Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ADVANTAGE BANCORP, INC.
AND
XXXXXXXX & XXXXXX CORPORATION
November 3, 1997
TABLE OF CONTENTS
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ARTICLE I - THE MERGER.......................................................................... 1
SECTION 1.1 The Merger................................................................ 1
SECTION 1.2 Effective Time............................................................ 1
SECTION 1.3 Effect of the Merger...................................................... 2
SECTION 1.4 Articles of Incorporation; By-Laws........................................ 2
SECTION 1.5 Directors and Officers.................................................... 2
SECTION 1.6 Conversion of Securities.................................................. 2
SECTION 1.7 Adjustments for Dilution and Other Matters................................ 3
SECTION 1.8 Exchange of Certificates.................................................. 3
SECTION 1.9 Stock Transfer Books...................................................... 5
SECTION 1.10 Company Common Stock...................................................... 5
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE SELLER....................................... 6
SECTION 2.1 Organization and Qualification; Subsidiaries.............................. 6
SECTION 2.2 Articles of Incorporation and By-Laws..................................... 7
SECTION 2.3 Capitalization............................................................ 7
SECTION 2.4 Authority................................................................. 8
SECTION 2.5 No Conflict; Required Filings and Consents................................ 8
SECTION 2.6 Compliance; Permits....................................................... 9
SECTION 2.7 Securities and Banking Reports; Financial Statements...................... 9
SECTION 2.8 Absence of Certain Changes or Events...................................... 10
SECTION 2.9 Absence of Litigation..................................................... 11
SECTION 2.10 Employee Benefit Plans.................................................... 11
SECTION 2.11 Registration Statement; Proxy Statement/Prospectus........................ 13
SECTION 2.12 Title to Property......................................................... 14
SECTION 2.13 Environmental Matters..................................................... 14
SECTION 2.14 Absence of Agreements..................................................... 15
SECTION 2.15 Taxes..................................................................... 15
SECTION 2.16 Insurance................................................................. 16
SECTION 2.17 Brokers................................................................... 16
SECTION 2.18 Tax Matters and Pooling................................................... 16
SECTION 2.19 Material Adverse Effect................................................... 16
SECTION 2.20 Material Contracts........................................................ 16
SECTION 2.21 Opinion of Financial Advisor.............................................. 17
SECTION 2.22 Vote Required............................................................. 17
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................... 17
SECTION 3.1 Organization and Qualification; Subsidiaries.............................. 17
SECTION 3.2 Articles of Incorporation and By-Laws..................................... 18
SECTION 3.3 Capitalization............................................................ 18
SECTION 3.4 Authority................................................................. 18
SECTION 3.5 No Conflict; Required Filings and Consents................................ 19
SECTION 3.6 Compliance; Permits....................................................... 19
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SECTION 3.7 Securities and Banking Reports; Financial Statements....................... 20
SECTION 3.8 Absence of Certain Changes or Events....................................... 20
SECTION 3.9 Absence of Litigation...................................................... 21
SECTION 3.10 Employee Benefit Plans..................................................... 21
SECTION 3.11 Registration Statement; Proxy Statement/Prospectus......................... 22
SECTION 3.12 Title to Property.......................................................... 22
SECTION 3.13 Absence of Agreements...................................................... 23
SECTION 3.14 Taxes...................................................................... 23
SECTION 3.15 Brokers.................................................................... 24
SECTION 3.16 Tax Matters and Pooling.................................................... 24
SECTION 3.17 Material Adverse Effect.................................................... 24
ARTICLE IV - COVENANTS OF THE SELLER............................................................. 24
SECTION 4.1 Affirmative Covenants...................................................... 24
SECTION 4.2 Negative Covenants......................................................... 25
SECTION 4.3 Letter of the Seller's Accountants......................................... 28
SECTION 4.4 Access and Information..................................................... 28
SECTION 4.5 Update Disclosure; Breaches................................................ 29
SECTION 4.6 Affiliates................................................................. 29
SECTION 4.7 Tax Treatment and Pooling.................................................. 29
SECTION 4.8 Expenses................................................................... 29
SECTION 4.9 Delivery of Shareholder List............................................... 30
ARTICLE V - COVENANTS OF THE COMPANY............................................................. 30
SECTION 5.1 Affirmative Covenants...................................................... 30
SECTION 5.2 Negative Covenants......................................................... 30
SECTION 5.3 Access and Information..................................................... 31
SECTION 5.4 Update Disclosure; Breaches................................................ 31
SECTION 5.5 Stock Exchange Listing..................................................... 32
SECTION 5.6 Tax Treatment and Pooling.................................................. 32
SECTION 5.7 Stock Options.............................................................. 32
ARTICLE VI - ADDITIONAL AGREEMENTS............................................................... 32
SECTION 6.1 Proxy Statement/Prospectus; Registration Statement......................... 32
SECTION 6.2 Meeting of the Seller's Shareholders....................................... 33
SECTION 6.3 Appropriate Action; Consents; Filings...................................... 33
SECTION 6.4 Employee Stock Options and Other Employee Benefit Matters.................. 33
SECTION 6.5 Directors' and Officers' Indemnification and Insurance..................... 34
SECTION 6.6 Notification of Certain Matters............................................ 35
SECTION 6.7 Public Announcements....................................................... 35
SECTION 6.8 Customer Retention......................................................... 35
SECTION 6.9 Incentive Bonus Pool....................................................... 36
SECTION 6.10 Recission of Repurchase Programs........................................... 36
ARTICLE VII - CONDITIONS OF MERGER............................................................... 36
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SECTION 7.1 Conditions to Obligation of Each Party to Effect the Merger.................. 36
SECTION 7.2 Additional Conditions to Obligations of the Company.......................... 37
SECTION 7.3 Additional Conditions to Obligations of the Seller........................... 38
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER................................................. 40
SECTION 8.1 Termination.................................................................. 40
SECTION 8.2 Effect of Termination........................................................ 41
SECTION 8.3 Amendment.................................................................... 41
SECTION 8.4 Waiver....................................................................... 41
ARTICLE IX - GENERAL PROVISIONS.................................................................. 41
SECTION 9.1 Non-Survival of Representations, Warranties and Agreements................... 41
SECTION 9.2 Enforcement of Agreement..................................................... 42
SECTION 9.3 Notices...................................................................... 42
SECTION 9.4 Certain Definitions.......................................................... 43
SECTION 9.5 Headings..................................................................... 43
SECTION 9.6 Severability................................................................. 43
SECTION 9.7 Entire Agreement............................................................. 44
SECTION 9.8 Assignment................................................................... 44
SECTION 9.9 Parties in Interest.......................................................... 44
SECTION 9.10 Governing Law................................................................ 44
SECTION 9.11 Counterparts................................................................. 44
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 3, 1997 (the "Agreement")
between ADVANTAGE BANCORP, INC., a Wisconsin corporation (the "Seller"), and
XXXXXXXX & ILSLEY CORPORATION, a Wisconsin corporation (the "Company").
WHEREAS, the Boards of Directors of the Company and the Seller have each
determined that it is fair to and in the best interests of their respective
shareholders for the Seller to merge with and into the Company (the "Merger")
upon the terms and subject to the conditions set forth herein and in accordance
with the Wisconsin Business Corporation Law (the "WBCL");
WHEREAS, the respective Boards of Directors of the Company and the Seller
have each approved the Merger of the Seller with and into the Company, upon the
terms and subject to the conditions set forth herein, and adopted in this
Agreement;
WHEREAS, concurrently with this Agreement and as a condition to the
willingness of the Company to enter into this Agreement, the Seller and the
Company have entered into a stock option agreement granting the Company, under
the conditions set forth therein, the option to purchase newly-issued shares of
common stock of the Seller (the "Stock Option Agreement");
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for financial accounting purposes it is intended that the Merger
shall be accounted for as a pooling of interests; and
WHEREAS, the Company and the Seller desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the parties hereto hereby agree as
follows:
ARTICLE I - THE MERGER
SECTION I.1 The Merger. Upon the terms and subject to the conditions set
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forth in this Agreement, and in accordance with the WBCL, at the Effective Time
(as defined in Section 1.2) the Seller shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of the
Seller shall cease and the Company shall continue as the surviving corporation
of the Merger (the "Surviving Corporation").
SECTION I.2 Effective Time. As promptly as practicable after the
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satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall cause the Merger
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to be consummated by filing articles of merger (the "Articles of Merger") with
the Department of Financial Institutions of the State of Wisconsin (the "DFI"),
in such form as required by, and executed in accordance with the relevant
provisions of, the WBCL (the date and time of such filing is referred to herein
as the "Effective Time").
SECTION I.3 Effect of the Merger. At the Effective Time, the effect of the
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Merger shall be as provided in this Agreement and the applicable provisions of
the WBCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of the Company and the Seller shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and the Seller shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION I.4 Articles of Incorporation; By-Laws. At the Effective Time, the
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Articles of Incorporation, as amended, of-the Company (the "Company Articles")
and the By-Laws, as amended, of the Company ("Company By-Laws"), as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the By-Laws of the Surviving Corporation.
SECTION I.5 Directors and Officers. At the Effective Time, the directors
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of the Company immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, each to hold office in accordance with the Articles
of Incorporation and By-Laws of the Surviving Corporation. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed.
SECTION I.6 Conversion of Securities. Subject to Section 1.8(e) regarding
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fractional shares, at the Effective Time, by virtue of the Merger and without
any action on the part of the Company, the Seller or the holder of the following
securities:
(a) Each share of the common stock, par value $.01 per share of the Seller
("Seller Common Stock"), issued and outstanding immediately prior to the
Effective Time (all such shares of Seller Common Stock issued and outstanding
immediately prior to the Effective Time being referred to herein as the
"Shares"), other than (i) Shares held by the Company for its own account or any
Company Subsidiary (as defined in Section 3.1(a), below) for its own account and
(ii) Shares held by the Advantage Bank, F.S.B. Bank Incentive Plan and Trust I
and the Advantage Bank, F.S.B. Bank Incentive Plan and Trust II and unallocated
to participants thereunder, shall cease to be outstanding and, subject to
Section 1.6(e) below, shall be converted into and become the right to receive
1.2 shares (the exchange ratio, as adjusted pursuant to Section 1.6(e), is
hereinafter referred to as the "Exchange Ratio") of common stock, $1.00 per
share par value, of the Company ("Company Common Stock"). All such Shares shall
no longer be outstanding and shall immediately be canceled and retired and shall
cease to exist, and each certificate previously representing any such Shares
shall thereafter represent the right to receive a certificate representing
shares of Company Common Stock into which such Seller Common Stock shall have
been converted. Certificates representing shares of Seller Common Stock shall
be exchanged for certificates representing whole shares of Company Common Stock
issued in consideration therefor upon the surrender of such certificates in
accordance with the provisions of Section 1.8 hereof, without interest.
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(b) Each share of Seller Common Stock held as treasury stock shall be
canceled and extinguished without conversion thereof into Company Common Stock
or payment therefor.
(c) Each share of Seller Common Stock held by the Company for its own
account or any Company Subsidiary for its own account shall be canceled and
extinguished without conversion thereof into Company Common Stock or payment
therefor.
(d) Each share of Seller Common Stock held by the Advantage Bank, F.S.B.
Bank Incentive Plan and Trust I and the Advantage Bank, F.S.B. Bank Incentive
Plan and Trust II and unallocated to participants thereunder shall be canceled
and extinguished without conversion thereof into Company Common Stock or payment
therefor.
(e) If the average closing sale price of Company Common Stock as reported
on the NASDAQ-NMS for the ten consecutive trading days immediately preceding the
fifth business day prior to the Effective Time (the "Average Price") is
(i) below $46.67 per share, then the Exchange Ratio shall be adjusted
to a number such that the product of the Exchange Ratio (taken to four
decimal places) and the Average Price shall equal $56.00 (rounded to
the nearest whole cent) (provided, however, that if prior to the
Effective Time the Company has, by written notice to the Seller,
informed the Seller that such adjustment (if applicable) shall not
occur, then such adjustment shall not occur and the Seller shall have
the right to terminate this Agreement immediately with the effect as
set forth in Section 8.2 hereof); or
(ii) above $61.67 per share, then the Company shall have the option,
but not the obligation, to adjust the Exchange Ratio to a number such
that the product of the Exchange Ratio (taken to four decimal places)
and the Average Price shall equal $74.00 (rounded to the nearest whole
cent); if prior to the Effective Time the Company has, by written
notice to the Seller, elected to adjust the Exchange Ratio as provided
in this subsection (ii) (if applicable), then such adjustment shall
occur and the Seller shall have the right to terminate this Agreement
immediately with the effect as set forth in Section 8.2 hereof.
SECTION I.7 Adjustments for Dilution and Other Matters. If prior to the
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Effective Time, (i) the Seller shall declare a stock dividend or distribution
upon or subdivide, split up, reclassify or combine the Seller Common Stock, or
declare a dividend or make a distribution on Seller Common Stock in any security
convertible into Seller Common Stock, or (ii) the Company shall declare a stock
dividend or distribution upon or subdivide, split up, reclassify or combine the
Company Common Stock or declare a dividend or make a distribution on Company
Common Stock in any security convertible into Company Common Stock, appropriate
adjustment or adjustments will be made to the Exchange Ratio and the methodology
for calculating the Exchange Ratio as set forth in Section 1.6 hereof.
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SECTION I.8 Exchange of Certificates.
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(a) Exchange Agent. As of the Effective Time, the Company shall deposit,
or shall cause to be deposited with an exchange agent chosen by the Company and
which is reasonably acceptable to the Seller (the "Exchange Agent"), for the
benefit of the holders of Shares for exchange in accordance with this Article I,
through the Exchange Agent, certificates representing the shares of Company
Common Stock and cash in lieu of fractional shares (such certificates for shares
of Company Common Stock, together with the amount of cash payable in lieu of
fractional shares and any dividends or distributions with respect to such
Company Common Stock are referred to herein as the "Exchange Fund") payable and
issuable pursuant to Section 1.6 in exchange for outstanding Shares; provided,
however, that the Company need not deposit the cash for fractional shares into
the Exchange Fund until such time as such funds are to be distributed by the
Exchange Agent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares which Shares were converted into the right to
receive shares of Company Common Stock pursuant to Section 1.6 (a "Certificate"
or "Certificates"), (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Company Common
Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Company Common Stock which such
holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article I (after taking into account all
Shares then held by such holder), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares which
is not registered in the transfer records of the Seller, a certificate
representing the proper number of shares of Company Common Stock may be issued
to a transferee if the Certificate representing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and the posting by such person of a
bond in such amount as the Company may direct as indemnity against any claim
that may be made against it or the Exchange Agent with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate a certificate representing the proper number of shares of
Company Common Stock. Until surrendered as contemplated by this Section 1.8,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Company Common Stock, dividends, cash in lieu of any
fractional shares of Company Common Stock as contemplated by Section 1.8(e) and
other distributions as contemplated by Section 1.8(c).
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Company Common Stock with
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a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Company Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 1.8(e), until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole shares of Company
Common Stock issued in exchange therefor, without interest, (i) promptly, the
amount of any cash payable with respect to a fractional share of Company Common
Stock to which such holder is entitled pursuant to Section 1.8(e) and the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Company Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Company Common Stock.
(d) No Further Rights in the Shares. All shares of Company Common Stock
issued and cash paid upon conversion of the Shares in accordance with the terms
hereof (including any cash paid pursuant to Section 1.8(e)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip representing fractional
shares of Company Common Stock shall be issued upon the surrender for exchange
of Certificates, and such fractional share interest will not entitle the owner
thereof to vote or to any rights of a shareholder of the Company. Each holder of
a fractional share interest shall be paid an amount in cash equal to the product
obtained by multiplying such fractional share interest to which such holder
(after taking into account all fractional share interests then held by such
holder) would otherwise be entitled by the Average Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the former shareholders of the Seller for six months
after the Effective Time shall be delivered to the Company, upon demand, and any
former shareholders of the Seller who have not theretofore complied with this
Article I shall thereafter look only to the Company to claim their shares of
Company Common Stock, any cash in lieu of fractional shares of Company Common
Stock and any dividends or distributions with respect to Company Common Stock,
in each case without interest thereon, and subject to Section 1.8(g).
(g) No Liability. Neither the Company nor the Seller shall be liable to
any former holder of Shares for any such Shares (or dividends or distributions
with respect thereto) or cash or other payment delivered to a public official
pursuant to any abandoned property, escheat or similar laws.
(h) Withholding Rights. The Company shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any former holder of Shares such amounts as the Company is required to deduct
and withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Company, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the former holder of the Shares in
respect of which such deduction and withholding was made by the Company.
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SECTION I.9 Stock Transfer Books. At the Effective Time, the stock
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transfer books of the Seller shall be closed and there shall be no further
registration of transfers of shares of the Seller Common Stock thereafter on the
records of the Seller. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such Shares except
as otherwise provided herein or by law. On or after the Effective Time, any
Certificates presented to the Exchange Agent or the Company for any reason shall
be converted into shares of Company Common Stock and cash in lieu of fractional
shares in accordance with this Article I.
SECTION I.10 Company Common Stock. The shares of Company Common Stock
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issued and outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and at the Effective Time, such shares shall remain
issued and outstanding.
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in the Disclosure Schedule delivered by the Seller to
the Company prior to the execution of this Agreement (the "Seller Disclosure
Schedule"), which will identify exceptions by specific Section references, the
Seller hereby represents and warrants to the Company that:
SECTION II.1 Organization and Qualification; Subsidiaries.
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(a) The Seller is a company duly organized, validly existing and in good
standing under the laws of the State of Wisconsin, and is registered as a
savings and loan holding company under the Home Owners' Loan Act ("HOLA"). Each
subsidiary of the Seller ("Seller Subsidiary" or, collectively, "Seller
Subsidiaries") is a federally-chartered savings bank or a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each of the Seller and the Seller Subsidiaries has the
requisite corporate power and authority and is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates,
approvals and orders ("Seller Approvals") necessary to own, lease and operate
its properties and to carry on its business as it is now being conducted,
including, without limitation, appropriate authorizations from the Federal
Deposit Insurance Corporation (the "FDIC") and the Office of Thrift Supervision
("OTS"), and neither the Seller nor any Seller Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Seller
Approvals, except in each case where the failure to be so organized, existing
and in good standing or to have such power, authority, Seller Approvals and
revocations or modifications would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below) on the Seller and the Seller
Subsidiaries, taken as a whole.
(b) The Seller and each Seller Subsidiary is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except where such failures to be so duly qualified or licensed and in
good standing would not, either individually or in the aggregate, have a
Material Adverse Effect on the Seller and the Seller Subsidiaries, taken as a
whole.
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(c) A true and complete list of all of the Seller Subsidiaries, together
with (i) the Seller's percentage ownership of each Seller Subsidiary and (ii)
laws under which the Seller Subsidiary is incorporated, is set forth on Section
2.1(c) of the Seller Disclosure Schedule. Except as set forth on Section 2.1(c)
of the Seller Disclosure Schedule, the Seller and/or one or more of the Seller
Subsidiaries owns beneficially and of record all of the outstanding shares of
capital stock of each of the Seller Subsidiaries. Except for the subsidiaries
set forth on Section 2.1(c) of the Seller Disclosure Schedule, the Seller does
not directly or indirectly own any equity or similar interests in, or any
interests convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity other than in the ordinary course of business,
and in no event in excess of 5% of the outstanding equity securities of such
entity.
