AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 19, 1999
BETWEEN
U.S. BANCORP
AND
WESTERN BANCORP
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I--CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II--THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.01 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.02 Effective Date and Effective Time . . . . . . . . . . . . . . . . . . . .8
ARTICLE III--MERGER CONSIDERATION; EXCHANGE PROCEDURES . . . . . . . . . . . . . . .8
3.01 Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.02 Rights as Shareholders; Stock Transfers . . . . . . . . . . . . . . . . .8
3.03 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.04 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.05 Anti-Dilution Provisions. . . . . . . . . . . . . . . . . . . . . . . . 10
3.06 Options and Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV--ACTIONS PENDING ACQUISITION. . . . . . . . . . . . . . . . . . . . . . 12
4.01 Forbearances of Seller. . . . . . . . . . . . . . . . . . . . . . . . . 12
4.02 Forbearances of Acquirer. . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V--REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 15
5.01 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.02 Standard. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.03 Representations and Warranties of Seller. . . . . . . . . . . . . . . . 16
5.04 Representations and Warranties of Acquirer. . . . . . . . . . . . . . . 29
ARTICLE VI--COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.01 Reasonable Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 33
6.02 Shareholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.03 Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . 33
6.04 Press Releases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.05 Access; Information . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.06 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.07 Affiliate Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.08 Stock Exchange Listing. . . . . . . . . . . . . . . . . . . . . . . . . 36
6.09 Regulatory Applications . . . . . . . . . . . . . . . . . . . . . . . . 36
6.10 Indemnification; Directors' and Officers' Insurance . . . . . . . . . . 37
6.11 Takeover Laws; No Right Triggered . . . . . . . . . . . . . . . . . . . 38
6.12 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . 39
6.13 Certain Loans and Related Matters . . . . . . . . . . . . . . . . . . . 39
6.14 Monthly Financial Statements. . . . . . . . . . . . . . . . . . . . . . 39
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6.15 Accountants' Letters. . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.16 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.17 Establishment of Accruals . . . . . . . . . . . . . . . . . . . . . . . 40
6.18 Coordination of Dividends . . . . . . . . . . . . . . . . . . . . . . . 40
6.19 Updated Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . 40
6.20 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII--CONDITIONS TO CONSUMMATION OF THE MERGER. . . . . . . . . . . . . . . 42
7.01 Conditions to Each Party's Obligation to Effect the Merger. . . . . . . 42
7.02 Conditions to Obligation of Seller. . . . . . . . . . . . . . . . . . . 43
7.03 Conditions to Obligation of Acquirer. . . . . . . . . . . . . . . . . . 44
ARTICLE VIII--TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.02 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . 48
8.03 Termination Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE IX--MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.01 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.02 Waiver; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.03 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.04 Governing Law; Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 49
9.05 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.07 Entire Understanding; No Third Party Beneficiaries. . . . . . . . . . . 50
9.08 Interpretation; Effect. . . . . . . . . . . . . . . . . . . . . . . . . 50
9.09 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . . . . 50
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Exhibit A--Form of Seller Stock Option Agreement . . . . . . . . . . . . . . . . .A-1
Exhibit B--Form of Affiliate Agreement . . . . . . . . . . . . . . . . . . . . . .B-1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 19, 1999 (this "Agreement"),
between U.S. BANCORP ("Acquirer") and WESTERN BANCORP ("Seller").
RECITALS
A. ACQUIRER. Acquirer is a Delaware corporation, having its principal
place of business in Minneapolis, Minnesota.
B. SELLER. Seller is a California corporation, having its principal
place of business in Newport Beach, California.
C. INTENTIONS OF THE PARTIES. Acquirer and Seller intend that the
merger (the "Merger") contemplated by this Agreement shall qualify as a
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
D. BOARD ACTION. The respective Boards of Directors of Seller and
Acquirer have determined that it is advisable and in the best interests of their
respective companies and their shareholders to consummate the Merger in
accordance with the terms provided for herein.
E. STOCK OPTION. As a condition to, and immediately after the execution
of, this Agreement, Acquirer and Seller are entering into the Stock Option
Agreement (the "Seller Option Agreement") in substantially the form attached
hereto as Exhibit A, pursuant to which Seller will grant Acquirer an option
exercisable upon the occurrence of certain events.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"1999 Bonus Amounts" has the meaning set forth in Section 6.20(b).
"Acquirer" has the meaning set forth in the preamble to this Agreement.
"Acquirer Average Price" has the meaning set forth in Section 8.01(h)(i).
"Acquirer Board" means the Board of Directors of Acquirer.
"Acquirer Common Stock" means the common stock, $1.25 par value per share,
of Acquirer.
"Acquirer Preferred Stock" has the meaning set forth in Section 5.04(b).
"Acquirer Regulatory Reports" has the meaning set forth in Section
5.04(i)(i).
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"CGCL" means the California General Corporation Law, as amended.
"Code" has the meaning set forth in the recitals.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(p)(i).
"Confidentiality Agreement" has the meaning set forth in Section 6.05(b).
"Continuing Employee" has the meaning set forth in Section 6.20(a).
"Costs" has the meaning set forth in Section 6.10(a).
"DFI" means the California Department of Financial Institutions.
"DGCL" means the Delaware General Corporation Law, as amended.
"DPC Shares" shall mean shares of Seller Common Stock held as a result of
debts previously contracted in good faith.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenting Shares" has the meaning set forth in Section 3.04(f).
"Effective Date" has the meaning set forth in Section 2.02.
"Effective Time" has the meaning set forth in Section 2.02.
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"Environmental Law" has the meaning set forth in Section 5.03(s).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(p)(iv).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04(a).
"Exchange Fund" has the meaning set forth in Section 3.04(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"Execution Date Average Price" has the meaning set forth in Section
8.01(h)(i).
"FDIC" means the Federal Deposit Insurance Corporation.
"FRB" means the Board of Governors of the Federal Reserve System.
"Final Index Price" has the meaning set forth in Section 8.01(h)(ii)(D).
"Final Price" has the meaning set forth in Section 8.01(h)(ii)(C).
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" has the meaning set forth in Section 5.03(s).
"Indemnified Parties" has the meaning set forth in Section 6.10(a).
"Index Group" has the meaning set forth in Section 8.01(h)(ii)(A).
"Initial Index Price" has the meaning set forth in Section 8.01(h)(ii)(B).
"Injunction" has the meaning set forth in Section 7.01(c).
"Insurance Amount" has the meaning set forth in Section 6.10(c).
"Latest Seller Balance Sheet" has the meaning set forth in Section
5.03(i).
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"Leases" has the meaning set forth in Section 5.03(r)(ii).
"Liabilities" has the meaning set forth in Section 5.03(i).
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance other than liens for taxes not yet due
and payable.
"Loans" has the meaning set forth in Section 5.03(w)(i).
"Material Adverse Effect" means, with respect to Acquirer or Seller, as
the case may be, any effect that: (i) is material and adverse to the financial
position, results of operations or business of Acquirer and its Subsidiaries,
taken as a whole, or Seller and its Subsidiaries, taken as a whole, or
(ii) would materially impair the ability of either Acquirer or Seller to perform
its obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that Material Adverse Effect
shall not be deemed to include the impact of (a) changes in banking and similar
laws of general applicability or interpretations thereof by any court or any
Governmental Authority, (b) changes in GAAP or regulatory accounting
requirements applicable to banks and their holding companies generally, (c) any
expenses incurred by a party hereto in connection with this Agreement or the
transactions contemplated hereby, or (d) any action or omission of Seller or any
of its Subsidiaries or Acquirer or any of its Subsidiaries taken with the prior
written consent of the other party hereto.
"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" has the meaning set forth in Section 2.01(a).
"Millennium Compliant" has the meaning set forth in Section 5.03(aa).
"Multiemployer Plans" has the meaning set forth in Section 5.03(p)(iii).
"NYSE" means the New York Stock Exchange.
"Net Option Value" has the meaning set forth in Section 3.06(a).
"New Certificates" has the meaning set forth in Section 3.04(a).
"OCC" means the Office of the Comptroller of the Currency.
"Old Certificates" has the meaning set forth in Section 3.04(a).
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"Option Stock Consideration" has the meaning set forth in Section 3.06(a).
"OREO" means the "other real estate owned."
"Pension Plan" has the meaning set forth in Section 5.03(p)(iii).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or other entity or
unincorporated organization.
"Plans" has the meaning set forth in Section 5.03(p)(iii).
"Previously Disclosed" by a party shall mean information set forth in its
Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03(a).
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authorities" has the meaning set forth in Section 5.03(k)(i).
"Replacement Warrant" has the meaning set forth in Section 3.06(b).
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.03(g).
"Sections 1300 et seq." has the meaning set forth in Section 3.04(f).
"Securities Act" means the Securities Act of 1933, as amended, and rules
and regulations thereunder.
"Seller" has the meaning set forth in the preamble to this Agreement.
"Seller Articles" means the Articles of Incorporation of Seller as in
effect as of the date hereof.
"Seller Board" means the Board of Directors of Seller.
"Seller By-Laws" means the By-Laws of Seller as in effect as of the date
hereof.
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"Seller Common Stock" means the common stock, no par value per share, of
Seller.
"Seller Meeting" has the meaning set forth in Section 6.02.
"Seller Option Agreement" has the meaning set forth in the recitals to
this Agreement.
"Seller Plans" means those plans set forth on Schedule 5.03(p) in the
Disclosure Schedule.
"Seller Preferred Stock" has the meaning set forth in Section 5.03(b).
"Seller Regulatory Reports" has the meaning set forth in Section
5.03(k)(iii).
"Seller Stock Option" has the meaning set forth in Section 3.06(a).
"Seller Warrant" has the meaning set forth in Section 3.06(b).
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Superior Proposal" means a bona fide Takeover Proposal which a majority
of the disinterested members of the Seller Board determines in its reasonable
good faith judgment to be more favorable to the Seller's shareholders than the
Merger (after receiving the written opinion, with only customary qualifications,
of the Seller's independent financial advisor that the financial value of the
consideration provided for in such Takeover Proposal exceeds the financial value
of the Merger Consideration) and for which financing, to the extent required, is
then committed by a third party or which, in the reasonable good faith judgment
of a majority of such disinterested members (after receiving the written advice
of the Seller's independent financial advisor), is highly likely to be financed
by such third party.
"Surviving Corporation" has the meaning set forth in Section 2.01(a).
"Takeover Laws" has the meaning set forth in Section 5.03(bb).
"Takeover Proposal" means, with respect to any Person, any tender or
exchange offer, proposal for a merger, consolidation or other business
combination involving Seller or any of its Significant Subsidiaries, or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets or deposits of, Seller or any of its
Significant Subsidiaries, other than the transactions contemplated by this
Agreement and the Seller Option Agreement.
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"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Seller Common Stock held by Seller
or by Acquirer or any of its Subsidiaries, in each case other than Trust Account
Shares and DPC Shares.
"Trust Account Shares" shall mean shares of Seller Common Stock held in a
fiduciary (including custodial or agency) capacity.
"Twenty Day Calculation Period" has the meaning set forth in Section
8.01(h)(ii)(E).
ARTICLE II
THE MERGER
2.01 THE MERGER.
(a) THE SURVIVING CORPORATION. At the Effective Time, Seller shall
merge with and into Acquirer (the "Merger"), the separate corporate existence of
Seller shall cease and Acquirer shall survive and continue to exist as a
Delaware corporation (Acquirer, as the surviving corporation in the Merger,
sometimes being referred to herein as the "Surviving Corporation"). Acquirer may
at any time prior to the Effective Time change the method of effecting the
combination with Seller (including, without limitation, the provisions of this
Article II) if and to the extent it deems such change to be desirable,
including, without limitation, to provide for a merger of Seller directly with
and into a wholly-owned subsidiary of Acquirer, in which either Seller or such
subsidiary is the surviving corporation; PROVIDED, HOWEVER, that no such change
shall (i) alter or change the amount or kind of consideration to be issued to
holders of Seller Common Stock as provided for in this Agreement (the "Merger
Consideration"), or the relative equity interest in the Surviving Corporation
represented thereby, (ii) adversely affect the tax treatment of Seller's
shareholders, as a result of the Merger, receiving the Merger Consideration, or
(iii) materially impede or delay consummation of the transactions
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contemplated by this Agreement.
(b) EFFECTIVE DATE OF MERGER; EFFECTS OF MERGER. Subject to the
satisfaction or waiver of the conditions set forth in Article VII in accordance
with this Agreement, the Merger shall become effective upon the occurrence of
both (i) the filing in the office of the Secretary of State of California of an
agreement of merger in accordance with Section 1103 of the CGCL and (ii) the
filing in the office of the Secretary of State of the State of Delaware of a
certificate of merger in accordance with Section 252 of the DGCL, or such later
date and time as may be set forth in such agreement and certificate. The Merger
shall have the effects prescribed in the CGCL and the DGCL.
