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EXHIBIT 10.11
PLAN AND AGREEMENT OF MERGER AND REORGANIZATION
Plan and Agreement of Merger and Reorganization (hereinafter referred to as
"Agreement"), made as of the 22 day of February, 1996, by and between F & M
Bancorporation, Inc., a Wisconsin corporation and Community State Bank, a
Wisconsin banking corporation.
1. Definitions.
The following definitions shall apply in this Plan and Agreement of Merger
and Reorganization:
1.1 "Agreement" shall mean this Plan and Agreement of Merger and
Reorganization.
1.2 "BANK" shall mean Community State Bank, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.3 "BANK Stock" shall mean BANK's voting capital stock $10.00 par value.
1.4 "BANK Shareholders" shall mean the shareholders of BANK shown in the
Schedule previously delivered to F & M.
1.5 "BANK Counsel" shall mean ▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
1.7 "Closing Date" shall mean the date set by mutual agreement of BANK and
F & M and will not occur prior to the satisfaction or the waiver of all of the
conditions to the transaction.
1.8 "Effective Time" shall mean the date on which the Certificate of
Consolidation issued by the State of Wisconsin Commissioner of Banking or the
successor thereto (the
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"Commissioner") is recorded with the Kewaunee County Register of Deeds. The
Certificate of Consolidation shall be filed as soon as possible after the
conditions precedent to this merger have been met or waived by F & M and BANK,
but not prior to the Closing Date.
1.9 "F & M" shall mean F & M Bancorporation, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.10 "F & M Common" shall mean F & M's voting common stock, $1.00 par
value.
1.11 "F & M Per Share Price" shall mean the average closing price, as
quoted on the NASDAQ National Market System ("NASDAQ"), for F & M Common for
the fifteen (15) trading days on which F & M Common is actually traded,
immediately preceding the five (5) calendar days prior to the Closing Date of
the transaction, provided, however, that the F & M Per Share Price shall not be
less than Twenty-one and 50/100 Dollars ($21.50) or exceed Thirty-two and
50/100 Dollars ($32.50).
1.12 "F & M Counsel" shall mean McCarty, Curry, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
1.13 "Securities Counsel" shall mean ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
1.14 "Subsidiary" shall mean F & M Interim Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a bank to be organized as a wholly-owned subsidiary
of F & M for the purpose of this transaction.
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1.15 "Registration Statement" shall mean the Registration Statement of F &
M pursuant to which the shares of F & M Common to be issued in the merger will
be registered with the Securities and Exchange Commission ("SEC"), and which
shall include the prospectus of F & M relating to the F & M Common issuable in
the transaction and the proxy statement of BANK to its shareholders relating to
approval of the merger (the "Prospectus/Proxy Statement").
2. Preamble.
F & M is a multi-bank holding company with subsidiaries located in
Wisconsin. BANK is a Wisconsin banking corporation with its main office in
Algoma, Wisconsin and a branch in Forestville, Wisconsin. F & M and BANK, by
their respective employees and agents have had the opportunity to make such
review and investigation of the other as they deem appropriate and to negotiate
the terms and conditions of this Agreement. F & M and BANK each believe that
this transaction is in their best interests and in the best interests of their
shareholders and desire to set forth their agreement and understanding in this
Agreement.
The parties have considered the proposed merger and believe that a merger
between BANK and Subsidiary resulting in BANK becoming a subsidiary of F & M
will be in the best interest of their respective corporations and shareholders.
The merger of Subsidiary into BANK is intended to constitute a reorganization
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within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended.
In consideration of the foregoing and the terms, conditions and covenants
of this Agreement and in reliance on the warranties and representations
contained herein, the parties adopt this Plan and Agreement of Merger and
Reorganization and agree as follows:
3. Merger of Subsidiary into BANK.
3.1 Surviving Corporation. At the Effective Time of the merger, Subsidiary
shall be merged into BANK in accordance with the laws of the State of Wisconsin.
BANK shall be the surviving corporation and the separate corporate existence,
identity, and the organization of Subsidiary, except as specifically provided by
law and this Agreement, shall cease. As the surviving corporation, BANK shall
succeed to and possess all the assets, properties, powers, privileges, rights
and immunities of Subsidiary and shall be subject to all liabilities,
obligations, limitations and duties of Subsidiary as described in this
Agreement.
3.2 Subsidiary Stock Subscription. Subject to the fulfilling of the
conditions precedent to the closing of this transaction set forth below, F & M
will transfer to Subsidiary such shares of F & M Common as may be necessary to
effect the merger, as described under paragraph 3.3 below.
3.3 Exchange of BANK Stock. At the Effective Time, the shares of the BANK
Stock shall be converted into shares of F & M Common as follows:
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(a) All BANK Shareholders will receive shares of F & M Common based
upon the Exchange Ratio. The Exchange Ratio shall be calculated by dividing the
Value Per BANK Share by the F & M Per Price Share. The Exchange Ratio shall be
multiplied by the number of shares of BANK Stock held by each BANK Shareholder
to determine the number of shares of F & M Common to be issued to that BANK
Shareholder.
(b) The Value Per BANK Share will be equal to Twelve Million Five
Hundred Thousand and 00/100 Dollars ($12,500,000.00) (the aggregate price)
divided by Forty-six Thousand (46,000) (the number of BANK Shares outstanding)
or Two Hundred Seventy-one and 74/100 Dollars ($271.74) per share subject to
adjustment under paragraph 3.4.
(c) No fractional shares of F & M Common shall be issued; all
fractional shares will be converted to cash in an amount equal to the fractional
share determined in accordance with the formula set forth above multiplied by F
& M Price Per Share.
3.4 Adjustment of Value Per BANK Share. The Value Per BANK Share is
subject to adjustment if any of the following occurs between the date of this
Agreement and the Closing Date:
(a) The BANK increases the number of outstanding shares of BANK Stock,
or is obligated to do so which obligation is enforceable by its holder
notwithstanding this Agreement or the BANK issues or agrees to issue any other
class of stock or instrument convertible into stock. The actual number of
shares of BANK Stock outstanding and any additional shares which BANK is
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obligated to issue as of the Closing Date shall be divided into the aggregate
price to determine the Value Per BANK Share.
(b) The dividends declared by BANK between January 1, 1996 and the
Closing Date (regardless of when such dividends are payable) exceed Three
Hundred Fourteen Thousand and 00/100 Dollars ($314,000.00) or the expenses of
this transaction [as set forth in paragraph 4.3(d)] exceed the limit established
in paragraph 4.3(d), provided, however, that in the event dividends or expenses
exceed their respective limits the Exchange Ratio shall be adjusted as follows:
(i) The total amount of such excess shall be multiplied by 1.35;
(ii) The product determined under sub-paragraph (i) above shall
be deducted from Twelve Million Five Hundred Thousand and No/100 Dollars
($12,500,000.00) (the aggregate price) and any adjustment under paragraph 3.4(e)
below to determine the "revised aggregate price;"
(iii) The revised aggregate price shall be used to determine the
Exchange Ratio under paragraphs 3.3(a) and (b) above.
(iv) The excess amounts for dividends and transaction expenses
shall be separately determined and no off-set shall be made if one amount
exceeds its limitation and the other does not.
