Exhibit 2
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as
of the 30th day of September, 1999, by and between FIRST FEDERAL HOLDING COMPANY
OF XXXXXX, a Minnesota corporation ("Xxxxxx"), and NORTHERN STAR FINANCIAL,
INC., a Minnesota corporation ("Northern").
WHEREAS, the parties hereto desire to effect a reorganization whereby
Xxxxxx will merge with and into Northern (the "Merger") pursuant to an agreement
and plan of merger (the "Merger Agreement") in substantially the form attached
hereto as Exhibit A, which provides, among other things, for the conversion and
exchange of the shares of Common Stock of Xxxxxx of the par value of $100 per
share (the "Xxxxxx Common Stock") outstanding immediately prior to the time the
Merger becomes effective in accordance with the provisions of the Merger
Agreement into shares of Common Stock of Northern of the par value of $.01 per
share (the "Northern Common Stock").
NOW, THEREFORE, to effect such reorganization and in consideration of
the premises and the mutual covenants and agreements contained herein, the
parties hereto do hereby represent, warrant, covenant and agree as follows:
1. Basic Plan of Reorganization
(a) Merger. Subject to the terms and conditions contained herein,
Xxxxxx will be merged by statutory merger with and into Northern pursuant to the
Merger Agreement, with Northern as the surviving corporation (as such, the
"Surviving Corporation"), in which each share of Xxxxxx Common Stock outstanding
immediately prior to the Effective Time of the Merger (as defined below) (other
than shares as to which statutory dissenters' appraisal rights have been
exercised) will be converted into and exchanged for the number of shares of
Northern Common Stock determined by dividing the Merger Consideration (as
defined below) by the number of shares of Xxxxxx Common Stock outstanding.
(i) Articles of Incorporation of Surviving Corporation. At the
Effective Time of the Merger, the Articles of Incorporation of Northern
then in effect shall constitute and be the Articles of Incorporation of
the Surviving Corporation until amended or changed as provided therein
or by law.
(ii) Bylaws of Surviving Corporation. At the Effective Time of
the Merger, the Bylaws of Northern then in effect shall constitute and
be the Bylaws of the Surviving Corporation until amended or changed as
provided therein or by law.
(iii) Board of Directors of Surviving Corporation. At the
Effective Time of the Merger, the members of the Board of Directors of
the Surviving Corporation shall be comprised of the individuals listed
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on Schedule 1(a)(iii), until such directors may be changed as provided
by the Articles of Incorporation or Bylaws of the Surviving
Corporation, or by law.
(iv) Officers of Surviving Corporation. At the Effective Time
of the Merger, the individuals holding officer positions in the
Surviving Corporation shall be as listed on Schedule 1(a)(iv), until
such officers may be changed as provided by the Articles of
Incorporation or Bylaws of the Surviving Corporation, or by law.
(v) Certain Effects of the Merger. At the Effective Time of
the Merger, the Surviving Corporation shall succeed to and possess all
the rights, privileges, powers, franchises and immunities of a public
as well as of a private nature, and be subject to all liabilities,
restrictions, disabilities, and duties of both of Northern and Xxxxxx;
and all and singular, the rights, privileges, powers, franchises and
immunities of both of Northern and Xxxxxx and all properties, real,
personal and mixed, and all other things in action of or belonging to
either of Northern and Xxxxxx on whatever account, shall be vested in
the Surviving Corporation; and all properties, assets, rights,
privileges, powers, franchises, immunities and all and every other
interest shall be thereafter as effectively the property of the
Surviving Corporation as they were or would be of Northern and Xxxxxx
or either of them; and title to any real estate or any interest therein
vested by deed or otherwise in either of Northern and Xxxxxx shall not
revert or be in any way impaired by any reason of the Merger; provided,
however, that all rights of creditors and all liens upon any property
of either of Northern and Xxxxxx shall be preserved unimpaired, limited
in lien to the property affected by such liens at the Merger Effective
Time, and all debts, liabilities and duties of either of Northern and
Xxxxxx shall thenceforth become those of the Surviving Corporation and
may be enforced against the Surviving Corporation to the same extent as
if such debts, liabilities and duties had been incurred or contracted
by the Surviving Corporation.
(b) Merger Consideration. The total merger consideration for all of the
Xxxxxx Common Stock (the "Merger Consideration") shall be expressed in shares of
Northern Common Stock and shall equal (i) the Valuation (defined below) divided
by (ii) the Northern Share Price (defined below). Immediately preceding the
Closing, the parties will cooperate in good faith to calculate the Merger
Consideration.
(c) Valuation. As used herein, "Valuation" shall be the sum of:
(i) 1.80588 multiplied by the sum of the amounts reflected as
shareholders' equity and loan loss reserves on the balance sheet of
First Federal Savings Bank of Xxxxxx dated as of September 30, 1999,
calculated in accordance with GAAP, consistently applied;
(ii) Xxxxxx' total assets (excluding amounts reflected in
Xxxxxx' September 30, 1999 balance sheet as Investment in Subsidiary)
less Xxxxxx' total liabilities as of September 30, 1999, but excluding
the net unrealized gains or losses on available-for-sale securities
(recorded under the provisions of FASB 115), calculated in accordance
with GAAP, consistently applied;
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(iii) Any increase (decrease) in Xxxxxx' book value from
October 1, 1999 to the Determination Date, but excluding the net
unrealized gains or losses on available-for-sale securities (recorded
under the provisions of FASB 115), calculated in accordance with GAAP,
consistently applied.
As soon as practicable, and in any case within 5 days after the Determination
Date, Xxxxxx shall deliver to Northern a copy of Xxxxxx' balance sheet as of
September 30, 1999 and a copy of Xxxxxx' income statement for the period from
October 1, 1999 to the Determination Date. As soon as practicable, and in any
case within 5 days after the Determination Date, Northern shall deliver to
Xxxxxx a copy of Northern's balance sheet as of September 30, 1999 and a copy of
Northern's income statement for the period from October 1, 1999 to the
Determination Date. Any objection to such balance sheets or income statements
must be raised in a written notice delivered to the other party within 5 days
after the receipt of such balance sheet/income statement. In the event any such
objection is raised, the parties will work together in good faith to resolve the
dispute as promptly as possible. For purposes of this Section, "Determination
Date" means the last day of the month preceding the mailing of the Proxy
Statement/Prospectus (the "Mailing"), unless the Mailing occurs within 21 days
after the end of a month, in which case, the Determination Date means the last
day of the penultimate month preceding the Mailing.
(d) Northern Share Price. As used herein, "Northern Share Price" shall
be sum of (i) $10.50, plus (ii) Northern's earnings (losses) from October 1,
1999 to the Determination Date divided by the number of shares of Northern
Common Stock outstanding on the date immediately preceding the Closing Date.
(e) Fractional Shares. No fractional shares of Northern Common Stock
and no certificates or scrip certificates therefor shall be issued to represent
any such fractional interest, and any holder thereof shall be paid an amount of
cash equal to the product obtained by multiplying the fractional share interest
to which such holder is entitled by the Northern Share Price. Northern shall
deposit with the Transfer Agent (defined below), sufficient cash to make all
payments for fractional share interests.
(f) Mechanics of Closing Merger. Subject to the terms and conditions
set forth herein, the Merger Agreement shall be executed and Articles of Merger
shall be filed with Secretary of State of the State of Minnesota within ten (10)
business days following the satisfaction or waiver of all conditions precedent
set forth in Sections 6 and 7 of this Agreement or on such other date as may be
agreed to by the parties (the "Closing Date"). Each of the parties agrees to use
its best efforts to cause the Merger to be completed as soon as practicable
after the receipt of final regulatory approval of the Merger and the expiration
of all required waiting periods. The time that the filing referred to in the
first sentence of this Section 1(f) is made is herein referred to as the "Time
of Filing". The day on which such filing is made and accepted is herein referred
to as the "Effective Date of the Merger". The "Effective Time of the Merger"
shall be 11:59 p.m. on the Effective Date of the Merger. At the Effective Time
of the Merger on the Effective Date of the Merger, the separate existence of
Xxxxxx shall cease and Xxxxxx will be merged with and into Northern pursuant to
the Merger Agreement.
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Prior to the Effective Time of the Merger, Xxxxxx shall cause the
holders of Xxxxxx Common Stock to deliver the certificates representing such
Xxxxxx Common Stock to Northern. When the conversion ratio in Section 1(a) is
computed and agreed to by the parties and after the Effective Time of the
Merger, Northern shall cause Continental Stock Transfer Company or such other
transfer agent as Northern shall designate to distribute certificates evidencing
the Northern Common Stock issuable in exchange for the certificates representing
the Xxxxxx Common Stock.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Xxxxxxxxxx & Xxxxx, P.A.
2. Representations and Warranties of Xxxxxx. Xxxxxx represents and
warrants to Northern as follows:
(a) Organization and Authority. Xxxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota,
is duly qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and failure to be so qualified would have a
material adverse effect on Xxxxxx and the Xxxxxx Subsidiaries (defined below)
taken as a whole and has the corporate power and authority to own its properties
and assets and to carry on its business as it is now being conducted. Xxxxxx is
registered as a federal savings bank holding company with the Office of Thrift
Supervision (the "OTS"). Xxxxxx has furnished Northern true and correct copies
of its Articles of Incorporation and Bylaws, as amended.
(b) Xxxxxx' Subsidiaries. Schedule 2(b) sets forth a complete and
correct list of all of Xxxxxx' subsidiaries as of the date hereof (individually
a "Xxxxxx Subsidiary" and collectively the "Xxxxxx Subsidiaries"), all shares of
the outstanding capital stock of each of which, except as set forth on Schedule
2(b), are owned directly or indirectly by Xxxxxx. Except as set forth on
Schedule 2(b), no equity security of any Xxxxxx Subsidiary is or may be required
to be issued to any person or entity other than Xxxxxx by reason of any option,
warrant, scrip, preemptive right, right to subscribe to, call or commitment of
any character whatsoever relating to, or security or right convertible into,
shares of any capital stock of such Xxxxxx Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Xxxxxx
Subsidiary is bound to issue additional shares of its capital stock, or any
option, warrant or right to purchase or acquire any additional shares of its
capital stock. Except as set forth on Schedule 2(b), all of such shares so owned
by Xxxxxx are fully paid and nonassessable and are owned by it free and clear of
any lien, claim, charge, option, encumbrance or agreement with respect thereto.
Each Xxxxxx Subsidiary is a corporation or federal savings bank duly organized,
validly existing, duly qualified to do business and in good standing under the
laws of its jurisdiction of incorporation, and has the corporate power and
authority to own or lease its properties and assets and to carry on its business
as it is now being conducted. Except as set forth on Schedule 2(b), Xxxxxx does
not own beneficially, directly or indirectly, more than 5% of any class of
equity securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture.
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(c) Capitalization. The authorized capital stock of Xxxxxx consists of
5,000 shares of common stock, of a par value of $100 per share, of which as of
the close of business on September 30, 1999, 1017 shares were outstanding and 25
shares were held in the treasury. The maximum number of shares of Xxxxxx Common
Stock (assuming for this purpose that phantom shares and other share-equivalents
constitute Xxxxxx Common Stock) that would be outstanding as of the Effective
Date of the Merger if all options, warrants, conversion rights and other rights
with respect thereto were exercised is 1017. All of the outstanding shares of
capital stock of Xxxxxx have been duly and validly authorized and issued and are
fully paid and nonassessable. Except as set forth in Schedule 2(c), there are no
outstanding subscriptions, contracts, conversion privileges, options, warrants,
calls, preemptive rights or other rights obligating Xxxxxx to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire, any shares of
capital stock of Xxxxxx. Except as set forth on Schedule 2(c), since September
30, 1997, no shares of Xxxxxx capital stock have been purchased, redeemed or
otherwise acquired, directly or indirectly, by Xxxxxx or any Xxxxxx Subsidiary
and, except as set forth on Schedule 2(c), no dividends or other distributions
have been declared, set aside, made or paid to the shareholders of Xxxxxx.
(d) Authorization. Xxxxxx has the corporate power and corporate
authority to enter into this Agreement and the Merger Agreement and, subject to
any required approvals of its shareholders, to carry out its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the Merger Agreement by Xxxxxx and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of Xxxxxx. Subject to such approvals of shareholders and of
government agencies and other governing boards having regulatory authority over
Xxxxxx as may be required by statute or regulation, this Agreement and the
Merger Agreement are valid and binding obligations of Xxxxxx enforceable against
Xxxxxx in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors and contracting parties generally
and except as enforceability may be subject to general principles of equity.
Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Xxxxxx of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by Xxxxxx with any of the provisions hereof or thereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any lien, security interest, charge or encumbrance
upon any of the properties or assets of Xxxxxx or any Xxxxxx Subsidiary under
any of the terms, conditions or provisions of (x) its Articles of Incorporation
or Bylaws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Xxxxxx or
any Xxxxxx Subsidiary is a party or by which it may be bound, or to which Xxxxxx
or any Xxxxxx Subsidiary or any of the properties or assets of Xxxxxx or any
Xxxxxx Subsidiary may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in the next sentence, to the best knowledge
of Xxxxxx, violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Xxxxxx or any Xxxxxx Subsidiary or any
of their respective properties or assets. Except as set forth on Schedule 2(d),
other than in connection with or in compliance with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder (the "Securities
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Act"), the Securities Exchange Act of 1934 and the rules and regulations
thereunder (the "Exchange Act"), the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHC Act, and filings required to effect the Merger under
Minnesota law, no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Xxxxxx of the transactions contemplated by this
Agreement and the Merger Agreement.
(e) Xxxxxx Financial Statements. The consolidated balance sheets of
Xxxxxx and the Xxxxxx Subsidiaries as of September 30, 1998, 1997 and 1996 and
related consolidated statements of income, shareholders' equity and cash flows
for the three years ended September 30, 1998, and the unaudited consolidated
statements of financial condition of Xxxxxx and the Xxxxxx Subsidiaries as of
August 31, 1999 and the related unaudited consolidated statements of income,
shareholders' equity and cash flows for the 11 months then ended (collectively,
the "Xxxxxx Financial Statements"), present fairly (subject, in the case of
financial statements for interim periods, to normal recurring adjustments) the
consolidated financial position of Xxxxxx and the Xxxxxx Subsidiaries at the
dates and the consolidated results of operations and cash flows of Xxxxxx and
the Xxxxxx Subsidiaries for the periods stated therein.
(f) Reports. Since September 30, 1992, Xxxxxx and each Xxxxxx
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file, if any, 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 Federal Deposit Insurance Corporation (the "FDIC"), (iv) the United
States Comptroller of the Currency (the "Comptroller"), (v) the OTS, and (vi)
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 "Xxxxxx Reports". As of their respective dates, the
Xxxxxx Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller, the OTS and applicable state securities or banking authorities, as
the case may be, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Copies of all the Xxxxxx Reports have been made
available to Northern by Xxxxxx.
(g) Properties and Leases. Except as may be reflected in the Xxxxxx
Financial Statements and except for any lien for current taxes not yet
delinquent, Xxxxxx and each Xxxxxx Subsidiary have good title free and clear of
any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Xxxxxx'
consolidated balance sheet as of August 31, 1999, and all real and personal
property acquired since such date, except such real and personal property as has
been disposed of in the ordinary course of business. All leases of real property
and all other leases material to Xxxxxx or any Xxxxxx Subsidiary pursuant to
which Xxxxxx or such Xxxxxx Subsidiary, as lessee, leases personal property,
which leases are described on Schedule 2(g), are valid and effective in
accordance with their respective terms, and there is not, under any such lease,
any material existing default by Xxxxxx or such Xxxxxx Subsidiary or any event
which, with notice or lapse of time or both, would constitute such a material
default. Substantially all Xxxxxx' and each Xxxxxx Subsidiary's buildings and
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equipment in regular use have been well maintained and are in good and
serviceable condition, reasonable wear and tear excepted.
(h) Taxes. Each of Xxxxxx and the Xxxxxx Subsidiaries has filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and, except as set forth on Schedule 2(h),
paid all taxes owed by it, including those with respect to income, withholding,
social security, unemployment, workers compensation, franchise, ad valorem,
premium, excise and sales taxes, and no taxes shown on such returns to be owed
by it or assessments received by it are delinquent. The federal income tax
returns of Xxxxxx and the Xxxxxx Subsidiaries for the fiscal year ended
September 30, 1992, and for all fiscal years prior thereto, are for the purposes
of routine audit by the Internal Revenue Service closed because of the statute
of limitations, and no claims for additional taxes for such fiscal years are
pending. Except only as set forth on Schedule 2(h), (i) neither Xxxxxx nor any
Xxxxxx Subsidiary is a party to any pending action or proceeding, nor to Xxxxxx'
knowledge is any such action or proceeding threatened by any governmental
authority, for the assessment or collection of taxes, interest, penalties,
assessments or deficiencies and (ii) no issue has been raised by any federal,
state, local or foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties of Xxxxxx or any Xxxxxx
Subsidiary which has not been settled, resolved and fully satisfied. Each of
Xxxxxx and the Xxxxxx Subsidiaries has paid all taxes owed or which it is
required to withhold from amounts owing to employees, creditors or other third
parties. The consolidated balance sheet as of August 31, 1999, referred to in
Section 2(e) hereof, includes adequate provision for all accrued but unpaid
federal, state, county, local and foreign taxes, interest, penalties,
assessments or deficiencies of Xxxxxx and the Xxxxxx Subsidiaries with respect
to all periods through the date thereof.
(i) Absence of Certain Changes. Since August 31, 1999, except as set
forth on Schedule 2(i), there has been no change in the business, financial
condition or results of operations of Xxxxxx or any Xxxxxx Subsidiary which has
had, or may reasonably be expected to have, a material adverse effect on the
business, financial condition or results of operations of Xxxxxx and the Xxxxxx
Subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
neither Xxxxxx nor any Xxxxxx Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any present or former officer,
director, employee or consultant (other than those which are terminable
at will by Xxxxxx or such Xxxxxx Subsidiary);
(ii) any plan, contract or understanding providing for any
bonus, pension, option, deferred compensation, retirement payment,
profit sharing or similar arrangement with respect to any present or
former officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
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(iv) any contract not made in the ordinary course of business
containing covenants which limit the ability of Xxxxxx or any Xxxxxx
Subsidiary to compete in any line of business or with any person or
which involve any restriction of the geographical area in which, or
method by which, Xxxxxx or any Xxxxxx Subsidiary may carry on its
business (other than as may be required by law or applicable regulatory
authorities);
(v) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K;
(vi) any lease with annual rental payments aggregating $10,000
or more;
(vii) any agreement or commitment with respect to the
Community Reinvestment Act with any state or federal bank regulatory
authority or any other party or any other agreement or commitment with
any state or federal bank or bank holding company regulatory authority;
or
(viii) any current or past agreement, contract or
understanding with any current or former director, officer, employee,
consultant, financial adviser, broker, dealer, or agent providing for
any rights of indemnification in favor of such person or entity.
(k) Litigation and Other Proceedings. Xxxxxx has furnished Northern a
written list of pending legal and regulatory proceedings filed against Xxxxxx or
any Xxxxxx Subsidiary. There is no pending or, to the best knowledge of Xxxxxx,
threatened, claim, action, suit, investigation or proceeding against Xxxxxx or
any Xxxxxx Subsidiary, nor is Xxxxxx or any Xxxxxx Subsidiary subject to any
order, judgment or decree, except for matters which, in the aggregate, will not
have, or cannot reasonably be expected to have, a material adverse effect on the
business, financial condition or results of operations of Xxxxxx and the Xxxxxx
Subsidiaries taken as a whole.
(l) Insurance. Xxxxxx and each Xxxxxx Subsidiary is presently insured,
and during each of the past five calendar years (or during such lesser period of
time as Xxxxxx has owned such Xxxxxx Subsidiary) has been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable law and regulation; provided,
however, Xxxxxx does not currently carry directors' and officers' liability
insurance or employer liability insurance. All insurance policies under which
Xxxxxx is the "Named Insured" are listed on Schedule 2(l).
(m) Compliance with Laws. Xxxxxx and each Xxxxxx Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties and assets and to carry on its business as presently
conducted and that are material to the business of Xxxxxx or such Xxxxxx
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best knowledge of Xxxxxx, no
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suspension or cancellation of any of them is threatened; and all such filings,
applications and registrations are current. The conduct by Xxxxxx and each
Xxxxxx Subsidiary of its business and the condition and use of its properties
does not violate or infringe, in any respect material to any such business, any
applicable domestic (federal, state or local) or foreign law, statute,
ordinance, license or regulation. Neither Xxxxxx nor any Xxxxxx Subsidiary is in
default under any order, license, regulation or demand of any federal, state,
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court. Except for statutory or regulatory
restrictions of general application and except as set forth on Schedule 2(m), no
federal, state, municipal or other governmental authority has placed any
restriction on the business or properties of Xxxxxx or any Xxxxxx Subsidiary
which reasonably could be expected to have a material adverse effect on the
business or properties of Xxxxxx and the Xxxxxx Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Xxxxxx or any Xxxxxx Subsidiary
is pending or, to the best knowledge of Xxxxxx, threatened. Neither Xxxxxx nor
any Xxxxxx Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding which could
materially and adversely affect the business of Xxxxxx or such Xxxxxx
Subsidiary. Employees of Xxxxxx and the Xxxxxx Subsidiaries are not represented
by any labor union nor are any collective bargaining agreements otherwise in
effect with respect to such employees.
(o) Material Interests of Certain Persons. Except as set forth on
Schedule 2(o), to the best knowledge of Xxxxxx no officer or director of Xxxxxx
or any Xxxxxx Subsidiary, or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such officer or director, has any interest
in any material contract or property (real or personal), tangible or intangible,
used in or pertaining to the business of Xxxxxx or any Xxxxxx Subsidiary.
Schedule 2(o) sets forth (i) a correct and complete list of any loan from Xxxxxx
or any Xxxxxx Subsidiary to any present officer, director, employee or any
associate or related interest of any such person which was required under
Regulation O of the Federal Reserve Board to be approved by or reported to
Xxxxxx' or such Xxxxxx Subsidiary's Board of Directors; (ii) all currently
outstanding loans made by Xxxxxx; (iii) all pledges of the capital stock of any
Xxxxxx Subsidiary; and (iv) all loans made by any Xxxxxx Subsidiary to any
shareholder of Xxxxxx or the Affiliates, to any relatives of such shareholder or
to any entity controlled by such shareholder or such shareholder's relative.
(p) Xxxxxx Benefit Plans.
(i) The only "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), for which Xxxxxx or any Xxxxxx Subsidiary acts as
the plan sponsor as defined in ERISA Section 3(16)(B), and with respect
to which any liability under ERISA or otherwise exists or may be
incurred by Xxxxxx or any Xxxxxx Subsidiary are those set forth on
Schedule 2(p) (the "Plans"). No Plan is a "multi-employer plan" within
the meaning of Section 3(37) of ERISA.
(ii) Each Plan is and has been in all material respects
operated and administered in accordance with its provisions and
applicable law. Except as set forth on Schedule 2(p), Xxxxxx or the
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Xxxxxx Subsidiaries have received favorable determination letters from
the Internal Revenue Service under the provisions of the Tax Reform Act
of 1986 ("TRA '86") for each of the Plans to which the qualification
requirements of Section 401(a) of the Code apply. Xxxxxx knows of no
reason that any Plan subject to the qualification provisions of Section
401(a) of the Code is not "qualified" within the meaning of Section
401(a) of the Code and knows of no reason that each related trust is
not exempt from taxation under Section 501(a) of the Code.
(iii) The present value of all benefits vested and all
benefits accrued under each Plan which is subject to Title IV of ERISA
did not, in each case, as determined for purposes of reporting on
Schedule B to the Annual Report on Form 5500 of each such Plan as of
the end of the most recent Plan year, exceed the value of the assets of
the Plan allocable to such vested or accrued benefits.
(iv) Except as disclosed in Schedule 2(p), and to the best
knowledge of Xxxxxx, no Plan or any trust created thereunder, nor any
trustee, fiduciary or administrator thereof, has engaged in a
"prohibited transaction", as such term is defined in Section 4975 of
the Code or Section 406 of ERISA or violated any of the fiduciary
standards under Part 4 of Title I of ERISA, which could subject, to the
best knowledge of Xxxxxx, such Plan or trust, or any trustee, fiduciary
or administrator thereof, or any party dealing with any such Plan or
trust, to the tax or penalty on prohibited transactions imposed by
Section 4975 of the Code or would result in material liability to
Xxxxxx and the Xxxxxx Subsidiaries taken as a whole.
(v) No Plan 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, other than those events which may result from
the transactions contemplated by this Agreement and the Merger
Agreement.
(vi) No Plan or any trust created thereunder has incurred any
"accumulated funding deficiency", as such term is defined in Section
412 of the Code (whether or not waived), since the effective date of
ERISA.
