Agreement and Plan of Merger by and among Harris Bankcorp, Inc., Boundary Acquisition Corporation and Merchants and Manufacturers Bancorporation, Inc. Dated as of July 9, 2007
EXHIBIT
2.1
EXECUTION
COPY
Agreement
and Plan of Merger
by
and
among
▇▇▇▇▇▇
Bankcorp, Inc.,
Boundary
Acquisition Corporation
and
Merchants
and Manufacturers Bancorporation, Inc.
Dated
as
of July 9, 2007
TABLE
OF CONTENTS
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PAGE
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Parties
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1
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ARTICLE
I
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DEFINITIONS
|
2
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Section
1.01.
|
Definitions
|
2
|
|
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Section
1.02.
|
Principles
of Construction
|
10
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ARTICLE
II
|
THE
MERGER
|
11
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Section
2.01.
|
The
Merger
|
11
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Section
2.02.
|
Closing;
Effective Time
|
11
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Section
2.03.
|
Effects
of Merger
|
11
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Section
2.04.
|
Conversion
of Capital Stock
|
12
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Section
2.05.
|
Deposit
of Payment Amount
|
13
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Section
2.06.
|
Exchange
of Shares
|
13
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Section
2.07.
|
Employee
Stock Options
|
15
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Section
2.08.
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Dissenting
Shares
|
16
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Section
2.09.
|
Aggregate
Merger Consideration; Adjustments to Prevent Dilution
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Section
2.10.
|
Plan
of Merger
|
17
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ARTICLE
III
|
REPRESENTATIONS
AND WARRANTIES OF THE BUYER AND NEWCO
|
17
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Section
3.01.
|
Organization
|
17
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|
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Section
3.02.
|
Authorization
|
18
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|
|
Section
3.03.
|
Conflicts
|
18
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Section
3.04.
|
Litigation
|
18
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Section
3.05.
|
Fees
|
18
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Section
3.06.
|
Non
Reportable Transaction of the Buyer or NewCo
|
18
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|
|
Section
3.07.
|
Financing
|
19
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|
|
Section
3.08.
|
Anti-Takeover
Laws
|
19
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|
|
Section
3.09.
|
No
Other Representation or Warranty
|
19
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ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
19
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|
|
Section
4.01.
|
Organization
|
19
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|
|
Section
4.02.
|
Authorization
|
20
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|
|
Section
4.03.
|
Conflicts
|
20
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|
|
Section
4.04.
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Capitalization
of the Company
|
20
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|
|
Section
4.05.
|
Capitalization
of the Banks
|
22
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|
|
Section
4.06.
|
Company
Financial Statements
|
24
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|
|
Section
4.07.
|
Subsidiaries
of the Company
|
24
|
|
|
Section
4.08.
|
Company
Reports; ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
|
26
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|
|
Section
4.09.
|
Compliance
with Laws
|
28
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|
i
|
Section
4.10.
|
Litigation
|
30
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|
Section
4.11.
|
Intellectual
Property
|
30
|
|
|
Section
4.12.
|
Taxes
|
30
|
|
|
Section
4.13.
|
Insurance
|
32
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|
|
Section
4.14.
|
Loans;
Investments
|
32
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|
|
Section
4.15.
|
Allowance
for Loan Losses
|
34
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|
Section
4.16.
|
Investment
Management and Related Activities
|
34
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|
|
Section
4.17.
|
Trust
or Agency Agreements
|
34
|
|
|
Section
4.18.
|
Trust
or Agency Records
|
35
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|
|
Section
4.19.
|
Trust
or Agency Standards
|
35
|
|
|
Section
4.20.
|
Compliance
with Law; Trust or Agency Agreements
|
36
|
|
|
Section
4.21.
|
Company
Benefit Plans
|
36
|
|
|
Section
4.22.
|
Compliance
with Environmental Laws
|
39
|
|
|
Section
4.23.
