Exhibit 2.1
AGREEMENT
AND
PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered into as of
the 13th day of December, 2001, by and between TEJAS BANCSHARES, INC.
("Company"), a Texas corporation, and XXXXX FARGO & COMPANY ("Xxxxx Fargo"), a
Delaware corporation.
WHEREAS, the parties hereto desire to effect a reorganization whereby a
wholly-owned subsidiary of Xxxxx Fargo will merge with and into Company (the
"Merger") pursuant to an agreement and plan of merger (the "Merger Agreement")
in substantially the form attached hereto as Exhibit A, which provides, among
other things, for the conversion of the shares of Common Stock of Company of the
par value of $1.00 per share ("Company Common Stock") outstanding immediately
prior to the time the Merger becomes effective in accordance with the provisions
of the Merger Agreement into the right to receive shares of voting Common Stock
of Xxxxx Fargo of the par value of $1-2/3 per share ("Xxxxx Fargo Common
Stock").
NOW, THEREFORE, to effect such reorganization and in consideration of the
premises and the mutual covenants and agreements contained herein, the parties
hereto do hereby represent, warrant, covenant and agree as follows:
1. Basic Plan of Reorganization
(a) Merger. Subject to the terms and conditions contained herein, a
wholly-owned subsidiary of Xxxxx Fargo (the "Merger Co.") will be merged by
statutory merger with and into Company pursuant to the Merger Agreement, with
Company as the surviving corporation, in which merger each share of Company
Common Stock outstanding immediately prior to the Effective Time of the Merger
(as defined in paragraph 1(d) below) (other than shares as to which statutory
dissenters' appraisal rights have been exercised) will be converted into the
right to receive, and exchanged for the number of shares of Xxxxx Fargo Common
Stock determined by dividing (a) the quotient of (i) $82,501,292 plus the
aggregate exercise price of all Company Options outstanding immediately prior to
the Effective Time divided by (ii) the aggregate number of shares of Company
Common Stock and Company Options outstanding immediately prior to the Effective
Time by (b) the Xxxxx Fargo Measurement Price ("Exchange Ratio"). "Company
Options" shall have the meaning given in paragraph 1(f) hereof. The "Xxxxx Fargo
Measurement Price" is defined as the average of the closing prices of a share of
Xxxxx Fargo Common Stock on the New York Stock Exchange only for each of the
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twenty (20) consecutive trading days ending on the day immediately preceding the
meeting of shareholders required by paragraph 4(c) of this Agreement.
(b) Xxxxx Fargo Common Stock Adjustments. If, between the date hereof and
the Effective Time of the Merger as defined below, shares of Xxxxx Fargo Common
Stock shall be changed into a different number of shares or a different class of
shares by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or if a stock dividend thereon
shall be declared with a record date within such period (a "Common Stock
Adjustment"), then the number of shares of Xxxxx Fargo Common Stock issuable
pursuant to subparagraph (a), above, will be appropriately and proportionately
adjusted so that the number of such shares of Xxxxx Fargo Common Stock issuable
in the Merger will equal the number of shares of Xxxxx Fargo Common Stock which
holders of shares of Company Common Stock would have received pursuant to such
Common Stock Adjustment had the record date therefor been immediately following
the Effective Time of the Merger.
(c) Fractional Shares. No fractional shares of Xxxxx Fargo Common Stock and
no certificates or scrip certificates therefor shall be issued to represent any
such fractional interest, and any holder thereof shall be paid an amount of cash
equal to the product obtained by multiplying the fractional share interest to
which such holder is entitled by the average of the closing prices of a share of
Xxxxx Fargo Common Stock on the New York Stock Exchange only for each of the
twenty (20) consecutive trading days ending on the day immediately preceding the
meeting of shareholders required by paragraph 4(c) of this Agreement.
(d) Mechanics of Closing Merger. Subject to the terms and conditions set
forth herein, the Merger Agreement shall be executed and it or Articles of
Merger shall be filed with the Secretary of State of the State of Texas within
ten (10) business days following the satisfaction or waiver of all conditions
precedent set forth in Sections 6 and 7 of this Agreement or on such other date
as may be agreed to by the parties (the "Closing Date"), provided that the
Closing Date shall not occur on the last business day of a calendar month. Each
of the parties agrees to use its best efforts to cause the Merger to be
completed as soon as practicable after the receipt of final regulatory approval
of the Merger and the expiration of all required waiting periods. The time that
the filing referred to in the first sentence of this paragraph is made is herein
referred to as the "Time of Filing." The day on which such filing is made and
accepted is herein referred to as the "Effective Date of the Merger." The
"Effective Time of the Merger" shall be 12:01 a.m., Austin, Texas time, on the
Effective Date of the Merger. At the Effective Time of the Merger on the
Effective Date of the Merger, the separate existence of Merger Co. shall cease
and Merger Co. will be merged with and into Company pursuant to the Merger
Agreement.
The closing of the transactions contemplated by this Agreement and the
Merger Agreement (the "Closing") shall take place on the Closing Date at the
offices of Xxxxx Fargo, Xxxxx Fargo Center, Sixth and Marquette, Minneapolis,
Minnesota or at such other place as the parties may mutually agree.
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(e) Reservation of Right to Revise Structure. At Xxxxx Fargo's election,
the Merger may alternatively be structured so that (1) Company is merged with
and into any other direct or indirect wholly-owned subsidiary of Xxxxx Fargo,
(2) any direct or indirect wholly-owned subsidiary of Xxxxx Fargo is merged with
and into Company, or (3) Company is merged with and into Xxxxx Fargo; provided,
however, that no such change shall (A) alter or change the amount or kind of
consideration to be issued to Company's shareholders in the Merger or under such
alternative structure (the "Merger Consideration"), (B) adversely affect the tax
treatment of Company's shareholders as a result of receiving the Merger
Consideration or prevent the parties from obtaining the opinion referred to in
Paragraph 6(h), or (C) materially impede or delay consummation of the Merger. In
the event of such election, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such election.
(f) Options. At the Effective Time, all options ("Company Options") granted
under the Tejas Bancshares, Inc. 1998 Incentive Stock Plan ("Company Option
Plan") which are then outstanding and unexercised shall cease to represent a
right to acquire shares of Company Common Stock and shall be converted into
options to purchase shares of Xxxxx Fargo Common Stock on the same terms and
conditions under the applicable Company Stock Plan and the stock option
agreement by which such Company Stock Option is evidenced. From and after the
Effective Time:
(i) the number of shares of Xxxxx Fargo Common Stock purchasable upon
exercise of such Company Stock Option shall equal the product (rounded down
to the nearest share) of (A) the number of shares of Company Common Stock
that were subject to such Company Stock Option immediately prior to the
Effective Time, and (B) the Exchange Ratio, and
(ii) the per share exercise price under each such Company Stock Option
shall be equal to the result (rounded down to the nearest cent) of dividing
the per share exercise price of each such Company Stock Option by the
Exchange Ratio.
Notwithstanding the foregoing, each Company Stock option that is intended to be
an "incentive stock option" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be adjusted in accordance with the
requirements of Section 424 of the Code.
2. Representations and Warranties of Company. Company represents and
warrants to Xxxxx Fargo as follows:
(a) Organization and Authority. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas, is
duly qualified to do business and is in good standing in all jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and failure to be so qualified would have a material adverse
effect on Company and the Company Subsidiaries (as defined in paragraph 2(b))
taken as a whole and has corporate power and
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authority to own its properties and assets and to carry on its business as it is
now being conducted. Company is registered as a bank holding company and a
financial holding company with the Federal Reserve Board under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). Company has furnished Xxxxx
Fargo true and correct copies of its articles of incorporation and by-laws, as
amended.
(b) Company's Subsidiaries.
(i) Schedule 2(b)(i) sets forth a complete and correct list of all of
Company's Subsidiaries as of the date hereof (individually a "Company
Subsidiary" and collectively, the "Company Subsidiaries"), all shares of
the outstanding capital stock of each of which, except as set forth on
Schedule 2(b)(i), are owned directly or indirectly by Company. No equity
security of any Company Subsidiary is or may be required to be issued by
reason of any option, warrant, scrip, preemptive right, right to subscribe
to, call, or commitment of any character whatsoever relating to, or
security or right convertible into, shares of any capital stock of such
subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional
shares of its capital stock, or any option, warrant, or right to purchase
or acquire any additional shares of its capital stock. Subject to 12 U.S.C.
ss. 55 (1982) and the Texas Business Corporation Act, all of such shares so
owned by Company are fully paid and nonassessable and are owned by it free
and clear of any lien, claim, charge, option, encumbrance, or agreement
with respect thereto. Each Company Subsidiary is a corporation or national
banking association duly organized, validly existing, duly qualified to do
business and in good standing under the laws of its jurisdiction of
incorporation, and has corporate power and authority to own or lease its
properties and assets and to carry on its business as it is now being
conducted. Except as set forth on Schedule 2(b)(i), Company does not own
beneficially, directly or indirectly, more than five percent (5%) of any
class of equity securities or similar interests of any corporation, bank,
business trust, association or similar organization, and is not, directly
or indirectly, a partner in any partnership or party to any joint venture.
(ii) Schedule 2(b)(ii) sets forth a true and complete list of all
companies or other entities, the equity securities of which or
substantially all of the assets of which have been acquired by Company or a
Company Subsidiary (or any Company or Company Subsidiary predecessor) since
December 31, 1997, or for which Company or any Company Subsidiary is a
successor in interest by merger, consolidation, or reorganization, or the
outstanding stock of which is currently owned by Company or any Company
Subsidiary, setting forth the date of closing, contingent payments,
earn-outs, and obligations to issue shares of Company or Company Subsidiary
capital stock.
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(iii) Schedule 2(b)(iii) sets forth the following information
concerning the Company and each of its Subsidiaries:
(A) Legal name, physical street address, city, county, state
(country), zip code;
(B) Formation date;
(C) Primary regulator that supervises each functionally regulated
entity;
(D) Except with respect to the Company, legal name of direct
equity holder and physical location (city/state/country);
(E) Except as with respect to the Company, percent of equity
held; and
(F) Except as with respect to the Company, a brief description of
the activity by such entity.
(c) Company Capitalization. The authorized capital stock of Company
consists of 20,000,000 shares of common stock, $1.00 par value, of which, as of
the close of business on June 30, 2001, 13,410,134 shares were outstanding and
no shares were held in the treasury. The maximum number of shares of Company
Common Stock (assuming for this purpose that phantom shares and other
share-equivalents constitute Company Common Stock) that would be outstanding as
of the Effective Date of the Merger if all options, warrants, conversion rights
and other rights with respect thereto, were exercised is 13,634,737. All of the
outstanding shares of capital stock of Company have been duly and validly
authorized and issued and are fully paid and nonassessable (except for shares
issuable under the Directors Plan (as defined in paragraph 4(b) as described on
Schedule 2(c)). Except as set forth in Schedule 2(c), there are no outstanding
subscriptions, contracts, conversion privileges, options, warrants, calls,
plans, preemptive rights or other rights obligating Company or any Company
Subsidiary to issue, sell or otherwise dispose of, or to purchase, redeem or
otherwise acquire, any shares of capital stock of Company or any Company
Subsidiary. Except as set forth in Schedule 2(c), since June 30, 2001, no shares
of Company capital stock have been purchased, redeemed or otherwise acquired,
directly or indirectly, by Company or any Company Subsidiary and no dividends or
other distributions have been declared, set aside, made or paid to the
shareholders of Company.
(d) Authorization. Company has the corporate power and authority to enter
into this Agreement and the Merger Agreement and, subject to any required
approvals of its shareholders, to carry out its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and the
Merger Agreement by Company and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Company. Subject to such approvals of
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shareholders and of government agencies and other governing boards having
regulatory authority over Company as may be required by statute or regulation,
this Agreement and the Merger Agreement are valid and binding obligations of
Company enforceable against Company in accordance with their respective terms.
Except as set forth on Schedule 2(d), neither the execution, delivery and
performance by Company of this Agreement or the Merger Agreement, nor the
consummation of the transactions contemplated hereby and thereby, nor compliance
by Company with any of the provisions hereof or thereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of, any lien, security interest, charge or encumbrance
upon any of the properties or assets of Company or any Company Subsidiary under
any of the terms, conditions or provisions of (x) its articles of incorporation
or by-laws or (y) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Company or
any Company Subsidiary is a party or by which it may be bound, or to which
Company or any Company Subsidiary or any of the properties or assets of Company
or any Company Subsidiary may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in the next paragraph, violate any statute,
rule or regulation or, to the best knowledge of Company, violate any judgment,
ruling, order, writ, injunction or decree applicable to Company or any Company
Subsidiary or any of their respective properties or assets.
Other than in connection or in compliance with the provisions of the
Securities Act of 1933 and the rules and regulations thereunder (the "Securities
Act"), the Securities Exchange Act of 1934 and the rules and regulations
thereunder (the "Exchange Act"), the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHC Act or the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976 ("HSR Act"), and filings required to effect the Merger under Texas law
and filings required to be made under ERISA (as defined in paragraph 2(p)), no
notice to, filing with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Company of the transactions contemplated by this Agreement and the Merger
Agreement.
