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AGREEMENT AND PLAN OF MERGER
by and among
HMN FINANCIAL, INC.,
HOME FEDERAL SAVINGS BANK,
HFSB ACQUISITION CO.
and
MARSHALLTOWN FINANCIAL CORPORATION
DATED AS OF
JULY 1, 1997
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TABLE OF CONTENTS
Page
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I. CONVERSION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Consummation of the Merger . . . . . . . . . . . . . . . . . . . 2
1.4 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Corporate Matters. . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Conversion of Securities . . . . . . . . . . . . . . . . . . . . 3
1.7 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Lost, Stolen or Destroyed Certificate. . . . . . . . . . . . . . 5
1.9 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . 5
II. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 6
2.1 Representations and Warranties of HMN. . . . . . . . . . . . . . 6
(a) Organization and Compliance with Law . . . . . . . . . . . 6
(b) Authorization and Validity of Agreements . . . . . . . . . 6
(c) No Notices or Approvals Required and No Conflicts. . . . . 6
(d) Financial Ability to Perform . . . . . . . . . . . . . . . 7
(e) Opinion of Financial Advisor . . . . . . . . . . . . . . . 7
(f) Certain Fees . . . . . . . . . . . . . . . . . . . . . . . 7
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Representations and Warranties of Marshalltown . . . . . . . . . 7
(a) Organization and Compliance with Law . . . . . . . . . . . 7
(b) Capitalization . . . . . . . . . . . . . . . . . . . . . . 8
(c) Authorization and Validity of Agreements . . . . . . . . . 9
(d) No Notices or Approvals Required and No Conflicts. . . . . 9
(e) Marshalltown Reports and Financial Statements. . . . . . .10
(f) Conduct of Business in the Ordinary Course and
Absence of Certain Changes and Events. . . . . . . . . . 11
(g) Certain Fees . . . . . . . . . . . . . . . . . . . . . . .12
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . .12
(I) Employee Benefit Plans . . . . . . . . . . . . . . . . . .12
(j) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .14
(k) Intellectual Property. . . . . . . . . . . . . . . . . . .15
(l) No Secured Debt. . . . . . . . . . . . . . . . . . . . . .15
(m) Opinion of Financial Advisor . . . . . . . . . . . . . . .15
(n) Deposit Insurance. . . . . . . . . . . . . . . . . . . . .15
(o) Properties . . . . . . . . . . . . . . . . . . . . . . . .15
(p) Insurance. . . . . . . . . . . . . . . . . . . . . . . . .16
(q) Affiliate Transactions . . . . . . . . . . . . . . . . . .16
(r) Environmental Matters. . . . . . . . . . . . . . . . . . .16
(s) Financial Institutions Bond. . . . . . . . . . . . . . . .17
(t) Loans. . . . . . . . . . . . . . . . . . . . . . . . . . .17
(u) Absence Of Questionable Payments . . . . . . . . . . . . .18
(v) Powers of Attorney, Guarantees . . . . . . . . . . . . . .18
(w) Interest Rate Risk Management Instruments. . . . . . . . .18
(x) Mortgage Servicing Agreements. . . . . . . . . . . . . . .18
(y) Regulatory Matters . . . . . . . . . . . . . . . . . . . .18
(z) Accuracy of Information. . . . . . . . . . . . . . . . . .18
III. COVENANTS OF MARSHALLTOWN . . . . . . . . . . . . . . . . . . . . . .18
3.1 Conduct of Business by Marshalltown and
Marshalltown Subsidiaries Pending the Merger . . . . . . . . .18
3.2 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . .21
3.3 Meeting of Stockholders of Marshalltown. . . . . . . . . . . . .21
3.4 No Solicitation of Acquisition Transactions. . . . . . . . . . .21
3.5 Access to Information. . . . . . . . . . . . . . . . . . . . . .22
3.6 Government Filings . . . . . . . . . . . . . . . . . . . . . . .23
3.7 Establishment of Accruals. . . . . . . . . . . . . . . . . . . .23
3.8 Filing of Tax Returns and Adjustments. . . . . . . . . . . . . .23
3.9 No Further Action Letter . . . . . . . . . . . . . . . . . . . .23
IV. COVENANTS OF HMN . . . . . . . . . . . . . . . . . . . . . . . . . . .24
4.1 Conduct of Business by HMN Pending the Merger. . . . . . . . . .24
4.2 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . .24
4.3 Access to Information. . . . . . . . . . . . . . . . . . . . . .24
4.4 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . .24
4.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .25
V. MUTUAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
5.2 Additional Agreements. . . . . . . . . . . . . . . . . . . . . .27
5.3 Notification of Certain Matters. . . . . . . . . . . . . . . . .27
5.4 Agreement to Defend. . . . . . . . . . . . . . . . . . . . . . .27
5.5 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . .27
VI. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
6.1 Conditions to Obligations of Each Party to
Effect the Merger. . . . . . . . . . . . . . . . . . . . . . .28
6.2 Additional Conditions to Obligations of HMN. . . . . . . . . . .28
6.3 Additional Conditions to Obligations of Marshalltown . . . . . .29
VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . .29
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . .30
7.3 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . .30
7.4 Nonsurvival of Representations and Warranties. . . . . . . . . .31
7.5 Public Statements. . . . . . . . . . . . . . . . . . . . . . . .31
7.6 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . .31
7.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .31
7.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
7.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .32
7.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . . .32
7.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .32
7.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
7.13 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . .32
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
July 1, 1997, by and among HMN Financial, Inc., a Delaware corporation
("HMN"), Home Federal Savings Bank, a federal savings bank ("Home
Federal"), HFSB Acquisition Co., a Delaware corporation ("Sub"), and
Marshalltown Financial Corporation, a Delaware corporation
("Marshalltown").
WHEREAS, Marshalltown is the beneficial and record owner of 100% of
the issued and outstanding capital stock of Marshalltown Savings
Bank FSB, a federal savings bank (the "Bank"); and
WHEREAS, Home Federal, a wholly-owned subsidiary of HMN, is the
beneficial and record owner of 100% of the issued and outstanding
capital stock of Sub; and
WHEREAS, the Boards of Directors of HMN, Home Federal, Sub and
Marshalltown, respectively, deem it advisable and in the best interests
of their respective stockholders that Home Federal acquire Marshalltown
and the Bank, pursuant to the terms and conditions of this Agreement,
and, in furtherance of such acquisition, such Boards of Directors (and
Home Federal as the sole stockholder of Sub) have approved this
Agreement and the merger of Sub with and into Marshalltown (the
"Merger") in accordance with the terms of this Agreement, applicable
federal law and the General Corporation Law of the State of Delaware
(the "Delaware Law"); and
WHEREAS, HMN, Home Federal, Sub and Marshalltown desire to adopt a
plan of reorganization, providing for the Merger pursuant to which all
of the issued and outstanding shares of Common Stock, $0.01 par value
per share, of Marshalltown ("Marshalltown Common Stock") will be
converted into the right to receive cash (the "Merger Consideration")
payable to the holder thereof in such amounts as set forth in this
Agreement; and
WHEREAS, through the Merger, Home Federal will obtain control over
Marshalltown and the Bank; and immediately after the Merger,
(i) Marshalltown will be liquidated (the "Liquidation"), and then (ii)
the Bank will be merged with and into Home Federal (the "Subsequent
Merger"); and
WHEREAS, following the Liquidation and the Subsequent Merger, Home
Federal shall be the surviving institution (sometimes hereinafter
referred to as the "Resulting Institution"); and
WHEREAS, HMN, Home Federal, Sub and Marshalltown desire to effect
the Merger and the other transactions contemplated hereby; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties, covenants and agreements made by each to
the others as an inducement to the consummation of the Merger and the
other transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements contained herein,
the parties hereto hereby agree as follows:
I. CONVERSION OF SHARES
In accordance with the terms and subject to the conditions of this
Agreement, HMN, Home Federal, Sub and Marshalltown shall effect the
Merger as follows:
1.1 THE MERGER. At the Effective Time (as defined in
Section 1.3), Sub shall be merged with and into Marshalltown and the
separate existence of Sub shall thereupon cease, and Marshalltown shall
continue as the surviving institution (sometimes hereinafter called the
"Surviving Corporation"). HMN may structure the acquisition of
Marshalltown contemplated by this Agreement in any other form of
reorganization or combination as HMN may elect; including (i) the merger
of any direct or indirect subsidiary of HMN, other than Sub, with and
into Marshalltown, (ii) the merger of Marshalltown with and into any
direct subsidiary of HMN, or (iii) the conversion of Marshalltown (the
"Conversion"), prior to the Merger, to a savings association to which
Marshalltown will contribute all of its assets and assign all of its
liabilities and obligations (including Marshalltown's obligations under
this Agreement); provided that any such election shall not result in a
material delay to the consummation of the transactions contemplated by
this Agreement. In the event of the foregoing election by HMN, the
parties hereto agree to execute an appropriate amendment to this
Agreement in order to reflect such election, provided, that as a result
of such election, the consideration to be received by the stockholders
of Marshalltown pursuant to the terms of this Agreement shall not be
changed or altered.
1.2 EFFECT OF THE MERGER. At the Effective Time, the Surviving
Corporation shall thereupon and thereafter possess all the rights,
privileges, powers and franchises, as well of a public as of a private
nature, of Sub and Marshalltown (collectively, the "Constituent
Corporations") and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; all and singular, the
rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property of each of the Constituent Corporations,
real, personal and mixed, and all debts due to each of the Constituent
Corporations on whatever account, as well for stock subscriptions as all
other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation; all assets,
property, rights, privileges, powers and franchises and all and every
other interest of each of the Constituent Corporations shall be
thereafter the property of the Surviving Corporation as they were of the
respective Constituent Corporations; and the title to any real estate
vested by deed or otherwise under the laws of the United States, the
State of Delaware, or other jurisdiction in each of the Constituent
Corporations shall be vested in the Surviving Corporation and shall not
revert or be in any way impaired by reason of the Merger; all rights of
creditors and all liens upon any property of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities,
obligations and duties of each of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation and may be enforced
against it to the extent as if such debts, liabilities, obligations and
duties had been incurred or contracted by it.
1.3 CONSUMMATION OF THE MERGER. As soon as is practicable on the
Closing Date (as defined in Section 1.4) after all conditions to the
consummation of the Merger set forth herein have been satisfied or duly
waived, the parties hereto shall cause the Merger to be consummated by
filing with the Secretary of State of the State of Delaware, a
certificate of merger in such form as is required by, and executed,
acknowledged and certified in accordance with, the Delaware Law (the
time of such filing is herein referred to as the "Effective Time").
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1.4 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Faegre &
Xxxxxx LLP, 2200 Norwest Center, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, at 10:00 a.m. local time on (i) the fifth day after the
latest to occur of (A) receipt of all necessary regulatory approvals and
the expiration of any waiting periods imposed by law and (B) the date on
which the stockholders of Marshalltown approve the Merger, or (ii) such
other date and at such other time and place as HMN, Home Federal, Sub
and Marshalltown shall agree (such date, the "Closing Date").
1.5 CORPORATE MATTERS. At the Effective Time:
(a) CHARTER. The Certificate of Incorporation of the Sub, as
in effect at the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until amended in accordance
with applicable law.
(b) BY-LAWS. The By-Laws of Sub, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until amended in accordance with applicable law.
(c) BOARD OF DIRECTORS. Subject to obtaining any requisite
approval of the Office of Thrift Supervision of the Department of the
Treasury (the "OTS"), the directors of the Surviving Corporation shall
consist of the directors on the Board of Directors of Sub, subject to
the right of the shareholder of the Surviving Corporation to remove and
elect such directors.
(d) OFFICERS. The officers of the Surviving Corporation
immediately after the Effective Time shall be the officers of the Sub,
and such other officers as the Board of Directors of the Surviving
Corporation may elect on the Closing Date, until their successors are
elected and qualified, and subject to the right of the Board of
Directors of the Surviving Corporation to remove and elect officers
after the Closing Date.
1.6 CONVERSION OF SECURITIES. In accordance with the terms and
subject to the conditions of this Agreement, at the Effective Time, by
virtue of the Merger and without any action on the part of the holder of
any of the following securities:
(a) MARSHALLTOWN COMMON STOCK. Each share of Marshalltown
Common Stock outstanding immediately prior to the Effective Time (except
for shares owned of record by HMN or any affiliate and except for
Dissenting Shares (as defined in Section 1.6(e)), including shares of
Marshalltown Common Stock issued pursuant to the Xxxxxxxxxxxx 0000
Recognition and Retention Plan (the "RRP"), which shares shall become
fully vested and nonforfeitable as of the Effective Time, shall be
automatically converted into the right to receive, in cash, the Merger
Consideration payable to the holder thereof (pro rated for fractional
shares, if any) without interest thereon. Subject to the terms and
conditions of this Agreement, including Section 5.1(a), the Merger
Consideration shall be $17.51 per share of Marshalltown Common Stock.
The certificates representing outstanding shares of Marshalltown Common
Stock shall, after the Effective Time, represent only the right to
receive the per share Merger Consideration from Home Federal. Each
holder of Marshalltown Common Stock, upon surrender to Registrar and
Transfer Company, (the "Paying Agent"), in proper form for cancellation,
of the stock certificate or certificates representing such shares of
Marshalltown Common Stock, shall be entitled to receive a check from the
Paying Agent in an appropriate amount of Merger Consideration for such
shares. Until so presented and surrendered in exchange for the Merger
Consideration, each certificate which represented issued and outstanding
shares of Marshalltown Common Stock (other than Dissenting Shares) shall
be deemed for all purposes to evidence ownership of the Merger
Consideration. After the Effective Time, there shall be no
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transfer on the stock transfer books of shares of Marshalltown Common
Stock. No interest shall accrue or be payable with respect to the
Merger Consideration.
(b) MARSHALLTOWN OPTIONS. Each option granted under the
Xxxxxxxxxxxx 0000 Stock Option and Incentive Plan (the "Marshalltown
Plan") issued and outstanding immediately prior to the Effective Time
shall be canceled and be converted into the right to receive, in cash,
the difference between the Merger Consideration per share and the
applicable option exercise price per share (subject to all applicable
tax withholding requirements). Upon surrender to the Paying Agent of
the applicable option agreement, each holder shall be entitled to
receive a check from the Paying Agent in an appropriate amount for such
option. Schedule 1.6(b) is a true and complete list of all such options
identifying (i) the name of the option holder, (ii) the number of
options held, and (iii) the exercise price.