(vii) Except as disclosed in Schedule 2(p), neither the
execution and delivery of this Agreement and the Merger Agreement nor
the consummation of the transactions contemplated hereby and thereby
will (i) result in any payment in excess of $5,000 for any individual
or $40,000 in the aggregate (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due
to any director or employee or former employee of Xxxxxx or any Xxxxxx
Subsidiary under any Plan or otherwise, (ii) materially increase any
benefits otherwise payable under any Plan or (iii) result in the
acceleration of the time of payment or vesting of any such benefits to
any material extent.
(q) Regulatory Filings. None of the information regarding Xxxxxx, the
holders of Xxxxxx' capital stock, or the Xxxxxx Subsidiaries, supplied or to be
supplied by Xxxxxx for inclusion in any documents to be filed with any
10
regulatory authority in connection with the transactions contemplated hereby or
by the Merger Agreement including, without limitation, any information supplied
specifically for inclusion or incorporation by reference in the Registration
Statement (defined below) or any of Northern's press releases, periodic reports
pursuant to Sections 13 and 15(d) of the Exchange Act, or other Northern
registration statements (collectively, the "Other Northern Public Documents"),
will, at the respective times such documents are filed with any regulatory
authority and/or disclosed to the public, and at any time they are amended or
supplemented and at the time they become effective under the Securities Act, as
applicable, contain an untrue statement of material fact or omit to state a
material fact required to be stated therein as necessary in order to make the
statement therein, in light of the circumstances under which they are made not
misleading. All documents which Xxxxxx and the Xxxxxx Subsidiaries are
responsible for filing with any regulatory authority in connection with the
Merger will comply as to form in all material respects with the provisions of
applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r),
neither Xxxxxx nor any Xxxxxx Subsidiary is under any obligation, contingent or
otherwise, which will survive the Merger by reason of any agreement to register
any of its securities under the Securities Act.
(s) Brokers and Finders. Neither Xxxxxx nor any Xxxxxx Subsidiary nor
any of their respective officers, directors or employees has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for Xxxxxx or any Xxxxxx Subsidiary in connection with this
Agreement and the Merger Agreement or the transactions contemplated hereby and
thereby.
(t) Administration of Trust Accounts. Xxxxxx and each Xxxxxx Subsidiary
has properly administered in all respects material and which could reasonably be
expected to be material to the financial condition of Xxxxxx and the Xxxxxx
Subsidiaries taken as a whole all accounts for which it acts as a fiduciary,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor,
in accordance with the terms of the governing documents and applicable state and
federal law and regulation and common law. Neither Xxxxxx, any Xxxxxx
Subsidiary, nor any director, officer or employee of Xxxxxx or any Xxxxxx
Subsidiary has committed any breach of trust with respect to any such fiduciary
account which is material to or could reasonably be expected to be material to
the financial condition of Xxxxxx and the Xxxxxx Subsidiaries taken as a whole,
and the accountings for each such fiduciary account are true and correct in all
material respects and accurately reflect the assets of such fiduciary account.
(u) No Defaults. Except as set forth on Schedule 2(u), Neither Xxxxxx
nor any Xxxxxx Subsidiary is in default, nor has any event occurred which, with
the passage of time or the giving of notice, or both, would constitute a
default, under any material agreement, indenture, loan agreement or other
instrument to which it is a party or by which it or any of its assets is bound
or to which any of its assets is subject, the result of which has had or could
reasonably be expected to have a material adverse effect upon Xxxxxx and the
Xxxxxx Subsidiaries taken as a whole. To the best of Xxxxxx' knowledge, all
parties with whom Xxxxxx or any Xxxxxx Subsidiary has material leases,
agreements or contracts or who owe to Xxxxxx or any Xxxxxx Subsidiary material
11
obligations other than with respect to those arising in the ordinary course of
the banking business of the Xxxxxx Subsidiaries are in compliance therewith in
all material respects.
(v) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could result in the imposition, on Xxxxxx or any Xxxxxx Subsidiary of any
liability relating to the release of hazardous substances as defined 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 ("CERCLA"), pending or to the
best of Xxxxxx' knowledge, threatened against Xxxxxx or any Xxxxxx Subsidiary,
the result of which has had or could reasonably be expected to have a material
adverse effect upon Xxxxxx and Xxxxxx' Subsidiaries taken as a whole; to the
best of Xxxxxx' knowledge there is no reasonable basis for any such proceeding,
claim or action; and to the best of Xxxxxx' knowledge neither Xxxxxx nor any
Xxxxxx Subsidiary is subject to any agreement, order, judgment, or decree by or
with any court, governmental authority or third party imposing any such
environmental liability. Xxxxxx has provided Northern with copies of all
environmental assessments, reports, studies and other related information in its
or any Xxxxxx Subsidiary's possession with respect to each bank facility and
each non-residential OREO property.
(w) Interest Rate Risk Management Instruments. All interest rate swaps,
caps, floors and option agreements (if any) to which Xxxxxx or any Xxxxxx
Subsidiary is a party or by which any of their respective properties may be
bound, are set forth on Schedule 2(w); and (i) were entered into in the ordinary
course of business and, to Xxxxxx' best knowledge, in accordance with prudent
banking practice and applicable rules, regulations and policies of all
regulatory authorities to which Xxxxxx and the Xxxxxx Subsidiaries are subject
and with counterparties believed to be financially responsible at the time, (ii)
are legal, valid and binding obligations enforceable in accordance with their
terms, and (iii) are in full force and effect. Xxxxxx and the Xxxxxx
Subsidiaries have duty performed in all material respects all of their material
obligations thereunder to the extent that such obligations to perform have
accrued; and, to Xxxxxx' best knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder. Xxxxxx has delivered or made available to Northern true, correct and
complete copies of all such interest rate risk management agreements and
arrangements.
(x) Corporate Records. Xxxxxx has provided to Northern a list of all
minutes of meetings of the Board of Directors, committees of the Board of
Directors and shareholders of Xxxxxx and each of the Xxxxxx Subsidiaries
certified by the Secretary of Xxxxxx or such Xxxxxx Subsidiary and true and
correct copies of such minutes signed by the Secretary or the Chairman of such
meeting are contained in the minute books of Xxxxxx or such Xxxxxx Subsidiary.
(y) Unfunded Commitments. Schedule 2(y) sets forth a true and complete
list of all unfunded commitments by borrower, date and amount of commitment as
of August 31, 1999, and such schedule will be updated as of the end of the month
immediately preceding the Closing Date.
12
3. Representations and Warranties of Northern. Northern represents and
warrants to Xxxxxx as follows:
(a) Organization and Authority. Northern is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on Northern and its subsidiaries taken as a whole
and has the corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted. Northern is registered as
a bank holding company with the Board of Governors of the Federal Reserve (the
"Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"). Northern has furnished Xxxxxx true and correct copies of its
Articles of Incorporation and Bylaws, as amended.
(b) Northern Subsidiaries. Schedule 3(b) sets forth a complete and
correct list of all of Northern's subsidiaries as of the date hereof
(individually a "Northern Subsidiary" and collectively the "Northern
Subsidiaries"), all shares of the outstanding capital stock of each of which,
except as set forth in Schedule 3(b), are owned directly or indirectly by
Northern. Except as set forth on Schedule 3(b), no equity security of any
Northern Subsidiary is or may be required to be issued to any person or entity
other than Northern by reason of any option, warrant, scrip, preemptive right,
right to subscribe to, call or commitment of any character whatsoever relating
to, or security or right convertible into, shares of any capital stock of such
Northern Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Northern Subsidiary is bound to issue additional
shares of its capital stock, or any option, warrant or right to purchase or
acquire any additional shares of its capital stock. Except as set forth on
Schedule 3(b), all of such shares so owned by Northern are fully paid and
nonassessable and are owned by it free and clear of any lien, claim, charge,
option, encumbrance or agreement with respect thereto. Each Northern Subsidiary
is a corporation or banking association duly organized, validly existing, duly
qualified to do business and in good standing under the laws of its jurisdiction
of incorporation, and has corporate power and authority to own or lease its
properties and assets and to carry on its business as it is now being conducted.
Except as set forth on Schedule 3(b), Northern does not own beneficially,
directly or indirectly, more than 5% of any class of equity securities or
similar interests of any corporation, bank, business trust, association or
similar organization, and is not, directly or indirectly, a partner in any
partnership or party to any joint venture.
(c) Northern Capitalization. The authorized capital stock of Northern
consists of 15,000,000 shares of common stock, of a par value of $.01 per share,
of which as of the close of business on September 30, 1999, 425,600 shares of
common stock were outstanding and no shares were held in treasury. All of the
outstanding shares of capital stock of Northern have been duly and validly
authorized and issued and are fully paid and nonassessable. Except as set forth
in Schedule 3(c), there are no outstanding subscriptions, contracts, conversion
privileges, options, warrants, calls, preemptive rights or other rights
obligating Northern to issue, sell or otherwise dispose of, or to purchase,
redeem or otherwise acquire, any shares of capital stock of Northern. No shares
13
of Northern capital stock have been purchased, redeemed or otherwise acquired,
directly or indirectly, by Northern or any Northern Subsidiary and no dividends
or other distributions have been declared, set aside, made or paid to the
shareholders of Northern.
(d) Authorization. Northern has the corporate power and authority to
enter into this Agreement and the Merger Agreement and, subject to any required
approvals of its shareholders, to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Merger Agreement by Northern and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Northern. Subject to such approvals of shareholders and of
government agencies and other governing boards having regulatory authority over
Northern as may be required by statute or regulation, this Agreement and the
Merger Agreement are valid and binding obligations of Northern enforceable
against Northern in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors and
contracting parties generally and except as enforceability may be subject to
general principles of equity. Except as set forth on Schedule 3(d), neither the
execution, delivery and performance by Northern of this Agreement or the Merger
Agreement, nor the consummation of the transactions contemplated hereby and
thereby, nor compliance by Northern with any of the provisions hereof or
thereof, will (i) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration of, or result in the creation of, any lien, security interest,
charge or encumbrance upon any of the properties or assets of Northern or any
Northern Subsidiary under any of the terms, conditions or provisions of (x) its
Articles of Incorporation or Bylaws or (y) any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Northern or any Northern Subsidiary is a party or by which
it may be bound, or to which Northern or any Northern Subsidiary or any of the
properties or assets of Northern or any Northern Subsidiary may be subject, or
(ii) subject to compliance with the statutes and regulations referred to in the
next sentence, to the best knowledge of Northern, violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
Northern or any Northern Subsidiary or any of their respective properties or
assets. Except as set forth on Schedule 3(d), other than in connection with or
in compliance with the provisions of the Securities Act, the Exchange Act, the
securities or blue sky laws of the various states or filings, consents, reviews,
authorizations, approvals or exemptions required under the BHC Act, and filings
required to effect the Merger under Minnesota law, no notice to, filing with,
exemption or review by, or authorization, consent or approval of, any public
body or authority is necessary for the consummation by Northern of the
transactions contemplated by this Agreement and the Merger Agreement.
(e) Northern Financial Statements. The consolidated balance sheets of
Northern and Northern's Subsidiaries as of June 30, 1999 and related
consolidated statements of income, stockholders' equity and cash flows for the
fiscal year ended June 30, 1999, and the unaudited statements of financial
condition of Northern and the Northern Subsidiaries as of August 31, 1999 and
the related unaudited consolidated statements of income, shareholders' equity
and cash flows for the two months then ended (collectively, the "Northern
14
Financial Statements"), present fairly (subject, in the case of financial
statements for interim periods, to normal recurring adjustments) the
consolidated financial position of Northern and the Northern Subsidiaries at the
dates and the consolidated results of operations and cash flows of Northern and
the Northern Subsidiaries for the periods stated therein.
(f) Reports. Since December 31, 1998, Northern and each Northern
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file, if any, with (i)
the SEC, including, but not limited to, Forms 10-KSB, Forms 10-QSB and proxy
statements, (ii) the Federal Reserve Board, (iii) the FDIC, (iv) the
Comptroller, (v) the OTS, and (vi) 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 "Northern Reports." As
of their respective dates, the Northern Reports complied in all material
respects with all the rules and regulations promulgated by the SEC, the Federal
Reserve Board, the FDIC, the Comptroller, the OTS and applicable state
securities or banking authorities, as the case may be, and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Copies of all
the Northern Reports have been made available to Xxxxxx by Northern.