(e) Company Financial Statements. Except as set forth in Schedule 2(e), the
consolidated balance sheets of Company and Company's Subsidiaries as of December
31, 2000 and 1999 and related consolidated statements of income, shareholders'
equity and cash flows for the three (3) years ended December 31, 2000, together
with the notes thereto, certified by Xxxxxxx Xxxxxxxxx, LLP and included in
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000
(the "Company 10-K") as filed with the Securities and Exchange Commission (the
"SEC"), and the unaudited consolidated balance sheets of Company and Company's
Subsidiaries as of June 30, 2001 and the related unaudited consolidated
statements of income, shareholders' equity and
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cash flows for the six (6) months then ended included in Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2001 as filed with the
SEC (collectively, the "Company Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis and present fairly (subject, in the case of financial statements for
interim periods, to normal recurring adjustments) the consolidated financial
position of Company and Company's Subsidiaries at the dates and the consolidated
results of operations and cash flows of Company and Company's Subsidiaries for
the periods stated therein.
(f) Reports. Since December 31, 1997, Company and each Company Subsidiary
has filed all reports, registrations and statements, together with any required
amendments thereto, that it was required to file, if any, with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii)
the Federal Reserve Board, (iii) the Federal Deposit Insurance Corporation (the
"FDIC"), (iv) the United States Comptroller of the Currency (the "Comptroller")
and (v) any applicable state securities or banking authorities. All such reports
and statements filed with any such regulatory body or authority are collectively
referred to herein as the "Company Reports." Except as set forth on Schedule
2(f), as of their respective dates, the Company Reports complied in all material
respects with all the rules and regulations promulgated by the SEC, the Federal
Reserve Board, the FDIC, the Comptroller and applicable state securities or
banking authorities, as the case may be, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Copies of all the
Company Reports have been made available to Xxxxx Fargo by Company.
(g) Properties and Leases. Except as may be reflected in the Company
Financial Statements and except for any lien for current taxes not yet
delinquent, Company and each Company Subsidiary has good title free and clear of
any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Company's
consolidated balance sheet as of June 30, 2001 included in Company's Quarterly
Report on Form 10-Q for the period then ended, and all real and personal
property acquired since such date, except such real and personal property as has
been disposed of in the ordinary course of business. All leases of real property
and all other leases material to Company or any Company Subsidiary pursuant to
which Company or such Company Subsidiary, as lessee, leases real or personal
property are valid and effective in accordance with their respective terms, and
there is not, under any such lease, any material existing default by Company or
such Company Subsidiary or any event which, with notice or lapse of time or
both, would constitute such a material default. Substantially all Company's and
each Company Subsidiary's buildings and equipment in regular use have been well
maintained and are in good and serviceable condition, reasonable wear and tear
excepted.
(h) Taxes. Each of Company and the Company Subsidiaries has filed all
federal, state, county, local and foreign tax returns, including information
returns, required to be filed by it, and paid when due all taxes owed by it,
including those with respect to
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income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent. The
federal income tax returns of Company and the Company Subsidiaries for the
fiscal year ended December 31, 1997, and for all fiscal years prior thereto, are
for the purposes of routine audit by the Internal Revenue Service closed because
of the statute of limitations, and no claims for additional taxes for such
fiscal years are pending. Except only as set forth on Schedule 2(h), (i) neither
Company nor any Company Subsidiary is a party to any pending action or
proceeding, nor, to the Company's knowledge, is any such action or proceeding
threatened by any governmental authority, for the assessment or collection of
taxes, interest, penalties, assessments or deficiencies and (ii) no issue has
been raised by any federal, state, local or foreign taxing authority in
connection with an audit or examination of the tax returns, business or
properties of Company or any Company Subsidiary which has not been settled,
resolved and fully satisfied. Each of Company and the Company Subsidiaries has
paid all taxes owed or which it is required to withhold from amounts owing to
employees, creditors or other third parties. The consolidated balance sheet as
of June 30, 2001, referred to in paragraph 2(e) hereof, includes adequate
provision for all accrued but unpaid federal, state, county, local and foreign
taxes, interest, penalties, assessments or deficiencies of Company and the
Company Subsidiaries with respect to all periods through the date thereof.
(i) Absence of Certain Changes. Since September 30, 2001 there has been no
change in the business, financial condition or results of operations of Company
or any Company Subsidiary, which has had, or may reasonably be expected to have,
a material adverse effect on the business, financial condition or results of
operations of Company and the Company Subsidiaries taken as a whole other than
changes affecting financial institutions generally.
(j) Commitments and Contracts. Except as set forth on Schedule 2(j),
neither Company nor any Company Subsidiary is a party or subject to any of the
following (whether written or oral, express or implied):
(i) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay, liabilities or fringe benefits) with any present or former
officer, director, employee or consultant (other than those that are
terminable at will by Company or such Company Subsidiary);
(ii) any plan, contract or understanding providing for any bonus,
pension, option, deferred compensation, retirement payment, profit
sharing or similar arrangement with respect to any present or former
officer, director, employee or consultant;
(iii) any labor contract or agreement with any labor union;
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(iv) any contract containing covenants that limit the ability of
Company or any Company Subsidiary to compete in any line of business
or with any person or which involve any restriction of the
geographical area in which, or method by which, Company or any Company
Subsidiary may carry on its business (other than as may be required by
law or applicable regulatory authorities);
(v) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K; or
(vi) any real property lease and any other lease with annual
rental payments aggregating $10,000 or more; or
(vii) any agreement or commitment with respect to the Community
Reinvestment Act with any state or federal bank regulatory authority
or any other party; or
(viii) any current or past agreement, contract or understanding
with any current or former director, officer, employee, consultant,
financial adviser, broker, dealer, or agent providing for any rights
of indemnification in favor of such person or entity.
(k) Litigation and Other Proceedings. Company has furnished Xxxxx Fargo
copies of (i) all attorney responses to the request of the independent auditors
for Company with respect to loss contingencies as of December 31, 2000 in
connection with the Company Financial Statements, and (ii) a written list of
legal and regulatory proceedings filed against Company or any Company Subsidiary
since said date. There is no pending or, to the best knowledge of Company,
threatened, claim, action, suit, investigation or proceeding, against Company or
any Company Subsidiary, nor is Company or any Company Subsidiary subject to any
order, judgment or decree, except for matters which, in the aggregate, will not
have, or cannot reasonably be expected to have, a material adverse effect on the
business, financial condition or results of operations of Company and the
Company Subsidiaries taken as a whole.
(l) Insurance. Company and each Company Subsidiary are presently insured,
and during each of the past five (5) calendar years (or during such lesser
period of time as Company has owned such Company Subsidiary) have been insured,
for reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable law and regulation.
(m) Compliance with Laws. Company and each Company Subsidiary have all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties and assets and to carry on its business as presently
conducted and that are material to the
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business of Company or such Company Subsidiary; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect
and, to the best knowledge of Company, no suspension or cancellation of any of
them is threatened; and all such filings, applications and registrations are
current. The conduct by Company and each Company Subsidiary of its business and
the condition and use of its properties does not violate or infringe, in any
respect material to any such business, any applicable domestic (federal, state
or local) or foreign law, statute, ordinance, license or regulation. Neither
Company nor any Company Subsidiary is in default under any order, license,
regulation or demand of any federal, state, municipal or other governmental
agency or with respect to any order, writ, injunction or decree of any court.
Except for statutory or regulatory restrictions of general application and
except as set forth on Schedule 2(m), no federal, state, municipal or other
governmental authority has placed any restriction on the business or properties
of Company or any Company Subsidiary which reasonably could be expected to have
a material adverse effect on the business or properties of Company and the
Company Subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Company or any Company Subsidiary is
pending or, to the best knowledge of Company, threatened. Neither Company nor
any Company Subsidiary is involved in, or threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding that could
materially and adversely affect the business of Company or such Company
Subsidiary. Employees of Company and the Company Subsidiaries are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.
(o) Material Interests of Certain Persons. Except as set forth on Schedule
2(o), to the best knowledge of Company, no officer or director of Company or any
Company Subsidiary, or any "associate" (as such term is defined in Rule l4a-1
under the Exchange Act) of any such officer or director, has any interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of Company or any Company Subsidiary.
Schedule 2(o) sets forth a correct and complete list of any loan from
Company or any Company Subsidiary to any present officer, director, employee or
any associate or related interest of any such person which was required under
Regulation O of the Federal Reserve Board to be approved by or reported to
Company's or such Company Subsidiary's Board of Directors.
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(p) Company Benefit Plans.
(i) Schedule 2(p)(i) sets forth each employee benefit plan with
respect to which Company or any Company Subsidiary contributes,
sponsors or otherwise has any obligation (the "Plans"). For purposes
of this Section 2(p) and Schedule 2(p)(i), "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended, and the term
"Plan" or "Plans" means all employee benefit plans as defined in
Section 3(3) of ERISA, and all other benefit arrangements including,
without limitation, any plan, program, agreement, policy or commitment
providing for insurance coverage of employees, workers' compensation,
disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, severance or termination of employment
benefits, life, health, death, disability or accidental benefits.
(ii) Except as disclosed on Schedule 2(p)(ii), no Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iii) Except as disclosed on Schedule 2(p)(iii), no Plan promises
or provides health or life benefits to retirees or former employees
except as required by federal continuation of coverage laws or similar
state laws.
(iv) Except as disclosed on Schedule 2(p)(iv), (a) each Plan is
and has been in all material respects operated and administered in
accordance with its provisions and applicable law including, if
applicable, ERISA and the Code; (b) all reports and filings with
governmental agencies (including but not limited to the Department of
Labor, Internal Revenue Service, Pension Benefit Guaranty Corporation
and the Securities and Exchange Commission) required in connection
with each Plan have been timely made; (c) all disclosures and notices
required by law or Plan provisions to be given to participants and
beneficiaries in connection with each Plan have been properly and
timely made; (d) there are no actions, suits or claims pending, other
than routine uncontested claims for benefits with respect to each
Plan; and (e) each Plan intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the
Internal Revenue Service stating that the Plan (including all
amendments) is tax qualified under Section 401(a) of the Code and
Company knows of no reason that any such Plan is not qualified within
the meaning of Section 401(a) of the Code and knows of no reason that
each related Plan trust is not exempt from taxation under Section
501(a) of the Code.
(v) Except as disclosed on Schedule 2(p)(v), (a) all
contributions, premium payments and other payments required to be made
in connection with the Plans as of the date of this Agreement have
been made; (b) a proper accrual has been made on the books of Company
for all contributions, premium payments and other payments due in the
current fiscal year but not made as of the date of this Agreement; (c)
no contribution, premium payment or other payment has been
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made in support of any Plan that is in excess of the allowable
deduction for federal income tax purposes for the year with respect to
which the contribution was made (whether under Sections 162, 404, 419,
419A of the Code or otherwise); and (d) with respect to each Plan that
is subject to Section 301 of ERISA or Section 412 of the Code, Company
is not liable for any accumulated funding deficiency as that term is
defined in Section 412 of the Code and the projected benefit
obligations determined as of the date of this Agreement do not exceed
the assets of the Plan.
(vi) Except as disclosed in Schedule 2(p)(vi) and to best
knowledge of Company, no Plan or any trust created thereunder, nor any
trustee, fiduciary or administrator thereof, has engaged in a
"prohibited transaction," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA or violated any of the fiduciary
standards under Part 4 of Title 1 of ERISA which could subject such
Plan or trust, or any trustee, fiduciary or administrator thereof, or
any party dealing with any such Plan or trust, to a tax penalty or
prohibited transactions imposed by Section 4975 of the Code or would
result in material liability to Company and the Company Subsidiaries
as a whole.
(vii) No Plan subject to Title IV of ERISA or any trust created
thereunder has been terminated, nor have there been any "reportable
events" as that term is defined in Section 4043 of ERISA, with respect
to any Plan, other than those events which may result from the
transactions contemplated by this Agreement and the Merger Agreement.
(viii) Except as disclosed in Schedule 2(p)(viii), neither the
execution and delivery of this Agreement and the Merger Agreement nor
the consummation of the transactions contemplated hereby and thereby
will (a) result in any material payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or employee or former employee
of Company under any Plan or otherwise, (b) materially increase any
benefits otherwise payable under any Plan, or (c) result in the
acceleration of the time of payment or vesting of any such benefits to
any material extent.
(ix) Except as disclosed in Schedule 2(p)(ix), Company has not
made any payments or transfers of property, is not obligated to make
any payments or transfers of property, nor is it a party to any
agreement that under certain circumstances could obligate it to make
any payments or transfers of property that will not be deductible
under section 280G of the Code. Schedule 2(p)(ix) sets forth all
payments (including compensation, stock awards, bonuses, or other
similar payments) or other obligations to former officers or directors
for which the Company is liable and which have not been made as of the
date hereof ("Past Service Payments").
