFAULT; CREATION OF LIENS. Neither the execution and
delivery of this Agreement nor the consummation of the transaction contemplated
hereby will conflict with, result in the breach of, constitute a default under
or accelerate the performance provided by the terms of any judgment, order or
decree of any court or other governmental agency to which CFB or any of the CFB
Subsidiaries may be subject, or any contract, agreement or instrument to
13
which CFB or any of the CFB Subsidiaries is a party or by which CFB or any of
the CFB Subsidiaries is bound or committed, or the Articles of Incorporation
or Bylaws of CFB, or constitute an event that, with the lapse of time or
action by a third party, could result in a default under any of the foregoing
or result in the creation of any lien, charge or encumbrance upon the CFB
Common Stock or the capital stock of any of the CFB Subsidiaries.
(e) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by CFB or the CFB Subsidiaries for inclusion or incorporation by
reference in (i) the Registration Statement will, at the time the Registration
Statement becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading and (ii) the
Prospectus-Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to Pioneer stockholders and at the times of the meetings of
stockholders of Pioneer to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. The Registration Statement will comply as to form in all material
respects with applicable law.
(f) NO PLAN TO TRANSFER ASSETS. CFB has no plan or intention to sell
or otherwise dispose of any of the assets of Pioneer to be acquired in the
Merger, except for dispositions in the ordinary course of business or transfers
to controlled subsidiaries as described in Section 368(a)(2)(C) of the Code.
ARTICLE 4
COVENANTS OF PIONEER AND CFB
4.1 COVENANTS OF PIONEER. During the period from the date of this
Agreement and continuing until the Effective Time, Pioneer agrees as follows:
(a) ORDINARY COURSE. Except as otherwise required under this
Agreement or by CFB, Pioneer shall carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted and
use all reasonable efforts to preserve intact its present business organization,
maintain its rights and franchises and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
their goodwill and ongoing businesses shall not be impaired in any material
respect. Pioneer shall not (i) enter into any new material line of business,
(ii) increase or decrease the current number of the directors of Pioneer, (iii)
change its lending, investment, liability management or other material banking
policies in any respect that is material to such party; or (iv) incur or commit
to any capital expenditures (or any obligations or liabilities in connection
therewith) other than capital expenditures (and obligations or liabilities in
connection therewith) incurred or committed to in the ordinary course of
business consistent with past practices. Any and all transaction costs incurred
by Pioneer, including legal, accounting and other professional fees and costs,
shall be based solely upon usual and customary rates and charges.
14
(b) SHAREHOLDER MEETING. Pioneer will cause to be duly called, and
will cause to be held not later than forty-five (45) days following the
effective date of the Registration Statement, a meeting of its shareholders and
will direct that this Agreement be submitted to a vote at such meeting. Pioneer
will (i) cause proper notice of such meeting to be given to its shareholders in
compliance with the Colorado Act and other applicable laws and regulations;
(ii) recommend by the affirmative vote of a majority of the Board of Directors a
vote in favor of approval of this Agreement; and (iii) use its best efforts to
solicit from its shareholders proxies in favor thereof.
(c) REGISTRATION STATEMENT. Pioneer will furnish or cause to be
furnished to CFB all of the information concerning Pioneer required for
inclusion in, and will cooperate with CFB in the preparation of, the
Registration Statement and Prospectus-Proxy Statement (including audited
financial statements, prepared in accordance with generally accepted accounting
principles, in form suitable for inclusion in the Registration Statement and
Prospectus-Proxy Statement), or any statement or application made by CFB to any
governmental body in connection with the Merger. Pioneer agrees promptly to
advise CFB if at any time prior to the Effective Date of the Merger, any
information provided by or on behalf of Pioneer becomes incorrect or incomplete
in any material respect and to provide the information needed to correct such
inaccuracy or omission.
(d) CONFIDENTIAL INFORMATION. Pioneer will hold in confidence all
documents and nonpublic information concerning CFB and the CFB Subsidiaries
furnished to Pioneer and its representatives in connection with the Merger and
will not release or disclose such information to any other person, except as
required by law and except to Pioneer's outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the Merger contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with CFB (except to the extent that such information can
be shown to be previously known to Pioneer, in the public domain, or later
acquired by Pioneer from other legitimate sources) and, upon request, all such
documents, any copies thereof and extracts therefrom shall immediately
thereafter be returned to CFB.
(e) BENEFIT PLANS. Pioneer will, to the extent legally permissible,
take all action necessary or required (i) to terminate or amend, if requested by
CFB and at CFB's cost, all qualified pension and welfare benefit plans and all
non-qualified benefit plans and compensation arrangements as of the Effective
Time; (ii) to amend the Plans to comply with the provisions of the Tax Reform
Act of 1986, as amended, and regulations thereunder and other applicable law as
of the Effective Time; and (iii) to submit application to the Internal Revenue
Service for a favorable determination letter for each of the Plans which is
subject to the qualification requirements of Section 401(a) of the Code prior to
the Effective Time.