(c) The actual earnings of BANK, determined in accordance with
accepted accounting standards applicable to preparation of Reports of Condition
required to be filed with the
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Federal Deposit Insurance Corporation, applied on a consistent basis, net of
tax effect, but without deduction for the expense of this transaction itemized
in paragraph 4.3(d) as of the end of the month prior to the month in which
closing occurs (the "Actual Earnings") shall not be less than the amounts
corresponding to such month end as shown on the attached Schedule A (the
"Minimum Earnings"), provided, however, that if the Actual Earnings are less
than the Minimum Earnings, the Exchange Ratio shall be adjusted as follows:
(i) The total amount of such difference shall be multiplied by
1.35;
(ii) The product determined under sub-paragraph (i) above shall
be deducted from Twelve Million Five Hundred Thousand and No/100 Dollars
($12,500,000.00) (the aggregate price) and any adjustment under paragraph 3.4(b)
above to determine the "revised aggregate price;"
(iii) The revised aggregate price shall be used to determine the
Exchange Ratio under paragraphs 3.3(a) and (b) above.
3.5 Articles of Incorporation. The Articles of Incorporation of BANK in
effect immediately prior to the Effective Time of the merger shall continue in
full force and effect as the Articles of Incorporation of the surviving
corporation.
3.6 Bylaws. The Bylaws of BANK in effect immediately prior to the
Effective Time of the merger, shall continue in full force and effect as the
bylaws of the surviving corporation.
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3.7 Officers and Directors. The officers and directors of BANK at the
Effective Time of the merger shall remain as the officers and directors of the
surviving corporation, provided, however, that nothing in this paragraph shall
create any rights in favor of such officers and directors to continued status
as such following the consummation of the merger.
4. Representations and Warranties of BANK. BANK, by its duly authorized
officers, directors or other agents makes the following representations and
warranties to F & M each of which is true and correct as of the date hereof,
and shall remain true and correct to and including the Closing Date, and shall
be unaffected by any investigation heretofore or hereafter made by or any
notice to F & M:
4.1 Ownership and Authority. The current BANK Shareholders are identified
in the Schedules previously delivered to F & M, which BANK will update
periodically as necessary.
4.2 BANK Organization and Authority.
(a) BANK is duly organized, validly existing and in good standing
under the laws of the State of Wisconsin and has all requisite banking and
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted. BANK's main office is located in
Algoma, Wisconsin and its only branch office is located in Forestville,
Wisconsin. All necessary corporate approval and authorization and regulatory
approval for BANK's present operations has been given and remains in full force
and effect and in good standing.
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(b) BANK is authorized to issue Forty-six Thousand (46,000) shares of
BANK Stock, BANK's only class of stock. BANK has Forty-six Thousand (46,000)
shares of BANK Stock issued and outstanding, all of which are legally and
validly issued, fully paid and nonassessable.
(c) BANK has not issued and does not have outstanding any option,
warrant or convertible securities or other right to purchase or convert any
obligation into BANK's securities and has not agreed to issue or sell any
additional securities of any type.
(d) The execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated under it have been duly authorized
by appropriate corporate approval and will not violate any provision of BANK's
articles of incorporation or bylaws or any provisions of, or result in the
acceleration of any obligation under the mortgage, lien, lease, agreement,
instrument, court order, arbitration award, judgment or decree to which BANK is
a party, or by which BANK is bound and will not require the consent,
authorization or approval of any other public or private person or entity other
than the approval by BANK's shareholders and the appropriate federal and state
securities and banking regulatory agencies and will not violate any other
restriction of any kind or character to which BANK is subject.
(e) Algoma Investment Corporation ("AIC") is duly organized, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate power to
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carry on its business as now being conducted. AIC is authorized to issue One
Thousand (1000) shares of common stock, of which One Thousand (1000) shares
legally and validly issued and fully paid nonassessable. BANK is the only
shareholder of AIC. AIC has one employee in the State of Nevada.
4.3 Financial Matters.
(a) True copies of BANK's consolidated financial statements,
consisting of consolidated balance sheets, consolidated statements of operations
and consolidated statements of stockholders' equity as of the close of business
on December 31, 1995, 1994, and 1993, have been delivered by BANK to F & M
("BANK's Financial Statements"). All of BANK's Financial Statements are true
and correct in all material respects and present an accurate and complete
disclosure of the financial condition of BANK as of their respective dates, and
the earnings for the periods covered, all determined in accordance with accepted
accounting standards applicable to preparation of Reports of Condition required
to be filed with the Federal Deposit Insurance Corporation, applied on a
consistent basis.
(b) BANK and AIC have good marketable title to all of their assets,
business and properties including, without limitation, all such properties
reflected in the BANK's Financial Statements as of December 31, 1995, free and
clear of any mortgage, lien, pledge, security interest, assessment, levy,
charge, claim or other encumbrance, except for real estate and personal property
taxes for 1996 which are not yet due and the One Hundred Thousand and 00/100
Dollars ($100,000.00) portion of
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a Five Hundred Thousand and 00/100 Dollars ($500,000.00) U.S. Treasury Note
pledged to the Federal Reserve Bank of Chicago as collateral for the BANK's
Treasury, Tax and Loan Account. AIC does not own any real property. BANK does
not have any notice of any special assessment which will be levied or assessed
against any real property owned or leased by it. All real property owned,
operated and leased by BANK is in full compliance in all material respects with
all applicable federal, state and local statutes and regulations including, but
not limited to, any building codes, safety codes, OSHA regulations,
environmental laws and regulations, the Americans with Disabilities Act, zoning
ordinances and other similar codes, ordinances, and regulations and BANK has
not received any citations, notices, charges or other complaints claiming a
violation of the foregoing nor is BANK aware of any investigation of any
alleged violation.
(c) All property and assets owned or currently in use by BANK or AIC,
or in which they have an interest (excluding interests which arise in collateral
given to secure loans made by BANK or because of a security interest granted to
BANK) or which are in their possession, are in good operating condition and
repair subject only to normal wear and tear. Schedules of all real and personal
property owned by BANK has previously been delivered by BANK to F & M. If BANK
leases any real or personal property, a separate schedule clearly identifying
such leased property will be included in the Schedules delivered by BANK to F &
M. As of the Closing Date, all such property and assets will be in the
condition represented above.
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(d) For the period from October 1, 1995 to September 30, 1996, BANK
has projected in good faith that its ordinary earnings determined in accordance
with accepted accounting standards applicable to preparation of Reports of
Condition required to be filed with the Federal Deposit Insurance Corporation,
applied on a consistent basis, net of tax effect shall be Six Hundred Twenty-two
Thousand Four Hundred Eighty and 00/100 Dollars ($622,480.00) but without
reduction for the expenses of this transaction. The expenses of this
transaction are those incurred by BANK for legal, accounting and/or auditing or
investment banking and/or brokerage fees or expenses associated with the
acquisition of BANK by F & M and will be reasonable and customary and will not
in any event exceed One Hundred Forty-five Thousand and 00/100 Dollars
($145,000.00).
4.4 Changes Since December 31, 1995. Since December 31, 1995, with respect
to BANK there has not been:
(a) Any loss, damage, destruction or failure to maintain the tangible
assets of BANK (whether or not covered by insurance), or affecting its business
or properties, which will materially adversely affect the financial condition or
operations BANK.
(b) Any lapse, revocation, failure to maintain in full force and
effect or other event which, through the passage of time or the giving of
notice, or both could render any insurance coverage previously maintained by
BANK ineffective in whole or in part.
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(c) Any acquisition by BANK of a capital asset at a cost in excess of
Five Thousand Dollars ($5,000.00) without prior approval of F & M, except for
the renovation of Forestville station which will not exceed Fifteen Thousand and
00/100 Dollars ($15,000.00).
(d) Any amendment to their Articles of Incorporation or Bylaws.
(e) Any change in accounting procedures, practices or methods from
those used by BANK in prior years except as may be necessary to prepare BANK's
1995 Financial Statements in accordance with generally accepted auditing
standards.