(c) MARSHALLTOWN COMMON STOCK HELD BY HMN. Each share of
Marshalltown Common Stock issued and owned of record by HMN, Home
Federal or any affiliate of HMN or Home Federal at the Effective Time
shall be canceled and retired, and no securities shall be issuable and
no cash paid with respect thereto.
(d) SUB COMMON STOCK. Each share of common stock of Sub
issued and outstanding at the Effective Time shall, without any action
on the part of the holder thereof, continue as one share of the common
stock of the Surviving Corporation and all of such shares of common
stock of the Surviving Corporation shall be owned by Home Federal.
(e) DISSENTING SHARES.
(i) Notwithstanding any provision of this Agreement to
the contrary, the holder (a "Dissenting Shareholder") of any shares of
Marshalltown Common Stock who has demanded and perfected such holder's
demand for appraisal of said shares (the "Dissenting Shares") in
accordance with the provisions of applicable law (if applicable law
provides such rights) and at the Effective Time has neither effectively
withdrawn nor lost his or her right to such appraisal, shall not have a
right to receive the Merger Consideration for such Dissenting Shares
pursuant to Section 1.6(a) above and shall only be entitled to such
rights as are granted by applicable law. Home Federal or the Surviving
Corporation shall make any and all payments due to holders of Dissenting
Shares.
(ii) Notwithstanding the provisions of Section 1.6(e)(i)
above, if any Dissenting Shareholder demanding appraisal of such
Dissenting Shareholder's Dissenting Shares under applicable law shall
effectively withdraw or lose (through failure to perfect or otherwise)
his or her right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever later occurs, such Dissenting Shares
shall automatically be converted into and represent only the right to
receive the Merger Consideration as provided in Section 1.6(a) upon
surrender of the certificate or certificates representing such
Dissenting Shares.
(iii) Marshalltown shall give HMN prompt notice of
any demands by a Dissenting Shareholder for payment, or notices of
intent to demand payment received by Marshalltown, and HMN shall have
the right to participate in all negotiations and proceedings with
respect to such demands. Marshalltown shall not, except with the prior
written consent of HMN, make any payment with respect to, or settle, or
offer to settle, any such demands.
1.7 PAYMENT FOR SHARES. At and from time to time after the
Effective Time, Home Federal shall make available or cause to be made
available to the Paying Agent amounts sufficient in the aggregate
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to provide all funds necessary for the Paying Agent to make payments of
the Merger Consideration hereof to holders of shares of Marshalltown
Common Stock issued and outstanding immediately prior to the Effective
Time. As soon as practicable after the Effective Time, Home Federal
shall cause to be mailed to each person (or otherwise to be delivered to
each person, at such person's expense, who requests delivery) who was,
at the Effective Time, a holder of record of issued and outstanding
shares of Marshalltown Common Stock (other than Dissenting Shares), a
letter of transmittal and instructions for use in effecting the
surrender of the certificate(s) which, immediately prior to the
Effective Time, represented such shares. Upon surrender to the Paying
Agent of such certificates (or, in accordance with Section 1.8, such
documentation as is acceptable to and required by the Paying Agent with
respect to lost certificates), together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto,
the Paying Agent shall promptly cause to be paid to the persons entitled
thereto a check in the amount to which such persons are entitled, after
giving effect to any required tax withholdings. If payment is to be
made to a person other than the registered holder of the certificate(s)
surrendered, it shall be a condition of such payment that the
certificate(s) so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the certificate(s)
surrendered or established to the satisfaction of Home Federal or the
Paying Agent that such tax has been paid or is not applicable. 180 days
following the Effective Time, Home Federal shall be entitled to cause
the Paying Agent to deliver to Home Federal any funds (including any
interest received with respect thereto) made available to the Paying
Agent which have not been disbursed to holders of certificates formerly
representing shares of Marshalltown Common Stock outstanding at the
Effective Time, and thereafter such holder shall be entitled to look to
Home Federal only as general creditors thereof with respect to the cash
payable upon due surrender of their certificates. Notwithstanding
anything in this Section 1.7 or elsewhere in this Agreement to the
contrary, neither the Paying Agent nor any party hereto shall be liable
to a former holder of shares of Marshalltown Common Stock for any cash
delivered to a public official pursuant to applicable escheat or
abandoned property laws. The Paying Agent shall also deliver to Home
Federal a certified list of the names and addresses of all former
registered holder of shares of Marshalltown Common Stock who have not
then surrendered their certificates to receive the Merger Consideration
to which they are entitled. Except as otherwise provided therein or in
the letter of transmittal, Home Federal shall pay all charges and
expenses, including those of the Paying Agent, in connection with the
payment of the Merger Consideration in exchange for shares of
Marshalltown Common Stock.
1.8 LOST, STOLEN OR DESTROYED CERTIFICATE. In the event that any
certificate evidencing shares of Marshalltown Common Stock shall be
alleged to have been lost, stolen or destroyed, the Paying Agent shall
pay the Merger Consideration in exchange for such alleged lost, stolen
or destroyed certificate, upon the making of an affidavit of such
allegation by the record holder thereof; provided however, that Home
Federal may, in its discretion and as a condition precedent to the
issuance thereof, require such holder of such alleged lost, stolen or
destroyed certificate to deliver a bond in such sum as Home Federal may
reasonably direct as indemnity against any claim that may be made
against Home Federal or the Paying Agent with respect to the certificate
alleged to have been lost, stolen or destroyed.
1.9 FURTHER ACTION. Each of HMN, Home Federal, Sub and
Marshalltown shall take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger as promptly
as possible. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title
and possession to all assets, property, rights, privileges, powers and
franchises of the Constituent Corporations, the directors and officers
of each of the Constituent Corporations are fully authorized and
empowered in
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the name and on behalf of their respective corporation or otherwise to
take, and shall take, all such further action.
II. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF HMN. HMN, Home Federal and
Sub each hereby represent and warrant to Marshalltown that:
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Each of HMN and
its direct and indirect subsidiaries (all such direct and indirect
subsidiaries, including without limitation Home Federal and Sub,
sometimes collectively referred to as the "HMN Subsidiaries") is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite power and corporate
authority and all requisite governmental and other authorizations to
own, lease and operate its assets and properties and to carry on its
business as now being conducted, except such governmental and other
authorizations (if any) where the failure to have such authorizations
does not and would not, either individually or in the aggregate, have a
material adverse effect on the financial condition, results of
operations or business of HMN and the HMN Subsidiaries, taken as a
whole. HMN and Sub are incorporated in the State of Delaware. Except
as disclosed in a disclosure letter delivered by HMN to Marshalltown
prior to the date hereof (the "HMN Disclosure Letter"), each of HMN,
Home Federal and Sub possesses all material permits, licenses,
authorizations, certificates, franchises, orders, consents or other
indicia of authority required by any governmental, administrative or
regulatory authority or agency and is in compliance with all applicable
laws, judgments, orders, decrees, rules and regulations.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENTS. HMN, Home
Federal and Sub have all requisite power and authority to enter into
this Agreement and to perform their respective obligations hereunder,
the execution and delivery by HMN, Home Federal and Sub of this
Agreement and the consummation by HMN, Home Federal and Sub of the
transactions contemplated hereby have been duly authorized by all
requisite action. This Agreement has been duly executed and delivered
by HMN, Home Federal and Sub and is the valid and binding obligation of
HMN, Home Federal and Sub, enforceable against HMN, Home Federal and Sub
in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally, and (ii) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought.
(c) NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None
of the execution and delivery of this Agreement by HMN, Home Federal or
Sub, the performance by HMN, Home Federal or Sub of their respective
obligations hereunder, or the consummation by HMN, Home Federal or Sub
of the transactions contemplated hereby will:
(i) conflict with the charter or by-laws of HMN, Home
Federal or Sub;
(ii) assuming satisfaction of the requirements set forth
in Clause (iii) (A) and (B) below, violate any provision of law
applicable to HMN, Home Federal or Sub;
(iii) require any consent or approval of, or filing
with or notice to, any public body or authority, domestic or foreign,
under any provision of law applicable to HMN, Home Federal or Sub,
except for (A) requirements arising under the Home Owners Loan Act, as
amended (the "HOLA"),
6
the Savings and Loan Holding Company Act, as amended (the "SLHC Act")
and the Federal Deposit Insurance Act, as amended (the "FDI Act") and
(B) the filing of this Agreement or a certificate of merger in
accordance with the Delaware Law and applicable federal law; or
(iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of, or result in the creation
or imposition of any lien upon any assets, properties or business of
HMN, Home Federal or Sub under, any note, bond, indenture, mortgage,
deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment, order, judgment
or decree to which HMN, Home Federal or Sub is a party or by which HMN,
Home Federal or Sub or any of the assets or properties thereof is bound
or encumbered.
(d) FINANCIAL ABILITY TO PERFORM. Home Federal has cash funds
available sufficient to make all cash payments required to be made
hereby for the shares of Marshalltown Common Stock in the Merger.
(e) OPINION OF FINANCIAL ADVISOR. HMN has received a written
opinion, in a form reasonably acceptable to HMN, from Capital Resources
Group, Inc., to the effect that the Merger is fair, from a financial
point of view, to the stockholders of HMN.
(f) CERTAIN FEES. Except for Capital Resources Group, Inc.,
none of HMN, Home Federal, Sub or any of their respective directors,
officers, employees, agents or representatives, on behalf of HMN, Home
Federal or Sub or their respective boards of directors, or any committee
thereof, has employed any financial advisor, broker or finder or
incurred any liability for any financial advisory, brokerage or finders'
fees or commissions in connection with the transactions contemplated
hereby.
(g) LITIGATION. There are no claims, actions, suits,
investigations or proceedings pending or, to the knowledge of HMN,
threatened against or affecting HMN or any of the HMN Subsidiaries or
any of their respective assets or properties, at law or in equity,
before or by any Federal, state, municipal, regulatory or other
governmental agency or authority, foreign or domestic, or before any
arbitration board or panel, wherever located, either individually or in
the aggregate, that would reasonably be expected to delay materially or
prevent the consummation of the Merger.
2.2 REPRESENTATIONS AND WARRANTIES OF MARSHALLTOWN.
Marshalltown hereby represents and warrants to HMN, Home Federal and Sub
that:
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Marshalltown is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. The Bank is a wholly-owned
subsidiary of Marshalltown. The Bank is a federal stock savings bank
organized, validly subsisting and in good standing under the laws of the
United States. The Bank is the only subsidiary of Marshalltown. MSL
Financial Corporation ("MSL") is a corporation duly organized, validly
existing and in good standing under the laws of Iowa. MSL is a
wholly-owned subsidiary of the Bank. MSL is the only subsidiary of the
Bank. Except for (i) common stock of the Federal Home Loan Bank of Des
Moines, (ii) readily marketable securities owned by Marshalltown or the
Marshalltown Subsidiaries in the ordinary course of their respective
businesses, and (iii) limited partnership interests in Xxxxxxx Xxxx
Limited Partnership and Southbrook Green Limited Partnership, none of
Marshalltown, the Bank or MSL is a partner, investor, security holder or
a party to any joint venture, partnership, corporation or other entity,
or have any obligations to make capital contributions. Marshalltown,
the Bank and MSL have all requisite power and authority and all
requisite governmental and other authorizations to own, lease and
operate their
7
respective assets and properties and to carry on their respective
businesses as now being conducted. The Bank and MSL are sometimes
hereinafter called the "Marshalltown Subsidiaries". Each of
Marshalltown and the Marshalltown Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified would not have a
material adverse effect on the financial condition, results of
operations or business of Marshalltown or the Marshalltown Subsidiaries.
Marshalltown is registered as a savings and loan holding company with
the OTS under the SLHC Act. Except as disclosed in a disclosure letter
delivered by Marshalltown to HMN prior to the date hereof (the
"Marshalltown Disclosure Letter"), Marshalltown and the Marshalltown
Subsidiaries each possess all material permits, licenses,
authorizations, certificates, franchises, orders, consents or other
indicia of authority required by any governmental, administrative or
regulatory authority or agency and is in compliance with all applicable
laws, judgments, orders, decrees, rules and regulations. Marshalltown
has heretofore delivered to HMN true and complete copies of its
certificate of incorporation and by-laws and of the charter and by-laws
of the Marshalltown Subsidiaries, in each case, as in existence on the
date hereof.
(b) CAPITALIZATION.
(i) The authorized capital stock of Marshalltown
consists of 3,250,000 shares of Marshalltown Common Stock and 250,000
shares of Preferred Stock, $0.01 par value per share ("Marshalltown
Preferred Stock"). As of March 31, 1997, there were issued and
outstanding 1,411,475 shares of Marshalltown Common Stock (including
18,974 shares of Marshalltown Common Stock issued pursuant to the terms
of the RRP) and no shares of Marshalltown Preferred Stock. As of
Xxxxx 00, 0000, Xxxxxxxxxxxx had 383 record stockholders. Except as
disclosed in the Marshalltown Disclosure Letter, since such date no
shares of Marshalltown Common Stock or Marshalltown Preferred Stock have
been issued. All outstanding shares of Marshalltown Common Stock are
validly issued, fully paid and nonassessable and no holder thereof is
entitled to any preemptive rights. Marshalltown and the Marshalltown
Subsidiaries are not parties to, nor is Marshalltown aware of, any
voting agreement, voting trust or similar agreement, arrangement or
understanding relating to any class of capital stock of, or any
agreement, arrangement or understanding providing for registration
rights with respect to any class of capital stock or other securities
of, Marshalltown or either of the Marshalltown Subsidiaries.
(ii) As of the date hereof, there are pursuant to the
terms of the Marshalltown Plan, outstanding options to purchase an
aggregate of not more than 122,730 shares of Marshalltown Common Stock
at an exercise price per share of $8.00. Other than these options, and
any shares of Marshalltown Common Stock issued pursuant to any of the
foregoing, there are not now, and at the Effective Time there will not
be, any outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
class of capital stock of Marshalltown, or contracts, agreements,
arrangements or understandings to which Marshalltown is a party, or by
which it is or may be bound, to issue additional shares of any class of
its capital stock or options, warrants, scrip or rights to subscribe
for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, any
additional shares of any class of capital stock of Marshalltown.
Marshalltown has heretofore delivered to HMN a true and complete copy of
the Marshalltown Plan and of each of the option agreements thereunder,
in each case as in existence on the date hereof.
(iii) The shares of capital stock or other equity
securities of the Marshalltown Subsidiaries are collectively referred to
herein as the "Marshalltown Subsidiary Shares". All outstanding
Marshalltown Subsidiary Shares are validly issued, fully paid and
nonassessable and owned beneficially
8
and of record directly or indirectly by Marshalltown, free and clear of
all liens, pledges, security interests, claims or other encumbrances.