Except as set forth in Section 3.1(j) of the Pioneer Disclosure
Schedule, and except as otherwise required pursuant to this Section 4.1(e),
Pioneer agrees that it will not, without the prior written consent of CFB, (i)
enter into, adopt, amend (except as may be required by law) or terminate any
Plan, as the case may be, or any other employee benefit plan or any agreement,
15
arrangement, plan or policy between Pioneer and one or more of its directors or
officers; provided, however, that Pioneer may amend any of the Plans to reduce
or eliminate a requirement of mandatory periodic contributions provided that if
any of the Plans do not have assets with an aggregate value that exceeds the
present value of its liability for accrued benefits, all as determined on a
termination basis, then Pioneer shall accrue on its Determination Date Financial
Statements the amount by which any of the Plans are underfunded; (ii) except for
normal increases in the ordinary course of business consistent with past
practice that in the aggregate do not result in aggregate annual base
compensation expense to Pioneer in excess of 105% of that in effect as of June
30, 1997, increase in any manner the compensation of any director, officer, or
employee, or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including, without limitation, the granting of
stock options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares) or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing; or (iii) enter into or
renew any contract, agreement, commitment or arrangement providing for the
payment to any director, officer or employee of Pioneer of compensation or
benefits contingent, or the terms of which are materially altered, upon the
occurrence of the Merger.
(f) NO SOLICITATIONS. Pioneer shall not authorize or permit any of
its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative or agent retained by it to
solicit, or take any other action to facilitate, any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
takeover proposal (as defined below), or agree or endorse any takeover proposal,
or participate in any discussions or negotiations, or provide third parties with
any nonpublic information, relating to any such inquiry or proposal. Pioneer
shall promptly advise CFB orally and in writing of any such inquiries or
proposals, including all of the material terms thereof. As used in this
Agreement, "takeover proposal" shall mean any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving Pioneer or
any proposal or offer to acquire in any manner a substantial equity interest in,
or a substantial portion of the assets of Pioneer other than the transactions
contemplated or permitted by this Agreement.
(g) NO ACQUISITIONS. Other than (i) acquisitions described in
Section 4.1(g) of the Pioneer Disclosure Schedule, as the case may be, or
(ii) acquisitions which may be mutually agreed to by the parties, Pioneer shall
not acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or division thereof or otherwise acquire or agree to acquire any
substantial amount of assets in each case; PROVIDED, however, that the foregoing
shall not prohibit (i) foreclosures and other acquisitions related to previously
contracted debt, in each case in the ordinary course of business, or (ii)
acquisitions of assets in each case in the ordinary course of business.
(h) INSURANCE. Pioneer shall maintain the insurance coverage (or
coverage of a like kind and amount) referenced in Section 3.1(o) through the
Effective Time.
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(i) POOLING RESTRICTIONS. From and after the date of this Agreement,
Pioneer shall not take any action which would disqualify the Merger as a
"pooling of interests" for accounting purposes.
(j) FINANCIAL STATEMENTS. Pioneer shall have prepared, filed and
submitted to CFB all quarterly and management prepared financial statements for
any periods ending at least 30 days before the Closing Date.
(k) ADDITIONAL COVENANTS OF PIONEER. From the date of this Agreement
to the Closing Date or the earlier termination of this Agreement, Pioneer,
EXCEPT WITH THE PRIOR WRITTEN CONSENT OF CFB (except as otherwise specifically
provided in clauses (xiv) and (xv) of this Section 4.1(k)), or as specifically
required under the Agreement, shall not, nor shall it allow the Bank to:
(i) Except as set forth in Section 4.1(g) of the Pioneer
Disclosure Schedule, issue, sell or commit to issue or sell any shares
of capital stock of Pioneer, securities convertible into or
exchangeable for capital stock of Pioneer, warrants, options or other
rights to acquire such stock, or enter into any agreement with respect
to the foregoing;
(ii) Redeem, purchase or otherwise acquire (except for trust
account shares) directly or indirectly, any shares of capital stock of
Pioneer or any securities convertible or exercisable for any shares of
capital stock of Pioneer;
(iii) Split, combine or reclassify any of capital stock of
Pioneer or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for shares of
capital stock of Pioneer;
(iv) Borrow, assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, in any material amount;
(v) Other than in the ordinary course of business, discharge or
satisfy any material lien or encumbrance on the properties or assets
of Pioneer or pay any material liability;
(vi) Mortgage, pledge or subject to any lien or other encumbrance
any of its assets, except (A) in the ordinary course of business, (B)
liens and encumbrances for current property taxes not yet due and
payable, and (C) liens and encumbrances which do not materially affect
the value or interfere with the current use or ability to convey the
property subject thereto or affected thereby;
(vii) Sell, assign or transfer any tangible or intangible assets
with a book value greater than $10,000, except in the ordinary course
of business;
