EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 15, 2004
AMONG
BANCWEST CORPORATION,
BW NEWCO, INC.
AND
COMMUNITY FIRST BANKSHARES, INC.
TABLE OF CONTENTS
PAGE
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ARTICLE 1. DEFINITIONS....................................................................... 1
ARTICLE 2. TERMS OF MERGER................................................................... 7
2.1. Effect of Merger and Surviving Corporation................................. 7
2.2. Stock of Company........................................................... 7
2.3. Company Stock Options...................................................... 8
2.4. Effect on Merger Sub Stock................................................. 8
2.5. Exchange Procedures........................................................ 8
2.6. Adjustments................................................................ 9
2.7. Directors of Surviving Corporation......................................... 9
2.8. Executive Officers of Surviving Corporation................................ 9
2.9. No Further Ownership Rights in Stock....................................... 9
2.10. Absence of Control......................................................... 9
2.11. Certificate of Incorporation and Bylaws.................................... 10
ARTICLE 3. THE CLOSING....................................................................... 10
3.1. Closing Date............................................................... 10
3.2. Certificate of Merger...................................................... 10
3.3. Further Assurances......................................................... 10
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF COMPANY......................................... 10
4.1. Incorporation, Standing and Power.......................................... 10
4.2. Capitalization............................................................. 11
4.3. Subsidiaries............................................................... 12
4.4. Financial Statements....................................................... 12
4.5. Reports and Filings........................................................ 12
4.6. Authority of Company....................................................... 13
4.7. Insurance.................................................................. 14
4.8. Personal Property.......................................................... 14
4.9. Real Estate................................................................ 14
4.10. Litigation................................................................. 14
4.11. Taxes...................................................................... 14
4.12. Compliance with Charter Provisions and Laws and Regulations................ 17
4.13. Employees.................................................................. 18
4.14. Brokers and Finders........................................................ 18
4.15. Scheduled Contracts........................................................ 19
4.16. Performance of Obligations................................................. 20
4.17. Certain Material Changes................................................... 21
4.18. Licenses and Permits....................................................... 21
4.19. Undisclosed Liabilities.................................................... 21
4.20. Employee Benefit Plans..................................................... 21
4.21. Corporate Records.......................................................... 25
4.22. Accounting Records......................................................... 25
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4.23. Offices and ATMs........................................................... 25
4.24. Agreements with Regulators................................................. 25
4.25. Vote Required.............................................................. 25
4.26. Power of Attorney.......................................................... 25
4.27. Facts Affecting Regulatory Approvals....................................... 26
4.28. Indemnification............................................................ 26
4.29. Community Reinvestment Act................................................. 26
4.30. Derivative Transactions.................................................... 26
4.31. Trust Administration....................................................... 27
4.32. Disclosure Documents and Applications...................................... 27
4.33. Intellectual Property...................................................... 27
4.34. State Takeover Laws; Company Rights Agreement.............................. 28
4.35. Registration Obligation.................................................... 28
4.36. Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co............................................. 28
4.37. Loans; Investments......................................................... 28
4.38. Allowance for Loan and Lease Losses........................................ 29
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PARENT.......................................... 29
5.1. Incorporation, Standing and Power.......................................... 29
5.2. Authority.................................................................. 29
5.3. Parent Stockholder Consent................................................. 30
5.4. Other Governmental Approvals............................................... 30
5.5. Financing.................................................................. 30
5.6. Litigation................................................................. 30
5.7. Brokers and Finders........................................................ 30
5.8. Facts Affecting Regulatory Approvals....................................... 30
5.9. Community Reinvestment Act................................................. 31
5.10. Accuracy of Information Furnished for Company Proxy Statement.............. 31
5.11. Investment in Company Shares............................................... 31
ARTICLE 6. COVENANTS OF COMPANY PENDING EFFECTIVE TIME OF THE MERGER......................... 31
6.1. Limitation on Conduct Prior to Effective Time of the Merger................ 31
6.2. Affirmative Conduct Prior to Effective Time of the Merger.................. 36
6.3. Access to Information...................................................... 38
6.4. Filings.................................................................... 38
6.5. Notices; Reports........................................................... 38
6.6. Company Stockholders' Meeting.............................................. 39
6.7. Applications............................................................... 39
ARTICLE 7. COVENANTS OF PARENT AND MERGER SUB................................................ 40
7.1. Limitation on Conduct Prior to Effective Time of the Merger................ 40
7.2. Applications............................................................... 40
7.3. Notices; Reports........................................................... 40
7.4. Indemnification and Directors' and Officers' Insurance..................... 40
7.5. Employee Plans............................................................. 41
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ARTICLE 8. ADDITIONAL COVENANTS.............................................................. 42
8.1. Commercially Reasonable Efforts............................................ 42
8.2. Public Announcements....................................................... 42
ARTICLE 9. CONDITIONS PRECEDENT TO THE MERGER................................................ 42
9.1. Stockholder Approval....................................................... 42
9.2. No Judgments or Orders..................................................... 42
9.3. Regulatory Approvals....................................................... 42
ARTICLE 10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF COMPANY............................... 43
10.1. Representations and Warranties; Performance of Covenants................... 43
10.2. Officers' Certificate...................................................... 43
10.3. Employee Benefit Plans..................................................... 43
ARTICLE 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB..................... 43
11.1. Representations and Warranties; Performance of Covenants................... 44
11.2. Authorization of Merger.................................................... 44
11.3. Absence of Certain Changes................................................. 44
11.4. Officers' Certificate...................................................... 44
11.5. Company Dissenting Shares.................................................. 44
11.6. Employee Benefit Plans..................................................... 44
ARTICLE 12. EMPLOYEE BENEFITS................................................................ 44
12.1. Employee Benefits.......................................................... 44
12.2. Company Stock Options and the Company Stock Option Plans................... 48
ARTICLE 13. TERMINATION...................................................................... 49
13.1. Termination................................................................ 49
13.2. Effect of Termination...................................................... 51
ARTICLE 14. MISCELLANEOUS.................................................................... 53
14.1. Expenses................................................................... 53
14.2. Notices.................................................................... 53
14.3. Assignment................................................................. 54
14.4. Counterparts............................................................... 54
14.5. Effect of Representations and Warranties................................... 54
14.6. Third Parties.............................................................. 54
14.7. Lists; Exhibits; Integration............................................... 54
14.8. Knowledge.................................................................. 54
14.9. Governing Law.............................................................. 54
14.10. Captions................................................................... 55
14.11. Severability............................................................... 55
14.12. Waiver and Modification; Amendment......................................... 55
14.13. Attorneys' Fees............................................................ 55
EXHIBIT A - Restated Certificate of Incorporation of the Surviving Corporation
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of the 15th day of March, 2004, by and among BANCWEST CORPORATION, a
Delaware corporation ("Parent"), BW NEWCO, INC., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and COMMUNITY FIRST
BANKSHARES, INC., a Delaware corporation ("Company").
WHEREAS, the Boards of Directors of each of Parent, Merger Sub and
Company deem advisable and in the best interests of their respective
stockholders the merger of Merger Sub with and into Company (the "Merger") upon
the terms and conditions set forth herein and in accordance with the Delaware
General Corporation Law (the "DGCL") (Company, following the effectiveness of
the Merger, being hereinafter sometimes referred to as the "Surviving
Corporation"); and
WHEREAS, the Boards of Directors of Parent, Merger Sub and Company have
approved this Agreement and the Merger pursuant to which Merger Sub will merge
with and into Company and each outstanding share of Company common stock, par
value $.01 per share ("Company Stock"), excluding any Company Dissenting Shares
(as defined below), will be converted into the right to receive the Merger
Consideration (as defined in Section 2.2(b)) upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the respective covenants, agreements, representations and
warranties contained herein, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Except as otherwise expressly provided for in this Agreement, or unless
the context otherwise requires, as used throughout this Agreement the following
terms shall have the respective meanings specified below:
"Affiliate" of, or a Person "Affiliated" with, a specific Person(s) is
a Person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person(s)
specified.
"Affiliated Group" means, with respect to any entity, a group of
entities required or permitted to file consolidated, combined or unitary Tax
Returns (as defined herein).
"ATMs" has the meaning set forth in Section 4.23.
"Average Net Income" has the meaning set forth in Section 6.1(b).
"Bank" means Community First National Bank, a national banking
association and a wholly-owned subsidiary of Company.
"Benefit Arrangements" has the meaning set forth in Section 4.20(b).
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Book Entry Shares" has the meaning set forth in Section 2.5(b).
"Business Day" means any day other than a Saturday, Sunday or other day
on which banks in San Francisco, California and Fargo, North Dakota, are
required or authorized by law to be closed.
"BW" means Bank of the West, a California state-chartered bank and a
wholly-owned subsidiary of Parent.
"Certificate of Merger" has the meaning set forth in Section 3.2.
"Certificates" has the meaning set forth in Section 2.5(b).
"Closing" means the consummation of the Merger provided for in Article
2 of this Agreement on the Closing Date (as defined herein) at the offices of
Pillsbury Winthrop LLP, San Francisco, California, or at such other place as the
parties may agree upon.
"Closing Date" means the date which is the first Friday which follows
the last to occur of (i) the approval of this Agreement and the transactions
contemplated hereby by the stockholders of Company, (ii) the receipt of all
permits, authorizations, approvals and consents specified in Section 9.3 hereof
and the satisfaction or waiver of all other conditions specified in Articles 9,
10 and 11 (excluding for purposes of this definition conditions that, by their
terms, are to be satisfied on the Closing Date), and (iii) the expiration of all
applicable waiting periods under the law, or such other date as the parties may
agree upon.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company 401(k) Plan" means the Company 401(k) Retirement Plan and
Trust.
"Company Disclosure Letter" means that letter designated as such which
has been delivered by Company to Parent concurrently with the execution and
delivery of this Agreement.
"Company Dissenting Shares" has the meaning set forth in Section
2.2(c).
"Company Governmental Filings" has the meaning set forth in Section
4.5(b).
"Company Intellectual Property" has the meaning set forth in Section
4.33.
"Company List" means any list required to be furnished by Company to
Parent herewith.
"Company Offices List" has the meaning set forth in Section 4.23.
"Company Option List" has the meaning set forth in Section 4.2(a).
"Company Property" has the meaning set forth in Section 4.12(b).
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"Company Rights Agreement" means that certain Amended and Restated
Rights Agreement dated as of August 13, 2002, among Company and ▇▇▇▇▇ Fargo Bank
Minnesota, N.A.
"Company SEC Documents" has the meaning set forth in Section 4.5(a).
"Company Stock" has the meaning set forth in the second recital of this
Agreement.
"Company Stock Option Plans" means, collectively, the Company Restated
1987 Stock Option Plan, as amended, the 1996 Stock Option Plan, as amended, and
the Director Deferred Compensation Plan, as amended.
"Company Stock Option" means any option issued pursuant to the Company
Stock Option Plans.
"Company Stockholders' Meeting" means the meeting of Company's
stockholders provided for in Section 6.6.
"Company Subsidiaries" means, collectively, the entities identified in
Section 4.1 of the Company Disclosure Letter.
"Company Supplied Information" has the meaning set forth in Section
4.32.
"Company's Current Premium" has the meaning set forth in Section
7.4(b).
"Competing Transaction" has the meaning set forth in Section 6.1(m).
"Confidentiality Agreement" means that certain Confidentiality
Agreement dated March 2, 2004 by and between Parent and Company, as amended on
March 15, 2004.
"Covered Parties" has the meaning set forth in Section 4.28.
"Derivative Transactions" has the meaning set forth in Section 4.30.
"DGCL" has the meaning set forth in the first recital of this
Agreement.
"DPC Shares" means shares of Company Stock held by Company or Parent or
any of their respective Subsidiaries in respect of a debt previously contracted.
"E&Y" means Ernst & Young LLP, Company's independent public
accountants.
"Effective Time of the Merger" means the date and time at which the
Certificate of Merger is filed with the Secretary of State of the State of
Delaware, or at such time thereafter as shall be agreed to by the parties and
specified in the Certificate of Merger.
"Employee Plans" has the meaning set forth in Section 4.20(a).
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"Encumbrance" shall mean any option, pledge, security interest, lien,
charge, encumbrance or restriction (whether on voting or disposition or
otherwise), whether imposed by agreement, understanding, law or otherwise.
"Environmental Regulations" has the meaning set forth in Section
4.12(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliates" has the meaning set forth in Section 4.20(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means BW.
"Exchange Fund" has the meaning set forth in Section 2.5(a).
"Expenses" has the meaning set forth in Section 14.1.
"FDIC" means the Federal Deposit Insurance Corporation.
"Financial Statements of Bank" means the consolidated reports of
condition and income of Bank as of December 31, 2001, 2002 and 2003, as filed
with the OCC.
"Financial Statements of Company" means the consolidated financial
statements of Company consisting of the consolidated balance sheets as of
December 31, 2001, 2002 and 2003, the related consolidated statements of
operations, stockholders' equity and cash flows for the years then ended and the
related notes thereto and related opinions of E&Y thereon for the years then
ended.
"FRB" means the Board of Governors of the Federal Reserve System.
"GAAP" means United States generally accepted accounting principles
consistently applied during the periods involved.
"Governmental Entity" means any court, tribunal or judicial or arbitral
body in any jurisdiction or any United States federal, state, municipal or local
or any foreign or other governmental, regulatory or administrative authority,
agency or instrumentality.
"Hazardous Materials" has the meaning set forth in Section 4.12(b).
"Indemnified Liabilities" has the meaning set forth in Section 7.4(a).
"Indemnified Parties" has the meaning set forth in Section 7.4(a).
"Instructions" means the Instructions for preparation of consolidated
reports of condition and income, issued by the Federal Financial Institutions
Examination Council.
"Investment Security" means any equity security or debt security as
defined in Statement of Financial Accounting Standards No. 115.
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"IRS" means the Internal Revenue Service.
"Material Adverse Effect" means any circumstance, change in or effect
on the Company or the Surviving Corporation or any Company Subsidiary (1) that
is or would reasonably be expected to be materially adverse to the condition
(financial or otherwise), business, properties, assets, liabilities, or results
of operations of Company or the Surviving Corporation and the Company
Subsidiaries, taken as a whole (whether or not required to be accrued or
disclosed under Statement of Financial Accounting Standards No. 5), or (2) that
materially impairs or would reasonably be expected to materially impair the
ability of Company to timely perform its obligations under this Agreement or to
consummate the transactions contemplated hereby; provided, however, that in
determining whether a Material Adverse Effect has occurred there shall be
excluded the effect of: (i) any change in banking and similar laws or
regulations of general applicability or interpretations thereof by courts or
governmental authorities, (ii) any change in GAAP or regulatory accounting
requirements applicable to banks or their holding companies generally, (iii) any
general social, political, economic, environmental or natural condition, change,
effect, event or occurrence the effects of which are not specific or unique to
Company or a Company Subsidiary, including changes in prevailing interest rates,
currency exchange rates or general economic or market conditions, except for any
condition, change, effect, event or occurrence which would have a material
adverse effect on Company and the Company Subsidiaries taken as a whole which is
substantially disproportionate relative to the effect on comparable financial
institutions, (iv) any action or omission by Company or any Company Subsidiary
pursuant to the terms of this Agreement including the public announcement of the
transactions contemplated by this Agreement, and (v) any expenses incurred in
connection with this Agreement or the transactions contemplated hereby.
"Merger" has the meaning set forth in the first recital of this
Agreement.
"Merger Consideration" has the meaning set forth in Section 2.2(b).
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Agreement" means the letter agreement dated August 30,
1999, between Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.
"New Plans" has the meaning set forth in Section 12.1(c).
"OCC" means the Office of the Comptroller of the Currency.
"Other Incentive Plans" has the meaning set forth in Section
12.1(d)(ii).
"Parent Costs" has the meaning set forth in Section 13.2(b).
"Parent Supplied Information" has the meaning set forth in Section
5.10.
"Person" means any individual, corporation, association, partnership,
limited liability company, trust, joint venture, other entity, unincorporated
organization, government or governmental department or agency.
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"Proxy Statement" means the Proxy Statement, together with any
supplements thereto, that is used to solicit proxies for the Company
Stockholders' Meeting in connection with the Merger.
"PwC" means PricewaterhouseCoopers LLP, Parent's independent public
accountants.
"Representatives" has the meaning set forth in Section 6.1(m).
"Scheduled Contract" has the meaning set forth in Section 4.15.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of a Person means any corporation, partnership, limited
liability company or other business entity of which more than 25% of the voting
power is owned or controlled by such Person; provided, that the entities listed
in Section 1 of the Company Disclosure Letter shall not be considered
Subsidiaries of Company for purposes of this definition.
"Superior Proposal" has the meaning set forth in Section 6.1(m).
"Surviving Corporation" has the meaning set forth in the first recital
of this Agreement.
"Tank" has the meaning set forth in Section 4.12(b).
"Tax" or "Taxes" means (i) any and all federal, state, local or foreign
taxes, charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property, corporation and estimated taxes, custom
duties, fees, assessments and charges of any kind whatsoever; (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i); and (iii) any
transferred liability in respect of any items described in clauses (i) and/or
(ii).