There are not now, and at the Effective Time there will not be, any
(A) outstanding Marshalltown Subsidiary Shares that are owned of record
or beneficially by any person or entity other than Marshalltown or the
Bank, or (B) outstanding options, warrants, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any
class of capital stock of the Marshalltown Subsidiaries, or contracts,
agreements, arrangements or understandings to which Marshalltown or the
Marshalltown Subsidiaries is a party, or by which any thereof is or may
be bound, to issue additional shares of any class of capital stock or
options, warrants, scrip or rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, any additional shares of
capital stock of either of the Marshalltown Subsidiaries.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENTS.
(i) Subject to approval of this Agreement and the Merger
by the stockholders of Marshalltown as provided for in Section 3.3,
(x) Marshalltown has all requisite corporate power and corporate
authority to enter into this Agreement and to perform its obligations
hereunder, and (y) the execution and delivery by Marshalltown of this
Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all requisite corporate action.
(ii) On or prior to the date hereof, the Marshalltown
Board of Directors (the "Marshalltown Board") has determined to
recommend approval of this Agreement and the Merger to the stockholders
of Marshalltown, and such determination is in effect as of the date
hereof. The affirmative vote of holders of a majority of the
outstanding shares of Marshalltown Common Stock is the only vote
necessary to approve the Merger and this Agreement. As of the date of
this Agreement, neither Marshalltown nor any director, officer or
representative thereof is soliciting, initiating or engaged in any
discussions or other negotiations with or providing any information to
any third party concerning any possible Acquisition Transaction (as
defined in Section 3.4).
(iii) This Agreement has been duly executed and
delivered by Marshalltown and is the valid and binding obligation of
Marshalltown, enforceable against Marshalltown in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to certain equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought.
(d) NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None
of the execution and delivery of this Agreement by Marshalltown, the
performance by Marshalltown of its obligations hereunder or the
consummation by Marshalltown of the transactions contemplated hereby
will:
(i) conflict with the certificate of incorporation or
by-laws of Marshalltown or with the charter or by-laws of the
Marshalltown Subsidiaries;
(ii) assuming satisfaction of the requirements set forth
in Clause (iii) (A), (B) and (C) below, violate any provision of law
applicable to Marshalltown or the Marshalltown Subsidiaries;
(iii) require any consent or approval of, or filing
with or notice to, any public body or authority, domestic or foreign,
under any provision of law applicable to Marshalltown or the
Marshalltown Subsidiaries, except for (A) requirements of Federal and
state securities laws,
9
(B) requirements arising under the HOLA, the SLHC Act, and the FDI Act
and (C) the filing of this Agreement or a certificate of merger in
accordance with the Delaware Law and applicable federal law; or
(iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of, or result in the creation
or imposition of any lien upon any assets, properties or business of
Marshalltown or the Marshalltown Subsidiaries under, any note, bond,
indenture, mortgage, deed of trust, lease, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment, order, judgment or decree to which Marshalltown or either of
the Marshalltown Subsidiaries is a party or by which Marshalltown or
either of the Marshalltown Subsidiaries or any of the assets or
properties thereof is bound or encumbered, except those disclosed in the
Marshalltown Disclosure Letter or those which the violation, breach,
conflict or default of which would not have a material adverse effect on
the financial condition, results of operations or business of
Marshalltown and the Marshalltown Subsidiaries, taken as a whole.
(e) MARSHALLTOWN REPORTS AND FINANCIAL STATEMENTS.
(i) Each of Marshalltown and the Marshalltown
Subsidiaries has filed all reports, registration statements and other
filings, together with any amendments required to be made with respect
thereto, that it has been required to file with the Securities and
Exchange Commission ("SEC") under the Securities Act of 1933, as amended
(the "1933 Act") and the Securities Exchange Act of 1934, as amended
(the "1934 Act"). All reports, registration statements and other
filings (including all exhibits, notes and schedules thereto and
documents incorporated by reference therein) filed by Marshalltown and
the Marshalltown Subsidiaries with the SEC, together with any amendments
thereto, including, when filed, the Proxy Statement (as defined in
Section 3.2), together with any amendments thereto, insofar as the Proxy
Statement contains data and information with respect to Marshalltown or
the Marshalltown Subsidiaries, are herein sometimes collectively
referred to as the "Marshalltown SEC Reports". Marshalltown has
heretofore delivered to HMN true and complete copies of all of the
Marshalltown SEC Reports that have been filed with the SEC prior to the
date hereof. As of (A) with respect to all of the Marshalltown SEC
Reports other than registration statements filed under the 1933 Act, the
respective dates of their filing with the SEC, and (B) with respect to
all registration statements filed under the 1933 Act, their respective
effective dates, the Marshalltown SEC Reports complied or will comply,
as the case may be, in all material respects with the rules and
regulations of the SEC and did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein not misleading.
(ii) All material contracts, agreements, arrangements and
understandings of Marshalltown have been disclosed in the Marshalltown
SEC Reports filed with the SEC or in the Marshalltown Disclosure Letter
except for those contracts, agreements, arrangements and understandings
that have already been fully performed and as to which there are not
contingent liabilities on the part of Marshalltown.
(iii) The consolidated financial statements
(including any related notes or schedules) included in Marshalltown's
Annual Report on Form 10-KSB for the year ended September 30, 1996 (the
"Marshalltown 10-K") and Marshalltown's Quarterly Report on Form 10-QSB
for the quarter ended December 31, 1996 (the "Marshalltown 10-Q"), as
filed with the SEC, were prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be
noted therein or in the notes or schedules thereto) and fairly present
the consolidated financial position of Marshalltown and its consolidated
subsidiaries as of September 30, 1995 and 1996 and December 31, 1996 and
the
10
consolidated results of their operations and cash flows for each of the
two years in the two-year period ended September 30, 1996 and each of
the three months ended December 31, 1995 and 1996. The independent
auditors who certified any financial statements and supporting schedules
included or incorporated by reference in the Marshalltown SEC Reports
are independent certified public accountants with respect to
Marshalltown as required by the rules and regulations of the SEC.
Subject to the provisions of Section 3.7, all of the obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due, and regardless of when
asserted) arising out of transactions or events heretofore entered into,
or any action or inaction, including taxes with respect to or based upon
transactions or events heretofore occurring, that are required to be
reflected, disclosed or reserved against in the consolidated financial
statements of Marshalltown in accordance with generally accepted
accounting principles are reflected, disclosed or reserved against in
the consolidated financial statements, and Marshalltown and its
consolidated subsidiaries have no other obligations or liabilities
except liabilities incurred since the date of its last audited annual
consolidated financial statements, in the ordinary course of business,
or in connection with the transactions contemplated by this Agreement.
(iv) Marshalltown has furnished HMN with unaudited
statements of financial condition, operations and various supporting
financial schedules as of, and for the periods ending on, each of the
last two fiscal quarters, all as included in the Thrift Financial
Reports ("TFR's") provided to the OTS. Marshalltown and the Bank have
also provided HMN with all management letters from Marshalltown's
independent certified public accountants since December 31, 1990. The
TFR's present fairly the financial condition and results of operations
of the Bank at the dates thereof, in accordance with the instructions
for preparing TFR's and, where applicable, with generally accepted
accounting principles consistently applied.
(v) Since December 31, 1990, each of Marshalltown and
the Marshalltown Subsidiaries has filed all reports and other filings,
together with any amendments required to be made with respect thereto,
that it has been required to file with federal and other banking, thrift
or other regulatory authorities (the "Marshalltown Regulatory Filings"),
and all of the Marshalltown Regulatory Filings filed prior to the date
hereof complied, and all such filings made hereafter prior to the
Effective Time will comply, in all material respects with applicable
laws, rules and regulations, and, except as disclosed in the
Marshalltown Disclosure Letter, there are no material open or unresolved
issues raised by any regulatory authority with respect to any of such
filings. Neither Marshalltown nor the Bank is subject to any cease and
desist order, written agreement or memorandum of understanding with, or
is 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 from, or has adopted any board
resolutions at the request of, federal or state governmental authorities
charged with the supervision or regulation of savings and loan
associations or savings and loan holding companies or engaged in the
insurance of savings and loan deposits, nor has Marshalltown been
advised by any such authority that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter,
board resolutions or similar undertaking.
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE AND ABSENCE OF
CERTAIN CHANGES AND EVENTS.
(i) Except as contemplated by this Agreement or as
disclosed in the Marshalltown SEC Reports filed with the SEC prior to
the date hereof or in the Marshalltown Disclosure Letter, since
September 30, 1996, Marshalltown and the Marshalltown Subsidiaries have
taken no action of the type referred to in Section 3.1 and there has not
been any material adverse change in the financial
11
condition, results of operations or business of Marshalltown or the
Marshalltown Subsidiaries, and there has not been any condition, event
or development that is reasonably expected by Marshalltown to result in
a material adverse change in the financial condition, results of
operations or business of Marshalltown or the Marshalltown Subsidiaries.
Marshalltown and the Marshalltown Subsidiaries are not parties to any
collective bargaining agreement and believe that their relations with
their employees are generally satisfactory. Since September 30, 1996,
no significant labor dispute with any employees of Marshalltown or the
Marshalltown Subsidiaries or union organizing effort has existed or, to
the knowledge of Marshalltown, is imminent or threatened.
(ii) None of Marshalltown or the Marshalltown
Subsidiaries is in violation of its charter or by-laws or in default in
the performance of, and no event has occurred that, with notice or lapse
of time or both, would constitute a default in the performance of, any
note, bond, indenture, mortgage, deed of trust, lease, franchise,
permit, authorization, license, contract, instrument or other agreement
or commitment, order, judgment or decree to which Marshalltown or either
of the Marshalltown Subsidiaries is a party or by which Marshalltown or
either of the Marshalltown Subsidiaries or any of the assets or
properties thereof is bound or encumbered, except for such defaults that
do not and would not have a material adverse effect on the financial
condition, results of operations or business of Marshalltown and the
Marshalltown Subsidiaries, taken as a whole.
(g) CERTAIN FEES. With the exception of the engagement by
Marshalltown of EVEREN Securities, Inc., none of Marshalltown, the
Marshalltown Subsidiaries, their respective directors, officers,
employees, agents or representatives, on behalf of Marshalltown or
either of the Marshalltown Subsidiaries, or their respective boards of
directors, or any committee thereof, has employed any financial advisor,
broker or finder or incurred any liability for any financial advisory,
brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby.
(h) LITIGATION. Except as disclosed in the Marshalltown SEC
Reports filed with the SEC prior to the date hereof or in the
Marshalltown Disclosure Letter, there are to the knowledge of
Marshalltown no claims, actions, suits, investigations or proceedings
pending or threatened to which Marshalltown or either of the
Marshalltown Subsidiaries is a party or to which any of their respective
assets or properties is effected, at law or in equity, before or by any
Federal, state, municipal or other governmental agency or authority,
foreign or domestic, or before any arbitration board or panel, wherever
located.
(i) EMPLOYEE BENEFIT PLANS.
(i) The Marshalltown Disclosure Letter lists (A) each
employee bonus, incentive, deferred compensation, stock purchase, stock
appreciation right, stock option and severance pay plan, (B) each
pension, profit sharing, stock bonus, thrift, savings and employee stock
ownership plan, and (C) every other employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) (collectively, "Marshalltown Benefit
Plans"), which Marshalltown or the Marshalltown Subsidiaries maintains
or to which Marshalltown or the Marshalltown Subsidiaries contributes on
behalf of current or former employees. Except as disclosed in the
Marshalltown Disclosure Letter, all of the Marshalltown Benefit Plans
comply and have at all times complied with all applicable requirements
of ERISA and all other applicable federal and state laws, including
without limitation the reporting and disclosure requirements of Part 1
of Title I of ERISA. Each of the Marshalltown Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, thrift, savings
or employee stock ownership plan that is qualified under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code") has been
determined by the Internal Revenue Service (the "IRS")
12
to qualify under Section 401(a) of the Code, and, except as disclosed in
Marshalltown Disclosure Letter, there exist no circumstances that would
adversely affect the qualified status of any such Marshalltown Benefit
Plan under that section. Except as set forth in the Marshalltown
Disclosure Letter, there is no pending or, to the knowledge of
Marshalltown, threatened litigation, governmental proceeding or
investigation against or relating to any Marshalltown Benefit Plan, and
to the knowledge of Marshalltown there is no reasonable basis for any
material proceedings, claims, actions or proceedings against any
Marshalltown Benefit Plan. Except as set forth in the Marshalltown
Disclosure Letter, no Marshalltown Benefit Plan has engaged in a
"prohibited transaction" (as defined in Section 406 of ERISA and
Section 4975(c) of the Code) since the date on which said sections
became applicable to such plan, and no Marshalltown Benefit Plan has
engaged in a transaction involving the purchase or sale of employer
securities by such plan from or to a "disqualified person" (within the
meaning of Section 4975 of the Code). Neither Marshalltown nor the
Marshalltown Subsidiaries has incurred any "accumulated funding
deficiency" (within the meaning of Section 412 of the Code), whether or
not waived, with respect to any Marshalltown Benefit Plan.
(ii) All Marshalltown Benefit Plans that are group health
plans, within the meaning of Section 4980E of the Code or Section 601 of
ERISA, have been operated in compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code and
Section 601 of ERISA to the extent such requirements are applicable. To
the best of Marshalltown's knowledge, all group health plans maintained
by Marshalltown or the Marshalltown Subsidiaries have been operated in
full compliance with the provisions of Part VII of ERISA and Subtitle K
of the Code, to the extent that such provisions apply to the group
health plan.
(iii) Marshalltown has delivered to HMN copies of
(A) each Marshalltown Benefit Plan, (B) current summary plan
descriptions of each Marshalltown Benefit Plan for which they are
required, (C) each trust agreement, insurance policy or other instrument
relating to the funding of any Marshalltown Benefit Plan, (D) the three
most recent Annual Reports (Form 5500 series) and accompanying schedules
filed with the IRS or United States Department of Labor with respect to
each Marshalltown Benefit Plan for which they are required, (E) the most
recent determination letter issued by the IRS with respect to each
Marshalltown Benefit Plan that is intended to qualify under Section 401
of the Code, (F) the three most recent available financial statements
for each Marshalltown Benefit Plan that has assets, and (G) the three
most recent audited financial statements for each Marshalltown Benefit
Plan for which audited financial statements are required by ERISA.