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(viii) Enter into any individual employment, agency or other
contract or arrangement for the performance of personal services for
an amount in excess of $10,000 (except for service agreements in the
ordinary course of business);
(ix) Amend Pioneer's Articles of Incorporation, Bylaws or other
governing documents;
(x) Fail to maintain a reserve for loss and cost associated with
those litigation matters reflected in Section 3.1(k) of the Pioneer
Disclosure Schedule to the extent required by generally accepted
accounting principles;
(xi) Cancel any material debt or claim or waive any right of
material value, except in the ordinary course of business;
(xii) Repurchase or enter into any agreement to repurchase all or
any portion of any loan previously participated to any other financial
institution other than loans repurchased in compliance with all
applicable laws and regulations;
(xiii) Originate any loan which is thereafter participated to
another financial institution providing for payment upon default on
any basis other than pro rata;
(xiv) Make or commit to make any further advances on any loan
which is either in default or classified, whether such classification
is a result of a federal or state bank regulatory examination or
internal classification of substandard or lower by Pioneer's officers
or directors, unless Pioneer is under a legal obligation to do so;
(xv) (A) make, or agree to make, any fully secured loan or
increase any existing fully secured loan for an amount in excess of
$500,000, to any one borrower, unless said loan is made pursuant to a
properly documented and legally enforceable commitment of Pioneer to
the borrower made prior to the date of this Agreement; (B) make, or
agree to make, any unsecured loan or increase any unsecured loan by
$50,000 or more, unless said loan is made pursuant to a properly
documented and legally enforceable commitment of Pioneer to the
borrower made prior to the date of this Agreement; (C) make, or agree
to make any new loan or advance on any existing loan, except in
conformity with Pioneer's current loan policies; or (D) make any
change with respect to the terms of any existing loan, except in the
ordinary course of business (the provisions of parts A and B of this
section shall not apply to renewals of existing loans, advances under
existing loans or increases to existing loans for an amount below the
applicable limit set forth in parts A and B);
(xvi) Make or agree to make any loan to any Bank principal or any
person, corporation or entity in violation of any state or federal law
or regulation;
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(xvii) Incur any obligation or liability with respect to capital
expenditures which exceeds $10,000 for any single matter or $50,000 in
the aggregate, except for capital expenditures described in Section
3.1(s) of the Pioneer Disclosure Schedule;
(xviii) Fail to timely pay and discharge all federal and state
taxes and other accounts payable for which it is liable, provided,
that Pioneer may deposit an amount equal to any such taxes, in lieu of
the payment thereof, into a reserve account, determined consistently
with prior practices, from which such taxes will be paid when and to
the extent they are found to be properly due and payable;
(xix) Except in accordance with (i) compensation schedules and
Plans in effect on June 30, 1997 and (ii) special compensation and
bonus arrangements which shall be fully accrued for on the
Determination Date, pay or commit to pay any additional salary or
other compensation to any of Pioneer's officers, directors or
employees;
(xx) Except as otherwise required pursuant to Section 4.1(e),
enter into, adopt, amend (except as may be required by law), terminate
or make or grant any increase above current funding levels in any of
the Plans (other than normal premium increases on current health care
insurance) or arrangement;
(xxi) Purchase or sell any bonds or other investment securities
prior to maturity without prior written consent of CFB or make or
agree to make any investment in violation of any federal law or
regulation except that Pioneer may purchase U.S. Treasury or Agencies
securities with maturity dates of 36 months or less;
(xxii) Fail to charge and pay interest rates on loans and
deposits, respectively, not materially consistent with practices in
Pioneer's marketplace;
(xxiii) Fail to use its reasonable best efforts to comply with
any law, rule, regulation or order applicable to Pioneer if such
failure would have a material adverse effect upon Pioneer;
(xxiv) Fail to make all appropriate and required transfers to
Pioneer's loan loss reserves based upon its existing policies or at
the request of any regulatory agency;
(xxv) Change any accounting methods, practices or procedures with
respect to the accumulation and presentation of financial information,
except as directed by applicable law or regulation or to conform with
accounting standards;
(xxvi) Declare or pay any dividends or distributions with respect
to its stock after the Determination Date; or
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(xxvii) Fail to use its reasonable best efforts to obtain the
consent or approval of each person (other than the government
authorities referred to in Section 6.1(c)) whose consent or approval
is required in order to permit a succession by the Surviving
Corporation pursuant to the Merger to any obligation, right or
interest of Pioneer under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument.
4.2 COVENANTS OF CFB. During the period from the date of this Agreement
and continuing until the Effective Time, CFB agrees as follows:
(a) ORDINARY COURSE. Except as set forth in Section 4.2(a) of the
CFB Disclosure Schedule, CFB shall carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted.