(c) CERTIFICATE OF INCORPORATION AND BY-LAWS. The certificate of
incorporation and by-laws of the Surviving Corporation immediately after the
Effective Time shall be those of Acquirer as in effect immediately prior to the
Effective Time.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
and officers of the Surviving Corporation immediately after the Effective Time
shall be the directors and officers of Acquirer immediately prior to the
Effective Time, until such time as their successors shall be duly elected and
qualified.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions as set forth in Article VII in accordance with this
Agreement, the parties shall cause the effective date of the Merger (the
"Effective Date") to occur on (i) the business day on which the last of the
conditions set forth in Sections 7.01, 7.02 and 7.03 shall have been satisfied
or waived in accordance with the terms of this Agreement (or, at the election of
Acquirer, on the last business day of the month in which such day occurs) or
(ii) such other date to which the parties hereto may agree in writing. The time
on the Effective Date when the Merger shall become effective is referred to as
the "Effective Time."
ARTICLE III
MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) OUTSTANDING SELLER COMMON STOCK. Each share of Seller Common
Stock, excluding Treasury Stock, issued and outstanding immediately prior to the
Effective Time shall be converted, subject to Section 3.05, into 1.2915 shares
of Acquirer Common Stock (the "Exchange Ratio").
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(b) OUTSTANDING ACQUIRER COMMON STOCK. Each share of Acquirer
Common Stock issued and outstanding immediately prior to the Effective Time
shall remain outstanding and unaffected and shall, together with the shares
converted into Acquirer Common Stock pursuant to Section 3.01(a), constitute all
of the then-issued and outstanding shares of common stock of the Surviving
Corporation.
(c) TREASURY STOCK. Each of the shares of Seller Common Stock
held as Treasury Stock immediately prior to the Effective Time shall be canceled
and retired at the Effective Time and no consideration shall be issued in
exchange therefor.
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Seller Common Stock shall cease to be, and shall have no rights as,
shareholders of Seller, other than to receive any dividend or other distribution
with respect to Seller Common Stock with a record date occurring prior to the
Effective Date and the consideration provided under this Article III, including
any dissenter's rights provided in Section 3.04(f). After the Effective Time,
there shall be no transfers on the stock transfer books of Seller or the
Surviving Corporation of shares of Seller Common Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Acquirer Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Acquirer shall pay to each holder of Seller Common Stock who would
otherwise be entitled to a fractional share of Acquirer Common Stock (after
taking into account all of the shares of Seller Common Stock represented by all
of the Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the closing
sale prices of Acquirer Common Stock, as reported by the NYSE Composite
Transactions Reporting System (as reported in THE WALL STREET JOURNAL or, if not
reported therein, in another authoritative source), for the five NYSE trading
days immediately preceding the Effective Date.
3.04 EXCHANGE PROCEDURES.
(a) DEPOSIT OF EXCHANGE FUND. At or prior to the Effective Time,
Acquirer shall deposit, or shall cause to be deposited, with such bank or trust
company as Acquirer shall elect (which may be a Subsidiary of Acquirer) (the
"Exchange Agent"), for the benefit of the holders of certificates formerly
representing shares of Seller Common Stock ("Old Certificates"), for exchange in
accordance with this Article III, certificates ("New Certificates") representing
the shares of Acquirer Common Stock and the cash in lieu of fractional shares
(such cash and New Certificates, together with any dividends or distributions
with a record date occurring after the Effective Date with respect thereto
(without any interest on any such cash, dividends or distributions) being
hereinafter referred to as the "Exchange Fund") to be issued and paid pursuant
to this Article III in exchange for the shares of Seller Common Stock
outstanding immediately prior to the Effective Time.
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(b) EXCHANGE OF CERTIFICATES. As promptly as practicable after the
Effective Date, Acquirer shall send or cause to be sent to each former holder of
record of shares of Seller Common Stock (other than Treasury Stock) immediately
prior to the Effective Time transmittal materials for use in exchanging such
shareholder's Old Certificates for the Merger Consideration set forth in this
Article III. Acquirer shall cause the New Certificates representing Acquirer
Common Stock into which shares of a shareholder's Seller Common Stock are
converted on the Effective Date and/or any check in respect of fractional share
interests or dividends or distributions which such Person shall be entitled to
receive to be delivered to such shareholder upon delivery to the Exchange Agent
of Old Certificates representing such shares of Seller Common Stock (or
indemnity reasonably satisfactory to Acquirer and the Exchange Agent, if any of
such certificates are lost, stolen or destroyed) owned of record immediately
prior to the Effective Time by such shareholder. No interest will be paid on
any such cash to be paid in lieu of fractional share interests or dividends or
distributions which any such Person shall be entitled to receive pursuant to
this Article III upon such delivery.
(c) UNCLAIMED CERTIFICATES. If Old Certificates are not surrendered or
the consideration therefor is not claimed prior to the date on which such
consideration would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed consideration shall, to the extent
permitted by abandoned property and any other applicable law, become the
property of Acquirer (and to the extent not in its possession shall be paid over
to Acquirer), free and clear of all claims or interest of any Person previously
entitled to such claims. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to any former holder of Seller Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) DISTRIBUTIONS IN RESPECT OF UNCLAIMED CERTIFICATES. No dividends or
other distributions with respect to Acquirer Common Stock with a record date
occurring after the Effective Time shall be paid to the holder of any
unsurrendered Old Certificate representing shares of Seller Common Stock
converted in the Merger into the right to receive shares of such Acquirer Common
Stock until the holder thereof shall be entitled to receive New Certificates in
exchange therefor after having complied with the procedures set forth in this
Section 3.04, and no such shares of Acquirer Common Stock shall be eligible to
vote until the holder of Old Certificates is entitled to receive New
Certificates after having complied with the procedures set forth in this Section
3.04. After becoming so entitled and after having complied with this Section
3.04, the record holder thereof also shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had otherwise become payable with respect to shares of Acquirer
Common Stock such holder had the right to receive upon surrender of the Old
Certificate.
(e) DISPOSITION OF UNCLAIMED EXCHANGE FUND. Any portion of the Exchange
Fund that remains unclaimed by the shareholders of Seller for six months after
the Effective Time shall be returned by the Exchange Agent to Acquirer. Any
shareholders
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of Seller who have not theretofore complied with this Article III shall
thereafter look only to Acquirer for payment of the shares of Acquirer Common
Stock, cash in lieu of any fractional shares of Acquirer Common Stock, and
unpaid dividends and distributions on Acquirer Common Stock deliverable in
respect of each share of Seller Common Stock such shareholder holds
immediately prior to the Effective Time, as determined pursuant to this
Agreement, in each case, without any interest thereon.
(f) DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, shares of Seller Common Stock which are outstanding immediately
prior to the Effective Time and which constitute "dissenting shares" as defined
in Section 1300 of the CGCL (such shares are referred to herein as "Dissenting
Shares") shall not be converted into shares of Acquirer Common Stock but,
instead, the holders thereof shall be entitled to receive payment of the fair
market value of such Dissenting Shares in accordance with the provisions of
Sections 1300-1312 ("Sections 1300 et seq.") of the CGCL; provided, however,
that (i) if any holder of Dissenting Shares shall subsequently withdraw, with
the consent of the Surviving Corporation, his or her demand for purchase of such
shares, or (ii) if any holder of Dissenting Shares fails to establish or perfect
or otherwise loses his or her entitlement to payment of the fair market value of
such shares as provided in Sections 1300 et seq. such holder or holders (as the
case may be) shall not be entitled to receive payment of the fair market value
of such shares of Seller Common Stock as contemplated by Sections 1300 et seq.,
and each of such shares shall thereupon be deemed to have been converted into
shares of Acquirer Common Stock and cash in lieu of fractional shares, without
any interest thereon, as provided in Article III hereof.
3.05 ANTI-DILUTION PROVISIONS. In the event Acquirer changes (or
establishes a record date for changing) the number of shares of Acquirer Common
Stock issued and outstanding prior to the Effective Date as a result of any
stock split, recapitalization, reclassification, combination, exchange of
shares, readjustment or similar transaction with respect to the outstanding
Acquirer Common Stock, or Acquirer declares a stock dividend or extraordinary
cash dividend, and the record date therefor shall be prior to the Effective
Date, the Exchange Ratio shall be proportionately adjusted.
3.06 OPTIONS AND WARRANTS.
(a) OPTIONS. Except as may be otherwise agreed in writing between
Acquirer and the holder of any option, at the Effective Time all outstanding
options to purchase shares of Seller Common Stock outstanding immediately prior
to the Effective Time under any of the Seller Plans (all such options of an
option holder having the same exercise price, a "Seller Stock Option") shall be
converted into the right to receive from Acquirer (i) that number of shares of
Acquirer Common Stock equal to the quotient obtained by dividing the Net Option
Value with respect to such Seller Stock Option (as defined below) by $35.62 plus
(ii) cash in lieu of any fractional shares in accordance
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with Section 3.03 (the "Option Stock Consideration"). The "Net Option Value"
shall be equal to the amount obtained by multiplying the difference, if
positive, between $46.00 less the applicable exercise price of such Seller
Stock Option times the number of shares for which such Seller Stock Option is
exercisable, such number of shares and exercise prices as expressly stated in
the applicable stock option agreement relating to such Seller Stock Option.
At or prior to the Effective Time, Seller shall take all reasonable action as
is necessary to fully advise holders of Seller Stock Options of their rights
under this Agreement and the Seller Stock Options, to facilitate their timely
exercise of such rights and to effectuate the provisions of this Section
3.06(a). From and after the Effective Time, other than as expressly set
forth in this Section 3.06(a), no holder of a Seller Stock Option shall have
any other rights in respect thereof other than to receive the consideration
for his or her Seller Stock Options in the manner described above. The
surrender of a Seller Stock Option to Acquirer in exchange for the Option
Stock Consideration shall be deemed a release of any and all rights the
option holder had or may have had in respect of such Seller Stock Option.
(b) WARRANTS. At the Effective Time, all outstanding warrants to
purchase shares of Seller Common Stock (all such warrants of a warrant holder, a
"Seller Warrant") shall be converted into a warrant to acquire, on the same
terms and conditions as were applicable under such Seller Warrant, that number
of shares of Acquirer Common Stock equal to (a) the number of shares of Seller
Common Stock subject to the Seller Warrant, multiplied by (b) the Exchange Ratio
(such product rounded up to the nearest whole number) (all such new warrants of
a warrant holder, a "Replacement Warrant"), at an exercise price per share
(rounded up or down to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of Seller Common Stock which were purchasable
pursuant to such Seller Warrant divided by (z) the number of full shares of
Acquirer Common Stock subject to such Replacement Warrant in accordance with the
foregoing. At or prior to the Effective Time, Seller shall take all reasonable
action, if any, necessary with respect to the applicable warrants or warrant
agreements to permit the replacement of the outstanding Seller Warrants by
Acquirer pursuant to this Section 3.06(b).
(c) Prior to the Effective Time, Acquirer shall reserve for issuance the
number of shares of Acquirer Common Stock necessary to satisfy Acquirer's
obligations under this Section 3.06.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FORBEARANCES OF SELLER. From the date hereof until the Effective
Time, except as contemplated by this Agreement or the Seller Option Agreement,
without the prior written consent of Acquirer (which consent will not be
unreasonably withheld), Seller will not, and will cause each of its Subsidiaries
not to:
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(a) ORDINARY COURSE. Conduct the business of Seller and its
Subsidiaries other than in the ordinary and usual course in accordance in all
material respects with all applicable laws, rules and regulations and past
practice, or, to the extent consistent therewith, fail to use reasonable efforts
to preserve intact in all material respects the business organizations and
assets and maintain in all material respects its rights, franchises and existing
relations with customers, suppliers, employees and business associates.
(b) DELAY. Willfully take any action that Seller knows or should
reasonably know would materially and adversely affect or delay the ability of
Seller or Acquirer to perform any of their respective obligations under this
Agreement.
(c) CAPITAL STOCK. Other than pursuant to the Rights Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of capital stock or any Rights, (ii) enter into any agreement with
respect to the foregoing, or (iii) permit any additional shares of capital stock
to become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights.
(d) DIVIDENDS, ETC. (i) Except as Previously Disclosed, subject
to the provisions of Section 6.18, take, declare, pay or set aside for payment
any dividend on or in respect of, or declare or make any distribution on, any
shares of its capital stock, other than normal quarterly dividends not in excess
of $.225 per share of Seller Common Stock with record and payment dates
consistent with past practice, or (ii) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire (except for the
acquisition of DPC Shares and Trust Account Shares), any shares of its capital
stock or any Rights with respect to Seller securities.