"Tax Returns" means all returns, declarations, reports, estimates,
information returns, statements, elections, disclosures and schedules required
to be filed in respect of any Taxes (including any attachments thereto or
amendments thereof).
"Termination Fee" has the meaning set forth in Section 13.2(b).
"Trust Account Shares" means shares of Company Stock held, directly or
indirectly, in trust accounts, managed accounts and the like or otherwise held
in a fiduciary or nominee capacity that are beneficially owned by third parties.
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ARTICLE 2.
TERMS OF MERGER
2.1. Effect of Merger and Surviving Corporation. At the
Effective Time of the Merger, Merger Sub will be merged with and into Company
pursuant to the terms, conditions and provisions of this Agreement and in
accordance with the applicable provisions of the DGCL, and the separate
corporate existence of Merger Sub shall cease. The Merger will have the effects
set forth in the DGCL.
2.2. Stock of Company. Subject to Section 2.6, each share
of Company Stock issued and outstanding immediately prior to the Effective Time
of the Merger shall, without any further action on the part of Company or the
holders of such shares, be treated on the basis set forth in this Section 2.2.
(a) Cancellation of Treasury Shares. All shares
of Company Stock that are owned by Company as treasury stock and all
shares of Company Stock that are owned directly or indirectly by
Company or Parent (other than Trust Account Shares and DPC Shares)
shall be cancelled and retired and shall cease to exist, and no Merger
Consideration shall be delivered in exchange therefor.
(b) Conversion of Company Stock. At the
Effective Time of the Merger, each issued and outstanding share of
Company Stock (other than shares to be cancelled in accordance with
Section 2.2(a) and any Company Dissenting Shares) shall be
automatically canceled and cease to be an issued and outstanding share
of Company Stock and be converted into the right to receive per share
consideration (the "Merger Consideration") in cash in the amount of
$32.25.
(c) Company Dissenting Shares. Notwithstanding
anything in this Agreement to the contrary, any shares of Company Stock
that are issued and outstanding as of the Effective Time of the Merger
and that are held by a stockholder of Company who has properly
exercised such holder's appraisal rights under the DGCL (the "Company
Dissenting Shares") shall not be converted into the right to receive
the Merger Consideration unless and until such holder shall have failed
to perfect, or shall have effectively withdrawn or lost, such holder's
right to dissent from the Merger under the DGCL and to receive such
consideration as may be determined to be due with respect to such
Company Dissenting Shares pursuant to and subject to the requirements
of the DGCL. If any such holder shall have so failed to perfect or have
effectively withdrawn or lost such right at the Effective Time of the
Merger, each share of such holder's Company Stock shall thereupon be
deemed to have been converted into and to have become, as of the
Effective Time of the Merger, the right to receive, without any
interest thereon, the Merger Consideration. Company shall give Parent
(i) prompt notice of any notice or demands for appraisal or payment for
shares of Company Stock received by Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect
to any such demands or notices. Company shall not, without the prior
written consent of Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
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2.3. Company Stock Options. Each Company Stock Option
outstanding as of the Effective Time of the Merger shall be treated in
accordance with Section 12.2.
2.4. Effect on Merger Sub Stock. At the Effective Time of
the Merger, each issued and outstanding share of capital stock of Merger Sub
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
2.5. Exchange Procedures.
(a) At the Effective Time of the Merger, Parent
shall deposit with the Exchange Agent for the benefit of the holders of
shares of Company Stock outstanding immediately prior to the Effective
Time of the Merger, for exchange in accordance with this Section 2.5
through the Exchange Agent, cash in the amount of the aggregate Merger
Consideration payable to such holders of Company Stock pursuant to
Section 2.2 in exchange for their shares of Company Stock
(collectively, the "Exchange Fund").
(b) Parent shall direct the Exchange Agent to
mail, promptly after the Effective Time of the Merger, to each holder
of record of shares of Company Stock which are represented by (x) a
certificate or certificates which immediately prior to the Effective
Time of the Merger represented outstanding shares of Company Stock (the
"Certificates") or (y) an entry to that effect in the shareholder
records maintained on behalf of Company by the Company stock transfer
agent (the "Book Entry Shares"), whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.2
hereof, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates (if
any) shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as
Parent and Company may reasonably specify), and (ii) instructions for
use in effecting the surrender of the Certificates or authorizing
transfer and cancellation of Book Entry Shares in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, or authorizing transfer of Book Entry Shares,
together with such letter of transmittal, duly executed, the holder of
such shares of Company stock shall be entitled to receive in exchange
therefor the amount of the Merger Consideration which such holder has
the right to receive pursuant to Section 2.2 hereof, and any
Certificate so surrendered shall forthwith be canceled. Until
surrendered as contemplated by this Section 2.5, each Certificate and
any Book Entry Shares shall be deemed at any time after the Effective
Time of the Merger to represent only the right to receive upon such
surrender the Merger Consideration to be paid in consideration therefor
upon surrender of such Certificate or transfer of the Book Entry
Shares, as the case may be, as contemplated by this Section 2.5.
Notwithstanding anything to the contrary set forth herein, if any
holder of shares of Company Stock that are not Book Entry Shares should
be unable to surrender the Certificates for such shares, because they
have been lost or destroyed, such holder may deliver in lieu thereof a
bond in form and substance and with surety reasonably satisfactory to
Parent and shall be entitled to receive the Merger Consideration to be
paid in consideration therefor in accordance with Section 2.2 hereof.
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(c) If, after the Effective Time of the
Merger, Certificates or Book Entry Shares are presented to Parent for
any reason, they shall be canceled and exchanged as provided in this
Agreement.
(d) Any portion of the Exchange Fund
which remains undistributed to the stockholders of Company following
the passage of twelve months after the Effective Time of the Merger
shall be delivered to the Surviving Corporation, upon demand, and any
stockholders of Company who have not theretofore complied with this
Section 2.5 shall thereafter look only to the Surviving Corporation
and/or Parent for payment of their claim for the Merger Consideration
payable in consideration for any Certificate or transfer of any Book
Entry Shares.
(e) Except as otherwise required by
law, none of Parent, Company or the Surviving Corporation shall be
liable to any holder of shares of Company Stock for such cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
2.6. Adjustments. If after the date hereof and on or prior
to the Effective Date of the Merger, the outstanding shares of Company Stock
shall be changed into a different number of shares by reason of any
reclassification, recapitalization or combination, stock split, reverse stock
split, stock dividend or rights issued in respect of such stock, or any similar
event shall occur, the Merger Consideration shall be adjusted accordingly to
provide to the holders of Company Stock the same economic effect as contemplated
by this Agreement prior to such event.
2.7. Directors of Surviving Corporation. At the Effective
Time of the Merger, the Board of Directors of the Surviving Corporation shall be
comprised of the persons serving as directors of Merger Sub immediately prior to
the Effective Time of the Merger. Such persons shall serve until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified.
2.8. Executive Officers of Surviving Corporation. At the
Effective Time of the Merger, the executive officers of the Surviving
Corporation shall be comprised of the persons serving as executive officers of
Merger Sub immediately prior to the Effective Time of the Merger. Such persons
shall serve until the earlier of their resignation or termination.
2.9. No Further Ownership Rights in Stock. All Merger
Consideration delivered upon the surrender for exchange of shares of Company
Stock in accordance with the terms hereof shall be deemed to have been delivered
in full satisfaction of all rights pertaining to ownership of such shares of
stock. At and after the Effective Time of the Merger, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Stock which were outstanding immediately
prior to the Effective Time of the Merger, and upon delivery of the Merger
Consideration upon surrender for exchange of Company Stock, each such share of
Company Stock shall be canceled.
2.10. Absence of Control. Subject to any specific
provisions of this Agreement, it is the intent of the parties hereto that
neither Parent nor Merger Sub by reason of this
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Agreement shall be deemed (until consummation of the transactions contemplated
hereby) to control, directly or indirectly, the Company and shall not exercise,
or be deemed to exercise, directly or indirectly, a controlling influence over
the management or policies of the Company.
2.11. Certificate of Incorporation and Bylaws. The Restated
Certificate of Incorporation of Company as in effect immediately prior to the
Effective Time of the Merger, shall be amended as of the Effective Time of the
Merger to read in its entirety as set forth in Exhibit A, and as so amended
shall be the Restated Certificate of Incorporation of the Surviving Corporation.
The Bylaws of Merger Sub as in effect immediately prior to the Effective Time of
the Merger shall be the Bylaws of the Surviving Corporation.
ARTICLE 3.
THE CLOSING
3.1. Closing Date. The Closing shall take place on the
Closing Date.
3.2. Certificate of Merger. Subject to the provisions of
this Agreement, a certificate of merger (the "Certificate of Merger") shall be
duly prepared, executed by the Surviving Corporation and thereafter delivered to
the Secretary of State of the State of Delaware for filing, as provided in the
DGCL, on the Closing Date.
3.3. Further Assurances. At the Closing, the parties
hereto shall deliver, or cause to be delivered, such documents or certificates
as may be necessary in the reasonable opinion of counsel for any of the parties,
to effectuate the transactions contemplated by this Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF Company
The following representations and warranties by Company to Merger Sub
are qualified by the Company Disclosure Letter. The Company Disclosure Letter
shall refer to the representation or warranty to which exceptions or matters
disclosed therein relate; provided, however, that an exception or matter
disclosed with respect to one representation or warranty shall also be deemed
disclosed with respect to each other warranty or representation to which the
exception or matter reasonably relates. The inclusion of any item in such
Company Disclosure Letter shall not be deemed an admission that such item is a
material fact, event or circumstance or that such item has or had, or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
4.1. Incorporation, Standing and Power. Company has been
duly organized, is validly existing and in good standing as a corporation under
the laws of the State of Delaware and is registered as a bank holding company
under the BHC Act. Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United States of
America and is authorized by the OCC to conduct a general banking business.
Bank's deposits are insured by the FDIC in the manner and to the fullest extent
provided by law. Each
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of the other Company Subsidiaries has been duly organized, is validly existing
and in good standing under the laws of its state of incorporation or
organization. Each of the Company Subsidiaries has all requisite corporate power
and authority to own, lease and operate its properties and assets and to carry
on its business as presently conducted. Neither the scope of the business of
Company or the Company Subsidiaries nor the location of any of their respective
properties requires that either Company or the Company Subsidiaries be licensed
to do business in any jurisdiction other than the state of its incorporation or
organization where the failure to be so licensed would, individually or in the
aggregate, have a Material Adverse Effect. Company has delivered to Parent true
and correct copies of each of the Company Subsidiaries' Certificate of
Incorporation or Articles of Association, as the case may be, and Bylaws, as
amended.
4.2. Capitalization.
(a) As of the date of this Agreement, the
authorized capital stock of Company consists of 80,000,000 shares of
Company Stock, of which 36,851,722 shares are outstanding, and
2,000,000 shares of preferred stock, none of which are outstanding. All
of the outstanding shares of Company Stock are duly authorized, validly
issued, fully paid and nonassessable. Except for Company Stock Options
covering 2,882,223 shares of Company Stock granted pursuant to the
Company Stock Option Plans, there are no outstanding options, warrants
or other rights in or with respect to the unissued shares of Company
Stock nor any securities convertible into such stock, and Company is
not obligated to issue any additional shares of its common stock or any
additional options, warrants or other rights in or with respect to the
unissued shares of such stock or any other securities convertible into
such stock. Company has furnished Parent a list (the "Company Option
List") setting forth the name of each holder of a Company Stock Option,
the number of shares of Company Stock covered by each such option, the
vesting schedule of each such option, the exercise price per share and
the expiration date of each such option.
(b) The authorized capital stock of Bank
consists of 100,000 shares of common stock, $100 par value per share,
all of which are outstanding. All of the outstanding shares of such
common stock of Bank are duly authorized, validly issued, fully paid
and nonassessable (except to the extent provided in the National Bank
Act) and are owned of record and beneficially by Company. There are no
outstanding options, warrants or other rights in or with respect to the
unissued or the issued or outstanding shares of such common stock or
any other securities convertible into such stock, and Bank is not
obligated to issue any additional shares of its common stock or any
options, warrants or other rights in or with respect to the unissued
shares of its common stock or any other securities convertible into
such stock.
(c) The authorized capital stock of the other
Company Subsidiaries is as described in the Company Disclosure Letter.
All of the outstanding shares of such capital stock are duly
authorized, validly issued, fully paid and nonassessable and are owned
of record and beneficially by Company or Bank or a Subsidiary of
Company or Bank. There are no outstanding options, warrants or other
rights in or with respect to the unissued or the issued or outstanding
shares of such capital stock or any other securities convertible into
such stock, and none of such Company Subsidiaries is obligated to issue
- 11 -
any additional shares of its capital stock or any options, warrants or
other rights in or with respect to the unissued shares of its capital
stock or any other securities convertible into such stock.
(d) No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which
stockholders of Company may vote are issued and outstanding.
4.3. Subsidiaries. Other than the Company Subsidiaries and
as set forth in the Company Disclosure Letter, Company does not have any other
Subsidiaries and does not own, directly or indirectly (except as a pledgee
pursuant to loans or upon acquisition in satisfaction of debt previously
contracted), the outstanding stock or equity or other voting interest in any
Person.
4.4. Financial Statements. Company has previously
furnished to Parent a copy of the Financial Statements of Company and the
Financial Statements of Bank. The Financial Statements of Company and the
Financial Statements of Bank: (a) present fairly the consolidated financial
condition of Company and Bank as of the respective dates indicated and their
respective consolidated statements of operations and changes in stockholders'
equity and cash flows, for the respective periods then ended; and (b) have been
prepared in accordance with GAAP consistently applied (except as otherwise
indicated therein and except that the Financial Statements of Bank have been
prepared in accordance with the Instructions thereto).
4.5. Reports and Filings.
(a) Company has filed all required reports,
proxy statements, schedules, registration statements and other
documents with the SEC since December 31, 2000 (the "Company SEC
Documents"). As of their respective dates of filing with the SEC (or,
if amended, supplemented or superseded by a filing prior to the date
hereof, as of the date of such filing), the Company SEC Documents
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents when filed contained
any untrue statement of a material fact or omitted 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. The consolidated financial statements of Company included
in the Company SEC Documents complied as to form, as of their
respective dates of filing with the SEC, in all material respects with
all applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto.
(b) Other than the Company SEC Documents, which
are addressed in subsection (a) above, each of Company and the Company
Subsidiaries have timely filed all reports, returns, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file since December 31,
2000 with (a) the FDIC, (b) the OCC, (c) the FRB, and (d) any other
applicable Governmental Entity, including taxing authorities
(collectively, "Company Governmental Filings"). No
- 12 -
administrative actions have been taken or threatened or orders issued
in connection with such Company Governmental Filings. As of their
respective dates, each of such Company Governmental Filings complied in
all material respects with all laws and regulations enforced or
promulgated by the Governmental Entity with which it was filed (or was
amended so as to be in compliance promptly following discovery of any
such noncompliance). Any financial statement contained in any of such
Company Governmental Filings fairly presented in all material respects
the financial position of Company on a consolidated basis, Company
alone or each of the Company Subsidiaries alone, as the case may be,
and was prepared in accordance with GAAP or banking regulations and
Instructions applied on a consistent basis during the periods involved,
except as may be disclosed therein, as of the dates and for the periods
shown. Company has furnished or made available to Parent true and
correct copies of all Company Governmental Filings filed by Company
since December 31, 2000.
4.6. Authority of Company. The execution and delivery by
Company of this Agreement and, subject to the requisite approval of the
stockholders of Company of this Agreement and the Merger, the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Company including, without
limitation, the vote of the Board of Directors of Company (which vote was
unanimous) approving this Agreement and the Merger. This Agreement is a valid
and binding obligation of Company enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, liquidation,
receivership, conservatorship, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and by general equitable principles.
Except as set forth in the Company Disclosure Letter, neither the execution and
delivery by Company of this Agreement, the consummation of the transactions
contemplated herein, nor compliance by Company with any of the provisions
hereof, will: (a) conflict with or result in a breach of any provision of its or
any of the Company Subsidiaries' Certificate of Incorporation or Articles of
Association, as amended, or Bylaws, as amended; (b) constitute a breach of or
result in a default (or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or assets) under any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
Company or any of the Company Subsidiaries is a party, or by which Company or
any of the Company Subsidiaries or any of their respective properties or assets
are bound; (c) result in the creation or imposition of any Encumbrance of
material consequence on any of the material properties or assets of Company or
the Company Subsidiaries; or (d) violate any material order, writ, injunction,
decree, statute, rule or regulation applicable to Company or any of the Company
Subsidiaries or any of their respective properties or assets. No consent of,
approval of, notice to or filing with any Governmental Entity having
jurisdiction over any aspect of the business or assets of Company or the Company
Subsidiaries, and no consent of, approval of or notice to any other Person, is
required in connection with the execution and delivery by Company of this
Agreement or the consummation by Company of the Merger or the other transactions
contemplated hereby or thereby, except (i) the approval of this Agreement by the
stockholders of Company (including the filing of the Proxy Statement with the
SEC); (ii) the approval of the FRB under the BHC Act; (iii) such approvals as
may be required by the insurance regulatory authorities of the states in which
Company or any of its Subsidiaries conducts insurance agency activities; and
(iv) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware.