(iv) The Marshalltown Disclosure Letter describes any
obligation that Marshalltown or the Marshalltown Subsidiaries has to
provide health and welfare benefits to retirees and other former
employees or their dependents (other than rights arising solely under
Section 601 of ERISA or Section 4980B of the Code) including information
as to the number of retirees, other former employees and dependents
entitled to such coverage and their ages.
(v) With respect to each Marshalltown Benefit Plan that
is an "employee pension benefit plan", as defined in Section 3(2) of
ERISA (collectively, "Marshalltown Pension Plans"), Marshalltown and the
Marshalltown Subsidiaries have fulfilled their respective obligations to
the extent applicable under the minimum funding requirements of Section
302 of ERISA and Section 412 of the Code with respect to the
Marshalltown Pension Plans. Marshalltown and the Marshalltown
Subsidiaries have paid all premiums, if any, that have become due to the
Pension Benefit Guaranty Corporation ("PBGC") with respect to any of the
Marshalltown Pension Plans.
13
(vi) None of Marshalltown or the Marshalltown
Subsidiaries has, or within the past five years has had, any obligation
to contribute to any "multiemployer plan", as defined in Section 3(37)
of ERISA, and none of Marshalltown or the Marshalltown Subsidiaries has
incurred, and no event has occurred that might reasonably be expected to
result in, any material liability under Title IV of ERISA (excluding
liability for required premium payments to the Pension Benefit Guaranty
Corporation ("PBGC")) in connection with any such multiemployer plan or
any of the Marshalltown Pension Plans that is subject to Title IV of
ERISA.
(j) TAXES.
(i) Except as disclosed in the Marshalltown Disclosure
Letter, all returns and reports, including without limitation
information and withholding returns and reports (collectively, "Tax
Returns") of or relating to any foreign, Federal, state, local or other
income, premium, property, sales, excise and other taxes of any nature
whatsoever, including any interest, penalties and additions to tax in
respect thereof ("Tax" or "Taxes") heretofore required to be filed by
Marshalltown or the Marshalltown Subsidiaries have been duly filed on a
timely basis. To the knowledge of Marshalltown, all such Tax Returns
were complete and accurate in all material respects. Each of
Marshalltown and the Marshalltown Subsidiaries has paid or made adequate
provision for the payment of all Taxes reflected in such Tax Returns.
(ii) As of the date of this Agreement there are no audits
or administrative proceedings, court proceedings or claims pending
against Marshalltown or the Marshalltown Subsidiaries with respect to
any Taxes, no assessment, deficiency or adjustment has been asserted or,
to the knowledge of Marshalltown, proposed with respect to any Tax
Return of or with respect to Marshalltown or the Marshalltown
Subsidiaries and there are no liens for Taxes upon the assets or
properties of Marshalltown or the Marshalltown Subsidiaries, except
liens for Taxes not yet delinquent.
(iii) Except as disclosed in the Marshalltown
Disclosure Letter, there are not in force any waivers or agreements,
arrangements or understandings by or with respect to Marshalltown or the
Marshalltown Subsidiaries of or for an extension of time for the
assessment or payment of any Taxes. Neither Marshalltown nor the
Marshalltown Subsidiaries has received a written ruling of a taxing
authority relating to Taxes or entered into a written and legally
binding agreement with a taxing authority relating to Taxes. Except as
disclosed in the Marshalltown Disclosure Letter, neither Marshalltown
nor the Marshalltown Subsidiaries is required to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by Marshalltown or the
Marshalltown Subsidiaries, and to the knowledge of Marshalltown the IRS
has not proposed any such adjustment or change in accounting method.
For purposes of this Section 2.2(j), the term "Marshalltown
Subsidiaries" shall include former subsidiaries of Marshalltown for the
periods during which any such subsidiaries were owned directly or
indirectly by Marshalltown.
(iv) Each of Marshalltown and the Marshalltown
Subsidiaries has withheld and paid all Taxes that, to the knowledge of
Marshalltown, are required to have been withheld and paid in connection
with amounts paid or owing to any employee, creditor, independent
contractor or other third party.
(v) Neither Marshalltown nor any of the Marshalltown
Subsidiaries has filed a consent under Section 341(f) of the Code.
Marshalltown and the Marshalltown Subsidiaries are parties to Tax
allocation and Tax sharing arrangements among them, all of which
arrangements have heretofore been disclosed to HMN by Marshalltown.
14
(vi) The Bank has not taken any voluntary action to cause
the bad debt reserve created under Section 593 of the Code to be
recaptured as taxable income to the Bank.
(k) INTELLECTUAL PROPERTY. As of the date of this Agreement,
Marshalltown and the Marshalltown Subsidiaries own or are otherwise duly
authorized or entitled to utilize all trademarks, service marks, trade
names, licenses, designs, copyrights, processes, patents, or
applications therefor, and other intellectual property rights as are
presently used in, or necessary for, the conduct of the business of
Marshalltown and the Marshalltown Subsidiaries as presently conducted,
except where the failure to have such ownership or authorization or
entitlement does not and would not, individually or in the aggregate,
have a material adverse effect on the financial condition, results of
operations or business of Marshalltown and the Marshalltown
Subsidiaries, taken as a whole. Since December 31, 1990, to the
knowledge of Marshalltown, there has not been any violation or
infringement by Marshalltown or either of the Marshalltown Subsidiaries
of any intellectual property right of any other person, or any claim of
such infringement, that has not been resolved and is continuing, and
none of Marshalltown or the Marshalltown Subsidiaries has given to or
made with any other person any indemnification, forbearance to xxx or
settlement for infringement of any intellectual property right.
(l) NO SECURED DEBT. Except as set forth in the Marshalltown
Disclosure Letter, there is not now, and there will not be immediately
prior to the Effective Time, any secured debt (including capitalized
leases) of Marshalltown or the Marshalltown Subsidiaries, except for
capitalized leases of Marshalltown and the Marshalltown Subsidiaries
reflected on the consolidated financial statements of Marshalltown, and,
in either case, the existence of which does not violate the terms of any
material note, bond, indenture, mortgage, deed of trust, lease,
franchise, permit, authorization, license, contract, instrument or other
agreement or commitment to which Marshalltown or either of the
Marshalltown Subsidiaries is a party or by which Marshalltown or either
of the Marshalltown Subsidiaries or any of their assets or properties
thereof is bound or encumbered.
(m) OPINION OF FINANCIAL ADVISOR. The Marshalltown Board has
received from EVEREN Securities, Inc. a written opinion, dated on or
prior to the date of this Agreement, to the effect that the Merger
Consideration is fair to the stockholders of Marshalltown from a
financial point of view.
(n) DEPOSIT INSURANCE. The customer deposits held by the
Bank are insured by the Savings Association Insurance Fund ("SAIF")
administered by the Federal Deposit Insurance Corporation ("FDIC") in
accordance with the FDI Act. The Bank has paid all assessments and
filed all reports required by the FDI Act.
(o) PROPERTIES. Except for property owned through
foreclosure that is, as of the date of this Agreement, under contract
to be sold, or as disclosed in the Marshalltown Disclosure Letter, the
Bank has good and marketable title, free and clear of any mortgage,
pledge, lien, charge or other encumbrance, to all of its real or
personal property reflected on the most recent consolidated financial
statements of Marshalltown and the Marshalltown Subsidiaries, except for
(i) liens for current taxes not yet delinquent or taxes reflected on the
most recent consolidated financial statements of Marshalltown and the
Marshalltown Subsidiaries; (ii) such imperfections of title,
encumbrances and easements, if any, as are not individually or in the
aggregate substantial or material in character, amount or extent and do
not materially detract from the value, or interfere with the present or
proposed use, of such properties; and (iii) dispositions of such
property or assets in the ordinary course of business. The structure
and other improvements to real estate, furniture, fixtures and
equipment, are in good operating condition and repair (ordinary wear and
tear excepted) and, to the knowledge of the Bank, comply in all material
respects with
15
all applicable laws, ordinances and regulations, including, without
limitation, all building codes, zoning ordinances and other similar
laws. The Bank owns or has the right to use all real and personal
property used in its business as conducted on the date hereof. Each
lease pursuant to which Bank as lessee, leases real or personal
property, is valid and in effect in accordance with its respective
terms, and there is not, under any of such leases, on the part of the
lessee any material existing default or any event which with notice or
lapse of time, or both, would constitute such a default, other than
defaults which would not individually or in the aggregate have a
material adverse effect on the financial condition, results of
operations or business of the Bank. The Marshalltown Disclosure Letter
identifies all parcels of real estate owned, leased or controlled by
Marshalltown or either of the Marshalltown Subsidiaries, including
without limitation, real estate managed, owned or controlled in
connection with the Bank's lending or financing operations.
(p) INSURANCE. Disclosed in the Marshalltown Disclosure
Letter is a listing of all insurance policies owned by Marshalltown, or
the Marshalltown Subsidiaries. Such policies are in effect and full
force pursuant to their terms. No notices of cancellation have been
received in connection therewith.
(q) AFFILIATE TRANSACTIONS. Except as disclosed in the
Marshalltown Disclosure Letter, none of the executive officers or
directors of Marshalltown and the Marshalltown Subsidiaries, or any
member of their immediate families (which for purposes hereof shall mean
a spouse, minor child or adult child living at the home of any such
officer or director), or any entity which any of such persons "controls"
(with the meaning of Regulation O of the Federal Reserve Board), has any
loan agreement, note or borrowing arrangement or any other agreement
with Marshalltown or either of the Marshalltown Subsidiaries (other than
normal employment arrangements) or any interests in any property used in
or pertaining to the business of Marshalltown and the Marshalltown
Subsidiaries pursuant to which the amount outstanding thereunder exceeds
$60,000.
(r) ENVIRONMENTAL MATTERS.
(i) For purposes of this Section 2.2(r), the following
terms shall have the indicated meaning:
"Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation or code, license, permit,
authorization, approval relating to (i) the protection, preservation or
restoration of the environment (including, without limitation, air,
water vapor, surface water, groundwater, drinking water supply, surface
soil, subsurface soil, plant and animal life or any other natural
resource), and (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of Hazardous Substances. The term Environmental Law includes
without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, as amended; the Resource Conservation
and Recovery Act; the Clean Air Act, as amended, the Federal Water
Pollution Control Act, as amended; the Toxic Substances Control Act, as
amended, the Emergency Planning and Community Right to Know Act, the
Safe Drinking Water Act, and all comparable state and local laws, and
any common law (including without limitation common law that may impose
strict liability) that may impose liability or obligation for injuries
or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Substance.
"Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or
dangerous or otherwise regulated under any Environmental Law, whether
by type or by quantity, including any material containing any such
substance as a component.
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Hazardous Substances include without limitation petroleum or any
derivative or by-product thereof, asbestos, radioactive material, and
polychlorinated biphenyls.
(ii) Except as disclosed in the Marshalltown Disclosure
Letter, none of Marshalltown, the Bank or MSL has knowledge of or
received any notice within the past three years of any violation of, or
claim, citation, assessment, proposed assessment or demand for abatement
in connection with any Environmental Laws, or generated, stored, or
disposed of any Hazardous Substance.
(s) FINANCIAL INSTITUTIONS BOND. Since January 1, 1991, the
Bank has continuously maintained in full force and effect a financial
institutions bond with coverage equal to or greater than that provided
for on a "Form 24" insuring against acts of dishonesty by each of its
employees. Marshalltown has provided HMN a copy of the bond currently
in effect. Except as disclosed in the Marshalltown Disclosure Letter,
no claim has been made under any such bond, and Marshalltown is unaware
of any fact or condition presently existing which might form the basis
of a claim under any such bond. Marshalltown has no reason to believe
that the Bank's present financial institutions bond will not be renewed
by its carrier on substantially the same basis and terms as those now
in effect.
(t) LOANS.
(i) The documentation relating to each loan of the Bank
and relating to all security interests, mortgages and other liens with
respect to all collateral for such loans is adequate, in the opinion of
the Bank's management, for the enforcement of the loans and the related
security interests, mortgages and other liens. Such documentation is
valid and correct in all material respects, genuine as to signatures of
makers and endorsers, were given for valid consideration and properly
perfected. The terms of such loans and of the related security
interests, mortgages and other liens comply in all material respects
with all applicable laws, rules and regulations (including without
limitation laws, rules and regulations relating to the extension of
credit).
(ii) Except as set forth in the Marshalltown Disclosure
Letter, as of December 31, 1996, there are no loans, leases, other
extensions of credit or commitments to extend credit of the Marshalltown
Subsidiaries that have been or should have been classified as
nonaccrual, as restructured, as 90 days past due, as still accruing and
doubtful of collection or any comparable classification and no material
information with respect to the loan portfolios of the Bank has been
withheld from HMN.
(iii) The allowances for loan losses contained in the
financial statements of the Bank were established in accordance with the
past practices and experiences of the Bank, and the allowance for loan
losses shown on the balance sheet of the Bank at December 31, 1996 is
adequate in all material respects under the requirements of generally
accepted accounting policies and the rules, regulations and policies of
the OTS to provide for possible losses on loans (including without
limitation accrued interest receivable) and credit commitments
(including without limitation stand-by letters of credit) outstanding as
of such date.
(iv) Except as identified in the Marshalltown Disclosure
Letter, there are no loans or extensions of credit made by the Bank to
a customer who presently has a principal residence, if the subject loan
is personal, or a principal place of business, if the subject loan is
commercial, outside of the State of Iowa.
(v) Except with respect to sales of participations in
student loans, since January 1, 1991, the Bank has not issued or sold
any loan participations which might expose Marshalltown
17
or either of the Marshalltown Subsidiaries to direct or indirect
recourse liability to the participant, pursuant to any written or verbal
agreements or understandings with such participant;
(u) ABSENCE OF QUESTIONABLE PAYMENTS. From and after
January 1, 1991, Marshalltown and the Marshalltown Subsidiaries have
not, nor, to the knowledge of Marshalltown, has any director, officer,
agent, employee, consultant or other person associated with, or acting
on behalf of, Marshalltown or the Marshalltown Subsidiaries (i) used any
corporate funds for unlawful contributions, gifts, entertainment or
unlawful expenses relating to political activity; or (ii) made any
direct or indirect unlawful payments to governmental officials from any
corporate funds, or established or maintained any unlawful or unrecorded
accounts with funds received from Marshalltown or the Marshalltown
Subsidiaries.
(v) POWERS OF ATTORNEY, GUARANTEES. Except as set forth in
the Marshalltown Disclosure Letter, Marshalltown and the Marshalltown
Subsidiaries have no power of attorney outstanding, or any obligation
or liability, either actual, accruing or contingent, as guarantor,
surety, cosigner, endorser, co-maker or indemnitor in respect of the
obligation of any person, corporation, partnership, joint venture,
association, organization or other entity.