(d) As used in this Agreement, the term "Material Adverse Effect" means,
with respect to the Company or the Seller, as the case may be, any effect that
(i) is material and adverse to the business, assets, liabilities, results of
operations or financial condition of the Company and the Company Subsidiaries
taken as whole or the Seller and the Seller Subsidiaries taken as a whole,
respectively, or (ii) materially impairs the ability of the Company or the
Seller to consummate the transactions contemplated hereby; provided, however,
that Material Adverse Effect shall not be deemed to include the impact of (a)
actions contemplated by this Agreement, (b) changes in laws and regulations or
interpretations thereof that are generally applicable to the banking or savings
industries, (c) changes in generally accepted accounting principles that are
generally applicable to the banking or savings industries, (d) reasonable
expenses incurred in connection with the transactions contemplated hereby, and
(e) changes attributable to or resulting from changes in general economic
conditions affecting banks, savings institutions or their holding companies
generally, including changes in the prevailing level of interest rates.
(e) The minute books of the Seller and each of the Seller Subsidiaries
contain true, complete and accurate records in all material respects of all
meetings and other corporate actions held or taken since September 30, 1994 of
their respective shareholders and Boards of Directors (including committees of
their respective Boards of Directors).
SECTION II.2 Articles of Incorporation and By-Laws. The Seller has
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heretofore furnished to the Company a complete and correct copy of the Articles
of Incorporation and the By-Laws, as amended or restated, of the Seller ("Seller
Articles" or "Seller By-Laws") and each Seller Subsidiary. Such Articles of
Incorporation and By-Laws of the Seller and each Seller Subsidiary are in full
force and effect. Neither the Seller nor any Seller Subsidiary is in violation
of any of the provisions of its Articles of Incorporation or By-Laws.
SECTION II.3 Capitalization. The authorized capital stock of the Seller
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consists of 10,000,000 shares of Seller Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share ("Seller Preferred Stock"). As of the
date of this Agreement, (i) 3,235,830 shares of Seller Common Stock are issued
and outstanding (of which 31,635 are restricted shares under employee benefit
plans which have not and will not be awarded), all of which are duly authorized,
validly issued, fully paid and non-assessable, except as provided by Section
180.0622(2)(b) of the WBCL (such section, including judicial interpretations
thereof and of Section 180.40(6), its predecessor statute, are referred to
herein as "Section 180.0622(2)(b) of the WBCL"), and were not issued in
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violation of any preemptive right of any Seller shareholder, (ii) 888,950 shares
of Seller Common Stock are held in the treasury of the Seller, (iii) 325,354
shares of Seller Common Stock are reserved for future issuance pursuant to
outstanding employee stock options issued pursuant to the Seller's stock option
plans, and (iv) 643,930 shares of Seller Common Stock are reserved for future
issuance under the Stock Option Agreement. As of the date of this Agreement, no
shares of Seller Preferred Stock are issued and outstanding. Except as set forth
in clauses (iii) and (iv), above, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character, including
without limitation voting agreements or arrangements, relating to the issued or
unissued capital stock of the Seller or any Seller Subsidiary or obligating the
Seller or any Seller Subsidiary to issue or sell any shares of capital stock of,
or other equity interests in, the Seller or any Seller Subsidiary. All shares of
Seller Common Stock subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and non-assessable, except
as otherwise provided by Section 180.0622(2)(b) of the WBCL. There are no
obligations, contingent or otherwise, of the Seller or any Seller Subsidiary to
repurchase, redeem or otherwise acquire any shares of Seller Common Stock or the
capital stock of any Seller Subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
Seller Subsidiary or any other entity, except for loan commitments and other
funding obligations entered into in the ordinary course of business. Each of the
outstanding shares of capital stock of each Seller Subsidiary are duly
authorized, validly issued, fully paid and non-assessable, except as provided by
Section 180.0622(2)(b) of the WBCL, and were not issued in violation of any
preemptive rights of any Seller Subsidiary shareholder, and such shares owned by
the Seller or another Seller Subsidiary are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations of the Seller's
voting rights, charges or other encumbrances of any nature whatsoever.
SECTION II.4 Authority.The Seller has the requisite corporate power and
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authority to execute and deliver this Agreement and the Stock Option Agreement,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby (other than, with respect to the
Merger, the approval and adoption of this Agreement by the Seller's shareholders
in accordance with the WBCL and the Seller Articles and Seller By-Laws). The
execution and delivery of this Agreement and the Stock Option Agreement by the
Seller and the consummation by the Seller of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Seller
are necessary to authorize this Agreement or the Stock Option Agreement or to
consummate the transactions so contemplated hereby or thereby (other than, with
respect to the Merger, the approval and adoption of this Agreement by the
Seller's shareholders in accordance with the WBCL and the Seller Articles and
Seller By-Laws). This Agreement and the Stock Option Agreement have been duly
executed and delivered by, and constitute valid and binding obligations of the
Seller and, assuming due authorization, execution and delivery by the Company,
are enforceable against the Seller in accordance with their respective terms,
except as enforcement may be limited by laws affecting insured depository
institutions, general principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
8
SECTION II.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement and the Stock Option
Agreement by the Seller does not, and the performance of this Agreement and the
Stock Option Agreement and the transactions contemplated hereby and thereby by
the Seller shall not, (i) conflict with or violate the Seller Articles or Seller
By-Laws or the Articles of Incorporation or By-Laws of any Seller Subsidiary,
(ii) conflict with or violate any domestic (federal, state or local) or foreign
law, statute, ordinance, rule, regulation, order, judgment or decree
(collectively, "Laws") applicable to the Seller or any Seller Subsidiary or by
which its or any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of the
Seller or any Seller Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Seller or any Seller Subsidiary is a party
or by which the Seller or any Seller Subsidiary or its or any of their
respective properties is bound or affected, except in the case of clauses (ii)
and (iii) for any such conflicts, violations, breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a Material
Adverse Effect on the Seller and the Seller Subsidiaries, taken as a whole. The
Board of Directors of the Seller has taken all actions necessary including
approving the transactions contemplated herein and in the Stock Option Agreement
to ensure that none of (A) the restrictions set forth in Sections 180.1130-32,
180.1134, 180.1140-44 and 180.1150 of the WBCL, and (B) the provisions set forth
in Article 4.c. and Article 11 of the Seller Articles, do or will apply to the
transactions contemplated herein or, except in the case of Article 4.c, in the
Stock Option Agreement
(b) The execution and delivery of this Agreement and the Stock Option
Agreement by the Seller do not, and the performance of this Agreement and the
Stock Option Agreement by the Seller shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, except (i) for applicable
requirements, if any, of the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
state securities or blue sky laws ("Blue Sky Laws"), the HOLA, and the filing of
appropriate merger or other documents as required by the WBCL and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay consummation of
the Merger or the issuance of Seller Common Stock pursuant to the Stock Option
Agreement, or otherwise prevent the Seller from performing its obligations under
this Agreement and the Stock Option Agreement and would not have a Material
Adverse Effect on the Seller and the Seller Subsidiaries, taken as a whole.
SECTION II.6 Compliance; Permits. Neither the Seller nor any Seller
-------------------
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Seller or any Seller Subsidiary or by which its or any of
their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Seller or any Seller Subsidiary is a
party or by which the Seller or any Seller Subsidiary or its or any of their
respective properties is bound or affected, except for any such conflicts,
defaults or violations which would not, individually or in the aggregate, have a
Material
9
Adverse Effect on the Seller or the Seller Subsidiaries, taken as a whole.
SECTION II.7 Securities and Banking Reports; Financial Statements.
----------------------------------------------------
(a) The Seller and each Seller Subsidiary have filed all forms, reports and
documents required to be filed with (x) the Securities and Exchange Commission
(the "SEC") since September 30, 1996, and as of the date of this Agreement has
delivered to the Company (i) its Annual Reports on Form 10-K for the fiscal
years ended September 30, 1994, 1995 and 1996, respectively, (ii) its Quarterly
Reports on Form 10-Q for the periods ended December 31, 1996, March 31, 1997 and
June 30, 1997, (iii) all proxy statements relating to the Seller's meetings of
shareholders (whether annual or special) held since September 30, 1994, (iv) all
Current Reports on Form 8-K filed by the Seller with the SEC since September 30,
1994, (v) all other reports or registration statements (other than Quarterly
Reports on Form 10-Q not referred to in clause (ii) above) filed by the Seller
with the SEC since September 30, 1994 and (vi) all amendments and supplements to
all such reports and registration statements filed by the Seller with the SEC
since September 30, 1994 (collectively, the "Seller SEC Reports") and (y) the
OTS, the FDIC and any other applicable federal or state securities or banking
authorities (all such reports and statements are collectively referred to with
the Seller SEC Reports as the "Seller Reports"). The Seller Reports, including
all Seller Reports filed after the date of this Agreement, (i) were or will be
prepared in all material respects in accordance with the requirements of
applicable Law and (ii) did not at the time they were filed, or will not at the
time they are filed, contain any untrue statement of 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 the light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Seller SEC Reports, including any
Seller SEC Reports filed since the date of this Agreement and prior to or on the
Effective Time, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of the Seller and the Seller
Subsidiaries as of the respective dates thereof and the consolidated results of
its operations and changes in financial position for the periods indicated,
except that any unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount.
(c) Except (i) for the liabilities that are fully reflected or reserved
against on the consolidated statement of financial condition of the Seller
included in the Seller's Form 10-Q for the quarter ended June 30, 1997, (ii) for
the liabilities incurred in the ordinary course of business consistent with past
practice since June 30, 1997, and (iii) as set forth in Section 2.7 of the
Seller Disclosure Schedule, neither the Seller nor any Seller Subsidiary has
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise due or to become due), that, either alone or when
combined with all similar liabilities, has had, or would reasonably be expected
to have, a Material Adverse Effect on the Seller and the Seller Subsidiaries,
taken as a whole.
SECTION II.8 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the Seller SEC Reports filed prior to the date of this Agreement or set forth in
Section 2.8 of the Seller Disclosure Schedule and except for the transactions
contemplated by this Agreement, since September 30, 1996
10
to the date of this Agreement, the Seller and the Seller Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since September 30, 1996, there has not been
(i) any change in the financial condition, results of operations or business of
the Seller and any of the Seller Subsidiaries having a Material Adverse Effect
on the Seller or the Seller Subsidiaries, taken as a whole, (ii) any damage,
destruction or loss (whether or not covered by insurance) with respect to any
assets of the Seller or any of the Seller Subsidiaries having a Material Adverse
Effect on Seller and the Seller Subsidiaries, taken as a whole, (iii) any change
by the Seller in its accounting methods, principles or practices, (iv) any
revaluation by the Seller of any of its assets in any material respect, (v)
except for repurchases pursuant to the Seller's Common Stock Repurchase Program
or for regular quarterly cash dividends on Seller Common Stock with usual record
and payment dates, to the date of this Agreement, any declaration, setting aside
or payment of any dividends or distributions in respect of shares of Seller
Common Stock or any redemption, purchase or other acquisition of any of its
securities or any of the securities of any Seller Subsidiary, (vi) any strike,
work stoppage, slow-down or other labor disturbance suffered by the Seller or
the Seller Subsidiaries, (vii) any collective bargaining agreement, contract or
other agreement or understanding with a labor union or organization to which the
Seller or the Seller Subsidiaries have been a party, (viii) any union organizing
activities relating to employees of the Seller or the Seller Subsidiaries, or
(ix) any increase in the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee or director,
any grant of severance or termination pay, any contract entered into to make or
grant any severance or termination pay, or any bonus paid other than year-end
bonuses for fiscal 1997 as listed in Section 2.8 of the Seller Disclosure
Schedule.
SECTION II.9 Absence of Litigation.
---------------------
(a) Except as set forth in Section 2.9 of the Seller Disclosure Schedule,
neither the Seller nor any of the Seller Subsidiaries is a party to any, and
there are no pending or, to the best of the Seller's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against the Seller or
any of the Seller Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement as to which there is reasonable
probability of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, have a Material Adverse Effect on the
Seller and the Seller Subsidiaries, taken as a whole.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon the Seller, any of the Seller Subsidiaries or the
assets of the Seller or any of the Seller Subsidiaries which has had a Material
Adverse Effect on the Seller and the Seller Subsidiaries, taken as a whole.
11
SECTION II.10 Employee Benefit Plans.
----------------------
(a) Plans of the Seller. Section 2.10(a) of the Seller Disclosure Schedule
lists (i) all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all material
employment, termination, severance or other employment contracts or employment
agreements, with respect to which the Seller or any Seller Subsidiary has any
obligation (collectively, the "Plans"). The Seller has furnished or made
available to the Company a complete and accurate copy of each Plan (or a
description of the Plans, if the Plans are not in writing) and a complete and
accurate copy of each material document prepared in connection with each such
Plan, including, without limitation, and where applicable, a copy of (i) each
trust or other funding arrangement, (ii) each summary plan description and
summary of material modifications, (iii) the three (3) most recently filed IRS
Forms 5500 and related schedules, (iv) the most recently issued IRS
determination letter for each such Plan and (v) the three (3) most recently
prepared actuarial and financial statements in connection with each such Plan.
(b) Absence of Certain Types of Plans. Except as disclosed in Section
2.10(b) of the Seller Disclosure Schedule, no member of the Seller's "controlled
group," within the meaning of Section 4001(a)(14) of ERISA, maintains or
contributes to, or within the five years preceding the date of this Agreement
has maintained or contributed to, an employee pension benefit plan subject to
Title IV of ERISA ("Title IV Plan"). No Title IV Plan is a "multiemployer
pension plan" as defined in Section 3(37) of ERISA. Except as disclosed in
Section 2.10(b) of the Seller Disclosure Schedule, none of the Plans obligates
the Seller or any of the Seller Subsidiaries to pay material separation,
severance, termination or similar- type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change in
control," within the meaning of such term under Section 280G of the Code.
Except as disclosed in Section 2.10(b) of the Seller Disclosure Schedule, or as
required by COBRA, none of the Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director or life insurance benefits to any current or former employee,
officer or director of the Seller or any of the Seller Subsidiaries. Each of
the Plans is subject only to the laws of the United States or a political
subdivision thereof.
(c) Compliance with Applicable Law. Except as disclosed in Section 2.10(c)
of the Seller Disclosure Schedule, each Plan has been operated in all respects
in accordance with the requirements of all applicable Law and all persons who
participate in the operation of such Plans and all Plan "fiduciaries" (within
the meaning of Section 3(21) of ERISA) have acted in accordance with the
provisions of all applicable Law, except where such violations of applicable Law
would not, individually or in the aggregate, have a Material Adverse Effect on
the Seller and the Seller Subsidiaries, taken as a whole. The Seller and the
Seller Subsidiaries have performed all obligations required to be performed by
any of them under, are not in any respect in default under or in violation of,
and the Seller and the Seller Subsidiaries have no knowledge of any default or
violation by any party to, any Plan, except where such failures, defaults or
violations would not, individually or in the aggregate, have a Material Adverse
Effect on the Seller and the Seller Subsidiaries, taken as a whole. No legal
action, suit or claim is pending or, to the knowledge of the Seller or the
Seller Subsidiaries,
12
threatened with respect to any Plan (other than claims for benefits in the
ordinary course) and, except as disclosed in Section 2.10(c) of the Seller
Disclosure Schedule, to the knowledge of the Seller or the Seller Subsidiaries,
no fact or event exists that could give rise to any such action, suit or claim.
Except as disclosed in Section 2.10(c) of the Seller Disclosure Schedule,
neither the Seller nor any Seller Subsidiary has incurred any material liability
to the Pension Benefit Guaranty Corporation (other than for premiums which have
been paid when due) or any material liability under Section 302 of ERISA or
Section 412 of the Code that has not been satisfied in full and no condition
exists that presents a material risk of incurring any such liability.
(d) Qualification of Certain Plans. Each Plan that is intended to be
qualified under Section 401(a) of the Code or Section 401(k) of the Code
(including each trust established in connection with such a Plan that is
intended to be exempt from Federal income taxation under Section 501(a) of the
Code) has received a favorable determination letter from the IRS (as defined
herein) that it is so qualified, and, except as disclosed in Section 2.10(d) of
the Seller Disclosure Schedule, the Seller is not aware of any fact or event
that has occurred since the date of such determination letter from the IRS to
adversely affect the qualified status of any such Plan. Except as disclosed in
Section 2.10(d) of the Seller Disclosure Schedule, no trust maintained or
contributed by the Seller or any of the Seller Subsidiaries is intended to be
qualified as a voluntary employees' beneficiary association or is intended to be
exempt from federal income taxation under Section 501(c)(9) of the Code.
(e) Absence of Certain Liabilities and Events. Except for matters
disclosed in Section 2.10(e) of the Seller Disclosure Schedule, there has been
no prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Plan. The Seller and each of the Seller
Subsidiaries has not incurred any liability for any excise tax arising under
Section 4972 or 4980B of the Code that would individually or in the aggregate
have a Material Adverse Effect on the Seller and the Seller Subsidiaries, taken
as a whole, and, to the knowledge of the Seller or the Seller Subsidiaries, no
fact or event exists that could give rise to any such liability.
(f) Plan Contributions. All contributions, premiums or payments required
to be made prior to the Effective Time with respect to any Plan have been made
on or before the Effective Time.
(g) Funded Status of Plans and Rights to Terminate. With respect to each
Title IV Plan, the present value of all accrued benefits under each such Plan,
based upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by each such Plan's actuary with respect to
each such Plan did not exceed, as of the most recent valuation date, the then
current value of assets of such Plan, allocable to each accrued benefit. No
provision of any such Plan, nor any amendment thereto, would result in any
limitation on the Seller or the Seller Subsidiaries rights to terminate each
such Plan and to receive any residual amounts under Section 4044 of ERISA.
(h) Stock Options. Section 2.10(h) of the Seller Disclosure Schedule sets
forth a true and complete list of each current or former employee, officer or
director of the Seller or any Seller Subsidiary who holds any option to purchase
Seller Common Stock as of the date of this Agreement, together with the number
of shares of Seller Common Stock subject to such option, the date of grant of
such option, the plan under which the options were granted, the option price of
such option, the vesting schedule for such option, whether such option is
intended to qualify as an incentive stock
13
option within the meaning of Section 422(b) of the Code (an "ISO"), and the
expiration date of such option. Section 2.10(h) of the Seller Disclosure
Schedule also sets forth the total number of such ISOs and such non-qualified
options.
(i) Employment Contracts. Except for employment, severance, consulting or
other similar contracts with any employees, consultants, officers or directors
of the Seller or any of the Seller Subsidiaries disclosed in Section 2.10(i) of
the Seller Disclosure Schedule, neither the Seller nor any Seller Subsidiary is
a party to any such contracts. Neither the Seller nor any Seller Subsidiary is
a party to any collective bargaining agreements.
(j) Effect of Agreement. Except as disclosed in Section 2.10(j) of the
Seller Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement will not, either alone or in conjunction with another event,
entitle any current or former employee of the Seller or any Seller Subsidiary to
severance pay, unemployment compensation or any other payment, except as
expressly provided herein, or accelerate the time of payment or vesting or
increase the compensation due any such employee or former employee, in each
case, except as expressly provided herein.
SECTION II.11 Registration Statement; Proxy Statement/Prospectus. The
--------------------------------------------------
information supplied by the Seller for inclusion in the Registration Statement
(as defined in Section 3.11) shall not at the time the Registration Statement is
declared effective 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 the light of the circumstances under which they
were made, not misleading. The information supplied by the Seller for inclusion
in the proxy statement/prospectus to be sent to the shareholders of the Seller
in connection with the meeting of the Seller's shareholders to consider the
Merger (the "Seller Shareholders' Meeting'") (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy
Statement/Prospectus") shall not at the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is first mailed to shareholders, at
the time of the Seller Shareholders' Meeting and at the Effective Time, be false
or misleading with respect to any material fact required to be stated herein, or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. If at any time prior to the Effective
Time any event relating to the Seller or any of its affiliates, officers or
directors should be discovered by the Seller which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, the Seller shall promptly inform the Company.