(e) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as expressly
contemplated by this Agreement, enter into or amend or renew any employment,
consulting, severance or similar agreements or arrangements with any director,
officer or employee of Seller or any of its Subsidiaries, or grant any bonus or
any salary or wage increase or establish or increase any employee benefit
(including incentive or bonus payments), except (i) for normal individual
increases in compensation and/or benefits to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are required
by applicable law, (iii) to satisfy Previously Disclosed contractual obligations
existing as of the date hereof, or (iv) for grants of awards to newly hired
employees consistent with past practice.
(f) BENEFIT PLANS. Except as Previously Disclosed or expressly
contemplated by this Agreement, enter into, establish, adopt or amend (except
(i) as may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any
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director, officer or employee of Seller or any of its Subsidiaries, or take
any action to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(g) DISPOSITIONS. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of the assets, deposits, business or properties of
Seller or any of its Subsidiaries except in the ordinary course of business;
provided, that any such sale, transfer, mortgage, encumbrance or disposition of
any real property, other than OREO, shall not be considered to be in the
ordinary course of business.
(h) ACQUISITIONS. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of
the assets, business, deposits or properties of any other entity except in the
ordinary course of business consistent with past practice and in a transaction
that is not material to Seller and its Subsidiaries, taken as a whole.
(i) CAPITAL EXPENDITURES. Except as Previously Disclosed, make
any capital expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding $50,000
individually or $500,000 in the aggregate.
(j) GOVERNING DOCUMENTS. Amend the Seller Articles or Seller
By-Laws.
(k) ACCOUNTING METHODS. Implement or adopt any change in its
financial accounting principles, practices or methods, other than as may be
required by GAAP or regulatory accounting principles.
(l) CONTRACTS. Except as Previously Disclosed and except in the
ordinary course of business consistent with past practice, enter into, terminate
or renew any material contract or amend or modify in any material respect any of
its existing material contracts.
(m) ADVERSE ACTIONS.
(i) Take any action while knowing that such action would,
or would be reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code; or
(ii) Knowingly take any action not otherwise specifically
permitted by this Agreement that is intended or is reasonably likely to
result in
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(A) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (B) any of the conditions to the Merger
set forth in Article VII not being satisfied, or (C) a material violation
of any provision of this Agreement except, in each case, as may be
required by applicable law or regulation; provided, however, that nothing
contained herein shall limit the ability of Acquirer to exercise its
rights under the Seller Option Agreement.
(n) RISK MANAGEMENT. Except as required by applicable law or
regulation (a) implement or adopt any material change in its interest rate and
other risk management policies, procedures or practices, (b) fail to follow its
existing policies or practices with respect to managing its exposure to interest
rate risk, or (c) fail to use commercially reasonable means to avoid any
material increase in its aggregate exposure to interest rate risk.
(o) INDEBTEDNESS; LIABILITIES. Except as Previously Disclosed,
incur any indebtedness for borrowed money in an amount exceeding $5,000,000 in
the aggregate or voluntarily incur or become subject to any material liability,
in each case other than in the ordinary course of business consistent with past
practice.
(p) DISCHARGE. Discharge or satisfy any material lien or
encumbrance on the properties or assets of Seller or any of its Subsidiaries or
pay or cancel any material debt, liability or claim of Seller or any of its
Subsidiaries or otherwise waive any rights of material value of Seller or any of
its Subsidiaries, except in the ordinary course of business.
(q) INSURANCE. Except as Previously Disclosed, permit the current
insurance policies of Seller or any of its Subsidiaries to be canceled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies providing
coverages substantially equal to the coverages under the canceled, terminated or
lapsed policies are in full force and effect.
(r) SETTLEMENTS. Except as Previously Disclosed, enter into any
settlement or similar agreement with respect to, or take any other significant
action with respect to the conduct of, any action, suit, proceeding, order or
investigation to which Seller or any of its Subsidiaries becomes a party after
the date of this Agreement, which settlement, agreement or action involves
payment by Seller or its Subsidiaries of amounts in excess of $100,000.
(s) EXTENSIONS OF CREDIT. Make any agreements or commitments
binding it to extend credit except in a manner consistent with past practice and
in accordance with the lending policies of the bank Subsidiaries of Seller or
make any agreement or commitment binding it to extend credit for any individual
loan in an amount in excess of $5,000,000 without submitting loan package
information to the
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chief credit officer of Acquirer for review with a right of comment at least
one full business day prior to taking such action.
(t) COMMITMENTS. Agree or commit to do any of the foregoing.
4.02 FORBEARANCES OF ACQUIRER. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Seller (which consent will not be unreasonably withheld),
Acquirer will not, and will cause each of its Subsidiaries not to:
(a) DELAY. Willfully take any action Acquirer knows or should
know would materially adversely affect or delay the ability of Seller or
Acquirer to perform any of their respective obligations under this Agreement.
(b) ADVERSE ACTIONS.
(i) Take any action while knowing that such action would,
or would be reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code.
(ii) Knowingly take any action not otherwise specifically
permitted by this Agreement that is intended or is reasonably likely to
result in (A) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (B) any of the conditions to the Merger
set forth in Article VII not being satisfied, or (C) a material violation
of any provision of this Agreement except, in each case, as may be
required by applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULE. On or prior to the date hereof, Seller has
delivered to Acquirer a schedule (the "Disclosure Schedule") setting forth,
among other things, items the disclosure of which is necessary either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03; provided, that (a) no such item is required to be set forth in a
Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02, and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or fact, event or
circumstance or that such item has had or will have a Material Adverse Effect.
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5.02 STANDARD. No representation or warranty of Seller or Acquirer
contained in Section 5.03 or 5.04, respectively, shall be deemed untrue or
incorrect for any purpose under this Agreement, and no party hereto shall be
deemed to have breached a representation or warranty, as a consequence of the
existence of any fact, event or circumstance unless such fact, event or
circumstance, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty contained in
Section 5.03 or 5.04 has had or would be reasonably expected to have a Material
Adverse Effect on the party making such representation or warranty.
5.03 REPRESENTATIONS AND WARRANTIES OF SELLER. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed, Seller hereby represents and
warrants to Acquirer:
(a) ORGANIZATION, STANDING AND AUTHORITY. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. Seller is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended. Seller is duly licensed and
qualified to do business and is in good standing in the states of the United
States and any foreign jurisdictions where its ownership or leasing of property
or assets or the conduct of its business requires it to be so licensed and
qualified. Seller has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted. The copies of the
Seller Articles and Seller By-Laws which have been provided to Acquirer prior to
the date of this Agreement are correct and complete and reflect all amendments
made thereto through the date hereof. True and correct copies of the minute
books of Seller have been made available to Acquirer and fairly and accurately
reflect all material corporate action taken by the Seller Board and the
shareholders of Seller since December 31, 1996.
(b) SELLER CAPITAL STOCK. As of the date of this Agreement, the
authorized capital stock of Seller consists solely of 100,000,000 shares of
Seller Common Stock and 5,000,000 shares of preferred stock (the "Seller
Preferred Stock"). As of May 17, 1999, there were 21,110,800 shares of Seller
Common Stock and no shares of Seller Preferred Stock issued and outstanding. As
of the date hereof no shares of Seller Common Stock were held in treasury by
Seller or otherwise owned by Seller. As of the date of this Agreement, no
shares of Seller Common Stock were reserved for issuance, except (i) a total of
1,049,444 shares of Seller Common Stock were reserved for issuance upon the
exercise of outstanding stock options pursuant to the Seller Plans, (ii) a total
of 54,987 shares of Seller Common Stock were reserved for issuance under stock
options that may be granted pursuant to the Seller Plans, (iii) 111,009 shares
of Seller Common Stock were reserved for issuance upon exercise of warrants, and
(iv) the shares of Seller Common Stock reserved for issuance pursuant to the
Seller Stock Option. All of the issued and outstanding shares of Seller Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable
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and free of preemptive rights. As of the date of this Agreement, except as
referred to above or as Previously Disclosed, Seller does not have any Rights
issued or outstanding with respect to any shares of Seller Common Stock or
any other equity securities of Seller. Other than as described above, Seller
has not authorized or issued any indebtedness, instrument, contract or other
arrangement that could be treated as equity of the Seller under United States
federal income tax law. Additionally, Seller has no outstanding stock,
indebtedness, instrument, contract or arrangement that Seller has treated as
debt for United States federal income tax purposes but not debt for other
purposes.
(c) SUBSIDIARIES; OWNERSHIP OF OTHER SECURITIES.
(i) (A) Seller has Previously Disclosed a list of all of
its Subsidiaries together with the jurisdiction of incorporation of each
such Subsidiary, (B) Seller owns, directly or indirectly, all of the
issued and outstanding capital stock of each of its Subsidiaries, (C) no
equity securities of any of its Subsidiaries are or may become required to
be issued (other than to it or its Subsidiaries) by reason of any Rights,
(D) there are no contracts, commitments, understandings or arrangements by
which any of such Subsidiaries is or may be bound to sell or otherwise
transfer any shares of the capital stock of any such Subsidiaries (other
than to it or its Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such shares (other than to it or its Subsidiaries), and (F) all
of the shares of capital stock of each such Subsidiary held by it or its
Subsidiaries are fully paid and (except pursuant to 12 U.S.C. Section 55
or equivalent state statutes in the case of bank Subsidiaries)
nonassessable and are owned by it or its Subsidiaries free and clear of
any Liens.
(ii) Other than in a bona fide fiduciary capacity or as a
result of a debt previously contracted, none of Seller or its Subsidiaries
owns beneficially, directly or indirectly, any equity securities or
similar interests of any Person, or any interest in a partnership or joint
venture of any kind, other than (i) its Subsidiaries or (ii) securities
held pursuant to the asset liability management policy of Seller.
(iii) Each of Seller's Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the
jurisdiction of its incorporation, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or leasing
of property or the conduct of its business requires it to be so qualified.
Each of such Subsidiaries has in effect all federal, state, local, and
foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted.
(d) CORPORATE POWER. Each of Seller and its Subsidiaries has the
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corporate power and authority to carry on its business as it is now being
conducted and to own all of its properties and assets; and Seller has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Seller Option Agreement and to consummate the
transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval by the holders of a majority of the
outstanding shares of Seller Common Stock entitled to vote thereon (which is the
only shareholder vote required thereon), this Agreement, the Seller Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of each of Seller and the Seller
Board on or prior to the date hereof and no other corporate proceedings on the
part of Seller are necessary to authorize this Agreement, the Seller Option
Agreement and the transactions contemplated hereby and thereby. Each of this
Agreement and the Seller Option Agreement is a valid and legally binding
obligation of Seller, enforceable in accordance with its respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights generally or by general
equity principles). The Seller Board has received the opinion of Credit Suisse
First Boston Corporation to the effect that as of the date hereof the Exchange
Ratio to be received by the holders of Seller Common Stock in the Merger is fair
to the holders of Seller Common Stock from a financial point of view.
(f) REGULATORY APPROVALS; NO DEFAULTS.
(i) Except as Previously Disclosed, no consents or
approvals of, or filings or registrations with, any Governmental Authority
or any third party are required to be made or obtained by Seller in
connection with the execution, delivery or performance by Seller of this
Agreement or the Seller Option Agreement or to consummate the transactions
contemplated hereby and thereby, except for: (A) any required filings of
applications or notices with the FRB and the DFI; (B) filings with the SEC
and state securities authorities; (C) the approval of this Agreement by
the shareholders of Seller; and (D) the filing of the agreement of merger
and the certificate of merger as contemplated in Section 2.01(b). As of
the date hereof, Seller has not been notified to the effect that the
approvals set forth in Section 7.01(b) will not be received.
(ii) Subject to receipt of the regulatory approvals referred
to in the preceding paragraph, and the expiration of related waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the Seller
Option Agreement and the consummation of the transactions contemplated
hereby and thereby do not and will not:
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(A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
agreement, arrangement, understanding, indenture or instrument of
Seller or any of its Subsidiaries or to which Seller or any of its
Subsidiaries or any of their respective properties is subject or
bound,
(B) constitute a breach or violation of, or a default
under, the Seller Articles or the Seller By-Laws or the certificate
of incorporation or by-laws (or similar governing documents) of any
of Seller's Subsidiaries, or
(C) require any consent or approval under any such
law, rule, regulation, judgment, decree, order, governmental permit
or license, agreement, arrangement, understanding, indenture or
instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS. The Annual Reports on
Form 10-K for the fiscal years ended December 31, 1998 and 1997, the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, and all
other reports, registration statements, definitive proxy statements or
information statements filed or to be filed subsequent to December 31, 1998
under the Securities Act or under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the form filed or to be filed with the SEC (collectively,
the "SEC Documents"), of Seller or any of its Subsidiaries, as of the date
filed (A) complied or will comply in all material respects as to form with
the applicable requirements under the Securities Act or the Exchange Act, as
the case may be, and (B) did not 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, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such SEC
Document of Seller or any of its Subsidiaries, including the related notes
and schedules thereto, fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date, and
each of the statements of income and changes in shareholders' equity and cash
flows or equivalent statements in such SEC Documents of Seller or any of its
Subsidiaries (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
shareholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods to which they relate,
in each case in accordance with GAAP consistently applied during the periods
involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements.