- 13 -
4.7. Insurance. Set forth in the Company Disclosure Letter
is a list, as of the date hereof, of all policies of insurance carried and owned
by either Company or the Company Subsidiaries showing the name of the insurance
company, the nature of the coverage, the policy limit, the annual premiums and
the expiration dates. All such insurance policies and bonds are in full force
and effect. No insurer under any such policy or bond has canceled or indicated
an intention to cancel or not to renew any such policy or bond or generally
disclaimed liability thereunder. None of Company or any the Company Subsidiaries
is in default under any such policy or bond which is material to the operations
of Company and the Company Subsidiaries taken as a whole and all material claims
thereunder have been filed in a timely fashion.
4.8. Personal Property. Each of Company and the Company
Subsidiaries has good title to all its material properties and assets, other
than real property, owned or stated to be owned by Company or the Company
Subsidiaries, free and clear of all Encumbrances except: (a) as set forth in the
Financial Statements of Company; (b) for Encumbrances for current taxes not yet
due; (c) for Encumbrances incurred in the ordinary course of business; or (d)
for Encumbrances that are not substantial in character, amount or extent and
that do not materially detract from the value, or interfere with present use, of
the property subject thereto or affected thereby, or otherwise materially impair
the conduct of business of Company or the Company Subsidiaries.
4.9. Real Estate. Each of Company and the Company
Subsidiaries has duly recorded or caused to be recorded, in the appropriate
county, all recordable interests in all material real property, including
leaseholds and other interests in such real property (other than easements or
security interests) owned or leased by Company or the Company Subsidiaries.
Either Company or the Company Subsidiaries has good and marketable title to such
real property, and valid leasehold interests in such leaseholds, free and clear
of all Encumbrances, except (a) for rights of lessors, co-lessees or sublessees
in such matters that are reflected in the lease; (b) for current taxes not yet
due and payable; and (c) for such Encumbrances, if any, as do not materially
detract from the value of or materially interfere with the present use of such
property.
4.10. Litigation. Except as disclosed in the Company SEC
Documents filed prior to the date of this Agreement or as set forth in the
Company Disclosure Letter, there is no suit, action, investigation or proceeding
(whether judicial, arbitral, administrative or other) pending or, to the
knowledge of Company, threatened, against or affecting Company or any Subsidiary
of Company as to which there is a significant possibility of an adverse outcome
which would, individually or in the aggregate, have a Material Adverse Effect,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Entity outstanding against Company or any Subsidiary of Company having or which
would have, individually or in the aggregate, a Material Adverse Effect. There
are no material judgments, decrees, stipulations or orders against Company or
the Company Subsidiaries or enjoining their respective directors, officers or
employees in respect of, or the effect of which is to prohibit, any business
practice or the acquisition of any property or the conduct of business in any
area.
4.11. Taxes.
- 14 -
(a) (i) All Tax Returns required to be filed by
or on behalf of Company or the Company Subsidiaries or the Affiliated
Group(s) of which any of them is or was a member, have been duly and
timely filed with the appropriate taxing authorities in all
jurisdictions in which such Tax Returns are required to be filed (after
giving effect to any valid extensions of time in which to make such
filings), and all such Tax Returns were true, complete and correct in
all material respects; (ii) all Taxes due and payable by or on behalf
of Company or the Company Subsidiaries, either directly, as part of an
Affiliated Group Tax Return, or otherwise, have been fully and timely
paid, except to the extent adequately reserved therefor in accordance
with GAAP and/or applicable regulatory accounting principles or banking
regulations consistently applied on the Company balance sheet, and
adequate reserves or accruals for Taxes have been provided in the
Company balance sheet with respect to any period through the date
thereof for which Tax Returns have not yet been filed or for which
Taxes are not yet due and owing; and (iii) no agreement, waiver or
other document or arrangement extending or having the effect of
extending the period for assessment or collection of Taxes (including,
but not limited to, any applicable statute of limitation) has been
executed or filed with any taxing authority by or on behalf of Company,
the Company Subsidiaries or any of their Subsidiaries, or any
Affiliated Group(s) of which any of them is or was a member.
(b) Company and the Company Subsidiaries have
complied in all material respects with all applicable laws, rules and
regulations relating to the payment and withholding of Taxes and have
duly and timely withheld from any salaries, wages or other compensation
paid to any employee or independent contractor, and have paid over to
the appropriate taxing authorities all amounts required to be so
withheld and paid over for all periods under all applicable laws.
(c) Company has furnished to Parent true and
correct copies of (i) all income or franchise Tax Returns of Company
and the Company Subsidiaries relating to all taxable periods beginning
after December 31, 1999, and (ii) any audit report issued within the
last three years relating to any Taxes due from or with respect to
Company or the Company Subsidiaries with respect to their respective
income, assets or operations.
(d) No written claim has been made by a taxing
authority in a jurisdiction where Company or the Company Subsidiaries
do not file an income or franchise Tax Return such that Company or the
Company Subsidiaries are or may be subject to taxation by that
jurisdiction.
(e) (i) All deficiencies asserted or assessments
made as a result of any examinations by any taxing authority of the Tax
Returns of or covering or including Company or the Company Subsidiaries
have been fully paid, and, to the best of Company's knowledge, there
are no other audits or investigations by any taxing authority in
progress, nor have Company or the Company Subsidiaries received any
written notice from any taxing authority that it intends to conduct
such an audit or investigation; (ii) no requests for a ruling or a
determination letter are pending with any taxing authority; and (iii)
no issue has been raised in writing by any taxing authority in any
current or prior examination which, by application of the same or
similar principles, could reasonably be
- 15 -
expected to result in a proposed deficiency against Company or the
Company Subsidiaries for any subsequent taxable period.
(f) Neither Company or the Company Subsidiaries
nor any other Person on behalf of Company or the Company Subsidiaries
has (i) filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply to any disposition
of a subsection (f) asset (as such term is defined in Section 341(f)(4)
of the Code) owned by Company or the Company Subsidiaries, (ii) agreed
to or is required to make any adjustments pursuant to Section 481(a) of
the Code or any similar provision of state, local or foreign law by
reason of a change in accounting method initiated by Company or the
Company Subsidiaries or has any knowledge that the IRS has proposed in
writing any such adjustment or change in accounting method, or has any
application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or
operations of Company or the Company Subsidiaries, or (iii) executed or
entered into a closing agreement pursuant to Section 7121 of the Code
or any predecessor provision thereof or any similar provision of state,
local or foreign law with respect to Company or the Company
Subsidiaries.
(g) No property owned by Company or the Company
Subsidiaries is (i) property required to be treated as being owned by
another Person pursuant to provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately
prior to the enactment of the Tax Reform Act of 1986, (ii) constitutes
"tax exempt use property" within the meaning of Section 168(h)(1) of
the Code or (iii) is "tax-exempt bond financed property" within the
meaning of Section 168(g)(5) of the Code.
(h) Neither Company (except with the Company
Subsidiaries) nor any of the Company Subsidiaries (except with Company)
is a party to any tax allocation, indemnification or sharing agreement
(or similar agreement or arrangement), whether written or not written,
pursuant to which it will have any obligation to make any payments
after the Closing.
(i) Neither Company nor any of the Company
Subsidiaries has been a member of an Affiliated Group (other than a
group whose common parent was Company).
(j) Neither Company nor any of the Company
Subsidiaries has any liability for the Taxes of any person (other than
the Company and any of the Company Subsidiaries) under section 1.1502-6
of the Treasury Regulations (or any similar provision of state, local
or foreign law), as a transferee or successor, by contract, or
otherwise.
(k) Neither Company nor any of the Company
Subsidiaries has any requests for rulings in respect of Taxes pending
between Company or any Company Subsidiary and any taxing authority.
- 16 -
(l) There is no contract, agreement, plan or
arrangement covering any Person that, individually or collectively,
could give rise to the payment of any amount that would not be
deductible by Company or the Company Subsidiaries or their respective
affiliates by reason of Section 280G of the Code, or would constitute
compensation in excess of the limitation set forth in Section 162(m) of
the Code.
(m) There are no liens as a result of any due
and unpaid Taxes upon any of the assets of Company or the Company
Subsidiaries.
(n) None of the members of Company's Affiliated
Group has any U.S. federal or state net operating loss carryovers.
4.12. Compliance with Charter Provisions and Laws and
Regulations.
(a) Neither Company nor any of the Company
Subsidiaries is in default under or in breach or violation of (i) any
provision its Certificate of Incorporation or Articles of Association,
as amended, or Bylaws, as amended, or (ii) any law, ordinance, rule or
regulation promulgated by any Governmental Entity, except, with respect
to this clause (ii), for such violations as would not have,
individually or in the aggregate, a Material Adverse Effect. Except for
routine examinations by Federal or state Governmental Entities charged
with the supervision or regulation of banks or bank holding companies
or engaged in the insurance of bank deposits, to the best knowledge of
Company, no investigation by any Governmental Entity with respect to
Company or any of the Company Subsidiaries is pending or threatened,
other than, in each case, those the outcome of which, individually or
in the aggregate, would not have a Material Adverse Effect.
(b) To Company's knowledge, (i) each of Company
and the Company Subsidiaries is in compliance with all Environmental
Regulations; (ii) there are no Tanks on or about Company Property;
(iii) there are no Hazardous Materials on, below or above the surface
of, or migrating to or from Company Property; and (iv) without limiting
Section 4.10 hereof or the foregoing representations and warranties
contained in clauses (i) through (iii), as of the date of this
Agreement, there is no claim, action, suit, or proceeding or notice
thereof before any Governmental Entity pending against Company or the
Company Subsidiaries and there is no outstanding judgment, order, writ,
injunction, decree, or award against or affecting Company Property
relating to the foregoing representations (i)-(iii), in each case the
noncompliance with which, or the presence of which would have a
Material Adverse Effect. For purposes of this Agreement, the term
"Environmental Regulations" shall mean all applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and similar
items, of all Governmental Entities and all applicable judicial,
administrative, and regulatory decrees, judgments, and orders relating
to the protection of human health or the environment, including,
without limitation, those pertaining to reporting, licensing,
permitting, investigation, and remediation of emissions, discharges,
releases, or threatened releases of Hazardous Materials, chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials or wastes whether solid, liquid, or gaseous in nature, into
the air,
- 17 -
surface water, groundwater, or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of chemical substances, pollutants, contaminants, or
hazardous or toxic substances, materials, or wastes, whether solid,
liquid, or gaseous in nature and all requirements pertaining to the
protection of the health and safety of employees or the public.
"Company Property" shall mean real estate currently owned, leased, or
otherwise used by Company or the Company Subsidiaries and properties
held by Company or the Company Subsidiaries in its capacity as a
trustee. "Tank" shall mean treatment or storage tanks, gas or oil ▇▇▇▇▇
and associated piping transportation devices. "Hazardous Materials"
shall mean any substance: (1) the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action, policy or common law; (2) which
is or becomes defined as a hazardous waste, hazardous substance,
hazardous material, used oil, pollutant or contaminant under any
federal, state or local statute, regulation, rule or ordinance or
amendments thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601, et seq.); the Resource Conservation and Recovery Act (42
U.S.C. Section 6901, et seq.); the Clean Air Act, as amended (42 U.S.C.
Section 7401, et seq.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Section 1251, et seq.); the Toxic Substances Control
Act, as amended (15 U.S.C. Section 9601, et seq.); the Occupational
Safety and Health Act, as amended (29 U.S.C. Section 651; the Emergency
Planning and Community Right-to-Know Act of 1986 (42 U.S.C. Section
11001, et seq.); the Mine Safety and Health Act of 1977, as amended (30
U.S.C. Section 801, et seq.); the Safe Drinking Water Act (42 U.S.C.
Section 300f, et seq.); and all comparable state and local laws,
including, without limitation, the ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous
Substance Account Act (State Superfund), the ▇▇▇▇▇▇-Cologne Water
Quality Control Act, Section 25140, 25501(j) and (k), 25501.1,25281 and
25250.1 of the California Health and Safety Code and/or Article I of
Title 22 of the California Code of Regulations, Division 4, Chapter 30;
(3) comparable laws of other jurisdictions or orders and regulations
thereunder; or (4) the presence of which causes or threatens to cause a
nuisance, trespass or other common law tort upon real property or
adjacent properties or poses or threatens to pose a hazard to the
health or safety of persons or without limitation, which contains
gasoline, diesel fuel or other petroleum hydrocarbons; or (5)
polychlorinated biphenyls (PCBs), asbestos, lead-containing paints or
urea formaldehyde foam insulation.
4.13. Employees. There are no controversies pending or, to
the best of Company's knowledge, threatened between either Company or the
Company Subsidiaries and any of their respective employees that could reasonably
be expected to have a Material Adverse Effect. Neither Company nor any of the
Company Subsidiaries is a party to any collective bargaining agreement with
respect to any of their respective employees or any labor organization to which
their respective employees or any of them belong.
4.14. Brokers and Finders. Except for the obligation to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Inc. set forth in the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Agreement, a copy of
which has been delivered to Parent, neither Company nor any of the Company
Subsidiaries is a party to or obligated under any agreement with any broker or
finder relating to the transactions contemplated hereby, and neither
- 18 -
the execution of this Agreement nor the consummation of the transactions
provided for herein will result in any liability to any broker or finder.
4.15. Scheduled Contracts. Except as set forth in the
Company Disclosure Letter or as disclosed in the Company SEC Documents (each
item listed or required to be listed in such Company Disclosure Letter or the
Company SEC Documents being referred to herein as a "Scheduled Contract"), as of
the date hereof, neither Company nor the Company Subsidiaries is a party or
otherwise subject to:
(a) any employment, deferred compensation, bonus
or consulting contract that (i) has a remaining term, as of the date of
this Agreement, of more than one year in length of obligation on the
part of Company or the Company Subsidiaries and is not terminable by
Company or the Company Subsidiaries within one year without penalty or
(ii) requires payment by Company or the Company Subsidiaries of
$250,000 or more per annum;
(b) any advertising, brokerage, licensing,
dealership, representative or agency relationship or contract requiring
payment by Company or the Company Subsidiaries of $250,000 or more per
annum;
(c) any contract or agreement that restricts
Company or the Company Subsidiaries (or would restrict any Affiliate of
Company or the Company Subsidiaries or the Surviving Corporation
(including Merger Sub and its Subsidiaries) after the Effective Time of
the Merger) from competing in any line of business with any Person or
using or employing the services of any Person;
(d) any lease of real or personal property
providing for annual lease payments by or to Company or the Company
Subsidiaries in excess of $250,000 per annum other than (A) financing
leases entered into in the ordinary course of business in which Company
or the Company Subsidiaries is lessor and (B) leases of real property
presently used by the Company Subsidiaries as offices or other
facilities;
(e) any mortgage, pledge, conditional sales
contract, security agreement, option, or any other similar agreement
with respect to any interest of Company or the Company Subsidiaries
(other than as mortgagor or pledgor in the ordinary course of its
banking business or as mortgagee, secured party or deed of trust
beneficiary in the ordinary course of its banking business or as
security for deposits of Governmental Entities in the ordinary course
of its banking business) in personal property having a value of
$250,000 or more;
(f) any stock purchase, stock option, stock
bonus, stock ownership, profit sharing, group insurance, bonus,
deferred compensation, severance pay, pension, retirement, savings or
other incentive, welfare or employment plan or material agreement
providing benefits to any present or former employees, officers or
directors of Company or the Company Subsidiaries;
(g) any agreement to acquire equipment or any
commitment to make capital expenditures of $500,000 or more;
- 19 -
(h) other than agreements entered into in the
ordinary course of business, including sales of other real estate
owned, any agreement for the sale of any property or assets in which
Company or the Company Subsidiaries has an ownership interest or for
the grant of any preferential right to purchase any such property or
asset;
(i) any agreement for the borrowing of any money
(other than liabilities or interbank borrowings made in the ordinary
course of its banking business and reflected in the financial records
of Company or the Company Subsidiaries);
(j) any guarantee or indemnification which
involves the sum of $250,000 or more, other than letters of credit or
loan commitments issued in the normal course of business;
(k) any material agreement which would be
terminable other than by Company or the Company Subsidiaries as a
result of the consummation of the transactions contemplated by this
Agreement;
(l) any contract of participation with any other
bank in any loan in excess of $1 million or any sales of assets of
Company or the Company Subsidiaries with recourse of any kind to
Company or the Company Subsidiaries except the sale of mortgage loans,
servicing rights, repurchase or reverse repurchase agreements,
securities or other financial transactions in the ordinary course of
business;
(m) any agreement providing for the sale or
servicing of any loan or other asset which constitutes a "recourse
arrangement" under applicable regulation or policy promulgated by a
Governmental Entity (except for agreements for the sale of guaranteed
portions of loans guaranteed in part by the U.S. Small Business
Administration and related servicing agreements);
(n) any contract relating to the provision of
data processing services to Company or the Company Subsidiaries which
provides for payments in excess of $250,000 per annum; or
(o) any other agreement of any other kind which
involves future payments or receipts or performances of services or
delivery of items requiring payment of $250,000 or more to or by
Company or the Company Subsidiaries other than payments made under or
pursuant to loan agreements, letters of credit and participation
agreements entered into in the ordinary course of business.