(b) APPLICATION. Subject to the required cooperation of Pioneer and
its affiliates, CFB shall use its reasonable best efforts to prepare and submit
within thirty (30) days of the date hereof an application to the Office of the
Comptroller of the Currency for approval of the proposed transaction, and to
prosecute all required federal and state applications.
(c) COOPERATION. CFB will furnish to Pioneer all the information
concerning CFB required for inclusion in, and will cooperate in the preparation
of, the Prospectus-Proxy Statement to be sent to the shareholders of Pioneer.
CFB agrees promptly to advise Pioneer if at any time prior to the Effective Date
of the Merger, any information provided by CFB in the Prospectus-Proxy Statement
becomes incorrect or incomplete in any material respect and to provide the
information needed to correct such inaccuracy or omission.
(d) REGISTRATION STATEMENT. As promptly as practicable after the
execution of this Agreement, CFB will file with the SEC appropriate documents
required under the Securities Act to register the exchange of CFB Common Stock
for Pioneer Common Stock, and will use its best efforts to cause any
registration statement or other filing to become effective under the Securities
Act and applicable state securities laws as soon as practicable. CFB shall
advise Pioneer promptly when such registration statement has become effective
with respect to this transaction and of any supplements or amendments thereto,
and CFB shall furnish Pioneer with copies of all such documents. At the time
such registration statement becomes effective, the Prospectus-Proxy Statement
will comply in all material respects with the provisions of the Securities Act
and the published rules and regulations thereunder, and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they are made, not misleading. At the
time of mailing thereof to the Pioneer shareholders, at the time of the Pioneer
shareholders' meeting referred to in Section 4.1(b) hereof and at the Effective
Time of the Merger, the Prospectus-Proxy Statement included as part of such
registration statement or any amendment thereof or supplement thereto, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained therein, in light of the
circumstances under which they are made, not misleading or omit to state a
material fact
20
necessary to correct any statement in any earlier communication with respect
to the solicitation of any proxy for the Pioneer shareholders' meeting;
PROVIDED, HOWEVER, that none of the provisions of this subparagraph shall
apply to statements in or omissions from such registration statement or any
amendment or supplement thereto or the Prospectus-Proxy Statement made in
reliance upon and in conformity with information furnished by Pioneer or the
Bank for use in such registration statement or the Prospectus-Proxy
Statement. CFB shall bear the costs of all SEC filing fees with respect to
such registration statement, the costs of printing the Prospectus-Proxy
Statement, and the costs of qualifying the shares of CFB Common Stock under
state blue sky laws as necessary.
(e) LISTING. CFB will file all documents required to be filed to
obtain approval for listing the CFB Common Stock to be issued pursuant to the
Merger on the Nasdaq Market System and use its best efforts to effect said
listing.
(f) SHARES TO BE ISSUED. The shares of CFB Common Stock to be issued
by CFB to the shareholders of Pioneer pursuant to this Agreement will, upon such
issuance and delivery to said shareholders pursuant to the Agreement, be duly
authorized, validly issued, fully paid and nonassessable. The shares of CFB
Common Stock to be delivered to the shareholders of Pioneer pursuant to this
Agreement are and will be free of any preemptive rights of the stockholders of
CFB.
(g) BLUE SKY. CFB will file all documents required to obtain prior
to the Effective Time of the Merger all necessary Blue Sky permits and
approvals, if any, required to carry out the transactions contemplated by this
Agreement, will pay all expenses incident thereto and will use its best efforts
to obtain such permits and approvals.
(h) CONFIDENTIAL INFORMATION. CFB will hold in confidence all
documents and information concerning Pioneer furnished to it and its
representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to its outside professional advisers in
connection with this Agreement, with the same undertaking from such professional
advisers. If the transactions contemplated by this Agreement shall not be
consummated, such confidence shall be maintained and such information shall not
be used in competition with Pioneer (except to the extent that such information
can be shown to be previously known to CFB, in the public domain, or later
acquired by CFB from other legitimate sources) and, upon request, all such
documents, copies thereof or extracts therefrom shall immediately thereafter be
returned to Pioneer.
(i) REGISTRATION STATEMENT. CFB will furnish or cause to be
furnished all of the information concerning CFB and the CFB Subsidiaries
required for inclusion in, and will cooperate with Pioneer in the preparation of
any registration statement or amendment or supplement thereto, or any statement
or application made by Pioneer to any governmental body in connection with the
transactions contemplated by this Agreement. CFB agrees to advise
21
Pioneer if at any time prior to the Effective Time, any information provided
by or on behalf of CFB becomes incorrect or incomplete in any material
respect and to provide the information needed to correct such inaccuracy or
omission.
4.3 COVENANTS OF PIONEER AND CFB. During the period from the date of this
Agreement and continuing until the Effective Time, Pioneer and CFB agree as to
themselves and their subsidiaries that, except as expressly contemplated or
permitted by this Agreement, or to the extent that the parties shall otherwise
consent in writing:
(a) GOVERNING DOCUMENTS. No party shall amend its Certificate or
Articles of Incorporation or Bylaws.