(w) INTEREST RATE RISK MANAGEMENT INSTRUMENTS. Disclosed in
the Marshalltown Disclosure Letter is a list of all interest rate swaps,
caps, floors and option agreements and other interest rate risk
management arrangements to which Marshalltown or either of the
Marshalltown Subsidiaries is a party or by which any of their properties
or assets may be bound. Each such arrangement was entered into in the
ordinary course of business and in accordance with prudent banking
practice and applicable rules, regulations and policies.
(x) MORTGAGE SERVICING AGREEMENTS. The Bank has previously
provided HMN copies of all mortgage servicing agreements to which Bank
is a party (the "Mortgage Servicing Agreements"). The Mortgage
Servicing Agreements set forth all applicable terms and conditions and
have not been modified in any material respect. As of the date of this
Agreement, there is no pending or, to the knowledge of the Bank,
threatened cancellation of any Mortgage Servicing Agreement. No
material sanctions or penalties have been imposed upon the Bank under
any Mortgage Servicing Agreement or under any applicable regulation
relating thereto.
(y) REGULATORY MATTERS. None of Marshalltown or the
Marshalltown Subsidiaries has taken or agreed to take any action or has
any knowledge of any fact or circumstance that would materially impede
or delay receipt of any approval necessary to the consummation of the
transactions contemplated by this Agreement.
(z) ACCURACY OF INFORMATION. The statements of Marshalltown
contained in this Agreement, the Schedules, the Marshalltown Disclosure
Letter and any other written document executed and delivered by or on
behalf of Marshalltown pursuant to the terms of this Agreement are true
and correct in all material respects, and such statements and documents
do not omit any material fact necessary to make the statements contained
therein not misleading.
III. COVENANTS OF MARSHALLTOWN
3.1 CONDUCT OF BUSINESS BY MARSHALLTOWN AND THE MARSHALLTOWN
SUBSIDIARIES PENDING THE MERGER. Marshalltown covenants and agrees with
HMN and Home Federal that, with respect to
18
Marshalltown and the Marshalltown Subsidiaries, prior to the Effective
Time, unless HMN shall otherwise agree in writing or as is otherwise
expressly contemplated by this Agreement:
(a) The businesses of Marshalltown and the Marshalltown
Subsidiaries will be conducted only in, and Marshalltown and the
Marshalltown Subsidiaries will not take any material action except in,
the ordinary course of business and consistent with prior practices.
(b) Each of Marshalltown and the Marshalltown Subsidiaries
will not directly or indirectly do any of the following: (i) issue,
sell, pledge, dispose of or encumber (A) any shares of capital stock of
Marshalltown or the Marshalltown Subsidiaries, except upon exercise of
options outstanding under the Marshalltown Plan as of the date hereof,
(B) any investment assets, loans or mortgage servicing rights of
Marshalltown or the Marshalltown Subsidiaries other than in the ordinary
course of business consistent with prior practices and not in excess of
$150,000, or (C) any other assets or properties of Marshalltown or the
Marshalltown Subsidiaries other than in the ordinary course of business
and consistent with prior practices and not in excess of $10,000 in the
aggregate; (ii) amend or propose to amend their respective charters or
by-laws; (iii) split, combine or reclassify any outstanding capital
stock, or declare, set aside or pay any dividend or distribution payable
in cash, stock, property or otherwise with respect to their respective
shares of capital stock whether now or hereafter outstanding;
(iv) redeem, purchase or acquire or offer to acquire any of the shares
of capital stock of Marshalltown or the Marshalltown Subsidiaries; or
(v) agree or commit to do any of the foregoing.
(c) Each of Marshalltown and the Marshalltown Subsidiaries
will not directly or indirectly do any of the following: (i) grant,
issue, sell, pledge or dispose of any options, warrants or rights of any
kind to acquire any shares of any class of capital stock of Marshalltown
or either of the Marshalltown Subsidiaries or any securities that are
convertible or exchangeable therefor; (ii) acquire (whether by merger,
consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division
thereof; (iii) other than short term borrowings in the ordinary course
of the Bank's banking business, incur any indebtedness for borrowed
money or issue any debt securities; (iv) cancel any material debts or
obligations owing to it, except in connection with the ordinary course
of the Bank's lending business; (v) liquidate or merge into or
consolidate with any other corporation, partnership, or other business
organization except as provided in Section 3.4; or (vi) agree or commit
to do any of the foregoing.
(d) Each of Marshalltown and the Marshalltown Subsidiaries
will not directly or indirectly do any of the following, (i) enter into
or increase any loan or credit commitment (including stand-by letters of
credit) to, or invest or agree to invest in, any one person, entity or
obligor or modify any of the material provisions or renew or otherwise
extend the maturity date of any existing loan or credit commitment to
any one person, entity or obligor (collectively, "Lend to") in an amount
in excess of $150,000, provided no such consent shall be required in
respect of (A) single-family residential loans or credits not exceeding
$214,600 that are saleable in recognized secondary markets pursuant to
the Bank's lending policies as in effect on the date hereof, (B) any
loans originated under an Iowa Housing Authority program and saleable to
such agency, or (C) with the prior approval of HMN, loans or
participation in loans originated by Anchor Bank; (ii) enter into, or
increase in an amount, any commercial or multi-family real estate loan
or credit commitment (including stand-by letters of credit) to, or
invest or agree to invest in, any commercial or multi-family real estate
project or entity, or Lend to any person other than in accordance with
lending policies as in effect on the date hereof, provided that the Bank
may make any such loan in the event (A) the Bank has delivered to HMN or
its designated representative a notice of its intention to make such
loan and such information as HMN or its designated representative may
reasonably require in respect thereof, and (B) HMN or its designated
representative shall not have objected to such loan by giving
19
written or facsimile notice of such objection within two business days
following the delivery to HMN of the notice of intention and information
as aforesaid; (iii) Lend to any person or entity, with respect to any of
the loans or other extensions of credit to which or investments in which
are on a "watch list" or similar internal report of the Bank; (iv) enter
into any agreement or engage in any transaction which reasonably could
be construed as materially affecting the asset/liability management or
interest rate risk management position of the Bank; (v) materially
change current deposit pricing practices or policies (in this regard,
the Bank shall promptly telecopy to HMN copies of all the Bank's
proposed deposit pricing), (vi) purchase, acquire or agree or offer to
purchase or acquire any investment securities with a maturity in excess
of three years, except for any securities, the purchase or acquisition
of which is approved by HMN prior to any such purchase or acquisition;
or (vii) change lending, credit, investment, liability management and
other material banking policies in any respect which is material to the
Bank; provided, however, that nothing in this Section 3.1(d) shall
prohibit the Bank from honoring any contractual obligation in existence
on the date of this Agreement;
(e) Each of Marshalltown and the Marshalltown Subsidiaries
will not enter into, amend in any material respect, terminate or waive
any material right under any contract or agreement referred to in
Section 2.2(e)(ii) or that would have been disclosed pursuant to this
Agreement if such contract or agreement had been in effect as of the
date hereof.
(f) Each of Marshalltown and the Marshalltown Subsidiaries
will not enter into or amend any employment, consulting, separation or
termination agreement, arrangement or understanding nor take any action
with respect to the grant of any separation or termination pay or with
respect to any increase of benefits payable under its separation or
termination pay policies or agreements or arrangements in effect as of
the date hereof.
(g) Each of Marshalltown and the Marshalltown Subsidiaries
will not (i) hire any new executive employees, (ii) except for
replacements in the ordinary course of business consistent with prior
practices, hire any other new employee, (iii) except in the ordinary
course of business consistent with prior practices, increase the
compensation of any employee, or (iv) adopt or amend (except to comply
with applicable law) any bonus, profit sharing, compensation, stock
option, pension, retirement, separation, deferred compensation or other
employee benefit plan, agreement, trust fund or arrangement for the
benefit or welfare of, any employee or former employee.
(h) Each of Marshalltown and the Marshalltown Subsidiaries
will not make any capital expenditure or commitment for which it is not
contractually bound at the date hereof except necessary replacements in
the ordinary course of business and capital expenditures reflected in
the current annual budget of the Bank (a copy of which has been provided
by Marshalltown to HMN prior to the execution of this Agreement and
accepted by HMN).
(i) Each of Marshalltown and the Marshalltown Subsidiaries
will not knowingly take any of the foregoing actions or willfully engage
in any activity, enter into any transaction or take or omit to take any
other voluntary act which would make any of the representations and
warranties in Section 2.2 untrue or incorrect in any material respect if
made anew after engaging in such activity, entering into such
transaction, or taking or omitting such other act.
(j) Subject to the provisions hereof, Marshalltown will use
all reasonable efforts (i) to preserve intact the business organization
of Marshalltown and the Bank and to preserve the goodwill of those
having relationships with Marshalltown or the Bank, and (ii) to prepare
with HMN, prior to
20
communicating with Marshalltown's employees, depositors, borrowers and
other customers, regarding the Merger and continuing operations after
consummation of the Merger.
3.2 PROXY STATEMENT. As promptly as practicable after the date
hereof, Marshalltown will draft and file with the SEC under the 1934
Act, and will use all reasonable efforts to have cleared by the SEC, a
proxy statement (the "Proxy Statement") with respect to the meeting of
stockholders of Marshalltown referred to in Section 3.3. The Proxy
Statement (as it relates to Marshalltown) will comply as to form in all
material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC, and the Proxy Statement (except with respect
to data and information concerning HMN and the HMN Subsidiaries
furnished by or on behalf of HMN to Marshalltown specifically for use
therein) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements made therein not misleading. Subject to the
provisions of Section 3.4, the Proxy Statement will contain the
recommendation of the Marshalltown Board that the stockholders of
Marshalltown vote to approve and adopt the Merger and this Agreement.
Marshalltown will promptly notify HMN in writing if prior to the
Effective Time it shall obtain knowledge of any fact that would make it
necessary to amend the Proxy Statement in order to render the statements
made therein not misleading or to comply with applicable law.
Marshalltown will promptly furnish to HMN a true and complete copy of
each written communication of Marshalltown with the SEC with respect to
the Proxy Statement and will promptly advise HMN of the substance of
each oral communication with the SEC.
3.3 MEETING OF STOCKHOLDERS OF MARSHALLTOWN. Subject to the
provisions of Section 3.4, as soon as the parties may agree after the
date hereof, but in no event later than the earliest practicable date
after receipt of all necessary permits, consents and approvals
contemplated by Section 6.1(b), Marshalltown and the Marshalltown Board
will (i) take all action necessary in accordance with the Delaware Law
and its certificate of incorporation and by-laws to convene a meeting of
its stockholders to consider and vote upon approval and adoption of the
Merger and this Agreement, (ii) recommend that the stockholders of
Marshalltown vote to approve and adopt the Merger and this Agreement,
(iii) mail the Proxy Statement to its stockholders, (iv) use all
reasonable efforts to solicit from its stockholders proxies in favor of
such approval and adoption, and (v) take all other action reasonably
necessary or helpful to secure a vote of its stockholders in favor of
such approval and adoption.
3.4 NO SOLICITATION OF ACQUISITION TRANSACTIONS. Each of
Marshalltown and the Marshalltown Subsidiaries will not directly or
indirectly, through any director, officer, employee, agent,
representative or otherwise, solicit, initiate or intentionally
encourage submission of any inquiries, proposals or offers from any
person or entity (other than HMN and the HMN Subsidiaries) relating to
any merger, consolidation, share exchange, purchase or other acquisition
of all or (other than in the ordinary course of business) any
substantial portion of the assets of or any substantial equity interest
in Marshalltown or the Bank or any business combination with
Marshalltown or the Bank (collectively, an "Acquisition Transaction"),
or participate in any discussions or negotiations regarding, or furnish
to any other person any information with respect to Marshalltown or the
Bank or MSL or afford access to the properties, books or records of
Marshalltown or the Bank for the purposes of, or cooperate with, or
assist or participate in, facilitate or encourage, any effort or attempt
by any other person or entity to seek or effect an Acquisition
Transaction, or enter into an agreement with any person or entity.
Notwithstanding the foregoing, the restrictions set forth in this
Agreement shall not prevent the Marshalltown Board from taking any of
the following actions: (i) furnishing information concerning
Marshalltown or (ii) negotiating with such third party concerning an
Acquisition Transaction provided that all of the following events shall
have occurred: (A) such third party has made a written proposal to the
Marshalltown Board (which proposal may be conditional) to consummate an
Acquisition Transaction which proposal identifies a price of range of
values to be paid for the outstanding securities or substantially all of
the assets of the Marshalltown, and if consummated, based
21
on the advice of the Marshalltown's investment bankers, the Marshalltown
Board has determined is financially more favorable to the stockholders
of Marshalltown than the terms of the Merger (a "Superior Proposal");
(B) the Marshalltown Board has determined, based on the advice of its
investment bankers, that such third party is financially capable of
consummating such Superior Proposal; (C) the Marshalltown Board shall
have determined, after consultation with its outside legal counsel, that
the fiduciary duties of the Marshalltown Board require Marshalltown to
furnish information to and negotiate with such third party; and (D) HMN
shall have been notified in writing of such Superior Proposal, including
all of its terms and conditions, and shall have been given copies of
such proposal. In addition to the foregoing, Marshalltown shall not
accept or enter into any agreement concerning an Acquisition Transaction
for a period of not less than 48 hours after HMN's receipt of a copy of
such proposal. Upon compliance with the foregoing, Marshalltown shall
be entitled to not recommend or change its recommendation concerning the
Merger; and enter into an agreement with such third party concerning an
Acquisition Transaction, provided that Marshalltown shall immediately
make payment in full to HMN of the fee set forth in Section 5.1. In
addition, following receipt of a proposal or offer relating to an
Acquisition Transaction, Marshalltown may take and disclose to its
stockholders a position contemplated by Rule 14e-2 or Rule 14d-9 under
the 1934 Act or otherwise make a disclosure to its stockholders.