|
Recent
Acquisitions and Divestitures
|
40
|
|
|
Section
4.24.
|
Agreements,
Contracts Commitments and Obligations
|
41
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|
Section
4.25.
|
Defaults
|
44
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|
|
Section
4.26.
|
Operations
Since December 31, 2006
|
44
|
|
|
Section
4.27.
|
Corporate
Records
|
46
|
|
|
Section
4.28.
|
Undisclosed
Liabilities
|
47
|
|
|
Section
4.29.
|
Assets
|
47
|
|
|
Section
4.30.
|
Indemnification
|
48
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|
|
Section
4.31.
|
Shareholder
Rights Plan and Anti-takeover Mechanisms
|
48
|
|
|
Section
4.32.
|
Company
Board Recommendation and Fairness Opinion
|
48
|
|
|
Section
4.33.
|
Insider
Interests
|
48
|
|
|
Section
4.34.
|
Fees
|
49
|
|
|
Section
4.35.
|
Non
Reportable Transaction of the Company
|
49
|
|
|
Section
4.36.
|
Disclosure
|
49
|
|
|
Section
4.37.
|
Transaction
Expense Estimate
|
49
|
|
|
Section
4.38.
|
No
Other Representation or Warranty
|
50
|
|
|
ARTICLE
V
|
CONDUCT
OF THE COMPANY PRIOR TO CLOSING
|
50
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|
|
Section
5.01.
|
Conduct
of Business
|
50
|
|
|
Section
5.02.
|
Current
Information
|
55
|
|
|
Section
5.03.
|
Access
to Properties and Records
|
55
|
|
|
Section
5.04.
|
No
Solicitation
|
56
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|
ARTICLE
VI
|
ADDITIONAL
COVENANTS
|
57
|
|
|
Section
6.01.
|
Confidentiality
|
57
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|
|
Section
6.02.
|
Title
Insurance and Surveys
|
58
|
|
|
Section
6.03.
|
Environmental
Reports
|
60
|
|
|
Section
6.04.
|
Shareholders
Meeting; Board of Directors Recommendation
|
61
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|
|
Section
6.05.
|
Proxy
Statement
|
61
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|
|
Section
6.06.
|
Public
Disclosure
|
63
|
|
|
Section
6.07.
|
Legal
Requirements
|
63
|
|
|
Section
6.08.
|
FIRPTA
|
63
|
|
ii
|
Section
6.09.
|
Commercially
Reasonable Efforts and Further Assurances
|
63
|
|
|
Section
6.10.
|
Director
and Officer Indemnification and Liability Coverage
|
63
|
|
|
Section
6.11.
|
Notification
of Certain Other Matters
|
65
|
|
|
Section
6.12.
|
Regulatory
Applications
|
65
|
|
|
Section
6.13.
|
Control
of the Company’s Business
|
66
|
|
|
Section
6.14.
|
Employees
Benefits
|
66
|
|
|
Section
6.15.
|
Third
Party Consents and Notices
|
68
|
|
|
Section
6.16.
|
Financial
Statements and Reports
|
68
|
|
|
Section
6.17.
|
Action
by The Reedsburg Bank Board of Directors
|
68
|
|
|
Section
6.18.
|
Exchange
Act Deregistration
|
69
|
|
|
Section
6.19.
|
Transaction
Expense Update
|
69
|
|
|
Section
6.20.
|
Transfer
of Seller Debt Obligations
|
69
|
|
|
Section
6.21.
|
Adjustments
in Respect of the Aggregate Response Estimate Amount
|
69
|
|
|
ARTICLE
VII
|
CONDITIONS
|
70
|
|
|
Section
7.01.
|
Conditions
to Obligations of Each Party to Effect the Merger
|
70
|
|
|
Section
7.02.
|
Additional
Conditions to Obligations of the Company
|
71
|
|
|
Section
7.03.