Complete copies of all Scheduled Contracts, including all amendments and
supplements thereto, have been delivered or made available to Parent.
4.16. Performance of Obligations. Each of Company and the
Company Subsidiaries has performed in all respects all of the obligations
required to be performed by it to date and is not in default under or in breach
of any term or provision of any Scheduled Contract to which it is a party, is
subject or is otherwise bound, and no event has occurred that, with the giving
of notice or the passage of time or both, would constitute such default or
breach, except where such failure of performance, breach or default would not
individually or in the aggregate
- 20 -
have a Material Adverse Effect. Except for loans and leases made by Company or
the Company Subsidiaries in the ordinary course of business, to Company's
knowledge, no party to any Scheduled Contract is in default thereunder.
4.17. Certain Material Changes. Except as specifically
required, permitted or effected by this Agreement, or as disclosed in the
Company SEC Documents, since December 31, 2003, there has not been, occurred or
arisen any of the following (whether or not in the ordinary course of business
unless otherwise indicated):
(a) any change in any of the assets,
liabilities, permits, methods of accounting or accounting practices,
business, or manner of conducting business, of Company or the Company
Subsidiaries or any other event or development that has had,
individually or in the aggregate, a Material Adverse Effect;
(b) any damage, destruction or other casualty
loss (whether or not covered by insurance) that has had Material
Adverse Effect;
(c) any amendment, modification or termination
of any existing, or entry into any new, material contract or permit
that has had a Material Adverse Effect;
(d) any disposition by Company or the Company
Subsidiaries of an asset the lack of which has had a Material Adverse
Effect; or
(e) any direct or indirect redemption, purchase
or other acquisition by Company or the Company Subsidiaries of any
equity securities or any declaration, setting aside or payment of any
dividend or other distribution on or in respect of Company Stock
whether consisting of money, other personal property, real property or
other things of value (except for dividends permitted by Section
6.1(b)).
4.18. Licenses and Permits. Each of Company and the Company
Subsidiaries has all material licenses and permits that are necessary for the
conduct of its business, and such licenses are in full force and effect in all
material respects. The respective properties, assets, operations and businesses
of Company and the Company Subsidiaries are and have been maintained and
conducted, in all material respects, in compliance with all such applicable
licenses and permits. To the knowledge of Company, no proceeding is pending or
threatened by any Governmental Entity which seeks to revoke or limit any such
licenses or permits.
4.19. Undisclosed Liabilities. Except for liabilities or
obligations which do not individually or in the aggregate have a Material
Adverse Effect, neither Company nor the Company Subsidiaries has any liabilities
or obligations, either accrued or contingent, that have not been: (a) reflected
or disclosed in the Financial Statements of Company; (b) incurred subsequent to
December 31, 2003 in the ordinary course of business consistent with past
practices; or (c) disclosed in the Company Disclosure Letter or on any other
Company List.
4.20. Employee Benefit Plans.
(a) Company has previously made available to
Parent copies of each "employee benefit plan," as defined in Section
3(3) of ERISA, of which Company or any
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member of the same controlled group of corporations, trades or
businesses as Company within the meaning of Section 4001(a)(14) of
ERISA ("ERISA Affiliates") is a sponsor or participating employer or as
to which Company or any of its ERISA Affiliates makes contributions or
is required to make contributions and which is subject to any provision
of ERISA and covers any employee, whether active or retired, of Company
or any of its ERISA Affiliates, together with all amendments thereto,
all currently effective and related summary plan descriptions, the
determination letter from the IRS, the annual reports for the most
recent three years (Form 5500 including, if applicable, Schedule B
thereto, and Form 11-K, if applicable) and a summary of material
modifications prepared in connection with any such plan. Such plans are
hereinafter referred to collectively as the "Employee Plans," and are
listed in Section 4.20(a) of the Company Disclosure Letter. No Employee
Plan is a "multiemployer plan" within the meaning of Section 3(37) of
ERISA. Each Employee Plan that is intended to be qualified in form and
operation under Section 401(a) of the Code is so qualified and the
associated trust for each such Employee Plan is exempt from tax under
Section 501(a) of the Code. No event has occurred that will subject
such Employee Plans to a material amount of tax under Section 511 of
the Code. All amendments required to bring each Employee Plan into
conformity with all of the applicable provisions of ERISA, the Code and
all other applicable laws have been made, except to the extent that
such amendments may be retroactively adopted under Section 401(b) of
the Code and the regulations issued thereunder. Except as disclosed in
the Company Disclosure Letter, all Employee Plans were in effect prior
to January 1, 2004, and there has been no material amendment thereof
(other than amendments required to comply with applicable law) or
increase in the cost thereof or benefits thereunder on or after January
1, 2004.
(b) Company has previously made available to
Parent copies or descriptions of each plan or arrangement maintained or
otherwise contributed to by Company or any of its ERISA Affiliates
which is not an Employee Plan and which (exclusive of base salary and
base wages and any benefit required solely under the law of any state)
provides for any form of current or deferred compensation, bonus, stock
option, stock awards, stock-based compensation or other forms of
incentive compensation or post-termination insurance, profit sharing,
benefit, retirement, group health or insurance, disability, workers'
compensation, welfare or similar plan or arrangement for the benefit of
any employee or class of employees, whether active or retired, of
Company or any of its ERISA Affiliates. Such plans and arrangements are
hereinafter collectively referred to as "Benefit Arrangements"), and
are listed in Section 4.20(b) of the Company Disclosure Letter. Except
as disclosed in the Company Disclosure Letter, all Benefit Arrangements
which are in effect were commenced or in effect prior to January 1,
2004. Except as disclosed in the Company Disclosure Letter, there has
been no material amendment thereof or increase in the cost thereof or
benefits payable thereunder since January 1, 2004. Except as set forth
in the Company Disclosure Letter, there has been no material increase
in the compensation of or benefits payable to any senior executive
employee of Company or Company Subsidiaries since January 1, 2004, nor
any employment, severance or similar contract entered into with any
such employee, nor any amendment to any such contract, since January 1,
2004.
- 22 -
(c) With respect to all Employee Plans and
Benefit Arrangements, Company and its ERISA Affiliates are in
compliance (other than noncompliance the cost or liability for which
would not have a Material Adverse Effect) with the requirements
prescribed by any and all statutes, governmental or court orders, or
governmental rules or regulations currently in effect, including but
not limited to ERISA and the Code, applicable to such plans or
arrangements. All government reports and filings required by law have
been properly and timely filed and all information required to be
distributed to participants or beneficiaries has been distributed with
respect to each Employee Plan, including, if applicable, Form S-8
registration statements, Forms 11-K and prospectus disclosures with
respect to Company Stock offered under any Employee Plan. Company and
its ERISA Affiliates have performed all of their obligations under all
such Employee Plans and Benefit Arrangements in all material aspects.
There is no pending or, to the best of Company's or Company
Subsidiaries' knowledge, threatened legal action, proceeding or
investigation against or involving any Employee Plan or Benefit
Arrangement, other than routine claims for benefits. No condition
exists that could constitute grounds for the termination of any
Employee Plan under Section 4042 of ERISA. No "prohibited transaction,"
as defined in Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Employee Plan, or any other employee
benefit plan maintained by Company or any of its ERISA Affiliates which
is covered by Title I of ERISA, which could subject any person (other
than a person for whom Company or Company Subsidiaries is not directly
or indirectly responsible) to liability under Title I of ERISA or to
the imposition of tax under Section 4975 of the Code (other than any
such transaction the cost or liability of which would not have a
Material Adverse Effect). No Employee Plan subject to Part III of
Subtitle B of Title I of ERISA or Section 412 of the Code, or both, has
incurred any "accumulated funding deficiency," as defined in Section
412 of the Code, whether or not waived, nor has Company or Company
Subsidiaries failed to make any contribution or pay any amount due and
owing as required by the terms of any Employee Plan or Benefit
Arrangement. No "reportable event" as defined in ERISA has occurred
with respect to any of the Employee Plans. Neither Company nor any of
its ERISA Affiliates has incurred nor expects to incur, directly or
indirectly, any liability under Title IV of ERISA arising in connection
with the termination of, or a complete or partial withdrawal from, any
plan covered or previously covered by Title IV of ERISA which could
constitute a liability of the Surviving Corporation or of any of its
Affiliates (including the Company Subsidiaries) at or after the
Effective Time of the Merger (other than plans maintained prior to the
Effective Time of the Merger by the Parent and any of its ERISA
Affiliates).
(d) Neither Company nor any of its ERISA
Affiliates has provided or is required to provide security to any
Employee Plan pursuant to Section 401(a)(29) of the Code. Each of the
Employee Plans that is intended to be a qualified plan under Section
401(a) of the Code has received a favorable determination letter from
the IRS and neither Company nor the Company Subsidiaries knows of any
fact that would adversely affect the qualified status of any such
Employee Plan and which would not be correctible under the Employee
Plans Correction Resolution System (Rev. Proc. 2003-44) without
material cost to Company or any of its ERISA Affiliates. All
contributions required to be made to each of the Employee Plans under
the terms of the Employee Plan, ERISA, the Code or any other applicable
laws have been timely made. Except as disclosed in the
- 23 -
Company Disclosure Letter, the Financial Statements of Company properly
reflect all amounts required to be accrued as liabilities to date under
each of the Employee Plans. Except as disclosed in the Company
Disclosure Letter, the fair market value of the assets of each Employee
Plan and Benefit Arrangement that is funded, or required to be funded
under the terms of the Employee Plan or Benefit Arrangement, ERISA, the
Code or any other applicable law, equals or exceeds the liabilities,
including the present value of benefit obligations, of such Employee
Plan or Benefit Arrangement. The Company and Company Subsidiaries have
no obligation to provide post-termination or retiree welfare benefits
to any person for any reason, except as may be required by The
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended or
similar state statute.
(e) Except for the Scheduled Contracts or as set
forth in the Company Disclosure Letter, each Employee Plan or Benefit
Arrangement and each personal services contract, fringe benefit,
consulting contract or similar arrangement with or for the benefit of
any officer, director, employee or other person can be terminated by
Company within a period of 30 days following the Effective Time of the
Merger, without liability to the Company or any Company Subsidiaries.
(f) All group health plans of Company and
Company Subsidiaries have been operated in compliance with the group
health plan continuation coverage requirements of Section 4980B of the
Code and with the group health plan portability, access and
renewability requirements of Sections 9801 through 9833 of the Code,
and corresponding provisions of ERISA, in all material respects.
(g) Neither Company nor the Company Subsidiaries
has used the services of (i) workers who have been provided by a third
party contract labor supplier for more than six months or who may
otherwise be eligible to participate in any of the Employee Plans or to
an extent that would result in the disqualification of any of the
Employee Plans or the imposition of penalties or excise taxes with
respect to the IRS, the Department of Labor, the Pension Benefit
Guaranty Corporation or any other Governmental Entity; (ii) temporary
employees who have worked for more than six months or who may otherwise
be eligible to participate in any of the Employee Plans or to an extent
that would result in the disqualification of any of the Employee Plans
or the imposition of penalties or excise taxes with respect to the IRS,
the Department of Labor, the Pension Benefit Guaranty Corporation or
any other Governmental Entity; (iii) individuals who have provided
services to Company or the Company Subsidiaries as independent
contractors for more than six months or who may otherwise be eligible
to participate in the Employee Plans or to an extent that would result
in the disqualification of any of the Employee Plans or the imposition
of penalties or excise taxes with respect to the IRS, the Department of
Labor, the Pension Benefit Guaranty Corporation or any other
Governmental Entity; or (iv) leased employees, as that term is defined
in section 414(n) of the Code.
(h) With respect to each Employee Plan that is
funded wholly or partially through an insurance policy, there will be
no material liability of Company or the Company Subsidiaries, as of the
Closing Date, under any such insurance policy or ancillary agreement
with respect to such insurance policy in the nature of a
- 24 -
retroactive rate adjustment, loss sharing arrangement or other actual
or contingent liability arising wholly or partially out of events
occurring prior to the Closing Date.
4.21. Corporate Records. The minute books of each of
Company and the Company Subsidiaries accurately reflect all material corporate
actions taken since January 1, 1999 to this date by the respective stockholders,
board of directors and committees of each of Company and the Company
Subsidiaries.
4.22. Accounting Records. Each of Company and the Company
Subsidiaries maintains accounting records which fairly and accurately reflect,
in all material respects, its transactions and accounting controls exist
sufficient to provide reasonable assurances that such transactions are, in all
material respects, (i) executed in accordance with its management's general or
specific authorization, and (ii) recorded as necessary to permit the preparation
of financial statements in conformity with GAAP.
4.23. Offices and ATMs. Company has furnished to Parent a
list (the "Company Offices List") setting forth the headquarters of each of
Company and the Company Subsidiaries (identified as such) and each of the
offices and automated teller machines ("ATMs") maintained and operated by
Company or the Company Subsidiaries (including, without limitation,
representative and loan production offices and operations centers) and the
location thereof. Except as set forth on the Company Offices List, neither
Company nor the Company Subsidiaries maintains any other office or ATM or
conducts business at any other location, and neither Company nor the Company
Subsidiaries has applied for or received permission to open any additional
branch or operate at any other location.
4.24. Agreements with Regulators. Except as set forth in
the Company Disclosure Letter, neither Company nor any Subsidiary of Company is
a party to any written agreement, consent decree or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any cease-and-desist or other order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
policies, procedures or board resolutions at the request of, any Governmental
Entity which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or risk management policies or its
management, nor has Company been advised by any Governmental Entity that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such written agreement, decree, memorandum of
understanding, extraordinary supervisory letter, commitment letter, order,
directive or similar submission, or any such policy, procedure or board
resolutions.
4.25. Vote Required. The affirmative vote of the holders of
a majority of the outstanding shares of Company Stock to adopt this Agreement is
the only vote of the holders of any class or series of Company capital stock
necessary to approve and adopt this Agreement and the transactions contemplated
hereby (including the Merger).
4.26. Power of Attorney. Neither Company nor the Company
Subsidiaries has granted any Person a power of attorney or similar authorization
that is presently in effect or outstanding.
- 25 -
4.27. Facts Affecting Regulatory Approvals. To the best
knowledge of Company, there is no fact, event or condition applicable to Company
or the Company Subsidiaries which will, or reasonably could be expected to,
adversely affect the likelihood of securing the requisite approvals or consents
of any Governmental Entity to the Merger and the transactions contemplated by
this Agreement.
4.28. Indemnification. Other than pursuant to the
provisions of their respective Certificate of Incorporation or Articles of
Association, as the case may be, or Bylaws, or as disclosed in the Company
Disclosure Letter, the Company SEC Filings, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Agreement, the
Scheduled Contracts, or pursuant to non-material leases, vendor or other similar
contracts entered into in the ordinary course of business, neither Company nor
the Company Subsidiaries is a party to any indemnification agreement with any of
its present or past officers, directors, employees, agents or other persons who
serve or served in any other capacity with any other enterprise at the request
of Company or the Company Subsidiaries ("Covered Parties"), and to the best
knowledge of Company, there are no claims for which any Covered Party would be
entitled to indemnification by Company or the Company Subsidiaries if such
provisions were deemed in effect.
4.29. Community Reinvestment Act. Bank has received a
rating of "satisfactory" in its most recent examination or interim review with
respect to the Community Reinvestment Act. Bank has not been advised of any
material supervisory concerns regarding Bank's compliance with the Community
Reinvestment Act.
4.30. Derivative Transactions.
(a) Except as would not have a Material Adverse
Effect, all Derivative Transactions (as defined herein) entered into by
Company or any of its Subsidiaries were entered into in accordance with
applicable rules, regulations and policies of any Governmental Entity,
and in accordance with the investment, securities, commodities, risk
management and other policies, practices and procedures employed by
Company and its Subsidiaries, and were entered into with counterparties
who are financially responsible and able to understand (either alone or
in consultation with their advisers) and to bear the risks of such
Derivative Transactions; and Company and each of its Subsidiaries have
duly performed all of their obligations under the Derivative
Transactions to the extent that such obligations to perform have
accrued, and, to Company's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any
party thereunder.
(b) For purposes of this Section 4.30,
"Derivative Transactions" means any swap transaction, option, warrant,
forward purchase or sale transaction, futures transaction, cap
transaction, floor transaction or collar transaction relating to one or
more currencies, commodities, bonds, equity securities, loans, interest
rates, credit-related events or conditions or any indexes, or any other
similar transaction or combination of any of these transactions,
including collateralized mortgage obligations or other similar
instruments or any debt or equity instruments evidencing or embedding
any such types of transactions, and any related credit support,
collateral or other similar arrangements
- 26 -
related to such transactions; provided that, for the avoidance of
doubt, the term "Derivative Transactions" shall not include any Company
Stock Options.