(f) Any increase in or agreement to increase salaries, wages, fringe
benefits, benefits under any plan subject to ERISA, or other compensation of any
officers, directors, employees or agents of BANK, except that for 1996, BANK may
grant wage and/or salary increases consistent with past practices which do not
exceed, in the aggregate, four percent (4%) of the wages and salaries being paid
as of December 31, 1995.
(g) Any issuance, or agreement to issue, on or before the Closing Date
or thereafter, directly or indirectly, any additional shares of BANK Stock, any
other class of stock, or other securities of BANK.
(h) Any declaration, setting aside or payment of any dividend or any
distribution in respect to BANK's stock or any redemption, purchase or other
acquisition by BANK of any stock or any other repayments to the shareholders of
BANK provided, however, that for the period from January 1, 1996, to the Closing
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Date the dividends which are paid or are declared do not exceed in total Three
Hundred Fourteen Thousand and 00/100 Dollars ($314,000.00).
(i) Any sale, transfer, or other disposition, prior to maturity, of
any security or other earning asset (exclusive of loans and leases).
(j) Any borrowings or other indebtedness (excluding deposit
liabilities) in excess of the amounts disclosed by BANK's December 31, 1995
Financial Statements, provided, however, that BANK may periodically borrow Fed
Funds provided that the total outstanding balances of such borrowing shall not
exceed the total amount historically borrowed by BANK for similar purposes.
(k) Any mortgage, lien, pledge, security interest, assessment, levy,
charge, claim or other encumbrance made with respect to any of the properties or
assets of BANK in addition to those disclosed by BANK's December 31, 1995
Financial Statements.
(l) Any sale, transfer or other disposition of assets of BANK except
in the normal course of business and consistent with past practices, provided,
however, that BANK may not dispose of any securities prior to maturity without
the prior consent of F & M.
(m) Any material change in the manner in which business was being
conducted by BANK prior to December 31, 1995, or other material failure by BANK
to use its best efforts to maintain its present business organization (subject
to the terms of this Agreement), employees and customers.
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(n) Any loan or commitment to make a loan by BANK with an interest
rate, repayment term, collateral or security requirements or other conditions
which are materially different from those upon which BANK made loans prior to
December 31, 1995, except to the extent such difference is in response to
competitive conditions encountered by BANK.
(o) The statements made in paragraphs 4.4(a), (b), (c), (d), (e),
(i), (k), (l), (m) and (p) are true and correct if "AIC" is substituted for
"BANK" in such paragraphs.
(p) Any other materially adverse change in BANK's prospects, financial
condition, assets, liabilities, properties or business.
4.5 Liabilities.
(a) Neither BANK nor AIC have any liabilities, whether accrued,
absolute, contingent or otherwise, which arose or relate to any transaction or
occurrence involving BANK or AIC or their respective officers, directors,
employees, agents or servants prior to the date of this Agreement which are not
disclosed by the BANK's Financial Statements described above. To the best of
its knowledge, after due and diligent inquiry, as of the date hereof, no known
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, exist which may hereafter give rise to any such liabilities of BANK
or AIC.
(b) To the best of its knowledge, all parties with whom BANK and AIC
have contractual arrangements are in compliance therewith. Neither BANK nor AIC
has declared, and is not prepared to declare, any such parties in default under
any such
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contractual arrangements. Neither BANK nor AIC is in default in any material
respect under any contracts to which it is a party, nor has any event occurred,
which through the passage of time or the giving of notice or both, would
constitute a default under any such contract or obligation or cause the
acceleration of any obligation of BANK or result in the creation of a lien,
charge, assessment, encumbrance or other claim whatsoever upon any asset of
BANK. None of the contracts to which BANK is a party will be adversely
affected by the transaction contemplated by this Agreement.
(c) To the best of its knowledge, BANK and AIC are in compliance in
all material respects with all applicable federal, state, county and local
statutes, ordinances, regulations, decrees, orders, or other laws. Neither BANK
nor AIC has received notice of any alleged violation of any such statutes,
ordinances, regulations, decrees, orders or other laws.
(d) Except as disclosed in the Schedules previously furnished by BANK
to F & M, no legal, administrative or other proceedings, investigations or
inquiries or other claims, judgments, consent decrees, stipulations, injunctions
or restrictions are either pending or outstanding, or to the best of its
knowledge, threatened against or involving BANK or AIC or affecting their
assets, properties or business except as described in paragraph 4.3(b). BANK
does not know, or have any grounds to know, of any basis for any such
proceedings, investigations or inquiries or other claims, judgments, consent
decrees, stipulations, injunctions or restrictions.
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(e) The assets and liabilities or potential liabilities of BANK and
AIC are fully insured (except for the deductible thereunder), except for taxes,
deposits, repurchase agreements or other similar deposit-type instruments, and
any borrowing of Fed Funds and all policies of insurance carried by BANK or AIC
are in full force and all premiums thereon have been paid in a timely manner and
are paid to date and all bonds have been acquired and maintained on all
employees, agents, officers and directors of BANK or AIC required to be bonded.
The limits of coverage, deductibles and other material provisions of such
insurance and bonds are disclosed in the Schedules previously delivered by BANK
to F & M. Said insurance and bonds, including but not limited to, general
comprehensive (commercial) public liability insurance covering personal
injuries, death and property damage, fidelity bonds and worker's compensation
insurance have been acquired and maintained for at least the past five (5)
years.
4.6 Taxes. BANK and AIC have filed all federal, state and local tax
returns and reports covering income, sales, use, real or personal property or
other taxes of any type required to be filed and have paid all taxes including
any interest, penalties and assessments which are due and required to be paid.
The taxes provided for in BANK's Financial Statements and which will be
provided for prior to the Closing Date will be adequate for the payment of any
unpaid taxes as of such dates. BANK's federal income tax return has never been
audited. Neither BANK nor AIC has waived any restrictions on the assessment or
collection of
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taxes or consented to the extension of any statute of limitations relating to
any tax liability. BANK has not determined or been advised that BANK may be
liable for a material deficiency or other liability in respect to any state or
federal income tax returns or other tax returns previously filed by BANK or
AIC.
4.7 Contracts and Commitments. Neither BANK nor AIC have any contracts or
commitments, either oral or written, with any officer, director, shareholder,
employee, customer, depositor, supplier of goods or services or any other
entity or person which contain any terms or conditions which are not usual and
customary under the circumstances and which may have a material adverse effect
on the operations, profitability or net worth of BANK.
4.8 Reporting and Withholding on Payment of Interest. To the best of its
knowledge, BANK has fully complied with the Internal Revenue Code (the "Code"),
and all rules and regulations of the Internal Revenue Service ("IRS") issued
thereunder, with respect to the reporting of payments of interest and other
payments by it, and has complied with all provisions requiring the withholding
for income taxes on such amounts when required. BANK has instituted adequate
procedures to assure compliance with such provisions. To the best of its
knowledge, all reporting to the IRS required of BANK has been done in a timely
manner via proper medium. BANK has not been advised of any violation or
potential violation with respect to such reporting requirements.
4.9 Employees and Employee Benefits.
(a) BANK is not a party to or bound by any written or oral (i)
employment or employment-related consulting contract
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which is not terminable at will by the BANK without penalty, (ii) plan or
agreement providing for any employee bonus, deferred compensation, pension,
profit sharing, retirement benefits, stock purchase, stock option employee
pension benefit plan or employee welfare benefit plan except as set forth in
the Schedules previously delivered by BANK to F & M as set forth in paragraphs
4.9(b) and 4.9(c) to this Agreement.