15
(q) Proxy Statement, Etc. None of the information regarding Company and the
Company Subsidiaries supplied or to be supplied by Company for inclusion in (i)
a Registration Statement on Form S-4 and the prospectus included therein to be
filed with the SEC by Xxxxx Fargo for the purpose of registering the shares of
Xxxxx Fargo Common Stock to be exchanged for shares of Company Common Stock
pursuant to the provisions of the Merger Agreement (the "Registration
Statement"), (ii) the proxy statement included in the Registration Statement to
be mailed to Company's shareholders in connection with the meeting to be called
to consider the Merger (the "Proxy Statement") and (iii) any other documents to
be filed with the SEC or any regulatory authority in connection with the
transactions contemplated hereby or by the Merger Agreement will, at the
respective times such Registration Statement, Proxy Statement and other
documents are filed with the SEC or any regulatory authority and, in the case of
the Registration Statement, when it becomes effective and, with respect to the
Proxy Statement, when mailed, and, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the meeting of
shareholders referred to in paragraph 4(c), contain any untrue statement of a
material fact, or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. All documents which
Company and the Company Subsidiaries are responsible for filing with the SEC and
any other regulatory authority in connection with the Merger will comply as to
form in all material respects with the provisions of applicable law.
(r) Registration Obligations. Except as set forth on Schedule 2(r), neither
Company nor any Company Subsidiary is under any obligation, contingent or
otherwise, by reason of any agreement to register any of its securities under
the Securities Act.
(s) Brokers and Finders. Except for SAMCO, neither Company nor any Company
Subsidiary nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for Company or any Company Subsidiary,
in connection with this Agreement and the Merger Agreement or the transactions
contemplated hereby and thereby.
(t) Fiduciary Activities. Company and each Company Subsidiary has properly
administered in all respects material and which could reasonably be expected to
be material, to the financial condition of Company and the Company Subsidiaries
taken as a whole all accounts for which it acts as a fiduciary, including but
not limited to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor, in
accordance with the terms of the governing documents and applicable state and
federal law and regulation and common law. Neither Company, any Company
Subsidiary, nor any director, officer or employee of Company or any Company
Subsidiary has committed any breach of trust with respect to any such fiduciary
account which is material to, or could reasonably be expected to be material to,
the financial condition of Company and the Company Subsidiaries taken as a
whole, and the accountings for each such fiduciary account are true and correct
in all material respects and accurately reflect the assets of such fiduciary
account.
16
(u) No Defaults. Neither Company nor any Company Subsidiary is in default,
nor has any event occurred that, with the passage of time or the giving
of notice, or both, would constitute a default, under any material agreement,
indenture, loan agreement or other instrument to which it is a party or by which
it or any of its assets is bound or to which any of its assets is subject, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Company and the Company Subsidiaries, taken as a whole. To
the best of Company's knowledge, all parties with whom Company or any Company
Subsidiary has material leases, agreements or contracts or who owe to Company or
any Company Subsidiary material obligations other than those arising in the
ordinary course of the banking business of the Company Subsidiaries are in
compliance therewith in all material respects.
(v) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition of, on Company or any Company Subsidiary, any liability
relating to the release of hazardous substances as defined under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), pending or to the best of
Company's knowledge, threatened against Company or any Company Subsidiary the
result of which has had or could reasonably be expected to have a material
adverse effect upon Company and Company's Subsidiaries taken as a whole; to the
best of Company's knowledge, there is no reasonable basis for any such
proceeding, claim or action; and to the best of Company's knowledge neither
Company nor any Company Subsidiary is subject to any agreement, order, judgment,
or decree by or with any court, governmental authority or third party imposing
any such environmental liability. Company has provided Xxxxx Fargo with copies
of all environmental assessments, reports, studies and other related information
in its possession with respect to each bank facility and each non-residential
OREO property.
3. Representations and Warranties of Xxxxx Fargo. Xxxxx Fargo represents
and warrants to Company as follows:
(a) Organization and Authority. Xxxxx Fargo is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and failure to be so qualified would
have a material adverse effect on Xxxxx Fargo and its subsidiaries taken as a
whole and has corporate power and authority to own its properties and assets and
to carry on its business as it is now being conducted. Xxxxx Fargo is registered
as a bank holding company and a financial holding company with the Federal
Reserve Board under the BHC Act.
(b) Xxxxx Fargo Subsidiaries. Schedule 3(b) sets forth a complete and
correct list as of December 31, 2000, of Xxxxx Fargo's Significant Subsidiaries
(as defined in Regulation S-X promulgated by the SEC), but excluding Norwest
Venture Partners VI, LP (individually a "Xxxxx Fargo Subsidiary" and
collectively the "Xxxxx Fargo
17
Subsidiaries"), all shares of the outstanding capital stock of each of which,
except as set forth in Schedule 3(b), are owned directly or indirectly by Xxxxx
Fargo. No equity security of any Xxxxx Fargo Subsidiary is or may be required to
be issued to any person or entity other than Xxxxx Fargo by reason of any
option, warrant, scrip, preemptive right, right to subscribe to, call or
commitment of any character whatsoever relating to, or security or right
convertible into, shares of any capital stock of such subsidiary, and there are
no contracts, commitments, understandings or arrangements by which any Xxxxx
Fargo Subsidiary is bound to issue additional shares of its capital stock, or
options, warrants or rights to purchase or acquire any additional shares of its
capital stock. Subject to 12 U.S.C. ss. 55 (1982), all of such shares so owned
by Xxxxx Fargo are fully paid and nonassessable and are owned by it free and
clear of any lien, claim, charge, option, encumbrance or agreement with respect
thereto. Each Xxxxx Fargo Subsidiary is a corporation or national banking
association duly organized, validly existing, duly qualified to do business and
in good standing under the laws of its jurisdiction of incorporation, and has
corporate power and authority to own or lease its properties and assets and to
carry on its business as it is now being conducted.
(c) Xxxxx Fargo Capitalization. As of June 30, 2001, the authorized capital
stock of Xxxxx Fargo consists of (i) 20,000,000 shares of Preferred Stock,
without par value, of which as of the close of business on June 30, 2001, 2,620
shares of ESOP Cumulative Convertible Preferred Stock, at $1,000 stated value;
8,190 shares of 1995 ESOP Cumulative Convertible Preferred Stock, at $1,000
stated value; 10,041 shares of 1996 ESOP Cumulative Convertible Preferred Stock,
at $1,000 stated value; 9,362 shares of 1997 ESOP Cumulative Convertible
Preferred Stock, at $1,000 stated value; 7,471 shares of 1998 ESOP Cumulative
Convertible Preferred Stock, at $1,000 stated value; 17,832 shares of 1999 ESOP
Cumulative Convertible Preferred Stock, at $1,000 stated value; 44,163 shares of
2000 ESOP Cumulative Convertible Preferred Stock, at $1,000 stated value;
112,031 shares of 2001 ESOP Cumulative Convertible Preferred Stock, at $1,000
stated value; 1,468,400 shares of Adjustable-Rate Cumulative Preferred Stock,
Series B, at $50 stated value; and 4,000,000 shares of 6.59% Adjustable Rate
Noncumulative Preferred Stock, Series H, at $50 stated value, were outstanding;
(ii) 4,000,000 shares of Preference Stock, without par value, of which as of the
close of business on June 30, 2001, no shares were outstanding; and (iii)
6,000,000,000 shares of Common Stock, $1-2/3 par value, of which as of the close
of business on June 30, 2001, 1,736,381,025 shares were outstanding and
22,993,569 shares were held in the treasury. All of the outstanding shares of
capital stock of Xxxxx Fargo have been duly and validly authorized and issued
and are fully paid and nonassessable.
(d) Authorization. Xxxxx Fargo has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by Xxxxx Fargo and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Xxxxx Fargo. No approval or consent by the
stockholders of Xxxxx Fargo is necessary for the execution and delivery of this
Agreement and the Merger Agreement and the consummation of the transactions
contemplated hereby and thereby. Subject to such approvals of government
agencies and other governing boards having regulatory
18
authority over Xxxxx Fargo as may be required by statute or regulation, this
Agreement is a valid and binding obligation of Xxxxx Fargo enforceable against
Xxxxx Fargo in accordance with its terms.
Neither the execution, delivery and performance by Xxxxx Fargo of this
Agreement or the Merger Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor compliance by Xxxxx Fargo with any of the
provisions hereof or thereof, will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Xxxxx Fargo or any Xxxxx Fargo Subsidiary under any of the terms, conditions or
provisions of, (x) its certificate of incorporation or by-laws or (y) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Xxxxx Fargo or any Xxxxx
Fargo Subsidiary is a party or by which it may be bound, or to which Xxxxx Fargo
or any Xxxxx Fargo Subsidiary or any of the properties or assets of Xxxxx Fargo
or any Xxxxx Fargo Subsidiary may be subject, or (ii) subject to compliance with
the statutes and regulations referred to in the next paragraph, violate any
statute, rule or regulation or, to the best knowledge of Xxxxx Fargo, violate
any judgment, ruling, order, writ, injunction or decree applicable to Xxxxx
Fargo or any Xxxxx Fargo Subsidiary or any of their respective properties or
assets.
Other than in connection with or in compliance with the provisions of the
Securities Act, the Exchange Act, the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals or exemptions
required under the BHC Act or the HSR Act, and filings required to effect the
Merger under Texas law, no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Xxxxx Fargo of the transactions contemplated by this
Agreement and the Merger Agreement.
(e) Xxxxx Fargo Financial Statements. The supplemental consolidated balance
sheets of Xxxxx Fargo and Xxxxx Fargo's subsidiaries as of December 31, 2000 and
1999 and related supplemental consolidated statements of income, changes in
stockholders' equity and comprehensive income, and cash flows for the three (3)
years ended December 31, 2000, together with the notes thereto, audited by KPMG
LLP and included in Xxxxx Fargo's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 (the "Xxxxx Fargo 10-K") as filed with the SEC, and the
unaudited consolidated balance sheet of Xxxxx Fargo as of June 30, 2001 and the
related unaudited consolidated statements of income, changes in stockholders'
equity and comprehensive income, and cash flows for the six (6) months then
ended included in Xxxxx Fargo's Quarter Report on Form 10-Q for the fiscal
quarter ended June 30, 2001 as filed with the SEC (collectively, the "Xxxxx
Fargo Financial Statements"), have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis and present fairly
(subject, in the case of financial statements for interim periods, to normal
recurring adjustments) the consolidated financial position of Xxxxx Fargo and
its subsidiaries at the
19
dates and the consolidated results of operations, changes in financial position
and cash flows of Xxxxx Fargo and its subsidiaries for the periods stated
therein.
(f) Reports. Since December 31, 1995, Xxxxx Fargo and each Xxxxx Fargo
Subsidiary has filed all reports, registrations and statements, together with
any required amendments thereto, that it was required to file with (i) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q and proxy statements, (ii)
the Federal Reserve Board, (iii) the FDIC, (iv) the Comptroller and (v) any
applicable state securities or banking authorities. All such reports and
statements filed with any such regulatory body or authority are collectively
referred to herein as the "Xxxxx Fargo Reports." As of their respective dates,
the Xxxxx Fargo Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, the Federal Reserve Board, the FDIC, the
Comptroller and any applicable state securities or banking authorities, as the
case may be, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(g) Properties and Leases. Except as may be reflected in the Xxxxx Fargo
Financial Statements and except for any lien for current taxes not yet
delinquent, Xxxxx Fargo and each Xxxxx Fargo Subsidiary has good title free and
clear of any material liens, claims, charges, options, encumbrances or similar
restrictions to all the real and personal property reflected in Xxxxx Fargo's
consolidated balance sheet as of June 30, 2001 included in Xxxxx Fargo's
Quarterly Report on Form 10-Q for the period then ended, and all real and
personal property acquired since such date, except such real and personal
property that has been disposed of in the ordinary course of business. All
leases of real property and all other leases material to Xxxxx Fargo or any
Xxxxx Fargo Subsidiary pursuant to which Xxxxx Fargo or such Xxxxx Fargo
Subsidiary, as lessee, leases real or personal property, are valid and effective
in accordance with their respective terms, and there is not, under any such
lease, any material existing default by Xxxxx Fargo or such Xxxxx Fargo
Subsidiary or any event which, with notice or lapse of time or both, would
constitute such a material default. Substantially all Xxxxx Fargo's and each
Xxxxx Fargo Subsidiary's buildings and equipment in regular use have been well
maintained and are in good and serviceable condition, reasonable wear and tear
excepted.
(h) Taxes. Each of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries has filed
all material federal, state, county, local and foreign tax returns, including
information returns, required to be filed by it, and paid or made adequate
provision for the payment of all taxes owed by it, including those with respect
to income, withholding, social security, unemployment, workers compensation,
franchise, ad valorem, premium, excise and sales taxes, and no taxes shown on
such returns to be owed by it or assessments received by it are delinquent. The
federal income tax returns of Xxxxx Fargo and the Xxxxx Fargo Subsidiaries for
the fiscal year ended December 31, 1982, and for all fiscal years prior thereto,
are for the purposes of routine audit by the Internal Revenue Service closed
because of the statute of limitations, and no claims for additional taxes for
such fiscal years are pending. Except only as set forth on Schedule 3(h), (i)
neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is a party to any pending
action or proceeding, nor to Xxxxx
20
Fargo's knowledge is any such action or proceeding threatened by any
governmental authority, for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies that could reasonably be expected to have
any material adverse effect on Xxxxx Fargo and its subsidiaries taken as a
whole, and (ii) no issue has been raised by any federal, state, local or foreign
taxing authority in connection with an audit or examination of the tax returns,
business or properties of Xxxxx Fargo or any Xxxxx Fargo Subsidiary that has not
been settled, resolved and fully satisfied, or adequately reserved for. Each of
Xxxxx Fargo and the Xxxxx Fargo Subsidiaries has paid all taxes owed or which it
is required to withhold from amounts owing to employees, creditors or other
third parties.