(b) OTHER ACTIONS. Unless such action is required by law or sound
banking practice, no party knowingly and intentionally shall, or shall permit
any of its subsidiaries to, take any action that (i) is intended to result in
any of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect, or in any of the conditions to the
Merger set forth in Article VI not being satisfied or in a violation of any
provision of this Agreement, or (ii) would adversely affect the ability of any
of them to obtain any of the Requisite Regulatory Approvals (as defined in
Section 5.1(b)) without imposition of a condition or restriction of the type
referred to in Section 6.1(f) hereof except, in every case, as may be required
by applicable law or this Agreement.
(c) ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall promptly
advise the other orally and in writing of any change or event constituting a
material breach of any of the representations, warranties or covenants of such
party contained herein. CFB shall file all reports required to be filed by it
with the SEC between the date of this Agreement and the Effective Time and shall
deliver to Pioneer copies of all such reports promptly after the same are filed.
CFB, Pioneer and each subsidiary of CFB that is a bank shall file all
Consolidated Reports of Income and Condition with the appropriate bank
regulators and all other reports, applications and other documents required to
be filed with the appropriate bank regulators between the date hereof and the
Closing Date and shall make available to the other party copies of all such
reports promptly after the same are filed.
(d) TITLE OF PROPERTY. Pioneer agrees to deliver to CFB (at
Pioneer's expense) within 30 days of the date hereof, a title insurance
commitment for all real property owned by Pioneer in the State of Colorado
(other than property held as OREO) (the "Title Opinions"). CFB shall have 15
days after receipt by CFB's counsel of said Title Opinions within which to
notify Pioneer, in writing, of CFB's objection to any exceptions (other than any
exception of the type described in Section 3.1(m)(i) through (iv)) to the title
shown in said Title Opinions. In the event of any such objection, then Pioneer
shall have 30 days from the date of such objection within which to attempt to
eliminate such objected to exceptions to title from the Title Opinions. In the
event such objected to exceptions are not eliminated or satisfied to the
reasonable satisfaction of CFB, CFB may terminate this Agreement pursuant to
Section 7.1 hereof and such
22
termination shall be the sole and exclusive remedy for the failure to
eliminate or satisfy such exceptions..
(e) ENVIRONMENTAL ASSESSMENT. Pioneer shall engage at its expense an
independent, qualified environmental engineering firm, acceptable to CFB, for
the purpose of conducting a Phase I Hazardous Waste Assessment (the
"Assessment") of all real properties owned or controlled by Pioneer. The
Assessment shall satisfy ASTM's E-1527 Standard Practice and shall include a
record review of publicly available federal, state and local sources of
environmental records. The Assessment shall be completed within thirty (30)
days after the date hereof. CFB shall have a period of fifteen (15) days from
the date of receipt of such Assessment to review such Assessment and give
written notice to Pioneer stating either that (i) such Assessment is approved by
CFB or (ii) such Assessment is not approved by CFB and the reasons therefor.
If CFB gives a notice pursuant to (ii) above which sets forth specific
objections to the Assessment, then CFB may, at its option, terminate this
Agreement as of the date which is sixty (60) days after the date of such notice
unless during such sixty (60) day period Pioneer corrects or satisfies such
objections, or indemnifies CFB against loss, liability or expense, to the
reasonable satisfaction of CFB.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 REGULATORY MATTERS.
(a) CFB shall use its reasonable best efforts to have any
registration statement or amendment or supplement thereto declared effective
under the Securities Act as promptly as practicable after such filing, and,
following the respective record dates for the stockholder meeting of Pioneer,
thereafter mail the Prospectus-Proxy Statement to the stockholders of Pioneer.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to obtain as promptly as practicable all necessary
permits, consents, and authorizations of all governmental entities necessary to
consummate the Merger ("Requisite Regulatory Approvals"). Pioneer and CFB shall
have the right to review in advance, and to the extent practicable each will
consult the other on, subject to applicable laws relating to the exchange of
information, all the information relating to Pioneer or CFB, as the case may be,
and any of their respective subsidiaries, which appear in any filing made with,
or written materials submitted to any governmental entity in connection with the
Merger. In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable.
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(c) Pioneer and CFB shall promptly furnish each other with copies of
written communications received by Pioneer or CFB, as the case may be, or any of
their respective Subsidiaries, Affiliates or Associates (as such items are
defined in Rule 12b-2 under the Exchange Act as in effect on the date hereof)
from, or delivered by any of the foregoing to, any governmental entity in
respect of the Merger.
5.2 LETTERS OF FINANCIAL OFFICERS. Pioneer shall cause to be delivered to
CFB a letter of Pioneer's chief financial officer in substantially the form
shown on EXHIBIT 5.2A dated (i) the date on which the Registration Statement
shall become effective and (ii) the business day prior to the Closing Date, and
addressed to CFB.