(b) All pension, profit sharing, or other employee pension benefit
plans of BANK ("the Plans") are included in the Schedules previously delivered
by BANK to F & M and are now, and will continue until the Closing Date to be,
qualified Plans under Section 401(a) of the Code, in full compliance with the
Employee Retirement Income Security Act of 1974 as amended ("ERISA"). To BANK's
best knowledge, all premiums, notices, reports and other filings required to be
delivered or filed under applicable law with respect to such Plans have been
duly and timely delivered or filed. BANK has no knowledge of any fact or
circumstance which would materially and adversely affect such Plans' qualified
status or compliance as above described, or of any "reportable event" (as such
term is defined in Section 4043(c) of ERISA) or any "prohibited transaction" (as
such term is defined in Section 406 of ERISA and Section 4975(c) of the Code)
which has occurred since the date on which said sections first became applicable
to the Plans. The Plans satisfy the minimum funding standards set forth in the
Code and ERISA. As of the Closing Date there will be no unfunded vested
liability of the Plans, except for the obligation of BANK for contributions for
the current year which
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are not yet due and payable but for which adequate amounts are being accrued on
a monthly basis.
(c) All employee welfare benefit plans of BANK (the "Welfare Plans")
are included in the Schedules previously delivered by BANK to F & M and are now,
and will continue until the Closing Date to be, in full compliance with the Code
and the Employee Retirement Income Security Act of 1974 as amended ("ERISA").
To BANK's best knowledge, all notices, reports and other filings required to be
delivered or filed under applicable law with respect to such Welfare Plans have
been duly and timely delivered or filed. BANK has no knowledge of any fact or
circumstance which would adversely affect such Welfare Plans' compliance as
above described or any "prohibited transaction" (as such term is defined in
Section 406 of ERISA and Section 4975(c) of the Code) which has occurred since
the date on which said sections first became applicable to the Welfare Plans.
(d) No person or governmental agency has made any claim against BANK
or its directors, officers, employees or agents arising out of any statute,
ordinance or regulation alleging (i) discrimination against applicants for
employment, employees or the public, (ii) any employment practices, policies or
procedures are discriminatory or have been breached, (iii) a failure to comply
with federal and state wage and hour laws, rules or regulations, (iv) a
violation of occupational safety and health statutes, regulations or standards
or (v) that BANK has committed an unfair labor practice(s).
4.10 Environmental Matters.
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(a) To the best knowledge of BANK, there has been no release of any
hazardous substance, as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") nor any release of oil or
hazardous substance as provided under Wis. Stats. Section 144.76, on, upon or
into the real property owned or leased to BANK or, to the best of BANK's
knowledge upon any real estate or property which secures any loan made by BANK
or which BANK has a right to acquire upon foreclosure or otherwise.
(b) To the best of BANK's knowledge, there have been no such releases
on, upon or into any real property adjoining or in the vicinity of the property
described in paragraph 4.10(a) above, which through air, soil or groundwater
migration could have come to be located upon any property owned or leased by
BANK, or which secures a loan made by BANK or may be acquired by BANK in
foreclosure.
4.11 Accuracy of All Statements. No representation or warranty by BANK in
this Agreement or otherwise, in any of BANK's Financial Statements, or in any
other statement, certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of BANK pursuant to this Agreement, nor any document
or certificate delivered to F & M pursuant to this Agreement or in connection
with actions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact necessary to
make the statement contained therein not misleading.
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4.12 Prospectus/Proxy Statement. The parts of the Prospectus/Proxy
Statement which were provided or reviewed by the BANK with respect to BANK will
not, at the date it is first mailed or delivered to the BANK's Shareholders,
and will not, at the date or dates of the meeting of the BANK's Shareholders
called to approve the Merger, as then amended or supplemented, contain any
statements that are, at the time at which, and in light of the circumstances
under which they are made, false or misleading with respect to any material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not false or misleading.
Notwithstanding the foregoing, the BANK makes no representation or warranty
regarding and shall have no responsibility for the accuracy of any information
with respect to F & M or Subsidiary or any of their affiliates or subsidiaries
contained in the Prospectus/Proxy Statement.
4.13 Financial Adviser. Except for the services of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co.
Incorporated ("▇▇▇▇▇"), BANK has not engaged, consented to engage, or
authorized any financial adviser, broker, investment banker, or similar third
party to act on its behalf, directly or indirectly, in connection with the
transaction contemplated by this Agreement. Any fees or expenses payable to
Baird shall be paid by BANK.
4.14 Schedules. The Schedules previously provided by BANK to F & M as
itemized in the attached Exhibit 4.14 to this Agreement are true, complete and
accurate copies of the documents
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contained therein. BANK will promptly notify F & M of any changes, amendments,
or other modifications to the Schedules.
5. Representations and Warranties of F & M.
F & M, by its duly authorized officers, employees or other agents makes
the following representations to BANK, each of which is true and correct as of
the date hereof and shall remain true and correct to and including the Closing
Date, shall be unaffected by any investigation heretofore or hereafter made by
or any notice to BANK except as set forth herein.
5.1 Organization and Authority.
(a) F & M is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin with all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as now being conducted and to enter into and perform its
obligations under this Agreement, upon receiving the necessary approval from the
federal and state regulatory authorities. F & M is only qualified to do business
in the State of Wisconsin and has received approval from the Federal Reserve
Bank of Chicago to engage in business as a bank holding company.
(b) Subsidiary will be organized as a banking corporation under the
State of Wisconsin and upon organization will have all requisite banking and
corporate power and authority to enter into and perform its obligations under
this Agreement, upon receiving the approval of F & M and the federal and state
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regulatory authorities. Subsidiary will be a wholly-owned subsidiary of F & M.
(c) F & M is authorized to issue Ten Million (10,000,000) shares of F
& M Common and has Five Million Nine Hundred Fifty-five Thousand One Hundred
Eight (5,955,108) shares issued and outstanding. F & M anticipates increasing
its authorized shares to Twenty Million (20,000,000) at its annual shareholders
meeting to be held April 23, 1996, and that additional shares of F & M Common
may be issued by it prior to the Closing Date. F & M has not announced any
other acquisition which will result in the issuance of any additional shares of
F & M Common. Additional shares of F & M Common may be issued by F & M pursuant
to its dividend reinvestment plan (up to a maximum of 150,000 shares) or
pursuant to its 1993 Stock Option Plans (up to a maximum of 150,000 shares) or
pursuant to stock options previously granted to ▇▇▇▇ ▇▇▇▇▇▇▇ (up to a maximum of
14,455 shares) or in connection with the acquisitions of other business entities
or their assets which are announced after the date of this Agreement. These
outstanding shares are legally and validly issued and fully paid and
nonassessable except as provided by Wis. Stats. Section 180.0622(2)(b).
5.2 Performance of this Agreement. The execution, delivery and performance
of this Agreement and the consummation of the transaction contemplated under it
have been duly authorized by appropriate corporate approval and will not violate
any provision of F & M's articles of incorporation or bylaws or any provisions
of, or result in the acceleration of any obligation under any
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mortgage, lien, lease, agreement, instrument, court order, arbitration award,
judgment or decree to which F & M is a party, or by which F & M is bound and
will not require the consent, authorization or approval of any other public or
private person or entity other than the approval by F & M as the sole
shareholder of Subsidiary and the appropriate federal and state securities and
banking regulatory agencies and will not violate any other restriction of any
kind or character to which F & M is subject except as set forth in this
Agreement.
5.3 Legality of Shares to be Issued. The shares of F & M Common to be
delivered pursuant to this Agreement, when so delivered, will have been duly
and validly authorized and issued by F & M and will be fully paid and
nonassessable, except as provided by Wis. Stats. Section 180.0622(2)(b).