(h) NO MATERIAL ADVERSE CHANGES. Except as Previously Disclosed,
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since December 31, 1998, no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and events
(described in any paragraph of this Section 5.03 or otherwise), has had or would
reasonably be expected to have a Material Adverse Effect with respect to Seller
and its Subsidiaries, taken as a whole.
(i) ABSENCE OF UNDISCLOSED LIABILITIES. All of the obligations or
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, and regardless of when asserted, including Taxes
with respect to or based upon transactions or events heretofore occurring
("Liabilities"), required to be reflected in the balance sheets of Seller and
its Subsidiaries in accordance with GAAP have been so reflected. Seller has no
Liabilities except (a) as reflected in the consolidated balance sheets of Seller
and its Subsidiaries as of March 31, 1999 contained in Seller's SEC Documents
(the "Latest Seller Balance Sheet"), (b) Liabilities which have arisen after the
date of the Latest Seller Balance Sheet in the ordinary course of business
(including, without limitation, deposit obligations), none of which (other than
deposit obligations) is a material uninsured liability, and (c) as otherwise
Previously Disclosed.
(j) LITIGATION. No litigation, claim or other proceeding before
any court or Governmental Authority is pending against Seller or any of its
Subsidiaries and, to Seller's knowledge, no such litigation, claim or other
proceeding has been threatened. None of Seller or its Subsidiaries is subject
to any outstanding order, writ, injunction or decree.
(k) REGULATORY MATTERS.
(i) None of Seller or its Subsidiaries is a party to or
subject to any order, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar submission to,
or extraordinary supervisory letter from, any Governmental Authority
charged with the supervision or regulation of financial institutions or
issuers of securities or engaged in the insurance of deposits (including,
without limitation, the DFI, the OCC, the FRB, the FDIC and/or any other
state regulatory agencies) (collectively, the "Regulatory Authorities").
(ii) None of Seller or its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar
submission.
(iii) Since December 31, 1996, each of Seller and its
Subsidiaries has filed each report or other filing that it was required to
file with any federal or state banking or other applicable Regulatory
Authorities having
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jurisdiction over it (together with all exhibits thereto, the "Seller
Regulatory Reports"). Seller has provided or made available to Acquirer
copies of all of the Seller Regulatory Reports. As of their respective
dates or as subsequently amended prior to the date hereof, each of the
Seller Regulatory Reports was true and correct and complied with the
requirements of the applicable form for each such Seller Regulatory
Report.
(l) COMPLIANCE WITH LAWS; PERMITS. Each of Seller and its
Subsidiaries:
(i) is in compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses on behalf of Seller and its Subsidiaries,
including, without limitation, to the extent applicable if at all, the
Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Occupational Safety and Health Act of 1970, the
Federal Deposit Insurance Act, as amended, the Real Estate Settlement
Procedures Act, the Federal Reserve Act, the Home Mortgage Disclosure Act
of 1975, the Home Owners Loan Act (each as amended) and all other
applicable fair lending laws and other laws relating to the business
practices of Seller's bank Subsidiaries;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit it
to own or lease its properties and to conduct its businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Seller's knowledge, no
suspension or cancellation of any of them is threatened;
(iii) is in compliance with the provisions of its articles of
incorporation or association or similar governing document and its
by-laws; and
(iv) has received, since December 31, 1996, no notification
or communication from any Governmental Authority (A) asserting that Seller
or any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces, or
(B) threatening to revoke any license, franchise, permit or governmental
authorization.
(m) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and
other documents filed as exhibits to their respective SEC Documents, none of
Seller or its Subsidiaries is a party to, bound by or subject to any agreement,
contract, arrangement, commitment or understanding (whether written or oral):
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(i) that is a "material contract" within the meaning of
Item 601(b)(10) of the SEC's Regulation S-K, or
(ii) that is a noncompetition (or comparable) agreement.
None of Seller or its Subsidiaries is in default and no circumstances exist
under which by notice or passage of time (or both) it would be in default under
any material contract, agreement, commitment, arrangement, lease or other
instrument to which it is a party, by which its assets, business, or operations
may be bound or affected, or under which it or its assets, business, or
operations receives benefits, and there has not occurred any event that, with
the lapse of time or the giving of notice or both, would constitute such a
default. To Seller's knowledge, there has been no default, cancellation or
breach by any other party to any material contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which Seller or any
of its Subsidiaries is a party.
(n) NO BROKERS. No action has been taken by Seller or any of its
Subsidiaries that would give rise to any valid claim against any party hereto
for a brokerage commission, finder's fee or other like payment with respect to
the transactions contemplated by this Agreement, other than the fee to be paid
to Credit Suisse First Boston Corporation and Belle Plaine Partners, Inc. as
Previously Disclosed.
(o) EMPLOYEES. To Seller's knowledge, as of the date of this
Agreement there is no announced or anticipated resignation of any key employee
of Seller or any of its Subsidiaries. Seller has complied with all laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and non-discrimination.
For purposes of this Section 5.03(o): (i) "key employee" shall mean any
employee of Seller with annual base compensation of $75,000 or more and (ii)
"Seller's knowledge" shall mean the knowledge of Seller's Chief Executive
Officer, Chief Financial Officer, General Counsel and Senior Vice President,
Director of Human Resources.
(p) EMPLOYEE BENEFIT PLANS.
(i) Seller's Disclosure Schedule contains a complete list
of all bonus, vacation, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock appreciation and stock option
plans, all employment or severance contracts, all medical, dental,
disability, severance, health and life plans, all other employee benefit
and fringe benefit plans, contracts or arrangements and any "change of
control" or similar provisions in any plan, contract or arrangement
maintained or contributed to by Seller or any of its Subsidiaries for the
benefit of officers, former officers, employees, former employees,
directors, former directors, or the beneficiaries of any of the
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foregoing (collectively, "Compensation and Benefit Plans"). Under the
applicable terms of the Compensation and Benefit Plans, Seller may amend
or terminate any such Compensation and Benefit Plans at any time without
incurring any liability thereunder.
(ii) True and complete copies of the Compensation and
Benefit Plans, including, but not limited to, any trust instruments and/or
insurance contracts, if any, forming a part thereof, and all amendments
thereto have been supplied or made available to Acquirer.
(iii) Each of the Compensation and Benefit Plans has been
administered in accordance with the terms thereof. All "employee benefit
plans" within the meaning of Section 3(3) of ERISA, other than
"multiemployer plans" within the meaning of Section 3(37) of ERISA
("Multiemployer Plans"), covering employees or former employees of Seller
and its Subsidiaries (its "Plans"), to the extent subject to ERISA, are in
material compliance with ERISA, the Code, the Age Discrimination in
Employment Act and other applicable laws. Each Compensation and Benefit
Plan of Seller or its Subsidiaries which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and
which is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue
Service, any voluntary employees' beneficiary association used to fund
Compensation and Benefit Plans has received an exemption letter from the
Internal Revenue Service, and Seller is not aware of any circumstances
reasonably likely to result in the revocation or denial of any such
favorable determination letter. There is no pending or, to its knowledge,
threatened litigation or governmental audit, examination or investigation
relating to the Plans.
(iv) No liability under Title IV of ERISA has been or is
expected to be incurred by Seller or any of its Subsidiaries with respect
to any ongoing, frozen or terminated "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained
by any of them, or the single-employer plan of any entity which is
considered one employer with it under Section 4001(a)(14) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither Seller nor any of
its present or former Subsidiaries nor any ERISA Affiliate of it or any of
its Subsidiaries presently contributes to a Multiemployer Plan or a
multiple employer plan (as described in Section 4064(a) of ERISA), nor
have they contributed to such a plan within this calendar year and the
preceding five calendar years. No notice of a "reportable event," within
the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Pension Plan of Seller or any of its Subsidiaries or by any ERISA
Affiliate within the past 12
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months.
(v) All contributions, premiums and payments required to
have been made under the terms of any Compensation and Benefit Plan of
Seller or any of its Subsidiaries have been made. Neither any Pension
Plan of Seller or any of its Subsidiaries nor any single-employer plan of
an ERISA Affiliate of Seller or any of its Subsidiaries has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA. Neither
Seller nor any of its Subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(vi) Under each Pension Plan of Seller or any of its
Subsidiaries which is a single-employer plan, as of the last day of the
most recent plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within the meaning
of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Pension Plan's most recent
actuarial valuation) did not exceed the then current value of the assets
of such Pension Plan, and there has been no adverse change in the
financial condition of such Pension Plan (with respect to either assets or
benefits) since the last day of the most recent plan year.
(vii) None of Seller or its Subsidiaries has any obligations
under any Compensation and Benefit Plans to provide benefits, including
death or medical benefits, with respect to employees of it or its
Subsidiaries beyond their retirement or other termination of service other
than (A) coverage mandated by Part 6 of Title I of ERISA or Section 4980B
of the Code, (B) retirement or death benefits under any employee pension
benefit plan (as defined under Section 3(2) of ERISA), (C) disability
benefits under any employee welfare plan that have been fully provided for
by insurance or otherwise, or (D) benefits in the nature of severance pay.
(viii) Except as set forth in Seller's Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will (A) result in any payment
(including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due to any current or former
director or employee of it or any of its Subsidiaries under any
Compensation and Benefit Plan or otherwise from it or any of its
Subsidiaries, (B) increase any benefits otherwise payable under any
Compensation and Benefit Plan or (C) result in any acceleration of the
time of payment or vesting of any such benefit.
(ix) Except as set forth in the Disclosure Schedule, no
Compensation and Benefit Plan, separately or in the aggregate, requires or
would result in the payment of any "excess parachute payments" within the
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meaning of Section 280G of the Code, and the consummation of the
transactions contemplated by this Agreement will not be a factor in
causing payments to be made by Acquirer or Seller that are not deductible
(in whole or in part) under Section 280G of the Code.
(q) LABOR MATTERS. None of Seller or its Subsidiaries is a party
to nor bound by any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor is it the subject
of a proceeding asserting that it has committed an unfair labor practice (within
the meaning of the National Labor Relations Act) or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving it or, to Seller's
knowledge, threatened, nor to Seller's knowledge is there any activity involving
any employee of Seller or any of its Subsidiaries seeking to certify a
collective bargaining unit or engaging in other organizational activity.
(r) PROPERTIES.
(i) Each of Seller and its Subsidiaries owns good and
marketable title to all of the real property and all of the personal
property, fixtures, furniture and equipment owned by it as reflected in
the Latest Seller Balance Sheet (other than real property reflected in the
Latest Seller Balance Sheet as OREO), free and clear of all liens and
encumbrances, except for (A) mortgages on real property as Previously
Disclosed, (B) encumbrances which do not materially affect the value of,
or interfere with the past or future use or ability to convey, the
property subject thereto or affected thereby, (C) liens for current taxes
and special assessments not yet due and payable, (D) leasehold estates
with respect to multi-tenant buildings owned by it, (E) mechanic's,
materialman's and other liens imposed by operation of law, and
(F) property disposed of since the date of the Latest Seller Balance Sheet
in the ordinary course of business; PROVIDED, HOWEVER, that no disposal of
any fee interest in real property housing Seller branches, loan offices or
offices engaged in Seller operations shall be considered to be in the
ordinary course of business.
(ii) Seller has previously made available to Acquirer
complete and accurate copies of abstracts of each of the leases, setting
forth the fundamental terms of each of such leases, of Seller or any of
its Subsidiaries, including all amendments and modifications thereto (such
leases, as amended and modified, the "Leases"). As of the date of this
Agreement, the Leases are in full force and effect, and Seller or such
Subsidiary, as applicable, has valid and existing leasehold interests
under the Leases for the terms set forth therein. With respect to the
Leases, none of Seller or its Subsidiaries is in default, and, to Seller's
knowledge, none of the other parties to any of the Leases is in default,
and, to Seller's knowledge, no circumstances (not in the control of
Seller) exist which could result in such a default under any of such
Leases.
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(iii) The rent rolls previously made available to Acquirer
are true and correct in all material respects and describe all occupancies
and the material terms of each occupancy as of the dates thereof.
(iv) All of the buildings, fixtures, furniture and equipment
necessary for the conduct of the business of Seller and its Subsidiaries
are in good condition and repair, ordinary wear and tear excepted, and are
usable in the ordinary course of business. Each of Seller and its
Subsidiaries owns, or leases under valid leases, all buildings, fixtures,
furniture, personal property, land improvements and equipment necessary
for the conduct of its business as it is presently being conducted.