Notwithstanding the foregoing, the Seller makes no representation or warranty
with respect to any information about, or supplied or omitted by, the Company
which is contained in any of the foregoing documents.
SECTION II.12 Title to Property.The Seller and each of the Seller
------------------
Subsidiaries has good and marketable title to all of their respective properties
and assets, real and personal, free and clear of all mortgage liens, and free
and clear of all other liens, charges and encumbrances except liens for taxes
not yet due and payable, pledges to secure deposits and such minor imperfections
of title, if any, as do not materially detract from the value of or interfere
with the present use of the property affected thereby or which, individually or
in the aggregate, would not have a Material Adverse Effect on the Seller and the
Seller Subsidiaries, taken as a whole; and all leases pursuant to which the
Seller or any of the Seller Subsidiaries lease from others material amounts of
real or personal property are in good
14
standing, valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing material default or event
of default (or event which with notice or lapse of time, or both, would
constitute a material default and in respect of which the Seller or such Seller
Subsidiary has not taken adequate steps to prevent such a default from
occurring). Substantially all of the Seller's and each of the Seller
Subsidiaries' buildings and equipment in regular use have been reasonably
maintained and are in good and serviceable condition, reasonable wear and tear
excepted.
SECTION II.13 Environmental Matters. Except as set forth in Section 2.13
---------------------
of the Seller Disclosure Schedule, the Seller represents and warrants that to
the best of the Seller's knowledge: (i) each of the Seller, the Seller
Subsidiaries and properties owned and operated by the Seller or the Seller
Subsidiaries, are in compliance with all applicable federal, state and local
laws including common law, rules, guidance, regulations and ordinances and with
all applicable decrees, orders, judgments, and contractual obligations relating
to the environment or Hazardous Materials which are hereinafter defined as
chemicals, pollutants, contaminants, wastes, toxic substances, compounds,
products, solid, liquid, gas, petroleum or other regulated substances or
materials which are hazardous, toxic or otherwise harmful to the environment
("Environmental Laws"), except for violations which, either individually or in
the aggregate would not have a Material Adverse Effect on the Seller and the
Seller Subsidiaries taken as a whole; (ii) there is no asbestos or any material
amount of ureaformaldehyde materials in or on any property owned or operated by
the Seller or Seller Subsidiaries and no electric transformers or capacitors,
other than those owned by public utility companies, on any such properties
contain any PCB's; (iii) there are no underground or aboveground storage tanks
located on, in or under any properties currently or formerly owned or operated
by the Seller or any of the Seller Subsidiaries; (iv) the Seller or the Seller
Subsidiaries have not received any notice from any governmental agency or third
party notifying the Seller or the Seller Subsidiaries of any Environmental Claim
(as defined herein); (v) there are no circumstances with respect to any
properties currently owned or operated by the Seller or any of the Seller
Subsidiaries that to the best of the Seller's knowledge (a) will form the basis
on an Environmental Claim against the Seller or the Seller Subsidiaries or any
properties currently or formerly owned or operated by the Seller or any of the
Seller Subsidiaries or (b) will cause any properties currently owned or operated
by the Seller or any of the Seller Subsidiaries to be subject to any
restrictions on ownership, occupancy, use or transferability under any
applicable Environmental Law or require notification to or consent of any
Governmental Authority (as defined herein) or third party pursuant to any
Environmental Law; and (vi) neither the Seller nor any Seller Subsidiary has
received any written communication from any federal or state agency naming the
Seller or any Seller Subsidiary as a potentially responsible party for
environmental contamination with respect to any property on which the Seller or
any Seller Subsidiary holds a security interest.
The following definitions apply for purposes of this Section 2.13: (a)
"Environmental Claims" shall mean any and all administrative, regulatory,
judicial or private actions, suits, demands, demand letters, notices, claims,
liens, notices of non-compliance or violation, investigations, allegations,
injunctions or proceedings relating in any way to (i) any Environmental Law;
(ii) any Hazardous Material including without limitation any abatements,
removal, remedial, corrective or other response action in connection with any
Hazardous Material, Environmental Law or order of a Governmental Authority or
(iii) any actual or alleged damage, injury, threat or harm to the environment,
which individually or in the aggregate would have a Material Adverse Effect on
the Seller or the Seller Subsidiaries; (b) "Governmental Authority" shall mean
any applicable federal,
15
state, regional, county or local person or body having governmental authority.
SECTION II.14 Absence of Agreements. Neither the Seller nor any Seller
---------------------
Subsidiary is a party to any agreement or memorandum of understanding with, or a
party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary supervisory letter
which restricts materially the conduct of its business (including any contract
containing covenants which limit the ability of the Seller or of any Seller
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,
the Seller or any Seller Subsidiary may carry on its business (other than as may
be required by Law or applicable regulatory authorities)), or in any manner
relates to its capital adequacy, its credit policies or its management, except
for those the existence of which has been disclosed to the Company prior to the
date of this Agreement, nor has the Seller been advised that any federal, state,
or governmental agency is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission, except as disclosed by the Seller in Section 2.14 of the
Seller Disclosure Schedule.
SECTION II.15 Taxes. The Seller and the Seller Subsidiaries have timely
-----
filed all material Tax Returns (as defined below) required to be filed by them,
and the Seller and the Seller Subsidiaries have timely paid and discharged all
material Taxes (as defined below) due in connection with or with respect to the
filing of such Tax Returns, except such as are being contested in good faith by
appropriate proceedings and with respect to which the Seller is maintaining
reserves adequate for their payment. To the best of the Seller's knowledge, the
liability for Taxes set forth on each such Tax Return adequately reflects the
Taxes required to be reflected on such Tax Return. For purposes of this
Agreement, "Tax" or "Taxes" shall mean taxes, charges, fees, levies, and other
governmental assessments and impositions of any kind, payable to any federal,
state, local or foreign governmental entity or taxing authority or agency,
including, without limitation, (i) income, franchise, profits, gross receipts,
estimated, ad valorem, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding, disability, employment,
social security, workers compensation, unemployment compensation, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
transfer and gains taxes, (ii) customs duties, imposts, charges, levies or other
similar assessments of any kind, and (iii) interest, penalties and additions to
tax imposed with respect thereto; and "Tax Returns" shall mean returns, reports,
and information statements with respect to Taxes required to be filed with the
United States Internal Revenue Service (the "IRS") or any other governmental
entity or taxing authority or agency, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns. Except as otherwise
disclosed in Section 2.15 of the Seller's Disclosure Schedule, to the best of
the Seller's knowledge, neither the IRS nor any other governmental entity or
taxing authority or agency is now asserting, either through audits,
administrative proceedings or court proceedings, any deficiency or claim for
additional Taxes. Except as otherwise disclosed in Section 2.15 of the Seller's
Disclosure Schedule, neither the Seller nor any of the Seller Subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. Except as otherwise
disclosed in Section 2.15 of the Seller's Disclosure Schedule and except for
statutory liens for current taxes not yet due, to the best of the Seller's
knowledge there are no material tax liens on any assets of the Seller or any of
the Seller Subsidiaries. Except as otherwise disclosed in Section 2.15 of the
Seller's Disclosure Schedule neither the Seller nor any of the Seller
Subsidiaries has received a ruling or entered into an agreement
16
with the IRS or any other taxing authority that would have a Material Adverse
Effect on the Seller or the Seller Subsidiaries, taken as a whole, after the
Effective Time. Except as otherwise disclosed in Section 2.15 of the Seller's
Disclosure Schedule, no agreements relating to allocating or sharing of Taxes
exist among the Seller and the Seller Subsidiaries. Neither the Seller nor any
of the Seller Subsidiaries has made an election under Section 341(f) of the
Code.
SECTION II.16 Insurance. Section 2.16 of the Seller Disclosure Schedule
---------
lists all material policies of insurance of the Seller and the Seller
Subsidiaries currently in effect. To the best of the Seller's knowledge, neither
the Seller nor any of the Seller Subsidiaries has any liability for unpaid
premiums or premium adjustments not properly reflected on the Seller's financial
statements included in the Seller's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.
SECTION II.17 Brokers. No broker, finder or investment banker (other than
-------
Xxxxx Financial, Inc.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Seller. Prior to the date of
this Agreement, the Seller has furnished to the Company a complete and correct
copy of all agreements between the Seller and Xxxxx Financial, Inc. pursuant to
which such firm would be entitled to any payment relating to the transactions
contemplated hereunder.
SECTION II.18 Tax Matters and Pooling.
-----------------------
(a) Neither the Seller nor, to the best of the Seller's knowledge, any of
its affiliates has through the date of this Agreement taken or agreed to take
any action that would prevent the Merger from qualifying as (i) a reorganization
under Section 368(a)(1)(A) of the Code or (ii) for pooling-of-interests
accounting treatment under generally accepted accounting principles ("GAAP").
(b) To the Seller's knowledge, there is no plan or intention on the part
of shareholders of the Seller who will receive Company Common Stock to sell or
otherwise dispose of an amount of Company Common Stock to be received in the
Merger which would reduce their ownership of Company Common Stock to a number of
shares having in the aggregate a value at the time of the Merger of less than 50
percent of the total value of the Seller Common Stock outstanding immediately
prior to the Merger.
SECTION II.19 Material Adverse Effect. Since June 30, 1997, there has been
-----------------------
no Material Adverse Effect on the Seller and the Seller Subsidiaries, taken as a
whole.
SECTION II.20 Material Contracts. Except as disclosed in Section 2.20 of
------------------
the Seller Disclosure Schedule (which may reference other sections of such
Schedule) and, except as included as exhibits in the Seller SEC Reports, neither
the Seller nor any Seller Subsidiary is a party to or obligated under any
contract, agreement or other instrument or understanding which is not terminable
by the Seller or the Seller Subsidiary without additional payment or penalty
within 60 days and obligates the Seller or any Seller Subsidiary for payments or
other consideration with a value in excess of $100,000, or would require
disclosure by the Seller pursuant to item 601(b)(10) of Regulation S-K under the
Exchange Act.
SECTION II.21 Opinion of Financial Advisor. The Seller has received the
----------------------------
opinion of
17
Xxxxx Financial, Inc. on the date of this Agreement to the effect that, as of
the date of this Agreement, the consideration to be received in the Merger by
the Seller's shareholders is fair to the Seller's shareholders from a financial
point of view, and Seller will promptly, after the date of this Agreement,
deliver a copy of such opinion to the Company.
SECTION II.22 Vote Required. The affirmative vote of a majority of the
-------------
votes that holders of the outstanding shares of Seller Common Stock are entitled
to cast is the only vote of the holders of any class or series of the Seller
capital stock necessary to approve the Merger.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company to
the Seller prior to the execution of this Agreement (the "Company Disclosure
Schedule"), which shall identify exceptions by specific Section references, the
Company hereby represents and warrants to the Seller that:
SECTION III.1 Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin. The Company is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended (the "BHCA"). Each subsidiary of the Company (a "Company Subsidiary"
or, collectively, "Company Subsidiaries") is a bank or a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation or the United States of America. Each of the Company and the
Company Subsidiaries have the requisite corporate power and authority and are in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Company Approvals")
necessary to own, lease and operate their respective properties and to carry on
their respective business as now being conducted, including appropriate
authorizations from the Federal Reserve Board, FDIC, the DFI or the Office of
the Comptroller of the Currency (the "OCC") and neither the Company nor any
Company Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Company Approvals, except in each case where
the failure to be so organized, existing and in good standing or to have such
power, authority, Company Approvals and revocations or modifications would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
and the Company Subsidiaries, taken as a whole.
(b) The Company and each Company Subsidiary is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on the Company and the Company Subsidiaries, taken as a
whole.
(c) A true and complete list of all of the Company Subsidiaries is set
forth in Exhibit 21 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 ("Exhibit 21") previously delivered to the Seller.
Except as set forth in Section 3.1(c) of the Company Disclosure
18
Schedule, the Company and/or one or more of the Company Subsidiaries owns
beneficially and of record substantially all of the outstanding shares of
capital stock of each of the Company Subsidiaries. Except for the Company
Subsidiaries, set forth on said Exhibit 21, the Company does not directly or
indirectly own any equity or similar interests in, or any interests convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business, other than in the
ordinary course of business, and in no event in excess of 5% of the outstanding
equity securities of such entity.
SECTION III.2 Articles of Incorporation and By-Laws. The Company has
-------------------------------------
previously furnished to the Seller a complete and correct copy of the Company
Articles and the Company By-Laws. The Company Articles and Company By-Laws are
in full force and effect. The Company is not in violation of any of the
provisions of the Company Articles or the Company By-Laws.
SECTION III.3 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of (i)
160,000,000 shares of Company Common Stock of which, as of October 27, 1997,
101,364,755 shares were issued and outstanding, 7,937,835 shares were held in
treasury, 6,416,320 shares were reserved for issuance pursuant to outstanding
employee stock options; and (ii) 5,000,000 shares of Preferred Stock, $1.00 par
value ("Company Preferred Stock"), of which 2,000,000 shares of Company
Preferred Stock have been designated as Series A Convertible Preferred Stock
("Series A Preferred Stock") and 685,314 shares of which, as of the date of this
Agreement, are outstanding. All of the outstanding shares of the Company's
capital stock have been duly authorized and validly issued and are fully paid
and non-assessable, except pursuant to Section 180.0622(2)(b) of the WBCL.
Except as set forth in clauses (i) and (ii), above, as of the date of this
Agreement there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any Company Subsidiary or obligating the Company
or any Company Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Company Subsidiary.
(b) The shares of Company Common Stock to be issued pursuant to the Merger
will, upon issuance in accordance with the provisions of this Agreement, be duly
authorized, validly issued, fully paid and non-assessable, except as otherwise
provided by Section 180.0622(2)(b) of the WBCL.
SECTION III.4 Authority. The Company has the requisite corporate power and
---------
authority to execute and deliver this Agreement and the Stock Option Agreement,
and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stock Option Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or the Stock Option Agreement or to
consummate the transactions so contemplated hereby or thereby. This Agreement
and the Stock Option Agreement have been duly and validly executed and delivered
by the Company and constitute valid and binding obligations of the Company and
assuming the authorization, execution and delivery by the Seller, are
enforceable against the Company in
19
accordance with their respective terms, except as enforcement may be limited by
laws affecting insured depository institutions, general principles of equity,
whether applied in a court of law or a court of equity, and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
SECTION III.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement and the Stock Option
Agreement by the Company do not, and the performance of this Agreement and the
Stock Option Agreement by the Company shall not, (i) conflict with or violate
the Company Articles or Company By-Laws or the Articles of Incorporation or By-
Laws any Company Subsidiary, (ii) conflict with or violate any Laws applicable
to the Company or any Company Subsidiary or by which any of their respective
properties is bound or affected, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
Company or any Company Subsidiary or its or any of their respective properties
is bound or affected, except in the case of clause (ii) and (iii) for any such
conflicts, violations, breaches, defaults or other occurrences that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
and the Company Subsidiaries, taken as a whole.
(b) The execution and delivery of this Agreement and the Stock Option
Agreement by the Company do not, and the performance of this Agreement by the
Company shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, the BHCA, the banking laws of
the State of Wisconsin (the "WBL") and the filing of appropriate merger or other
documents as required by Wisconsin Law and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger or issuance
of Seller Common Stock pursuant to the Stock Option Agreement, or otherwise
prevent the Company from performing its obligations under this Agreement, and
would not have a Material Adverse Effect on the Company or the Company
Subsidiaries, taken as a whole.
SECTION III.6 Compliance; Permits. Neither the Company nor any Company
-------------------
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Company or any Company Subsidiary or by which its or any of
their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any Company Subsidiary is
a party or by which the Company or any Company Subsidiary or any of its or any
of their respective properties is bound or affected, except for any such
conflicts, defaults or violations which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company and the Company
Subsidiaries, taken as a whole.
20
SECTION III.7 Securities and Banking Reports; Financial Statements.
----------------------------------------------------
(a) The Company and each Company Subsidiary have filed all forms, reports
and documents required to be filed with (x) the SEC since December 31, 1996, and
as of the date of this Agreement have delivered or made available to Seller, in
the form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1994, 1995 and 1996, respectively, (ii) all proxy
statements relating to the Company's meetings of shareholders (whether annual or
special) held since December 31, 1994, (iii) all Current Reports on Form 8-K
filed by the Company with the SEC since December 31, 1994, (iv) all other
reports or registration statements (other than Quarterly Reports on Form 10-Q
not referred to in clause (ii) above) filed by the Company with the SEC since
December 31, 1994, and (v) all amendments and supplements to all such reports
and registration statements filed by the Company with the SEC since December 31,
1994 (collectively, the "Company SEC Reports") and (y) the Federal Reserve
Board, the DFI and any other applicable Federal or state securities or banking
authorities (all such reports and statements are collectively referred to with
the Company SEC Reports as the "Company Reports"). The Company Reports,
including all Company Reports filed after the date of this Agreement, (i) were
or will be prepared in accordance with the requirements of applicable Law and
(ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of 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.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports, including
any Company SEC Reports filed since the date of this Agreement and prior to or
on the Effective Time, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of the Company and the Company
Subsidiaries as of the respective dates thereof and the consolidated results of
its operations and changes in financial position for the periods indicated,
except that any unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments, which were not or are not expected to
be material in amount.
(c) Except (i) for the liabilities that are fully reflected or reserved
against on the consolidated statement of financial condition of the Company
included in the Company Form 10-K for the year ended December 31, 1996, (ii) for
the liabilities incurred in the ordinary course of business consistent with past
practice since December 31, 1996, and (iii) as set forth in Section 3.7 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary has
incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due) that, either alone or
when combined with all similar liabilities, has had, or would reasonably be
expected to have, a Material Adverse Effect on the Company and the Company
Subsidiaries, taken as a whole.
SECTION III.8 Absence of Certain Changes or Events. Except as disclosed
------------------------------------
in the Company SEC Reports filed prior to the date of this Agreement, since
December 31, 1996 to the date of this Agreement, the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since December 31, 1996,
21
there has not been (i) any change in the financial condition, results of
operations or business of the Company or any of the Company Subsidiaries having
a Material Adverse Effect on the Company and the Company Subsidiaries, taken as
a whole, (ii) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company or any of the Company
Subsidiaries having a Material Adverse Effect on the Company and the Company
Subsidiaries, taken as a whole, (iii) any change by the Company or any Company
Subsidiaries in its accounting methods, principles or practices, (iv) any
revaluation by the Company or any Company Subsidiaries of any of its assets in
any respect, (v) to the date of this Agreement, any entry by the Company or any
of the Company Subsidiaries into any commitment or transactions material to the
Company and the Company Subsidiaries taken as a whole or (vi) except for
repurchases pursuant to the Company's Common Stock repurchase program or for
regular quarterly cash dividends of Company Common Stock with usual record and
payment dates, to the date of this Agreement, any declaration, setting aside or
payment of any dividends or distributions in respect of shares of Company Common
Stock or any redemption, purchase or other acquisition of any of its securities
or any of the securities of any Company Subsidiary.
SECTION III.9 Absence of Litigation.