(i) Absence of Certain Changes. Since December 31, 2000, there has been no
change in the business, financial condition or results of operations of Xxxxx
Fargo or any Xxxxx Fargo Subsidiary which has had, or may reasonably be expected
to have, a material adverse effect on the business, financial condition or
results of operations of Xxxxx Fargo and its subsidiaries taken as a whole.
(j) Commitments and Contracts. Except as set forth on Schedule 3(j), as of
December 31, 2000 neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is a party
or subject to any of the following (whether written or oral, express or
implied):
(i) any labor contract or agreement with any labor union;
(ii) any contract not made in the ordinary course of business
containing covenants which materially limit the ability of Xxxxx Fargo
or any Xxxxx Fargo Subsidiary to compete in any line of business or
with any person or which involve any material restriction of the
geographical area in which, or method by which, Xxxxx Fargo or any
Xxxxx Fargo Subsidiary may carry on its business (other than as may be
required by law or applicable regulatory authorities);
(iii) any other contract or agreement which is a "material
contract" within the meaning of Item 601(b)(10) of Regulation S-K.
(k) Litigation and Other Proceedings. There is no pending or, to the best
knowledge of Xxxxx Fargo, threatened, claim, action, suit, investigation or
proceeding, against Xxxxx Fargo or any Xxxxx Fargo Subsidiary nor is Xxxxx Fargo
or any Xxxxx Fargo Subsidiary subject to any order, judgment or decree, except
for matters which, in the aggregate, will not have, or cannot reasonably be
expected to have, a material adverse effect on the business, financial condition
or results of operations of Xxxxx Fargo and its subsidiaries taken as a whole.
(l) Insurance. Xxxxx Fargo and each Xxxxx Fargo Subsidiary is presently
insured or self insured, and during each of the past five (5) calendar years (or
during such lesser period of time as Xxxxx Fargo has owned such Xxxxx Fargo
Subsidiary) has been insured or self-insured, for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in
21
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable law and regulation.
(m) Compliance with Laws. Xxxxx Fargo and each Xxxxx Fargo Subsidiary has
all permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local or foreign
governmental or regulatory bodies that are required in order to permit it to own
or lease its properties or assets and to carry on its business as presently
conducted and that are material to the business of Xxxxx Fargo or such Xxxxx
Fargo Subsidiary; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect, and to the best knowledge of Xxxxx
Fargo, no suspension or cancellation of any of them is threatened; and all such
filings, applications and registrations are current. The conduct by Xxxxx Fargo
and each Xxxxx Fargo Subsidiary of its business and the condition and use of its
properties does not violate or infringe, in any respect material to any such
business, any applicable domestic (federal, state or local) or foreign law,
statute, ordinance, license or regulation. Neither Xxxxx Fargo nor any Xxxxx
Fargo Subsidiary is in default under any order, license, regulation or demand of
any federal, state, municipal or other governmental agency or with respect to
any order, writ, injunction or decree of any court. Except for statutory or
regulatory restrictions of general application, no federal, state, municipal or
other governmental authority has placed any restrictions on the business or
properties of Xxxxx Fargo or any Xxxxx Fargo Subsidiary which reasonably could
be expected to have a material adverse effect on the business or properties of
Xxxxx Fargo and its subsidiaries taken as a whole.
(n) Labor. No work stoppage involving Xxxxx Fargo or any Xxxxx Fargo
Subsidiary is pending or, to the best knowledge of Xxxxx Fargo, threatened.
Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is involved in, or threatened
with or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding that could materially and adversely affect the business of Xxxxx
Fargo or such Xxxxx Fargo Subsidiary. Employees of Xxxxx Fargo and the Xxxxx
Fargo Subsidiaries are not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such employees.
(o) Xxxxx Fargo Benefit Plans.
(i) For purposes of this Section 3(o), the term "Xxxxx Fargo
Plan" or "Xxxxx Fargo Plans" means all employee benefit plans as
defined in Section 3(3) of ERISA, to which Xxxxx Fargo contributes,
sponsors, or otherwise has any obligations.
(ii) No Xxxxx Fargo Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(iii) Each Xxxxx Fargo Plan is and has been in all material
respects operated and administered in accordance with its provisions
and applicable law, including, if applicable, ERISA and the Code.
22
(iv) Each Xxxxx Fargo Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service stating that the Xxxxx Fargo Plan
(including all amendments) is tax qualified under Section 401(a) of
the Code and Xxxxx Fargo knows of no reason that any such Xxxxx Fargo
Plan is not qualified within the meaning of Section 401(a) of the Code
and knows of no reason that each related Xxxxx Fargo Plan trust is not
exempt from taxation under Section 501(a) of the Code.
(v) All contributions, premium payments, and other payments
required to be made in connection with the Xxxxx Fargo Plans as of the
date of this Agreement have been made.
(vi) With respect to each Xxxxx Fargo Plan that is subject to
Section 301 of ERISA or Section 412 of the Code, neither Xxxxx Fargo
nor any Xxxxx Fargo Subsidiary is liable for any accumulated funding
deficiency as that term is defined in Section 412 of the Code.
(vii) The present value of all benefits vested and all benefits
accrued under each Xxxxx Fargo Plan that is subject to Title IV of
ERISA does not, in each case, exceed the value of the assets of the
Xxxxx Fargo Plans allocable to such vested or accrued benefits as of
the end of the most recent Plan Year.
(p) Registration Statement, etc. None of the information regarding Xxxxx
Fargo and its subsidiaries supplied or to be supplied by Xxxxx Fargo for
inclusion in (i) the Registration Statement, (ii) the Proxy Statement, or (iii)
any other documents to be filed with the SEC or any regulatory authority in
connection with the transactions contemplated hereby or by the Merger Agreement
will, at the respective times such Registration Statement, Proxy Statement and
other documents are filed with the SEC or any regulatory authority and, in the
case of the Registration Statement, when it becomes effective and, with respect
to the Proxy Statement, when mailed, and, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the meeting of
shareholders referred to in paragraph 4(c), contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. All documents which
Xxxxx Fargo and the Xxxxx Fargo Subsidiaries are responsible for filing with the
SEC and any other regulatory authority in connection with the Merger will comply
as to form in all material respects with the provisions of applicable law.
(q) Brokers and Finders. Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for Xxxxx Fargo or any Xxxxx Fargo Subsidiary in
connection with this Agreement and the Merger Agreement or the transactions
contemplated hereby and thereby.
23
(r) No Defaults. Neither Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is in
default, nor has any event occurred that, with the passage of time or the giving
of notice, or both, would constitute a default under any material agreement,
indenture, loan agreement or other instrument to which it is a party or by which
it or any of its assets is bound or to which any of its assets is subject, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Xxxxx Fargo and its subsidiaries taken as a whole. To the
best of Xxxxx Fargo's knowledge, all parties with whom Xxxxx Fargo or any Xxxxx
Fargo Subsidiary has material leases, agreements or contracts or who owe to
Xxxxx Fargo or any Xxxxx Fargo Subsidiary material obligations, other than those
arising in the ordinary course of the banking business of the Xxxxx Fargo
Subsidiaries are in compliance therewith in all material respects.
(s) Environmental Liability. There is no legal, administrative, or other
proceeding, claim, or action of any nature seeking to impose, or that could
result in the imposition, on Xxxxx Fargo or any Xxxxx Fargo Subsidiary of any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance
including, without limitation, CERCLA, pending or to the best of Xxxxx Fargo's
knowledge, threatened against Xxxxx Fargo or any Xxxxx Fargo Subsidiary, the
result of which has had or could reasonably be expected to have a material
adverse effect upon Xxxxx Fargo and its subsidiaries taken as a whole; to the
best of Xxxxx Fargo's knowledge, there is no reasonable basis for any such
proceeding, claim or action; and to the best of Xxxxx Fargo's knowledge, neither
Xxxxx Fargo nor any Xxxxx Fargo Subsidiary is subject to any agreement, order,
judgment, or decree by or with any court, governmental authority or third party
imposing any such environmental liability.
(t) Merger Co. As of the Closing Date, Merger Co. will be a corporation
duly organized, validly existing, duly qualified to do business and in good
standing under the laws of its jurisdiction of incorporation, and will have
corporate power and authority to own or lease its properties and assets and to
carry on its business. As of the Closing Date, the execution, delivery and
performance by Merger Co. of the Merger Agreement will have been duly authorized
by Merger Co.'s Board of Directors and shareholders, and the Merger Agreement
will be a valid and binding obligation of Merger Co., enforceable against Merger
Co. in accordance with its terms.
4. Covenants of Company. Company covenants and agrees with Xxxxx Fargo as
follows:
(a) Affirmative Covenants. Except as otherwise permitted or required by
this Agreement, from the date hereof until the Effective Time of the Merger,
Company, and each Company Subsidiary will: maintain its corporate existence in
good standing; maintain the general character of its business and conduct its
business in its ordinary and usual manner; extend credit in accordance with
existing lending policies, except that it shall not, without the prior written
consent of Xxxxx Fargo (which consent requirement shall be deemed to be waived
as to any loan approval request to which Xxxxx Fargo has made no response by the
end of the second (2nd) complete business day following the
24
receipt of the request by a Xxxxx Fargo representative designated in writing),
make any new loan to any borrower in excess of $250,000, or modify, restructure
or renew any existing loan (except pursuant to commitments made prior to the
date of this Agreement) to any borrower if the amount of the resulting loan,
when aggregated with all other loans or extensions of credit to such person,
would be in excess of $500,000; maintain proper business and accounting records
in accordance with generally accepted principles; maintain its properties in
good repair and condition, ordinary wear and tear excepted; maintain in all
material respects presently existing insurance coverage; use its best efforts to
preserve its business organization intact, to keep the services of its present
principal employees and to preserve its good will and the good will of its
suppliers, customers and others having business relationships with it; use its
best efforts to obtain any approvals or consents required to maintain existing
leases and other contracts in effect following the Merger; comply in all
material respects with all laws, regulations, ordinances, codes, orders,
licenses and permits applicable to the properties and operations of Company and
each Company Subsidiary the non-compliance with which reasonably could be
expected to have a material adverse effect on Company and the Company
Subsidiaries taken as a whole; and permit Xxxxx Fargo and its representatives
(including KPMG LLP) upon prior notice to Company to examine its and its
subsidiaries books, records and properties and to interview officers, employees
and agents at all reasonable times when it is open for business, provided that
such examination is conducted in a manner designed to be the least disruptive to
Company's operations. No such examination by Xxxxx Fargo or its representatives
either before or after the date of this Agreement shall in any way affect,
diminish or terminate any of the representations, warranties or covenants of
Company herein expressed.
(b) Negative Covenants. Except as otherwise contemplated or required by
this Agreement, from the date hereof until the Effective Time of the Merger,
Company and each Company Subsidiary will not (without the prior written consent
of Xxxxx Fargo): amend or otherwise change its articles of incorporation or
association or by-laws; issue or sell or authorize for issuance or sale, or
grant any options or make other agreements with respect to the issuance or sale
or conversion of, any shares of its capital stock, phantom shares or other
share-equivalents, or any other of its securities, except that Company may issue
shares of Company Common Stock (i) upon the exercise of Company Options granted
under the Company Option Plan, and (ii) under "The First National Bank of
Amarillo Directors Stock Compensation Plan" ("Directors Plan") in accordance
with the terms of such plans; authorize or incur any long-term debt (other than
deposit liabilities); mortgage, pledge or subject to lien or other encumbrance
any of its properties, except in the ordinary course of business; enter into any
material agreement, contract or commitment in excess of $25,000, except banking
transactions in the ordinary course of business and in accordance with policies
and procedures in effect on the date hereof; make any investments except
investments made by bank subsidiaries in the ordinary course of business for
terms of up to one (1) year and in amounts of $100,000 or less; amend or
terminate any Plan except as required by law or by paragraph 4(j) hereof or
except as otherwise required by this Agreement; make any contributions to any
Plan except as required by the terms of such Plan in effect as of the date
hereof; declare, set aside, make or pay any dividend or other distribution with
respect to its capital stock
25
except any dividend declared by a Company Subsidiary's Board of Directors in
accordance with applicable law and regulation; redeem, purchase or otherwise
acquire, directly or indirectly, any of the capital stock of Company, except
resulting from the forfeiture of shares of Company Common Stock pursuant to the
Directors Plan; increase the compensation of any officers, directors or
executive employees, except for periodic increases in the ordinary course of
business consistent with past practice and except with respect to the bonus
payments in the amounts and payable as set forth on Schedule 4(b); sell or
otherwise dispose of any shares of the capital stock of any Company Subsidiary;
or sell or otherwise dispose of any of its assets or properties other than in
the ordinary course of business.