(s) ENVIRONMENTAL MATTERS. To Seller's knowledge, neither the
conduct nor operation of Seller or any of its Subsidiaries nor any condition of
any property presently or previously owned, leased or operated by it (including,
without limitation, in a fiduciary or agency capacity), violates or violated
Environmental Laws and to Seller's knowledge, no condition has existed or event
has occurred with respect to it or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. None of Seller or any of its Subsidiaries has received any
written notice from any Person that it or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a fiduciary
capacity by it is or was in violation of or otherwise is alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from, any such property.
To Seller's knowledge, no Hazardous Substances (as defined below) have been
deposited or disposed of in, on or under Seller's or any Subsidiary's owned or
leased properties (including properties owned, managed or controlled by Seller
or any Subsidiary in connection with its lending or fiduciary operations). As
used herein, the term "Environmental Law" means any federal, state or local law,
regulation, order, decree, permit, authorization, opinion, common law or agency
requirement relating to:
(i) the protection or restoration of the environment,
health, safety, or natural resources;
(ii) the handling, use, presence, disposal, release or
threatened release of any Hazardous Substance; or
(iii) noise, odor, wetlands, indoor air, pollution,
contamination or any injury or threat of injury to persons or property in
connection with any Hazardous Substance.
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As used herein, the term "Hazardous Substance" means any substance in any
concentration that is:
(i) listed, classified or regulated pursuant to any
Environmental Law;
(ii) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or
(iii) any other substance which is or may be the subject of
regulatory action by any Governmental Authority in connection with any
Environmental Law.
(t) TAX MATTERS. Each of Seller and its Subsidiaries and all
members of any consolidated, affiliated, combined or unitary group of which
Seller or any of its Subsidiaries is a member have filed or will file all Tax
Returns required to be filed (taking into account permissible extensions) by
them on or prior to the Effective Time, and have paid (or have accrued or will
accrue, prior to the Effective Time, amounts for the payment of) all Taxes
relating to the time periods covered by such returns and reports. The accrued
taxes payable accounts for Taxes reflected on the Latest Seller Balance Sheet
(or the notes thereto) are sufficient for the payment of all unpaid Taxes of
Seller and its Subsidiaries accrued for or applicable to all periods ended on or
prior to the date of the Latest Seller Balance Sheet or which may subsequently
be determined to be owing with respect to any such period. None of Seller or its
Subsidiaries has waived any statute of limitations with respect to Taxes or
agreed to any extension of time with respect to an assessment or deficiency for
Taxes. Each of Seller and its Subsidiaries has paid or will pay in a timely
manner and as required by law all Taxes due and payable by it or which it is
obligated to withhold from amounts owing to any employee or third party. All
Taxes which will be due and payable, whether now or hereafter, for any period
ending on or prior to the Effective Time, shall have been paid by or on behalf
of Seller and its Subsidiaries or shall be reflected on the books of Seller and
its Subsidiaries as an accrued Tax liability determined in a manner which is
consistent with past practices and the Latest Balance Sheets, without taking
account of the Merger. There are no unresolved questions, claims or disputes
asserted by any relevant taxing authority concerning the liability for Taxes of
Seller or any of its Subsidiaries. None of Seller or its Subsidiaries has made
an election under Section 341(f) of the Code for any taxable years not yet
closed for statute of limitations purposes. In the five years prior to the date
of this Agreement, no demand or claim has been made against Seller or any of its
Subsidiaries with respect to any Taxes arising out of membership or
participation in any consolidated, affiliated, combined or unitary group of
which Seller or any of its Subsidiaries was at any time a member. As of the
date hereof, Seller has no reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization within
the meaning of Section 368 of the Code.
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(u) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Seller's or any of its
Subsidiaries' own account, or for the account of one or more of its customers
(all of which are listed on Seller's Disclosure Schedule), if any, were entered
into:
(i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies, and
(ii) with counterparties believed to be financially
responsible at the time;
and each of them constitutes the valid and legally binding obligation of the
other party thereto enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights generally or by general
equity principles) and is in full force and effect. None of Seller or its
Subsidiaries, or to Seller's knowledge, any other party thereto, is in breach of
any of its obligations under any such agreement or arrangement.
(v) BOOKS AND RECORDS. The books and records of each of Seller
and its Subsidiaries prepared on or after December 31, 1996, have been fully,
properly and accurately maintained in all material respects, and there are no
material inaccuracies or discrepancies of any kind contained or reflected
therein.
(w) LOAN PORTFOLIO.
(i) None of Seller or its Subsidiaries is a party to any
written or oral (A) loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements, commitments,
guarantees and interest-bearing assets) reflected as an asset in the
Seller's audited financial statements for the year ended December 31, 1998
(collectively, "Loans"), other than Loans the unpaid unguaranteed
principal balance of which does not exceed $500,000, under the terms of
which the obligor was, as of December 31, 1998, over 90 days delinquent in
payment of principal or interest, or (B) Loan with any director, executive
officer or five percent or greater shareholder of Seller or any of its
Subsidiaries, or to Seller's knowledge, any Person controlling, controlled
by or under common control with any of the foregoing. Seller's Disclosure
Schedule sets forth (x) all of the Loans with original unguaranteed
principal amounts in excess of $100,000 of Seller or any of its
Subsidiaries that as of December 31, 1998, were classified by any bank
examiner (whether regulatory or internal) as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans",
"Watch List" or words of similar import, together with the principal
amount of each such
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Loan and the identity of the borrower thereunder, (y) by category of Loan
(i.e., commercial, consumer, etc.), all of the other Loans of Seller or
any of its Subsidiaries that as of December 31, 1998, were classified as
such, together with the aggregate principal amount of such Loans by
category and (z) each asset of Seller that as of December 31, 1998, was
classified as "Other Real Estate Owned" and the book value thereof.
(ii) The documentation relating to each Loan and relating to
all security interests, mortgages and other liens with respect to all
collateral for each such Loan, taken as a whole, is adequate for the
enforcement of the material terms of each such Loan and of the related
security interests, mortgages and other Liens. The terms of each such
Loan and of the related security interests, mortgages and other Liens
comply in all material respects with all applicable laws, rules and
regulations (including, without limitation, laws, rules and regulations
relating to the extension of credit).
(x) INSURANCE. Seller's Disclosure Schedule lists each insurance
policy maintained by Seller or any of its Subsidiaries with respect to its
properties and assets. Prior to the date hereof, Seller has provided or made
available to Acquirer complete and accurate copies of each of the insurance
policies described on Seller's Disclosure Schedule. All such insurance policies
are in full force and effect, and Seller is not in default with respect to its
obligations under any of such insurance policies.
(y) AFFILIATE TRANSACTIONS. None of Seller or its Subsidiaries
nor any of their respective executive officers or directors, or, to Seller's
knowledge, any member of the immediate family of any such executive officer or
director (which for the purposes hereof shall mean a spouse, minor child or
adult child living at the home of any such executive officer or director), or,
to Seller's knowledge, any entity which any of such persons "controls" (within
the meaning of Regulation O of the FRB), has any agreement with Seller or any of
its Subsidiaries (other than employment arrangements or deposit account
relationships) or any interest in any property, real, personal or mixed,
tangible or intangible, used in or pertaining to the business of Seller or any
of its Subsidiaries.
(z) ADMINISTRATION OF FIDUCIARY ACCOUNTS. Each of Seller and its
Subsidiaries has properly administered, in all respects material and which could
reasonably be expected to be material to the business, operations or financial
condition of Seller and its 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.
None of Seller or its Subsidiaries nor any of their respective officers or
directors 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 business, operations or financial condition of Seller and its Subsidiaries,
taken as a whole, and the accountings for each such fiduciary account are true
and
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correct in all material respects and accurately reflect the assets of such
fiduciary account in all material respects.
(aa) MILLENNIUM COMPLIANCE. All hardware and software, whether
embedded or otherwise, used or licensed for use in the business of Seller and
its Subsidiaries as presently conducted is Millennium Compliant or will be
Millennium Compliant by a date so that the business, operations or financial
condition of Seller and its Subsidiaries or the Surviving Corporation will not
be adversely affected. Seller is undertaking all reasonable efforts necessary
to determine whether any third party with whom Seller has a material business
relationship has software that is Millennium Compliant and to replace all such
material business relationships where, in the judgment of Seller, software that
is Millennium Compliant is not present and will not be present in time to avoid
processing failures or errors that would have a detrimental impact on such
third party that could be detrimental to Seller and its Subsidiaries or the
Surviving Corporation.
As used in this Agreement, "Millennium Compliant" shall mean that
neither performance nor functionality is affected by data manipulation
concerning dates prior to, during, spanning, or after January 1, 2000, and shall
include, but not be limited to: (i) accurately processing (including, but not
limited to, calculating, comparing and sequencing) date/time data from, into and
between the twentieth and twenty-first centuries and the years 1999 and 2000 and
leap year calculations; (ii) functioning without error, interruption, or
decreased performance relating to such date/time data; (iii) accurately
processing such date/time data when used in combination with other technology;
(iv) accurate date/time data century recognition; (v) calculations that
accurately use same century and multi-century formulas and date/time values;
(vi) date/time interface values that reflect the correct century; and
(vii) processing, storing, receiving and outputting all date/time data in a
format that accurately indicates the century of the date/time data.
(bb) TAKEOVER LAWS. Seller has taken all action required to be
taken by it in order to exempt this Agreement and the Seller Option Agreement
and the transactions contemplated hereby and thereby from the requirements of
any applicable "moratorium", "control share", "fair price" or other antitakeover
laws and regulations of any state (collectively, "Takeover Laws").
5.04 REPRESENTATIONS AND WARRANTIES OF ACQUIRER. Subject to
Section 5.02, Acquirer hereby represents and warrants to Seller as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. Acquirer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Acquirer is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended. Acquirer and each of
its Significant Subsidiaries is duly licensed and qualified to do business and
is in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing
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of property or assets or the conduct of its business requires it to be so
licensed and qualified. Acquirer has in effect all federal, state, local,
and foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted.
(b) ACQUIRER CAPITAL STOCK. As of the date of this Agreement, the
authorized capital stock of Acquirer consists solely of 1,500,000,000 shares of
Acquirer Common Stock and 50,000,000 shares of preferred stock, par value $1.00
per share ("Acquirer Preferred Stock"). As of March 31, 1999, there were
744,797,857 shares of Acquirer Common Stock and 56,539 shares of Acquirer
Preferred Stock issued and outstanding. As of the date hereof, 18,428,964
shares of Acquirer Common Stock were held in treasury by Acquirer or otherwise
owned by Acquirer. As of the date of this Agreement, no shares of Acquirer
Common Stock or Acquirer Preferred Stock were reserved for issuance, except that
60,090,134 shares of Acquirer Common Stock were reserved for issuance pursuant
to Acquirer's employee and director stock purchase and option plans and dividend
reinvestment plan, 89,108 shares were reserved for issuance under outstanding
warrants to purchase Acquirer Common Stock and 45,000,000 shares were reserved
for issuance upon exercise of the Periodic Stock Purchase Rights and Risk Event
Warrants of Acquirer. As of March 31, 1999, 12,750 shares of Acquirer Preferred
Stock were reserved for issuance. All of the issued and outstanding shares of
Acquirer Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, except as
referred to above, Acquirer does not have any Rights issued or outstanding with
respect to any shares of Acquirer Common Stock or Acquirer Preferred Stock or
any other equity securities of Acquirer. The shares of Acquirer Common Stock to
be issued pursuant to the Merger will be duly authorized and validly issued and,
at the Effective Time, all such shares will be fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the ownership
thereof.
(c) CORPORATE POWER. Each of Acquirer and its Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all of its properties and assets; and Acquirer has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
(d) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
each of Acquirer and the Acquirer Board on or prior to the date hereof and no
other corporate proceedings on the part of Acquirer are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement is a
valid and legally binding agreement of Acquirer, enforceable in accordance with
its terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors' rights or by general
equity principles).
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(e) REGULATORY APPROVALS; NO DEFAULTS.
(i) No consents or approvals of, or filings or
registrations with, any Governmental Authority or any third party are
required to be made or obtained by Acquirer or any of its Subsidiaries in
connection with the execution, delivery or performance by Acquirer of this
Agreement or to consummate the transactions contemplated hereby except
for: (A) any required filings of applications or notices with the FRB and
the DFI; (B) filings with the SEC and state securities authorities and the
approval of the listing on the NYSE of Acquirer Common Stock to be issued
in the Merger; and (C) the filing of the agreement of merger and the
certificate of merger as contemplated in Section 2.01(b). As of the date
hereof, Acquirer is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received.
(ii) Subject to receipt of the regulatory approvals referred
to in the preceding paragraph and the expiration of related waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby do not and will not:
(A) constitute a breach or violation of, or a default
under, or give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of Acquirer or of any of its
Subsidiaries or to which Acquirer or any of its Subsidiaries or any
of their respective properties is subject or bound;
(B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar
governing documents) of Acquirer or any of its Subsidiaries; or
(C) require any consent or approval under any such
law, rule, regulation, judgment, decree, order, governmental permit
or license, agreement, indenture or instrument.