CFB shall cause to be delivered to Pioneer a letter of CFB's chief
financial officer in substantially the form shown on EXHIBIT 5.2B dated (i) the
date on which the Registration Statement shall become effective and (ii) the
business day prior to the Closing Date, and addressed to Pioneer.
5.3 ACCESS TO INFORMATION. Upon reasonable notice and subject to
applicable laws relating to the exchange of information, Pioneer and CFB shall
each (and cause each of its subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of CFB, access during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records for the purpose of
updating any review of such items performed prior to the date of this Agreement
and, during such period, Pioneer and CFB shall (and shall cause each of its
subsidiaries to) make available to the other: (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal or state securities
laws or federal or state banking laws (other than reports or documents which
either party is not permitted to disclose under applicable law); and (b) all
other information concerning its business, properties and personnel as either
party may reasonably request. It is the intention of the parties that CFB shall
conduct an examination of Pioneer prior to the Closing Date in order to confirm
compliance with the representations, warranties and covenants set forth in this
Agreement. No investigation by either party shall affect the representations
and warranties set forth herein.
5.4 AFFILIATES. Each of Pioneer and CFB shall use its reasonable best
efforts to cause each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act) of Pioneer or
CFB to deliver to the other party hereto, as soon as practicable after the date
hereof, and at least 32 days prior to the Closing Date, a written agreement
substantially in the form of EXHIBIT 5.5.
5.5 EMPLOYEE BENEFIT PLANS. Each person who is an employee of Pioneer
as of the Effective Time ("Employees") shall be participants in the employee
welfare plans, and shall be eligible for participation in the pension plans
of CFB, as in effect from time to time, subject to any eligibility
requirements (with full credit for years of past service to Pioneer, or to
any predecessor-in-interest of Pioneer to the extent such service is
presently given credit under the Plans described in Section 3.1(j) hereof,
for the purpose of satisfying any eligibility and vesting
24
periods) applicable to such plans (but not subject to any pre-existing
condition exclusions) and shall enter each welfare plan immediately after the
Effective Time and shall enter each pension plan not later than the first day
of the calendar quarter which begins at least 32 days after the Effective
Time. For the purpose of determining each Employee's benefit for the year in
which the Merger occurs under the CFB vacation program, vacation taken by an
Employee in the year in which the Merger occurs will be deducted from the
total CFB benefit. Each Employee shall be eligible for participation, as a
new employee with the credit for past service described above, in the CFB
Plans under the terms thereof.
5.6 EXPENSES. Except as otherwise stated herein, whether or not the
Merger is consummated, all costs and expenses incurred in connection with
this Agreement, and the transactions contemplated hereby shall be paid by the
party incurring such expense, except as may be permitted by Section 7.2. All
of the expenses (including but not limited to professional fees) incurred or
to be incurred by Pioneer in connection with the Merger shall be accrued as
expenses on the Determination Date Balance Sheet.
5.7 ADDITIONAL AGREEMENTS; BEST EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its
reasonable best efforts to take all action and to do all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, cooperating fully with the other party hereto, providing
the other party hereto with any appropriate information and making all
necessary filings in connection with the Requisite Regulatory Approvals.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved
and adopted by the affirmative vote of the holders of a majority of the
outstanding shares of Pioneer Common Stock entitled to vote thereon.
(b) NASDAQ MARKET SYSTEM LISTING. The shares of CFB Common Stock
issuable to the Pioneer stockholders pursuant to this Agreement shall have
been approved for listing on the Nasdaq Market System upon notice of issuance.
(c) OTHER APPROVALS. Other than the filing provided for by
Section 1.1, all consents, orders or approvals of, or declarations or filings
with, and all expirations of waiting periods imposed by, any governmental
entity (collectively, the "Consents") which are prescribed
25
by law as necessary for the consummation of the Merger and the other
transactions contemplated hereby (other than immaterial Consents) shall have
been filed, occurred or been obtained and all such Requisite Regulatory
Approvals shall be in full force and effect.
(d) REGISTRATION STATEMENT. The registration statement or
amendment or supplement thereto shall have become effective under the
Securities Act and no stop order suspending such effectiveness shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree issued by any court or agency of competent jurisdiction
or other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or any of the transactions contemplated hereby
shall be in effect, nor shall any proceeding by any governmental entity
seeking any such Injunction be pending. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, or enforced by any
governmental entity which prohibits, restricts or makes consummation of the
Merger illegal.
(f) NO UNDULY 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 or any of the transactions contemplated
hereby, by any federal or state governmental entity which, in connection with
the grant of a Requisite Regulatory Approval, imposes any condition or
restriction upon CFB or any of its Subsidiaries which would so materially
adversely impact the economic or business benefits of the transactions
contemplated by this Agreement as to render inadvisable, in the reasonable
business judgment of the Board of Directors of CFB; the consummation of the
Merger.