(c) Shareholder Meeting. The Board of Directors of Company will duly call,
and will cause to be held not later than twenty-five (25) business days
following the effective date of the Registration Statement, a meeting of its
shareholders and will direct that this Agreement and the Merger Agreement be
submitted to a vote at such meeting. The Board of Directors of Company will (i)
cause proper notice of such meeting to be given to its shareholders in
compliance with the Texas Business Corporation Act and other applicable law and
regulation, (ii) recommend by the affirmative vote of the Board of Directors a
vote in favor of approval of this Agreement and the Merger Agreement, and (iii)
use its best efforts to solicit from its shareholders proxies in favor thereof.
(d) Information Furnished by Company. Company will furnish or cause to be
furnished to Xxxxx Fargo all the information concerning Company and the Company
Subsidiaries required for inclusion in the Registration Statement, or any
statement or application made by Xxxxx Fargo to any governmental body in
connection with the transactions contemplated by this Agreement. Any financial
statement for any fiscal year provided under this paragraph must include the
audit opinion and the consent of Xxxxxxx Xxxxxxxxx, LLP to use such opinion in
such Registration Statement.
(e) Approvals. Company will take all necessary corporate and other action
and use its best efforts to obtain all approvals of regulatory authorities,
consents and other approvals required of Company to carry out the transactions
contemplated by this Agreement and will cooperate with Xxxxx Fargo to obtain all
such approvals and consents required of Xxxxx Fargo.
(f) Delivery of Closing Documents. Company will use its best efforts to
deliver to the Closing all opinions, certificates and other documents required
to be delivered by it at the Closing.
(g) Confidential Information. Company will hold in confidence all documents
and information concerning Xxxxx Fargo and its subsidiaries furnished to Company
and its representatives in connection with the transactions contemplated by this
Agreement and will not release or disclose such information to any other person,
except as required by law and except to Company's outside professional advisers
in connection with this Agreement, with the same undertaking from such
professional advisers. If the transactions contemplated by this Agreement shall
not be consummated, such confidence
26
shall be maintained and such information shall not be used in competition with
Xxxxx Fargo (except to the extent that such information was previously known to
Company, in the public domain, or later acquired by Company from other sources
not known to Company to be subject to a confidentiality obligation to Xxxxx
Fargo) and, upon request, all such documents and any copies thereof and all
documents prepared by Company that include such confidential information shall
be destroyed, excluding documents such as minutes of meetings and regulatory
filings that Company is required to retain.
(h) Competing Transactions. Neither Company, nor any Company Subsidiary,
nor any director, officer, representative or agent thereof, will, directly or
indirectly, solicit, authorize the solicitation of or enter into any discussions
with any corporation, partnership, person or other entity or group (other than
Xxxxx Fargo) concerning any offer or possible offer (i) to purchase any shares
of common stock, any option or warrant to purchase any shares of common stock,
any securities convertible into any shares of such common stock, or any other
equity security of Company or any Company Subsidiary, (ii) to make a tender or
exchange offer for any shares of such common stock or other equity security,
(iii) to purchase, lease or otherwise acquire the assets of Company or any
Company Subsidiary except in the ordinary course of business, or (iv) to merge,
consolidate or otherwise combine with Company or any Company Subsidiary. If any
corporation, partnership, person or other entity or group makes an offer or
inquiry to Company or any Company Subsidiary concerning any of the foregoing,
Company or such Company Subsidiary will promptly disclose such offer or inquiry
to Xxxxx Fargo.
(i) Public Disclosure. Company shall consult with Xxxxx Fargo as to the
form and substance of any proposed press release or other proposed public
disclosure of matters related to this Agreement or any of the transactions
contemplated hereby.
(j) Benefit Plans. Company and each Company Subsidiary will take all action
necessary or required (i) to terminate or amend, if requested by Xxxxx Fargo,
all qualified retirement and welfare benefit plans and all non-qualified benefit
plans and compensation arrangements as of the Effective Date of the Merger to,
among other matters, facilitate the merger of such plans with Xxxxx Fargo plans
without gaps in coverage for participants in the plans, and (ii) to submit
application to the Internal Revenue Service for a favorable determination letter
for each of the Plans that is subject to the qualification requirements of
Section 401(a) of the Code prior to the Effective Date of the Merger.
(k) Affiliate Letters. Company shall use its best efforts to obtain and
deliver prior to the Effective Date of the Merger signed representations
substantially in the form attached hereto as Exhibit B to Xxxxx Fargo by each
executive officer, director or shareholder of Company who may reasonably be
deemed an "affiliate" of Company within the meaning of such term as used in Rule
145 under the Securities Act.
(l) Accruals and Reserves. Company shall establish such additional accruals
and reserves as may be necessary (i) to conform Company's accounting and credit
loss reserve practices and methods to those of Xxxxx Fargo, consistent with
Xxxxx Fargo's plans with respect to the conduct of Company's business following
the Merger and (ii) to
27
the extent permitted by generally accepted accounting principles, to provide for
the costs and expenses relating to the consummation by Company of the Merger and
the other transactions contemplated by this Agreement; provided, however, that
the Company shall not be obligated to record any such accounting adjustments
pursuant to this paragraph 4(l) unless and until Xxxxx Fargo has certified to
the Company that the conditions to its obligation to consummate the Merger will
be satisfied or waived on or before the Effective Time and in no event be
effective prior to the date prior to the Effective Date. The Company's
representations, warranties, and covenants contained in this Agreement shall not
be deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on account of this
Section 4(l).
(m) Environmental Assessments. Company shall obtain, from firms reasonably
acceptable to Xxxxx Fargo, at Company's sole expense (unless otherwise agreed to
by Company and Xxxxx Fargo), Phase I environmental assessments for each owned
bank facility and each non-residential OREO property. Oral reports of such
environmental assessments shall be delivered to Xxxxx Fargo no later than four
(4) weeks and written reports shall be delivered to Xxxxx Fargo no later than
eight (8) weeks from the date of this Agreement. Company shall obtain, at its
sole expense (unless otherwise agreed to by Company and Xxxxx Fargo), Phase II
environmental assessments for properties identified by Xxxxx Fargo on the basis
of the results of such Phase I environmental assessments. Company shall obtain a
survey and assessment of all potential asbestos containing material in owned or
leased real properties (other than OREO property) and a written report of the
results shall be delivered to Xxxxx Fargo within four (4) weeks of execution of
this Agreement.
(n) Title Commitments and Boundary Surveys. Company shall obtain, at its
sole expense (unless otherwise agreed to by Company and Xxxxx Fargo),
commitments for title insurance and boundary surveys from firms reasonably
acceptable to Xxxxx Fargo for each owned bank facility which shall be delivered
to Xxxxx Fargo no later than four (4) weeks from the date of this Agreement.
(o) 280G Shareholder Approval. Company shall obtain the approval of
shareholders holding at least 75% of the issued and outstanding shares of
Company Common Stock in accordance with rules relating to shareholder approval
for purposes of Section 280G of the Code prior to any payment, grant of any
right or provision of any benefit to an employee of Company as a result of or in
connection with the consummation of the transactions contemplated hereby which
would cause the limitations of Section 280G of the Code with respect to tax
deductibility to be exceeded ("Excess 280G Agreements"). Company shall use its
best efforts to amend any Excess 280G Agreements to make any payment thereunder
subject to and contingent upon such shareholder approval.
(p) Company Stock Options. Company shall take all actions necessary to
provide for the conversion of Company Options into options to acquire Xxxxx
Fargo Common Stock as contemplated by paragraph 1(f).
28
(q) Directors Plan. Company shall take all action necessary to (i) cause
any awards under the Directors Plan for any period beginning January 1, 2002 to
be in the form of cash only (ii) to terminate the Directors Plan and to issue
and distribute all shares of Company Common Stock awarded and earned under the
Directors Plan effective prior to the Effective Date and (iii) to cause all
unearned awards of Company Common Stock under the Directors Plan to terminate
prior to the Effective Date.
(r) Divestiture Cooperation. In anticipation of conditions reasonably
expected to be imposed by the Federal Reserve Board and the Antitrust Division
of the Department of Justice ("DOJ") in approving the Merger ("Board Approval"),
Company agrees to enter into and agrees to cause its Subsidiaries to enter into
such agreements prior to Closing for such divestitures of such branch or
branches of such Subsidiaries (each, a "Branch") as the Federal Reserve Board
and DOJ may require and to take such other actions prior to the Closing as may
be necessary (or may reasonably be expected to be necessary) to be taken in
connection therewith and in order to satisfy any requirements related thereto to
be imposed by the Federal Reserve Board and DOJ as a condition to the Board
Approval. Company shall use, and shall cause its Subsidiaries to use their
respective commercially reasonable best efforts to cooperate with Xxxxx Fargo in
identifying prospective bidders for the Branches, allowing prospective bidders
to conduct due diligence on the Branches, and in negotiating the terms of the
Divestitures; provided that neither Company nor its Subsidiaries shall enter
into definitive agreements for the Divestitures without the prior consent of
Xxxxx Fargo, which consent shall not be unreasonably withheld; provided further
that the consummation of the Divestitures contemplated by this Paragraph 2(r)
will be subject to and contingent upon Closing of the Merger and will not occur
prior to the Effective Time of the Merger; provided further that the actions
taken to implement the Divestitures shall not impair or unduly burden or be
deemed to impair or unduly burden the operations of business of Company and the
Company Subsidiaries. Nothing contained in this Paragraph 4(r) shall diminish
the agreements, covenants, and obligations of the parties otherwise set forth in
Articles 4 and 5 of the Agreement."
5. Covenants of Xxxxx Fargo. Xxxxx Fargo covenants and agrees with Company
as follows:
(a) Affirmative Covenants. From the date hereof until the Effective Time of
the Merger, Xxxxx Fargo will maintain its corporate existence in good standing;
conduct, and cause the Xxxxx Fargo Subsidiaries to conduct, their respective
businesses in compliance with all material obligations and duties imposed on
them by all laws, governmental regulations, rules and ordinances, and judicial
orders, judgments and decrees applicable to Xxxxx Fargo or the Xxxxx Fargo
Subsidiaries, their businesses or their properties; maintain all books and
records of it and the Xxxxx Fargo Subsidiaries, including all financial
statements, in accordance with the accounting principles and practices
consistent with those used for the Xxxxx Fargo Financial Statements, except for
changes in such principles and practices required under generally accepted
accounting principles.
29
(b) Information Provided by Xxxxx Fargo. Xxxxx Fargo will furnish to
Company all the information concerning Xxxxx Fargo required for inclusion in a
proxy statement or statements to be sent to the shareholders of Company, or in
any statement or application made by Company to any governmental body in
connection with the transactions contemplated by this Agreement.
(c) Registration Statement. As promptly as practicable after the execution
of this Agreement, Xxxxx Fargo will file with the SEC the Registration Statement
and any other applicable documents, relating to the shares of Xxxxx Fargo Common
Stock to be delivered to the shareholders of Company pursuant to the Merger
Agreement, and will use its best efforts to cause the Registration Statement to
become effective. At the time the Registration Statement becomes effective, the
Registration Statement will comply in all material respects with the provisions
of the Securities Act and the published rules and regulations thereunder, and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not false or misleading, and at the time of mailing thereof to the
Company shareholders, at the time of the Company shareholders' meeting referred
to in paragraph 4(c) hereof and at the Effective Time of the Merger the
prospectus included as part of the Registration Statement, as amended or
supplemented by any amendment or supplement filed by Xxxxx Fargo (hereinafter
the "Prospectus"), will not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
false or misleading; provided, however, that none of the provisions of this
subparagraph shall apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished by Company or any Company Subsidiary for use in the
Registration Statement or the Prospectus.
(d) Stock Exchange Listings. Xxxxx Fargo will file all documents required
to be filed to list the Xxxxx Fargo Common Stock to be issued pursuant to the
Merger Agreement on the New York Stock Exchange and the Chicago Stock Exchange
and use its best efforts to effect said listings on or before the Effective Time
of the Merger.
(e) Xxxxx Fargo Shares. The shares of Xxxxx Fargo Common Stock to be issued
by Xxxxx Fargo to the shareholders of Company pursuant to this Agreement and the
Merger Agreement will, upon such issuance and delivery to said shareholders
pursuant to the Merger Agreement, be duly authorized, validly issued, fully paid
and nonassessable. The shares of Xxxxx Fargo Common Stock to be delivered to the
shareholders of Company pursuant to the Merger Agreement are and will be free of
any preemptive rights of the stockholders of Xxxxx Fargo.
(f) Blue Sky Approvals. Xxxxx Fargo will file all documents required to
obtain, prior to the Effective Time of the Merger, all necessary Blue Sky
permits and approvals, if any, required to carry out the transactions
contemplated by this Agreement, will pay all expenses incident thereto and will
use its best efforts to obtain such permits and approvals on or before the
Effective Time of the Merger.