(g) Properties and Leases. Except as may be reflected in the Northern
Financial Statements and except for any lien for current taxes not yet
delinquent, Northern and each Northern Subsidiary have good title free and clear
of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Northern's
consolidated balance sheet as of June 30, 1999, and all real and personal
property acquired since such date, except such real and personal property as has
been disposed of in the ordinary course of business. All leases of real property
and all other leases material to Northern or any Northern Subsidiary pursuant to
which Northern or such Northern Subsidiary, as lessee, leases personal property,
are valid and effective in accordance with their respective terms, and there is
not, under any such lease, any material existing default by Northern or such
Northern Subsidiary or any event which, with notice or lapse of time or both,
would constitute such a material default. Substantially all Northern's and each
Northern Subsidiary's buildings and equipment in regular use have been well
maintained and are in good and serviceable condition, reasonable wear and tear
excepted.
(h) Taxes. Each of Northern and the Northern Subsidiaries has filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and, except as set forth on Schedule 3(h),
paid all taxes owed by it, including those with respect to income, withholding,
social security, unemployment, workers compensation, franchise, ad valorem,
premium, excise and sales taxes, and no taxes shown on such returns to be owed
by it or assessments received by it are delinquent. The first federal income tax
return of Northern and the Northern Subsidiaries is for the fiscal year ended
June 30, 1999. Except only as set forth on Schedule 3(h), (i) neither Northern
nor any Northern Subsidiary is a party to any pending action or proceeding, nor
to Northern's knowledge is any such action or proceeding threatened by any
governmental authority, for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies and (ii) no issue has been raised by any
federal, state, local or foreign taxing authority in connection with an audit or
examination of the tax returns, business or properties of Northern or any
Northern Subsidiary which has not been settled, resolved and fully satisfied.
15
Each of Northern and the Northern Subsidiaries has paid all taxes owed or which
it is required to withhold from amounts owing to employees, creditors or other
third parties. The consolidated balance sheet as of June 30, 1999, referred to
in Section 3(e) hereof, includes adequate provision for all accrued but unpaid
federal, state, county, local and foreign taxes, interest, penalties,
assessments or deficiencies of Northern and the Northern Subsidiaries with
respect to all periods through the date thereof.
(i) Absence of Certain Changes. Since June 30, 1999, there has been no
change in the business, financial condition or results of operations of Northern
or any Northern Subsidiary which has had, or may reasonably be expected to have,
a material adverse effect on the business, financial condition or results of
operations of Northern and the Northern Subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 3(j),
neither Northern nor any Northern Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any present or former officer,
director, employee or consultant (other than those which are terminable
at will by Northern or such Northern Subsidiary);
(ii) any plan, contract or understanding providing for any
bonus, pension, option, deferred compensation, retirement payment,
profit sharing or similar arrangement with respect to any present or
former officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union.
(iv) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of Northern or
any Northern Subsidiary to compete in any line of business or with any
person or which involve any material restriction of the geographical
area in which, or method by which, Northern or any Northern Subsidiary
may carry on its business (other than as may be required by law or
applicable regulatory authorities);
(v) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K; and
(vi) any current or past agreement, contract or understanding
with any current or former director, officer, employee, consultant,
financial adviser, broker, dealer, or agent providing for any rights of
indemnification in favor of such person or entity.
(k) Litigation and Other Proceedings. There is no pending or, to the
best knowledge of Northern, threatened, claim, action, suit, investigation or
proceeding against Northern or any Northern Subsidiary, nor is Northern or any
16
Northern Subsidiary subject to any order, judgment or decree, except for matters
which, in the aggregate, will not have, or cannot reasonably be expected to
have, a material adverse effect on the business, financial condition or results
of operations of Northern and the Northern Subsidiaries taken as a whole.
(l) Insurance. Northern and each Northern Subsidiary is presently
insured, and during each of the past five calendar years (or during such lesser
period of time as Northern has owned such Northern Subsidiary) has been insured,
for reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable law and regulation.
(m) Compliance with Laws. Northern and each Northern Subsidiary has all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties or assets and to carry on its business as presently
conducted and that are material to the business of Northern or such Northern
Subsidiary; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the best knowledge of Northern,
no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current. The conduct by Northern and
each Northern Subsidiary of its business and the condition and use of its
properties does not violate or infringe, in any respect material to any such
business, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license or regulation. Neither Northern nor any Northern
Subsidiary is in default under any order, license, regulation or demand of any
federal, state, municipal or other governmental agency or with respect to any
order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application and except as set forth on
Schedule 3(m), no federal, state, municipal or other governmental authority has
placed any restriction on the business or properties of Northern or any Northern
Subsidiary which reasonably could be expected to have a material adverse effect
on the business or properties of Northern and the Northern Subsidiaries taken as
a whole.
(n) Labor. No work stoppage involving Northern or any Northern
Subsidiary is pending or, to the best knowledge of Northern, threatened. Neither
Northern nor any Northern Subsidiary is involved in, or threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which could materially and adversely affect the business of Northern
or such Northern Subsidiary. Employees of Northern and the Northern Subsidiaries
are not represented by any labor union nor are any collective bargaining
agreements otherwise in effect with respect to such employees.
(o) Northern Benefit Plans.
(i) The only "employee benefit plans" within the meaning of
Section 3(3) of ERISA for which Northern or any Northern Subsidiary
acts as the plan sponsor as defined in ERISA Section 3(16)(B), and with
respect to which any liability under ERISA or otherwise exists or may
17
be incurred by Northern or any Northern Subsidiary are those set forth
on Schedule 3(o) (the "Northern Plans"). No Northern Plan is a
"multi-employer plan" within the meaning of Section 3(37) of ERISA.
(ii) Each Northern Plan is and has been in all material
respects operated and administered in accordance with its provisions
and applicable law. Except as set forth on Schedule 3(o), Northern or
the Northern Subsidiaries have received favorable determination letters
from the Internal Revenue Service under the provisions of TRA '86 for
each of the Northern Plans to which the qualification requirements of
Section 401(a) of the Code apply. Northern knows of no reason that any
Northern Plan subject to the qualification provisions of Section 401(a)
of the Code is not "qualified" within the meaning of Section 401(a) of
the Code and knows of no reason that each related trust is not exempt
from taxation under Section 501(a) of the Code.
(iii) The present value of all benefits vested and all
benefits accrued under each Northern Plan which is subject to Title IV
of ERISA did not, in each case, as determined for purposes of reporting
on Schedule B to the Annual Report on Form 5500 of each such Northern
Plan as of the end of the most recent Plan year, exceed the value of
the assets of the Northern Plans allocable to such vested or accrued
benefits.
(iv) Except as set forth on Schedule 3(o), and to the best
knowledge of Northern, no Northern Plan or any trust created
thereunder, nor any trustee, fiduciary or administrator thereof, has
engaged in a "prohibited transaction", as such term is defined in
Section 4975 of the Code or Section 406 of ERISA or violated fiduciary
standards under Part 4 of Title I of ERISA, which could subject, to the
best knowledge of Northern, such Northern Plan or trust, or any
trustee, fiduciary or administrator thereof, or any party dealing with
any such Northern Plan or trust, to the tax or penalty on prohibited
transactions imposed by Section 4975 of the Code or would result in
material liability to Northern and the Northern Subsidiaries taken as a
whole.
(v) No Northern Plan 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 Northern Plan, other than those events which
may result from the transactions contemplated by this Agreement and the
Merger Agreement.
(vi) No Northern Plan or any trust created thereunder has
incurred any "accumulated funding deficiency", as such term is defined
in Section 412 of the Code (whether or not waived), since the effective
date of ERISA.
(vii) Neither the execution and delivery of this Agreement and
the Merger Agreement nor the consummation of the transactions
contemplated hereby and thereby will (i) result in any payment in
excess of $5,000 for any individual or $40,000 in the aggregate
(including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any director or employee
or former employee of Northern or any Northern Subsidiary under any
Northern Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Northern Plan or (iii) result in the
18
acceleration of the time of payment or vesting of any such benefits to
any material extent.
(p) Regulatory Filings. None of the information regarding Northern and
the Northern Subsidiaries supplied or to be supplied by Northern for inclusion
in any documents to be filed with any regulatory authority in connection with
the transactions contemplated hereby or by the Merger Agreement will, at the
respective times such documents are filed with any regulatory authority, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading.
All documents which Northern and the Northern Subsidiaries are responsible for
filing with any regulatory authority in connection with the Merger will comply
as to form in all material respects with the provisions of applicable law.
(q) Brokers and Finders. Neither Northern nor any Northern Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for Northern or any Northern Subsidiary in connection
with this Agreement and the Merger Agreement or the transactions contemplated
hereby and thereby.
(r) No Defaults. Neither Northern nor any Northern Subsidiary is in
default, nor has any event occurred which, with the passage of time or the
giving of notice, or both, would constitute a default under any material
agreement, indenture, loan agreement or other instrument to which it is a party
or by which it or any of its assets is bound or to which any of its assets is
subject, the result of which has had or could reasonably be expected to have a
material adverse effect upon Northern and the Northern Subsidiaries taken as a
whole. To the best of Northern's knowledge, all parties with whom Northern or
any Northern Subsidiary has material leases, agreements or contracts or who owe
to Northern or any Northern Subsidiary material obligations other than with
respect to those arising in the ordinary course of the banking business of the
Northern Subsidiaries are in compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or
other proceeding, claim, or action of any nature seeking to impose, or that
could result in the imposition, on Northern or any Northern Subsidiary of any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or to the best of Northern's
knowledge, threatened against Northern or any Northern Subsidiary, the result of
which has had or could reasonably be expected to have a material adverse effect
upon Northern and the Northern Subsidiaries taken as a whole; to the best of
Northern's knowledge there is no reasonable basis for any such proceeding, claim
or action; and to the best of Northern's knowledge neither Northern nor any
Northern Subsidiary is subject to any agreement, order, judgment, or decree by
or with any court, governmental authority or third party imposing any such
environmental liability. Northern has provided Xxxxxx with copies of all
environmental assessments, reports, studies and other related information in its
or any Northern Subsidiary's possession.
19
(t) No Intention to Dispose of Assets. Northern has no plan or
intention to sell or otherwise dispose of any of the assets of Xxxxxx to be
acquired in the Merger, except for dispositions in the ordinary course of
business or transfers to controlled subsidiaries.
4. Covenants of Xxxxxx. Xxxxxx covenants and agrees with Northern as
follows:
(a) Except as otherwise permitted or required by this Agreement, from
the date hereof until the Effective Time of the Merger, Xxxxxx, and each Xxxxxx
Subsidiary will: maintain its corporate existence in good standing; maintain the
general character of its business and conduct its business in its ordinary and
usual manner; extend credit in accordance with existing lending policies, except
that it shall not, without the prior written consent of Northern (which consent
requirement shall be deemed to be waived as to any loan approval request to
which Northern has not responded by the end of the next business day following
the day of receipt of the written request by the designated Northern employee
identified in Schedule 4(a) hereto, as such Schedule 4(a) may be changed by
Northern from time to time upon five (5) days advance written notice to Xxxxxx),
make any new loan (except pursuant to commitments made prior to the date of this
Agreement) to any borrower if the amount of the resulting loan, when aggregated
with all other loans or extensions of credit to such person, would be in excess
of $250,000, or modify, restructure or renew any existing loan (except pursuant
to commitments made prior to the date of this Agreement) to any borrower if the
amount of the resulting loan, when aggregated with all other loans or extensions
of credit to such person, would be in excess of $250,000; maintain all books and
records of it and the Xxxxxx Subsidiaries, including all financial statements,
in accordance with the accounting principles and practices consistent with those
used for the Xxxxxx Financial Statements, except for changes in such principles
and practices required under generally accepted accounting principles; maintain
its properties in good repair and condition, ordinary wear and tear excepted;
maintain in all material respects presently existing insurance coverage; use its
best efforts to preserve its business organization intact, to keep the services
of its present principal employees and to preserve its good will and the good
will of its suppliers, customers and others having business relationships with
it; use its best efforts to obtain any approvals or consents required to
maintain existing leases and other contracts in effect following the Merger;
comply in all material respects with all laws, regulations, ordinances, codes,
orders, licenses and permits applicable to the properties and operations of
Xxxxxx and each Xxxxxx Subsidiary the noncompliance with which reasonably could
be expected to have a material adverse effect on Xxxxxx and the Xxxxxx
Subsidiaries taken as a whole; and permit Northern and its representatives to
examine its and its subsidiaries' books, records and properties and to interview
officers, employees and agents at all reasonable times when it is open for
business. No such examination by Northern or its representatives either before
or after the date of this Agreement shall in any way affect, diminish or
terminate any of the representations, warranties or covenants of Xxxxxx herein
expressed.