3.5 ACCESS TO INFORMATION.
(a) Subject to the provisions of Section 3.4, from the date
hereof to the Effective Time, each of Marshalltown and the Marshalltown
Subsidiaries will, and their respective directors, officers, employees,
agents and representatives will, afford the officers, employees, agents
and representatives of HMN reasonable access at all reasonable times to
the officers, employees, representatives, properties, books and records
of Marshalltown and the Marshalltown Subsidiaries, and to the books and
records of any predecessors thereof in the possession of Marshalltown or
the Marshalltown Subsidiaries, and will furnish to HMN all financial,
operating and other data and information as HMN and the HMN
Subsidiaries, through its officers, employees or representatives, may
reasonably request. From the date hereof to the Effective Time,
Marshalltown and the Bank shall promptly furnish HMN with copies of all
monthly and other interim financial statements and other information,
including information disseminated to the Marshalltown Board, as the
same become available. Marshalltown shall promptly notify HMN of any
material change in the business or operations of Marshalltown or the
Bank and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the
institution or the threat of material litigation involving Marshalltown
or the Bank. Two representatives of HMN shall attend all meetings of
the Marshalltown Board and committees thereof (except meetings of the
Marshalltown Board relating to the Merger and the transactions
contemplated hereby) and of each of its subsidiaries conducted prior to
the Effective Time, and give HMN reasonable advance notice of the date,
time and place of any such regularly scheduled meetings and special
meetings of the entire Board of Directors of any such entity.
Notwithstanding anything to the contrary in this Section 3.5(a), nothing
in this Section 3.5(a) shall require Marshalltown to provide access to
or copies of any information to HMN, pursuant to this Section 3.5(a), if
such access would result in the violation of the attorney-client
privilege afforded such information.
(b) Marshalltown agrees to hold in confidence all, and not to
disclose to others for any reason whatsoever any, non-public information
received by it pursuant to Section 4.3 or otherwise in connection with
the transactions contemplated hereby, except (i) as required by law,
(ii) for disclosure to directors, officers, employees, agents and
representatives as necessary to consummate the Merger or as necessary to
the operation of its and HMN's businesses, and (iii) for information
that becomes publicly available other than through Marshalltown or the
Marshalltown Subsidiaries or their respective directors, officers,
employees, agents or representatives. In the event that this Agreement
is terminated, upon receipt
22
of a written request from HMN, Marshalltown will return to HMN all
documents and other material (and all copies thereof) obtained from HMN
or any of the HMN Subsidiaries in connection with the transactions
contemplated hereby and will destroy all documents and other material
prepared by Marshalltown or any of the Marshalltown Subsidiaries, or
their respective directors, officers, employees, agents and
representatives, that reflect any non-public information received by any
of them in connection with the transactions contemplated hereby.
3.6 GOVERNMENT FILINGS. Marshalltown and the Marshalltown
Subsidiaries shall file all reports with the appropriate regulatory
authorities and all other reports, applications and other documents
required to be filed with the OTS and other regulatory authorities
between the date of this Agreement and the Effective Time and shall make
available to HMN copies of all such reports.
3.7 ESTABLISHMENT OF ACCRUALS. If requested by HMN immediately
prior to the Effective Time, the Bank shall, consistent with generally
accepted accounting principles, establish such additional accruals
(including an addition of $150,000 for income taxes) and reserves as may
be necessary to conform the Bank's accounting and credit loss reserve
practices and methods to those of HMN (as such practices and methods are
to be applied to the Bank from and after the Effective Time) and reflect
HMN's plans with respect to the conduct of the Bank's business following
the Merger and to provide for the costs and expenses relating to the
consummation by Marshalltown and the Bank of the transactions
contemplated by this Agreement.
3.8 FILING OF TAX RETURNS AND ADJUSTMENTS.
(a) Marshalltown, on its behalf and on behalf of each of the
Marshalltown Subsidiaries, shall file (or cause to be filed) at its own
expense, on or prior to the due date, all Tax Returns, including all
Marshalltown Benefit Plan returns and reports, for all Tax periods
ending on or before the Closing Date where the due date for such Returns
(taking into account valid extension of the respective due dates) falls
on or before the Closing Date; provided, however, that Marshalltown and
the Marshalltown Subsidiaries shall not amend any Tax Returns, or other
elections or information statements which reflects an additional
liability for Taxes, or consent to any material adjustment or otherwise
compromise or settle any material matters with respect to Taxes, without
prior consultation with HMN; provided, further, that Marshalltown and
the Marshalltown Subsidiaries shall not make any election or take any
other discretionary position with respect to any material amount of
Taxes in a manner inconsistent with past practices, without the prior
written approval of HMN. Marshalltown shall provide HMN with a copy of
appropriate workpapers, schedules, drafts and final copies of each
material federal and state income Tax Return or election of Marshalltown
and the Marshalltown Subsidiaries (including returns of all Marshalltown
Benefit Plans) as soon as practicable before filing such return or
election and the parties shall reasonably cooperate with each other in
connection therewith.
(b) HMN, in its sole and absolute discretion, will file (or
cause to be filed) all Tax Returns of Marshalltown and the Marshalltown
Subsidiaries due after the Closing Date. After the Closing Date, HMN,
in its sole and absolute discretion and to the extent permitted by law,
shall have the right to amend, modify or otherwise change all Tax
Returns of Marshalltown and the Marshalltown Subsidiaries for all Tax
periods.
3.9 NO FURTHER ACTION LETTER. Marshalltown will use all
reasonable efforts to file as promptly as possible any notifications or
reports or other documents required to obtain a no further action letter
from the Iowa Department of National Resources regarding the
environmental contamination detected at the Bank's facility at 00 Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxx.
23
IV. COVENANTS OF HMN
4.1 CONDUCT OF BUSINESS BY HMN PENDING THE MERGER. HMN will use
all reasonable efforts to assist Marshalltown in communicating with
Marshalltown's employees, depositors, borrowers and other customers,
regarding the Merger and continuing operations after consummation of the
Merger.
4.2 PROXY STATEMENT. As promptly as practicable after the date
hereof, HMN will cooperate with Marshalltown in drafting the Proxy
Statement. The Proxy Statement (as it relates to HMN) will not contain
(with respect to data and information concerning HMN and the HMN
Subsidiaries furnished by or on behalf of HMN to Marshalltown
specifically for use therein) any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements made therein not misleading. HMN will promptly
notify Marshalltown in writing if prior to the Effective Time it shall
obtain knowledge of any fact that would make it necessary to amend the
Proxy Statement in order to render the statements made therein not
misleading or to comply with applicable law.
4.3 ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, HMN and its
directors, officers, employees, agents and representatives will furnish
to Marshalltown all financial, operating and other data and information,
as filed by HMN with the SEC, as Marshalltown, through its officers,
employees or representatives, may reasonably request. HMN shall also
provide Marshalltown with copies of any applications, notifications or
other documents filed with the OTS or any other applicable regulatory
authority and any correspondence related thereto. Notwithstanding
anything to the contrary in this Section 4.3(a), nothing in this Section
4.3(a) shall require HMN to provide access to or copies of any
information to Marshalltown, pursuant to this Section 4.3(a), if such
access would result in the violation of the attorney-client privilege
afforded such information.
(b) HMN agrees to hold in confidence all, and not to disclose
to others for any reason whatsoever any, non-public information received
by it pursuant to Section 3.5 or otherwise in connection with the
transactions contemplated hereby, except (i) as required by law,
(ii) for disclosure to directors, officers, employees, agents and
representatives as necessary to consummate the Merger or as necessary to
the operation of its and Marshalltown's businesses, and (iii) for
information that becomes publicly available other than through HMN or
any of the HMN Subsidiaries or their respective directors, officers,
employees, agents or representatives. In the event that this Agreement
is terminated, upon receipt of a written request from Marshalltown, HMN
will return to Marshalltown all documents and other material (and all
copies thereof) obtained from Marshalltown or any of the Marshalltown
Subsidiaries in connection with the transactions contemplated hereby and
will destroy all documents and other material prepared by HMN or any of
the HMN Subsidiaries, or their respective directors, officers,
employees, agents and representatives, that reflect any non-public
information received by any of them in connection with the transactions
contemplated hereby.
4.4 EMPLOYEE BENEFITS.
(a) At the Effective Time HMN will assume all employee
benefit plans, programs, policies, contracts, agreements and
arrangements maintained by Marshalltown or either of the Marshalltown
Subsidiaries (the "Marshalltown Employee Plans") and shall succeed to
all rights as the employer or sponsor under the Marshalltown Employee
Plans to amend, modify or terminate the same in
24
accordance with their terms and applicable law. To the extent after the
Effective Time, employees of Marshalltown and Marshalltown Subsidiaries
participate in any employee benefit plans, programs, policies,
contracts, agreements and arrangements of HMN, such employees will
receive prior service credit for participation, vesting and benefit
accrual purposes, except no benefit accrual credit will be given for
prior service with Marshalltown or Marshalltown Subsidiaries relating to
any HMN defined benefit retirement plan.
(b) The existing Marshalltown profit sharing plan will be
continued, at the option of HMN, through either December 31, 1997 or
December 31, 1998 at which time it will be terminated with all
participant accounts becoming fully vested. Prior to termination
eligible employees will be entitled to employer contributions at 15% of
eligible compensation for the year ended December 31, 1997 and an amount
equivalent to the percentage allocation under the HMN Employee Stock
Ownership Plan for the year ended December 31, 1998. This percentage
allocation shall be determined by the sum of the fair market value of
the ESOP shares allocated to employees of HMN and its subsidiaries
during the year divided by the total eligible compensation paid to the
participants in the ESOP Plan for the same period, subject to the 15%
limit of eligible compensation imposed by the existing Marshalltown
Profit Sharing Plan. The accounts of participants and beneficiaries
shall be distributed as soon as practicable after the termination of
such plan, with distributions being subject, at the option of the
participant or beneficiary, to rollover to an HMN qualified plan (if
permitted by the terms of such plan), or to an individual retirement
account (to the extent permitted by law). Upon termination of the
Marshalltown profit sharing plan, full-time employees of Marshalltown
and Marshalltown Subsidiaries employed as of the Effective Time will be
eligible to participate (subject to eligibility and vesting provisions
thereof) in the Home Federal Savings Bank 401(k) Plan and the HMN
Employee Stock Ownership Plan. For purposes of such participation,
employees of Marshalltown and Marshalltown Subsidiaries will receive
prior service credit for their service with Marshalltown or Marshalltown
Subsidiaries for eligibility, participation and vesting purposes only.
(c) Employees of Marshalltown and Marshalltown Subsidiaries
will participate in their existing employee welfare programs at existing
contribution rates through the Effective Time. At the Effective Time,
such programs will be terminated and replaced with HMN plans.
(d) Subject to satisfaction of the provisions of Section
6.2(e), at the Effective Time, Home Federal (i) will assume the terms
and conditions of certain employment agreements between the Bank and six
employees of the Bank, including Xxxxxxx X. Xxxxxx and (ii) will
terminate Xxxxxxx X. Xxxxxx in accordance with the terms and conditions
set forth in the employment agreement between Marshalltown and Xxxxxxx
X. Xxxxxx dated June 30, 1995.
(e) Nothing contained in this Section 4.4 or elsewhere in
this Agreement shall confer, or be deemed to confer, upon any person who
is an employee or former employee of Marshalltown or either of the
Marshalltown Subsidiaries or a beneficiary of an employee or former
employee any rights to continued employment or, to continuation of any
benefit plans, programs, policies or arrangements, including the
Marshalltown Employee Plans and the HMN Plans, for any particular period
of time following consummation of the Merger.
4.5 INDEMNIFICATION.
(a) HMN agrees that from and after the Effective Time it will
assume and honor the indemnification obligations of Marshalltown and the
Marshalltown Subsidiaries set forth in their respective certificate of
incorporation, charter or bylaws, as in effect on the date hereof with
respect to any person described in such provision (the "indemnities").
25
(b) HMN agrees that for a period of three years from and
after the Effective Time it will maintain and cause to remain in effect
the current directors' and officers' liability insurance policies
maintained by Marshalltown and the Marshalltown Subsidiaries with
respect to claims arising from facts or events which occurred at or
before the Effective Time.
(c) In the event HMN or any of its successors or assigns
(i) reorganizes or consolidates with or merges into or enters into
another business combination transaction with any other person or entity
and is not the resulting, continuing or surviving corporation or entity
of such consolidation, merger or transaction, or (ii) liquidates,
dissolves or transfers all or substantially all of its properties and
assets to any person or entity, then, and in each such case, proper
provision shall be made so that the successors and assigns of HMN assume
the obligations set forth in this Section 4.5.
(d) This Section 4.5 shall be construed as an agreement, as
to which the indemnitees are intended to be third-party beneficiaries,
between HMN and such indemnitees as unaffiliated third parties and is
not subject to any limitations to which HMN may be subject in
indemnifying its own directors or officers or other persons.
V. MUTUAL COVENANTS
5.1 EXPENSES.
(a) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the
party incurring such costs and expenses; provided, however, that any of
such costs and expenses incurred by Marshalltown or either of the
Marshalltown Subsidiaries and payable to third parties (other than HMN)
in excess of $400,000 shall result in an adjustment to the amount of the
Merger Consideration as follows: the amount, if any, in excess of
$400,000 shall be divided by 1,534,205, and shall be subtracted from the
amount of the Merger Consideration paid per share of Marshalltown Common
Stock. For purposes of this Section 5.1(a), all costs and expenses (the
"Environmental Costs") incurred or to be incurred by Marshalltown,
either of the Marshalltown Subsidiaries or any successor thereto, with
respect to the environmental contaminants detected in the soil and
groundwater of the Bank's facility at 00 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxx, including, without limitation, all costs and
expenses incurred or to be incurred in connection with the remediation
and clean-up of such site shall be included; provided, however, that the
testing and assessment costs related to such site shall not be included.
Notwithstanding the provisions of the foregoing sentence, the portion,
if any, of the Environmental Costs which are reimbursed, or would be
subject to reimbursement, pursuant to Iowa's environmental reimbursement
funds will not be included in Environmental Costs provided Marshalltown
delivers to HMN, on or prior to Closing, a letter or other evidence,
reasonably satisfactory to HMN, that such portion has been reimbursed or
shall qualify for reimbursement under the terms and provisions of such
funds. The calculation of the Environmental Costs, if any, to be
incurred, shall be derived from the estimate of the Environmental Costs
prepared by an environmental engineer engaged by Marshalltown in
connection with any requirements of the Iowa Department of Natural
Resources related to the issuance of a no further action letter and the
approval of any monitoring or remediation plan for the Marshalltown
property. Such estimate shall be subject to HMN's prior review and
approval.