30
(g) Approvals. Xxxxx Fargo will take all necessary corporate and other
action and file all documents required to obtain and will use its best efforts
to obtain all approvals of regulatory authorities, consents and approvals
required of it to carry out the transactions contemplated by this Agreement and
will cooperate with Company to obtain all such approvals and consents required
by Company.
(h) Confidential Information. Xxxxx Fargo will hold in confidence all
documents and information concerning Company and Company's Subsidiaries
furnished to it and its representatives in connection with the transactions
contemplated by this Agreement and will not release or disclose such information
to any other person, except as required by law and except to its outside
professional advisers in connection with this Agreement, with the same
undertaking from such professional advisers. If the transactions contemplated by
this Agreement shall not be consummated, such confidence shall be maintained and
such information shall not be used in competition with Company (except to the
extent that such information was previously known to Xxxxx Fargo, in the public
domain, or later acquired by Xxxxx Fargo from other sources not known to Xxxxx
Fargo to be subject to a confidentiality obligation to Company) and, upon
request, all such documents and any copies thereof and all documents prepared by
Xxxxx Fargo that include such confidential information shall be destroyed,
excluding documents such as minutes of meetings and regulatory filings that
Xxxxx Fargo is required to retain.
(i) Merger Filings. Xxxxx Fargo will file any documents or agreements
required to be filed in connection with the Merger under the Texas Business
Corporation Act.
(j) Delivery of Closing Documents. Xxxxx Fargo will use its best efforts to
deliver to the Closing all opinions, certificates and other documents required
to be delivered by it at the Closing.
(k) Public Disclosure. Xxxxx Fargo shall consult with Company as to the
form and substance of any proposed press release or other proposed public
disclosure of matters related to this Agreement or any of the transactions
contemplated hereby.
(l) Notice of Regulatory Approvals. Xxxxx Fargo shall furnish Company with
copies of the non-confidential portions of the applications referred to in
paragraph 7(l) hereof and shall promptly give Company notice of receipt of the
regulatory approvals referred to in paragraph 7(e).
(m) Indemnification of Directors and Officers. With respect to the
indemnification of directors and officers, Xxxxx Fargo agrees as follows:
(i) Xxxxx Fargo shall ensure that all rights to indemnification
and all limitations of liability existing in favor of any person who
is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time of the Merger, a director or
officer of Company or any Company Subsidiary, (an "Indemnified Party"
and, collectively, the "Indemnified Parties") in Company's Articles of
Incorporation or By-laws or similar governing documents of any
31
Company Subsidiary, as applicable in the particular case and as in
effect on the date hereof, shall, with respect to claims arising from
(A) facts or events that occurred before the Effective Time of the
Merger, or (B) this Agreement and the Merger Agreement or any of the
transactions contemplated hereby or thereby, whether in any case
asserted or arising before or after the Effective Time of the Merger,
survive the Merger and shall continue in full force and effect.
Nothing contained in this paragraph 5(m)(i) shall be deemed to
preclude the liquidation, consolidation or merger of Company or any
Company Subsidiary, in which case all of such rights to
indemnification and limitations on liability shall be deemed to
survive and continue as contractual rights notwithstanding any such
liquidation or consolidation or merger; provided, however, that in the
event of liquidation or sale of substantially all of the assets of
Company, Xxxxx Fargo shall guarantee, to the extent of the greater of
the net asset value of Company as of the Effective Date of the Merger
or as of the date of such liquidation or sale, the indemnification
obligations of Company or any Company Subsidiary to the extent of
indemnification obligations of Company and the Company Subsidiaries
described above. Each Indemnified Party shall have the right to assert
claims for indemnification directly against Xxxxx Fargo without first
having to assert such claim against Company or any Company Subsidiary.
Notwithstanding anything to the contrary contained in this paragraph
5(m)(i), nothing contained herein shall require Xxxxx Fargo to
indemnify any person who was a director or officer of Company or any
Company Subsidiary to a greater extent than Company or any Company
Subsidiary is, as of the date of this Agreement, required to indemnify
any such person;
(ii) any Indemnified Party wishing to claim indemnification under
paragraph 5(m)(i), upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Xxxxx Fargo
thereof, but the failure to so notify shall not relieve Xxxxx Fargo of
any liability it may have to such Indemnified Party. In the event of
any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time of the Merger), (A) Xxxxx
Fargo shall have the right to assume the defense thereof and Xxxxx
Fargo shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Party in connection with the defense thereof,
except that if Xxxxx Fargo elects not to assume such defense or
counsel for the Indemnified Party advises that there are issues which
raise conflicts of interest between Xxxxx Fargo and the Indemnified
Party, the Indemnified Party may retain counsel satisfactory to them,
and Xxxxx Fargo shall pay the reasonable fees and expenses of such
counsel for the Indemnified Party promptly as statements therefor are
received; provided, however, that Xxxxx Fargo shall be obligated
pursuant to this subparagraph (ii) to pay for only one firm of counsel
for all Indemnified Parties in any jurisdiction unless the use of one
counsel for such Indemnified Parties would present such counsel with a
conflict of interest and (B) such Indemnified Party shall cooperate in
the defense of any such matter;
32
(iii) for a period of six (6) years from the Effective Time,
Xxxxx Fargo shall use its reasonable best efforts to provide that
portion of director's and officer's liability insurance that serves to
reimburse the present and former officers and directors of the Company
or any Company Subsidiary with respect to claims against such
directors and officers arising from facts or events that occurred
before the Effective Time, which insurance shall contain at least the
same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by the Company;
provided however, that in no event shall Xxxxx Fargo be required to
expend more than 125% of the current amount expended by the Company
(such limit on the premiums required to be expended by Xxxxx Fargo,
the "Insurance Amount") to maintain or procure such director's and
officer's insurance coverage for a comparable six-year period;
provided further, that if Xxxxx Fargo is unable to maintain or obtain
the insurance called for by this Section 5(m)(iii), Xxxxx Fargo shall
use its reasonable best efforts to obtain as much comparable insurance
as is available for the Insurance Amount;
(iv) if Xxxxx Fargo or any of its successors or assigns (A) shall
consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (B) shall transfer all or substantially all
of its properties and assets to any individual, corporation or other
entity, then and in each such case, proper provision shall be made so
that the successors and assigns of Xxxxx Fargo shall assume the
obligations set forth in this paragraph 5(m); and
(v) the provisions of this paragraph 5(m) are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
6. Conditions Precedent to Obligation of Company. The obligation of Company
to effect the Merger shall be subject to the satisfaction at or before the Time
of Filing of the following further conditions, which may be (to the extent not
otherwise required by law) waived in writing by Company:
(a) Representations and Warranties. Except as they may be affected by
transactions contemplated hereby and except to the extent such representations
and warranties are by their express provisions made as of a specified date and
except for activities or transactions after the date of this Agreement made in
the ordinary course of business and not expressly prohibited by this Agreement,
the representations and warranties contained in paragraph 3 hereof shall be true
and correct in all respects material to Xxxxx Fargo and its subsidiaries taken
as a whole as if made at the Time of Filing.
(b) Performance of Xxxxx Fargo Obligations. Xxxxx Fargo shall have, or
shall have caused to be, performed and observed in all material respects all
covenants,
33
agreements and conditions hereof to be performed or observed by it and Merger
Co. at or before the Time of Filing.
(c) Xxxxx Fargo Compliance Certificate. Company shall have received a
favorable certificate, dated as of the Effective Date of the Merger, signed by
the Chairman, the President or any Executive Vice President or Senior Vice
President and by the Secretary or Assistant Secretary of Xxxxx Fargo, as to the
matters set forth in subparagraphs (a) and (b) of this paragraph 6.
(d) Shareholder Approvals. This Agreement and the Merger Agreement shall
have been approved by the affirmative vote of the holders of the percentage of
the outstanding shares of Company required for approval of a plan of merger in
accordance with the provisions of Company's Articles of Incorporation and the
Texas Business Corporation Act.
(e) Governmental Approvals. Xxxxx Fargo shall have received approval by the
Federal Reserve Board and by such other governmental agencies as may be required
by law of the transactions contemplated by this Agreement and the Merger
Agreement and all waiting and appeal periods prescribed by applicable law or
regulation shall have expired.
(f) No Restraining Order, Etc. No court or governmental authority of
competent jurisdiction shall have issued an order restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement.
(g) Shares Authorized for Listing. The shares of Xxxxx Fargo Common Stock
to be delivered to the stockholders of Company pursuant to this Agreement and
the Merger Agreement shall have been authorized for listing on the New York
Stock Exchange and the Chicago Stock Exchange.
(h) Tax Opinion. Company shall have received an opinion, dated the Closing
Date, of counsel to Company, substantially to the effect that, for federal
income tax purposes: (i) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code; (ii) no gain or loss will be recognized
by the holders of Company Common Stock upon receipt of Xxxxx Fargo Common Stock
except for cash received in lieu of fractional shares; (iii) the basis of the
Xxxxx Fargo Common Stock received by the shareholders of Company will be the
same as the basis of Company Common Stock exchanged therefor; and (iv) the
holding period of the shares of Xxxxx Fargo Common Stock received by the
shareholders of Company will include the holding period of the Company Common
Stock, provided such shares of Company Common Stock were held as a capital asset
as of the Effective Time of the Merger.
(i) Registration Statement Effective; No Stop Order, Etc.; Blue Sky
Authorizations Received. The Registration Statement (as amended or supplemented)
shall have become effective under the Securities Act and shall not be subject to
any stop order, and no action, suit, proceeding or investigation by the SEC to
suspend the
34
effectiveness of the Registration Statement shall have been initiated and be
continuing, or have been threatened and be unresolved. Xxxxx Fargo shall have
received all state securities law or blue sky authorizations necessary to carry
out the transactions contemplated by this Agreement.
(j) No Material Adverse Change. Since September 30, 2001, no change shall
have occurred and no circumstance shall exist which has had or might reasonably
be expected to have a material adverse effect on the financial condition,
results of operations, business or prospects of Xxxxx Fargo and its Subsidiaries
taken as a whole (other than changes in banking laws or regulations, or
interpretations thereof, that affect the banking industry generally, or changes
in the general level of interest rates).
7. Conditions Precedent to Obligation of Xxxxx Fargo. The obligation of
Xxxxx Fargo to effect the Merger shall be subject to the satisfaction at or
before the Time of Filing of the following conditions, which may be waived in
writing by Xxxxx Fargo:
(a) Representations and Warranties. Except as they may be affected by
transactions contemplated hereby and except to the extent such representations
and warranties are by their express provisions made as of a specified date and
except for activities or transactions or events occurring after the date of this
Agreement made in the ordinary course of business and not expressly prohibited
by this Agreement, the representations and warranties contained in paragraph 2
hereof shall be true and correct in all respects material to Company and the
Company Subsidiaries taken as a whole as if made at the Time of Filing.
(b) Performance of Company Obligations. Company shall have, or shall have
caused to be, performed and observed in all material respects all covenants,
agreements and conditions hereof to be performed or observed by it at or before
the Time of Filing.
(c) Shareholder Approvals. This Agreement and the Merger Agreement shall
have been approved by the affirmative vote of the holders of the percentage of
the outstanding shares of Company required for approval of a plan of merger in
accordance with the provisions of Company's Articles of Incorporation and the
Texas Business Corporation Act.
(d) Company's Compliance Certificate. Xxxxx Fargo shall have received a
favorable certificate dated as of the Effective Date of the Merger signed by the
Chairman or President and by the Secretary or Assistant Secretary of Company, as
to the matters set forth in subparagraphs (a) through (c) of this paragraph 7.
(e) Governmental Approvals. Xxxxx Fargo shall have received approval by all
governmental agencies as may be required by law of the transactions contemplated
by this Agreement and the Merger Agreement and all waiting and appeal periods
prescribed by applicable law or regulation shall have expired. No approvals,
licenses or consents granted by any regulatory authority shall contain any
condition or requirement relating to
35
Company or any Company Subsidiary that, in the good faith judgment of Xxxxx
Fargo, is unreasonably burdensome to Xxxxx Fargo.
(f) Consents, Authorizations, Etc. Obtained. Company and each Company
Subsidiary shall have obtained any and all material consents or waivers from
other parties to loan agreements, leases or other contracts material to
Company's or such Company Subsidiary's business required for the consummation of
the Merger, and Company and each Company Subsidiary shall have obtained any and
all material permits, authorizations, consents, waivers and approvals required
for the lawful consummation by it of the Merger.
(g) No Restraining Order, etc. No court or governmental authority of
competent jurisdiction shall have issued an order restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement.
(h) Number of Outstanding Shares. At any time since the date hereof the
total number of shares of Company Common Stock outstanding and subject to
issuance upon exercise (assuming for this purpose that phantom shares and other
share-equivalents constitute Company Common Stock) of all warrants, options,
conversion rights, phantom shares or other share-equivalents, shall not have
exceeded 13,634,737.