6.2 CONDITIONS TO OBLIGATIONS OF CFB. The obligation of CFB to effect
the Merger is also subject to the satisfaction or waiver by CFB prior to the
Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Pioneer set forth in this Agreement shall be true and correct
in all material respects as of the date of the Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on the Closing Date, except where the failure
to be true and accurate in all material respects would not have or would not
be reasonably expected to have a material adverse effect on Pioneer, and CFB
shall have received a certificate signed on behalf of Pioneer by the
President of Pioneer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PIONEER. Pioneer shall have
performed in all materials respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and CFB shall
have received a certificate signed on behalf of Pioneer by the President of
Pioneer to such effect.
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(c) MINIMUM PIONEER VALUE. The Value of Pioneer as of the
Determination Date shall not be less than $8,100,000. The confirmation of
the minimum Pioneer Value shall be made pursuant to the procedures set forth
in Section 1.4.
(d) SUPPLEMENT TO LOAN LOSS RESERVE. The Pioneer loan loss
reserve shall have been supplemented by a transfer of $400,000 on or before
the Determination Date, and reflected in the Determination Date financial
statements and the calculation of Pioneer Value, in accordance with the
procedures set forth in Section 1.4.
(e) POOLING LETTER. CFB shall have received a letter from Ernst &
Young, in form and substance reasonably satisfactory to CFB, approving the
accounting treatment of the Merger as a "pooling of interests" in accordance
with generally accepted accounting principles, as of a date no more than five
business days prior to the Closing Date; in support of the Ernst & Young
pooling letter, Ernst & Young and CFB shall have received a letter from
Pioneer's accountants, in form and substance reasonably satisfying to Ernst &
Young, confirming certain facts on behalf of Pioneer. Without limiting the
foregoing, it shall be a condition of receipt of such pooling letter that
Xxxxx X. Xxxx shall refinance that certain outstanding loan secured by stock
of Pioneer with a bank not affiliated with CFB.
(f) LEGAL OPINION. CFB shall have received the opinion of Xxxxxx
X. Xxxxxxxx, counsel to Pioneer, dated the Closing Date, in substantially the
form shown on Exhibit 6.2, and such opinion shall not have been withdrawn
prior to the Effective Time.
6.3 CONDITIONS TO OBLIGATIONS OF PIONEER. The obligation of Pioneer to
effect the Merger is also subject to the satisfaction or waiver by Pioneer
prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CFB set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on the Closing Date, except as otherwise
contemplated by this Agreement, and Pioneer shall have received a certificate
signed on behalf of CFB by the Chairman and Chief Executive Officer of CFB to
such effect.
(b) PERFORMANCE OF OBLIGATIONS OF CFB. CFB and the Acquisition
Subsidiary shall have performed in all material respects all obligations
required to be performed by either of them under this Agreement at or prior
to the Closing Date, and Pioneer shall have received a certificate signed on
behalf of CFB and the Acquisition Subsidiary by the Chairman and Chief
Executive Officer of CFB to such effect.
(c) CONSENTS UNDER AGREEMENTS. CFB shall have obtained the
consent or approval of each person (other than the governmental entities
referred to in Section 6.1(c)) whose consent or approval shall be required in
connection with the transactions contemplated hereby under any
27
loan or credit agreement, note, mortgage, indenture, lease, license or other
agreement or instrument to which CFB or any of its subsidiaries is a party or
is otherwise bound, except those for which failure to obtain such consents
and approvals would not, in the reasonable opinion of Pioneer, individually
or in the aggregate, have a material adverse effect on CFB or upon the
consummation of the transactions contemplated hereby.
(d) TAX OPINION. Pioneer shall have received the opinion of Xxxx
& Associates, P. C., advisors to Pioneer, dated the Closing Date, to the
effect that (i) the Merger will be treated for Federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code, (ii) CFB
and Pioneer will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, (iii) shareholders of Pioneer who exchange their
shares of Pioneer Common Stock for shares of CFB Common Stock will not
recognize gain or loss, for purposes of federal income tax, except to the
extent of the cash received in lieu of fractional shares, and (iv) Pioneer
will not recognize gain or loss, for purposes of federal income tax, as a
result of consummation of the Merger.
(e) LEGAL OPINION. Pioneer shall have received the opinion of
Xxxxxxxxx and Xxxxxx, P.L.L.P., counsel to CFB, dated the Closing Date, in
substantially the form shown on Exhibit 6.3, and such opinion shall not have
been withdrawn prior to the Effective Time.
(f) EMPLOYMENT AGREEMENT. Xxxxxx X. Xxxxx and CFB shall have
entered into an Employment Agreement, for a term of two (2) years beginning
the Effective Time, providing for payment of base salary no less in amount
than that currently due and providing for benefits comparable to those
currently enjoyed. Xx. Xxxxx shall be eligible for participation in CFB's
Annual Incentive Plan for executive officers.