---------------------
(a) Except as set forth in Section 3.9 of the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries is a party to any, and
there are no pending or, to the best of the Company's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against the Company or
any of the Company Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement as to which there is a reasonable
probability of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, have a Material Adverse Effect on the
Company and the Company's Subsidiaries, taken as a whole.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon the Company, any of the Company Subsidiaries or the
assets of the Company or any of the Company Subsidiaries which has had a
Material Adverse Effect on the Company and the Company's Subsidiaries, taken as
a whole.
22
SECTION III.10 Employee Benefit Plans.
----------------------
(a) Compliance with Applicable Laws. Each of the Company's "employee
benefit plans" within the meaning of Section 3(3) of ERISA, for the benefit of
employees of the Company and the Company Subsidiaries (the "Company Plans") has
been operated in all respects in accordance with the requirements of all
applicable Law and all persons who participate in the operation of such Company
Plans and all Company Plan "fiduciaries" (within the meaning of Section 3(21) of
ERISA) have acted in accordance with the provisions of all applicable Law,
except where such violations of applicable Law would not, individually or in the
aggregate, have a Material Adverse Effect on the Company and the Company
Subsidiaries, taken as a whole. The Company and the Company Subsidiaries have
performed all obligations required to be performed by any of them under, are not
in any respect in default under or in violation of, and the Company and the
Company Subsidiaries have no knowledge of any default or violation by any party
to, any Company Plan, except where such failures, defaults or violations would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company and the Company Subsidiaries, taken as a whole. No legal action, suit
or claim is pending or, to the knowledge of the Company or the Company
Subsidiaries, threatened with respect to any Company Plan (other than claims for
benefits in the ordinary course) and, to the knowledge of the Company or the
Company Subsidiaries, no fact or event exists that could give rise to any such
action, suit or claim.
(b) Qualification of Certain Plans. Each Company Plan that is intended to
be qualified under Section 401(a) of the Code or Section 401(k) of the Code
(including each trust, established in connection with such a Plan that is
intended to be exempt from Federal income taxation under Section 501(a) of the
Code) has received a favorable determination letter from the IRS (as defined
herein) that it is so qualified, and the Company is not aware of any fact or
event that has occurred since the date of such determination letter from the IRS
to adversely affect the qualified status of any Company Plan or the exempt
status of any such trust. Except as disclosed in Section 3.10(b) of the Company
Disclosure Schedule, no trust maintained or contributed to by the Company or any
of the Company Subsidiaries is intended to be qualified as a voluntary
employees' beneficiary association or is intended to be exempt from federal
income taxation under Section 501(c)(9) of the Code.
(c) Absence of Certain Liabilities and Events. There have been no
prohibited transactions (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Company Plan. The Company and each of the
Company Subsidiaries has not incurred any liability for any excise tax arising
under Section 4972 or 4980B of the Code and, to the knowledge of the Company or
the Company Subsidiaries, no fact or event exists that could give rise to any
such liability.
(d) Plan Contributions. All contributions, provisions or payments required
to be made with respect to any Company Plan have been made on or before their
due dates.
SECTION III.11 Registration Statement; Proxy Statement/Prospectus. The
--------------------------------------------------
information supplied by the Company for inclusion in the registration statement
of the Company (the "Registration Statement") pursuant to which the shares of
Company Common Stock to be issued in the Merger will be registered with the SEC
shall not, at the time the Registration Statement (including any
23
amendments or supplements thereto) is declared effective by the SEC, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
information supplied by the Company for inclusion in the Proxy
Statement/Prospectus shall not, at the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is first mailed to shareholders, at
the time of the Seller Shareholders' Meeting and at the Effective Time, be false
or misleading with respect to any material fact required to be stated therein,
or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event relating to the
Company or any of its affiliates, officers or directors should be discovered by
the Company which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement/Prospectus, the Company will
promptly inform the Seller. The Registration Statement and the Proxy
Statement/Prospectus shall comply in all material respects as to form with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information about, or supplied or
omitted by, Seller which is contained in any of the foregoing documents.
SECTION III.12 Title to Property. The Company and each of the Company
-----------------
Subsidiaries has good and marketable title to all of their respective properties
and assets, real and personal, free and clear of all mortgage liens, and free
and clear of all other liens, charges and encumbrances except liens for taxes
not yet due and payable, pledges to secure deposits and such minor imperfections
of title, if any, as do not materially detract from the value of or interfere
with the present use of the property affected thereby or which, individually or
in the aggregate, would not have a Material Adverse Effect on the Company and
the Company Subsidiaries, taken as a whole; and all leases pursuant to which the
Company or any of the Company Subsidiaries lease from others material amounts of
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which the Company or such subsidiary has not taken adequate steps to
prevent such a default from occurring). Substantially all of the Company's and
each of the Company Subsidiaries' buildings and equipment in regular use have
been reasonably maintained and are in good and serviceable condition, reasonable
wear and tear excepted.
SECTION III.13 Absence of Agreements. Neither the Company nor any of the
---------------------
Company Subsidiaries is a party to any agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter which restricts materially the conduct of its business
(including any contract containing covenants which limit the ability of the
Company or Company 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, the Company or any Company Subsidiary may carry on its business
(other than as may be required by Law or applicable regulatory authorities)), in
any manner relates to its capital adequacy, its credit policies, or its
management, except for those the existence of which has been disclosed to Seller
prior to the date of this Agreement, nor has the Company been advised that any
federal, state, or governmental agency is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such order,
decree,
24
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission, except as disclosed by the Company in
Section 3.13 of the Company Disclosure Schedule.
SECTION III.14 Taxes. The Company and the Company Subsidiaries have timely
-----
filed all Material Tax Returns (as defined below) required to be filed by them,
and the Company and the Company Subsidiaries have timely paid and discharged all
Material Taxes (as defined below) due in connection with or with respect to the
filing of such Tax Returns and have timely paid all other Taxes as are due,
except such as are being contested in good faith by appropriate proceedings and
with respect to which Seller is maintaining reserves adequate for their payment.
For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes, charges,
fees, levies, and other governmental assessments and impositions of any kind,
payable to any federal, state, local or foreign governmental entity or taxing
authority or agency, including, without limitation, (i) income, franchise,
profits, gross receipts, estimated, ad valorem, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, (ii) customs
duties, imposts, charges, levies or other similar assessments of any kind, and
(iii) interest, penalties and additions to tax imposed with respect thereto; and
"Tax Returns" shall mean returns, reports, and information statements with
respect to Taxes required to be filed with the IRS or any other governmental
entity or taxing authority or agency, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns. Except as otherwise
disclosed in Section 3.14 of the Company Disclosure Schedule, to the best
knowledge of the Company, neither the IRS nor any other governmental entity or
taxing authority or agency is now asserting, either through audits,
administrative proceedings or court proceedings, any deficiency or claim for
additional Taxes. Except as otherwise disclosed in Section 3.14 of the Seller's
Disclosure Schedule, neither Company nor any of the Company's Subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. Except as otherwise
disclosed in Section 3.14 of the Company Disclosure Schedule and except for
statutory liens for current taxes not yet due, there are no material tax liens
on any assets of the Company or any of the Company Subsidiaries. Except as
otherwise disclosed in Section 3.14 of the Company Disclosure Schedule neither
the Company nor any of the Company Subsidiaries has received a ruling or entered
into an agreement with the IRS or any other taxing authority that would have a
Material Adverse Effect on the Company and the Company Subsidiaries, taken as a
whole, after the Effective Time.
Except as otherwise disclosed in Section 3.14 of the Company Disclosure
Schedule, no agreements relating to allocating or sharing of Taxes exist among
the Company and the Company Subsidiaries. Neither the Company nor any of the
Company Subsidiaries has made an election under Section 341(f) of the Code.
SECTION III.15 Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
SECTION III.16 Tax Matters and Pooling. Neither the Company nor, to the
-----------------------
Company's knowledge, any of its affiliates has through the date of this
Agreement taken or agreed to take any
25
action that would prevent the Merger from qualifying (i) as a reorganization
under Section 368(a)(1)(A) of the Code or (ii) for pooling-of-interests
accounting treatment under GAAP.
SECTION III.17 Material Adverse Effect. Since December 31, 1996 there has
-----------------------
been no Material Adverse Effect on the Company and the Company Subsidiaries,
taken as a whole.
ARTICLE IV - COVENANTS OF THE SELLER
SECTION IV.1 Affirmative Covenants. The Seller hereby covenants and agrees
---------------------
with the Company that prior to the Effective Time, unless the prior written
consent of the Company shall have been obtained and except as otherwise
contemplated herein, it will and it will cause each Seller Subsidiary to:
(a) operate its business only in the ordinary course consistent with past
practices;
(b) use all reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the services
of its officers and key employees and maintain its relationships with customers;
(c) use all reasonable efforts to maintain and keep its properties in as
good repair and condition as at present, ordinary wear and tear excepted;
(d) use all reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that now maintained by
it;
(e) use all reasonable efforts to perform in all material respects all
obligations required to be performed by it under all material contracts, leases,
and documents relating to or affecting its assets, properties, and business;
(f) take such reasonable actions as are requested by the Company to
complete the Merger; and
(g) The Seller will use its reasonable best efforts to cause each holder
of an option to purchase Seller Common Stock under the 1991 Stock Option and
Incentive Plan and the 1995 Equity Incentive Plan to execute a consent and
waiver agreement amending the terms of such option in the form of Exhibit 4.1
hereof (an "Option Agreement"), and to cause Messrs. Xxxxxx and Xxxxxxx to
execute amendments to their Employment Agreements in the form of Exhibit 4.1
hereof to clarify their rights under said Employment Agreements.
SECTION IV.2 Negative Covenants. Except as specifically contemplated by
------------------
this Agreement, from the date of this Agreement until the Effective Time, the
Seller shall not do, or permit any Seller Subsidiary to do, without the prior
written consent of the Company, any of the following:
(a) (i) except as required by applicable law or to maintain qualification
pursuant to the
26
Code, adopt, amend, renew or terminate any Plan or any agreement, arrangement,
plan or policy between the Seller or any Seller Subsidiary and one or more of
its current or former directors, officers or employees or (ii) except for normal
increases in the ordinary course of business consistent with past practice, and
subject to the specific provisions of Annex A, or, except as required by
applicable law, increase in any manner the base salary, bonus incentive
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares);
(b) (i) except as provided below declare or pay any dividend on, or make
any other distribution in respect of, its outstanding shares of capital
stock, except for (A) regular quarterly cash dividends on Seller Common
Stock with usual record and payment dates for such dividends with each such
dividend at a rate per share of Seller Common Stock not in excess of $.10
and (B) dividends by a Seller Subsidiary to the Seller;
(ii) declare or pay any dividends or make any distributions in any
amount on Seller Common Stock in or with respect to the quarter in which
the Effective Time shall occur and in which the shareholders of Seller
Common Stock are entitled to receive dividends on the shares of Company
Common Stock into which the shares of Seller Common Stock have been
converted; provided that, it is the intent of this clause (ii) to provide
that the holders of Seller Common Stock will receive either the payment of
cash dividends on their shares of Seller Common Stock or the payment of
cash dividends as the holders of shares of Company Common Stock received in
exchange for the shares of Seller Common Stock pursuant to this Agreement
for the calendar quarter during which the Effective Time shall occur, but
will not receive and will not become entitled to receive for the same
calendar quarter both the payment of a cash dividend as shareholders of
Seller Common Stock and the payment of a cash dividend as the holders of
shares of Company Common Stock received in exchange for the shares of
Seller Common Stock pursuant to this Agreement; and if the Seller does not
declare and pay cash dividends in a particular calendar quarter because of
the Seller's reasonable expectation that the Effective Time was to have
occurred in such calendar quarter wherein the holders of Seller Common
Stock would have become entitled to receive cash dividends for such
calendar quarter on the shares of Company Common Stock to have been
exchanged for the shares of Seller Common Stock pursuant to this Agreement,
and the Effective Time does not in fact occur in such calendar quarter,
then, as a result thereof, the Seller shall be entitled to declare and pay
a cash dividend (within the limitations of this clause (ii)) on such shares
of Seller Common Stock for such calendar quarter by the declaration and
payment of such cash dividends as soon as reasonably practicable after the
end of such calendar quarter;
(c) (i) redeem, purchase or otherwise acquire any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or any options, warrants, conversion or other
rights to acquire any shares of its capital stock or any such securities or
obligations; (ii) merge with or into any other corporation or bank, permit any
other corporation or bank to merge into it or consolidate with any other
corporation or bank, or effect any reorganization or recapitalization; (iii)
purchase or otherwise acquire any substantial portion of the assets, or more
than 5% of any class of stock, of any corporation, bank or other business other
than in the ordinary course of business and consistent with past practice; (iv)
liquidate, sell, dispose of, or
27
encumber any assets or acquire any assets, other than in the ordinary course of
its business consistent with past practice; or (v) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock;
(d) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of any class of capital
stock of the Seller or any Seller Subsidiary (including shares held in treasury)
or any rights, warrants or options to acquire, any such shares, other than the
issuance of Seller Common Stock issuable upon exercise of employee or director
stock options outstanding as of the date of this Agreement or pursuant to Seller
Plans, in effect as of the date of this Agreement;
(e) authorize, permit or cause any of its officers, directors, employees
or agents to directly or indirectly solicit, initiate or encourage any inquiries
relating to, or the making of any proposal which constitutes, a "takeover
proposal" (as defined below), or (i) recommend, endorse or agree to any takeover
proposal, (ii) participate in any discussions or negotiations with respect to a
takeover proposal, or (iii) provide third parties with any nonpublic information
relating to any such inquiry or proposal; provided, however, that the Seller
may, and may authorize and permit its officers, directors, employees or agents
to, provide third parties with nonpublic information, otherwise facilitate any
effort or attempt by any third party to make or implement a takeover proposal
and participate in discussions and negotiations with any third party relating to
any takeover proposal, if the Seller, after having consulted with and considered
the advice of outside counsel, has determined in good faith that such actions
are necessary for the discharge of the fiduciary duties of the Seller's Board of
Directors. The Seller will immediately cease and cause to be terminated any
existing activities, discussions or negotiations previously conducted with any
parties other than the Company with respect to any of the foregoing. The Seller
will notify the Company immediately if any such inquiries or takeover proposals
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, the
Seller, and the Seller shall keep the Company informed, on a current basis, of
the status of any such discussions and negotiations. As used in this Agreement,
"takeover proposal" shall mean any tender or exchange offer, proposal for a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Seller or any Seller Subsidiary
or any proposal or offer to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets of, the Seller or any Seller
Subsidiary other than the transactions contemplated or permitted by this
Agreement;
(f) propose or adopt any amendments to its Articles of Incorporation or
By-laws in any way adverse to the Company;
(g) change any of its methods of accounting in effect at June 30, 1997, or
change any of its methods of reporting income or deductions for federal income
tax purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending December 31, 1996, except as may be required
by Law or GAAP;
(h) change in any material respect any lending, investment, liability
management or other material policies concerning the business or operations of
the Seller or any of the Seller Subsidiaries,
28
except as required by Law, including, without limitation: (i) acquire or sell
any contracts for the purchase or sale of financial or other futures or any put
or call options, or enter into any xxxxxx or interest rate swaps relating to
cash, securities, or any commodities whatsoever or enter into any other
derivative transaction; (ii) except for transactions disclosed in Section 4.2(h)
of the Seller Disclosure Schedule, sell, assign, transfer, pledge, mortgage or
otherwise encumber, or permit any encumbrances to exist with respect to, any of
its assets with a value in excess of $100,000 individually, except in the
ordinary course of business consistent with past practice; (iii) make any
investment with an interest maturity of five years or more except in the
ordinary course of business consistent with past practice; (iv) incur any
material liabilities or material obligations, whether directly or by way of
guaranty, including any obligation for borrowed money, whether or not evidenced
by a note, bond, debenture or similar instrument, except in the ordinary course
of business consistent with past practice and in no event in excess of $100,000
individually except for borrowings from the FHLB or pursuant to repurchase
agreements consistent with past practices; (v) enter into any agreement with
respect to any acquisition of a material amount of assets or securities or any
discharge, waiver, satisfaction, release or relinquishment of any material
contract rights, liens, encumbrances, debt or claims, not in the ordinary course
of business and consistent with past practices and in no event with a value in
excess of $200,000 individually except for satisfaction of liens on loans
receivable consistent with past practice; (vi) settle any claim, action, suit,
litigation, proceeding, arbitration, investigation or controversy of any kind,
for any amount in excess of $250,000, net of any insurance proceeds, or in any
manner which would restrict in any material respect the operations or business
of the Seller or any of the Seller Subsidiaries; (vii) make any capital
expenditure, except in the ordinary course and consistent with past practice and
in no event in excess of $100,000 individually; or (viii) take any action or
fail to take any action which individually or in the aggregate can be expected
to have a Material Adverse Effect on the Seller and the Seller Subsidiaries,
taken as a whole;
(i) take or cause to be taken any action which would disqualify the Merger
(i) as a tax-free reorganization under Section 368 of the Code or (ii) for
pooling of interests accounting treatment under GAAP; and
(j) agree in writing or otherwise to do any of the foregoing.
SECTION IV.3 Letter of the Seller's Accountants. The Seller shall use
----------------------------------
its reasonable best efforts to cause to be delivered to the Company "comfort"
letters of Ernst & Young, LLP, the Seller's independent public accountants,
dated the date on which the Registration Statement shall become effective and
the Effective Time, respectively, and addressed to the Company, in a form
reasonably satisfactory to the Company and reasonably customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement and
transactions such as those contemplated by this Agreement.
29
SECTION IV.4 Access and Information.
----------------------
(a) Until the Effective Time and upon reasonable notice, and subject to
applicable laws relating to the exchange of information, the Seller shall, and
shall cause each Seller Subsidiary to, afford to the Company's officers,
employees, accountants, legal counsel and other representatives of the Company,
access, during normal business hours, to all its properties, books, contracts,
commitments and records. Prior to the Effective Time, the Seller shall (and
shall cause each Seller Subsidiary to) furnish promptly (as soon as available or
received by the Seller or any Seller Subsidiary) to the Company (i) a copy of
each Seller Report filed by it or received by it (to the extent not prohibited
by Law and if so prohibited the Seller shall promptly so notify the Company)
after the date of this Agreement and prior to the Effective Time pursuant to the
requirements of federal or state securities laws, the HOLA or any other federal
or state banking laws or any other applicable Laws promptly after such documents
are available, (ii) the monthly financial statements of the Seller and the
Seller Subsidiaries (as prepared by the Seller in accordance with its normal
accounting procedures) promptly after such financial statements are available
without further request by the Company, (iii) a copy of any action, including
all minutes, taken by the Board of Directors, or any committee thereof, of the
Seller and the Seller Subsidiaries and any documents or other materials of any
kind provided to such Boards or committees promptly after such action, minutes,
materials or other documents become available without further request by the
Company, (iv) a copy of each Tax Return filed by the Seller and each Seller
Subsidiary for the three most recent years available, a copy of any
correspondence received from the IRS or any other governmental entity or taxing
authority or agency and any other correspondence relating to Taxes, and any
other documents relating to Taxes as the Company may reasonably request, and (v)
all other information concerning its business, properties and personnel as the
Company may reasonably request, other than in each case reports or documents
which the Seller is not permitted to disclose under applicable Law or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) Unless otherwise required by Law, the parties will hold any such
information which is nonpublic in confidence until such time as such information
becomes publicly available through no wrongful act of either party, and in the
event of termination of this Agreement for any reason each party shall promptly
return all nonpublic documents obtained from any other party, and any copies
made of such documents, to such other party or destroy such documents and
copies.
30
SECTION IV.5 Update Disclosure; Breaches.