(i) Registration Statement Effective; No Stop Order, etc.; Blue Sky
Authorizations Received. The Registration Statement (as amended or supplemented)
shall have become effective under the Securities Act and shall not be subject to
any stop order, and no action, suit, proceeding or investigation by the SEC to
suspend the effectiveness of the Registration Statement shall have been
initiated and be continuing, or have been threatened or be unresolved. Xxxxx
Fargo shall have received all state securities law or blue sky authorizations
necessary to carry out the transactions contemplated by this Agreement.
(j) No Casualty Losses, Etc. Company and the Company Subsidiaries
considered as a whole shall not have sustained since June 30, 2001 any material
loss or interference with their business from any civil disturbance or any fire,
explosion, flood or other calamity, whether or not covered by insurance.
(k) No Environmental Liability. There shall be no reasonable basis for any
proceeding, claim or action of any nature seeking to impose, or that could
result in the imposition on Company or any Company Subsidiary of, any liability
relating to the release of hazardous substances as defined under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, CERCLA, which has had or could reasonably be expected to
have a material adverse effect upon Company and its subsidiaries taken as a
whole.
(l) No Material Adverse Change. Since September 30, 2001, no change shall
have occurred and no circumstances shall exist which has had or might reasonably
be expected to have a material adverse effect on the financial condition,
results of
36
operations, business or prospects of Company and the Company Subsidiaries taken
as a whole (other than changes in banking laws or regulations, or
interpretations thereof, that affect the banking industry generally, or changes
in the general level of interest rates). No action taken by Company solely in
order to comply with the requirements of paragraph 4(l) shall be deemed to have
a material adverse effect for purposes of this paragraph 7(l).
(m) Resignations. Company shall have delivered the resignations of each
member of its Board of Directors as of the Effective Time, and such resignations
shall not have been withdrawn.
(n) Company Option Plan. The Company shall have complied with the
provisions of paragraph 4(p) hereof.
(o) Section 280G. The Company shall have complied with the provision of
paragraph 4(o) hereof.
(p) Directors Plan. The Company shall have taken the actions required by
paragraph 4(q).
(r) Opinion Regarding Non-Compete; No Payments. Company shall have provided
to Xxxxx Fargo an opinion (upon which Xxxxx Fargo may rely) in form and
substance reasonably satisfactory to Xxxxx Fargo to the effect that the entering
into of that certain Non-Compete Agreement between Company, Bank, and Xxx X.
Xxxxxx dated August 28, 2001 and the performance of any obligation of any party
thereunder do not violate any federal laws, regulations, or policies. Except as
set forth on Schedule 2(p)(ix), the Company shall not be liable for any Past
Service Payments.
(s) Non-Compete. The Consulting and Non-Competition Agreement described on
Schedule 7(s) shall be in full force and effect.
8. Employee Benefit Plans. Each person who is an employee of Company or any
Company Subsidiary as of the Effective Date of the Merger ("Company Employees")
shall be eligible for participation in the employee welfare and retirement plans
of Xxxxx Fargo, as in effect from time to time, as follows:
(a) Employee Welfare Benefit Plans. Each Company Employee shall be eligible
for participation in the employee welfare benefit plans of Xxxxx Fargo listed
below subject to any eligibility requirements applicable to such plans (and not
subject to pre-existing condition exclusions, except with respect to the Xxxxx
Fargo Long Term Care Plan and Xxxxx Fargo Long Term Disability Plan) and shall
enter each plan not later than the first day of the calendar quarter which
begins at least thirty-two (32) days after the Effective Date of the Merger (the
"Benefits Conversion Date"):
Medical Plan
Dental Plan
37
Vision Plan
Short Term Disability Plan
Long Term Disability Plan
Long Term Care Plan
Flexible Benefits Plan
Basic Group Life Insurance Plan
Group Universal Life Insurance Plan
Dependent Group Life Insurance Plan
Business Travel Accident Insurance Plan
Accidental Death and Dismemberment Plan
Salary Continuation Pay Plan
Paid Time Off Program
It is intended that the transition from Company's Plans to the Xxxxx Fargo Plans
will be facilitated without gaps in coverage to the participants and without
duplication of costs to Xxxxx Fargo. Company Employees shall receive credit for
years of service to Company, the Company Subsidiaries and any predecessors of
Company or the Company Subsidiaries (to the extent credited under the vacation
and short-term disability programs of Company) for the purpose of determining
benefits under the Xxxxx Fargo Paid Time Off Program. For purposes of the Salary
Continuation Pay Plan and Short Term Disability Plan, we will recognize the most
recent hire date with Company, which cannot precede January 1, 1997 ("Xxxxx
Fargo Corporate Hire Date"). Company Employees shall be eligible for
participation in the Xxxxx Fargo Salary Continuation Pay Plan subject to any
eligibility requirements applicable to such plans immediately following the
Effective Time of the Merger; provided, however, that no Company Employee who is
a participant in any Company severance or salary continuation plan that would
provide such Company Employee with benefits after the Effective Time of the
Merger or who has an employment agreement with Company or any Company Subsidiary
at the Effective Time of the Merger shall be eligible to participate in the
Xxxxx Fargo Salary Continuation Pay Plan.
(b) Employee Retirement Benefit Plans. Each Company Employee shall be
eligible to participate in the Xxxxx Fargo 401(k) Plan (the "401(k) Plan"),
subject to any eligibility requirements applicable to the 401(k) Plan (with full
credit for years of past service to Company and the Company Subsidiaries, or to
any predecessor-in-interest of Company or the Company Subsidiaries to the extent
such service is currently given credit under the existing Company 401(k) plan)
for the purpose of satisfying any eligibility and vesting periods applicable to
the 401(k) Plan, and shall enter the 401(k) Plan no later than the Benefits
Conversion Date.
Each Company Employee shall be eligible to participate in the Xxxxx Fargo
Cash Balance Plan (the "Cash Balance Plan") subject to any eligibility
requirements applicable to the Cash Balance Plan. Xxxxx Fargo shall not
recognize a Company Employee's past service with Company or any Company
Subsidiary for any purpose under the Cash Balance Plan. Therefore, each Company
Employee shall be eligible for participation, as a new employee, in the Cash
Balance Plan pursuant to the terms thereof.
38
Each Company Employee shall be eligible for access to Xxxxx Fargo's retiree
medical benefit, subject to any eligibility requirements applicable to such
benefit. Xxxxx Fargo shall recognize years of past service with Company and the
Company Subsidiaries for the purpose of eligibility to access Xxxxx Fargo's
retiree medical benefit.
9. Termination of Agreement.
(a) This Agreement may be terminated at any time prior to the Time of
Filing:
(i) by mutual written consent of the parties hereto;
(ii) by either of the parties hereto upon written notice to the
other party if the Merger shall not have been consummated by April 30,
2002 unless such failure of consummation shall be due to the failure
of the party seeking to terminate to perform or observe in all
material respects the covenants and agreements hereof to be performed
or observed by such party; or
(iii) by Company or Xxxxx Fargo upon written notice to the other
party if any court or governmental authority of competent jurisdiction
shall have issued a final order restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement.
(b) Termination of this Agreement under this paragraph 9 shall not release,
or be construed as so releasing, either party hereto from any liability or
damage to the other party hereto arising out of the breaching party's willful
and material breach of the warranties and representations made by it, or willful
and material failure in performance of any of its covenants, agreements, duties
or obligations arising hereunder, and the obligations under paragraphs 4(g),
5(h), and 10 shall survive such termination.
10. Expenses. All expenses in connection with this Agreement and the
transactions contemplated hereby, including without limitation legal and
accounting fees, incurred by Company and Company Subsidiaries shall be borne by
Company, and all such expenses incurred by Xxxxx Fargo shall be borne by Xxxxx
Fargo.
11. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, but shall not be assignable by either party hereto without the prior
written consent of the other party hereto.
12. Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
13. Notices. Any notice or other communication provided for herein or given
hereunder to a party hereto shall be in writing and shall be (i) delivered in
person, or
39
(ii) shall be mailed by first class registered or certified mail, postage
prepaid, or (iii) shall be sent by facsimile, or (iv) shall be sent by reputable
overnight courier service addressed as follows:
If to Xxxxx Fargo:
Xxxxx Fargo & Company
Xxxxx Fargo Center
MAC N9305-173
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Secretary
If to Company:
Tejas Bancshares, Inc.
000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxx
With a copy to:
Jenkens & Xxxxxxxxx
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
or to such other address with respect to a party as such party shall notify the
other in writing as above provided. Notice shall be effective upon receipt.
14. Complete Agreement. This Agreement, including the Exhibits and
Schedules hereto, and the Merger Agreement contain the complete agreement
between the parties hereto with respect to the Merger and other transactions
contemplated hereby and supersede all prior agreements and understandings
between the parties hereto with respect thereto.
15. Captions. The captions contained in this Agreement and the Exhibits and
Schedules hereto are for convenience of reference only and do not form a part of
this Agreement or the Exhibits or Schedules.
16. Waiver and Other Action. Either party hereto may, by a signed writing,
give any consent, take any action pursuant to paragraph 9 hereof or otherwise,
or waive
40
any inaccuracies in the representations and warranties by the other party and
compliance by the other party with any of the covenants and conditions herein.
17. Amendment. At any time before the Time of Filing, the parties hereto,
by action taken by their respective Boards of Directors or pursuant to authority
delegated by their respective Boards of Directors, may amend this Agreement;
provided, however, that no amendment after approval by the shareholders of
Company shall be made which changes in a manner adverse to such shareholders the
consideration to be provided to said shareholders pursuant to this Agreement and
the Merger Agreement.
18. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas without regard to the conflict of
laws provisions thereof.
19. Non-Survival of Representations and Warranties. No representation or
warranty contained in the Agreement or the Merger Agreement shall survive the
Merger or, except as set forth in paragraph 9(b), the termination of this
Agreement. Paragraph 10 shall survive the Merger.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute but one instrument.
21. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
[The rest of this page has intentionally been left blank.]
41
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
XXXXX FARGO & COMPANY
By /s/ Xxxx X. Xxxxx
-------------------------------------
Its Executive Vice President
-------------------------------------
TEJAS BANCSHARES, INC.
By /s/ Xxxx Xxxxxxxx
-------------------------------------
Its President
-------------------------------------
42
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
between
TEJAS BANCSHARES, INC.,
a Texas corporation
(the surviving corporation)
and
XXXXX FARGO TBI MERGER CO.,
a Texas corporation
(the merged corporation)
This Agreement and Plan of Merger dated as of __________ ___, 2002, between
TEJAS BANCSHARES, INC. ("Tejas"), a Texas corporation (hereinafter sometimes
called "Tejas" and sometimes called the "surviving corporation"), and XXXXX
FARGO TBI MERGER CO., a Texas corporation ("Xxxxx Fargo TBI Merger Co.") (said
corporations being hereinafter sometimes referred to as the "constituent
corporations").
WHEREAS, Xxxxx Fargo TBI Merger Co., a wholly-owned subsidiary of Xxxxx
Fargo & Company, a Delaware corporation ("Xxxxx Fargo"), was incorporated by
Articles of Incorporation filed in the office of the Secretary of State of the
State of Texas on ___________ ___, 200_, and said corporation is now a
corporation subject to and governed by the provisions of the Texas Business
Corporation Act. Xxxxx Fargo TBI Merger Co. has authorized capital stock of
10,000 shares of common stock, $1.00 par value per share ("Xxxxx Fargo TBI
Merger Co. Common Stock"). As of _________ ___, 2002, there were 10,000 shares
of Xxxxx Fargo TBI Merger Co. Common Stock outstanding and no shares were held
in the treasury; and
WHEREAS, Tejas was incorporated by Articles of Incorporation filed in the
office of the Secretary of State of the State of Texas on June 22, 1983, and
said corporation is now a corporation subject to and governed by the provisions
of the Texas Business Corporation Act, with authorized capital stock consisting
of 20,000,000 shares of common stock, $1.00 par value per share ("Tejas Common
Stock"), of which as of _______________, 2002, ______________ shares of Tejas
Common Stock and ________ shares of Tejas Common Stock were held in the
treasury; and
WHEREAS, Xxxxx Fargo and Tejas are parties to an Agreement and Plan of
Reorganization dated as of December ___, 2001 (the "Reorganization Agreement"),
setting forth certain representations, warranties and covenants in connection
with the merger provided for herein; and
WHEREAS, the directors, or a majority of them, of each of the constituent
corporations respectively deem it advisable for the welfare and advantage of
said corporation and for the best interests of the respective shareholders of
said corporations that said corporations merge and that
Xxxxx Fargo TBI Merger Co. be merged with and into Tejas, with Tejas continuing
as the surviving corporation, on the terms and conditions hereinafter set forth
in accordance with the provisions of the Texas Business Corporation Act, which
statute permits such merger;
NOW, THEREFORE, the parties hereto, subject to the approval of the
shareholders of Xxxxx Fargo TBI Merger Co. and Tejas, in consideration of the
premises and of the mutual covenants and agreements contained herein and of the
benefits to accrue to the parties hereto, have agreed and do hereby agree that
Xxxxx Fargo TBI Merger Co. shall be merged with and into Tejas pursuant to the
laws of the State of Texas, and do hereby agree upon, prescribe and set forth
the terms and conditions of the merger of Xxxxx Fargo TBI Merger Co. with and
into Tejas, the mode of carrying said merger into effect, the manner and basis
of exchanging the shares of Tejas Common Stock for shares of common stock, par
value $1-2/3 per share, of Xxxxx Fargo ("Xxxxx Fargo Common Stock"), and such
other provisions with respect to said merger as are deemed necessary or
desirable, as follows:
FIRST: At the time of merger, Xxxxx Fargo TBI Merger Co. shall be merged
with and into Tejas, one of the constituent corporations, which shall be the
surviving corporation, and the separate existence of Xxxxx Fargo TBI Merger Co.
shall cease and the name of the surviving corporation shall remain "Tejas
Bancshares, Inc."