(b) Except as otherwise contemplated or required by this Agreement,
from the date hereof until the Effective Time of the Merger, Xxxxxx and each
Xxxxxx Subsidiary will not (without the prior written consent of Northern):
amend or otherwise change its articles or certificate of incorporation or
by-laws; issue or sell or authorize for issuance or sale, or grant any options
or make other agreements with respect to the issuance or sale or conversion of,
20
any shares of its capital stock, phantom shares or other share-equivalents, or
any other of its securities; authorize or incur any long-term debt (other than
deposit liabilities); mortgage, pledge or subject to lien or other encumbrance
any of its properties, except in the ordinary course of business; enter into any
agreement, contract or commitment in excess of $5,000 except banking
transactions in the ordinary course of business and in accordance with policies
and procedures in effect on the date hereof; make any investments except
investments made by bank subsidiaries in the ordinary course of business for
terms of up to one year and in amounts of $1,000,000 or less; amend or terminate
any Plan except as required by law; make any contributions to any Plan except as
required by the terms of such Plan in effect as of the date hereof; declare, set
aside, make or pay any dividend or other distribution with respect to its
capital stock except: (i) any dividend declared by a Xxxxxx Subsidiary's Board
of Directors in accordance with applicable law and regulation or (ii) dividends
declared by Xxxxxx which (x) are consistent with Xxxxxx' past practices and (y)
aggregate to no more than $300,000; redeem, purchase or otherwise acquire,
directly or indirectly, any of the capital stock of Xxxxxx or any Xxxxxx
Subsidiary; increase the compensation of any officers, directors or executive
employees, except pursuant to existing compensation plans and practices; sell or
otherwise dispose of any shares of the capital stock of any Xxxxxx Subsidiary;
or sell or otherwise dispose of any of its assets or properties other than in
the ordinary course of business.
(c) Xxxxxx shall promptly take all action necessary in accordance with
Minnesota law and Xxxxxx' articles of incorporation, as amended, and bylaws to
cause a meeting of Xxxxxx shareholders (the "Shareholders Meeting") to be duly
called and held as soon as reasonably practicable following the date upon which
the Registration Statement (as defined below) becomes effective for the purpose
of voting upon the Merger, and, subject to fiduciary duties, shall use all
reasonable efforts to obtain Xxxxxx shareholder approval of this Agreement and
the Merger. In accordance therewith, Xxxxxx shall cooperate with Northern in the
preparation and filing, as soon as reasonably practicable, of a Proxy
Statement/Prospectus to be included as part of the Registration Statement (such
Proxy Statement/Prospectus together with Notice of Meeting, form of Proxy and
any letter or other materials to the Xxxxxx shareholders included therein are
referred to in this Agreement as the "Proxy Statement/Prospectus"). Xxxxxx shall
use all reasonable efforts to cause the Proxy Statement/Prospectus to be mailed
to the shareholders of Xxxxxx as soon as reasonably practicable following its
effectiveness, with the date of mailing as mutually determined by Xxxxxx and
Northern.
If at any time prior to the Shareholders Meeting, any event should
occur relating to Xxxxxx or Xxxxxx' officers or directors that is required to be
described in an amendment or supplement to the Proxy Statement/Prospectus or the
Registration Statement, Xxxxxx shall promptly inform Northern. Whenever any
event that occurs that should be described in an amendment of, or supplement to,
the Proxy Statement/Prospectus or the Registration Statement, Xxxxxx, shall,
upon learning of such event, promptly notify Northern and consult and cooperate
with Northern in connection with the preparation of a mutually acceptable
amendment or supplement, and shall cooperate with Northern to promptly file such
amendment or supplement with the SEC and mail such amendment or supplement as
soon as practicable after it is cleared by the SEC.
(d) None of the information supplied or to be supplied by Xxxxxx
specifically for inclusion or incorporation by reference in the Proxy
21
Statement/Prospectus will, at the date it is first mailed to Xxxxxx'
shareholders and at the time of the Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement/Prospectus will comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations thereunder,
except that no representation is made by Xxxxxx with respect to statements made
or incorporated by reference therein based on information supplied by Northern
specifically for inclusion or incorporation by reference in the Registration
Statement or the Proxy Statement/Prospectus.
(e) Xxxxxx will take all necessary corporate and other action and use
its best efforts to obtain all approvals of regulatory authorities, consents and
other approvals required of Xxxxxx to carry out the transactions contemplated by
this Agreement and will cooperate with Northern to obtain all such approvals and
consents required of Northern.
(f) Xxxxxx will use its best efforts to cause its counsel to deliver to
Northern a favorable opinion as of the Closing Date in form and substance
customary for transactions of this type and satisfactory to counsel for
Northern;
(g) Xxxxxx will hold in confidence all documents and information
concerning Northern and Northern's Subsidiaries furnished to it and its
representatives in connection with the transactions contemplated by this
Agreement (the "Northern Evaluation Material") and will not release or disclose
the Northern Evaluation Material to any other person, except, in the opinion of
Xxxxxx' counsel, as required by law and except to its directors, officers,
employees and representatives in connection with this Agreement, who shall be
directed to treat the Northern Evaluation Material confidentially. If disclosure
of the Northern Evaluation Material is required by law, other than pursuant to
obtaining regulatory approvals pursuant to the terms of this Agreement, Xxxxxx
will, unless prohibited by law, in advance of such disclosure provide Northern
to the extent reasonably practicable with prompt notice of such requirement(s).
In such event, Xxxxxx will, unless prohibited by law, use commercially
reasonable efforts to provide Northern, in advance of any such disclosure, with
copies of any Northern Evaluation Material Xxxxxx intends to disclose (and, if
applicable, the text of the disclosure language itself) and, to the extent
reasonably practicable, to cooperate with Northern at Northern's expense to the
extent it may seek to limit such disclosure. If the transactions contemplated by
this Agreement shall not be consummated, such confidence shall be maintained and
the Northern Evaluation Material shall not be used in competition with Northern
(except to the extent that it can be shown to be previously known to Xxxxxx and
not known to Xxxxxx to be subject to a confidentiality obligation to Northern,
in the public domain other than as a result of disclosure by Xxxxxx or its
representatives, or later acquired by Xxxxxx from other legitimate sources not
known to Xxxxxx to be subject to a confidentiality obligation to Northern) and,
upon request, all such documents, copies thereof or extracts therefrom shall
immediately thereafter be destroyed (except for Xxxxxx Board of Directors
minutes, regulatory applications and similar documents) and such destruction
shall be certified in writing.
(h) Neither Xxxxxx, nor any Xxxxxx Subsidiary, nor any director,
officer, representative or agent thereof, will, directly or indirectly, solicit,
22
authorize the solicitation of or enter into any discussions with any
corporation, partnership, person or other entity or group (other than Northern)
concerning any offer or possible offer (i) to purchase any shares of common
stock, any option or warrant to purchase any shares of common stock, any
securities convertible into any shares of such common stock, or any other equity
security of Xxxxxx or any Xxxxxx Subsidiary, (ii) to make a tender or exchange
offer for any shares of such common stock or other equity security, (iii) to
purchase, lease or otherwise acquire the assets of Xxxxxx or any Xxxxxx
Subsidiary except in the ordinary course of business, or (iv) to merge,
consolidate or otherwise combine with Xxxxxx or any Xxxxxx Subsidiary. If any
corporation, partnership, person or other entity or group makes an offer or
inquiry to Xxxxxx or any Xxxxxx Subsidiary concerning any of the foregoing,
Xxxxxx or such Xxxxxx Subsidiary will (i) promptly disclose to Northern the fact
that such offer or inquiry was made and the terms of such offer (if any), and
(ii) perform the transaction under the terms of such offer with Northern rather
than the offeror at Northern's option. If Xxxxxx breaches this Section 4(g) or
if Northern chooses not to match the terms of a competing offer as contemplated
in the previous sentence, Xxxxxx will promptly pay to Northern an amount equal
to all reasonable and documented out-of-pocket expenses and fees incurred by
Northern prior to the notice of the breach or the competing offer (including,
without limitation, all fees and expenses of counsel and accountants to
Northern) actually incurred or accrued by Northern or on their behalf in
connection with the Merger plus $200,000.
(i) Xxxxxx shall consult with Northern before issuing any press release
or making any public statement with respect to this Agreement and the
transactions contemplated hereby and, except as may be required by applicable
law, will not issue any such press release or make any such public statement
prior to such consultation and the consent of Northern. The parties have agreed
on the text of a press release by which Northern and Xxxxxx will announce the
execution of this Agreement.
(j) Xxxxxx and each Xxxxxx Subsidiary will take all action necessary or
required (i) to terminate or amend, if requested by Northern, all qualified
pension and welfare benefit plans and all non-qualified benefit plans and
compensation arrangements as of the Effective Date of the Merger, and (ii) 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 Date of the Merger.
(k) Xxxxxx will and will cause the Xxxxxx Subsidiaries to do anything
reasonably requested of it by Northern to qualify the Merger as a "pooling of
interests" for accounting purposes and neither Xxxxxx nor any Xxxxxx Subsidiary
shall take any action which Northern has advised Xxxxxx would disqualify the
transaction as a pooling transaction.
(l) Xxxxxx shall use its best efforts to obtain and deliver at least 32
days prior to the Effective Date of the Merger signed representations
substantially in the form attached hereto as Exhibit B to Northern by each
executive officer, director or shareholder of Xxxxxx who may reasonably be
deemed an "affiliate" of Xxxxxx within the meaning of such term as used in Rule
145 under the Securities Act.
(m) Xxxxxx shall establish, no earlier than two days prior to the
Closing Date, such additional accruals and reserves as may be necessary (i) to
23
conform Xxxxxx' accounting and credit loss reserve practices and methods to
those of Northern and Northern's plans with respect to the conduct of Xxxxxx'
business following the Merger, provided, however, that no change made by Xxxxxx
solely based on Northern's direction under this Section will, in and of itself,
affect the Valuation, and (ii) to the extent permitted by generally accepted
accounting principles, to provide for the costs and expenses relating to the
consummation by Xxxxxx of the Merger and the other transactions contemplated by
this Agreement.
(n) Xxxxxx shall obtain, at its sole expense, Phase I environmental
assessments for each parcel of owned real property, excluding only residential
OREO property. Oral reports of such environmental assessments shall be delivered
to Northern no later than four weeks and written reports shall be delivered to
Northern no later than eight weeks from the date of this Agreement. Xxxxxx shall
obtain, at its sole expense, Phase II environmental assessments for properties
identified by Northern on the basis of the results of such Phase I environmental
assessments. Xxxxxx shall obtain a survey and assessment of all potential
asbestos containing material in owned or leased properties (other than OREO
property) and a written report of the results shall be delivered to Northern
within four weeks of execution of this Agreement.
(o) Xxxxxx shall obtain, at its sole expense, commitments for title
insurance and boundary surveys for each parcel of owned real property, excluding
only OREO property, which shall be delivered to Northern no later than four
weeks from the date of this Agreement.
(p) Xxxxxx agrees that effective with the Closing Date, all policies,
as set forth on Schedule 2(l), issued to the "Named Insured" as defined on the
policies, will be canceled and become the assets of Northern. To the extent that
any such policies provide defense and/or indemnity for claims or losses which
occurred prior to the Closing Date, Northern will have the right to manage such
claims or losses associated with the liabilities assumed under this Agreement.
(q) At all times prior to the Closing Date, Xxxxxx will permit Northern
and its representatives to examine its books, records and properties and
interview officers, employees and agents of Xxxxxx at all reasonable times when
it is open for business. No such examination by Northern or its representatives
shall in any way affect, diminish or terminate any of the representations,
warranties or covenants of Xxxxxx herein expressed.
(r) Xxxxxx shall furnish or cause to be furnished to Northern all
information concerning Xxxxxx, the holders of its capital stock and the Xxxxxx
Subsidiaries and shall take all such other action and otherwise cooperate with
Northern as Northern may request (i) in satisfying Northern's obligations to
publicly disclose information regarding Xxxxxx and this Agreement in the
Registration Statement, or the Other Northern Public Documents and (ii) for
inclusion in any other statement or application made by Northern to any
governmental body in connection with the transactions contemplated by this
Agreement.