---------------------------
(a) From and after the date of this Agreement until the Effective Time,
the Seller shall update the Seller Disclosure Statement on a regular basis by
written notice to the Company to reflect any matters which have occurred from
and after the date of this Agreement which, if existing on the date of this
Agreement, would have been required to be described therein; provided that, (i)
to the extent that any information that would be required to be included in an
update under this Section 4.5(a) would have in the past been contained in
internal reports prepared by the Seller or any Seller Subsidiary in the ordinary
course, such update may occur by delivery of such internal reports prepared in
accordance with past practice, with appropriate steps taken by the Seller to
identify relevant information contained therein, and (ii) to the extent that
updating required under this Section is unduly burdensome to the Seller, the
Seller and the Company will use their best efforts to develop alternate updating
procedures utilizing, wherever possible, existing reporting systems.
(b) The Seller shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or constitute
a material breach (or would have caused or constituted a material breach had
such event occurred or been known prior to the date of this Agreement) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to the Company and use its best efforts to prevent or
promptly remedy the same.
SECTION IV.6 Affiliates. Within thirty (30) days after the date of this
----------
Agreement, (a) the Seller shall deliver to the Company a letter identifying all
persons who are then "affiliates" of the Seller, including, without limitation,
all directors and executive officers of the Seller, for purposes of Rule 145
promulgated under the Securities Act and/or for purposes of applicable SEC
accounting releases with respect to pooling-of-interests accounting treatment
(each a "Seller Affiliate") and (b) the Seller shall advise the persons
identified in such letter of the resale restrictions imposed by applicable
securities laws and regulations governing pooling-of-interests accounting
treatment and shall use reasonable efforts to obtain from each person identified
in such letter a written agreement, substantially in the form attached hereto as
Exhibit 4.6. The Seller shall use its reasonable best efforts to obtain from any
person who becomes an affiliate of the Seller after the Seller's delivery of the
letter referred to above, and on or prior to the Effective Time, a written
agreement substantially in such form as soon as practicable after attaining such
status.
SECTION IV.7 Tax Treatment and Pooling. The Seller will use its reasonable
-------------------------
best efforts to cause the Merger to qualify for pooling-of-interests accounting
treatment and as a reorganization under Section 368(a)(1)(A) of the Code.
SECTION IV.8 Expenses.
--------
(a) All Expenses (as defined below) incurred by the Company and the Seller
shall be borne solely and entirely by the party which has incurred the same,
except that the parties shall share equally in the out-of-pocket expenses
relating to the printing of the Registration Statement and the Proxy
Statement/Prospectus, and all SEC, NASDAQ, and other regulatory filing and
listing fees incurred in connection herewith.
31
(b) "Expenses" as used in this Agreement shall include all reasonable out-
of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to the party
and its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation and execution of this Agreement and
the Stock Option Agreement, the solicitation of shareholder approvals and all
other matters related to the closing of the transactions contemplated hereby and
by the Stock Option Agreement.
SECTION IV.9 Delivery of Shareholder List. The Seller shall arrange to
----------------------------
have its transfer agent deliver to the Company or its designee, from time to
time prior to the Effective Time, a true and complete list setting forth the
names and addresses of the Seller shareholders, their holdings of stock as of
the latest practicable date, and such other shareholder information as the
Company may reasonably request.
ARTICLE V - COVENANTS OF THE COMPANY
SECTION V.1 Affirmative Covenants. The Company hereby covenants and agrees
---------------------
with the Seller that prior to the Effective Time, unless the prior written
consent of the Seller shall have been obtained and except as otherwise
contemplated herein, it will and it will cause each Company Subsidiary to:
(a) maintain its corporate existence in good standing and maintain all
books and records in accordance with accounting principles and practices as
utilized in the Company's or the Company Subsidiaries', as the case may be,
financial statements applied on a consistent basis; and
(b) conduct its business in the ordinary course of business consistent
with past practices and in a manner that does not violate any Law, except for
possible violations which individually or in the aggregate do not, and, insofar
as reasonably can be foreseen, in the future will not, have a Material Adverse
Effect on the Company and the Company Subsidiaries, taken as a whole.
SECTION V.2 Negative Covenants. Except as otherwise contemplated by this
------------------
Agreement, from the date of this Agreement until the Effective Time, the Company
shall not do, or agree to commit to do, or permit any Company Subsidiaries to
do, without the prior written consent of the Seller any of the following:
(a) solely in the case of the Company, declare or pay any extraordinary or
special dividends on or make any other extraordinary or special distributions in
respect of any of its capital stock unless appropriate adjustment or adjustments
are made to the Exchange Ratio as set forth in Section 1.6 hereof; provided,
however, that nothing contained herein shall prohibit the Company from
increasing the quarterly cash dividend on Company Common Stock;
(b) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect, or in any of the conditions to
the Merger set forth in Article VII not being satisfied, or in a violation of
any provision of this Agreement except, in every case, as may be required by
applicable
32
Law;
(c) take or cause to be taken any action which would disqualify the Merger
(i) as a tax free reorganization under Section 368 of the Code or (ii) for
pooling-of-interests accounting treatment under GAAP;
(d) amend its Articles of Incorporation or By-laws or other governing
instrument in a manner which would adversely affect in any manner the terms of
the Company Common Stock or the ability of the Company to consummate the
transactions contemplated hereby;
(e) enter into any agreement providing for, or otherwise participate in,
any merger, consolidation or other transaction in which the Company or any
surviving corporation would be required not to consummate the Merger or any of
the other transactions contemplated hereby in accordance with the terms of this
Agreement, as the case may be; or
(f) agree to do any of the foregoing.
SECTION V.3 Access and Information.
----------------------
(a) Until the Effective Time and upon reasonable notice and subject to
applicable laws relating to the exchange of information, the Company shall, and
shall cause each Company Subsidiary to, afford to the Seller's officers,
employees, accountants, legal counsel and other representatives of the Seller,
access, during normal business hours, to all its properties, books, contracts,
commitments and records. Prior to the Effective Time, the Company shall (and
shall cause each Company Subsidiary to) furnish promptly (as soon as available
or received by the Company or any Company Subsidiary) to the Seller (i) a copy
of each Company Report filed by it or received by it (to the extent not
prohibited by Law and if so prohibited, the Company shall promptly so notify the
Seller) after the date of this Agreement and prior to the Effective Time
pursuant to the requirements of federal or state securities laws, the BHCA, any
other federal or state banking laws or any other applicable Laws promptly after
such documents are available and (ii) all other information concerning the
business, properties and personnel of the Company or the Company Subsidiaries as
the Seller may reasonably request, other than in each case reports or documents
which the Company is not permitted to disclose under applicable law or binding
agreement entered in to prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) Unless otherwise required by Law, the parties will hold any such
information which is nonpublic in confidence until such time as such information
becomes publicly available through no wrongful act of either party, and in the
event of termination of this Agreement for any reason each party shall promptly
return all nonpublic documents obtained from any other party, and any copies
made of such documents, to such other party or destroy such documents or copies.
33
SECTION V.4 Update Disclosure; Breaches.
---------------------------
(a) From and after the date of this Agreement until the Effective Time,
the Company shall update the Company Disclosure Statement on a regular basis by
written notice to the Seller to reflect any matters which have occurred from and
after the date of this Agreement which, if existing on the date of this
Agreement, would have been required to be described therein; provided that, to
the extent that updating required under this Section is unduly burdensome to the
Company, the Company and the Seller will use their best efforts to develop
alternate updating procedures utilizing, wherever possible, existing reporting
systems.
(b) The Company shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or constitute
a material breach (or would have caused or constituted a material breach had
such event occurred or been known prior to the date of this Agreement) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to the Seller and use its best efforts to prevent or
promptly remedy the same.
SECTION V.5 Stock Exchange Listing. The Company shall use all reasonable
----------------------
efforts to cause the shares of Company Common Stock to be issued in the Merger
to be approved for listing on the Nasdaq National Market prior to the Effective
Time.
SECTION V.6 Tax Treatment and Pooling. The Company will use its reasonable
-------------------------
best efforts to cause the Merger to qualify (i) as a reorganization under
Section 368(a)(1)(A) of the Code and (ii) for pooling-of-interests accounting
treatment under GAAP.
SECTION V.7 Stock Options.
-------------
(a) At the Effective Time, the Company will assume the Seller's 1991 Stock
Option and Incentive Plan, the 1995 Equity Incentive Plan and the 1996 Non-
Employee Director Stock Option Plan (the "Option Plans") and all of the Seller's
obligations thereunder. At the Effective Time, each outstanding option issued
pursuant to the Option Plans shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under such option (as
amended as contemplated in Section 4.1(g) and Annex A) (including, without
limitation, the time periods allowed for exercise), a number of shares of
Company Common Stock equal to the product of the Exchange Ratio and the number
of shares of Seller Common Stock subject to such option (provided that any
fractional shares of Company Common Stock resulting from such multiplication
shall be rounded down to the nearest share), at a price per share (rounded up to
the nearest cent) equal to the exercise price per share of the shares of Seller
Common Stock subject to such option divided by the Exchange Ratio.
(b) Within five days after the Effective Time, the Company shall file with
the SEC a registration statement on an appropriate form under the Securities Act
with respect to the shares of Company Common Stock subject to options to acquire
Company Common Stock issued pursuant to Section 5.7(a) hereof, and shall use its
best efforts to maintain the current status of the prospectus related thereto,
as well as comply with applicable state securities or Blue Sky Laws, for so long
as
34
such options remain outstanding.
The adjustment provided herein with respect to any options which are ISOs
shall be and is intended to be effected in a manner which is consistent with
Section 424(a) of the Code. The duration and other terms of the new option
shall be the same as the original option, except that all references to the
Seller shall be deemed to be references to the Company.
ARTICLE VI - ADDITIONAL AGREEMENTS
SECTION VI.1 Proxy Statement/Prospectus; Registration Statement. As
--------------------------------------------------
promptly as practicable after the execution of this Agreement, the Seller and
the Company shall prepare and file with the SEC the Proxy Statement/Prospectus
and Registration Statement under the Securities Act and the Exchange Act
relating to the approval of the Merger by the shareholders of the Seller and
shall use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. The Proxy Statement/Prospectus
shall include the recommendation of the Board of Directors of the Seller in
favor of the Merger, unless the Board of Directors of the Seller shall have
determined in good faith based on advice of counsel that such recommendation
would violate its fiduciary duty to the Seller's shareholders.
SECTION VI.2 Meeting of the Seller's Shareholders. The Seller shall
------------------------------------
promptly after the date of this Agreement take all action necessary in
accordance with the WBCL and Seller Articles and the Seller By-Laws to convene
the Seller Shareholders' Meeting. The Seller shall use its best efforts to
solicit from shareholders of the Seller proxies in favor of the Merger and shall
take all other action necessary or advisable to secure the vote or consent of
shareholders required by the WBCL to approve the Merger, unless the Board of
Directors of the Seller shall have determined in good faith based on advice of
counsel that such actions would violate its fiduciary duty to the Seller's
shareholders.
SECTION VI.3 Appropriate Action; Consents; Filings. The Seller and the
-------------------------------------
Company shall use all reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law to consummate and make effective the transactions
contemplated by this Agreement and the Stock Option Agreement, (ii) obtain all
consents, licenses, permits, waivers, approvals, authorizations or orders
required under Law (including, without limitation, all foreign and domestic
(federal, state and local) governmental and regulatory rulings and approvals and
parties to contracts) required in connection with the authorization, execution
and delivery of this Agreement and the Stock Option Agreement and the
consummation by them of the transactions contemplated hereby and thereby,
including, without limitation, the Merger and the issuance of Seller Common
Stock pursuant to the Stock Option Agreement, (iii) make all necessary filings,
and thereafter make any other required submissions, with respect to this
Agreement, the Stock Option Agreement and the Merger required under (A) the
Securities Act and the Exchange Act and the rules and regulations thereunder,
and any other applicable federal or state securities laws, (B) applicable
federal or state banking laws and (C) any other applicable Law; provided that,
the Company and the Seller shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such documents
to the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions,
35
deletions or changes suggested in connection therewith. The Seller and the
Company shall furnish all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable Law
(including all information required to be included in the Proxy
Statement/Prospectus and the Registration Statement) in connection with the
transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use all reasonable efforts to take all such necessary
action.
SECTION VI.4 Employee Stock Options and Other Employee Benefit Matters.
---------------------------------------------------------
Annex A hereto sets forth certain agreements with respect to the Seller's
employee and director stock options and other employee benefit matters.
36
SECTION VI.5 Directors' and Officers' Indemnification and Insurance.
------------------------------------------------------
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director, officer or employee of the Seller or any of the Seller Subsidiaries
(including in his/her role as a fiduciary of the employee benefit plans of the
Seller or the Seller Subsidiaries, if applicable) (the "Indemnified Parties")
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he is or
was a director, officer or employee of the Seller, any of the Seller
Subsidiaries or any of their respective predecessors or (ii) this Agreement or
any of the transactions contemplated hereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond thereto. It
is understood and agreed that after the Effective Time, the Company shall
indemnify and hold harmless, to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted or arising
before or after the Effective Time), the Indemnified Parties may retain counsel
satisfactory to them after consultation with the Company; provided, however,
that the (1) Company shall have the right to assume the defense thereof and upon
such assumption the Company shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
any Indemnified Party in connection with the defense thereof, except that if the
Company elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises that there are issues which raise conflicts of interest
between the Company and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them after consultation with the Company, and the
Company shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) Company shall in all cases be obligated pursuant to
this Section 6.5(a) to pay for only one firm of counsel for all Indemnified
Parties, (3) Company shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld) and (4)
Company shall have no obligation hereunder to any Indemnified Party when and if
a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification under
this Section 6.5, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Company thereof, provided that the
failure to so notify shall not affect the obligations of the Company under this
Section 6.5 except to the extent such failure to notify materially prejudices
the Company.
(b) The Company shall purchase, and for a period of three (3) years after
the Effective Time, the Company shall use its best efforts to maintain,
directors and officers liability insurance "tail" or "runoff" coverage with
respect to wrongful acts and/or omissions committed or allegedly committed prior
to the Effective Time. Such coverage shall have an aggregate coverage limit
over the
37
term of such policy in an amount no less than the annual aggregate coverage
limit under the Seller's existing directors and officers liability policy, and
in all other respects shall be at least comparable to such existing policy;
provided, however, that in no event shall the Company be required to expend on
an annual basis more than 200% of the current amount expended by the Seller (the
"Insurance Amount") to maintain or procure insurance coverage, and further
provided that if the Company is unable to maintain or obtain the insurance
called for by this Section 6.5 Company shall use all reasonable efforts to
obtain as much comparable insurance as available for the Insurance Amount.
(c) In the event the Company or the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, assume the obligations set forth in
this section.
(d) In addition to the other indemnification obligations set forth in this
Section 6.5, the Company will fulfill the obligations to indemnify directors and
officers of the Seller contained in the Seller Articles.
(e) The provisions of this Section 6.5 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
SECTION VI.6 Notification of Certain Matters. The Seller shall give
, -------------------------------
prompt notice to the Company, and the Company shall give prompt notice to the
Seller, of (i) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate and (ii) any
failure of the Seller or the Company, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION VI.7 Public Announcements. The Company and the Seller shall
--------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Law or any listing agreement with or rule of the National
Association of Securities Dealers, Inc.
SECTION VI.8 Customer Retention. To the extent permitted by law or
------------------
applicable regulation, the Seller shall use all reasonable efforts to assist the
Company in its efforts to retain the Seller's customers for the Surviving
Corporation. Such efforts shall include making introductions of the Company's
employees to such customers, assisting in the mailing of information prepared by
the Company and reasonably acceptable to the Seller, to such customers and
actively participating in any "transitional marketing programs" as the Company
shall reasonably request.
38
SECTION VI.9 Incentive Bonus Pool. Promptly following the execution and
--------------------
delivery of this Agreement, the Seller will establish a bonus pool equal to
$516,000 for employees of the Seller and Seller Subsidiaries (the "Bonus Pool").
The Bonus Pool will be used to:
(1) incent employees of the Seller and the Seller Subsidiaries to
retain the Seller's customers;
(2) incent employees of the Seller and the Seller Subsidiaries to
attain net income targets; and
(3) retain key employees of the Seller and the Seller Subsidiaries.
The Bonus Pool will be administered by a committee of three persons: Xxxx
X. Xxxxxx, President and Chief Executive Officer of the Seller, Xxxxxx X.
Xxxxxxx, the President of the Company and Xxxx X. Xxxxxxx, the Senior Vice
President and Chief Financial Officer of the Seller. The committee will
designate participants, set targets and do all other things necessary to
administer the Bonus Pool. The initial allocation of the Bonus Pool will be
determined by Xxxx X. Xxxxxx and may thereafter be changed only with his written
consent. The committee shall act by the decision of the majority of its
members, except as stated in the previous sentence.
SECTION VI.10 Recission of Repurchase Programs. Prior to the Effective
--------------------------------
Time, the Company and the Seller shall renounce and rescind their respective
publicly announced share repurchase programs in order to meet the requirements
for pooling of interests accounting treatment for the Merger under GAAP.
ARTICLE VII - CONDITIONS OF MERGER
SECTION VII.1 Conditions to Obligation of Each Party to Effect the Merger.
-----------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall, on
or prior to the Effective Time, have been initiated or, to the knowledge of the
Company or the Seller, threatened by the SEC.
(b) Shareholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the shareholders of the Seller.
(c) Regulatory Approvals. (i) The Merger shall have been approved by the
applicable regulatory authorities, including, without limitation, the OTS and
the Federal Reserve Board, which approvals shall not contain any materially
burdensome conditions that would significantly adversely affect the Company;
(ii) all conditions required to be satisfied prior to the Effective Time imposed
by
39
the terms of such approval shall have been satisfied; and (iii) all waiting
periods relating to such approval shall have expired.
(d) No Order. No federal or state governmental or regulatory authority or
other agency or commission, or federal or state court of competent jurisdiction,
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect restricting, preventing
or prohibiting consummation of the transactions contemplated by this Agreement.
(e) Pooling of Interests. The Seller and the Company shall have received a
letter of the Seller's independent public accountants, dated as of the Closing
Date, in form and substance reasonably satisfactory to the Seller and the
Company, stating that the Seller is an entity that qualifies for pooling of
interests accounting treatment pursuant to GAAP and applicable SEC regulations.
The Seller and the Company shall also have received a letter of the Company's
independent accountants, dated the Closing Date, in form and substance
reasonably satisfactory to the Seller and the Company, stating that the
transactions effected pursuant to this Agreement will qualify as a pooling of
interests pursuant to GAAP and applicable SEC regulations.
SECTION VII.2 Additional Conditions to Obligations of the Company. The
---------------------------------------------------
obligations of the Company to effect the Merger are also subject to the
following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Seller contained in this Agreement, without giving effect to
any update to the Seller Disclosure Schedule or notice to the Company under
Section 4.5 or 6.6, shall be true and correct in all respects as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Effective Time as though made on and as
of the Effective Time; provided, however, that for purposes of determining the
satisfaction of the condition contained in this clause, no effect shall be given
to any exception in such representations and warranties relating to materiality
or a Material Adverse Effect, and provided, further, however, that, for purposes
of this clause, such representations and warranties shall be deemed to be true
and correct unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
represent a Material Adverse Effect on the Seller and the Seller Subsidiaries,
taken as a whole. Company shall have received a certificate signed on behalf of
the Seller by the Chief Executive Officer and the Chief Financial Officer of the
Seller to the foregoing effect.