26
(b) Notwithstanding the provisions of Section 5.1(a),
(i) if (A) there has been no material breach by HMN of
the representations, warranties, covenants and agreements of HMN under
this Agreement (an "HMN Material Breach"), (B) this Agreement is
terminated pursuant to Section 7.1(f), (C) prior to such termination an
Acquisition Proposed (as hereinafter defined) is outstanding, and (D) an
Acquisition Proposal, as it may be modified, or a substitute,
alternative or other Acquisition Proposal, is consummated within
18 months after this Agreement is terminated pursuant to Section 7.1(f),
then Marshalltown will at the time of such consummation or promptly
thereafter, but in no event later than three business days after
receiving a written request from HMN therefor, pay to HMN a fee of
$750,000. As used herein, an "Acquisition Proposal" shall mean a publicly-
announced offer, or a publicly-announced intent to make an offer, from
a party other than HMN or its affiliates, to acquire Marshalltown or the
Bank in a merger, consolidation, share exchange or other business
combination or joint venture, to acquire all or substantially all of the
assets of Marshalltown or the Bank or a substantial part of the assets
of Marshalltown and the Bank, taken as a whole, or to acquire at least
50% of the outstanding Marshalltown Common Stock or at least 50% of the
equity interests in the Bank, or a negotiated transaction for any of the
foregoing.
(ii) if (A) there has been no HMN Material Breach and
(B) this Agreement is terminated pursuant to Section 7.1(g) or (h), then
Marshalltown will promptly thereafter, but in no event later than three
business days after receiving a written request by HMN therefor, pay to
HMN a fee of $750,000.
(c) In no event shall more than one termination fee be
payable under Section 5.1(b) above.
5.2 ADDITIONAL AGREEMENTS. In accordance with the terms and
subject to the conditions hereof, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable to
fulfill the conditions and consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
5.3 NOTIFICATION OF CERTAIN MATTERS. Marshalltown will give
prompt notice to HMN and Home Federal, and HMN and Home Federal will
give prompt notice to Marshalltown, of (a) the occurrence, or failure to
occur, of any event which occurrence or failure would be likely to cause
any representation or warranty contained in this Agreement to be untrue
or inaccurate in any material respect at any time from the date hereof
to the Effective Time, and (b) any material failure of Marshalltown,
HMN, Home Federal or Sub, or any of their respective directors,
officers, employees, agents or representatives, to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by such party hereunder.
5.4 AGREEMENT TO DEFEND. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other
person or other legal or administrative proceeding is commenced that
questions the validity or legality of the transactions contemplated
hereby or seeks damages in connection therewith, whether before or after
the Effective Time, the parties hereto agree to cooperate and use all
reasonable efforts to defend against and respond thereto.
5.5 REGULATORY APPROVALS. Each of HMN, Home Federal, Sub and
Marshalltown will use all reasonable efforts to file as promptly as
possible any applications, notifications or other documents required to
obtain regulatory approvals and consents from the OTS and any other
applicable regulatory authorities of the Merger and the other
transactions contemplated hereby.
27
VI. CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party hereto to effect the Merger and
to consummate the other transactions contemplated hereby will be subject
to the fulfillment at or prior to the Closing of the following
conditions:
(a) The Merger and this Agreement shall have been approved
and adopted by the requisite vote of the stockholders of Marshalltown as
required by law, and by any applicable provisions of its certificate of
incorporation and by-laws.
(b) The Merger and the other transactions contemplated hereby
shall have been approved by the OTS and any other regulatory authority
without any condition, in the reasonable opinion of HMN, unduly
burdensome to HMN, all conditions required to be satisfied prior to the
Effective Time imposed by the terms of such approvals shall have been
satisfied and all waiting period relating to such approvals shall have
expired.
(c) No order shall have been entered and remain in effect in
any action or proceeding before any foreign, Federal or state court or
governmental agency or other foreign, Federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the Merger.
(d) There shall have been obtained such other permits,
consents and approvals of bank, thrift, insurance or securities
commissions or agencies of any jurisdiction and of other governmental
bodies or agencies that may reasonably be deemed necessary so that the
consummation of the Merger and the other transactions contemplated
hereby will be in compliance with applicable laws, without any
condition, in the reasonable opinion of HMN, unduly burdensome to HMN.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF HMN. The obligations
of HMN, Home Federal and Sub to effect the Merger and to consummate the
other transactions contemplated hereby are, at the option of HMN, Home
Federal and Sub, also subject to the fulfillment at or prior to the
Closing of the following conditions:
(a) The representations and warranties of Marshalltown
contained in Section 2.2 shall be accurate in all material respects as
of the date of this Agreement, and there shall be no inaccuracy in any
such representations and warranties as of the Closing Date except to the
extent that any such inaccuracy individually or in the aggregate does
not constitute a material adverse change in the financial condition,
results of operations or business of Marshalltown and the Marshalltown
Subsidiaries, taken as a whole; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by
Marshalltown at or before the Closing shall have been duly complied with
and performed in all material respects; and a certificate to the
foregoing effect dated as of the Closing Date and signed by the Chief
Executive Officer and Chief Financial Officer of Marshalltown shall
have been delivered to HMN.
(b) Since the date of this Agreement, no material adverse
change in the financial condition, results of operations or businesses
of Marshalltown and the Marshalltown Subsidiaries, taken as a whole,
shall have occurred, and a certificate to such effect dated as of the
Closing Date and signed by the Chief Executive Officer or Chief
Financial Officer of Marshalltown shall have been delivered to HMN.
28
(c) Dissenting Shares shall constitute no more than 7 1/2% of
the shares of Marshalltown Common Stock issued and outstanding
immediately prior to the Effective Time.
(d) HMN shall have received written opinion of counsel to
Marshalltown, dated as of the Closing Date, substantially to the effect
set forth in Exhibit 6.2(d).
(e) HMN shall have received the consent in writing of the
parties to the employment agreements listed on Exhibit 6.2(e) to the
effect that the transactions contemplated by this Agreement, including
the Merger, the Liquidation and the Subsequent Merger, do not constitute
a material diminution of or interference with such employee's duties,
responsibilities and benefits under such agreements.
(f) As a part of HMN's continuing examination of
Marshalltown, HMN shall have completed its examination of the assets and
liabilities of Marshalltown, including, but not limited to, a review of
the results of the most recent regulatory examination report of
Marshalltown and all previous regulatory examination reports and related
correspondence and administrative actions, and all the documentation
relating to assets or liabilities of Marshalltown (all of which will be
updated by Marshalltown at its expense), and the results of such
examinations shall have disclosed no material adverse change in the
financial condition, results of operations or business of Marshalltown.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF MARSHALLTOWN. The
obligations of Marshalltown to effect the Merger and to consummate the
other transactions contemplated hereby are, at the option of
Marshalltown, also subject to the fulfillment at or prior to the Closing
of the following conditions:
(a) The representations and warranties of HMN, Home Federal
and Sub contained in Section 2.1 shall be accurate in all material
respects as of the date of this Agreement, and there shall be no
inaccuracy in any such representations and warranties as of the Closing
Date except to the extent that any such inaccuracy individually or in
the aggregate does not constitute a material adverse change in the
financial condition, results of operations or business of HMN and the
HMN Subsidiaries, taken as a whole; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by HMN,
Home Federal and Sub at or before the Closing shall have been duly
complied with and performed in all material respects; and a certificate
to the foregoing effect dated as of the Closing Date and signed by the
Chief Executive Officer and Chief Financial Officer of HMN shall have
been delivered to Marshalltown.
(b) On the date of the Proxy Statement, the Marshalltown
Board shall have received from EVEREN Securities, Inc. a written update,
dated as of such date, confirming the opinion referred to in
Section 2.2(m).
(c) Marshalltown shall have received written opinion of
Faegre & Xxxxxx LLP, counsel to HMN, dated as of the Closing Date,
substantially to the effect set forth in Exhibit 6.3(c).
VII. MISCELLANEOUS
7.1 TERMINATION. This Agreement may be terminated and the Merger
and the other transactions contemplated hereby may be abandoned at any
time prior to the Effective Time, whether prior to or after approval by
the stockholders of Marshalltown:
(a) By mutual consent of the HMN Board and the Marshalltown
Board.
29
(b) By the HMN Board or the Marshalltown Board, if the Merger
shall not have been consummated on or before June 30, 1998 (unless such
circumstance is the result of a breach of the terms hereof in any
material respect by the party asserting the termination right).
(c) By the Marshalltown Board, if a condition to
Marshalltown's obligations to close set forth in Article VI of this
Agreement cannot be met on the Closing Date and is not waived; provided
however, that with respect to the failure to satisfy a condition under
Section 6.3 that is capable of being cured within 30 days, the right of
the Marshalltown Board to terminate this Agreement shall exist only if
the failure to satisfy such condition is not cured within 30 days after
written notice by Marshalltown to HMN of such condition.
(d) By the HMN Board, if a condition to HMN's obligations to
close set forth in Article VI of this Agreement cannot be met on the
Closing Date and is not waived; provided however, that with respect to
the failure to satisfy a condition under Section 6.2 that is capable of
being cured within 30 days, the right of the HMN Board to terminate this
Agreement shall exist only if the failure to satisfy such condition is
not cured within 30 days after written notice by HMN to Marshalltown of
such condition.
(e) By the HMN Board or the Marshalltown Board, if a final
unappealable order to restrain, enjoin or otherwise prevent, or awarding
substantial damages in connection with, the consummation of the Merger
or the other transactions contemplated hereby shall have been entered by
a court of competent jurisdiction, the OTS or other regulatory
authority.
(f) By the HMN Board or the Marshalltown Board, if the Merger
and this Agreement shall have been submitted to a vote of the
stockholders of Marshalltown and shall not have been approved by the
requisite vote.
(g) By the HMN Board or the Marshalltown Board, if the
Marshalltown Board does not make to the stockholders of Marshalltown a
favorable recommendation with respect to the Merger or such
recommendation is modified or withdrawn in a way detrimental to HMN (and
HMN and Marshalltown agree that a determination by the Marshalltown
Board not to call the meeting of stockholders contemplated by
Section 3.3 or the cancellation or adjournment of such meeting without
a vote on the Merger and this Agreement being taken (except under
circumstances where Marshalltown is otherwise attempting to secure a
vote of its stockholders in favor of approval and adoption of the Merger
and this Agreement) shall be deemed to be such a failure to make or
withdrawal of such recommendation).
(h) By the HMN Board or the Marshalltown Board, if
Marshalltown shall have entered into a definitive agreement for an
Acquisition Transaction in accordance with Section 3.4.
7.2 EFFECT OF TERMINATION. In the event of any termination of
this Agreement pursuant to Section 7.1, HMN and Marshalltown shall have
no obligation or liability to each other except that (a) the provisions
of Sections 3.5(b) and 4.3(b) and the provisions of Section 5.1 shall
survive any such termination, and (b) nothing herein and no termination
pursuant hereto shall relieve any party from liability for any breach of
this Agreement.
7.3 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by action of the Board of Directors of the party that
is, or whose stockholders are, entitled to the benefits thereof. This
Agreement may not be amended or supplemented at any time, except by an
instrument in writing signed on behalf of each party hereto; provided
however, that after this Agreement has been
30
approved and adopted by the stockholders of Marshalltown this
Agreement may be amended only as may be permitted by applicable
provisions of the Delaware Law.
7.4 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representation or warranty in this Agreement shall survive the
consummation of the Merger.
7.5 PUBLIC STATEMENTS. HMN and Marshalltown agree to consult with
each other prior to issuing any press release or otherwise making any
public statement or disclosure with respect to the transactions
contemplated hereby, and neither will issue any such press release or
make any such public statement or disclosure prior to such consultation,
except as may be required by law or applicable stock exchange policy.
7.6 KNOWLEDGE. All references in this Agreement to knowledge of
a corporation shall be deemed to mean knowledge of any one or more of
its executive officers.
7.7 ASSIGNMENT. This Agreement will not be assignable by the
parties hereto.
7.8 NOTICES. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be given (and will
be deemed to have been duly received if so given) by delivery by cable,
telegram, telex, telecopy or by registered or certified mail, postage
prepaid, return receipt requested, to the respective parties as follows:
if to HMN, Home Federal or Sub:
HMN Financial, Inc.
000 Xxxxx Xxxxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxx 00000
Attention: President and Chief Executive Officer
Telephone Number: 507/000-0000
Telecopy Number: 507/346-1111
with a copy to:
Faegre & Xxxxxx LLP
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telephone Number: 612/000-0000
Telecopy Number: 612/336-3026
31
and if to Marshalltown:
Marshalltown Financial Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxx 00000
Attention: President and Chief Executive Officer
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
with a copy to:
Silver Xxxxxxxx & Xxxx
0000 Xxx Xxxx Xxxxxx X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone Number: 202/000-0000
Telecopy Number: 202/682-0354
or to such other address as either party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall only be effective upon receipt.
7.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE STATE OF
DELAWARE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF.
7.10 SEVERABILITY. If any term, provision, covenant, agreement or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants, agreements and restrictions of this
Agreement will continue in full force and effect and will in no way be
affected, impaired or invalidated.
7.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which will be an original, but all of which together will
constitute one and the same agreement.
7.12 HEADINGS. The section headings herein are for convenience
only and will not affect the construction hereof.
7.13 ENTIRE AGREEMENT. This Agreement (a) constitutes the entire
agreement between the parties hereto and supersede all other prior
agreements and understandings, both oral and written, between the
parties relating to the subject matter hereof and thereof, and (b) does
not confer upon any person or entity not a party hereto or thereto any
rights or remedies hereunder or thereunder.
32
IN WITNESS WHEREOF, HMN has caused this Agreement to be signed
by its Chairman or its President or a Vice President and attested by its
Secretary or an Assistant Secretary, Home Federal has caused this
Agreement to be signed by its Chairman or its President and attested by
its Secretary, Sub has caused this Agreement to be signed by its
Chairman or President and attested by its Secretary, and Marshalltown
has caused this Agreement to be signed by its Chairman or its President
or a Vice President and attested by its Secretary or an Assistant
Secretary, all as of the date first above written.
HMN FINANCIAL, INC.
By /s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx
President and Chief Executive
Officer
Attest:
/s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx, Secretary
HOME FEDERAL SAVINGS BANK
By /s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx, President
Attest:
/s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx, Secretary
HFSB ACQUISITION CO.