(s) Xxxxxx shall use all reasonable efforts to cause Xxxxxxx Xxxxxxxx &
Associates ("Xxxxxx' Accountant"), its independent auditors, to deliver a letter
dated as of the date of the Proxy Statement/Prospectus, and addressed to itself
and Northern and their respective Boards of Directors, consenting to the use of
its audit reports in connection with the Registration Statement and the Proxy
24
Statement/Prospectus and otherwise in form and substance reasonably satisfactory
to Northern.
(t) Xxxxxx shall use all reasonable efforts to cause the Merger to
qualify, and shall not take, and shall use all reasonable efforts to prevent any
affiliate of such party from taking, any actions which could prevent the Merger
from qualifying, as a reorganization under the provisions of Section 368(a) of
the Code.
5. Covenants of Northern. Northern covenants and agrees with Xxxxxx as
follows:
(a) From the date hereof until the Effective Time of the Merger,
Northern will maintain its corporate existence in good standing; conduct, and
cause the Northern Subsidiaries to conduct, their respective businesses in
compliance with all material obligations and duties imposed on them by all laws,
governmental regulations, rules and ordinances, and judicial orders, judgments
and decrees applicable to Northern or the Northern Subsidiaries, their
businesses or their properties; maintain all books and records of it and the
Northern Subsidiaries, including all financial statements, in accordance with
the accounting principles and practices consistent with those used for the
Northern Financial Statements, except for changes in such principles and
practices required under generally accepted accounting principles.
(b) Northern shall, with the cooperation of Xxxxxx, prepare and file,
as soon as reasonably practicable, a registration statement under the Securities
Act registering the shares of Northern Common Stock to be issued in the Merger
or an offering memorandum to take advantage of an available exemption from
registration (provided that the holders of Xxxxxx Common Stock shall be granted
registration rights with respect to any shares distributed to them on the basis
of any exemption from registration) (the "Registration Statement"), which
Registration Statement shall include the Proxy Statement/Prospectus. Northern
will use all reasonable efforts to have the Registration Statement declared
effective by the SEC as promptly thereafter as practicable. Northern shall also
take any action required to be taken under state blue sky or securities laws in
connection with the issuance of Northern Common Stock pursuant to the Merger. In
the event Northern is not permitted by the SEC to file a registration statement
registering the shares of Northern Common Stock to be issued in the Merger,
Northern agrees to file as soon as practicable following written notice from no
fewer than three (3) of the former Xxxxxx shareholders, a registration statement
on Form S-3 with the SEC registering the shares of Northern Common stock to be
issued in the Merger. Northern agrees to use its best efforts to file all
documents and to take all other steps possible in order to have such
registration declared effective within 90 days following date of notice.
Northern further agrees that once the S-3 registration statement has been
declared effective, it will use its best efforts to keep such S-3 registration
statement effective for a period of not less than two (2) years after the
Closing Date, or when the shareholders giving notice have sold the Northern
shares registered on the S-3 registration statement, whichever occurs first. For
a period of two (2) years following the Closing Date, Xxxxxx shareholders shall
have piggyback registration rights to register Northern shares received in the
Merger in any registration statement filed by Northern (other than Forms S-8 or
S-4).
25
(c) None of the information supplied or to be supplied by Northern
specifically for inclusion or incorporation by reference in the Proxy
Statement/Prospectus or the Registration Statement will, at the time the
Registration Statement or Proxy Statement/Prospectus is filed with the SEC, at
any time it is amended or supplemented and at the time it 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 in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement and Proxy
Statement/Prospectus will comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations thereunder,
except that no representation is made by Northern with respect to statements
made or incorporated by reference therein based on information supplied by
Xxxxxx specifically for inclusion or incorporation by reference in the
Registration Statement or the Proxy Statement/Prospectus.
(d) Northern shall call and hold a stockholders meeting for the purpose
of voting on the approval of the Merger as soon as practicable after the date on
which the Registration Statement becomes effective. Unless otherwise required
under the applicable fiduciary duties of the board of directors of Northern, as
determined by such directors in good faith after consultation with and based
upon the advice of independent legal counsel, Northern shall solicit from its
stockholders proxies in favor of adoption of this Agreement and approval of the
transactions contemplated hereby, and shall take all other action necessary or
advisable to secure the vote or consent of stockholders to obtain such approval.
If, as a result of Northern's secondary offering, one or more persons acting in
concert, which persons are not currently shareholders of Northern, obtain
control (meaning the power to vote a majority of Northern's outstanding shares)
of Northern and vote against the Merger, Northern will promptly pay to Xxxxxx an
amount equal to all reasonable and documented out-of-pocket expenses and fees
incurred by Xxxxxx prior to the negative vote (including, without limitation,
all fees and expenses of counsel and accountants to Xxxxxx) actually incurred or
accrued by Xxxxxx or on their behalf in connection with the Merger plus
$200,000.
(e) For a period of one year beginning on the Closing Date, Northern
will continue to file all reports under Sections 13 and 15(d) of the Exchange
Act necessary to permit persons formerly holding Xxxxxx Common Stock to sell
their Northern Common Stock under Rules 144 and 145(d).
(f) Northern will file all documents required to be filed to permit the
Northern Common Stock to be quoted on the OTS Bulletin Board.
(g) The shares of Northern Common Stock to be issued by Northern to the
shareholders of Xxxxxx pursuant to this Agreement and the Merger Agreement will,
upon such issuance and delivery to the shareholders of Xxxxxx pursuant to the
Merger Agreement, be duly authorized, validly issued, fully paid and
nonassessable. The shares of Northern Common Stock to be delivered to the
shareholders of Xxxxxx pursuant to the Merger Agreement are and will be free of
any preemptive rights of the stockholders of Northern.
(h) Northern will take all necessary corporate and other action and
file all documents required to obtain and will use its best efforts to obtain
26
all approvals of regulatory authorities, consents and approvals required of it
to carry out the transactions contemplated by this Agreement and will cooperate
with Xxxxxx to obtain all such approvals and consents required by Xxxxxx,
including, without limitation, actions required to comply with any of the
following laws (if any are required) the provisions of the Securities Act, the
Exchange Act, the securities or blue sky laws of the various states or filings,
consents, reviews, authorizations, approvals or exemptions required under the
BHC Act, and filings required to effect the Merger under Minnesota law.
(i) Northern will hold in confidence all documents and information
concerning Xxxxxx and Xxxxxx' Subsidiaries furnished to it and its
representatives in connection with the transactions contemplated by this
Agreement (the "Xxxxxx Evaluation Material") and will not release or disclose
the Xxxxxx Evaluation Material to any other person, except, in the opinion of
Northern's counsel, as required by law and except to its directors, officers,
employees and representatives in connection with this Agreement, who shall be
directed to treat the Xxxxxx Evaluation Material confidentially. If disclosure
of the Xxxxxx Evaluation Material is required by law, other than pursuant to
obtaining regulatory approvals pursuant to the terms of this Agreement, Northern
will, unless prohibited by law, in advance of such disclosure provide Xxxxxx to
the extent reasonably practicable with prompt notice of such requirement(s). In
such event, Northern will, unless prohibited by law, use commercially reasonable
efforts to provide Xxxxxx, in advance of any such disclosure, with copies of any
Xxxxxx Evaluation Material Northern intends to disclose (and, if applicable, the
text of the disclosure language itself) and, to the extent reasonably
practicable, to cooperate with Xxxxxx at Xxxxxx' expense to the extent it may
seek to limit such disclosure. If the transactions contemplated by this
Agreement shall not be consummated, such confidence shall be maintained and the
Xxxxxx Evaluation Material shall not be used in competition with Xxxxxx (except
to the extent that it can be shown to be previously known to Northern and not
known to Northern to be subject to a confidentiality obligation to Xxxxxx, in
the public domain other than as a result of disclosure by Northern or its
representatives, or later acquired by Northern from other legitimate sources not
known to Northern to be subject to a confidentiality obligation to Xxxxxx) and,
upon request, all such documents, copies thereof or extracts therefrom shall
immediately thereafter be destroyed (except for Northern Board of Directors
minutes, regulatory applications and similar documents) and such destruction
shall be certified in writing.
(j) Northern will file any documents or agreements required to be filed
in connection with the Merger under the Minnesota Business Corporation Act.
(k) Northern will use its best efforts to cause its counsel to deliver
to Xxxxxx a favorable opinion as of the Closing Date in form and substance
customary for transactions of this type and satisfactory to counsel for Xxxxxx;
(l) Northern shall consult with Xxxxxx before issuing any press release
or making any public statement with respect to this Agreement and the
transactions contemplated hereby and, except as may be required by applicable
law, will not issue any such press release or make any such public statement
prior to such consultation and the consent of Xxxxxx. The parties have agreed on
the text of a press release by which Northern and Xxxxxx will announce the
execution of this Agreement.
27
(m) Northern shall give Xxxxxx notice of receipt of the regulatory
approvals referred to in Section 7(f) and shall provide Xxxxxx with copies,
immediately prior to filing and as filed, of the non-confidential portions of
the applications required to be filed in connection with such approvals.
(n) Neither Northern nor any Northern Subsidiary shall take any action
which with respect to Northern would disqualify the Merger as a "pooling of
interests" for accounting purposes. Northern shall use its best efforts to
obtain and deliver to Xxxxxx, prior to the Effective Date of the Merger, signed
representations from the directors and executive officers of Northern to the
effect that, except for de minimum dispositions which will not disqualify the
Merger as a pooling of interests, they will not dispose of shares of Northern or
Xxxxxx during the period commencing 30 days prior to the Effective Date and
ending upon publication by Northern of financial results including at least 30
days of combined operations of Xxxxxx and Northern.
(o) At all times prior to the Closing Date, Northern will permit Xxxxxx
and its representatives to examine its books, records and properties and
interview officers, employees and agents of Northern at all reasonable times
when it is open for business. No such examination by Xxxxxx or its
representatives shall in any way affect, diminish or terminate any of the
representations, warranties or covenants of Northern herein expressed.
(p) Northern shall use all reasonable efforts to cause the Merger to
qualify, and shall not take, and shall use all reasonable efforts to prevent any
affiliate of such party from taking, any actions which could prevent the Merger
from qualifying, as a reorganization under the provisions of Section 368(a) of
the Code.
6. Conditions Precedent to Obligation of Xxxxxx. The obligation of
Xxxxxx to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following further conditions, which may be waived in
writing by Xxxxxx:
(a) Except as they may be affected by transactions contemplated by this
Agreement and except to the extent such representations and warranties are by
their express provisions made as of a specified date and except for activities
or transactions after the date of this Agreement made in the ordinary course of
business and not expressly prohibited by this Agreement, the representations and
warranties contained in Section 3 hereof shall be true and correct in all
respects material to Northern and its subsidiaries taken as a whole or material
to the Merger as if made at the Time of Filing.
(b) Northern shall have, or shall have caused to be, performed and
observed in all respects material to Northern and its subsidiaries taken as a
whole or material to the Transaction all covenants, agreements and conditions
contained herein to be performed or observed by it at or before the Time of
Filing.
(c) Xxxxxx shall have received a favorable certificate, dated as of the
Effective Date of the Merger, signed by the Chairman, the President or any
28
Executive Vice President or Senior Vice President and by the Secretary or
Assistant Secretary of Northern, as to the matters set forth in Subsections (a)
and (b) of this Section 6.
(d) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Xxxxxx required for approval of a plan of merger in accordance with the
provisions of Xxxxxx' Articles of Incorporation and the Minnesota Business
Corporation Act.
(e) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Northern required for approval of a plan of merger in accordance with the
provisions of Northern's Articles of Incorporation and the Minnesota Business
Corporation Act.
(f) Northern shall have received approval by the Federal Reserve Board
and by such other governmental agencies as may be required by law of the
transactions contemplated by this Agreement and the Merger Agreement and all
waiting and appeal periods prescribed by applicable law or regulation shall have
expired.
(g) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(h) The Registration Statement shall have been declared effective by
the SEC, and shall not be subject to any stop order, and no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness of the
Registration Statement shall have been initiated and be continuing, or have been
threatened and be unresolved. Northern shall have received all state securities
law or blue sky authorizations necessary to carry out the transactions
contemplated by this Agreement.
(i) The shares of Northern Common Stock to be delivered to the
stockholders of Xxxxxx pursuant to this Agreement and the Merger Agreement shall
have been authorized for quotation on the OTC Bulletin Board and shall be freely
tradable subject only to such limitations as may be applicable pursuant to Rule
145 under the Securities Act.