(b) Agreements and Covenants. The Seller shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time.
(c) Consents Obtained. All Seller Approvals and all filings required to be
made by the Seller for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Seller, except those for which failure
to obtain such Seller Approvals or make such filings would not individually or
in the aggregate, have a Material Adverse Effect on the Seller and the Seller
Subsidiaries, taken as a whole.
(d) No Challenge. There shall not be pending any action, proceeding or
investigation
40
before any court or administrative agency or by a government agency (i)
challenging or seeking material damages in connection with, the Merger or the
conversion of Seller Common Stock into Company Common Stock pursuant to the
Merger or (ii) seeking to restrain, prohibit or limit the exercise of full
rights of ownership or operation by the Company or the Company Subsidiaries of
all or any portion of the business or assets of the Seller, which in either case
is reasonably likely to have a Material Adverse Effect on either the Seller and
the Seller Subsidiaries, taken as a whole, or the Company and the Company
Subsidiaries, taken as a whole.
(e) Tax Opinion. An opinion of Xxxxxxx & Xxxx, S.C., independent counsel
to the Company, dated as of the Effective Time, substantially to the effect that
on the basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and accordingly that no gain
or loss will be recognized by Seller as a result of the Merger. In rendering
such opinion, Xxxxxxx & Xxxx, S.C. may require and rely upon representations and
covenants contained in certificates of officers of the Company, the Seller and
others.
(f) Comfort Letters. The Company shall have received from Ernst & Young,
LLP the "comfort" letters referred to in Section 4.3.
(g) No Material Adverse Changes. Since the date of the Agreement, there
has not been any change in the financial condition, results of operations or
business of the Seller and the Seller Subsidiaries, taken as a whole, that
either individually or in the aggregate would have a Material Adverse Effect on
the Seller and the Seller Subsidiaries taken as a whole. The Company shall have
received a certificate of the President and the Chief Financial Officer of the
Seller to that effect.
(h) Opinion of Counsel. The Company shall have received from Xxxxx &
Xxxxxxx an opinion dated the Effective Time, in form and substance reasonably
satisfactory to the Company, covering the matters set forth in Annex B hereto,
which opinion shall be based on such assumptions and containing such
qualifications and limitations as are appropriate and reasonably satisfactory to
the Company.
41
SECTION VII.3 Additional Conditions to Obligations of the Seller. The
--------------------------------------------------
obligation of the Seller to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement, without giving effect to
any notice to the Seller under Section 5.4 or 6.6, shall be true and correct in
all respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Time, as though made on and as of the Effective Time; provided, however, that
for purposes of determining the satisfaction of the condition contained in this
clause, no effect shall be given to any exception in such representations and
warranties relating to materiality or a Material Adverse Effect, and provided,
further, however, that, for purposes of this clause, such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, individually
or in the aggregate, represent a Material Adverse Effect on the Company and the
Company Subsidiaries, taken as a whole. The Seller shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company to the foregoing effect.
(b) Agreements and Covenants. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time.
(c) Consents Under Agreements. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by the Company for the authorizations, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Company, except where failure to obtain
any consents, waivers, approvals, authorizations or orders required to be
obtained or any filings required to be made would not have a Material Adverse
Effect on the Company and the Company Subsidiaries, taken as a whole.
(d) Federal Tax Opinion. The Seller shall have received an opinion of
Xxxxx & Lardner ("Seller's Counsel"), in form and substance reasonably
satisfactory to the Seller, dated as of the Effective Time, substantially to the
effect that on the basis of facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Effective Time, the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code, and that, accordingly, for federal income
tax purposes:
(i) No gain or loss will be recognized by the Seller as a result of
the Merger;
(ii) No gain or loss will be recognized by the shareholders of the
Seller (except with respect to cash received in lieu of a fractional share
interest in Company Common Stock); and
(iii) The aggregate tax basis of the Company Common Stock received
by shareholders of Seller pursuant to the Merger will be the same as the
aggregate tax basis of the Seller Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a
42
fractional share interest for which cash is received).
In rendering such opinion, the Seller's Counsel may require and rely upon
representations and covenants contained in certificates of officers of Company,
the Seller and others.
(e) No Challenge. There shall not be pending any action, proceeding or
investigation before any court or administrative agency or by a government
agency (i) challenging or seeking material damages in connection with, the
Merger or the conversion of Seller Common Stock into Company Common Stock
pursuant to the Merger or (ii) seeking to restrain, prohibit or limit the
exercise of full rights of ownership or operation by the Company or the Company
Subsidiaries of all or any portion of the business or assets of Seller, which in
either case is reasonably likely to have a Material Adverse Effect on either the
Seller and the Seller Subsidiaries, taken as a whole, or the Company and the
Company Subsidiaries, taken as a whole.
(f) No Material Adverse Changes. Since the date of the Agreement, there
has not been any change in the financial condition, results of operations or
business of the Company and the Company Subsidiaries, taken as a whole, that
either individually or in the aggregate would have a Material Adverse Effect on
the Company and the Company Subsidiaries taken as a whole. The Seller shall
have received a certificate of the President and the Chief Financial Officer of
the Company to that effect.
(g) Opinion of Counsel. The Seller shall have received from Xxxxxxx &
Xxxx, S.C. an opinion dated the Effective Time, in form and substance reasonably
satisfactory to the Seller, covering the matters set forth in Annex C hereto,
which opinion shall be based on such assumptions and contain such qualifications
and limitations as are appropriate and reasonably satisfactory to the Seller.
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER
SECTION VIII.1 Termination.
-----------
(a) This Agreement may be terminated at any time prior to the Effective
Time:
(i) by mutual consent of the Company and the Seller by a vote of a
majority of the members of the entire Boards of Directors of the Company
and Seller;
(ii) by either the Company or the Seller if any approval of the
shareholders of the Seller required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of such shareholders or at any
adjournment or postponement thereof;
(iii) by the Seller or the Company (A) if there has been a breach in
any material respect (except that where any statement in a representation
or warranty expressly includes a standard of materiality, such statement
shall have been breached in any respect) of any representation, warranty,
covenant or agreement on the part of Seller, on the one hand, or the
Company, on the other hand, set forth in this Agreement, or (B) if any
representation or
43
warranty of Seller, on the one hand, or the Company, on the other hand,
shall be discovered to have become untrue in any material respect (except
that where any statement in a representation or warranty expressly includes
a standard of materiality, such statement shall have become untrue in any
respect), in either case which breach or other condition has not been cured
within 30 business days following receipt by the nonterminating party of
notice of such breach or other condition, or which breach by its nature,
cannot be cured prior to Closing; provided, however, neither party shall
have the right to terminate this Agreement pursuant to this Section
8.1(a)(iii) unless the breach of any representation or warranty (but not
breaches of covenants or agreements), together with all other such
breaches, would entitle the party receiving such representation or warranty
not to consummate the transactions contemplated hereby under Section 7.2(a)
(in the case of a breach of a representation or warranty by the Seller) or
Section 7.3(a) (in the case of a breach of a representation or warranty by
the Company); and, provided further this Agreement may not be terminated
pursuant to this clause (iii) by the breaching party or party making any
representation or warranty which shall have become untrue in any material
respect;
(iv) by either the Company or the Seller if any permanent injunction
preventing the consummation of the Merger shall have become final and
nonappealable;
(v) by either the Company or the Seller if the Merger shall not
have been consummated by April 30, 1998, for a reason other than the
failure of the party seeking termination to comply with its obligations
under this Agreement; provided that if the Merger shall not have been
consummated on or prior to April 30, 1998 as a result of proceedings of a
governmental authority or litigation, then the date on which either the
Company or the Seller may terminate this Agreement under this Section
8.1(a)(v) shall be extended to the earlier of (A) the elapse of a
reasonable period of time necessary to consummate the Merger following the
final termination of proceedings of a governmental authority or litigation
or (B) November 30, 1998;
(vi) by either the Company or the Seller if any regulatory authority
has denied approval of the Merger, and neither the Company nor the Seller
has, within 30 days after the entry of such order denying approval, filed a
petition seeking review of such order as provided by applicable law;
(vii) by the Seller pursuant to Section 1.6(e) hereof; or
(viii) by the Company at any time prior to the Seller Shareholders'
Meeting if the Seller's Board of Directors shall have failed to make its
recommendation referred to in Section 6.1, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any respect
to the interests of the Company.
SECTION VIII.2 Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and all rights and obligations of any party hereto shall cease except: (i)
as set forth in Section 9.1 of this Agreement and (ii) nothing herein shall
relieve any party from liability for any willful breach of this Agreement or
shall restrict either party's rights in the case thereof.
44
SECTION VIII.3 Amendment. This Agreement may be amended by the parties
---------
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the shareholders of the Seller, no amendment may be made,
without further approval of such shareholders which would reduce the amount or
change the type of consideration into which each share of Seller Common Stock
shall be converted pursuant to this Agreement upon consummation of the Merger.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
SECTION VIII.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX - GENERAL PROVISIONS
SECTION IX.1 Non-Survival of Representations, Warranties and Agreements.
----------------------------------------------------------
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Article VIII, except that the agreements set forth in Article I and Sections
5.7, 6.4 (including Annex A), 6.5 and 6.9 shall survive the Effective Time and
those set forth in Sections 4.4(b), 4.8, 5.3(b) and Article IX hereof shall
survive termination indefinitely.
SECTION IX.2 Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that the provisions contained in
each of Sections 4.4(b), 5.3(b), 5.7, 6.4 (including Annex A), 6.5 and 6.9 of
this Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of Sections 4.4(b), 5.3(b),
5.7, 6.4 (including Annex A), 6.5 and 6.9 of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
SECTION IX.3 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) and shall be effective upon receipt:
45
(a) If to the Company:
Xxxxxxxx & Ilsley Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
With a copy to:
Xxxxxxx & Xxxx, S.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxxx
(b) If to the Seller:
Advantage Bancorp, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxx
With a copy to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
Xxx X. Xxxxxxx
SECTION IX.4 Certain Definitions. For purposes of this Agreement, the
-------------------
term:
(a) "affiliate" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the first mentioned person; including, without limitation, any partnership
or joint venture in which any person (either alone, or through or together with
any other subsidiary) has, directly or indirectly, an interest of 5% or more;
(b) "business day" means any day other than a day on which banks in
Wisconsin are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with")
46
means the possession, directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of stock or as trustee or executor, by
contract or credit arrangement or otherwise;
(d) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in Section
13(d) of the Exchange Act); and
(e) "subsidiary" or "subsidiaries" of Seller, the Company, the Surviving
Corporation, or any other person, means any corporation, partnership, joint
venture or other legal entity of which the Seller, the Company, the Surviving
Corporation or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
SECTION IX.5 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION IX.6 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION IX.7 Entire Agreement. This Agreement, the Stock Option
----------------
Agreement, and the written confidentiality agreement in effect between the
parties constitute the entire agreement of the parties and supersede all prior
agreements and undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
SECTION IX.8 Assignment. This Agreement and the Stock Option Agreement
----------
shall not be assigned by operation of law or otherwise, except that the Company
may assign all or any of its rights hereunder and thereunder to any affiliate
provided that no such assignment shall relieve the assigning party of its
obligations hereunder.
SECTION IX.9 Parties in Interest. This Agreement (including Annex A
-------------------
hereto) shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than (i) Section 6.5
(which is intended to be for the benefit of the Indemnified Parties and may be
enforced by such Indemnified Parties) and (ii) Section 5.7, Section 6.4
(including Annex A hereto) and Section 6.9 (which are intended to be for the
benefit of the directors, officers and employees of the Seller and the Seller
Subsidiaries and may be enforced by such persons).
47
SECTION IX.10 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION IX.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION IX.12 Time Is of the Essence. Time is of the essence of this
----------------------
Agreement and the Stock Option Agreement.
IN WITNESS WHEREOF, the Company and the Seller have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
ADVANTAGE BANCORP, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Xxxx X. Xxxxxx
Chairman of the Board,
President and Chief Executive Officer
XXXXXXXX & XXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
Chairman of the Board and
Chief Executive Officer
48
EXHIBIT 4.1
-----------
CONSENT AND WAIVER AGREEMENT
THIS AGREEMENT is entered into as of the __ day of __________, 1997 by and
among ___________________ ("Optionee"), Advantage Bancorp, Inc. ("Seller") and
Xxxxxxxx & Ilsley Corporation ("Company").
PREAMBLE
In connection with the proposed merger of Seller with and into Company (the
"Merger") pursuant to that certain Agreement and Plan of Merger dated as of
_______________ (the "Merger Agreement"), and in order to induce the Company and
Seller to consummate the Merger, Optionee, as the holder of an option or options
to purchase Seller's common stock (the "Option") pursuant to Seller's 1991 Stock
Option and Incentive Plan ("the 1991 Plan"), hereby agrees as follows:
1. Consent. The Optionee hereby consents to the amendment of Section 13
-------
of the 1991 Plan and Section 8 of his or her Option Agreement(s) by adding the
following sentence at the end thereof:
"Notwithstanding anything contained herein to the contrary, if any merger
or consolidation of the Corporation is to be treated as a pooling of
interests for accounting purposes, the Committee shall not provide a
Participant exercising any Option or Right pursuant to this Paragraph with
any consideration therefor other than stock of the acquiring corporation."
2. Waiver. The Optionee hereby waives any and all rights he or she might
------
have under Section 13 of the 1991 Plan and Section 8 of his or her Option
Agreement(s) prior to the amendment thereof.
3. Reliance. Optionee acknowledges that Seller and Company are taking
--------
various actions, including, without limitation, expending significant amounts of
money to pursue the Merger, in reliance upon this Agreement.
4. Choice of Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Wisconsin.
5. Termination. This Agreement shall terminate in the event the Merger
-----------
Agreement is terminated prior to the consummation of the Merger.
2
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
_____________________________
Optionee
_____________________________
Print Name
ADVANTAGE BANCORP, INC.
By:__________________________
Its:_________________________
XXXXXXXX & XXXXXX CORPORATION
By:__________________________
Its:_________________________
3
CONSENT AND WAIVER AGREEMENT
THIS AGREEMENT is entered into as of the __ day of ________, 1997 by and
among _______________ ("Optionee"), Advantage Bancorp, Inc. ("Seller") and
Xxxxxxxx & Ilsley Corporation ("Company").
PREAMBLE
In connection with the proposed merger of Seller with and into Company (the
"Merger") pursuant to that certain Agreement and Plan of Merger dated
________________ (the "Merger Agreement"), and in order to induce the Company
and Seller to consummate the Merger, Optionee, as the holder of an option or
options to purchase Seller's common stock (the "Option") pursuant to Seller's
1995 Equity Incentive Plan ("the 1995 Plan"), hereby agrees as follows:
1. Consent. The Optionee hereby consents to the amendment of Section
-------
4(b)(iii) of the 1995 Plan to delete the following clause: "...or, if deemed
appropriate, make provisions for a cash payment to the holder of any outstanding
Award;...". The Optionee further consents to the amendment of Section 8 of his
or her Option Agreement(s) by adding the following sentence at the end thereof:
"Notwithstanding anything contained herein to the contrary, if any merger
or consolidation of the Corporation is to be treated as a pooling of
interests for accounting purposes, the Committee shall not provide a
Participant exercising any Option or Right pursuant to this Paragraph with
any consideration therefor other than stock of the acquiring corporation."
2. Waiver. The Optionee hereby waives any and all rights he or she might
------
have under Section 4(b)(iii) of the 1995 Plan and Section 8 of his or her Option
Agreement(s) prior to the amendment thereof.
3. Reliance. Optionee acknowledges that Seller and Company are taking
--------
various actions, including, without limitation, expending significant amounts of
money to pursue the Merger, in reliance upon this Agreement.
4. Choice of Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Wisconsin.
5. Termination. This Agreement shall terminate in the event the Merger
-----------
Agreement is terminated prior to the consummation of the Merger.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
_____________________________
Optionee
_____________________________
Print Name
ADVANTAGE BANCORP, INC.
By:__________________________
Its:_________________________
XXXXXXXX & XXXXXX CORPORATION
By:__________________________
Its:_________________________
2
AMENDMENT OF EMPLOYMENT AGREEMENT
---------------------------------
This Amendment of Employment Agreement ("Amendment #3"), dated as of
November __, 1997, is between Advantage Bancorp, Inc. ("Advantage"), Advantage
Bank, FSB (the "Bank"), Xxxx Xxxxxxx (the "Employee") and Xxxxxxxx & Xxxxxx
Corporation ("M&I").
WHEREAS, Employee and the Bank entered into an Employment Agreement on
March 20, 1992, which has been amended on two previous occasions (the
"Employment Agreement"); and
WHEREAS, M&I and Advantage have entered into an Agreement and Plan of
Merger dated as of the date hereof (the "Merger Agreement") pursuant to which
Advantage will merge with and into M&I with M&I being the survivor (the
"Merger").
NOW, THEREFORE, in connection with, and as consideration for, such Merger,
the parties hereto wish to enter into this Amendment #3 as follows.
1. Agreement as to Pay-out. The parties hereto agree that (A) the Merger
-----------------------
(if consummated) will satisfy the conditions in the Employment Agreement for a
lump sum cash payment to Employee pursuant to Section 8 of the Employment
Agreement and, accordingly, the Bank shall make such payment to Employee
(subject to the limitations set forth in the last sentence of Section 8(a) of
the Employment Agreement as amended hereby), within 25 business days after the
Merger so long as (i) Employee is employed by the Bank on the date of the Merger
and (ii) Employee executes a complete and permanent release of all claims
arising out of his employment through the date of the Merger in the form
attached hereto and does not revoke the release within the statutory period for
revocation and (B) the "Date of Termination", as used in the Employment
Agreement, shall be the date of the Merger. The parties further agree that,
except for health insurance benefits to be provided by M&I to Employee through
March 20, 2000 pursuant to the M&I Health Program with the same cost sharing
arrangement provided to M&I employees, the Employment Agreement will not govern
the terms and conditions of Employee's employment with the Bank or any successor
thereto after the Merger.
2. Amendment of Section 8. Section 8(a) of the Employment Agreement shall
----------------------
be amended by deleting the last sentence thereof in its entirety and
substituting the following:
"Notwithstanding any other statement or provision herein to the contrary,
the amounts payable to the Employee pursuant to subsections (i) and (ii)
above shall not exceed $455,802.
3. Choice of Law. This Amendment #3 shall be governed by, and construed
-------------
in accordance with the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the undersigned have executed this Amendment of
Employment Agreement as of the date set forth above.
ADVANTAGE BANCORP, INC. ADVANTAGE BANK, FSB
By:______________________ By:_______________________
Title:___________________ Title:____________________
EMPLOYEE XXXXXXXX & ILSLEY CORPORATION
________________________ By:________________________
Xxxx Xxxxxxx
Title:_____________________
2
COMPLETE AND PERMANENT RELEASE
The undersigned, formerly an employee of Advantage Bank, FSB (the
"Employee"), entered into an Employment Agreement with Advantage Bank, FSB (the
"Bank") whereby the Employee was entitled to certain payments and benefits if
his employment were terminated or constructively terminated after a "Change in
Control." Section 8(a) of this Employment Agreement was amended as of
___________, 1997 to modify the amount of payments in the event of a "Change in
Control." The payments were conditioned on Employee executing this Complete and
Permanent Release and not revoking it within the statutory period for
revocation.