ARTICLE 7
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated in writing at any
time prior to the Effective Time, whether before or after approval of the
Merger by the stockholders of Pioneer or CFB, only in the following
circumstances:
(a) by mutual consent of CFB and Pioneer in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of
the members of its entire Board;
(b) by either CFB or Pioneer if (i) any Requisite Regulatory
Approval shall have been denied; or (ii) any governmental entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of the transactions contemplated by
this Agreement;
28
(c) by either CFB or Pioneer if the Merger shall not have been
consummated on or before March 1, 1998, unless the failure of consummation
shall be due to the failure of the party seeking to terminate to perform or
observe in all material respects the covenants and agreements hereunder to be
performed or observed by such party; or
(d) by either CFB or Pioneer if there shall have been a material
breach of any of the covenants or agreements set forth in this Agreement on
the part of the other party, which breach shall not have been cured before
closing or within twenty (20) business days following receipt by the
breaching party of written notice of such breach from the other party,
whichever occurs first.
(e) by Pioneer if the CFB Trading Value shall be less than $46.00;
(f) by CFB pursuant to the terms of Section 4.3(d) or 4.3(e), as
applicable.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either CFB or Pioneer as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect except that the obligations
under Sections 4.1(d), 4.2(h), 5.6, and 7.2 shall survive termination of this
Agreement; provided, however, that no party shall be relieved or released
from any liabilities or damages arising out of the willful breach by such
party of any provision of this Agreement.
7.3 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of Pioneer, provided, however, that after any
such approval, no amendment shall be made which by law requires further
approval by such stockholders, without such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto; (ii) waive any inaccuracies in the representations and warranties
contained herein or in any of the Schedules; and (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
29
ARTICLE 8
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No representation
or warranty contained in this Agreement shall survive the Merger or the
termination of this Agreement, except that Sections 3.2, 4.2(c), 4.2(d),
4.2(e), 4.2(f), 4.2(h), 4.2(i), 5.6 and 8.5 shall survive the Merger, and
Sections 4.1(d) and 4.2(h), 5.6 and 7.2 shall survive the termination of this
Agreement.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given when received by the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to CFB or
Acquisition Subsidiary, to: Community First Bankshares, Inc.
Attn: Xxxxxx X. Xxxxxxxxx, President
000 Xxxx Xxxxxx
Xxxxx, XX 00000
with copies to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
and
(b) if to Pioneer, to: Pioneer Bank of Longmont
Attn: Xxx Xxxxx, President
0000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
with copies to: Xxxxxx X. Xxxxxxxx, Esq.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx X-0
Xxxxxxxx, XX 00000
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation".
30
8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
8.5 ENTIRE AGREEMENT: THIRD PARTY BENEFICIARIES; RIGHTS OF OWNERSHIP.
This Agreement (including the documents and the instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof. This Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder, except
that Sections 3.2 and 4.2(i) are intended for the benefit of the Pioneer
shareholders; and Section 5.5 is intended for the benefit of employees of the
Bank. CFB shall be liable to such third-party beneficiaries for damages
caused by the breach of such Sections. No party shall have the right to
acquire or shall be deemed to have acquired shares of common stock of the
other party pursuant to the Merger until consummation thereof.
8.6 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Colorado.
8.7 PUBLICITY. Except as otherwise required by law or the rules of the
Nasdaq Market System or the National Association of Securities Dealers, so
long as this Agreement is in effect, neither CFB nor Pioneer shall, nor shall
either of them permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the
other party, which consent shall not be unreasonably withheld.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
8.9 ENFORCEMENT OF AGREEMENT. Each of the parties hereto agrees that
it will not object if the other party seeks to obtain an injunction to
prevent breaches of this Agreement or to enforce specifically the terms and
provision hereof in any court in the United States or any state have
jurisdiction. The enforcing party shall be entitled to recover its attorneys
fees incurred in the successful enforcement of the terms and provisions of
this Agreement.
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IN WITNESS WHEREOF, CFB, Acquisition Subsidiary and Pioneer have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
COMMUNITY FIRST BANKSHARES, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxx
Attest: Title: Senior Vice President
/s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X.Xxxxxx
Title: Senior Vice President COMMUNITY FIRST NATIONAL BANK
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
Attest:
/s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
PIONEER BANK OF LONGMONT
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Attest: Name: Xxxxxx X. Xxxxx
Title: President
/s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
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TABLE OF EXHIBITS
EXHIBIT A - Articles of Merger
EXHIBIT B - Pioneer Disclosure Schedule
EXHIBIT C - CFB Disclosure Schedule
EXHIBIT 2.1(c) - Illustrations of Exchange Rate Calculations
EXHIBIT 5.5 - Affiliate Agreement
EXHIBIT 6.2 - Xxxxxx X. Xxxxxxxx Opinion
EXHIBIT 6.3 - Xxxxxxxxx & Xxxxxx Opinion