4.31. Trust Administration. Bank presently maintains trusts
or exercises trust powers, including, but not limited to, trust administration
and has performed such activities in a manner that complies in all material
respects with all applicable laws, regulations, orders, agreements, instruments
and common law standards which are of material consequence to Bank's trust
business. The term "trusts" as used in this Section 4.31 includes (i) any and
all common law or other trusts between an individual, corporation or other
entities and Bank or any of its predecessors, as trustee or co-trustee,
including, without limitation, pension or other qualified or nonqualified
employee benefit plans, compensation, testamentary, inter vivos, and charitable
trust indentures; (ii) any and all decedents' estates where Bank or any of its
predecessors is serving or has served as a co-executor or sole executor,
personal representative or administrator, administrator ▇▇ ▇▇▇▇▇ non,
administrator ▇▇ ▇▇▇▇▇ non with will annexed, or in any similar fiduciary
capacity; (iii) any and all guardianships, conservatorships or similar positions
where Bank or any of its predecessors is serving or has served as a co-grantor
or a sole grantor or a conservator or co-conservator of the estate, or any
similar fiduciary capacity; and (iv) any and all agency and/or custodial
accounts and/or similar arrangements, including plan administrator for employee
benefit accounts, under which Bank or any of its predecessors is serving or has
served as an agent or custodian for the owner or other party establishing the
account with or without investment authority.
4.32. Disclosure Documents and Applications. None of the
information supplied or to be supplied by Company in writing ("Company Supplied
Information") for inclusion in any documents to be filed with the SEC, the FRB
or any other Governmental Entity in connection with the transactions
contemplated in this Agreement, will, at the respective times such documents are
filed or become effective, or with respect to the Proxy Statement when mailed,
with respect to the Company Supplied Information, contain any untrue statement
of a material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.33. Intellectual Property. To the best knowledge of
Company, Company and the Company Subsidiaries own or have a valid license to use
all trademarks, trade names and service marks (including any registrations or
applications for registration of any of the foregoing) (collectively, "Company
Intellectual Property") necessary to carry on their business substantially as
currently conducted, except where such failures to own or validly license such
Company Intellectual Property would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither Company nor
any of the Company Subsidiaries has received any notice of infringement of or
conflict with, and to Company's knowledge, there are no infringements of or
conflicts with, the rights of others with respect to the use of any Company
Intellectual Property that, individually or in the aggregate, in either such
case, would reasonably be expected to have a Material Adverse Effect.
- 27 -
4.34. State Takeover Laws; Company Rights Agreement.
(a) The Board of Directors of Company has
approved this Agreement and the transactions contemplated hereby, and
taken such other actions, and such actions are sufficient, to render
inapplicable to this Agreement and the transactions contemplated
hereby, including, without limitation, the Merger, all state takeover
statutes and any similar "takeover" or "interested stockholder" law.
(b) Company has taken all action, if any,
necessary or appropriate so that the entering into of this Agreement,
and the consummation of the transactions contemplated hereby, do not
and will not result in the ability of any person to exercise any Rights
(as defined in the Company Rights Agreement) under the Company Rights
Agreement or enable or require any Rights to separate from the shares
of Company Stock to which they are attached or to be triggered or
become exercisable. No "Distribution Date" or "Stock Acquisition Date"
(as such terms are defined in the Company Rights Agreement) has
occurred.
4.35. Registration Obligation. Neither Company nor the
Company Subsidiaries is under any obligation, contingent or otherwise, to
register any of their respective securities under the Securities Act.
4.36. Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Company has received
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc., dated as of the date hereof, to the
effect that, based upon and subject to the matters set forth in the Opinion, the
Merger Consideration is fair from a financial point of view to the holders of
the Company Stock.
4.37. Loans; Investments.
(a) The outstanding loans, including guarantees
thereon, originated by Bank have been documented in all material
respects in accordance with the policies of Bank, including guarantees
thereon, and all loans purchased by or participated in by Bank are
documented in a manner substantially consistent with such policies in
all material respects. Neither Company nor any Company Subsidiary
(other than Bank), originates or makes extensions of credit.
(b) Except for pledges to secure public and
trust deposits and borrowings in the ordinary course of business, none
of the investments reflected in the Financial Statements of Company
under the heading "Investment Securities," and none of the investments
made by Company, Bank or any Company Subsidiary since December 31, 2003
is subject to any restriction, whether contractual or statutory, which
materially impairs the ability of Company, Bank or Company Subsidiary
to freely dispose of such investment at any time, other than those
restrictions permitted or imposed on securities held for investment
under GAAP. With respect to all material repurchase agreements to which
Company, Bank or any Company Subsidiary, is a party, Company, Bank or
Company Subsidiary has a valid, perfected first lien or security
interest in the government securities or other collateral securing each
such repurchase agreement, and the value of the collateral securing
each such repurchase agreement equals or exceeds the
- 28 -
amount of the debt secured by such collateral under such agreement.
Except for any securities sold subject to repurchase obligations in the
normal course of business and any loans or loan participations subject
to customary repurchase obligations, none of Company, Bank or Company
Subsidiaries has sold or otherwise disposed of any assets in a
transaction in which the acquirer of such assets or other person has
the right, either conditionally or absolutely, to require Company, Bank
or any Company Subsidiary to repurchase or otherwise reacquire any such
assets.
(c) All United States Treasury securities,
obligations of other United States Government agencies and
corporations, obligations of States of the United States and their
political subdivisions, and other investment securities classified as
"held to maturity" and "available for sale" held by Company, Bank and
Company Subsidiaries, as reflected in the Financial Statements of
Company, were classified and accounted for in accordance with Statement
of Financial Accounting Standards No. 115 and the intentions of
management.
4.38. Allowance for Loan and Lease Losses.
Company's allowance for loan and lease losses was determined by
application of the Company's policies and procedures on a basis
consistently applied from prior periods and represents management's
good faith estimate of reasonably expectable losses, net of recoveries
relating to loans and leases previously charged off, on loans and
leases outstanding (including accrued interest receivable) as of that
date.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF Parent
Parent represents and warrants to Company as follows, except as set
forth in the Parent Disclosure Letter:
5.1. Incorporation, Standing and Power. Parent has been
duly organized, is validly existing and in good standing as a corporation under
the laws of the State of Delaware and is registered as a bank holding company
under the BHC Act. Merger Sub has been duly organized, is validly existing and
in good standing as a corporation under the laws of the State of Delaware.
Merger Sub has conducted no business or operations and has no material
liabilities other than its obligations under this Agreement.
5.2. Authority. The execution and delivery by Parent of
this Agreement, and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Parent. The execution and delivery by Merger Sub of this Agreement, and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary corporate action on the part of Merger Sub.
This Agreement is a valid and binding obligation of Parent and Merger Sub, in
each case enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, liquidation, receivership,
conservatorship, insolvency, moratorium or other similar laws affecting the
rights of creditors generally and by general equitable principles. Neither the
execution and delivery by Parent or Merger Sub of this Agreement, the
consummation of the transactions contemplated herein, nor compliance by Parent
and Merger Sub with any of the
- 29 -
provisions hereof, will: (a) conflict with or result in a breach of any
provision of its respective Certificate of Incorporation, as amended, or Bylaws,
as amended; (b) constitute a breach of or result in a default (or give rise to
any rights of termination, cancellation or acceleration, or any right to acquire
any securities or assets) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, franchise, license, permit, agreement or
other instrument or obligation to which Parent or any Subsidiary of Parent is a
party, or by which Parent or any Subsidiary of Parent or any of its properties
or assets is bound (except as would not be reasonably likely to have a material
adverse effect on the ability of Parent and Merger Sub to consummate the
transactions contemplated by this Agreement); or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any
Subsidiary of Parent or any of its respective properties or assets. No consent
of, approval of, notice to or filing with any Governmental Entity having
jurisdiction over any aspect of the business or assets of Parent or any of its
Subsidiaries, and no consent of, approval of or notice to any other Person, is
required in connection with the execution and delivery by Parent or Merger Sub
of this Agreement, or the consummation by Parent and Merger Sub of the Merger or
the transactions contemplated hereby, except (i) such approvals as may be
required by the FRB under the BHC Act; and (ii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware.
5.3. Parent Stockholder Consent. BNP Paribas, the sole
stockholder of Parent, has approved this Agreement and the transactions
contemplated hereby.
5.4. Other Governmental Approvals. The execution, delivery
and performance of this Agreement by Parent and Merger Sub do not and will not
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Entity in the Republic of
France.
5.5. Financing. Parent has available sufficient cash or
other liquid assets or financial resources which may be used to fund the Merger
and perform its other obligations hereunder. Parent's ability to consummate the
transactions contemplated by this Agreement is not contingent on raising any
equity capital, obtaining financing therefor, consent of any lender or any other
matter.
5.6. Litigation. No claim, action, proceeding or
investigation is pending or, to the knowledge of Parent, threatened, that seeks
to delay or prevent the consummation of, or that would be reasonably likely to
materially adversely affect Parent's or Merger Sub's ability to consummate the
transactions contemplated by this Agreement.
5.7. Brokers and Finders. Except for the obligation to
▇▇▇▇▇▇ Brothers, Inc., as set forth in a letter agreement dated March 1, 2004,
Parent is not a party to or obligated under any agreement with any broker or
finder relating to the transactions contemplated hereby, and neither the
execution of this Agreement nor the consummation of the transactions provided
for herein will result in any liability to any broker or finder.
5.8. Facts Affecting Regulatory Approvals. To the best
knowledge of Parent, there is no fact, event or condition applicable to Parent
or any of its Subsidiaries which will, or reasonably could be expected to,
adversely affect the likelihood of promptly securing the requisite approvals or
consents of any Governmental Entity to the Merger.
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5.9. Community Reinvestment Act. BW has received a rating
of "satisfactory" in its most recent examination or interim review with respect
to the Community Reinvestment Act. BW has not been advised of any material
supervisory concerns regarding BW's compliance with the Community Reinvestment
Act.
5.10. Accuracy of Information Furnished for Company Proxy
Statement. None of the information supplied or to be supplied by Parent in
writing ("Parent Supplied Information") for inclusion in any documents to be
filed by Company with the SEC or any other Governmental Entity in connection
with the transactions contemplated in this Agreement, will, at the respective
times such documents are filed or become effective, or with respect to the Proxy
Statement when mailed, with respect to the Parent Supplied Information, contain
any untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5.11. Investment in Company Shares. Neither Parent nor
Merger Sub nor any Affiliate of Parent or Merger Sub owns or controls, directly
or indirectly, any capital stock of Company, other than in accordance with and
as permitted by the Confidentiality Agreement.
ARTICLE 6.
COVENANTS OF Company PENDING EFFECTIVE TIME OF THE MERGER
Company covenants and agrees with Parent and Merger Sub as follows:
6.1. Limitation on Conduct Prior to Effective Time of the
Merger. Between the date hereof and the earlier of the Effective Time of the
Merger or the termination of the Agreement, except as contemplated by this
Agreement and subject to requirements of law and regulation, Company agrees to
conduct its business (and to cause the Company Subsidiaries to conduct their
respective businesses) in the ordinary course in substantially the manner
heretofore conducted and in accordance with sound banking practices, and Company
shall not (and shall cause the Company Subsidiaries to not), without the prior
written consent of Parent; which consent shall not be unreasonably withheld or
delayed:
(a) issue, sell or grant any Company Stock
(except pursuant to the exercise of Company Stock Options outstanding
as of the date hereof), any other securities (including long term debt)
of Company or the Company Subsidiaries, or any rights, stock
appreciation rights, options or securities to acquire any Company
Stock, or any other securities (including long term debt) of Company or
the Company Subsidiaries or enter into any agreements to take any such
actions;
(b) (i) other than dividends by a direct or
indirect wholly-owned Subsidiary of Company to its parent, declare, set
aside or pay any dividend (except for the regular quarterly cash
dividend in respect of the first fiscal quarter of 2004 which shall not
exceed $0.24 per share of Company Stock, and thereafter, regular
quarterly cash dividends not to exceed the lesser of (x) $0.24 per
share of Company Stock or (y) an amount per share of Company Stock
equal to the quotient obtained by dividing (A) 60%
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of the Average Net Income of the Company (where "Average Net Income" is
equal to the quotient obtained by dividing (a) the sum of the net
income of the Company (1) for the fiscal quarter in respect of which
the dividend has been declared and (2) the immediately preceding fiscal
quarter by (b) two) by (B) the number of outstanding shares of Company
Stock on the record date for such dividend) or make any other
distribution upon any of the capital stock of Company or the Company
Subsidiaries, or (ii) split, combine or reclassify any shares of
capital stock or other securities of Company or the Company
Subsidiaries;
(c) purchase, redeem or otherwise acquire any
capital stock or other securities of Company or the Company
Subsidiaries or any rights, options, or securities to acquire any
capital stock or other securities of Company or the Company
Subsidiaries (other than the redemption upon maturity of the Company's
subordinated notes and the issuance of Company Stock upon the exercise
of Company Stock Options that are outstanding as of the date hereof in
accordance with their present terms);
(d) except as may be required to effect the
transactions contemplated herein, amend its Certificate of
Incorporation or Articles of Association, as the case may be, or
Bylaws;
(e) grant any general or uniform increase in the
rate of pay of employees or employee benefits;
(f) except as provided in the Company Disclosure
Letter and in Section 12.1, grant any increase in salary, incentive
compensation or employee benefits or pay any bonus to any Person or
voluntarily accelerate the vesting of any employee benefits, other than
payments of bonuses consistent with past practice pursuant to plans in
effect on the date hereof and disclosed in the Company Disclosure
Letter and increases in salary consistent with past practice to Persons
eligible for such salary increases on the anniversary dates of their
employment, provided that the percentage increase in salaries for all
such Persons shall not exceed three percent on average;
(g) make any capital expenditure or commitments
with respect thereto in excess of $500,000 with respect to any item or
project or in the aggregate with respect to any related items or
projects, except for capital expenditures described in the Company
Disclosure letter and ordinary repairs, renewals and replacements;
(h) compromise or otherwise settle or adjust any
assertion or claim of a deficiency in taxes (or interest thereon or
penalties in connection therewith), extend the statute of limitations
with any tax authority or file any pleading in court in any tax
litigation or any appeal from an asserted deficiency, or file or amend
any federal, foreign, state or local tax return, or make any tax
election that is inconsistent with Company's current tax election
practices;
(i) change or make any tax elections or its tax
or accounting policies and procedures or any method or period of
accounting unless required by GAAP or a Governmental Entity;
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(j) grant or commit to grant any extension of
credit or amend the terms of any such credit outstanding on the date
hereof to any executive officer, director or holder of 10% or more of
the outstanding Company Stock, or any Affiliate of such Person;
(k) close or relocate any offices at which
business is conducted or open any new offices; except as described in
the Company Disclosure Letter
(l) except as provided in the Company Disclosure
Letter and in Section 12.1, adopt or enter into any new employment
agreement or other employee benefit plan or arrangement or amend or
modify any employment agreement or employee benefit plan or arrangement
of any such type except for such amendments as are required by law;
(m) initiate, solicit or knowingly encourage
(including by way of furnishing information or assistance), or take any
other action to facilitate, any inquiries or the making of any proposal
which constitutes, or would reasonably be expected to lead to, any
Competing Transaction (as such term is defined below), or negotiate or
have any discussions with any person in furtherance of such inquiries
or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or approve or recommend, or propose to approve
or recommend, or execute or enter into, any letter of intent, agreement
in principle, merger agreement, asset purchase or share exchange or
issuance agreement, option agreement, or other similar agreement
related to any Competing Transaction or propose or agree to do any of
the foregoing, or authorize any of its or the Company Subsidiaries'
officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or any other representative retained by
it or any of its Affiliates (the "Representatives") to take any such
action, and will cause the Representatives and the Company Subsidiaries
not to take any such action, and Company shall promptly notify Parent
(orally
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and in writing) of all of the relevant details relating to all
inquiries and proposals which it may receive relating to any of such
matters, including the identity of the offeror or Person making the
request or inquiry. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following involving Company or the
Company Subsidiaries and any Person other than Parent or any of its
Affiliates: any merger, consolidation, share exchange or other business
combination; a sale, lease, exchange, mortgage, pledge, transfer or
other disposition of assets of Company or the Company Subsidiaries
representing 15% or more of the consolidated assets of Company and the
Company Subsidiaries; a sale of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any
agreement or instrument evidencing, the right to acquire capital
stock), representing 15% or more of the voting power of Company or the
Company Subsidiaries; or a tender offer or exchange offer for at least
15% of the outstanding shares of Company. Company will immediately
cease and cause to be terminated (and will cause the Company
Subsidiaries to cease and terminate) any existing activities,
discussions or negotiations with any parties (other than Parent and its
Affiliates and representatives) conducted heretofore with respect to
any of the foregoing. Company shall (and shall cause the Company
Subsidiaries to) take the necessary steps to inform promptly the
appropriate individuals or entities referred to above of the
obligations undertaken in this Section. Company shall notify Parent
(orally and in writing) within 24 hours of the receipt of any such
inquiries, proposals or offers, the request for any such information,
or the initiation or continuation of any such negotiations or
discussions which are sought to be initiated or continued with Company
and the Company Subsidiaries. Company shall promptly request each other
Person, other than Parent, that has, since January 1, 2001, executed a
confidentiality agreement in connection with its consideration of
entering into a business combination with Company and the Company
Subsidiaries (other than a business combination in which Company or a
Company Subsidiary would acquire control of such Person) to return all
confidential information heretofore furnished to such person by or on
behalf of Company and the Company Subsidiaries and enforce any such
confidentiality agreements. Notwithstanding any other provision in this
Section 6.1(m) or any other provision of this Agreement, prior to the
duly convened Company Stockholders' Meeting, and subject to compliance
with the other terms of this Section 6.1(m), and to first entering into
a confidentiality agreement having provisions that are no less
favorable to Company than those contained in the Confidentiality
Agreement, the Board of Directors of Company shall be permitted to
engage in discussions or negotiations with, and provide nonpublic
information or data to, any Person in response to an unsolicited bona
fide written proposal for a Competing Transaction by such Person first
made after the date hereof which the Board of Directors of Company
concludes in good faith (after consultation with a financial advisor of
nationally recognized reputation in similar transactions) constitutes
or is reasonably likely to result in a Superior Proposal (as defined
below), and to recommend such Superior Proposal to the holders of
Company Stock, if and only to the extent that the Board of Directors of
Company reasonably determines in good faith (after consultation with
outside legal counsel) that failure to do so would be inconsistent with
its fiduciary duties under applicable law; provided, that Company shall
have given Parent (orally and in writing) at least 36 hours prior
notice of its intent to do so before taking the first of any such
actions with any one such Person; provided, further, that Company and
the Board of Directors of Company shall keep Parent informed of the
status and terms of any such proposals, offers, discussions or
negotiations on a prompt basis, including by providing a copy of all
material documentation or correspondence relating thereto. For purposes
of this Agreement, "Superior Proposal" shall mean a bona fide written
proposal for a Competing Transaction which the Board of Directors
concludes in good faith, after consultation with a financial advisor of
nationally recognized reputation in similar transactions and its legal
advisors, taking into account all legal, financial, regulatory and
other aspects of the proposal and the Person making the proposal (i) is
more favorable to the Company's stockholders from a financial point of
view, than the transactions contemplated by this Agreement and (ii) is
fully financed or reasonably capable of being fully financed,
reasonably likely to receive all required governmental approvals on a
timely basis and otherwise reasonably capable of being completed on the
terms proposed; provided, that, for purposes of this definition of
"Superior Proposal" the term Competing Transaction shall have the
meaning assigned to such term in this Section 6.1(m), except that the
reference to "15% or more" in the definition of Competing Transaction
shall be deemed to be a reference to "a majority". Nothing in this
Section 6.1(m) shall prohibit Company or its Board of Directors from
taking and disclosing to the Company stockholders a position with
respect to a Competing Transaction to the extent required under the
Exchange Act, or from making
- 34 -
such disclosure to the Company stockholders which, after consultation
with outside counsel, the Board determines is otherwise required under
applicable law; provided, that taking any such action required to
comply with any such obligations shall not in any way limit or modify
the effect that any action so taken has under any other provision of
this Agreement, including, without limitation, Section 13.1(j).