In consideration of the payments to be made pursuant to Section 8(a) of the
Employment Agreement, as amended (the "Payments"), Employee, by signing below,
hereby agrees that execution of this Release operates to, and hereby does,
release Xxxxxxxx & Ilsley Corporation ("M&I"), its parent corporations, its and
their subsidiaries and affiliates, its and their predecessors in interest
including Advantage Bancorp, Inc. ("Advantage"), the Bank and its other
subsidiaries and affiliates, its and their present, future or former employees,
officers, directors, stockholders, representatives, agents, successors and
assigns (the "Released Parties") from all claims or demands and all rights to
any monetary payment or recovery (the "Claims") the Employee has had, presently
has or may have, arising out of the Employee's employment with the Bank or the
termination of that employment, which Claims are based on facts or circumstances
existing prior to the date the Employee signs this Release, regardless of
whether such facts or circumstances are currently known or unknown by the
Employee, including, without limitation, a release of any Claims the Employee
may have based on the Civil Rights Act of 1866, as amended, the Civil Rights Act
of 1991, as amended; the Age Discrimination in Employment Act of 1967, as
amended; Title VII of the Civil Rights Act of 1964, as amended; the Americans
with Disabilities Act; the Equal Pay Act of 1963, any and all laws of any state
concerning wages, employment and discharge; any state or local municipality fair
employment statutes or laws; and any other law, rule, regulation or ordinance or
common law cause of action, whether arising in contract or tort, pertaining to
employment, terms and conditions of employment, or termination of employment;
provided, however, that execution of this Release shall not adversely affect the
-------- -------
Employee's rights to receive benefits under any qualified or nonqualified
employee benefit plans and arrangements of the Bank in which he participated
prior to the merger of Advantage into M&I (the "Merger") including, but not
limited to, the following: the Bank Incentive Plan and Trust I and II, the 1991
Stock Option and Incentive Plan, the Employment Agreement, as amended, and the
Executive Salary Continuation Agreement.
THE EMPLOYEE HAS 21 DAYS FROM THE DATE THE EMPLOYEE RECEIVES THIS RELEASE TO
SIGN AND RETURN THIS RELEASE TO M&I, BUT IN NO EVENT MAY THE EMPLOYEE SIGN THIS
RELEASE PRIOR TO THE FIRST DAY SUBSEQUENT TO THE DATE OF THE MERGER. By signing
below, the Employee agrees to and acknowledges that the Payments a) are in lieu
of any amount that such Employee would otherwise receive under any other
severance plan of Advantage, the Bank, M&I or M&I Xxxxxxxx & Xxxxxx Bank, b)
shall not be taken into account for purposes of determining benefits under any
pension, deferred compensation or welfare benefit plans of Advantage, the Bank,
M&I
or M&I Xxxxxxxx & Ilsley Bank, whether qualified or nonqualified and c) shall be
reduced by any Federal, State or local withholding or other taxes as required
under applicable law.
The Released Parties hereby release the Employee from any liability to the
Released Parties arising out of the Employee's employment with the Bank through
the date of this Complete and Permanent Release except (i) to the extent of the
obligations set forth herein, (ii) any obligations under any of the employee
benefit plans and arrangements referred to in the proviso of the second
paragraph of this Complete and Permanent Release, or (iii) liabilities
attributable to (aa) a willful failure to deal fairly with the Bank or its
shareholders in connection with a matter in which the Employee had a material
conflict of interest, (bb) a violation of criminal law, unless the Employee had
reasonable cause to believe that his conduct was lawful, (cc) a transaction from
which the Employee derived an improper personal profit or benefit, or (dd)
willful misconduct.
Notwithstanding the foregoing, this Complete and Permanent Release does not
waive rights, if any, the Employee or his successors and assigns may have under
or pursuant to, or release the Released Parties from obligations, if any, they
may have to the Employee or to his successors and assigns on claims arising out
of, related to or asserted under or pursuant to, this Complete and Permanent
Release, the merger agreement relating to the Merger, any insurance contract, or
any indemnity agreement or obligation contained in or adopted or acquired
pursuant to any provision of the charter or by-laws of Advantage or its
subsidiaries or affiliates or in any applicable insurance policy carried by
Advantage or its affiliates or subsidiaries for any matter which arises or may
arise in the future in connection with the Employee's employment with the Bank.
The Payments will be paid no later than 25 business days following the
Merger except in no event will the Payments be paid before the expiration of the
period allowable for revocation as set forth below. Upon execution, this Release
should be returned to Xxxxxxxx & Xxxxxx Corporation, Attn: Xxxxxx Xxxxxx, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.. The Employee has seven (7) calendar
days from the date that the Employee signs this Release to revoke this Release
by giving written notice of the Employee's intent to do so to M&I. This Release
shall not become effective or enforceable until this seven (7) day period has
expired. If the Employee revokes this Release, the Employee will not receive the
Payments.
THE EMPLOYEE IS ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE.
AGREED TO AND ACCEPTED THIS ___ DAY OF ________, 1997.
___________________________
Employee
___________________________
Print Name
0
XXXXXXXX & XXXXXX CORPORATION
By:________________________
Its:_______________________
M&I XXXXXXXX & ILSLEY BANK
By:________________________
Its:_______________________
3
AMENDMENT OF EMPLOYMENT AGREEMENT
---------------------------------
This Amendment of Employment Agreement ("Amendment #3"), dated as of
November __, 1997, is between Advantage Bancorp, Inc. ("Advantage"), Advantage
Bank, FSB (the "Bank"), Xxxx X. Xxxxxx (the "Employee") and Xxxxxxxx & Ilsley
Corporation ("M&I").
WHEREAS, Employee and the Bank entered into an Employment Agreement on
March 20, 1992, which has been amended on two previous occasions (the
"Employment Agreement"); and
WHEREAS, M&I and Advantage have entered into an Agreement and Plan of
Merger dated as of the date hereof (the "Merger Agreement") pursuant to which
Advantage will merge with and into M&I with M&I being the survivor (the
"Merger").
NOW, THEREFORE, in connection with, and as consideration for, such Merger,
the parties hereto wish to enter into this Amendment #3 as follows.
1. Agreement as to Pay-out. The parties hereto agree that (A) the Merger
-----------------------
(if consummated) will satisfy the conditions in the Employment Agreement for a
lump sum cash payment to Employee pursuant to Section 8 of the Employment
Agreement and, accordingly, the Bank shall make such payment to Employee
(subject to the limitations set forth in the last sentence of Section 8(a) of
the Employment Agreement as amended hereby), within 25 business days after the
Merger so long as (i) Employee is employed by the Bank on the date of the Merger
and (ii) Employee executes a complete and permanent release of all claims
arising out of his employment through the date of the Merger in the form
attached hereto, and does not revoke the release within the statutory period for
revocation and (B) the "Date of Termination", as used in the Employment
Agreement, shall be the date of the Merger. The parties further agree that,
except for health insurance benefits to be provided by M&I to Employee through
March 20, 2000 pursuant to the M&I Health Program with the same cost sharing
arrangement provided to M&I employees, the Employment Agreement will not govern
the terms and conditions of Employee's employment with the Bank or any successor
thereto after the Merger.
2. Amendment of Section 8. Section 8(a) of the Employment Agreement shall
----------------------
be amended by deleting the last sentence thereof in its entirety and
substituting the following:
"Notwithstanding any other statement or provision herein to the contrary,
the amounts payable to the Employee pursuant to subsections (i) and (ii)
above shall not exceed $1,094,802.
3. Choice of Law. This Amendment #3 shall be governed by, and construed
-------------
in accordance with the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the undersigned have executed this Amendment of
Employment Agreement as of the date set forth above.
ADVANTAGE BANCORP, INC. ADVANTAGE BANK, FSB
By:________________________ By:_____________________
Title:______________________ Title:____________________
EMPLOYEE XXXXXXXX & XXXXXX CORPORATION
__________________________ By:______________________
Xxxx X. Xxxxxx
Title:_____________________
2
COMPLETE AND PERMANENT RELEASE
The undersigned, formerly an employee of Advantage Bank, FSB (the
"Employee"), entered into an Employment Agreement with Advantage Bank, FSB (the
"Bank") whereby the Employee was entitled to certain payments and benefits if
his employment were terminated or constructively terminated after a "Change in
Control." Section 8(a) of this Employment Agreement was amended as of
___________, 1997 to modify the amount of payments in the event of a "Change in
Control." The payments were conditioned on Employee executing this Complete and
Permanent Release and not revoking it within the statutory period for
revocation.
In consideration of the payments to be made pursuant to Section 8(a) of the
Employment Agreement, as amended (the "Payments"), Employee, by signing below,
hereby agrees that execution of this Release operates to, and hereby does,
release Xxxxxxxx & Xxxxxx Corporation ("M&I"), its parent corporations, its and
their subsidiaries and affiliates, its and their predecessors in interest
including Advantage Bancorp, Inc. ("Advantage"), the Bank and its other
subsidiaries and affiliates, its and their present, future or former employees,
officers, directors, stockholders, representatives, agents, successors and
assigns (the "Released Parties") from all claims or demands and all rights to
any monetary payment or recovery (the "Claims") the Employee has had, presently
has or may have, arising out of the Employee's employment with the Bank or the
termination of that employment, which Claims are based on facts or circumstances
existing prior to the date the Employee signs this Release, regardless of
whether such facts or circumstances are currently known or unknown by the
Employee, including, without limitation, a release of any Claims the Employee
may have based on the Civil Rights Act of 1866, as amended, the Civil Rights Act
of 1991, as amended; the Age Discrimination in Employment Act of 1967, as
amended; Title VII of the Civil Rights Act of 1964, as amended; the Americans
with Disabilities Act; the Equal Pay Act of 1963, any and all laws of any state
concerning wages, employment and discharge; any state or local municipality fair
employment statutes or laws; and any other law, rule, regulation or ordinance or
common law cause of action, whether arising in contract or tort, pertaining to
employment, terms and conditions of employment, or termination of employment;
provided, however, that execution of this Release shall not adversely affect the
-------- -------
Employee's rights to receive benefits under any qualified or nonqualified
employee benefit plans and arrangements of the Bank in which he participated
prior to the merger of Advantage into M&I (the "Merger") including, but not
limited to, the following: the Bank Incentive Plan and Trust I and II, the 1991
Stock Option and Incentive Plan, the Employment Agreement, as amended, and the
Executive Salary Continuation Agreement.
THE EMPLOYEE HAS 21 DAYS FROM THE DATE THE EMPLOYEE RECEIVES THIS RELEASE TO
SIGN AND RETURN THIS RELEASE TO M&I, BUT IN NO EVENT MAY THE EMPLOYEE SIGN THIS
RELEASE PRIOR TO THE FIRST DAY SUBSEQUENT TO THE DATE OF THE MERGER. By signing
below, the Employee agrees to and acknowledges that the Payments a) are in lieu
of any amount that such Employee would otherwise receive under any other
severance plan of Advantage, the Bank, M&I or M&I Xxxxxxxx & Xxxxxx Bank, b)
shall not be taken into account for purposes of determining benefits under any
pension, deferred compensation or welfare benefit plans of Advantage, the Bank,
M&I
or M&I Xxxxxxxx & Ilsley Bank, whether qualified or nonqualified and c) shall be
reduced by any Federal, State or local withholding or other taxes as required
under applicable law.
The Released Parties hereby release the Employee from any liability to the
Released Parties arising out of the Employee's employment with the Bank through
the date of this Complete and Permanent Release except (i) to the extent of the
obligations set forth herein, (ii) any obligations under any of the employee
benefit plans and arrangements referred to in the proviso of the second
paragraph of this Complete and Permanent Release, or (iii) liabilities
attributable to (aa) a willful failure to deal fairly with the Bank or its
shareholders in connection with a matter in which the Employee had a material
conflict of interest, (bb) a violation of criminal law, unless the Employee had
reasonable cause to believe that his conduct was lawful, (cc) a transaction from
which the Employee derived an improper personal profit or benefit, or (dd)
willful misconduct.
Notwithstanding the foregoing, this Complete and Permanent Release does not
waive rights, if any, the Employee or his successors and assigns may have under
or pursuant to, or release the Released Parties from obligations, if any, they
may have to the Employee or to his successors and assigns on claims arising out
of, related to or asserted under or pursuant to, this Complete and Permanent
Release, the merger agreement relating to the Merger, any insurance contract, or
any indemnity agreement or obligation contained in or adopted or acquired
pursuant to any provision of the charter or by-laws of Advantage or its
subsidiaries or affiliates or in any applicable insurance policy carried by
Advantage or its affiliates or subsidiaries for any matter which arises or may
arise in the future in connection with the Employee's employment with the Bank.
The Payments will be paid no later than 25 business days following the
Merger except in no event will the Payments be paid before the expiration of the
period allowable for revocation as set forth below. Upon execution, this Release
should be returned to Xxxxxxxx & Xxxxxx Corporation, Attn: Xxxxxx Xxxxxx, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.. The Employee has seven (7) calendar
days from the date that the Employee signs this Release to revoke this Release
by giving written notice of the Employee's intent to do so to M&I. This Release
shall not become effective or enforceable until this seven (7) day period has
expired. If the Employee revokes this Release, the Employee will not receive the
Payments.
THE EMPLOYEE IS ADVISED TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE.
AGREED TO AND ACCEPTED THIS ___ DAY OF ________, 1997.
___________________________
Employee
___________________________
Print Name
0
XXXXXXXX & XXXXXX CORPORATION
By:________________________
Its:_______________________
M&I XXXXXXXX & ILSLEY BANK
By:________________________
Its:_______________________
3
EXHIBIT 4.6
-----------
AFFILIATE LETTER
----------------
_________________________
_________________________
_________________________
_________________________
Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of _______________________, a Wisconsin corporation
("Seller"), as the term "affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the Rules and Regulation (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series, Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of _______________ (the "Agreement"), among _____________________, a Wisconsin
corporation ("the Company"), and Seller, Seller will be merged with and into the
Company (the "Merger").
As a result of the Merger, I may receive shares of capital stock of
Company Common Stock, par value $1.00 per share (the "Company Securities"). I
would receive such shares in exchange for, respectively, shares owned by me of
Seller Common Stock par value $.01 per share (the "Seller Securities").
I represent, warrant and covenant to Company that in the event I
receive any Company Securities as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Company Securities in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Agreement and
discussed its requirements and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of Company Securities to the extent
I felt necessary, with my counsel or counsel for Seller.
C. I have been advised that the issuance of Company Securities
to me pursuant to the Merger has been registered with the Commission under
the Act on a Registration Statement on Form S-4. However, I have also been
advised that, since at the time the Merger was submitted for a vote of the
stockholders of Seller, I may be deemed to have been an affiliate of Seller
and the distribution by me of the Company Securities has not been
registered under the Act, and that I may not sell, transfer or otherwise
dispose of Company Securities issued to me in the Merger unless (i) such
sale, transfer or other disposition has been registered under the Act, (ii)
such sale, transfer or other disposition is made in conformity with the
volume and other limitations of Rule 145 promulgated by the Commission
under the Act, or (iii) in the opinion of counsel reasonably acceptable to
the Company, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that the Company is under no obligation to
register the sale, transfer or other disposition of the Company Securities
by me or on my behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
E. I also understand that stop transfer instructions will be
given to the Company's transfer agents with respect to the Company
Securities and that there will be placed on the certificates for the
Company Securities issued to me, or any substitutions therefor, a legend
stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED ______________ BETWEEN THE
REGISTERED HOLDER HEREOF AND THE COMPANY, A COPY OF WHICH AGREEMENT IS ON
FILE AT THE PRINCIPAL OFFICES OF THE COMPANY."
F. I also understand that unless the transfer by me of my
Company Securities has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, the Company reserves the right
to put the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF WITHIN THE MEANING OF SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in paragraph E
and F above shall be removed by delivery of substitute certificates without such
legend if the undersigned
2
shall have delivered to the Company a copy of a letter from the staff of the
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to the Company, to the effect that such legend is not required for
purposes of the Act.
I further represent to and covenant with the Company that I have not,
within the 30 days prior to the Effective Time (as defined in the Agreement),
sold, transferred or otherwise disposed of any shares of Seller Securities or
shares of the capital stock of the Company held by me and that I will not sell,
transfer or otherwise dispose of any shares of Company Securities received by me
in the Merger or other shares of the capital stock of the Company until after
such time as results covering at least 30 days of combined operations of Seller
and the Company have been published by the Company, in the form of a quarterly
earnings report, an effective registration statement filed with the Commission,
a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other public
filing or announcement which includes the combined results of operations.
Very truly yours,
___________________________________
Name:
Accepted this ___ day of
____________, 199_ by
COMPANY
By: _____________________________
Name:
Title:
3
ANNEX A
-------
EMPLOYEE BENEFIT MATTERS
------------------------
1. Conduct of Business Between Date of Signing the Agreement and the
Effective Time. Between the date of signing of the Agreement and the Effective
Time (i) there will be no increases in base salary for Messrs. Xxxxxx and
Xxxxxxx; (ii) other employees may receive increases in base salary and bonuses
in the ordinary course of business consistent with past practice, subject to
Paragraphs 10 and 11 hereof; (iii) no new programs, plans or agreements
providing compensation for employees or directors will be adopted or
implemented, existing programs, plans or agreements will not be amended or
modified except as provided herein or in agreements executed by employees and/or
directors in connection herewith, and no further grants or awards will be made
under existing programs or agreements except as explicitly provided herein; (iv)
no new employment agreements will be granted and the existing employment
agreements will not be amended except as provided herein or in the agreements
executed by employees contemporaneously herewith; (v) Seller shall not make any
contributions, other than employee elective deferrals, to its 401(k) plan but
shall make contributions to Seller's ESOP (as defined in Paragraph 9) at levels
consistent with prior Seller contributions and as further permitted under
Paragraph 9; and (vi) Seller or Seller Subsidiaries will only pay severance to
those employees who are terminated by their employer and then only in amounts
and for a period consistent with past practice of the employer.
2. General.
(a) Those individuals who are employed by the Seller or the Seller
Subsidiaries as of the Effective Time and who remain, at the Company's
discretion, employees of the Company or its subsidiaries following the Effective
Time shall be referred to hereinafter as "Affected Employees".
(b) The Company will give Affected Employees full credit for their prior
service with the Seller or the Seller Subsidiaries (or any service credited as
such in connection with a previous acquisition by Seller or any Seller
Subsidiary) (i) for purposes of eligibility (including initial participation and
eligibility for retirement benefits) and vesting under any qualified or
nonqualified retirement or profit sharing plans maintained by the Company in
which employees of Seller and Seller Subsidiaries may be eligible to participate
and (ii) for all purposes under any welfare benefit plans (including severance)
and vacation plans and arrangements maintained by the Company. Further, the
Company shall treat compensation received from the Seller or Seller Subsidiaries
(or any compensation credited as such in connection with a previous acquisition
by Seller or any Seller Subsidiary) as compensation received from the Company
for all purposes under any welfare benefit plans (including severance) and
vacation plans and arrangements maintained by the Company. Notwithstanding the
preceding sentences of this Section 2(b) or anything else contained in this
Annex or the Merger Agreement to the contrary, for purposes of the Company's
retiree health plan, Affected Employees will be given access to the retiree
health plan if they meet the eligibility criteria for the plan with no credit
for prior service with Seller or Seller Subsidiaries (or any service credited as
such in connection with a previous acquisition by Seller or any Seller
Subsidiary), but the cost of health insurance under the plan will be borne 100%
by the Affected Employees with no subsidy by the Company.
(c) The Company will, or will cause the Seller or the Seller Subsidiaries
to, waive all limitations as to preexisting conditions and waiting periods with
respect to participation and coverage requirements applicable to the Affected
Employees under any welfare benefit plans that such
employees may be eligible to participate in on or after the Effective Time,
other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the Effective
Time under any welfare plan maintained for the Affected Employees immediately
prior to the Effective Time.