(f) FINANCIAL REPORTS AND SEC DOCUMENTS. The SEC Documents of
Acquirer or any of its Subsidiaries, as of the date filed: (A) complied or will
comply in all material respects as to form with the applicable requirements
under the Securities Act or the Exchange Act, as the case may be, and (B) did
not 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, in light of the circumstances under
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which they were made, not misleading; and each of the balance sheets
contained in or incorporated by reference into any such SEC Document of
Acquirer or any of its Subsidiaries, including the related notes and
schedules thereto, fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date, and
each of the statements of income and changes in shareholders' equity and cash
flows or equivalent statements in such SEC Documents of Acquirer or any of
its Subsidiaries (including any related notes and schedules thereto) fairly
presents and will fairly present the results of operations, changes in
shareholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods to which they relate,
in each case in accordance with GAAP consistently applied during the periods
involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements.
(g) NO MATERIAL ADVERSE CHANGES. Except as Previously Disclosed,
since December 31, 1998, no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and events
(described in any paragraph of this Section 5.04 or otherwise), has had or would
reasonably be expected to have a Material Adverse Effect with respect to
Acquirer and its Subsidiaries, taken as a whole.
(h) TAX MATTERS. As of the date hereof, Acquirer has no reason to
believe that any conditions exist that might prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the Code.
(i) REGULATORY MATTERS.
(i) Since December 31, 1996, each of Acquirer and its
Subsidiaries has filed each report or other filing that it was required to
file with any federal or state banking or other applicable Regulatory
Authorities having jurisdiction over it (together with all exhibits
thereto, the "Acquirer Regulatory Reports"). As of their respective dates
or as subsequently amended prior to the date hereof, each of the Acquirer
Regulatory Reports was true and correct and complied with the requirements
of the applicable form for each such Acquirer Regulatory Report.
(ii) None of Acquirer or its Subsidiaries or any of their
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment
letter or similar submission to, or extraordinary supervisory letter from,
any Regulatory Authority.
(iii) None of Acquirer or its Subsidiaries has been advised
by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar
submission.
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(j) LITIGATION. No litigation, claim or other proceeding before
any court or Governmental Authority is pending against Acquirer or any of its
Subsidiaries and, to Acquirer's knowledge, no such litigation, claim or other
proceeding has been threatened. None of Acquirer or its Subsidiaries is subject
to any outstanding order, writ, injunction or decree.
(k) COMPLIANCE WITH LAWS; PERMITS. Each of Acquirer and its
Subsidiaries:
(i) is in compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses on behalf of Acquirer and its Subsidiaries;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit it
to own or lease its properties and to conduct its businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Acquirer's knowledge,
no suspension or cancellation of any of them is threatened; and
(iii) is in compliance with the provisions of its articles of
incorporation or association or similar governing document and its
by-laws.
(l) MILLENNIUM COMPLIANCE. All hardware and software, whether
embedded or otherwise, used or licensed for use in the business of Acquirer and
its Subsidiaries as presently conducted is Millennium Compliant or will be
Millennium Compliant by a date so that the business, operations or financial
condition of Acquirer and its Subsidiaries will not be adversely affected.
Acquirer is undertaking all reasonable efforts necessary to determine whether
any third party with whom Acquirer has a material business relationship has
software that is Millennium Compliant and to replace all such material business
relationships where, in the judgment of Acquirer, software that is Millennium
Compliant is not present and will not be present in time to avoid processing
failures or errors that would have a detrimental impact on such third party
that could be detrimental to Acquirer and its Subsidiaries.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of Seller and Acquirer agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to
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permit consummation of the Merger as promptly as practicable and otherwise to
enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other party hereto to that end.
6.02 SHAREHOLDER APPROVAL. Seller shall take, in accordance with
applicable law, applicable stock exchange or Nasdaq rules and the Seller
Articles and the Seller By-Laws, all action necessary to convene, an appropriate
meeting of shareholders of Seller to consider and vote upon (i) the approval of
the principal terms of this Agreement and (ii) any other matters required to be
approved by the shareholders of Seller for consummation of the Merger (including
any adjournment or postponement, the "Seller Meeting"), as promptly as
practicable after the Registration Statement is declared effective. Seller
Board shall recommend such approval, and Seller shall take all reasonable lawful
action to solicit such approval by its shareholders. The Seller Board may not
withdraw or modify its recommendation except as expressly permitted by Section
6.06(b).
.
6.03 REGISTRATION STATEMENT.
(a) REGISTRATION STATEMENT. Acquirer and Seller agree to cooperate in
the preparation of a registration statement on Form S-4 or other applicable form
(the "Registration Statement") to be filed by Acquirer with the SEC in
connection with the issuance of Acquirer Common Stock in the Merger (including
the proxy statement and prospectus and other proxy solicitation materials of
Seller constituting a part thereof (the "Proxy Statement") and all related
documents). Seller agrees to file the Proxy Statement in preliminary form with
the SEC as soon as reasonably practicable, and Acquirer agrees to file the
Registration Statement with the SEC as soon as reasonably practicable after any
SEC comments with respect to the preliminary Proxy Statement are resolved. Each
of Seller and Acquirer agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. Acquirer also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Seller agrees to furnish to Acquirer all information
concerning Seller, its officers, directors and shareholders as may be reasonably
requested in connection with the foregoing.
(b) QUALITY OF INFORMATION. Each of Seller and Acquirer agrees that
none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in:
(i) the Registration Statement will, at the time the Registration
Statement and each amendment or supplement thereto, if any, becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary
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to make the statements therein not misleading, and
(ii) the Proxy Statement and any amendment or supplement thereto
will, at the date of mailing to shareholders and at the time of the Seller
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or any statement which, in the light of
the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state
any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
statement in the Proxy Statement or any amendment or supplement thereto.
Each of Seller and Acquirer further agrees that if it shall become aware
prior to the Effective Date of any information furnished by it that would cause
any of the statements in the Proxy Statement to be false or misleading with
respect to any material fact, or that it has omitted to state any material fact
necessary to make the statements therein not false or misleading, it shall
promptly inform the other party thereof and to take the necessary steps to
correct the Proxy Statement.
(c) NOTICES REGARDING REGISTRATION. Acquirer agrees to advise Seller,
promptly after Acquirer receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order or the suspension of the
qualification of Acquirer Common Stock for offering or sale in any jurisdiction,
of the initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration Statement
or for additional information.
6.04 PRESS RELEASES. Each of Seller and Acquirer agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or rules of the stock market where its securities are traded
(provided that the issuing party shall nevertheless provide the other party with
notice of, and the opportunity to review, any such press release or written
statement).
6.05 ACCESS; INFORMATION.
(a) ACCESS. Seller agrees that upon reasonable notice, it shall afford
Acquirer and Acquirer's officers, employees, counsel, accountants and other
authorized representatives, such access during normal business hours throughout
the period prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information (including, without limitation, Seller's
or any of its Subsidiaries' Year 2000 contingency plan) as Acquirer may
reasonably request and, during such period, Seller
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shall furnish promptly to Acquirer (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of
federal or state securities or banking laws, and (ii) all other information
concerning the business, properties and personnel of it as Acquirer may
reasonably request. Seller shall not be required to provide access or to
disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize any attorney-client
privilege or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) CONFIDENTIALITY. All information furnished to Acquirer pursuant to
Section 6.05(a) shall be subject to, and Acquirer shall hold all such
information in confidence in accordance with, the provisions of the
confidentiality agreement dated April 14, 1999 (the "Confidentiality Agreement")
between Acquirer and Seller. Seller shall have the same obligations to Acquirer
with respect to information furnished to Seller by Acquirer.
(c) INVESTIGATION. No investigation by either party of the business and
affairs of the other party shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
6.06 ACQUISITION PROPOSALS.
(a) Seller shall not, and shall cause its Subsidiaries and its and its
Subsidiaries' officers, directors, agents, advisors and affiliates not to,
solicit or encourage inquiries or proposals with respect to, or engage in any
negotiations concerning, or provide any confidential information to, or have any
discussions with, any person relating to, any Takeover Proposal. Seller shall
immediately cease and cause to be terminated any activities, discussions or
negotiations conducted prior to the date of this Agreement with any parties
other than Acquirer with respect to any of the foregoing. Seller shall promptly
(within 24 hours) advise Acquirer following the receipt by Seller of any
Takeover Proposal and the substance thereof (including the identity of the
person making such Takeover Proposal), and advise the Acquirer of any
developments with respect to such Takeover Proposal immediately upon the
occurrence thereof. Notwithstanding the first sentence of this Section 6.06(a),
in the event that, prior to the date of the Seller Meeting, the Seller Board
determines in good faith and in conformity with the written advice of outside
counsel, after Seller has received an unsolicited Takeover Proposal that is a
Superior Proposal, that the failure to do so would result in a breach of Seller
Board's fiduciary duties to Seller's shareholders, Seller may, in response to an
unsolicited request therefor, furnish information with respect to the Seller to,
and enter into discussions with, the party making the Superior Proposal pursuant
to a customary confidentiality agreement.
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(b) Except as expressly permitted by this Section 6.06(b), the Seller
Board may not (i) withdraw or modify, or propose publicly to withdraw or modify,
in a manner adverse to Acquirer, the approval or recommendation by the Seller
Board of the Merger or this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal, or (iii) cause or
authorize Seller to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Takeover
Proposal. Notwithstanding the foregoing, in the event that prior to the date of
the Seller Meeting, the Seller Board determines in good faith, after the Seller
has received a Superior Proposal and in conformity with the written advice of
outside counsel, that failure to do so would result in a breach of its fiduciary
duties to the Seller's shareholders under applicable law, the Seller Board may
upon not less than three business days notice to Acquirer of Seller Board's
intention to do so withdraw or modify or propose publicly to withdraw or modify
its approval or recommendation of the Merger or this Agreement. Such withdrawal
or modification shall not affect the Seller's obligation to convene the Seller
Meeting as required by Section 6.02.
6.07 AFFILIATE AGREEMENTS. Seller shall use its reasonable best efforts
to cause each director, executive officer and other Person who as of the date of
the Seller Meeting to Seller's knowledge is reasonably likely to be an
"affiliate" (for purposes of Rule 145 under the Securities Act) of Seller to
execute and deliver to Acquirer on or before the date of mailing of the Proxy
Statement a written agreement in the form of Exhibit B hereto.
6.08 STOCK EXCHANGE LISTING. Acquirer agrees to use its reasonable best
efforts to list, prior to the Effective Date, on the NYSE, subject to official
notice of issuance, the shares of Acquirer Common Stock to be issued to the
holders of Seller Common Stock in the Merger.
6.09 REGULATORY APPLICATIONS.
(a) COOPERATION WITH FILINGS. Seller and Acquirer and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts
(i) to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all. third parties and
Regulatory Authorities necessary to consummate the transactions contemplated by
this Agreement, including, without limitation, any such approvals or
authorizations required by the FRB, the DFI and any other applicable Regulatory
Agencies and (ii) to cause the Merger to be consummated as expeditiously as
reasonably practicable. Provided Seller has cooperated as required above,
Acquirer agrees to file the requisite applications to be filed by it with the
FRB, the DFI and any other applicable Regulatory Agencies, as promptly as
reasonably practicable. Each of Acquirer and Seller shall have the right to
review in advance, and to the extent practicable each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to, all material written information submitted to any
third party or any Regulatory Authority in connection with the transactions
contemplated by this Agreement. In exercising the
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foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party hereto agrees that it will consult with
the other party hereto with respect to the obtaining of all material permits,
consents, approvals and authorizations of all third parties and Regulatory
Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party
appraised of the status of material matters relating to completion of the
transactions contemplated hereby.
(b) AGREEMENT TO FURNISH INFORMATION. Each party agrees, upon request,
to furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Regulatory Authority. Any such information that is not
ultimately included in any publicly available filing, notice or application
shall be kept confidential in accordance with Section 6.05(b).
6.10 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) INDEMNIFICATION BY ACQUIRER. From and after the Effective Time,
Acquirer agrees to indemnify and hold harmless each present and former director
and officer of Seller and its Subsidiaries determined as of the Effective Time
(the "Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any actual or threatened
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including with respect to this Agreement or any
of the transactions contemplated hereby) to the fullest extent permitted by law.
Acquirer shall also advance expenses as incurred to the fullest extent permitted
under Delaware law, upon receipt of any undertaking required by applicable law.