SECOND: The Articles of Incorporation of Tejas at the time of merger shall
be the Articles of Incorporation of the surviving corporation until amended
according to law, except that Article IX of the Articles of Incorporation of
Tejas is amended in its entirety as follows:
"The address of its Registered Office is 800 Brazos, Xxxxxx, XX 00000, and
its Registered Agent is Corporation Service Company, d/b/a CSC-Lawyers
Incorporating Service Company."
THIRD: The Bylaws of Tejas at the time of merger shall be and remain the
Bylaws of the surviving corporation until amended according to the provisions of
the Articles of Incorporation of the surviving corporation or of said Bylaws.
FOURTH: At the time of merger, the following-named persons shall become the
directors of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected and qualify:
[Xxxxx Fargo to supply prior to closing.]
FIFTH: At the time of merger, the following named persons shall become the
officers of the surviving corporation and shall hold office from the time of
merger until their respective successors are elected or appointed and qualify:
[Xxxxx Fargo to supply prior to closing.]
SIXTH: The manner and basis of converting the shares of Tejas Common Stock
shall be as follows:
1. Subject to the terms and conditions contained herein, Xxxxx
Fargo TBI Merger Co. will be merged by statutory merger with and into
Tejas, with Tejas as the Surviving Corporation, in which merger each
share of Tejas Common Stock outstanding immediately prior to the
effective time of the merger (other than shares as to which statutory
dissenters' rights have been exercised) will be converted into the
right to receive the number of shares of Xxxxx Fargo Common Stock
determined by dividing (a) the quotient of (i) $82,501,292 plus the
aggregate exercise price of all Company Options outstanding
immediately prior to the effective time of the merger divided by (ii)
the aggregate number of shares of Tejas Common Stock and Company
Options outstanding immediately prior to the effective time of the
merger by (b) the Xxxxx Fargo Measurement Price. "Company Options"
shall have the meaning given in paragraph 1(f) of the Reorganization
Agreement . The "Xxxxx Fargo Measurement Price" is defined as the
average of the closing prices of a share of Xxxxx Fargo Common Stock
on the New York Stock Exchange only for each of the twenty (20)
consecutive trading days ending on the day immediately preceding the
meeting of shareholders required by paragraph 4(c) of the
Reorganization Agreement..
2. As soon as practicable after the merger becomes effective,
each holder of a certificate which, prior to the effective time of the
merger, represented shares of Tejas Common Stock outstanding
immediately prior to the time of merger shall be entitled, upon
surrender of such certificate representing a share of Tejas Common
Stock for cancellation to the surviving corporation or to Xxxxx Fargo
Bank Minnesota, National Association, as the designated agent of the
surviving corporation (the "Agent"), to receive a new certificate
representing the number of whole shares of Xxxxx Fargo Common Stock to
which such holder shall be entitled on the basis set forth in
paragraph 1 above. Until so surrendered each certificate which,
immediately prior to the time of merger, represented shares of Tejas
Common Stock shall not be transferable on the books of the surviving
corporation but shall be deemed to evidence only the right to receive
(except for the payment of dividends as provided below) the number of
whole shares of Xxxxx Fargo Common Stock issuable on the basis above
set forth; provided, however, until the holder of such certificate for
Tejas Common Stock shall have surrendered the same as above set forth,
no dividend payable to holders of record of Xxxxx Fargo Common Stock
as of any date subsequent to the effective date of merger shall be
paid to such holder with respect to the shares of Xxxxx Fargo Common
Stock issuable in connection with the merger, but, upon surrender and
exchange thereof as herein provided, there shall be paid by the
surviving corporation or the Agent to the record holder of such
certificate representing Xxxxx Fargo Common Stock issued in exchange
therefor an amount with respect to such shares of Xxxxx Fargo Common
Stock equal to all dividends that shall have been paid or become
payable to holders of record of Xxxxx Fargo Common Stock between the
effective date of merger and the date of such exchange.
3. If between the date of the Reorganization Agreement and the
time of merger, shares of Xxxxx Fargo Common Stock shall be changed
into a different number of shares
or a different class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or if a stock dividend thereon shall be declared with a
record date within such period, then the number of shares of Xxxxx
Fargo Common Stock, if any, into which a share of Tejas Common Stock
shall be exchangeable on the basis above set forth, will be
appropriately and proportionately adjusted so that the number of such
shares of Xxxxx Fargo Common Stock into which a share of Tejas Common
Stock shall be exchanged will equal the number of shares of Xxxxx
Fargo Common Stock which the holders of shares of Tejas Common Stock
would have received pursuant to such reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or stock dividend had the record date therefor been
immediately following the time of merger.
4. No fractional shares of Xxxxx Fargo Common Stock and no
certificates or scrip certificates therefor shall be issued to
represent any such fractional interest, and any holder of a fractional
interest shall be paid an amount of cash equal to the product obtained
by multiplying the fractional share interest to which such holder is
entitled by the average of the closing prices of a share of Xxxxx
Fargo Common Stock on the New York Stock Exchange only for each of the
twenty (20) consecutive trading days ending on the day immediately
preceding the meeting of shareholders held to approve the merger.
5. Each share of Xxxxx Fargo TBI Merger Co. Common Stock issued
and outstanding at the time of merger shall be converted into and
exchanged for one (1) share of the surviving corporation after the
time of merger.
SEVENTH: The merger provided for by this Agreement shall be effective as
follows:
1. The effective date of merger shall be the date on which the
Articles of Merger (as described in subparagraph 1(b) of this Article
Seventh) shall be delivered to and filed by the Secretary of State of
the State of Texas; provided, however, that all of the following
actions shall have been taken in the following order:
a. This Agreement shall be approved and adopted on behalf of
Xxxxx Fargo TBI Merger Co. and Tejas in accordance with the Texas
Business Corporation Act; and
b. Articles of Merger (with this Agreement attached as part
thereof) with respect to the merger, setting forth the
information required by the Texas Business Corporation Act, shall
be executed by the President or a Vice President of Xxxxx Fargo
TBI Merger Co. and by the Secretary or an Assistant Secretary of
Xxxxx Fargo TBI Merger Co., and by the President or a Vice
President of Tejas and by the Secretary or an Assistant Secretary
of Tejas, and shall be filed in the office of the Secretary of
State of the State of Texas in accordance with the Texas Business
Corporation Act; and
2. The merger shall become effective as of 12:01 a.m. (the "time
of merger") on the effective date of merger.
EIGHTH: At the time of merger:
1. The separate existence of Xxxxx Fargo TBI Merger Co. shall
cease, and the corporate existence and identity of Tejas shall
continue as the surviving corporation.
2. The merger shall have the other effects prescribed by Section
5.06 of the Texas Business Corporation Act.
NINTH: The following provisions shall apply with respect to the merger
provided for by this Agreement:
1. If at any time Tejas shall consider or be advised that any
further assignment or assurance in law or other action is necessary or
desirable to vest, perfect or confirm in Tejas the title to any
property or rights of Xxxxx Fargo TBI Merger Co. acquired or to be
acquired as a result of the merger provided for herein, the proper
officers and directors of Tejas and Xxxxx Fargo TBI Merger Co. may
execute and deliver such deeds, assignments and assurances in law and
take such other action as may be necessary or proper to vest, perfect
or confirm title to such property or right in Tejas and otherwise
carry out the purposes of this Agreement.
2. For the convenience of the parties and to facilitate the
filing of this Agreement, any number of counterparts hereof may be
executed and each such counterpart shall be deemed to be an original
instrument.
3. This Agreement and the legal relations among the parties
hereto shall be governed by and construed in accordance with the laws
of the State of Texas.
4. This Agreement cannot be altered or amended except pursuant to
an instrument in writing signed by both of the parties hereto.
5. At any time prior to the filing of Articles of Merger with the
Secretary of State of the State of Texas, this Agreement may be
terminated in accordance with the terms of the Reorganization
Agreement upon approval by the Board of Directors of either of the
constituent corporations notwithstanding the approval of the
shareholders of either constituent corporation.
6. Tejas will be responsible for the payment of all fees and
franchise taxes that may be owed by Xxxxx Fargo TBI Merger Co. and
Tejas will be obligated to pay such fees and franchise taxes if the
same are not timely paid.
[The rest of this page has intentionally been left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be signed in their respective corporate names by the undersigned
officers pursuant to authority duly given by their respective Boards of
Directors, all as of the day and year first above written.
XXXXX FARGO TBI MERGER CO.
By:
-------------------------------------
Its
--------------------------------
Attest:
---------------------------------------
, [Assistant] Secretary
[Signature page to Agreement and Plan of Merger between
Tejas Bancshares, Inc. and Xxxxx Fargo TBI Merger Co.]
TEJAS BANCSHARES, INC.
By:
-------------------------------------
Its
--------------------------------
Attest:
---------------------------------------
, [Assistant] Secretary
[Signature page to Agreement and Plan of Merger between
Tejas Bancshares, Inc. and Xxxxx Fargo TBI Merger Co.]
EXHIBIT B
Xxxxx Fargo & Company
Xxxxx Fargo Center
Sixth and Marquette
Xxxxxxxxxxx, XX 00000
Attn: Secretary
Gentlemen:
I have been advised that I might be considered to be an "affiliate," as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") promulgated by the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act") of Tejas
Bancshares, Inc., a Texas corporation ("Tejas").
Pursuant to an Agreement and Plan of Reorganization, dated as of December
__, 2001 (the "Reorganization Agreement") between Tejas and Xxxxx Fargo &
Company, a Delaware corporation ("Xxxxx Fargo"), it is contemplated that a
wholly-owned subsidiary of Xxxxx Fargo will merge with and into Tejas (the
"Merger") and as a result, I will receive in exchange for each share of Common
Stock, $.01 par value, of Tejas ("Tejas Common Stock") owned by me immediately
prior to the Effective Time of the Merger (as defined in the Reorganization
Agreement), a number of shares of Common Stock, par value $1-2/3 per share, of
Xxxxx Fargo ("Xxxxx Fargo Common Stock"), as more specifically set forth in the
Reorganization Agreement.
I hereby agree as follows:
I will not offer to sell, transfer or otherwise dispose of any of the
shares of Xxxxx Fargo Common Stock issued to me pursuant to the Merger (the
"Stock") except (a) in compliance with the applicable provisions of Rule 145,
(b) in a transaction that is otherwise exempt from the registration requirements
of the Securities Act, or (c) in an offering registered under the Securities
Act.
I consent to the endorsement of the certificates representing the Stock
issued to me pursuant to the Merger with a restrictive legend which will read
substantially as follows:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of 1933,
as amended (the "Act"), applies, and may be sold or otherwise transferred
only in compliance with the limitations of such Rule 145, or upon receipt
by Xxxxx Fargo & Company of an opinion of counsel reasonably satisfactory
to it that some other exemption from registration under the Act is
available, or pursuant to a registration statement under the Act."
Xxxxx Fargo's transfer agent shall be given an appropriate stop transfer
order and shall not be required to register any attempted transfer of the shares
of the Stock, unless the transfer has been effected in compliance with the terms
of this letter agreement.
It is understood and agreed that this letter agreement shall terminate and
be of no further force and effect and the restrictive legend set forth above
shall be removed by delivery of substitute certificates without such legend, and
the related stop transfer restrictions shall be lifted forthwith, if (i) any
such shares of Stock shall have been registered under the Securities Act for
sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Stock are sold
in accordance with the provisions of paragraphs (c), (e), (f) and (g) of Rule
144 promulgated under the Securities Act, or (iii) I am not at the time of such
disposition an affiliate of Xxxxx Fargo and have been the beneficial owner of
the Stock for at least one year (or such other period as may be prescribed by
the Securities Act) and Xxxxx Fargo has filed with the Commission all of the
reports it is required to file under the Securities Exchange Act of 1934, as
amended, during the preceding twelve months, or (iv) I am not and have not been
for at least three months an affiliate of Xxxxx Fargo and have been the
beneficial owner of the Stock for at least two years (or such other period as
may be prescribed by the Securities Act, and the rules and regulations
promulgated thereunder), or (v) Xxxxx Fargo shall have received an opinion of
counsel acceptable to Xxxxx Fargo to the effect that the stock transfer
restrictions and the legend are not required.
I have carefully read this letter agreement and the Reorganization
Agreement and have discussed their requirements and other applicable limitations
upon my ability to offer to sell, transfer or otherwise dispose of shares of the
Stock, to the extent I felt necessary, with my counsel or counsel for Tejas.
Sincerely,
-----------------------------------------