Notwithstanding any other provision in this Section 6.1(m) or any other
provision of this Agreement, Company may waive any provision of any
confidentiality agreement entered into as provided above if the Board
of Directors of Company, in the exercise of its fiduciary duties under
applicable law, reasonably determines in good faith (after consultation
with outside legal counsel) that the failure to take such action would
be inconsistent with its fiduciary duties under applicable law and
Company also contemporaneously waives similar provisions of the
Confidentiality Agreement;
(n) grant any Person a power of attorney or
similar authority;
(o) make any investment by purchase of stock or
securities (including an Investment Security), contributions to
capital, property transfers or otherwise in any other Person, except
for federal funds, obligations of the United States Treasury or an
agency of the United States Government the obligations of which are
entitled to or implied to have the full faith and credit of the United
States government and which have an original maturity not in excess of
one year, bank qualified investment grade municipal bonds, in any case,
in the ordinary course of business consistent with past practices and
which are not designated as trading;
(p) amend or modify any Scheduled Contract or
enter into any agreement or contract that would be required to be a
Scheduled Contract under Section 4.15; provided, that Company and any
Company Subsidiary may renew an existing Scheduled Contract in the
ordinary course of business on substantially equivalent terms;
(q) sell, transfer, mortgage, encumber or
otherwise dispose of any assets or release or waive any claim, except
in the ordinary course of business and consistent with past practices;
(r) take any action which would or could
reasonably be expected to (i) adversely affect the ability of Parent or
Company to obtain any necessary approval of any Governmental Entity
required for the transactions contemplated hereby; (ii) adversely
affect Company's ability to perform its covenants and agreements under
this Agreement; or (iii) result in any of the conditions to the
performance of Parent's or Company's obligations hereunder, as set
forth in Articles 9, 10 or 11 herein not being satisfied;
(s) make any special or extraordinary
distributions or payments to any Person;
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(t) reclassify any Investment Security from
held-to-maturity or available for sale to trading, unless required by
changes in GAAP or regulatory accounting requirements applicable to
banks and their holding companies generally;
(u) sell any security other than in the ordinary
course of business, except as provided in the Company Disclosure
Letter;
(v) take title to any real property without
conducting prior thereto an environmental investigation, which
investigation shall not reflect the presence of any suspected
environmental contamination;
(w) settle any material claim, action or
proceeding involving any material liability for monetary damages or
enter into any settlement agreement containing material obligations;
(x) make, acquire a participation in, or
reacquire an interest in a participation sold of, any loan, commitment
to make a loan or other extension of credit, that is not in compliance
with its normal credit underwriting standards, policies and procedures
as in effect on December 31, 2003 or which would involve a credit
exposure on the part of the Company or any Company Subsidiary, of
$10,000,000 or more;
(y) incur any indebtedness for borrowed money or
assume, guaranty, endorse or otherwise as an accommodation become
responsible for the obligations of any other person, except for (i) in
connection with banking transactions with banking customers in the
ordinary course of business, or (ii) short-term borrowings made at
prevailing market rates and terms consistent with prior practice;
(z) enter into any new material line of
business;
(aa) engage in any material transaction or incur
or sustain any material obligation not in the ordinary course of
business consistent with past practice;
(bb) except as contemplated by Section 4.34,
modify, amend or waive any provision of, or terminate the Company
Rights Plan, or redeem any of the rights outstanding thereunder, unless
the Board of Directors of Company determines reasonably and in good
faith (after consultation with outside legal counsel) that the failure
to take any such action would be inconsistent with its fiduciary duties
under applicable law; or
(cc) agree or make any commitment to take any
actions prohibited by this Section 6.1.
6.2. Affirmative Conduct Prior to Effective Time of the
Merger. Between the date hereof and the Effective Time of the Merger, Company
shall (and shall cause the Company Subsidiaries to):
(a) use its commercially reasonable efforts
consistent with this Agreement to maintain and preserve intact its
present business organization and to maintain and preserve its
relationships and goodwill with account holders, borrowers,
- 36 -
employees and others having business relationships with Company or the
Company Subsidiaries;
(b) use its commercially reasonable efforts to
keep in full force and effect all of the existing material permits and
licenses of Company and the Company Subsidiaries;
(c) use its commercially reasonable efforts to
maintain insurance coverage at least equal to that now in effect on all
properties which it owns or leases and on its business operations;
(d) perform its material contractual obligations
and not become in material default on any such obligations;
(e) duly observe and conform in all material
respects to all lawful requirements applicable to its business;
(f) maintain its assets and properties in good
condition and repair, normal wear and tear excepted;
(g) file all Tax Returns required to be filed
with any tax authority in accordance with all applicable laws, timely
pay all Taxes due and payable as shown in the respective Tax Returns
that are so filed and ensure that the Tax Returns will, as of the time
of filing, be based on tax positions that have substantial support
under all applicable laws;
(h) promptly notify Parent regarding receipt
from any tax authority of any notification of the commencement of an
audit, any request to extend the statute of limitations, any statutory
notice of deficiency, any revenue agent's report, any notice of
proposed assessment, or any other similar notification of potential
adjustments to the Tax liabilities or attributes of Company, or any
actual or threatened collection enforcement activity by any Tax
authority with respect to tax liabilities of Company;
(i) make available to Parent monthly unaudited
balance sheets and income statements of Company within 25 days after
the close of each calendar month;
(j) use its commercially reasonable efforts to
obtain any third party consent with respect to any contract, agreement,
lease, license, arrangement, permit or release that is material to the
business of Company and the Company Subsidiaries on a consolidated
basis or that is contemplated in this Agreement as required in
connection with the Merger; provided, however, that no such third party
consent need be obtained if a material amount of monetary consideration
is required; and
(k) maintain an allowance for loan and lease
losses consistent with practices and methodology as in effect on the
date of the execution of this Agreement provided that the dollar amount
of such allowance shall be, in any event, maintained at a level which
is at least equal to the amount thereof at December 31, 2003.
- 37 -
6.3. Access to Information. Company will afford, upon
reasonable notice, to Parent and its representatives, counsel, accountants,
agents and employees reasonable access during normal business hours to all of
their business, operations, properties, books, files and records and will do
everything reasonably necessary to enable Parent and its representatives,
counsel, accountants, agents and employees to make a complete examination of the
financial statements, business, assets and properties of Company and the Company
Subsidiaries and the condition thereof and to update such examination at such
intervals as Parent shall deem appropriate. Such examination shall be conducted
in cooperation with the officers of Company and the Company Subsidiaries and in
such a manner as to minimize any disruption of, or interference with, the normal
business operations of Company and the Company Subsidiaries. Upon the request of
Parent, and upon Parent's execution and delivery of a customary waiver, Company
will request E&Y to provide reasonable access to representatives of PwC working
on behalf of Parent to auditors' work papers with respect to the business and
properties of Company and the Company Subsidiaries, including tax accrual work
papers prepared for Company and the Company Subsidiaries during the preceding 60
months, other than (a) books, records and documents covered by the
attorney-client privilege, or that are attorneys' work product, and (b) books,
records and documents that Company or the Company Subsidiaries are legally
obligated to keep confidential. No examination or review conducted under this
section shall constitute a waiver or relinquishment on the part of Parent of the
right to rely upon the representations and warranties made by Company herein.
All documents and information concerning Company and the Company Subsidiaries so
obtained from any of them (except to the extent that such documents or
information are a matter of public record or require disclosure in the Proxy
Statement or any of the public portions of any applications required to be filed
with any Governmental Entity to obtain the approvals and consents required to
effect the transactions contemplated hereby), shall be subject to the
Confidentiality Agreement.
6.4. Filings. Company agrees that through the Effective
Time of the Merger, each of Company's or the Company Subsidiaries' reports,
proxy statements, registrations, statements and other filings required to be
filed with any applicable Governmental Entity will comply in all material
respects with all the applicable statutes, rules and regulations enforced or
promulgated by the Governmental Entity with which it will be filed and none will
contain any untrue statement of 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. Any
financial statement contained in any such report, proxy statement, registration,
statement or other filing that is intended to present the financial position of
the entity to which it relates will fairly present the financial position of
such entity and will be prepared in accordance with GAAP or applicable banking
regulations consistently applied during the periods involved.
6.5. Notices; Reports. Company will promptly notify Parent
of any event of which Company obtains knowledge which has had or may have a
Material Adverse Effect, or in the event that Company determines that it is
unable to fulfill any of the conditions to the performance of Parent's
obligations hereunder, as set forth in Articles 9 or 11 herein, and Company will
furnish Parent (i) as soon as available, and in any event within one Business
Day after it is mailed or delivered to the Board of Directors of Company or the
Company Subsidiaries or committees thereof, any report by Company or the Company
Subsidiaries for submission to the Board of Directors of Company or the Company
Subsidiaries or committees thereof,
- 38 -
provided, however, that Company need not furnish to Parent communications of
Company's legal counsel regarding Company's rights and obligations under this
Agreement or the transactions contemplated hereby, or other communication or
incident to Company's actions pursuant to Section 6.1(m) hereof, or books,
records and documents covered by confidentiality agreements or the
attorney-client privilege, or which are attorneys' work product, (ii) as soon as
available, all proxy statements, information statements, financial statements,
reports, letters and communications sent by Company to its stockholders or other
security holders, and all reports filed by Company or the Company Subsidiaries
with the SEC, FRB, the OCC or other Governmental Entities, and (iii) such other
existing reports as Parent may reasonably request relating to Company or the
Company Subsidiaries.
6.6. Company Stockholders' Meeting. As promptly as
practicable after the execution of this Agreement, Company will take action
necessary in accordance with applicable law and its Certificate of Incorporation
and Bylaws to convene a meeting of its stockholders to consider and vote upon
this Agreement and the transactions contemplated hereby so as to permit the
consummation of the transactions contemplated hereby. The Board of Directors of
Company shall recommend that its stockholders approve and adopt this Agreement
and the transactions contemplated hereby, including the Merger; provided,
however, that the Board of Directors of Company may withdraw, modify or change
its recommendation to the stockholders if the Board determines in good faith,
following consultation with outside legal counsel, that failure to do so would
be inconsistent with its fiduciary duties under applicable law. Subject to the
proviso of the immediately preceding sentence, Company will use its commercially
reasonable efforts to obtain the requisite affirmative vote of the holders of
the outstanding Company Stock for the approval and adoption of this Agreement
and the Merger.
6.7. Applications. Company will promptly prepare or cause
to be prepared the Proxy Statement and will duly send the same to the holders of
the Company Stock in connection with the Company Stockholders' Meeting, and
further agrees to provide any information requested by Parent for the
preparation of any applications necessary to consummate the transactions
contemplated hereby. Company shall afford Parent a reasonable opportunity to
review all such applications and all amendments and supplements thereto before
the filing thereof. Company covenants and agrees that, with respect to the
information relating to Company or the Company Subsidiaries, the Proxy Statement
will comply in all material respects with the provisions of applicable law, and
will not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. Company will use its commercially reasonable efforts to assist
Parent in obtaining all approvals or consents of Governmental Entities necessary
to effect the Merger and the transactions contemplated herein.
- 39 -
ARTICLE 7.
COVENANTS OF PARENT AND MERGER SUB
Parent and Merger Sub covenant and agree with Company as follows:
7.1. Limitation on Conduct Prior to Effective Time of the
Merger. Between the date hereof and the Effective Time of the Merger, except as
contemplated by this Agreement and subject to requirements of law and regulation
generally applicable to bank holding companies and banks, each of Parent and its
Subsidiaries shall not, without the prior written consent of Company, which
consent Company shall not unreasonably withhold or delay:
(a) take any action which would or is reasonably
likely to (i) adversely affect the ability of Parent to obtain any
necessary approvals of any Governmental Entity required for the
transactions contemplated hereby; (ii) adversely affect Parent's
ability to perform its covenants and agreements under this Agreement;
or (iii) result in any of the conditions to the performance of
Company's or Parent's obligations hereunder, as set forth in Articles
10 or 11 herein not being satisfied; or
(b) agree or make any commitment to take any
actions prohibited by this Section 7.1.
7.2. Applications. Parent will, as promptly as
practicable, but in any event within 30 days of the date hereof, prepare and
file in final form or cause to be prepared and filed in final form (it being
recognized that the FRB or other applicable Governmental Entities may require
supplemental filings after such filing in final form) (i) an application for
approval of the Merger with the FRB; and (ii) any other applications necessary
to consummate the transactions contemplated hereby. Parent shall afford Company
a reasonable opportunity to review all such applications (except for the
confidential portions thereof) and all amendments and supplements thereto before
the filing thereof.
7.3. Notices; Reports. Parent will promptly notify Company
in the event that Parent determines that it is unable to fulfill any of the
conditions to the performance of Company's obligations hereunder, as set forth
in Articles 9 or 10 herein.
7.4. Indemnification and Directors' and Officers'
Insurance.
(a) From and after the Effective Time of the
Merger, the Surviving Corporation shall, to the fullest extent
permitted by applicable law, indemnify, defend and hold harmless, and
provide advancement of expenses to, each person who is now, or has been
at any time prior to the date hereof or who becomes prior to the
Effective Time of the Merger, an officer or director of Company or any
of its Subsidiaries (the "Indemnified Parties") against all losses,
claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was
a director or officer of Company or any Subsidiary of Company, and
pertaining to any matter existing or occurring, or any
- 40 -
acts or omissions occurring, at or prior to the Effective Time of the
Merger, whether asserted or claimed prior to, or at or after, the
Effective Time of the Merger (including matters, acts or omissions
occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby) ("Indemnified
Liabilities") to the same extent such persons are indemnified or have
the right to advancement of expenses as of the date of this Agreement
by Company pursuant to Company's Certificate of Incorporation, Bylaws
and indemnification agreements, if any, in existence on the date hereof
with any directors or officers of Company and its Subsidiaries.