|
Additional
Conditions to the Obligations of Buyer nd NewCo
|
72
|
|
|
ARTICLE
VIII
|
TERMINATION;
AMENDMENT; WAIVER
|
73
|
|
|
Section
8.01.
|
Termination
|
73
|
|
|
Section
8.02.
|
Notice
of Termination; Effect of Termination
|
75
|
|
|
Section
8.03.
|
Expenses
|
75
|
|
|
Section
8.04.
|
Termination
Fee
|
75
|
|
|
Section
8.05.
|
Amendment
|
76
|
|
|
Section
8.06.
|
Waiver
|
76
|
|
|
ARTICLE
IX
|
GENERAL
PROVISIONS
|
77
|
|
|
Section
9.01.
|
Notices
|
77
|
|
|
Section
9.02.
|
Counterparts
|
78
|
|
|
Section
9.03.
|
Entire
Agreement; Third Party Beneficiaries
|
78
|
|
|
Section
9.04.
|
Severability
|
78
|
|
|
Section
9.05.
|
Surviving
Provisions
|
79
|
|
|
Section
9.06.
|
Other
Remedies; Specific Performance
|
79
|
|
|
Section
9.07.
|
Assignment
|
79
|
|
|
Section
9.08.
|
Governing
Law
|
79
|
|
|
Section
9.09.
|
Reliance
on Tax Advisers
|
80
|
|
|
Signatures
|
81
|
||
iii
Index
of Exhibits
|
Exhibit
2.03(b)
|
Amended
and Restated Articles of Incorporation of the Surviving
Corporation
|
|
Exhibit
2.03(c)
|
Amended
and Restated Bylaws of the Surviving Corporation
|
|
Exhibit
6.02
|
Real
Property
|
|
Exhibit
6.14(g)
|
Certain
Notices
|
|
Exhibit
7.02(c)
|
Buyer
and NewCo’s Officer’s Certificate
|
|
Exhibit
7.03(h)
|
Third
Party Consents and Notices
|
|
Exhibit
7.03(i)
|
Company’s
Officer’s Certificate
|
|
Index
of Appendices
|
|
|
Appendix
I
|
Company
Disclosure Statement
|
iv
INDEX
OF
DEFINED TERMS
|
TERM
|
SECTION
|
|
Acquisition
Proposal
|
1.01
|
|
Affiliate
|
1.01
|
|
Aggregate
Merger Consideration
|
1.01
|
|
Aggregate
Response Estimate Amount
|
6.21(a)
|
|
Agreement
|
Preamble
|
|
Anti-Money
Laundering Laws
|
1.01
|
|
Articles
of Merger
|
2.02
|
|
Bank
|
4.05
|
|
Bank
Reports
|
4.06(b)
|
|
Business
Day
|
1.01
|
|
Buyer
|
Preamble
|
|
Buyer’s
Objection Notice
|
6.02(b)
|
|
Change
in Control Benefit
|
4.21(a)
|
|
Closing
Date
|
2.02
|
|
Closing
|
2.02
|
|
Code
|
1.01
|
|
Commercially
Reasonable Efforts
|
1.01
|
|
Common
Equivalent Shares
|
1.01
|
|
Community
Bank Financial Common Stock
|
4.05(d)
|
|
Company
Benefit Plans
|
4.21(a)
|
|
Company
Board Recommendation
|
4.32(a)
|
|
Company
Certificate
|
1.01
|
|
Company
Common Stock
|
4.04
|
|
Company
Contract
|
4.25
|
|
Company
Earnings
|
1.01
|
|
Company
Financial Statement
|
4.06(a)
|
|
Company
Leases
|
4.29(b)
|
|
Company
Premises
|
4.22(b)(ii)
|
|
Company
Qualified Plans
|
4.21(b)
|
|
Company
Real Property
|
4.29(a)
|
|
Company
Reports
|
4.08
|
|
Company
|
Preamble
|
|
Company
401(k) Plan
|
6.14(a)
|
|
Confidential
Information
|
6.01(a)
|
|
Confidentiality
Agreement
|
5.04(a)
|
|
Continuing
Employee
|
6.14(c)
|
|
CRA
Agreement
|
4.09(d)
|
|
CRA
|
1.01
|
|
Disclosure
Statement
|
Preamble
to Article IV
|
|
Dissenting
Share
|
1.01
|
|
DPC
Shares
|
2.04(b)
|
v
|
Effective
Time
|
2.02
|
|
Encumbrance
|
1.01
|
|
Environmental
Condition
|
1.01
|
|
Environmental