(j) Xxxxxx shall have received an opinion, dated the Closing Date, of
counsel to Xxxxxx, substantially to the effect that, for federal income tax
purposes: (i) the Merger will constitute a reorganization within the meaning of
Sections 368(a)(1)(A) of the Code; (ii) no gain or loss will be recognized by
the holders of Xxxxxx Common Stock upon receipt of Northern Common Stock except
for cash received in lieu of fractional shares; (iii) the basis of the Northern
Common Stock received by the shareholders of Xxxxxx will be the same as the
basis of Xxxxxx Common Stock exchanged therefor; and (iv) the holding period of
the shares of Northern Common Stock received by the shareholders of Xxxxxx will
include the holding period of the Xxxxxx Common Stock, provided such shares of
Xxxxxx Common Stock were held as a capital asset as of the Effective Time of the
Merger.
29
(k) At least 350,000 shares of Northern Common Stock shall have been
sold in the secondary offering planned by Northern at a price not less than $10
per share.
(l) The execution and delivery of an employment agreement between
Northern and Xxxxx X. Xxxxxx to be effective as of the Closing Date.
(m) The Merger shall qualify as a "pooling of interests" for accounting
purposes and Northern shall have received from Xxxxxxx Xxxxxx & Co., LLP and
Xxxxxx' Accountant opinions to that effect.
(n) Since June 30, 1999, no change shall have occurred and no
circumstances shall exist which has had or might reasonably be expected to have
a material adverse effect on the financial condition, results of operations,
business or prospects of Northern and the Northern Subsidiaries taken as a whole
(other than changes in banking laws or regulations, or interpretations thereof,
that affect the banking industry generally or changes in the general level of
interest rates).
7. Conditions Precedent to Obligation of Northern. The obligation of
Northern to effect the Merger shall be subject to the satisfaction at or before
the Time of Filing of the following conditions, which may be waived in writing
by Northern:
(a) Except as they may be affected by transactions contemplated by this
Agreement and except to the extent such representations and warranties are by
their express provisions made as of a specified date and except for activities
or transactions occurring after the date of this Agreement made in the ordinary
course of business and not expressly prohibited by this Agreement, the
representations and warranties contained in Section 2 hereof shall be true and
correct in all respects material to Xxxxxx and the Xxxxxx Subsidiaries taken as
a whole or material to the Merger as if made at the Time of Filing.
(b) Xxxxxx, and the Xxxxxx Subsidiaries shall have, or shall have
caused to be, performed and observed in all respects material to Xxxxxx and the
Xxxxxx Subsidiaries taken as a whole or material to the Merger, all covenants,
agreements and conditions contained herein to be performed or observed by them
at or before the Time of Filing.
(c) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Xxxxxx required for approval of a plan of merger in accordance with the
provisions of Xxxxxx' Articles of Incorporation and the Minnesota Business
Corporation Act and no shareholder shall have taken any action to exercise
dissenters' appraisal rights.
(d) This Agreement and the Merger Agreement shall have been approved by
the affirmative vote of the holders of the percentage of the outstanding shares
of Northern required for approval of a plan of merger in accordance with the
provisions of Northern's Articles of Incorporation and the Minnesota Business
Corporation Act.
30
(e) Northern shall have received a favorable certificate dated as of
the Effective Date of the Merger signed by the Chairman or President and by the
Secretary or Assistant Secretary of Xxxxxx, as to the matters set forth in
Subsections (a) through (c) of this Section 7.
(f) Northern shall have received approval by all governmental agencies
as may be required by law of the transactions contemplated by this Agreement and
the Merger Agreement and all waiting and appeal periods prescribed by applicable
law or regulation shall have expired. No approvals, licenses or consents granted
by any regulatory authority shall contain any condition or requirement relating
to Xxxxxx or any Xxxxxx Subsidiary that, in the good faith judgment of Northern,
is unreasonably burdensome to Northern.
(g) Xxxxxx and the Xxxxxx Subsidiaries shall have obtained any and all
consents or waivers from other parties to loan agreements, leases or other
contracts required for the consummation of the Merger, and any and all permits,
authorizations, consents, waivers and approvals required for the lawful
consummation by Xxxxxx of the Merger except to the extent that such permits,
authorizations, consents, waivers and approvals are not material to the business
of Xxxxxx and the Xxxxxx Subsidiaries taken as a whole or material to the
Merger.
(h) No court or governmental authority of competent jurisdiction shall
have issued an order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
(i) The Merger shall qualify as a "pooling of interests" for accounting
purposes and Northern shall have received from Xxxxxxx Xxxxxx & Co., LLP and
Xxxxxx' Accountant opinions to that effect.
(j) At any time since the date hereof the total number of shares of
Xxxxxx Common Stock outstanding and subject to issuance upon exercise (assuming
for this purpose that phantom shares and other share-equivalents constitute
Xxxxxx Common Stock) of all warrants, options, conversion rights, phantom shares
or other share-equivalents, other than any option held by Northern, shall not
have exceeded 1017.
(k) The Registration Statement shall have been declared effective by
the SEC, and shall not be subject to any stop order, and no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness of the
Registration Statement shall have been initiated and be continuing, or have been
threatened or be unresolved. Northern shall have received all state securities
law or blue sky authorizations necessary to carry out the transactions
contemplated by this Agreement.
(l) Xxxxxx and the Xxxxxx Subsidiaries considered as a whole shall not
have sustained since June 30, 1999 any material loss or interference with their
business from any civil disturbance or any fire, explosion, flood or other
calamity, whether or not covered by insurance.
(m) There shall be no reasonable basis for any proceeding, claim or
action of any nature seeking to impose, or that could result in the imposition
on Xxxxxx or any Xxxxxx Subsidiary, any liability relating to the release of
31
hazardous substances as defined under any local, state or federal environmental
statute, regulation or ordinance including, without limitation, CERCLA, which
has had or could reasonably be expected to have a material adverse effect upon
Xxxxxx and the Xxxxxx Subsidiaries taken as a whole.
(n) Since September 30, 1998, no change shall have occurred and no
circumstances shall exist which has had or might reasonably be expected to have
a material adverse effect on the financial condition, results of operations,
business or prospects of Xxxxxx and the Xxxxxx Subsidiaries taken as a whole
(other than changes in banking laws or regulations, or interpretations thereof,
that affect the banking industry generally or changes in the general level of
interest rates).
(o) Intentionally Omitted.
(p) The agreements set forth on Schedule 7(p) shall have been
terminated without penalty and Xxxxxx shall have terminated such other contracts
as Northern shall reasonably request.
(q) Intentionally Omitted.
(r) Xxxxxx shall deliver to Northern at the Closing, original stock
certificates evidencing all of the outstanding capital stock it owns of the
Xxxxxx Subsidiaries free and clear of any lien, claim, charge, pledge, option,
encumbrance or agreement with respect thereto (including any pledges set forth
on Schedule 2(o)).
(s) Xxxxxx shall fully fund or accrue the retirement plans for Xxxxxxx
Xxxx, Xxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx prior to Closing.
(t) At least 350,000 shares of Northern Common Stock shall have been
sold in the secondary offering planned by Northern at a price not less than $10
per share.
(u) The execution and delivery of an employment agreement between
Northern and Xxxxx X. Xxxxxx.
8. Employee Benefit Plans. Xxxxxx' Subsidiaries will continue to
maintain and administer the Plans. Northern Subsidiaries will continue to
maintain and administer the Northern Plans.
9. Termination of Agreement.
(a)This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon 10 business days
advance written notice to the other party if the Merger shall not have
been consummated by June 30, 2000, unless the Merger is consummated on
32
or before the end of such 10-day period, or unless such 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 hereof to be performed or observed by such party;
provided, that, the party giving such notice shall identify with
particularity each of the other party's representations, covenants or
agreements that have not been satisfied and that the notifying party
has not waived as a condition to Closing. The notifying party shall
proceed with the Closing to the extent required herein if the other
party cures each of such matters prior to the expiration of the 10-day
notice period;
(iii) by Xxxxxx or Northern upon written notice to the other
party if any court or governmental authority of competent jurisdiction
shall have issued a final order restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement;
(iv) by either Xxxxxx or Northern upon the occurrence of any
event which constitutes a material adverse change in the business or
financial condition of the other party;
(v) by Northern if Northern chooses not to match the terms of
a competing offer under Section 4(g).
(b) Termination of this Agreement under this Section 9 shall not
release, or be construed as so releasing, either party hereto from any liability
or damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under Sections 4(f), 5(g),
this 9(b), and Xxxxxx' obligation to pay costs, expenses and fees under Section
4(g) shall survive such termination.
10. Expenses. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Xxxxxx and Xxxxxx Subsidiaries shall be borne by
Xxxxxx, and all such expenses incurred by Northern shall be borne by Northern.
11. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. Notices. Any notice or other communication provided for herein or
given hereunder to a party hereto shall be in writing and shall be delivered in
person or shall be mailed by first class registered or certified mail, postage
prepaid, addressed as follows:
33
If to Northern:
Northern Star Financial, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
If to Morris:
First Federal Holding Company of Morris, Inc.
000 Xxxxxxxx Xxxxxx, X.X Xxx 000
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx
With a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
or to such other address with respect to a party as such party shall notify the
other in writing as above provided.
14. Complete Agreement. This Agreement and the exhibits and schedules
hereto contain the complete agreement between the parties hereto with respect to
the Merger and other transactions contemplated hereby and supersede all prior
agreements and understandings between the parties hereto with respect thereto,
including, without limitation, the Reciprocal Confidentiality Agreement dated
July 27, 1999.
15. Captions. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement. The
summaries of the representations and warranties and other terms of this
Agreement contained in the Schedules are for convenience of reference only and
do not form a part of this Agreement or the Schedules and do not, in any way,
modify the representations and warranties, or any of the other terms, of this
Agreement.
34
16. Waiver and Other Action. Either party hereto may, by a signed
writing, give any consent, take any action pursuant to Section 9 hereof or
otherwise, or waive any inaccuracies in the representations and warranties by
the other party and compliance by the other party with any of the covenants and
conditions herein.
17. Amendment. At any time before the Time of Filing, the parties
hereto, by action taken by their respective Boards of Directors or pursuant to
authority delegated by their respective Boards of Directors, may amend this
Agreement; provided, however, that no amendment after approval by the
shareholders of Xxxxxx shall be made which changes in a manner adverse to such
shareholders the consideration to be provided to the shareholders of Xxxxxx
pursuant to this Agreement and the Merger Agreement.
18. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
19. Non-Survival of Representations and Warranties. No representation
or warranty contained in the Agreement or the Merger Agreement shall survive the
Merger or except as set forth in Section 9(b), the termination of this
Agreement. Section 10 shall survive the Merger.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NORTHERN STAR FINANCIAL, INC.
By /s/ Xxxxxx Xxxxxxxxxx
Its President/CEO
FIRST FEDERAL HOLDING COMPANY
OF XXXXXX
By /s/ Xxxxxxx X. Xxxxxxx
Its Chairman
/s/ Xxxxx X. Xxxxxx
Director
35
--------------- ---------------------------------------------------------
Exhibits
--------------- ---------------------------------------------------------
Exhibit A Merger Agreement
--------------- ---------------------------------------------------------
Exhibit B Form of Affiliate Letter
--------------- ---------------------------------------------------------
Schedules
--------------- ---------------------------------------------------------
1(a)(iii) Surviving Board
--------------- ---------------------------------------------------------
1(a)(iv) Surviving Officers
--------------- ---------------------------------------------------------
2(b) Xxxxxx Subsidiaries
--------------- ---------------------------------------------------------
2(c) Xxxxxx Stock Rights
--------------- ---------------------------------------------------------
2(d) Xxxxxx Authorizations Required
--------------- ---------------------------------------------------------
2(g) Xxxxxx Leases
--------------- ---------------------------------------------------------
2(h) Xxxxxx Taxes
--------------- ---------------------------------------------------------
2(i) Material Xxxxxx Changes
--------------- ---------------------------------------------------------
2(j) Xxxxxx Contracts
--------------- ---------------------------------------------------------
2(l) Xxxxxx Insurance
--------------- ---------------------------------------------------------
2(m) Xxxxxx Governmental Restrictions
--------------- ---------------------------------------------------------
2(o) Material Interests of Certain Persons
--------------- ---------------------------------------------------------
2(p) Xxxxxx Benefit Plans
--------------- ---------------------------------------------------------
2(r) Xxxxxx Registration Obligations
--------------- ---------------------------------------------------------
2(u) Xxxxxx Defaults
--------------- ---------------------------------------------------------
2(w) Xxxxxx Interest Rate Risk Management Agreements
--------------- ---------------------------------------------------------
2(y) Xxxxxx Unfunded Commitments
--------------- ---------------------------------------------------------
3(b) Northern Subsidiaries
--------------- ---------------------------------------------------------
3(c) Northern Stock Rights
--------------- ---------------------------------------------------------
3(d) Northern Authorizations Required
--------------- ---------------------------------------------------------
3(h) Northern Taxes
--------------- ---------------------------------------------------------
3(j) Northern Contracts
--------------- ---------------------------------------------------------
3(m) Northern Governmental Restrictions
--------------- ---------------------------------------------------------
3(o) Northern Benefit Plans
--------------- ---------------------------------------------------------
4(a) Northern Loan Consent Employee
--------------- ---------------------------------------------------------
7(p) Xxxxxx Agreements to be Terminated
--------------- ---------------------------------------------------------
Exhibit A
PLAN OF MERGER
OF
FIRST FEDERAL HOLDING COMPANY OF XXXXXX
INTO
NORTHERN STAR FINANCIAL, INC.