(b) For a period of six years after the
Effective Time of the Merger, the Surviving Corporation shall cause to
be maintained in effect the current policies of directors' and
officers' liability insurance maintained by Company (provided, that the
Surviving Corporation may substitute therefor policies with a
substantially comparable insurer of at least the same coverage, amounts
and retentions containing terms and conditions which are no less
advantageous to the insured) with respect to claims arising from facts
or events which occurred at or before the Effective Time of the Merger;
provided, however, that the Surviving Corporation shall not be
obligated to make annual premium payments for such insurance to the
extent such premiums exceed 200% of the premiums paid as of the date
hereof by Company for such insurance ("Company's Current Premium"), and
if such premiums for such insurance would at any time exceed 200% of
Company's Current Premium, then the Surviving Corporation shall cause
to be maintained policies of insurance which, in the Surviving
Corporation's good faith determination, provide the maximum coverage
available at an annual premium equal to 200% of Company's Current
Premium.
(c) The Surviving Corporation shall pay (as
incurred) all expenses, including reasonable fees and expenses of
counsel, that an Indemnified Person may incur in enforcing the
indemnity and other obligations provided for in this Section 7.4.
(d) If the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (ii) transfers or conveys
all or substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of the Surviving
Corporation, as the case may be, shall assume the obligations set forth
in this Section 7.4.
(e) The provisions of this Section 7.4, (i) are
intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party, his or her heirs and representatives and (ii) are in
addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have or
contract or otherwise.
7.5. Employee Plans. From and after the Effective Time of
the Merger, Parent shall and shall cause the Surviving Corporation to honor the
arrangements regarding continuation of employee health, dental, vision and life
insurance coverage, payments pursuant to the Company's Annual Incentive Plan and
other cash incentive plans for calendar year 2004, and the
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obligations under the Directors Deferred Compensation Plan and the Executive
Severance Plan described in the Company Disclosure Letter.
ARTICLE 8.
ADDITIONAL COVENANTS
The parties hereto hereby mutually covenant and agree with each other
as follows:
8.1. Commercially Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each party will use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement as promptly as practicable.
8.2. Public Announcements. No press release or other
public disclosure of matters related to this Agreement or any of the
transactions contemplated hereby shall be made by Parent or Company unless the
other party shall have provided its prior consent (which shall not be
unreasonably withheld, delayed or conditioned) to the form and substance
thereof; provided, however, that nothing herein shall be deemed to prohibit any
party hereto from making any disclosure which its counsel deems necessary or
advisable in order to fulfill such party's disclosure obligations imposed by
law.
ARTICLE 9.
CONDITIONS PRECEDENT TO THE MERGER
The obligations of each of the parties hereto to consummate the
transactions contemplated herein are subject to the satisfaction, on or before
the Closing Date, of the following conditions:
9.1. Stockholder Approval. The Agreement and the
transactions contemplated hereby shall have received all requisite approvals of
the stockholders of Company.
9.2. No Judgments or Orders. No judgment, decree,
injunction, order or proceeding shall be outstanding by any Governmental Entity
which prohibits or restricts the effectuation of, or threatens to invalidate or
set aside, the Merger substantially in the form contemplated by this Agreement.
9.3. Regulatory Approvals. To the extent required by
applicable law or regulation, all approvals or consents of any Governmental
Entity, including, without limitation, those of the FRB, shall have been
obtained or granted for the Merger and the transactions contemplated hereby and
the applicable waiting period under all laws shall have expired; provided, that,
in respect of such conditions to the obligations of Parent and Merger Sub, such
approvals or consents shall have been granted without any condition or
restriction upon Parent or the Surviving Corporation, or any of their respective
Subsidiaries or Affiliates which would reasonably be expected to have a material
adverse effect after the Effective Time on the present
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or prospective consolidated financial condition, business or operating results
of Parent or the Surviving Corporation or any of their respective Subsidiaries
or Affiliates or otherwise materially and adversely impair the economic benefits
to the combined enterprise (i.e., Parent, the Surviving Corporation and their
respective Subsidiaries) of the transactions contemplated hereby. All other
statutory or regulatory requirements for the valid completion of the
transactions contemplated hereby shall have been satisfied.
ARTICLE 10.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF Company
All of the obligations of Company to effect the transactions
contemplated hereby shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions, any of which may be waived in writing
by Company:
10.1. Representations and Warranties; Performance of
Covenants. All the covenants, terms and conditions of this Agreement to be
complied with and performed by Parent or Merger Sub on or before the Closing
Date shall have been complied with and performed in all material respects. Each
of the representations and warranties of Parent contained in Article 5 hereof
shall have been true and correct in all respects on and as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date or for changes expressly contemplated by this Agreement) on
and as of the Closing Date, subject to such exceptions as would not
(individually or in the aggregate) have a material adverse effect on Parent and
its Subsidiaries, taken as a whole, with the same effect as though such
representations and warranties had been made on and as of the Closing Date (it
being understood that, for purposes of determining the effect of such
exceptions, all materiality qualifications contained in such representations and
warranties shall be disregarded).
10.2. Officers' Certificate. There shall have been
delivered to Company on the Closing Date a certificate executed by the Chief
Executive Officer and the Chief Financial Officer of Parent and Merger Sub
certifying, to the best of their knowledge, compliance with all of the
provisions of Section 10.1.
10.3. Employee Benefit Plans. Company shall have received
evidence reasonably satisfactory to it that all of Company's employee benefit
plans, programs and arrangements, including, without limitation, the Company
401(k) Plan and the Company Stock Options, have been treated as provided in
Article 12 of this Agreement.
ARTICLE 11.
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
All of the obligations of Parent and Merger Sub to effect the
transactions contemplated hereby shall be subject to the satisfaction, on or
before the Closing Date, of the following conditions, any of which may be waived
in writing by Parent:
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11.1. Representations and Warranties; Performance of
Covenants. All the covenants, terms and conditions of this Agreement to be
complied with and performed by Company at or before the Closing Date shall have
been complied with and performed in all material respects. Each of the
representations and warranties of Company contained in Article 4 hereof shall
have been true and correct in all respects on and as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date or for changes expressly contemplated by this Agreement) on
and as of the Closing Date, subject to such exceptions as would not
(individually or in the aggregate) have a Material Adverse Effect, with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (it being understood that, for purposes of determining the
effect of such exceptions, all Material Adverse Effect and materiality
qualifications contained in such representations and warranties shall be
disregarded).
11.2. Authorization of Merger. All actions necessary to
authorize the execution, delivery and performance of this Agreement by Company
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors and stockholders of Company.
11.3. Absence of Certain Changes. Between the date of this
Agreement and the Effective Time of the Merger, there shall not have occurred
any event that constitutes, either individually or in the aggregate, a Material
Adverse Effect.
11.4. Officers' Certificate. There shall have been
delivered to Parent on the Closing Date a certificate executed by the Chief
Executive Officer and the Chief Financial Officer of Company certifying, to the
best of their knowledge, compliance with all of the provisions of Sections 11.1,
11.2 and 11.3.
11.5. Company Dissenting Shares. The number of shares of
Company Stock which constitute Company Dissenting Shares, and with respect to
which the holders thereof shall have not failed to perfect or have not
effectively withdrawn or lost the right to dissent from the Merger under the
DGCL at the Effective Time of the Merger, shall not exceed 10% of the Company
Stock issued and outstanding as of the Closing Date.
11.6. Employee Benefit Plans. Parent shall have received
satisfactory evidence that all of Company's employee benefit plans, programs and
arrangements, including, without limitation, the Company 401(k) Plan and the
Company Stock Options, have been treated as provided in Article 12 of this
Agreement.
ARTICLE 12.
EMPLOYEE BENEFITS
12.1. Employee Benefits.
(a) Parent in its sole discretion, may elect to
require that Company terminate the Company 401(k) Plan prior to the
Effective Time of the Merger and contingent upon consummation of the
Merger; provided, however, that (i) Company shall
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make a matching contribution in accordance with past practice (as
described in the Company Disclosure Letter) to employees who are
eligible under the terms of the Company 401(k) Plan as if the Effective
Date of the Merger were the last day of the plan year (and, if
required, an excess matching contribution for the Supplemental
Executive Retirement Plan in accordance with past practice (as
described in the Company Disclosure Letter)), (ii) active employee
participants shall be eligible to participate in equivalent plans
maintained by Parent or BW (including the 401(k) and pension plans of
Parent and BW), with benefits at least equal to the Company 401(k) Plan
and (iii) in such event, Parent shall permit rollover of participant
loans to Parent's or Surviving Corporation's or BW's plan for employees
retained by Parent or Surviving Corporation or BW. If Parent determines
that the Company 401(k) Plan should be terminated prior to the
Effective Time of the Merger, Company shall provide Parent with
evidence that the Company 401(k) Plan has been properly terminated
(effective as of the day immediately preceding the Effective Time)
pursuant to resolution of Company's Board of Directors. The form and
substance of such resolutions shall be subject to prior review and
approval of Parent. In the event the Company 401(k) Plan is terminated,
as soon as administratively practicable following the Effective Time of
the Merger, the Surviving Corporation and Parent shall cause the assets
of the Company 401(k) Plan to be liquidated in an orderly manner
without material adverse effect on the value of the accounts (or
transferred in kind) and cause each Participant's account to be
transferred in a taxable or tax deferred distribution, such transfer to
occur in a manner that does not result in the loss of qualification of
the Company 401(k) Plan. Subject to the following Sections 12.1(b),
(c), (d), (e) and (f) below, Company shall also take such other actions
in furtherance of amending or terminating any Company Employee Plan or
Benefit Arrangements prior to the Effective Time as Parent may
reasonably require; provided, that any such action is not inconsistent
with the authority of Company under Sections 6.1(f) and (l), as such
authority is described in the Company Disclosure Letter. If the Company
401(k) Plan is not terminated as provided above, the Parent or
Surviving Corporation will make a matching contribution for the plan
year ending December 31, 2004 as a percentage of employee deferrals
that is not less than the percentage contributed for the plan year
ending December 31, 2003 (as set forth in the Company Disclosure
Letter) to all participants who are eligible as provided in the Company
401(k) Plan and to any participant whose termination of employment was
involuntary (and not due to misconduct) and with respect to employees
eligible under the Executive Severance Plan, whose termination of
employment was for Good Reason as defined in the Executive Severance
Plan.
(b) Following the Effective Time of the Merger,
employees of Company and the Company Subsidiaries (i) may continue in
the Company Employee Plans and Benefit Arrangements (other than
equity-based plans or arrangements), or (ii) become eligible for the
employee benefit plans and benefit arrangements of Parent or BW
(including, without limitation, the medical, dental, vision, 401(k) and
pension plans of BW) on the same terms as such plans and arrangements
are generally offered from time to time to employees of Parent and BW
in comparable positions with Parent or BW (subject to any applicable
restrictions or limitations on new entrants or categories of entrants),
or (iii) a combination thereof, it being understood that, except as
otherwise provided in this Section 12.1 or under the terms of any such
Company Employee Plan or
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Benefit Arrangement, Parent and BW shall be entitled from time to time
to modify, terminate or supplement any such employee plans or benefit
arrangements or to substitute new employee plans or benefit
arrangements for such employee plans or benefit arrangements in the
exercise of their business judgment.
(c) With respect to any employee plans and
benefit arrangements of Parent or the Surviving Corporation or BW in
which any employees of Company or the Company Subsidiaries first become
eligible to participate on or after the Effective Time of the Merger
("New Plans") but prior to December 31, 2005, Parent shall (i) waive
all pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements under any such New
Plans, except to the extent such conditions or exclusions would have
been recognized under the Company Employee Plans or Benefit
Arrangements, (ii) recognize service of the employees of Company or the
Company Subsidiaries credited by Company or the Company Subsidiaries
prior to the Effective Time of the Merger for purposes of eligibility
and vesting under the New Plans (and not for purposes of benefit
accrual under any employee pension or retiree medical plans), (iii)
credit any deductibles, co-payments or other out-of-pocket expenses for
the current calendar year for each employee and dependent recognized or
recognizable under the Company Employee Plans or Benefit Arrangements,
and (iv) apply any increase in any of the employee's portion of the
premium cost, deductibles, co-payments and other out-of-pocket costs no
earlier than the later of the first day of the first plan year
beginning after the Effective Time of the Merger of either the Company
Employee Plan or Benefit Arrangement or the employee plan or benefit
arrangement of the Parent or BW. Entitlement to Paid Time Off (PTO) of
employees of Company and the Company Subsidiaries accrued as of the
Effective Time of the Merger (including any PTO classified as
short-term disability under Company's Short-Term Disability Plan) shall
not be reduced. Company agrees that it will accrue as a liability on
its financial statements prior to the Closing its good faith estimate
of the dollar amount attributable to such PTO entitlement and will
advise Parent in writing of the amount of such accrual at least five
(5) Business Days prior to the Closing Date. Such employees will
continue to accrue PTO at no less a rate after the Effective Time of
the Merger than under the Company Benefit Arrangements in effect
immediately prior to the Effective Time of the Merger; provided, that
Parent may determine to apply to such employees the PTO policy existing
from time to time with respect to employees of Parent or BW in
comparable positions; provided further, that, if Parent makes such a
change in policy, such employees shall be entitled to retain any PTO
benefit accrued under the applicable policy prior to the time of any
such change.
(d) (i) Parent agrees that after the Effective
Time of the Merger, the Surviving Corporation will pay or provide for
the year ending December 31, 2004, to those persons employed by Company
or the Company Subsidiaries immediately prior to the Effective Time of
the Merger and who are eligible, the cash incentive payment under the
Annual Incentive Program and the Corporate Performance Bonus Plan and a
credit to the employee's account under the Supplemental Executive
Retirement Plan as a percentage of compensation through December 31,
2004, or if earlier, the date of termination of employment (unless such
employee's termination of employment shall be involuntary (and not due
to death, Disability or Cause, which solely for this purpose shall
- 46 -
be as defined in the Executive Severance Plan) or with respect to those
employees eligible under the Executive Severance Plan, whose
termination of employment is for Good Reason as such term is defined in
the Executive Severance Plan, in which case such employee shall be
entitled to such payment and credit based on such employee's annualized
base compensation), waiving any condition precedent to the payment or
credit and assuming that the performance goals were achieved at the
target level. It is understood that Parent's undertaking herein to
cause such payments and credits to be made is predicated upon Company's
representation and warranty to Parent that the aggregate amount of such
cash incentive payments under the Annual Incentive Program and the
Corporate Performance Bonus Plan and the credits to the accounts of
such employees under the Supplemental Executive Retirement Plan under
the terms thereof will not exceed the maximum amount specified in the
Company Disclosure Letter. It is further understood that nothing in
this Section will be interpreted to reduce any rights the employee may
have under the Executive Severance Plan. Company also represents and
warrants that the only employees of Company and the Company
Subsidiaries who are participating in the Annual Incentive Program and
the Corporate Performance Bonus Plan and the Supplemental Executive
Retirement Plan are those that are identified as such in the Company
Disclosure Letter.
(ii) Parent further agrees that after the
Effective Time of the Merger, the Surviving Corporation will pay or
provide for the year ending December 31, 2004, to the persons employed
by Company or the Company Subsidiaries immediately prior to the
Effective Time of the Merger, any other cash incentive payment to which
they shall be entitled under the Custom Incentive Plans, the Corporate
Loan Center Incentive Plans, the Corporate Call Center Incentive Plans,
the Qualified Lender Incentive Plan, the Relationship Manager Incentive
Plan, the Sales Associate Referral Plan and the Area Manager/Bank
President/Branch Manager Incentive Plan (collectively, the "Other
Incentive Plans," which Company represents and warrants are the only
other incentive compensation plans at Company or the Company
Subsidiaries) as a percentage of base compensation through December 31,
2004, or if earlier, the date of termination of employment under the
Other Incentive Plans, which plans Parent agrees will be maintained in
effect through December 31, 2004; provided, that Parent shall be
entitled to make such adjustments in the performance goals of the Other
Incentive Plans as it shall deem appropriate in light of any changes in
circumstance following the Effective Time of the Merger that do not
materially reduce either the amount as a percentage of base
compensation or the likelihood of achievement of the goals; provided
further, however, that if any such employees are involuntarily
terminated prior to January 1, 2005 (other than for misconduct, death
or disability), they shall receive a cash incentive payment as a
percentage of base compensation through such employee's date of
termination which will assume that any performance goals based on
Company performance (as may be modified as provided above) were
achieved at the target level in effect at the time of such employee's
termination. It is understood that Parent's undertaking herein to cause
such cash incentive payments to be made is predicated upon Company's
representation and warranty to Parent that the aggregate amount of such
cash incentive payments under the Other Incentive Plans (without taking
into account any modifications that Parent may undertake in accordance
with the above provisions) under the terms thereof will not exceed the
maximum amount specified in the Company Disclosure Letter.
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(iii) Company shall not prior to the Effective
Time of the Merger expand any of the plans or programs described in
Sections 12.1(d)(i) or (ii) above or the class or classes of employees
entitled to such plans or programs, it being understood that changes in
the compensation or in the individuals entering or leaving the class of
employees eligible in the ordinary course of business shall not violate
this provision. Payments or credits under the plans and programs
described in Sections 12.1(d)(i) or (ii) above to each eligible
employee shall be made at the time provided under the plan or program,
or within 30 days of that employee's termination of employment,
whichever is earlier.