Laws
|
1.01
|
|
ERISA
Affiliate
|
1.01
|
|
ERISA
|
4.21(a)
|
|
Exchange
Act
|
1.01
|
|
Family
|
1.01
|
|
FDIC
|
1.01
|
|
Federal
Reserve Board
|
1.01
|
|
Financial
Statements
|
1.01
|
|
Fortress
Bank Common Stock
|
4.05(e)
|
|
Fortress
Bank of Cresco Common Stock
|
4.05(h)
|
|
GAAP
|
1.01
|
|
Governmental
Approvals
|
1.01
|
|
Governmental
Authorization
|
1.01
|
|
Governmental
Entity
|
1.01
|
|
Grafton
State Bank Common Stock
|
4.05(c)
|
|
Hazardous
Substance
|
1.01
|
|
HOEPA
|
1.01
|
|
IDB
|
1.01
|
|
Insider
Loan
|
4.33
|
|
Intercompany
Agreement
|
1.01
|
|
Iowa
Bank
|
4.07(c)(ii)
|
|
IRS
|
1.01
|
|
Knowledge
|
1.01
|
|
Law
|
1.01
|
|
Lend
to
|
5.01(l)
|
|
Liability
|
1.01
|
|
Lincoln
State Bank Common Stock
|
4.05(b)
|
|
Loan
|
1.01
|
|
Material
Adverse Effect
|
1.01
|
|
Maximum
Amount
|
6.10(b)(iii)
|
|
MDC
|
1.01
|
|
Merger
|
Recitals
|
|
Minnesota
Bank
|
4.07(c)(iii)
|
|
Mortgaged
Premises
|
1.01
|
|
NewCo
|
Preamble
|
|
Non-Bank
Subsidiary
|
1.01
|
|
Option
Consideration
|
2.07(b)
|
|
Order
|
1.01
|
|
Ordinary
Course of Business
|
1.01
|
|
OREO
|
4.14(a)
|
|
Organizational
Documents
|
1.01
|
|
OSFI
|
1.01
|
|
OTCBB
|
1.01
|
vi
|
Parent
|
1.01
|
|
Participating
Company Common Stock
|
2.04(a)
|
|
Participating
Facility
|
1.01
|
|
Participating
Shareholder
|
2.06(a)
|
|
Participating
Shareholder List
|
2.06(a)
|
|
Paying
Agent
|
1.01
|
|
Payment
Account
|
2.05
|
|
Payment
Amount
|
1.01
|
|
Per
Share Merger Consideration
|
1.01
|
|
Permitted
Assignee
|
9.07
|
|
Person
|
1.01
|
|
Phase
I
|
6.03(a)
|
|
Phase
I Property
|
6.03(a)
|
|
Phase
I Review Period
|
6.03(a)
|
|
Phase
II
|
6.03(a)
|
|
Phase
II Notice
|
6.03(a)
|
|
Phase
II Report
|
6.03(a)
|
|
Proceeding
|
1.01
|
|
Purchase
Price Reduction Amount
|
6.21(e)
|
|
Real
Property
|
6.02(a)
|
|
Records
|
1.01
|
|
Regulatory
Applications
|
6.12
|
|
Response
Estimate
|
6.03(b)
|
|
Representatives
|
1.01
|
|
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
|
1.01
|
|
SEC
Reports
|
4.08
|
|
SEC
|
1.01
|
|
Securities
Act
|
1.01
|
|
Shareholders
Approval
|
4.02
|
|
Shareholders
Meeting
|
6.04(a)
|
|
Shareholders
|
1.01
|
|
Subsidiary
|
1.01
|
|
Superior
Proposal
|
1.01
|
|
Supplemental
Disclosure Statement
|
6.11(b)
|
|
Survey
|
6.02(a)(iii)
|
|
Surveyor
|
6.02(a)(iii)
|
|
Surviving
Corporation Common Stock
|
2.04(c)
|
|
Surviving
Corporation
|
2.01
|
|
Tax
|
1.01
|
|
Termination
Plans
|
6.14(a)
|
|
The
Reedsburg Bank Common Stock
|
4.05(f)
|
|
Third
Party Consents and Notices
|
6.15
|
|
Threatened
|
1.01
|
|
Title
Commitment
|
6.02(a)(i)
|
|
Title
Documents
|
6.02(a)(ii)
|
|
Title
Insurer
|
6.02(a)(i)
|
vii
viii
Agreement
and Plan of Merger
This
Agreement and Plan of Merger (this “Agreement”) is made and entered
into as of July 9, 2007, by and among ▇▇▇▇▇▇ Bankcorp, Inc., a
Delaware corporation (the “Buyer”), Boundary Acquisition Corporation, a