5.4 Financial Statements. True copies of the audited consolidated
financial statements of F & M consisting of consolidated balance sheets,
consolidated statements of income, consolidated statements of stockholder's
equity and consolidated statements of cash flows as of the close of business on
December 31, 1994 and 1993, have been delivered by F & M to BANK (F & M's
Financial Statements). All of F & M's Financial Statements are true and
correct in all material respects and present an accurate and complete
disclosure of the financial condition of F & M as of their respective dates and
of the earnings for the periods covered, in accordance with generally accepted
accounting principles applied on a consistent basis.
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5.5 Litigation. There are no legal, administrative or other proceedings,
investigations or inquiries or other claims, judgments, consent decrees,
stipulations, injunctions or restrictions, either threatened, pending or
outstanding against or involving F & M or its properties, or business, nor does
F & M know, or have reasonable grounds to know, of any basis for any such
proceedings, investigations or inquiries, or other claims, judgments, consent
decrees, stipulations, injunctions or restrictions.
5.6 Directors, Officers and Employees of BANK. Neither F & M nor their
respective directors, officers, employees, agents, attorneys or accountants have
made or will make any representations or warranties as to any further positions
with BANK, F & M following the consummation of the transaction contemplated by
this Agreement to any director, officer or employee of BANK, except that ▇▇▇▇
▇▇▇▇▇ will continue in his current position as president of BANK until January
1, 1997 and that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be employed pursuant to a written
employment agreement with BANK for not less than twelve (12) months after the
Closing Date.
5.7 Accuracy of All Statements. No representation or warranty by F & M in
this Agreement or otherwise, nor any financial statements, statement,
certificate, schedule or exhibit hereto furnished or to be furnished by or on
behalf of F & M pursuant to this Agreement, nor any document or certificate
delivered to BANK pursuant to this Agreement or in connection with actions
contemplated hereby, contains or shall contain any
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untrue statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
5.8 Prospectus/Proxy Statement. The Prospectus/Proxy Statement will not,
at the date it is first mailed or delivered to the BANK's shareholders, and
will not, at the date or dates of the meeting of the BANK's Shareholders called
to approve the Merger, as then amended or supplemented, contain any statements
that are at the time at which, and in light of the circumstances under which
they are made, false or misleading with respect to any material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not false or misleading. Notwithstanding the
foregoing, F & M make no representation or warranty and shall have no
responsibility for the accuracy of any information contained in or omitted from
the Prospectus/Proxy Statement in so far as it describes the BANK.
5.9 No Broker. All negotiations relative to this Agreement and the
transaction contemplated hereby have been carried on directly by F & M with
BANK without the intervention of any broker or third party on behalf of F & M.
F & M has not engaged, consented to engage, or authorized any broker,
investment banker, or third party to act on its behalf, directly or indirectly,
in any capacity in connection with the transaction contemplated by this
Agreement.
6. Covenants of BANK.
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BANK hereby covenants and agrees as follows:
6.1 Access to Information. F & M and its authorized representatives shall
have full access during normal business hours to all properties, books,
records, contracts and documents of BANK and BANK shall furnish or cause to be
furnished to F & M and its authorized representative all information with
respect to the affairs and business of BANK as F & M may reasonably request.
6.2 Actions Prior to Closing. From and after the date of this Agreement
and until the Closing Date, BANK:
(a) Shall carry on its business diligently and substantially in the
same manner as heretofore and BANK shall not engage in or institute any unusual
or novel methods of doing business and shall use its best efforts to inform F &
M in advance before either introducing any new products or services or modifying
any existing products or services.
(b) Shall not (i) grant any increase in the rates of pay, salary or
compensation provided to its officers, directors or employees, which in
combination with all increases granted since January 1, 1996 exceed in the
aggregate four percent (4%) of the total compensation paid to the officers,
directors or employees of BANK as of December 31, 1995, and (ii) shall not
increase or decrease the benefits provided under, the contribution to, the cost
sharing allocation expense or cost to BANK of any employee fringe benefit or of
any of the benefit plans included in the Schedules described in paragraphs
4.9(b) and 4.9(c), except for normal adjustments imposed by third party
providers.
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(c) Shall not enter into any contract or commitment or engage in any
transaction which is not in the normal course of business and which is not
consistent with BANK's past business practices.
(d) Shall not create any indebtedness other than (i) short term
indebtedness incurred in the normal course of business, (ii) indebtedness
incurred pursuant to an existing contract previously disclosed to F & M or (iii)
indebtedness other than as necessary to do the acts and things contemplated by
this Agreement.
(e) Shall not declare or pay any cash dividend, stock dividend or make
any other distribution in respect of its stock, or directly or indirectly
redeem, purchase or otherwise acquire any of its own stock, or grant any stock
warrant, option options or issue directly or indirectly any shares of common or
preferred stock or any other security of any type whatsoever or in any way
dispose of any shares of its own stock or any other security, except that
dividends may be paid by the BANK prior to the Closing Date provided that the
total of all dividends paid between January 1, 1996, and the Closing Date shall
not exceed Three Hundred Fourteen Thousand and 00/100 Dollars ($314,000.00).
(f) Shall not amend its Articles of Incorporation or Bylaws or make
any changes in authorized or issued stock.
(g) Shall maintain current insurance in effect and acquire such
additional insurance as may be reasonably required by increased business and
risks, and operate, maintain and repair all property in a normal business
manner.
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(h) Shall make adequate provision for any income tax which will be due
with respect to any 1996 earnings and shall file all tax reports or returns and
pay all income, franchise, sales, use, excise or other taxes on or before the
date on which such reports, returns, or payments are due.
(i) Shall pay all liabilities in a timely manner on or before their
due dates and shall make adequate provision or accruals for all liabilities of
BANK.
(j) Shall use its best efforts (without making any commitments on
behalf of F & M) to preserve its business organization intact, to keep available
to F & M the present key officers and employees of BANK and to preserve for F &
M the present relationships of BANK with its suppliers, customers and others
having business relations with them.
(k) Shall not sell or dispose of any property or assets except in the
normal course of business, including but not limited to, selling or disposing of
any securities held by BANK prior to their normal maturity dates.
(l) Shall promptly notify F & M of any lawsuits, claims, proceedings,
regulatory actions or investigations that may be threatened, brought, asserted
or commenced against it or its officers, directors, employees or agents
involving in any way the business, properties or assets of BANK.
(m) Shall not make loans or grant credit to any customer on terms
materially more favorable than those which are available from competitive
sources. F & M and BANK understand that BANK, in order to meet market
conditions may need to offer
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terms more favorable than those currently offered but that BANK will not be a
market leader in this regard.
(n) Shall not allow BANK's primary capital to asset ratio (12 C.F.R.
Part 325 method), determined in accordance with accepted accounting standards
applicable to preparation of Reports of Condition required to be filed with the
Federal Deposit Insurance Corporation, applied on a consistent basis, to drop
below eight percent (8%).
(o) Shall remain in compliance with all agreements, commitments,
understandings, undertakings or other obligations to the Commissioner, the FDIC
or any other regulatory agency having jurisdiction over BANK.
(p) Shall cooperate fully and completely with F & M in the preparation
and filing of the Registration Statement, and shall provide to F & M such
information as may be required for use therein pertaining to BANK, or its
businesses or operations.
(q) Shall not take any action which would be reasonably likely to make
unavailable either the pooling of interest accounting treatment of the merger or
to cause the merger not to qualify as a tax-free reorganization.
6.3 Audited Financial Statements. BANK shall deliver audited financial
statements to F & M for the period ended December 31, 1995 on or before March
31, 1996.