3. 401(k) Plan. Accounts in Seller's 401(k) plan of participants who are
employed at the Effective Time by the Seller or Seller Subsidiaries will be
fully vested as of the Effective Time. The Company reserves the right
thereafter to merge or freeze Seller's 401(k) plan.
4. Employment Agreements. The Employment Agreements for Messrs. Xxxxxx
and Xxxxxxx are being contemporaneously amended by execution of agreements
between the executive, Seller, Seller's bank subsidiary and the Company in the
form attached to the Merger Agreement as Exhibit 4.1 setting the maximum amount
to be paid under Sections 8(a)(i) and (ii) of the Employment Agreements
consistent with prior information provided to the Company, and making payment of
compensation under each Employment Agreement subject to a complete and permanent
release of all claims arising out of the applicable executive's employment,
including age discrimination (but not including any vested accrued benefits
under the Seller's or Seller's bank subsidiary's qualified or nonqualified
retirement or profit sharing plans), which release is not revoked during the
statutory period allowed for revocation.
5. Employee Welfare Benefits. Affected Employees will be integrated into
the employee welfare benefit plans of the Company, including health, dental,
group term life insurance, tuition reimbursement, long-term disability and other
employee benefit plans available to similarly situated employees, as of the
later of (i) the Effective Time; or (ii) at the discretion of the Company, such
later date as is administratively practicable but no later than January 1, 1999;
provided, however, that Seller's employee welfare benefit plans shall continue
-------- -------
in force until the applicable Company employee welfare benefit plan applies to
the Affected Employees. Company reserves the right, at any time and from time
to time, to modify or amend, in whole or in part, any or all provisions of such
plans of the Company, except to the extent otherwise provided in this Annex.
6. Severance Plan. Severance payments to former employees of Seller or
Seller Subsidiaries who are terminated by Company or its subsidiaries will be
made in accordance with the Company's normal severance schedule, as attached
hereto, pursuant to the M&I Severance Plan as in effect on the date of such
employee's termination of employment. Notwithstanding the foregoing, all
employees of Seller or Seller Subsidiaries, including Messrs. Xxxxxx and
Xxxxxxx, who have written agreements in effect at the Effective Time pertaining
to payments on termination of their employment with Seller or Seller
Subsidiaries will not be entitled to any payments pursuant to the M&I Severance
Plan upon termination of employment unless they waive all rights to
compensation, severance and benefits under those other agreements.
7. Executive Salary Continuation Agreement. The Executive Salary
Continuation Agreements for Messrs. Xxxxxx and Xxxxxxx shall be assumed in full
by the Company.
8. Bank Incentive Plans and Trusts I and II. The Bank Incentive Plans and
Trusts I and II will be assumed in full by the Company.
2
9. ESOP.
(a) As of the Effective Time, Seller shall amend its Employee Stock
Ownership Plan (the "ESOP") as necessitated by the remaining provisions of this
Section 9 and to provide that effective as of the Effective Time, Seller shall
appoint three (3) independent persons who shall serve as the Administrator and
Advisory Committee (as defined in the ESOP) of the ESOP (collectively, the
"Administrator"), with all of the powers and duties previously vested under the
ESOP in the Administrator, Advisory Committee and Seller's Board of Directors,
including but not limited to, complete authority to administer, amend and
terminate the ESOP in accordance with the terms and intent of this Agreement.
Notwithstanding the foregoing, such amendment shall also provide that in the
event any of these three individuals resigns or otherwise vacates his
appointment, the remaining person or persons constituting the Administrator
shall appoint the successor for the vacant position.
(b) As of the day (the "Contribution Date") immediately prior to the
Effective Time, the Seller shall make a contribution to the Seller's ESOP,
which, together with any dividends on Seller's stock held in the ESOP, will
equal the amount the Seller would have contributed to the ESOP pursuant to
Section 3.03(b)(ii) of the ESOP to pay the currently maturing obligation under
the Exempt Loan (as defined in the ESOP) for the then current Plan Year (as
defined in the ESOP) multiplied by a fraction (the "Fraction"), the numerator of
which is the number of days in the current Plan Year through and including the
Effective Time and the denominator of which is 365, and shall cause the Trustee
of the ESOP to use the full amount of such contribution promptly to repay a
portion of the outstanding Exempt Loan. As a result of the aforementioned
contribution and repayment, the Seller shall take such action as may be
necessary or appropriate to cause shares of the Seller's stock to be released
from the suspense account maintained under the ESOP and allocated to the
accounts of certain Participants (as defined in the ESOP) as follows:
(i) first, if (A) Seller paid cash dividends on one or more dividend
dates that coincide with or precede the Contribution Date and (B)
allocations have not yet been made on or before such Contribution
Date to the accounts of eligible Participants in accordance with
Section 3.03(d)(i) of the ESOP as of such dividend dates, then
full and fractional shares of Seller's stock shall be allocated
as of each respective dividend date to Participants who otherwise
would have received or had allocated to their accounts cash
dividends on such dividend date but for the fact that such
dividends were used in accordance with Section 3.03(b)(i) of the
ESOP to pay principal and interest on the Exempt Loan. Such
allocation shall be made in accordance with Section 3.03(d)(i) of
the ESOP; and
(ii) second, as of the Contribution Date, to the accounts of each
Participant who would be entitled to an allocation for the then
current Plan Year if (A) the Contribution Date were the last day
of such Plan Year and (B) the 1,000 Hour of Service requirements
set forth in Section 3.01(b)(i) and (ii) and Section 3.02(b)(i)
and (ii) of the ESOP were multiplied by the Fraction; such
allocation of the Employer Matching Contribution (as defined in
the ESOP) for such Plan Year shall be made under Section 3.01(a)
of the ESOP, in accordance with each such Participant's Deposits
(as defined in the ESOP) under Seller's 401(k) Plan for the
portion of such Plan Year through the end
3
of the last payroll period ending on or before the Contribution
Date; such allocation of the Other Employer Contribution (as
defined in the ESOP) shall be made, under Section 3.02(a) of the
ESOP, in accordance with the ratio of (A) the Compensation (as
defined in the ESOP) of each such Participant for the portion of
the Plan Year through the end of the last payroll period ending
on or before the Contribution Date to (B) the aggregate
Compensation through the end of the last payroll period ending
on or before the Contribution Date of all Participants entitled
to such allocation.
(c) The Company, Seller and the Administrator agree to take such action as
may be necessary or appropriate:
(i) to cause the ESOP to terminate as of the Effective Time and for
all Account balances to become fully vested and nonforfeitable as of such
date;
(ii) to cause the Trustee of the ESOP to sell, from the suspense
account maintained under the ESOP, shares of stock of the Company with an
aggregate value equal to the remaining outstanding ESOP indebtedness, after
giving effect to the repayment described in paragraph (a) hereof, and to
use the proceeds of such sale to repay in full all such outstanding ESOP
indebtedness;
(iii) to cause those shares of stock of the Company (and any cash)
remaining in the suspense account maintained under the ESOP, after giving
effect to the aforementioned sale (the "Remaining Shares"), to be allocated
among all Participants in proportion to the number of shares allocated to
such Participants' ESOP Accounts as of the Effective Time or in such other
manner as may be required by the Internal Revenue Service (the "Service")
as a condition to its issuance of a favorable determination letter
regarding the qualified status of the ESOP upon its termination; and
(iv) for the Account balances of all Participants to be distributed
in a lump sum (or transferred in accordance with Section 401(a)(31) of the
Code) as soon as practicable, and consistent with any requirements in the
determination letter from the Service, following the later of (A) the
Effective Time or (B) the date of receipt of such favorable determination
letter from the Service.
(d) As soon as practicable after the date hereof, the Seller and the
Company shall jointly file a request for an advance determination letter from
the Service regarding the continued qualified status of the ESOP upon its
termination, and the parties hereby agree to cooperate fully in all matters
pertaining to such filing (including, but not limited to, making such changes to
the ESOP and the proposed allocations described herein as may be requested by
the Service as a condition to its issuance of a favorable determination letter;
and authorizing and directing their respective counsel jointly to perform all
acts necessary to secure such favorable determination letter from the Service
(including preparing the determination letter application, filing such
application with the Service, and dealing with any employee of the Service who
reviews such application)). The Seller and the Company recognize that time is
of the essence, and the parties hereby agree to use their best efforts to secure
a favorable determination letter from the Service prior to the Effective Time.
If, despite the Seller's and the Company's attempts to obtain such a favorable
determination letter, the Service does not permit all or any portion of the
Remaining Shares to be allocated as of the Effective Time as contemplated
4
hereby, the parties hereby agree to take such action as may be necessary to
allocate the Remaining Shares (or amounts attributable thereto) as rapidly as
possible among Participants in the ESOP in such other manner as is consistent
with meeting their respective fiduciary duties under ERISA and with obtaining
the Service's determination that the ESOP retains its qualified status upon its
termination, including, without limitation, and notwithstanding paragraph
9(b)(i) hereof, to cause the ESOP to remain open after the Effective Time, until
all of the Remaining Shares have been allocated among such Participants'
Accounts and upon such basis as the Service may require or as may be necessary
to avoid the imposition of any tax or other liability upon the Company in
connection with the ESOP; provided, however, that no such action shall create
any liability for the Company to make any contributions to the ESOP or to
provide any replacement benefits to Participants outside the ESOP. In all
events, it is the intention that the Participants in the ESOP will receive the
entire benefit of the Remaining Shares which are unallocated after application
of the above provisions. In the event that any action under this Agreement
needs to be taken with respect to the ESOP on or after the Effective Time, such
action may only be taken by and shall be the sole and exclusive responsibility
of the Administrator; provided, however, that any and all such actions shall be
taken in accordance with the provisions and intent of this Agreement.
(e) The Trustee (as defined in the ESOP) fees and expenses described in
Section 9.09 of the ESOP shall be paid consistent with the historic practice of
the ESOP and the Seller.
10. Officer Incentive Compensation Plan. For that portion of fiscal 1998
ending on the earlier of (a) a participant's termination of employment or (b)
the Effective Time, participant will receive a prorated portion of the bonus
payment paid to such participant under the Seller's Officer Incentive
Compensation Plan for fiscal year 1997, based on the number of days which
elapsed during such period as a percentage of 365 days.
11. Bonuses. Bonuses for employees of the Seller and Seller Subsidiaries
other than those participating in the Officer Incentive Compensation Plan, for
fiscal 1998 shall be paid pursuant to the terms of any such bonus plans, or in
the absence of a plan, consistent with past practice of Seller and Seller
Subsidiaries. Any bonus amounts which, in a manner consistent with past
practice, have been accrued as of the end of fiscal 1997, including amounts
accrued under the Seller's Excell Bonus Plan and Seller's Officer Incentive
Compensation Plan, may also be paid. All bonuses in respect of fiscal 1998
which, in a manner consistent with past practice, are accrued but unpaid as of
the Effective Time shall be paid promptly following the Effective Time. In
addition, Seller and Seller Subsidiaries may make bonus payments to employees
(whether or not such employees are participating in the Officer Incentive
Compensation Plan) from the Bonus Pool established pursuant to Section 6.9 of
the Merger Agreement.
12. Amendments. The Company agrees that the Seller shall be permitted,
prior to the Effective Time, to make the amendments to, and to take such other
actions with respect to, its plans and agreements, as described herein, but to
make no other amendments or changes in policy without the consent of the
Company.
13. Amendment of Option Plans and Participant Consent. The Seller will
amend its 1991 Stock Option and Incentive Plan (the "1991 Plan"),
contemporaneously with the execution of the Agreement, to add the following
sentence to the end of Section 13 of the 1991 Plan:
"Notwithstanding anything contained herein to the contrary, if any merger
or consolidation of
5
the Corporation is to be treated as a pooling of interests for accounting
purposes, the Committee shall not provide a Participant exercising any
Option or Right pursuant to this Paragraph with any consideration therefor
other than stock of the acquiring corporation."
The Seller, contemporaneously with the execution of the Agreement to the extent
practicable, but in no event later than the Effective Time, will use its
reasonable best efforts to obtain a consent and waiver, in the form attached to
the Agreement as Exhibit 4.1, of each person granted an option under the 1991
Plan agreeing to the amendment to the 1991 Plan and to the same amendment to
Section 8 of the option grant form and waiving any rights he or she might have
had under Section 13 of the 1991 Plan or Section 8 of the option grant form
before such amendment. The Seller will amend, contemporaneously with the
execution of the Agreement, its 1995 Equity Incentive Plan (the "1995 Plan") to
delete the following clause in Section 4(b)(iii) thereof: "... or, if deemed
appropriate, make provisions for a cash payment to the holder of an outstanding
Award, ...". In addition, contemporaneously with the execution of the
Agreement to the extent practicable, but in no event later than the Effective
Time, Seller will use its reasonable best efforts to obtain a consent and
waiver, in the form attached to the Agreement as Exhibit 4.1., of each person
granted options under the 1995 Plan agreeing to the amendment of Section 8 of
the option grant forms as set forth above and waiving any rights he or she might
have had under Section 4(b)(iii) of the 1995 Plan before such amendment.
6
================================================================================
SCHEDULE OF SEVERANCE PAYMENTS
------------------------------
--------------------------------------------------------------------------------
Your Position Severance Pay
--------------------------------------------------------------------------------
Nonexempt Employee 2 weeks, plus 1 week for each full year of
continuous employment.
Minimum: 4 weeks
Maximum: 26 weeks
--------------------------------------------------------------------------------
Exempt Employee 2 weeks, plus 2 weeks for each full year of
(Non-Officer) continuous employment.
Minimum: 8 weeks
Maximum: 26 weeks
--------------------------------------------------------------------------------
Officer/Assistant Vice 2 weeks, plus 2 weeks for each full year of
President continuous employment.
Minimum: 12 weeks
Maximum: 36 weeks
--------------------------------------------------------------------------------
Vice President or Above 2 weeks, plus 2 weeks for each full year of
continuous employment.
Minimum: 24 weeks
Maximum 52 weeks
================================================================================
7
ANNEX B
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FORM OF OPINION OF COUNSEL TO SELLER
------------------------------------
(i) Seller is a corporation validly existing and in good standing
(meaning it has filed its most recent annual report and has not filed articles
of dissolution) under the laws of the State of Wisconsin, and has the requisite
corporate power and authority to carry on its business as now being conducted.
(ii) Seller has the necessary corporate power and authority to execute
and deliver the Agreement and the Stock Option Agreement and to perform its
obligations thereunder and to consummate the transactions contemplated thereby.
(iii) The execution and delivery of the Agreement and the Stock Option
Agreement by Seller and the consummation by Seller of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action on the part of Seller.
(iv) The Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by Seller and, assuming the due execution and
delivery thereof by the Company, each constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its
respective terms, (a) except as such enforceability may be subject to the effect
of any applicable bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
law affecting creditors' rights generally and to the effect of general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law) and (b) except as the enforceability of any
indemnity provision may be limited by federal or state securities laws or the
public policy underlying such laws or may otherwise be limited by applicable
provisions of the WBCL.
(v) The execution and delivery of the Agreement and the Stock Option
Agreement by Seller do not, and the performance of the Agreement and the Stock
Option Agreement by Seller shall not, (a) conflict with or violate the Seller
Articles or Seller By-Laws, or (b) conflict with or violate any material federal
or Wisconsin state or local law, statute, ordinance, rule, regulation, order,
judgment or decree known to us to be applicable to Seller or by which any of its
properties is bound or affected. The limitations of Article 4.C. of the Seller
Articles and the voting requirements of Article 11.A. of the Seller Articles are
inapplicable to the transactions contemplated in the Agreement (other than the
transactions contemplated in the Stock Option Agreement). The voting
requirements of Article 11.A. of the Seller Articles are inapplicable to the
transactions contemplated in the Stock Option Agreement.
We have participated in the preparation and filing of the Proxy
Statement/Prospectus and the Registration Statement and, in the course of such
preparation, in conferences with certain officers and employees of Seller with
respect thereto. Although we are not passing upon or
assuming any responsibility for the accuracy, completeness or fairness of the
statements contained or incorporated in the Proxy Statement/Prospectus or the
Registration Statement, during the course of such participation no facts have
come to our attention which would lead us to believe that the Proxy
Statement/Prospectus at the time it was first mailed to holders of Seller Common
Stock and at the time of the Seller Shareholders' Meeting, or the Registration
Statement at the time it became effective and at the Effective Time, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading (except that we do not comment with respect to the financial
statements and other financial and statistical information included therein or
omitted therefrom, or any information about, or supplied or omitted by, the
Company for use in the Proxy Statement/Prospectus or the Registration
Statement).
2
ANNEX C
-------
FORM OF OPINION OF COUNSEL TO COMPANY
-------------------------------------
(i) The Company is a corporation validly existing and in good standing
(meaning it has filed its most recent annual report and has not filed articles
of dissolution) under the laws of the State of Wisconsin, and has the requisite
corporate power and authority to carry on its business as now being conducted.
(ii) The Company has the necessary corporate power and authority to
execute and deliver the Agreement and the Stock Option Agreement and to perform
its obligations thereunder and to consummate the transactions contemplated
thereby.
(iii) The execution and delivery of the Agreement and the Stock Option
Agreement by the Company and the consummation by the Company of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action on the part of the Company.
(iv) The Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by the Company and, assuming the due execution
and delivery thereof by Seller, each constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms, (a) except as such enforceability may be subject to the
effect of any applicable bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar law affecting creditors' rights generally and to the effect of general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law) and (b) except as the enforceability of the
indemnity provision may be limited by federal or state securities laws or the
public policy underlying such laws or may otherwise be limited by applicable
provisions of the WBCL.
(v) The shares of Company Common Stock to be delivered in exchange for
the outstanding shares of Seller Common Stock, as set forth in the Agreement,
are duly authorized and, when issued as contemplated by the Agreement, will be
validly issued, fully paid and nonassessable (except as otherwise provided in
Section 180.0622(2)(b) of the WBCL).
(vi) The execution and delivery of the Agreement and the Stock Option
Agreement by the Company do not, and the performance of the Agreement and the
Stock Option Agreement by the Company shall not, (a) conflict with or violate
the Company Articles or Company By-Laws, or (b) conflict with or violate any
material federal or Wisconsin state or local law, statute, ordinance, rule,
regulation, order, judgment or decree known to us to be applicable to the
Company or by which any of its properties is bound or affected.
(vii) The Registration Statement has become effective under the Securities
Act and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending under the Securities Act.
(viii) The Registration Statement as of the effective date thereof
(excluding the financial statements and other financial and statistical
information included or incorporated therein or omitted therefrom, and all
information about, or supplied or omitted by, Seller for use in the Registration
Statement, as to all of which we do not express any opinion) complied as to form
in all material respects with the requirements of the Securities Act and the
Exchange Act.
We have participated in the preparation and filing of the Proxy
Statement/Prospectus and the Registration Statement and, in the course of such
preparation, in conferences with certain officers and employees of the Company
with respect thereto. Although we are not passing upon or assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained or incorporated in the Proxy Statement/Prospectus or the Registration
Statement, during the course of such participation no facts have come to our
attention which would lead us to believe that the Proxy Statement/Prospectus at
the time it was first mailed to holders of Seller Common Stock and at the time
of the Seller Shareholders' Meeting, or the Registration Statement at the time
it became effective and at the Effective Time, contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading (except that
we do not comment with respect to the financial statements and other financial
and statistical information included therein or omitted therefrom, or any
information about, or supplied or omitted by, Seller for use in the Proxy
Statement/Prospectus or the Registration Statement).
2