ARTICLE 1.
THE MERGER
1.1) Surviving Corporation. In accordance with the provisions of this
Plan and the applicable laws of the State of Minnesota, at the Effective Time
(as defined in Section 1.2), First Federal Holding Company of Xxxxxx ("Xxxxxx")
shall be merged with and into Northern Star Financial, Inc. ("Northern"), and
Northern shall be the Surviving Corporation and shall continue its corporate
existence and organization under the laws of the State of Minnesota, and the
separate existence of Xxxxxx shall thereupon cease. The name of the Surviving
Corporation shall be Northern Star Financial, Inc.
1.2) Effective Time. As used in this Agreement, the term "Effective
Time" shall be the close of business on the date of filing of the Articles of
Merger with the Minnesota Secretary of State in the manner described in
Minnesota Statutes Section 302A.011, Subd. 11 and Section 302A.615, Subd. 2.
1.3) Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of Northern then in effect shall constitute and be the Articles of
Incorporation of the Surviving Corporation until amended or changed as provided
therein or by law.
1.4) Bylaws. At the Effective Time, the Bylaws of Northern then in
effect shall constitute and be the Bylaws of the Surviving Corporation until
amended or changed as provided therein or by law.
1.5) Board of Directors. The Board of Directors of the Surviving
Corporation shall consist of eight members as follows: Xxxxx X. Xxxxxx, Xxx
Xxxxxxxxxx, _____________, ________________, ________________,
_________________, ______________ and ______________. Such directors shall serve
until such board may be changed or reconstituted as provided by the Articles of
Incorporation or Bylaws of the Surviving Corporation, or by law.
1.6) Officers. The officers of the Surviving Corporation shall consist
of: Xxx Xxxxxxxxxx as Chairman; Xxxxx X. Xxxxxx as Vice Chairman;
________________as Chief Financial Officer; ________________as Vice President;
and ________________ as Secretary. Such officers shall serve until such officers
may be changed as provided by the Articles of Incorporation or Bylaws of the
Surviving Corporation, or by law.
1.7) Certain Effects of the Merger. At the Effective Time, the
Surviving Corporation shall succeed to and possess all the rights, privileges,
powers, franchises and immunities of a public as well as of a private nature,
1
and be subject to all liabilities, restrictions, disabilities, and duties of
both of Xxxxxx and Northern (collectively the "Constituent Corporations"); and
all and singular, the rights, privileges, powers, franchises and immunities of
both of the Constituent Corporations and all properties, real, personal and
mixed, and all other things in action of or belonging to either of the
Constituent Corporations on whatever account, shall be vested in the Surviving
Corporation; and all properties, assets, rights, privileges, powers, franchises,
immunities and all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as they were or would be of the
Constituent Corporations or either of them; and title to any real estate or any
interest therein vested by deed or otherwise in either of the Constituent
Corporations shall not revert or be in any way impaired by any reason of the
Merger; provided, however, that all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, limited in lien to the property affected by such liens at the
Effective Time, and all debts, liabilities and duties of either of the
Constituent Corporations shall thenceforth become those of the Surviving
Corporation and may be enforced against the Surviving Corporation to the same
extent as if such debts, liabilities and duties had been incurred or contracted
by the Surviving Corporation.
1.8) Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any instruments of
further assurance are desirable in order to evidence the vesting in it of the
title of either of the Constituent Corporations to any of the property rights of
the Constituent Corporations, the appropriate officers or directors of Xxxxxx or
of Northern, as the case may be, are hereby authorized to execute, acknowledge
and deliver all such instruments of further assurance and to do all other acts
or things, either in the name of Xxxxxx, in the name of Northern, or in the name
of the Surviving Corporation, as may be requisite or desirable to carry out the
provisions of this Plan.
ARTICLE 2.
MANNER AND BASIS OF CONVERTING SHARES
2.1) Northern Shares. At the Effective Time, each share of Common Stock
of Northern then outstanding shall, by virtue of the Merger and without any
further action on the part of the holder thereof, be converted into and
thereafter shall constitute one issued and outstanding share of Common Stock of
the Surviving Corporation.
2.2) Xxxxxx Shares. At the Effective Time, each share of Common Stock
of Xxxxxx then outstanding shall, by virtue of the Merger and without any
further action on the part of the holder thereof, be converted into and
thereafter shall constitute the right to receive a number of shares of Northern
Common Stock .*
* To be completed following the calculation of the Merger
Consideration as set forth in the Agreement and Plan of Reorganization.
2
ARTICLES OF MERGER
OF
FIRST FEDERAL HOLDING COMPANY OF XXXXXX
INTO
NORTHERN STAR FINANCIAL, INC.
Pursuant to the provisions of Minnesota Statutes Section 302A.615,
Subd. 1, the following Articles of Merger are executed on the date hereinafter
set forth:
FIRST: The names of the corporations which are parties to the merger
are First Federal Holding Company of Xxxxxx ("Xxxxxx"), and Northern Star
Financial, Inc. ("Northern").
SECOND: The Plan of Merger attached hereto has been duly approved by
each of Xxxxxx and Northern pursuant to Section 302A.613 of Minnesota Statutes.
The undersigned swears that the foregoing is true and accurate and that
they have the authority to sign these Articles of Merger on behalf of Xxxxxx and
Northern.
Dated: __________________, 1999 FIRST FEDERAL HOLDING COMPANY OF XXXXXX
By
Its Chief Executive Officer
NORTHERN STAR FINANCIAL, INC.
By
Its Chief Executive Officer
Exhibit B
AFFILIATE'S LETTER
Northern Star Financial, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx
Ladies and Gentlemen:
The undersigned officer and/or director of First Federal Holding Company of
Xxxxxx, Inc. (the "Company") has been advised that the undersigned may be deemed
by the Company to be an "affiliate" of the Company, as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act") (such rule, as amended or replaced by any successor rule,
referred to herein as "Rule 145") and for purposes of Accounting Series Releases
130 and 135, as amended, of the Securities and Exchange Commission (the "SEC").
Pursuant to the terms of the Agreement and Plan of Reorganization dated on or
about the date hereof (the "Merger Agreement"), among Northern Star Financial
("Northern") and the Company, the Company will be merged with and into Northern
(the "Merger"). As a result of the Merger, outstanding shares of common stock,
$___ par value per share, of the Company ("Company Common Stock") will be
converted into the right to receive shares of common stock, $.01 par value per
share, of Northern ("Northern Common Stock"), as determined pursuant to the
Merger Agreement.
In order to induce Northern and the Company to enter into the Merger Agreement,
the undersigned (referred to herein as "Affiliate") represents, warrants and
agrees as follows:
1. Affiliate will not directly or indirectly take any action that would
have the effect of jeopardizing the treatment of the Merger as a
"pooling of interests," sell, transfer, pledge, dispose of, or
otherwise reduce Affiliate's risk relative to, any Northern Common
Stock or Company Common Stock during the period commencing 30 days
prior to the effective time of the Merger and ending at such time as
financial results covering at least 30 days of the post-Merger combined
operations of Northern and the Company have been published by Northern,
in the form of a quarterly earnings report, an effective registration
statement filed with the SEC, a report to the SEC on Form 10-K, 10-Q or
8-K, or any other public filing or announcement which includes the
combined results of operations.
2. Affiliate has been advised that the issuance of the Northern Common
Stock, if any, to Affiliate pursuant to the Merger is being registered
with the SEC under the Securities Act and the rules and regulations
promulgated thereunder on a Registration Statement on Form S-4.
However, Affiliate has also been advised that, because Affiliate may be
deemed to be an "affiliate" of the Company (as that term is used in
paragraphs (c) and (d) of Rule 145), any sale, transfer or other
disposition by Affiliate of any Northern Common Stock issued pursuant
to the Merger will, under current law, require either (a) further
registration under the Securities Act of the Northern Common Stock to
1
be sold, transferred, or otherwise disposed of, (b) compliance with
Rule 145, or (c) the availability of another exemption from such
registration.
3. Affiliate will not offer to sell, sell, or otherwise dispose of any
Northern Common Stock issued pursuant to the Merger except pursuant to
an effective registration statement or in compliance with Rule 145 or
another exemption from the registration requirements of the Securities
Act (the compliance with Rule 145 or the availability of such other
exemption to be established by Affiliate to the reasonable satisfaction
of Northern's counsel).
4. Affiliate consents to the placement of a stop transfer order with the
Company's and Northern's stock transfer agent and registrar, and to the
placement of the following legend on certificates representing the
Company Common Stock and Northern Common Stock issued or to be issued
to Affiliate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH AN AFFILIATE'S
LETTER FROM THE UNDERSIGNED TO Northern Star Financial, Inc.
AND PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
COMPLIANCE WITH RULE 145 OF THE SECURITIES ACT OF 1933 OR
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
5. Affiliate has carefully read this letter and has discussed with counsel
for Affiliate or counsel for the Company, to the extent Affiliate felt
necessary, the requirements of this letter and other applicable
limitations on the Affiliate's ability to sell, transfer, or otherwise
dispose of Company Common Stock and Northern Common Stock.
6. The Company agrees to take all reasonable actions up to the date of the
Merger, including but not limited to the placement of a stop transfer
order with the Company's stock transfer agent and registrar, to ensure
compliance by Affiliate with the provisions of this letter.
7. Execution of this letter should not be considered an admission on the
part of Affiliate that Affiliate is an "affiliate" of the Company as
described in the first paragraph of this letter, nor as a waiver of any
rights that Affiliate may have to object to any claim that Affiliate is
such an affiliate on or after the date of this letter.
8. By Northern's acceptance of this letter, Northern hereby agrees with
Affiliate as follows:
(A) For so long as and to the extent necessary to permit Affiliate
to sell Northern Common Stock pursuant to Rule 145 and, to the
extent applicable, Rule 144 under the Act, and to enable
Affiliate to sell Northern Common Stock pursuant to the
restrictions set forth in paragraph 1 above, Northern shall
(a) use its reasonable efforts to (i) file, on a timely basis,
2
all reports and data required to be filed with the SEC by it
pursuant to Section 13 of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and (ii) furnish to Affiliate
upon request a written statement as to whether Northern has
complied with such reporting requirements during the 12 months
preceding any proposed sale of Northern Common Stock by
Affiliate under Rule 145, and (b) otherwise use its reasonable
efforts to permit such sales pursuant to Rule 145 and Rule
144. Northern hereby represents to Affiliate that it has filed
all reports required to be filed with the SEC under Section 13
of the 1934 Act during the preceding 12 months.
(B) It is understood and agreed that certificates bearing the
legends set forth in paragraph 4 above will be substituted by
delivery of certificates without such legends if (i) one year
shall have elapsed from the date the undersigned acquired the
Northern Common Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to the
undersigned, (ii) two years shall have elapsed from the date
the undersigned acquired the Northern Common Stock received in
the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) Northern has received
either an opinion of counsel, which opinion of counsel shall
be reasonably satisfactory to Northern, or a "no action"
letter obtained by the undersigned from the staff of the SEC,
to the effect that the restrictions imposed by Rule 145 under
the Act no longer apply to the undersigned.
Very truly yours,
September ___, 1999 _____________________________
(Signature)
_____________________________
(Name) (Please Print)
First Federal Holding Company
of Xxxxxx, Inc.
By:__________________________
Its:______________________
3
ACCEPTANCE
Northern Star Financial, Inc. hereby accepts the foregoing Affiliate's
Letter delivered pursuant to Section 4(l) of the Agreement and Plan of
Reorganization dated ___________, 1999, by and among Northern Star Financial,
Inc. and First Federal Holding Company of Xxxxxx, Inc.
Northern Star Financial, Inc.
By:_________________________________
Xxx Xxxxxxxxxx, President