6.4 Stock Records. Prior to the special shareholders meeting to approve
the Merger, the Board of Directors of BANK, in accordance with its bylaws,
shall take such steps as are necessary to close its stock transfer books and
establish a
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record date for such meeting after the close of the transfer books, furnish
F & M with a current shareholder list as of such record date and validly call a
special shareholders meeting.
7. Covenants of F & M. F & M hereby covenants and agrees as follows:
(a) As promptly as practicable after the execution of this Agreement,
F & M, with the cooperation of BANK, shall prepare and file with the SEC the
Registration Statement. As promptly as practicable after comments, if any, are
received from the SEC on such preliminary Registration Statement, F & M, with
the cooperation of BANK, shall file with the SEC an amendment to the
Registration Statement responding to such comments, and shall seek to have such
Registration Statement declared effective. F & M shall also use its best
efforts to qualify under the blue sky laws of the various states in which common
shareholders of BANK are located the shares of F & M Common Stock to be issued
pursuant to this transaction and shall file the NASD Listing Application in a
timely manner. F & M shall pay the expenses of preparing and delivering the
joint Prospectus/Proxy Statement for BANK's Shareholders.
(b) As promptly as practicable after the execution of this Agreement,
F & M shall take action to organize Subsidiary, to capitalize Subsidiary and to
take such other actions as may be necessary to cause Subsidiary to perform its
obligations in connection with this transaction.
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(c) As promptly as practicable after the execution of that Agreement,
F & M shall take action to obtain regulatory approval of this transaction.
(d) Shall not take any action which would be reasonably likely to
make unavailable either the pooling of interest accounting treatment of the
merger or to cause the merger not to qualify as a tax-free reorganization.
(e) F & M shall provide its proposed employment agreement with ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ as soon as reasonably practical after this Agreement is signed. This
employment agreement will provide that ▇▇▇▇▇▇ ▇▇▇▇▇▇ will remain in his current
position and will become president of BANK when ▇▇▇▇ ▇▇▇▇▇ no longer holds that
office. The parties anticipate that ▇▇. ▇▇▇▇▇▇ will be nominated to a position
on the BANK's Board of Directors after becoming president.
(f) Within ten (10) days after its 1995 audited financial statements
are in final form, F & M shall deliver a copy thereof to BANK.
(g) Upon execution of this Agreement, F & M will investigate the
availability of directors and officers' liability insurance coverage under its
policy covering the directors and officers of F & M and its Subsidiaries and
will promptly notify BANK of the availability and coverage under such insurance
for BANK's directors and officers upon consummation of the acquisition.
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8. Conditions Precedent to F & M's Obligation. Each and every obligation of F
& M and Subsidiary to be performed on the Closing Date shall be subject to the
satisfaction prior thereto of the following conditions:
8.1 Truth of Representations and Warranties. The representations and
warranties made in this Agreement or given on behalf of BANK hereunder, shall
have been continuously true and correct from the date of execution of this
Agreement to the Closing Date, and shall be true and correct on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on and as of the Closing Date and BANK shall have
complied with all other terms, conditions and covenants of this Agreement.
8.2 Compliance with Covenants. Except as expressly set forth in paragraph
8.7, BANK shall have performed all of its obligations, and complied with all of
the covenants under this Agreement which are to be performed or complied with
by it from the date of this Agreement through and as of the Closing Date,
including the delivery of the closing documents specified in paragraph 10.3.
8.3 Absence of Suit. No action, suit or proceeding before any court or
any governmental or regulatory authority shall have been commenced or
threatened, and no investigation by any governmental or regulatory authority
shall have been commenced, against F & M, Subsidiary, or BANK, or any of the
affiliates, associates, officers, directors or employees of any of them,
seeking to restrain, prevent or change the transaction
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contemplated hereby, or questioning the validity or legality of any such
transaction, or seeking damages in connection with any of such transaction.
8.4 BANK's Director and Shareholder Authorization. The merger
contemplated by this Agreement shall have been duly and validly authorized by
BANK's directors and shareholders in accordance with the laws of the State of
Wisconsin, including but not limited to the provisions of Wis. Stats. Section
221.565.
8.5 Receipt of Approvals. All approvals, consents and/or waivers,
including any approvals required by any federal or state governmental
regulatory agency, that are necessary to effect the transactions contemplated
hereby shall have been received and all waiting periods thereunder shall have
expired.
8.6 Accuracy of Financial Statements. In the event interim financial
statements are provided to F & M by BANK, F & M and its representatives shall
be reasonably satisfied as to the accuracy of all interim balance sheets,
statements of income and other financial statements of BANK furnished to F & M
and Subsidiary for periods ended after December 31, 1995.
8.7 BANK Earnings. The Actual Earnings of BANK from October 1, 1995
through the month end prior to the month in which closing occurs, determined in
accordance with accepted accounting standards applicable to preparation of
Reports of Condition required to be filed with the Federal Deposit Insurance
Corporation, applied on a consistent basis shall not be less than the Minimum
Earnings from October 1, 1995, through the month end prior to the month in
which closing occurs.
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8.8 Legal Opinion. F & M shall have received the opinion of BANK Counsel
referred to in subparagraph 10.3(e).
8.9 Accountants' Letters. F & M and Subsidiary shall receive before the
Closing Date the accountants' letters referred to in subparagraphs 10.3(d).
8.10 Time Limit on Closing. Closing shall have taken place by October
15, 1996.
8.11 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as F & M may reasonably request shall
have been delivered to F & M. BANK shall have delivered certificates in such
detail as F & M may reasonably request as to compliance with the conditions set
forth in this Article 8.
8.12 Securities Matters. The Registration Statement shall have been
declared effective under the Securities Act of 1933 by the SEC. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purpose shall, to the knowledge
of F & M, on or prior to the Effective Time, have been initiated or threatened
by the SEC. F & M shall have received all other federal or state securities
permits exemptions, registrations or other authorizations necessary to issue
the F & M Common in exchange for the BANK Stock to consummate the merger.
8.13 Prospectus/Proxy Statement. The Prospectus/Proxy Statement will not
contain any untrue statement of a material
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fact or omit any material fact required to be stated therein or necessary to
make the statements contained therein, in the light of the circumstances under
which they were made, not misleading.
8.14 Exchange of Stock Certificates. As a condition of delivery of the
consideration required by this Agreement, the BANK Shareholders shall have
executed and delivered documents assigning their shares of BANK Stock to F & M
and/or Subsidiary containing appropriate representations regarding tax matters,
ownership, authority to act, residency and such other matters as F & M shall
request.
8.15 Affiliates of BANK. Each person who shall be deemed to be an
"affiliate" of BANK within the meaning of the Securities Act of 1933 and Rule
145 promulgated by the SEC thereunder shall have executed and delivered to F &
M an Affiliate's Undertaking, in the form attached hereto as Exhibit 8.1, dated
as of the Effective Time.
8.16 Pooling Accounting. The merger contemplated herein shall be treated
as and qualify for accounting using the pooling of interests method provided
that this condition shall be deemed waived if the disqualification is the
result of an omission by F & M.
8.17 No Change Prior to Closing Date. No material adverse change in the
business or financial condition of BANK shall occur after the execution of this
Agreement but prior to the Closing Date.
8.18 Tax Status. No information has been discovered or made known to F &
M to indicate that the IRS has challenged or
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intends to challenge the status of this transaction as a tax-free
reorganization.
8.19 Dissenters Rights. That no more than ten percent (10%) of the total
consideration paid by F & M in this transaction, determined in accordance with
the accounting rules applicable to the pooling of interests, shall be paid in
cash, including amounts paid for fractional shares and amounts paid to BANK
Shareholders who exercise their dissenters rights under Wis. Stats. Section
221.25.