(b) INDEMNIFICATION PROCEDURE. Any Indemnified Party wishing to claim
indemnification under Section 6.10(a), upon learning of any such claim, action,
suit, proceeding or investigation, shall as promptly as possible notify Acquirer
thereof, but the failure to so notify shall not relieve Acquirer of any
liability it may have to such Indemnified Party if such failure does not
materially prejudice Acquirer. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time):
(i) Acquirer shall have the right to assume the defense thereof
and Acquirer shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except
that if Acquirer elects not to assume such defense or counsel for the
Indemnified Parties advises in writing that there are issues which raise
conflicts of interest between Acquirer and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to
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them, and Acquirer shall pay the reasonable fees and expenses of one such
counsel for the Indemnified Parties in any jurisdiction promptly as
statements thereof are received;
(ii) the Indemnified Parties will cooperate in the defense of any
such matter; and
(iii) Acquirer shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided, further, that Acquirer shall not have any
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that the indemnification of
such Indemnified Party in the manner contemplated hereby is not permitted
or is prohibited by applicable law.
(c) DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. For a period of six
years after the Effective Date, Acquirer shall use its best efforts to provide
that portion of directors' and officers' liability insurance that serves to
reimburse officers and directors of Seller or any of its Subsidiaries
(determined as of the Effective Time) with respect to claims against such
officers and directors arising from facts or events which occurred on or before
the Effective Time of at least the same coverage and amounts, and containing
terms and conditions no less advantageous, as that coverage currently provided
by Seller; provided, however, that in no event shall Acquirer be required to
expend more than 200% per annum of the current amount expended by Seller (the
"Insurance Amount") to maintain or procure such directors and officers insurance
coverage; provided, further, that if Acquirer is unable to obtain the insurance
called for by this Section 6.10(c), Acquirer shall use its reasonable best
efforts to obtain as much comparable insurance as is available for the Insurance
Amount; and provided, further, that officers and directors of Seller or any of
its Subsidiaries may be required to make application and provide customary
representations and warranties to Acquirer's insurance carrier for the purpose
of obtaining such insurance; and provided, further, that such coverage will have
a single aggregate for such six-year period in an amount not less than the
annual aggregate of such coverage currently provided by Seller.
(d) SUCCESSOR LIABILITY. If Acquirer or any of its successors or
assigns (i) 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 (ii) 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 Acquirer shall assume the obligations set forth in
this Section 6.10.
6.11 TAKEOVER LAWS; NO RIGHT TRIGGERED.
(a) No party shall take any action that would cause the transactions
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contemplated by this Agreement and the Seller Option Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement and the Seller Option
Agreement from, or if necessary challenge the validity or applicability of, any
applicable Takeover Law, as now or hereafter in effect that purport to apply to
this Agreement, the Seller Option Agreement or the transactions contemplated
hereby or thereby.
(b) Seller shall take all reasonable steps necessary to ensure that the
entering into of this Agreement and the Seller Option Agreement, and the
consummation of the transactions contemplated hereby and thereby and any other
action or combination of actions, or any other transactions contemplated hereby
and thereby, do not and will not result in the grant of any rights to any Person
(i) under the Seller Articles or the Seller By-Laws or (ii) under any material
agreement to which it or any of its Subsidiaries is a party (except as expressly
contemplated by (A) the mandatory provisions under the Seller Plans or (B) the
Seller Option Agreement, as applicable).
6.12 NOTIFICATION OF CERTAIN MATTERS. Each of Seller and Acquirer shall
give prompt notice to the other of any fact, event or circumstance known to it
that:
(i) individually or taken together with all other facts, events
and circumstances known to it, has had or is reasonably likely to have a
Material Adverse Effect, or
(ii) would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained herein.
6.13 CERTAIN LOANS AND RELATED MATTERS. Seller will furnish to Acquirer
a complete and accurate list as of the end of each calendar month after March
31, 1999, within 15 business days after the end of each such calendar month, of
(a) all of the periodic internal credit quality reports prepared during such
calendar month (which reports will be prepared in a manner consistent with past
practices) of Seller or any of its Subsidiaries, (b) all loans of Seller or any
of its Subsidiaries classified as non-accrual, as restructured, as 90 days past
due, as still accruing and doubtful of collection or any comparable
classification, (c) all OREO, including in-substance foreclosures and real
estate in judgment, (d) any current repurchase obligations of Seller or any of
its Subsidiaries with respect to any loans, loan participations or state or
municipal obligations or revenue bonds and (e) any standby letters of credit
issued by Seller or any of its Subsidiaries.
6.14 MONTHLY FINANCIAL STATEMENTS. Seller shall furnish Acquirer with
the balance sheets of Seller and each of its Subsidiaries as of the end of each
calendar
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month after March 31, 1999 and the related statements of income, within
15 business days after the end of each such calendar month. Such financial
statements shall be prepared on a basis consistent with the SEC Documents and on
a consistent basis during the periods involved and shall fairly present the
financial positions of Seller and its Subsidiaries as of the dates thereof and
the results of operations of Seller and its Subsidiaries for the periods then
ended.
6.15 ACCOUNTANTS' LETTERS. Each of Seller and Acquirer shall use its best
efforts to cause to be delivered to the other party, and such other party's
directors and officers who sign the Registration Statement, a letter or letters
from each party's independent auditors as are customarily required,
respectively, dated (i) the date on which the Registration Statement shall
become effective and (ii) a date shortly prior to the Effective Date, and
addressed to such other party, and such directors and officers, in form and
substance customary for "comfort" letters delivered by independent accountants
in accordance with Statement of Accounting Standards No. 72.
6.16 TAX MATTERS. Seller shall file (or cause to be filed) at its own
expense, on or prior to the due date, all Tax returns of Seller and its
Subsidiaries, including all Compensation and Benefit Plan returns and reports,
for all Tax periods ending on or before the Effective Time where the due date
for such returns or reports (taking into account valid extensions of the
respective due dates) falls on or before the Effective Time; PROVIDED, HOWEVER,
that Seller shall not file (and shall cause not to be filed) any such Tax
returns, or other returns, elections or information statements with respect to
any liabilities for Taxes (other than federal, state or local sales, use,
withholding or employment tax returns or statements), or consent to any
adjustment or otherwise compromise or settle any matters with respect to Taxes,
without prior consultation with Acquirer; PROVIDED, FURTHER, that Seller shall
not make (and shall cause not to be made) any election or take any other
discretionary position with respect to Taxes, in a manner inconsistent with past
practices, without the prior written approval of Acquirer.
6.17 ESTABLISHMENT OF ACCRUALS. If requested by Acquirer, on the
business day immediately prior to the Effective Time, Seller shall, consistent
with GAAP, establish such additional accruals and reserves as may be necessary
to conform its and its Subsidiaries accounting and credit loss reserve practices
and methods to those of Acquirer (as such practices and methods are to be
applied to Seller and its Subsidiaries from and after the Effective Time) and
reflect Acquirer's plans with respect to the conduct of Seller's and its
Subsidiaries' business following the Merger and to provide for the costs and
expenses relating to the consummation by Seller of the transactions contemplated
by this Agreement. The establishment of such accruals and reserves shall not,
in and of itself, constitute a breach of any representation or warranty of
Seller contained in this Agreement or constitute a material adverse change in
the business, operations or financial condition of Seller and its Subsidiaries,
taken as a whole.
6.18 COORDINATION OF DIVIDENDS. Until the Effective Time, Seller shall
coordinate with Acquirer the declaration of any dividends or other distributions
with
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respect to the Seller Common Stock and the record dates and payment dates
relating thereto, it being the intention of the parties that holders of shares
of Seller Common Stock shall not receive more than one dividend, or fail to
receive one dividend, for any single calendar quarter on their shares of Seller
Common Stock (including any shares of Acquirer Common Stock received in exchange
therefor in the Merger).
6.19 UPDATED DISCLOSURE SCHEDULE. On a date 15 business days prior to
the Effective Date and on the Effective Date, Acquirer and Seller shall modify
their respective Disclosure Schedules to this Agreement for the purpose of
making the representations and warranties to which any such Disclosure Schedule
relates true and correct in all material respects as of such date, whether to
correct any misstatement or omission in any Schedule or to reflect any
additional information obtained by Acquirer or Seller subsequent to the date any
Disclosure Schedule was previously delivered. Notwithstanding the foregoing,
the updated Disclosure Schedule shall not have the effect of making any
representation or warranty contained in this Agreement true and correct in all
material respects for purposes of Sections 7.02(a) and 7.03(a) hereof.
6.20 BENEFIT PLANS.
(a) Acquirer shall, for two years after the Effective Time, provide
former employees of Seller and its Subsidiaries who remain as employees of
Acquirer or the Surviving Corporation ("Continuing Employee") with compensation
and employee benefit plans no less favorable in the aggregate than those
provided to similarly situated employees of Acquirer. From time to time after
the Effective Time, Acquirer may, at its sole discretion, discontinue all or any
Compensation and Benefit Plans maintained by Seller and its Subsidiaries for the
benefit of employees of the Seller and its Subsidiaries so long as it replaces
them with compensation and employee benefit plans of Acquirer as offered to
similarly situated employees of Acquirer and its Subsidiaries. If any employee
of Seller or its Subsidiaries becomes a participant in any employee benefit
plan, practice or policy of Acquirer or the Surviving Corporation, such employee
shall be given credit under such plan, practice or policy for all service with
Seller or its Subsidiaries from the employee's most recent date of hire by
Seller or its Subsidiaries (as provided by Seller to Acquirer prior to the
Effective Date) and prior to the Effective Time for purposes of eligibility and
vesting, but not for the purposes of determining benefit accruals or the rate of
benefit accruals, for which such service is taken into account or recognized,
provided that there be no duplication of such benefits as are provided under any
employee benefit plans, practices, or policies of Seller or any of its
Subsidiaries that continue in effect following the Effective Time.
(b) Acquirer shall pay to Continuing Employees the amounts payable under
Seller's incentive plans as Previously Disclosed for the year ended December 31,
1999 in accordance with the terms thereof ("1999 Bonus Amounts"). Prior to the
Effective Date, the Chief Executive Officer of Seller, after prior consultation
with Acquirer, shall determine the 1999 Bonus Amounts payable pursuant to the
terms of the applicable incentive plans of Seller. Acquirer shall also pay to
employees of Seller and its Subsidiaries whose employment is terminated by
Acquirer or its Subsidiaries (other than by reason of such employee's
misconduct, nonperformance of duties or violations of other rules and policies
of Acquirer or its Subsidiaries,
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including confidentiality obligations) after the Effective Time and prior to
the date such 1999 Bonus Amounts have been paid an amount equal to the 1999
Bonus Amount to which they would otherwise have been entitled. Such 1999
Bonus Amounts shall be paid upon such termination.
(c) Employees covered under Seller's Employee Severance Plan as of the
Effective Date who are terminated by the Acquirer within 12 months after the
Effective Time shall be eligible for severance, if any, under the terms of
Seller's Employee Severance Plan except that the required release shall be in
the form and manner required by the Acquirer. During such 12 month period, such
employees shall be excluded from coverage from Acquirer's severance plans or
programs but shall not be excluded from coverage under Acquirer's Change In
Control Severance Pay Programs provided such employees meet the coverage
requirements set forth in such Change In Control Severance Pay Programs. If a
change in control of Acquirer occurs during such 12 month period said employees
will cease to be eligible for severance under Seller's Employee Severance Plan
if they are covered employees under Acquirer's Change In Control Severance Pay
Programs.
(d) Employees eligible for severance payments under Seller's Executive
Severance Plan shall be excluded from coverage from Acquirer's severance plans
or programs including Acquirer's Change In Control Severance Pay Plan or
Programs so long as such employee is covered by Seller's Executive Severance
Plan. Acquirer further agrees that the "target bonus" for purposes of the
Executive Severance Plan shall mean the maximum target bonus payable under the
applicable incentive plan in the event that the applicable "target bonus" is
expressed as a range. Schedule 6.20(d) sets forth the employees currently
covered by Seller's Executive Severance Plan. Seller shall provide Acquirer
with an updated schedule of employees covered under Seller's Executive Severance
Plan prior to the Effective Date.
(e) This Section 6.20 is an agreement solely between Seller and
Acquirer. Nothing in this Section 6.20, whether express or implied, shall be
considered to be a contract between Seller or Acquirer or any other person or
shall confer upon any employee of Seller or Acquirer or any other person, any
rights or remedies that such person did not already have including, but not
limited to (i) any right to employment or recall, (ii) any right to continued
employment of any specified person or (iii) any right to claim any particular
compensation, benefit or aggregation of benefits of any kind or nature
whatsoever.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Acquirer and Seller to consummate the Merger is
subject to the fulfillment or written waiver by Acquirer and Seller prior to the
Effective Time of each of the following conditions:
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(a) SHAREHOLDER APPROVAL. The principal terms of this Agreement
and the Merger shall have been duly adopted by the requisite vote of the
shareholders of Seller.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the Merger and the other transactions contemplated hereby shall have
been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired.
(c) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule or regulation, or any judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) (an "Injunction") which is in
effect and prohibits consummation of the transactions contemplated by this
Agreement.