By /s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx, President
Attest:
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx, Secretary
MARSHALLTOWN FINANCIAL CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx,
President and Chief Executive
Officer
Attest:
/s/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx, Secretary
M1:0240953.11
SCHEDULE 1.6(b)
Option Holders
--------------
Option Holder Number of Options Held Exercise Price
---------------- ---------------------- --------------
Xxxxx X. Xxxxx 2,727 $8.00
Xxxxxxx X. Xxxxxxxx 6,818 8.00
W. Xxxx Xxxxx 6,818 8.00
Xxxxx X. Xxxxx 2,727 8.00
Xxxxxxx X. Xxxxx 27,275 8.00
Xxxxxxx X. Xxxxxxxx 6,818 8.00
Xxxx X. Xxxxxx 2,727 8.00
Xxxxx X. Xxxxxx 6,818 8.00
Xxxxxx X. Xxxxxx 2,727 8.00
Xxxxxxx X. Xxxxxx 40,912 8.00
Xxxx X. Xxxxxxx 2,727 8.00
Xxx X. Xxxxx 6,818 8.00
Xxxxxx X. Xxxxxxxx 6,818 8.00
-------
Total 122,730
=======
M1:0240953.11
EXHIBIT 6.2(d)
SUBSTANCE OF OPINION OF SILVER XXXXXXXX & TAFF, COUNSEL TO
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MARSHALLTOWN
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1. Each of Marshalltown and MSL is a corporation duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation. Marshalltown is a registered savings
and loan holding company, under the Homeowners Loan Act. The Bank is a
federal stock savings bank duly organized, and validly existing under
the laws of the United States. Each of Marshalltown, the Bank and MSL
has the necessary power and authority to carry on its business as
described in the Proxy Statement.
2. The authorized capital stock of Marshalltown consists of
3,250,000 shares of Marshalltown Common Stock and 250,000 shares of
Marshalltown Preferred Stock. As of the close of business on the
business day immediately prior to the date hereof, there were issued and
outstanding 1,411,475 shares of Marshalltown Common Stock. No shares of
Marshalltown Preferred Stock are issued and outstanding. All
outstanding shares of Marshalltown Common Stock are validly issued,
fully paid and nonassessable, and no holder thereof is entitled to
preemptive rights under the certificate of incorporation or the by-laws
of Marshalltown or the laws of the jurisdiction in which Marshalltown is
incorporated.
3. Marshalltown has the necessary power and authority to enter
into the Agreement and to perform its obligations thereunder. The
execution, delivery and performance of the Agreement by Marshalltown and
the consummation by Marshalltown of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on
the part of Marshalltown.
4. The Agreement has been duly executed and delivered by
Marshalltown and constitutes a legal, valid and binding agreement of
Marshalltown, enforceable against Marshalltown in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
liquidation, conservation, dissolution, insolvency, reorganization,
moratorium, receivership, fraudulent conveyance or other similar laws or
judicial decisions now or hereafter in effect relating to creditors'
rights generally, including laws and/or regulations or judicial
decisions specifically applicable to creditors of institutions the
deposits of which are insured by the Federal Deposit Insurance
Corporation and (ii) the effects of general principles of equity
(regardless of whether considered in a proceeding at equity or at law),
including, without limitation, (A) the possible unavailability of
specific performance, injunctive relief or any other equitable remedy
and (B) concepts of materiality, reasonableness, good faith and fair
dealing.
5. The execution and delivery of the Agreement by Marshalltown
did not and the performance by Marshalltown of its obligations
thereunder and the consummation by Marshalltown of the transactions
contemplated thereby will not (i) conflict with or result in a breach of
the certificate of incorporation or by-laws of Marshalltown,
(ii) violate the Federal laws of the United States of America, (iii) to
such counsel's knowledge, violate, conflict with or result in a breach
of any Material Order (as defined below), or (iv) to such counsel's
knowledge, result in a breach of or constitute (with or without due
notice or lapse of time or both) a default under any Material Contract
(as defined below), except as set forth in the Marshalltown Disclosure
Letter.
6. Except for the filing of the certificate of merger as provided
in the Merger Agreement, there are no consents, approvals or
authorizations of, or designations, declarations or filings with any
governmental agency or authority on the part of Marshalltown required
for the validity of the execution and delivery by Marshalltown of the
Agreement or the consummation by Marshalltown of the transactions
contemplated thereby other than those which have been obtained or made.
7. Upon the completion of the filing of a certificate of merger,
the Merger will be effective in accordance with applicable law.
8. All outstanding Marshalltown Subsidiary Shares are validly
issued, fully paid and nonassessable and, owned beneficially and of
record, directly or indirectly, by Marshalltown free and clear of all
liens, pledges, security interests, claims or other encumbrances.
9. To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened, or statutes, that are
required to be disclosed with respect to Marshalltown or the
Marshalltown Subsidiaries in the Marshalltown SEC Reports filed prior to
the date of such opinion, including the Proxy Statement, other than
those disclosed therein, and no pending legal or governmental proceeding
to which Marshalltown or any of the Marshalltown Subsidiaries is a party
or to which any of their assets or properties are subject that are not
described in such Marshalltown SEC Reports.
10. To such counsel's knowledge, no holder of any security of
Marshalltown has any right to require registration of shares of
Marshalltown Common Stock or any other security of Marshalltown.
Wherever a statement in such counsel's opinion is qualified by
"we are not aware," "known to us," "to our knowledge," or a similar
phrase, it is intended to indicate that, during the course of such
counsel's representation of Marshalltown and certain of the Marshalltown
Subsidiaries, no information that would give such counsel current actual
knowledge of the inaccuracy of such statement has come to the attention
of those attorneys in such firm who have rendered legal services in
connection with the representations described in the introductory
paragraph of the opinion letter of such counsel. However, such counsel
has not undertaken any independent investigation to determine the
accuracy of such statement, and any limited inquiry undertaken by such
during the preparation of such opinion letter should not be regarded as
such an investigation; no inference as to the knowledge of such counsel
of any matters bearing on the accuracy of any such statement should be
drawn from the fact of such representation.
Such counsel also shall state that the Proxy Statement (except
with respect to data and information concerning HMN and the HMN
Subsidiaries and except with respect to financial statements and notes
thereto and any related schedules and other financial data therein, as
to which no opinion need be expressed) complies as to form in all
material respects with the requirements of the 1934 Act, and (based
solely on the participation of such counsel in the preparation of such
document) such counsel has no reason to believe that (with such
exceptions) the Proxy Statement when it was filed with the SEC
contained, or as of the date of such opinion contains, any untrue
statement of a material fact or omitted, or omits, to state any material
fact required to be stated therein or necessary to make the statements
made therein not misleading.
For purposes of the opinion, "Material Order" and "Material
Contract" shall mean an order or contract, respectively, listed in the
Marshalltown Disclosure Letter.
In expressing such counsel's opinion as to matters of fact
relevant to conclusions of law, such counsel may rely, to the extent
such counsel deems proper, upon certificates of responsible officers,
Marshalltown's stock transfer agent (with respect to the second sentence
of paragraph 2 of the opinion) and other agents of Marshalltown and the
Marshalltown Subsidiaries and of public officials. Such counsel may
state that it is assuming the accuracy of, and has not made any
independent investigations or other attempts to certify the accuracy of,
any such information or to verify the existence or non-existence of any
other factual matters; provided that such counsel also states that it
has no knowledge concerning the factual matters upon which reliance is
placed which would render such reliance unreasonable. Counsel may also
Schedule 6.2(d)
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assume the authenticity of all documents represented to such counsel to
be originals, the conformity to original documents of all copies of
documents submitted to such counsel, the accuracy and completeness of
all corporate records made available to such counsel by Marshalltown and
the Marshalltown Subsidiaries and their agents and the genuineness of
all signatures not executed in such counsel's presence, the correctness
of all certificates, that each party to the Agreement other than
Marshalltown and the Bank (i) has the power and capacity to enter into
and perform all its obligations under such Agreement, (ii) duly
authorized all requisite action with respect to such Agreement, and
(iii) duly executed and delivered the Agreement, and that all terms,
provisions and conditions are correctly reflected in the Agreement.
Such counsel shall be permitted to express no opinion (1) that
a course of dealing by HMN, Home Federal or Sub, or a failure on the
part of HMN, Home Federal or Sub to exercise, in whole or in part, a
right or remedy provided in the Agreement, shall not constitute a waiver
of their respective rights or remedies of any default under the
Agreement; (2) as to the enforceability of any provision or accumulation
of provisions that may be deemed to be unconscionable; (3) as to any
anti-trust, state securities or tax laws; (4) as to provisions which
purport to establish evidentiary standards; (5) as to provisions
relating to venue, governing law, waiver of remedies (or the delay or
omission of enforcement thereof), disclaimers or liability limitations
with respect to third parties; and (6) as to the enforceability of any
requirement in the Agreement or related documents specifying that
provisions thereof may only be waived in writing, to the extent that an
oral agreement or an implied agreement by trade practice or course of
conduct has been created modifying any provision of such Agreement or
related documents.
Such counsel's opinions may be limited to the matters
expressly set forth in such opinion letter, and no opinion is to be
implied or may be inferred beyond the matters expressly so stated.
Such counsel may disclaim any obligation to update such
opinion letter for events occurring after the date thereof.
Such opinion may be limited to the effect of the laws of the
State of Delaware and the federal laws of the United States of America.
M1:0269798.04
Schedule 6.2(d)
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EXHIBIT 6.2(e)
REQUIRED CONSENTS TO SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
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Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxxx
Xxxxx X. Xxxxx
Xxxx X. Xxxxxx
Xxxxx X. Xxxxx
M1:0240953.11
EXHIBIT 6.3(c)
SUBSTANCE OF OPINION OF FAEGRE & XXXXXX LLP, COUNSEL TO HMN, HOME
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FEDERAL AND SUB
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1. Each of HMN and the HMN Subsidiaries is duly organized,
validly existing and in good standing under the laws of its jurisdiction
of organization. Each of HMN and the HMN Subsidiaries has the necessary
power and authority to carry on its business as now conducted.
2. HMN and Home Federal have the necessary power and authority to
enter into the Agreement and to perform their respective obligations
thereunder. The execution, delivery and performance of the Agreement by
HMN and Home Federal and the consummation by HMN and Home Federal of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of HMN and Home Federal.
3. The Agreement has been duly executed and delivered by HMN and
Home Federal and constitutes a legal, valid and binding agreement of HMN
and Home Federal, enforceable against HMN and Home Federal in accordance
with its terms, except that such enforcement may be subject to
(i) bankruptcy, liquidation, conservation, dissolution, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) the effects of
general principles of equity (regardless of whether considered in a
proceeding at equity or at law), including, without limitation, (A) the
possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (B) concepts of materiality,
reasonableness, good faith and fair dealing.
4. The execution and delivery of the Agreement by HMN and Home
Federal does not and the performance by HMN and Home Federal of their
obligations thereunder and the consummation by HMN and Home Federal of
the transactions contemplated thereby will not (i) conflict with or
result in a breach of the certificate of incorporation or by-laws of HMN
or the charter or by-laws of Home Federal, (ii) violate the Federal
laws of the United States of America, (iii) to such counsel's knowledge,
violate, conflict with or result in a breach of any Material Order (as
defined below), or (iv) to such counsel's knowledge, result in a breach
of or constitute (with or without due notice or lapse of time or both)
a default under any Material Contract (as defined below).
5. Except for the filing of the articles of merger as provided in
the Agreement, there are no consents, approvals or authorizations of, or
designations, declarations or filings with any governmental agency or
authority on the part of HMN or Home Federal required for the validity
of the execution and delivery by HMN and Home Federal of the Agreement
or the consummation by HMN and Home Federal of the transactions
contemplated thereby other than those which have been obtained or made.
Such counsel also shall state that such counsel has no reason
to believe that (based solely on the participation of such counsel in
the preparation of the Proxy Statement) the Proxy Statement (except with
respect to data and information concerning Marshalltown and the
Marshalltown Subsidiaries and the meeting of stockholders, and except
with respect to financial statements and notes thereto and any related
schedules and other financial data therein, as to which no opinion need
be expressed) when the Proxy Statement was filed with the SEC contained,
or as of the date of such opinion contains, any untrue statement of a
material fact or omitted, or omit, to state any material fact required
to be stated therein or necessary to make the statements made therein
not misleading.
For purposes of the opinion, "Material Order" and "Material
Contract" shall mean an order or contract, respectively, listed on a
schedule to the opinion on the basis of the certificate of a
responsible officer of HMN or Home Federal to the effect that the orders
and contracts listed on those schedules are the only material orders and
contracts with respect to HMN and Home Federal.
In expressing such counsel's opinion as to matters of fact
relevant to conclusions of law, such counsel may rely, to the extent
such counsel deems proper, upon certificates of responsible officers,
and other agents of HMN and the HMN Subsidiaries and of public
officials. Counsel may also assume the authenticity of all documents
represented to such counsel to be originals, the conformity to original
documents of all copies of documents submitted to such counsel, the
accuracy and completeness of all corporate records made available to
such counsel by HMN and the HMN Subsidiaries and their agents and the
genuineness of all signatures not executed in such counsel's presence,
that each party to the Agreement other than Marshalltown and the Bank
(i) has the power and capacity to enter into and perform all its
obligations under such Agreement, (ii) duly authorized all requisite
action with respect to such Agreement, and (iii) duly executed and
delivered the Agreement, and that all terms, provisions and conditions
are correctly reflected in the Agreement.
As to other questions of fact material to these opinions, such counsel
may rely upon certificates of officers and other representatives of
Marshalltown and the Marshalltown Subsidiaries and upon such counsel's
examination of the documents referred to above and may assume the
current accuracy and completeness of the information contained in such
certificates and obtained from public officials and public records
included in the documents referred to above. Such counsel may state
that it has not made any independent investigations or other attempts to
certify the accuracy of any such information or to verify the existence
or non-existence of any other factual matters; provided that such
counsel also states that it has no knowledge concerning the factual
matters upon which reliance is placed which would render such reliance
unreasonable.
Such counsel shall be permitted to express no opinion (1) that
a course of dealing by HMN, Home Federal or Sub, or a failure on the
part of HMN, Home Federal or Sub to exercise, in whole or in part, a
right or remedy provided in the Agreement, shall not constitute a waiver
of their respective rights or remedies of any default under the
Agreement; (2) as to the enforceability of any provision or accumulation
of provisions that may be deemed to be unconscionable; (3) as to any
anti-trust, state securities or tax laws; (4) as to provisions which
purport to establish evidentiary standards; (5) as to provisions
relating to venue, governing law, waiver of remedies (or the delay or
omission of enforcement thereof), disclaimers or liability limitations
with respect to third parties; and (6) as to the enforceability of any
requirement in the Agreement or related documents specifying that
provisions thereof may only be waived in writing, to the extent that an
oral agreement or an implied agreement by trade practice or course of
conduct has been created modifying any provision of such Agreement or
related documents.
Such counsel's opinions may be limited to the matters
expressly set forth in such opinion letter, and no opinion is to be
implied or may be inferred beyond the matters expressly so stated.
Such counsel may disclaim any obligation to update such
opinion letter for events occurring after the date thereof.
Such opinion may be limited to the effect of the laws of the
State of Delaware and the federal laws of the United State of America.
M1:0269855.04
Exhibit 6.3(c)
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