9. Conditions Precedent to BANK's Obligations.
Each and every obligation of BANK to be performed on the Closing Date
shall be subject to the satisfaction prior thereto of the following conditions:
9.1 Truth of Representations and Warranties. The representations and
warranties made by F & M in this Agreement or given on their behalf hereunder,
shall be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and as of
the Closing Date.
9.2 F & M's Compliance. F & M shall have performed and complied with all
of its obligations under this Agreement which are to be performed or complied
with by it prior to or as of the Closing Date, including delivery of the
closing documents.
9.3 Absence of Suit. No action, suit or proceeding before any court or
any governmental or regulatory authority shall have been commenced or be
threatened and, no investigation by any
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governmental or regulatory authority shall have been commenced, against F & M,
Subsidiary, or BANK, or any of the affiliates, associates, officers, directors,
or employees of any of them, seeking to restrain, prevent, or change the
transactions contemplated hereby, or questioning the validity or legality of
any such transactions, or seeking damages in connection with any of such
transactions.
9.4 Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken by F & M in connection with
the transaction contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as BANK may reasonably request shall
have been delivered to BANK. F & M shall have delivered certificates in such
detail as BANK may reasonably request as to compliance with the conditions set
forth in this Article 9.
9.5 Receipt of Approvals. All approvals, consents and or waivers,
including any approvals required by any federal or state governmental
regulatory agency, that are necessary to effect the transactions contemplated
hereby shall have been received, and all waiting periods shall have expired
provided the failure to obtain the same was not the result of an act or
omission by BANK.
9.6 Time Limit on Closing. Closing shall have taken place by October 15,
1996.
9.7 Legal Opinion. BANK shall have received the opinion of F & M Counsel
referred to in subparagraph 10.4(d).
9.8 Prospectus/Proxy Statement. The Prospectus/Proxy Statement will not
contain any untrue statement of material fact
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or omit any material fact required to be stated therein or necessary to make
the statements contained therein, in the light of the circumstances under which
they were made, not misleading.
9.9 Tax Status. No information has been discovered or made known to BANK
to indicate that the IRS has challenged or intends to challenge the status of
this transaction as a tax-free reorganization.
9.10 Tax Opinion. BANK Shareholders shall have received an opinion
obtained by BANK at BANK's expense to the effect that the transaction
contemplated by this Agreement shall be tax-free to those BANK Shareholders who
receive F & M Common in exchange for their BANK Stock (excluding fractional or
dissenting shares), provided that if BANK fails to deliver said opinion, F & M
may, but is not required to, deliver such an opinion from legal counsel it
selects in which case this condition shall be deemed satisfied. If BANK has
not made a good faith effort to obtain this opinion from its counsel and such
opinion is provided by F & M, the expense and cost of such opinion provided
by F & M shall be multiplied by 1.35. This product shall be deducted from the
aggregate price and the Exchange Ratio shall be recalculated after making such
deduction. In connection with the rendering of the tax opinion referenced in
this section, the BANK, F & M and Subsidiary agree to execute certificates in
the form attached hereto as Exhibits 9.10 and 9.10(a).
9.11 Fairness Opinion. BANK shall have obtained a fairness opinion from
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., Incorporated indicating its
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opinion that the proposed transaction is fair from a financial point of view to
the BANK Shareholders.
9.12 Directors and Officers Liability Insurance. F & M shall furnish
evidence to BANK that BANK's directors and officers are covered under the
directors and officers liability insurance provided to the directors and
officers of F & M and its subsidiaries, which coverage shall include coverage
in accordance with the standard terms and conditions of such policy for claims
based upon occurrences which occurred prior to F & M acquisition of BANK. In
the event such coverage is not available, F & M may satisfy this condition by
offering separate coverage to BANK's directors and officers which is
substantially equivalent to the coverage carried by BANK as of the date of this
Agreement.
10. Closing.
10.1 Time and Place. The closing of this transaction ("Closing") shall
take place at the offices of F & M (or such other place as the parties may
agree) on the Closing Date.
10.2 Rights of BANK Shareholders After the Effective Time. After the
Effective Time and until the surrender of a stock certificate representing
shares of BANK Stock, each such outstanding certificate, which prior to the
Effective Time represented shares of BANK Stock, shall be deemed for all
purposes, subject to the further provisions of this Agreement, to evidence the
ownership of the number of full shares of F & M Common into which such shares
have been converted; provided, however, that unless and until any such
certificates representing BANK Stock shall be so surrendered, the stock
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certificate representing the shares, any dividends or other distributions of any
kind payable in respect of shares of F & M Common into which such BANK Stock has
been converted, shall be withheld by F & M. Upon the subsequent surrender and
exchange of such BANK Stock certificates, such holder of record of the
certificates formerly representing shares of BANK Stock (or such holder's
assignee) shall be paid the amount of any such cash dividends or other
distributions, without interest, which became payable under this Agreement to
holders of record of shares of F & M Common on or after the Effective Time and
prior to the surrender and exchange of the certificates. Delivery of
certificates representing shares of F & M Common to former BANK Shareholders who
have tendered their certificates for their shares of BANK Stock at or before the
Effective Time shall be made as soon as reasonably possible after the Effective
Time.
10.3 Documents to be Delivered by BANK. At the time of or prior to the
closing, BANK shall deliver the following documents:
(a) A certificate by the chairman, vice-chairman or president of BANK
(i) that the representations and warranties made by BANK as the case may be in
this Agreement are true and correct on as of the Closing Date with the same
effect as though such representations and warranties had been made on or given
on and as of the Closing Date, (ii) that BANK has performed and complied with
all of its obligations under this Agreement which are to be performed or
complied with by or prior to or on the Closing Date, and (iii) that all
Schedules and Exhibits delivered by BANK to F & M prior or as of the Closing
Date are true, correct and complete as of the Closing Date.
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(b) An Incumbency Certificate for the officers executing the documents
in connection with the transaction contemplated hereby.
(c) Copies of the Articles of Incorporation and Bylaws of BANK, duly
certified by their respective custodians as true, correct and complete copies
thereof, including any amendments as of the Closing Date.
(d) A letter from BANK's certified public accountants, prepared in
accordance with Statement on Auditing Standards 72, "Letters for Underwriters
and Certain Other Requesting Parties", addressed to F & M dated as of the
Closing Date to the effect that (i) the audited financial statements of BANK
included in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Securities Exchange
Act of 1934 and related published rules and regulations, (ii) nothing came to
their attention to cause them to believe that the unaudited condensed interim
financial statements of BANK included in the Registration Statement do not
conform in all material respects with the applicable requirements of the
Securities Exchange Act of 1934 and related published rules and regulations or
that such unaudited condensed interim financial statements of BANK included in
the Registration Statement require material modifications for them to be in
conformity with generally accepted accounting principles, (iii) except as
disclosed in the letter, nothing came to their attention to cause them to
believe that as of the date not earlier than five (5) days prior to the Closing
Date, there was any change from the
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unaudited condensed interim financial statements of BANK included in the
Registration Statement in capital stock, increase in long-term debt or any
decrease in stockholders' equity of BANK or there were any decreases for the
period from the date of the unaudited condensed interim financial statements of
BANK included in the Registration Statement to the date not earlier than five
(5) days prior to the Closing Date, as compared with the corresponding period
in the preceding year, in net interest revenue or net income of BANK and that
nothing came to their attention to indicate that the condition set forth in
paragraph 8.7 had not been met. Such letter to F & M requires delivery of a
representation letter to BANK's certified public accountants consistent with
the requirements of Statement on Auditing Standards 72.