(iv) Parent agrees that those persons who were
employees of Company and the Company Subsidiaries who remain as
employees of Company, the Company Subsidiaries, Parent or BW in 2005
and thereafter will be entitled to participate in annual cash incentive
performance programs generally offered to employees of Parent or BW (to
the extent that such programs are offered from time to time by Parent
or BW) on the same terms as such programs are generally offered from
time to time to employees in comparable positions with Parent or BW.
(e) (i) Except with respect to employees
described in Section 12.1(e)(ii) below, Parent will cause the Surviving
Corporation to pay and provide to employees of Company or the Company
Subsidiaries whose employment terminates on or after the Effective Date
of the Merger as a result of the consummation of the transactions
contemplated under this Agreement severance benefits under conditions
and in an amount that are no less favorable to the employee than those
contained in the Company Severance Plan as disclosed in the Company
Disclosure Letter as in effect as of the Effective Time of the Merger
(ii) Parent will cause the Surviving Corporation
to pay and provide to Employees of the Company or the Company
Subsidiaries whose employment terminates on or after the Effective Date
and who, as a result, become eligible for benefits under the terms of
the Executive Severance Plan as disclosed in the Disclosure Letter,
each and every benefit (including outplacement and continuation
coverage) to which the employee is entitled under the terms of the
Executive Severance Plan.
(f) Parent will cause the Surviving Corporation
to assume and perform all of the obligations of Company under the terms
of the Supplemental Executive Retirement Plan and the Directors
Deferred Compensation Plan, subject to Parent's right to require that
such plans be amended prior to the Effective Time of the Merger other
than to reduce the amount of benefits previously accrued or required to
be credited under Section 12.1(d) hereof or to adversely affect the
timing or manner of payment of any benefits due or the intended tax
effect to any participant (other than the right, after the Effective
Time of the Merger, to receive distributions in the form of Company
Stock).
12.2. Company Stock Options and the Company Stock Option
Plans.
(a) As soon as practicable following the date of this
Agreement, the Board of Directors of Company (or, if appropriate, any committee
administering the
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Company Stock Option Plans) shall adopt such resolutions or take such other
actions as are required to provide for the cancellation of all outstanding
Company Stock Options upon the Effective Time of the Merger, in exchange for a
cash payment by Company of an amount equal to (i) the excess, if any, of (x) the
Merger Consideration over (y) the exercise price per share of Company Stock
subject to such Company Stock Option, multiplied by (ii) the number of shares of
Company Stock subject to such Company Stock Option for which such Company Stock
Option shall not theretofore have been exercised, whether vested or unvested and
whether or not then exercisable.
(b) All amounts payable pursuant to this Section 12.2
shall be subject to any required withholding of taxes and shall be paid without
interest.
(c) The Board of Directors of Company (or, if
appropriate, any committee administering the Company Stock Plans) shall adopt
such resolutions or take such actions as are required to delete as of the
Effective Time of the Merger the provision in any other Benefit Arrangements of
Company providing for the issuance, transfer or grant of any capital stock of
Company or any interest in respect of any capital stock of Company and to ensure
that following the Effective Time of the Merger no holder of a Company Stock
Option or any participant in any Company Stock Plan or other Company Benefit
Arrangement shall have any right thereunder to acquire any capital stock of
Company or the Surviving Corporation.
ARTICLE 13.
TERMINATION
13.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time of the Merger, whether before or after approval
of this Agreement by the stockholders of Company, upon the occurrence of any of
the following:
(a) By mutual agreement of the parties, in
writing;
(b) By Parent or Company upon the failure of the
stockholders of Company to give the requisite approval of this
Agreement at the duly convened Company Stockholders' Meeting;
(c) By Company, upon written notice to Parent,
if there shall have been a breach by Parent or Merger Sub of any of the
covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of Parent or Merger Sub, which
breach, either individually or in the aggregate, would result in the
failure of the condition set forth in Section 10.1 and which breach has
not been cured within 60 days following written notice thereof to
Parent or, by its nature, cannot be cured within such time period;
(d) By Parent, upon written notice to Company,
if there shall have been a breach by Company of any of the covenants or
agreements or any of the representations or warranties set forth in
this Agreement on the part of Company, which
- 49 -
breach, either individually or in the aggregate, would result in the
failure of the condition set forth in Section 11.1 and which breach has
not been cured within 60 days following written notice thereof to
Company or, by its nature, cannot be cured within such time period;
(e) By Company or Parent if any Governmental
Entity which must grant a regulatory approval required for consummation
of the Merger has denied such approval and such denial has become final
and nonappealable or any Governmental Entity of competent jurisdiction
shall have issued a final nonappealable order permanently enjoining or
prohibiting the Merger; provided, however, that such right to terminate
this Agreement under this Section 13.1(e) shall not be available to
Company or Parent if either such party's failure to comply in all
material respects with Section 6.7 or 7.2, respectively, was a cause of
such action;
(f) By Company or Parent if any conditions set
forth in Article 9 shall not have been met by December 31, 2004;
provided, however, that this Agreement shall not be terminated pursuant
to this Section 13.1(f) if the relevant condition shall have failed due
to the failure of the party seeking to terminate to comply in all
material respects with its obligations under this Agreement;
(g) By Company if any of the conditions set
forth in Article 10 shall not have been met by December 31, 2004;
provided, however, that this Agreement shall not be terminated pursuant
to this Section 13.1(g) if the relevant condition shall have failed due
to the failure of Company to comply in all material respects with its
obligations under this Agreement;
(h) By Parent if any of the conditions set forth
in Article 11 shall not have been met by December 31, 2004; provided,
however, that this Agreement shall not be terminated pursuant to this
Section 13.1(h) if the relevant condition shall have failed due to the
failure of Parent to comply in all material respects with its
obligations under this Agreement;
(i) By Parent if Company or the Company
Subsidiaries shall have breached in any material respect any of their
obligations contained in Sections 6.1(m) or 6.6 or Company shall have
breached in any material respect its obligation under Section 6.7 to
promptly prepare or cause to be prepared the Proxy Statement and to
send the same to the holders of Company Stock in connection with the
Company Stockholders' Meeting;
(j) By Parent if the Board of Directors of
Company shall have failed to recommend adoption of this Agreement at
the duly convened Company Stockholders' Meeting, or withdrawn or
modified or qualified (or proposed to withdraw, modify or qualify) in a
manner adverse to Parent its favorable recommendation of this Agreement
or recommended any Competing Transaction to the stockholders of Company
or taken any action or made any other statement in connection with such
meeting or the Merger having such effect; or
- 50 -
(k) By Company if the Board of Directors of
Company shall, concurrently with such termination, authorize Company to
enter into an agreement with respect to a Competing Transaction;
provided, however, that Company may only exercise its right to
terminate this Agreement pursuant to this Section 13.1(k) if (i)
Company shall have complied in all material respects with Section
6.1(m) (including, without limitation, providing to Parent at least 36
hours prior notice of its intention to take such termination action);
(ii) the Board of Directors of Company, after consultation with a
financial advisor of nationally recognized reputation in similar
transactions, has reasonably determined in good faith that such
Competing Transaction is a Superior Proposal (taking into account any
proposal or offer which shall have been made by Parent to modify the
terms of this Agreement); (iii) the Board of Directors of Company has
reasonably determined in good faith (after consultation with outside
legal counsel) that the failure to exercise such right of termination
would be inconsistent with its fiduciary duties under applicable law;
and (iv) simultaneously with such termination, Company shall make a
payment to Parent in an amount equal to the sum of the Termination Fee
and the Parent Costs (as such terms are defined below) ; provided, that
for purposes of this Section 13.1(k) the term "Competing Transaction"
shall have the meaning set forth in Section 6.1(m), except that the
reference to "15% or more" in the definition of Competing Transaction
shall be deemed to be a reference to "a majority".
13.2. Effect of Termination.
(a) In the event of termination of this
Agreement by either Company or Parent as provided in Section 13.1,
neither Company nor Parent shall have any further obligation or
liability to the other party except with respect to the last sentence
of Section 6.3, Section 13.1(k)(iv) and this Section 13.2; provided,
however, that nothing herein shall relieve any party from liability for
any willful and material breach of the warranties and representations
made by it, or willful and material failure in performance of any of
its covenants, agreements or obligations hereunder.
(b) Company shall pay Parent (by Fed wire
transfer of immediately available funds to such account as may be
designated by Parent in writing to Company) an amount equal to the sum
of (x) $41,600,000 (the "Termination Fee") and (y) all of Parent's
out-of-pocket costs and expenses incurred through the date of
termination of this Agreement in connection with the transactions
contemplated by this Agreement (up to a maximum of $3,000,000),
including all legal, investment banking and accounting fees (the
"Parent Costs") if this Agreement is terminated as follows:
(i) if Parent shall terminate this Agreement pursuant to
Sections 13.1(i) or (j), then Company shall pay Parent the Termination
Fee and the Parent Costs on the Business Day following such
termination;
(ii) if (A) either party shall terminate this Agreement
pursuant to Section 13.1(b) and (B) at any time after the date of this
Agreement and at or before the date of the Company Stockholders'
Meeting, a Competing Transaction (or a proposal therefor) shall have
been publicly announced or otherwise publicly communicated to Company's
stockholders; and if (C) within twelve (12) months of the date of such
- 51 -
termination of this Agreement, Company or any of its Subsidiaries
executes any definitive agreement with respect to, or consummates, any
Competing Transaction, then Company shall pay to Parent the Termination
Fee and the Parent Costs on the Business Day following such execution
or consummation; provided, that for purposes of this paragraph (ii) the
term "Competing Transaction" shall have the meaning set forth in
Section 6.1(m), except that the reference to "15% or more" in the
definition of Competing Transaction shall be deemed to be a reference
to "a majority"; and
(iii) if (A) either party shall terminate this Agreement
pursuant to Sections 13.1(f), (g) or (h) or Parent shall terminate this
Agreement pursuant to Section 13.1(d), (B) at any time after the date
of this Agreement and before such termination a Competing Transaction
(or a proposal therefor) shall have been publicly announced or
otherwise communicated to the Board of Directors of Company and (C)
following such public announcement or communication of such Competing
Transaction (or a proposal therefor), Company shall have intentionally
breached (and not cured after notice thereof) any of its
representations, warranties, covenants or agreements set forth in this
Agreement, which breach shall have materially contributed to the
failure of the Effective Time to occur prior to the termination of this
Agreement, then Company shall pay to Parent the Parent Costs and 50% of
the Termination Fee on the Business Day following such termination; and
if (D) within twelve (12) months of the date of such termination of
this Agreement, Company or any of its Subsidiaries executes any
definitive agreement with respect to, or consummates, any Competing
Transaction, then Company shall pay to Parent the remaining 50% of the
Termination Fee on the Business Day following such execution or
consummation; provided, that for purposes of this paragraph (iii) the
term "Competing Transaction" shall have the meaning set forth in
Section 6.1(m), except that the reference to "15% or more" in the
definition of Competing Transaction shall be deemed to be a reference
to "a majority".
(c) If Company fails to pay all amounts due to
Parent on the dates specified in this Section 13.2, then Company shall
pay all costs and expenses (including legal fees and expenses) incurred
by Parent in connection with any action or proceeding (including the
filing of any lawsuit) taken by it to collect such unpaid amounts,
together with interest on such unpaid amounts at the prime lending rate
prevailing at such time, as published in the Wall Street Journal, from
the date such amounts were required to be paid until the date actually
received by Parent.
(d) In no event shall more than one Termination
Fee be payable under this Section 13.2. Parent (for itself and its
Affiliates) hereby agrees that, upon any termination of this Agreement
under circumstances where Parent is entitled to a Termination Fee and
the Parent Costs under this Section 13.2 and Parent receives such
Termination Fee and the Parent Costs, Parent and its Affiliates shall
be precluded from any other remedy against the Company, at law or in
equity or otherwise, and neither Parent nor any of its Affiliates shall
seek (and Parent shall cause its Affiliates not to seek) to obtain any
recovery, judgment, or damages of any kind, including consequential,
indirect, or punitive damages, against Company or any Company
Subsidiary or any of their respective directors, officers, employees,
partners, managers, members or stockholders in connection with this
Agreement or the transactions contemplated hereby.
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ARTICLE 14.
MISCELLANEOUS
14.1. Expenses. Except as otherwise provided herein, all
Expenses incurred by Parent, Merger Sub and Company in connection with or
related to the authorization, preparation and execution of this Agreement, the
solicitation of stockholder approvals and all other matters related to the
closing of the transactions contemplated hereby, including, without limitation
of the generality of the foregoing, all fees and expenses of agents,
representatives, counsel and accountants employed by either such party or its
Affiliates, shall be borne solely and entirely by the party which has incurred
the same. "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including all fees and expenses of attorneys,
accountants, investment bankers, experts and consultants to the party and its
Affiliates) incurred by the party or on its behalf in connection with the
consummation of the transactions contemplated by this Agreement.
14.2. Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to another shall be in
writing and delivered personally or by confirmed facsimile transmission or sent
by a recognized overnight courier service or by registered or certified mail,
postage prepaid, with return receipt requested, addressed as follows:
To Parent or Merger Sub: BancWest Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Vice
President and Chief
Financial Officer
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pillsbury Winthrop LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To Company: Community First Bankshares, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and Chief
Executive Officer
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P.
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
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Any such notice, request, instruction or other document shall be deemed
received (i) on the date delivered personally or delivered by confirmed
facsimile transmission, (ii) on the next Business Day after it was sent by
overnight courier, delivery charges prepaid; or (iii) on the fourth Business Day
after it was sent by registered or certified mail, postage prepaid. Any of the
persons shown above may change its address for purposes of this section by
giving notice in accordance herewith.
14.3. Assignment. All terms and conditions of this
Agreement shall be binding upon and shall inure, to the extent permitted by law,
to the benefit of the parties hereto and their respective permitted transferees
and successors and permitted assigns; provided, however, that this Agreement and
all rights, privileges, duties and obligations of the parties hereto, without
the prior written approval of the other parties hereto, may not be transferred,
assigned or delegated by any party hereto (by operation of law or otherwise) and
any such attempted transfer, assignment or delegation shall be null and void.
14.4. Counterparts. This Agreement and any exhibit hereto
may be executed in one or more counterparts, all of which, taken together, shall
constitute one original document and shall become effective when one or more
counterparts have been signed by the appropriate parties and delivered to each
party hereto.
14.5. Effect of Representations and Warranties. The
representations and warranties contained in this Agreement shall terminate
immediately after the Effective Time of the Merger.
14.6. Third Parties. Each party hereto intends that this
Agreement shall not benefit or create any right or cause of action to any person
other than parties hereto, except as provided in Section 7.4(e). As used in this
Agreement the term "parties" shall refer only to Parent, Merger Sub and Company
as the context may require.
14.7. Lists; Exhibits; Integration. The Confidentiality
Agreement and each Exhibit and the Company Disclosure Letter delivered pursuant
to this Agreement shall be in writing and shall constitute a part of this
Agreement, although the Confidentiality Agreement and each such Exhibit and the
Company Disclosure Letter need not be attached to each copy of this Agreement.
This Agreement, together with the Confidentiality Agreement and each Exhibit and
the Company Disclosure Letter, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith.
14.8. Knowledge. Whenever any statement herein or in any
list, certificate or other document delivered to any party pursuant to this
Agreement is made "to the knowledge" or "to the best knowledge" of any party or
another Person, such party or other Person shall make such statement based upon
the actual knowledge of the senior executive officers of such Person.
14.9. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
- 54 -
14.10. Captions. The captions contained in this Agreement
are for convenience of reference only and do not form a part of this Agreement
and shall not affect the interpretation hereof.
14.11. Severability. If any portion of this Agreement shall
be deemed by a court of competent jurisdiction to be unenforceable, the
remaining portions shall be valid and enforceable only if, after excluding the
portion deemed to be unenforceable, the remaining terms hereof shall provide for
the consummation of the transactions contemplated herein in substantially the
same manner and with substantially the same effect as originally set forth at
the date this Agreement was executed.
14.12. Waiver and Modification; Amendment. No waiver of any
term, provision or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any such
term, provision or condition of this Agreement. Except as otherwise required by
law, this Agreement, when executed and delivered, may be modified or amended by
action of the Boards of Directors of Parent, Merger Sub and Company without
action by their respective stockholders. This Agreement may be modified or
amended or any provision hereof waived only by an instrument of equal formality
signed by the parties or their duly authorized agents.
14.13. Attorneys' Fees. If any legal action or any
arbitration upon mutual agreement is brought for the enforcement of this
Agreement or because of an alleged dispute, controversy, breach, or default in
connection with this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and all other reasonable costs and expenses
incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
[Remainder of Page Intentionally Left Blank]
- 55 -
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first above written.
BANCWEST CORPORATION
By: ________________________________________
▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President and Chief Operating Officer
BW NEWCO, INC.
By: ________________________________________
▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President and Chief Executive Officer
COMMUNITY FIRST BANKSHARES, INC.
By: ________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: President and Chief Executive Officer
- 56 -
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF THE SURVIVING CORPORATION
- 57 -