(d) REGISTRATION STATEMENT; NYSE. The Registration Statement
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC. The Acquirer Common Stock to be issued in the Merger
shall have been approved for listing on the NYSE, subject to official notice of
issuance.
(e) BLUE SKY APPROVALS. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Acquirer Common Stock to be
issued in the Merger shall have been received and be in full force and effect.
(f) NO PENDING GOVERNMENTAL ACTIONS. No proceeding initiated by
any Governmental Authority seeking an Injunction shall be pending.
7.02 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the Merger is also subject to the fulfillment or written waiver by
Seller prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) Subject to Section 5.02,
the representations and warranties of Acquirer set forth in this Agreement shall
be true and correct as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak only as of the date of this Agreement
or some other date shall be true and correct as of such date); and (ii) Seller
shall have received a certificate, dated the Effective Date, signed on behalf of
Acquirer by the Chief Financial Officer of Acquirer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF ACQUIRER. Acquirer shall have
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performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Seller shall have
received a certificate, dated the Effective Date, signed on behalf of Acquirer
by the Chief Financial Officer of Acquirer to such effect.
(c) OPINION OF SELLER'S COUNSEL. Seller shall have received an
opinion from Irell & ▇▇▇▇▇▇▇ LLP, counsel to Seller, dated as of the Effective
Time, substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will be
treated for Federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and that accordingly:
(i) No gain or loss will be recognized by Acquirer or
Seller as a result of the Merger;
(ii) No gain or loss will be recognized by the shareholders
of Seller who exchange their Seller Common Stock for Acquirer Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Acquirer Common Stock);
(iii) The tax basis of the Acquirer Common Stock received by
the shareholders who exchange all of their Seller Common Stock in the
Merger will be the same as the tax basis of the Seller Common Stock
surrendered in exchange therefor; and
(iv) The holding period of the Acquirer Common Stock
received by a shareholder of Seller pursuant to the Merger will include
the period during which the Seller Common Stock surrendered therefor was
held, provided the Seller Common Stock is a capital asset in the hands of
the shareholder of Seller at the time of the Merger.
In rendering such opinion, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Acquirer, Seller and others.
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no material adverse change in, and no event, occurrence or
development in the business of Acquirer or any of its Subsidiaries that, taken
together with other events, occurrences and developments with respect to such
business, would have or would reasonably be expected to have a Material Adverse
Effect with respect to Acquirer and its Subsidiaries, taken as a whole.
7.03 CONDITIONS TO OBLIGATION OF ACQUIRER. The obligation of Acquirer to
consummate the Merger is also subject to the fulfillment or written waiver by
Acquirer prior to the Effective Time of each of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES. (i) Subject to Section 5.02,
the representations and warranties of Seller set forth in this Agreement shall
be true and correct as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak only as of the date of this Agreement
or some other date shall be true and correct as of such date); and
(ii) Acquirer shall have received a certificate, dated the Effective Date,
signed on behalf of Seller by the Chief Financial Officer of Seller to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time; provided that Seller
shall have performed its agreements contained in Sections 4.01(c) and (d) in all
respects; and Acquirer shall have received a certificate, dated the Effective
Date, signed on behalf of Seller by the Chief Financial Officer of Seller to
such effect.
(c) OPINION OF ACQUIRER'S COUNSEL. Acquirer shall have received
an opinion from ▇▇▇▇▇▇ & Whitney LLP, Minneapolis, Minnesota, counsel to
Acquirer, dated as of the Effective Time, substantially to the effect that, on
the basis of the facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the Effective
Time, the Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and that
accordingly:
(i) No gain or loss will be recognized by Acquirer or
Seller as a result of the Merger;
(ii) No gain or loss will be recognized by the shareholders
of Seller who exchange their Seller Common Stock for Acquirer Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Acquirer Common Stock);
(iii) The tax basis of the Acquirer Common Stock received by
the shareholders of Seller who exchange all of their Seller Common Stock
in the Merger will be the same as the tax basis of the Seller Common Stock
surrendered in exchange therefor; and
(iv) The holding period of the Acquirer Common Stock
received by a shareholder of Seller pursuant to the Merger will include
the period during which the Seller Common Stock surrendered therefor was
held, provided the Seller Common Stock is a capital asset in the hands of
the shareholder of Seller at the time of the Merger.
In rendering such opinion, such counsel may require and rely upon
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representations and covenants including those contained in certificates of
officers of Acquirer, Seller, and others.
(d) MATERIAL ADVERSE CHANGE. Since the date of this Agreement,
there shall have been no material adverse change in, and no event, occurrence or
development in the business of Seller or any of its Subsidiaries that, taken
together with other events, occurrences and developments with respect to such
business, would have or would reasonably be expected to have a Material Adverse
Effect with respect to Seller and its Subsidiaries, taken as a whole.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Merger may
be abandoned, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of Seller.
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by
the mutual consent of Acquirer and Seller.
(b) BREACH. At any time prior to the Effective Time, by Acquirer
or Seller, upon written notice to the other party, in the event of either:
(i) a breach by the other party of any representation or
warranty contained herein (subject to the standard set forth in Section
5.02), which breach cannot be or has not been cured within 30 days after
the giving of written notice to the breaching party of such breach, or
(ii) a breach by the other party of any of the covenants or
agreements contained herein, which breach cannot be or has not been cured
within 30 days after the giving of written notice to the breaching party
of such breach, provided that such breach (whether under (i) or (ii))
individually or in the aggregate with other breaches, has had or is
reasonably expected to have a Material Adverse Effect on the breaching
party.
(c) DELAY. At any time prior to the Effective Time, by Acquirer
or Seller, in the event that the Merger is not consummated by December 31, 1999,
except to the extent that the failure of the Merger then to be consummated
arises out of or results from the failure of the party seeking to terminate
pursuant to this Section 8.01(c) to perform or observe the covenants and
agreements of such party set forth herein.
(d) NO APPROVAL. By Seller or Acquirer, in the event:
(i) the approval of any Governmental Authority required for
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consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority, or
(ii) the shareholder approval required by Section 7.01(a)
herein is not obtained at the Seller Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the Seller
Meeting, by Acquirer if the Seller Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any respect to
the interests of Acquirer.
(f) FAILURE OF CONDITION. By either Acquirer or Seller, if any of
the conditions to such party's obligation to consummate the transactions
contemplated in this Agreement shall have become impossible to satisfy.
(g) SELLER OPTION AGREEMENT. By Acquirer, at any time after 6:00
a.m. New York City time on May 20, 1999, if the Seller Option Agreement shall
not have been executed and delivered by Seller to Acquirer prior to such
termination.
(h) ACQUIRER SIGNIFICANT STOCK DECLINE. By Seller, on either of
the two trading days immediately after the Twenty Day Calculation Period (as
defined below), if both of the following conditions are satisfied:
(i) the average of the daily closing prices of a share of
Acquirer Common Stock as reported on the consolidated tape of the NYSE
during the Twenty Day Calculation Period (the "Acquirer Average Price") is
less than $28.38; and
(ii) the number obtained by dividing the Acquirer Average
Price by $35.4792 is less than the number obtained by dividing the Final
Index Price (as defined below) by the Initial Index Price (as defined
below) and subtracting .20 from such quotient;
PROVIDED, HOWEVER, that Seller shall not be permitted to terminate this
Agreement pursuant to the provisions of this Section 8.01(h) if Acquirer agrees
to adjust the Exchange Ratio in such a manner as to provide the shareholders of
Seller with Merger Consideration per share of Seller Common Stock with a value
(using the Acquirer Average Price) greater than or equal to $36.80. For purposes
of this Section 8.01(h):
(A) The "Index Group" shall mean all of those
companies listed on Schedule 8.01(h), the common stock of which is
publicly traded and as to which there is no pending publicly
announced proposal at any time during the Twenty Day Calculation
Period for such company to be acquired. In the event that any such
company or companies are so
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removed from the Index Group, the weights attributed to the
remaining companies shall be adjusted proportionately.
(B) The "Initial Index Price" shall mean the weighted
average (weighted in accordance with the factors listed on Schedule
8.01(h)) of the closing prices for the period from and including May
6, 1999 to and including May 18, 1999 of the companies comprising
the Index Group.
(C) The "Final Price" of any company belonging to the
Index Group shall mean the average of the daily closing sale prices
of a share of common stock of such company, as reported on the
consolidated transaction reporting system for the market or exchange
on which such common stock is principally traded, during the Twenty
Day Calculation Period.
(D) The "Final Index Price" shall mean the weighted
average (weighted in accordance with the factors listed on Schedule
8.01(h)) of the Final Prices for all of the companies comprising the
Index Group.
(E) The "Twenty Day Calculation Period" shall mean the
20 consecutive trading days ending at the end of the third business
day prior to the Effective Date.
(F) If Acquirer or any company belonging to the Index
Group declares a stock dividend or effects a reclassification,
recapitalization, split-up, combination, exchange of shares or
similar transaction between the date of this Agreement and the date
three days prior to the Effective Date, the closing prices for the
common stock of such company shall be appropriately adjusted for the
purposes of the definitions above so as to be comparable to the
price on the date of this Agreement.
8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
VIII, no party to this Agreement shall have any liability or further obligation
to any other party hereunder except (i) as set forth in Sections 8.03 and 9.01,
and (ii) that termination will not relieve a breaching party from liability for
any willful breach of this Agreement giving rise to such termination; PROVIDED,
HOWEVER, that any termination shall not affect the Seller Option Agreement.
8.03 TERMINATION EXPENSES.
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(a) In the event of termination of this Agreement and the abandonment of
the Merger at any time (a) by Acquirer pursuant to Sections 8.01(b), 8.01(e) or
8.01(g) or (b) by Acquirer or Seller pursuant to Section 8.01(d)(ii) as a result
of the failure to receive the shareholder approval at the Seller Meeting
contemplated by Section 6.02 (but only in the event that it shall have been
publicly announced that any Person (other than Acquirer) shall have made, or
disclosed an intention to make, a Takeover Proposal) and in order to compensate
Acquirer for the expenses associated with the negotiation of this Agreement and
the other matters contemplated hereby, Seller shall, within one business day
following such termination, pay Acquirer a fee of $5,000,000 in immediately
available funds. Acquirer's right to receive such fee, and ability to enforce
the provisions of this Section 8.03(a), shall not be subject to approval by the
shareholders of Seller. Upon and after payment of such fee to Acquirer, Seller
shall not have any liability to Acquirer for any breach (including a willful
breach) by Seller specified in Section 8.01(b).
(b) In the event of termination of this Agreement and the abandonment of
the Merger at any time by Seller pursuant to Section 8.01(b) and in order to
compensate Seller for the expenses associated with the negotiation of this
Agreement and the other matters contemplated hereby, Acquirer shall, within one
business day following such termination, pay Seller a fee of $5,000,000 in
immediately available funds. Seller's right to receive such fee, and ability to
enforce the provisions of this Section 8.03(b), shall not be subject to approval
by the shareholders of Acquirer. Upon and after payment of such fee to Seller,
Acquirer shall not have any liability to Seller for any breach (other than a
willful breach) by Acquirer specified in Section 8.01(b).
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than those
covenants and agreements which by their terms apply in whole or in part after
the Effective Time, and this Article IX which shall survive the Effective Time)
or the termination of this Agreement (other than Sections 6.05(b), 8.02 and
8.03, and this Article IX, each of which shall survive such termination).
9.02 WAIVER; AMENDMENT.
(a) At any time prior to the Effective Time, each of the parties hereto,
by action taken or authorized by its Board of Directors, may, to the extent
legally allowed, (i) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions of the other party contained
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herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party, but such extension or waiver or failure to insist on
strict compliance with an obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
(b) Prior to the Effective Time, any provision of this Agreement may be
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that after the
Seller Meeting, this Agreement may not be amended if it would violate the CGCL
or reduce the amount or change the form of the consideration to be received by
Seller shareholders in the Merger.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
Delaware applicable to contracts made and to be performed entirely within such
State (except to the extent that mandatory provisions of Federal law apply).
Each of the parties hereto irrevocably waives any and all right to trial by jury
in any legal proceeding arising out of or related to this Agreement or the
transactions contemplated thereby.
9.05 EXPENSES. Except as otherwise provided in Section 8.03 hereof, each
party hereto will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby.
9.06 NOTICES. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Seller, to: Western Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Irell & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Esq.
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Acquirer, to: U.S. Bancorp
U.S. Bank Place
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. Mitau, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Pillsbury Center South
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements heretofore made, in each case other
than the Seller Option Agreement and the Confidentiality Agreement. Except as
otherwise expressly provided herein, nothing in this Agreement is intended to
confer upon any Person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to May 19, 1999.
9.09 ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in Section 6.05(b)
of this Agreement were not performed in accordance with their respective
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
Section 6.05(b) of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first
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above written.
WESTERN BANCORP
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
U.S. BANCORP
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
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