(e) A written opinion from BANK counsel dated as of the Closing Date
addressed to F & M and F & M Counsel, in form and substance substantially in the
form attached hereto as Exhibit 10.3(e)
(f) Certified copies of resolutions adopted by BANK's board of
directors to the effect that the execution, delivery and performance of this
Agreement and the transactions contemplated by it have been duly and validly
authorized in accordance with the laws of the State of Wisconsin and of the
action taken by the BANK's Shareholders to approve the merger and authorize the
acquisition of 10% or more of BANK's Stock by F & M as provided by Wis. Stats.
Section 221.565.
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(g) Such other documents of transfer, certificates or authority and
other documents as F & M may reasonably request.
10.4 Documents to be Delivered by F & M and Subsidiary. At the closing F
& M and Subsidiary shall deliver the following documents:
(a) Certificates for shares of F & M Common as determined under
Article 3 of this Agreement. Such certificates will be in the name of BANK
Shareholders entitled to the same in accordance with their interest in BANK as
of the Effective Time provided, however, that any certificates need not be
delivered until such time as the provisions of paragraph 10.2 have been complied
with by such Shareholders.
(b) An Incumbency Certificate relating to all parties executing
documents relating to any of the transactions contemplated hereby on behalf of F
& M and Subsidiary.
(c) A certificate by an officer of F & M that, to the best of such
officer's knowledge, (i) the representations and warranties made by F & M and
Subsidiary in this Agreement are true and correct as of the Closing Date, (ii)
that F & M and Subsidiary have performed and complied with all of their
obligations which are to be performed or complied with by or prior to or as of
the Closing Date and (iii) that all Schedules and Exhibits delivered by F & M to
BANK are true, correct and complete as of the Closing Date.
(d) A written opinion from counsel for F & M and Subsidiary dated as
of the Closing Date addressed to BANK and
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BANK Counsel in form and substance substantially in the form attached hereto as
Exhibit 10.4(d).
(e) A written opinion from Securities Counsel dated as of the
Effective Time addressed to F & M and BANK, reasonably satisfactory in form and
substance to F & M Counsel, to the effect that the shares of F & M Common
issuable in the transaction are the subject of an effective Registration
Statement with the SEC, and that no stop order relating to such Registration
Statement has been issued by the SEC and that, to the knowledge of such counsel,
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(f) Certified copies of the resolutions adopted by F & M's and
Subsidiary's boards of directors to the effect that the execution, delivery and
performance of this Agreement and the transactions contemplated by it have been
duly and validly authorized in accordance with the laws of the State of
Wisconsin.
11. Law Governing.
This Agreement shall be construed and interpreted according to the laws of
the State of Wisconsin.
12. Assignment.
This Agreement may not be assigned in whole or in part without the written
consent of all parties, provided, however, that Subsidiary's participation in
this transaction shall not require any further consent or authorization.
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13. Amendment and Modification.
This Agreement may only be amended or modified by a written agreement
signed by the duly authorized representatives of F & M and BANK.
14. Abandonment.
This Agreement may be terminated and the transaction provided for by this
Agreement may be abandoned at any time before the Closing Date:
(a) By mutual consent of F & M and BANK;
(b) By F & M if (i) any of the conditions provided for in Article 8 of
this Agreement have not been met and have not been waived in writing by F & M,
or (ii) the F & M Per Share Price is more than Thirty-two and 50/100 Dollars
($32.50) per share; or
(c) By BANK if (i) any of the conditions provided for in Article 9 of
this Agreement have not been met and have not been waived in writing by BANK, or
(ii) the F & M Per Share Price is less than Twenty-one and 50/100 Dollars
($21.50) per share.
(d) In the event of a breach of this Agreement, by notice from the
non-breaching party to the breaching party as set forth below.
In the event of termination and abandonment by any party as provided in
this Article, written notice shall forthwith be given to the other party
setting forth the breach of this Agreement or the default in performance which
has occurred, or the condition which has not been met. The party to whom the
notice is directed
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shall, if such party is able to effect a satisfaction or cure, have ten (10)
days after such notice is given to satisfy such condition or cure such breach
or default, provided that if such ten (10) day period is not sufficient and the
party is making a diligent effort to satisfy such condition or cure such breach
or default, the time to do so may be extended for such period as the parties
may agree not to exceed thirty (30) days provided however, that the F & M Per
Share Price shall be the higher of the price as of the date of the notice or as
of the date on which the default is satisfied or cured. The termination and/or
abandonment of this Agreement shall not alter or diminish the liability of the
party that failed to comply with the conditions of this Agreement. Each party
shall pay its own expenses incident to preparation for the consummation of this
Agreement and the transactions contemplated hereunder. In the event F & M
declares a stock dividend or stock split, the maximum and minimum F & M Per
Share set forth in subparagraphs (b) and (c), above, and in paragraph 1.11,
shall be adjusted in proportionately and based upon the stock dividend or stock
split.
15. Notices.
All notices, requests, demands, and other communications hereunder shall
be deemed to have been duly given, upon actual delivery, if delivered by hand;
or upon receipt by the addressee, if given by mail (certified mail - return
receipt requested with postage prepaid is required for notice by mail); or upon
receipt by the addressee, if by private courier; or upon receipt of the
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transmission by the addressee if by telecopy (with a copy sent by first class
mail):
(a) If to BANK, to ▇▇▇▇ ▇▇▇▇▇, Community State Bank, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX: ▇▇▇-▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇
▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, FAX: ▇▇▇- ▇▇▇-▇▇▇▇.
(b) If to F & M or Subsidiary, to ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX: ▇▇▇-▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, Esq., McCarty, Curry, ▇▇▇▇▇▇▇, Peeters & ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX: ▇▇▇-▇▇▇-▇▇▇▇.
The place to which notice is to be given may be changed by notice given in
accordance with this Article.
16. Entire Agreement.
This Agreement with Exhibits embodies the entire agreement between the
parties hereto with respect to the transaction contemplated herein and
supersedes all prior agreements, written or oral, express or implied and all
negotiations, discussions or other matters between the parties and there have
been and are no agreements representations or warranties between the parties
other than those set forth or provided for herein.
17. Counterparts.
This Agreement may be executed in two (2) or more partially or fully
executed counterparts, each of which shall be deemed an
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original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument.
18. Binding Effect.
This Agreement shall inure to the benefit of and bind the parties and
their respective heirs, beneficiaries, transferees, successors, and assigns.
19. Headings.
The headings of this Agreement are inserted for convenience only and shall
not constitute a part hereof.
20. Confidentiality. Except as necessary to take action pursuant to this
Agreement, each party agrees that all information and documents received from
the other party regarding the proposed transaction shall be held in confidence
and that all documents containing such information will be returned upon
request if the parties abandon the transaction. The parties further agree to
use such information only in connection with the proposed transaction
contemplated by this Agreement. This paragraph shall not apply to information
or documents which are, or by law must be made, publicly available. The
parties agree to not publicly disclose this Agreement or its Exhibits or any of
the provisions hereof, except as a part of regulatory filings or pursuant to
press releases and other public statements approved by F & M and BANK.
21. Further Documents.
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F & M, Subsidiary, and BANK agree to execute any and all other documents
and to take such other action or corporate proceedings as may be reasonably
necessary or desirable to carry out the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
F & M BANCORPORATION, INC. ("F & M")
By:__/s/____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ATTEST:
By:__/s/____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
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COMMUNITY STATE BANK ("BANK")
By:__/s/______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman of the Board
ATTEST:
By:__/s/____________________________
▇▇▇▇ ▇▇▇▇▇, President
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