Wisconsin corporation and wholly-owned subsidiary of the Buyer
(“NewCo”), and Merchants and Manufacturers Bancorporation, Inc., a
Wisconsin corporation (the “Company”).
Recitals
Whereas,
the Buyer desires to acquire the Company by causing NewCo to merge with and
into
the Company in accordance with this Agreement, which provides, among other
things, that the Company shall be the surviving corporation (the
“Merger”); and
Whereas,
the board of directors of each of the Buyer, NewCo and the Company deem it
advisable that NewCo be merged with and into the Company in accordance with
this
Agreement; and
Whereas,
the parties hereto are desirous of entering into this Agreement for the purpose
of effecting the Merger; and
Whereas,
as a condition and inducement to the Buyer’s and NewCo’s willingness to enter
into this Agreement, contemporaneously herewith each
of the members of the board of directors of the Company is
entering into a voting agreement with the Buyer whereby such Person agrees
to
vote his or her shares of Company Common Stock in favor of this Agreement and
the transactions contemplated hereby (including the Merger and the Plan of
Merger) in any vote put forth to the Shareholders seeking approval of this
Agreement or any of the transactions contemplated hereby; and
Whereas,
the parties desire to make certain representations, warranties and agreements
in
connection with the Merger and also to prescribe certain conditions to the
Merger;
Now,
Therefore, in consideration of the premises and mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
hereby agree as follows:
Article
I
Definitions
Section 1.01.Definitions. In
addition to capitalized terms otherwise defined herein, as used in this
Agreement the following capitalized terms shall have the meanings provided
in
this Section 1.01:
“Acquisition
Proposal” shall mean any inquiry, proposal or offer relating to (a) a
merger or consolidation or any similar transaction (other than the Merger)
of
any Person with either the Company or any Subsidiary of the Company, (b) a
purchase, lease or other acquisition of all or substantially all of the assets
of either the Company or any Subsidiary of the Company, (c) a purchase or
other acquisition of beneficial ownership by any Person or group of Persons
of
any equity securities of, or other proprietary interests in, any Subsidiary
of
the Company or (d) a purchase or other acquisition of beneficial ownership
by any Person or group of Persons of equity securities of, or other proprietary
interests in, the Company (i) representing ten percent
(10%) or more of the voting power of the Company or
(ii) which would cause such Person or group of Persons to become the
beneficial owner of equity securities representing fifty percent (50%) or more
of the voting power of the Company provided, however, that the
transactions relating to the sale of the Iowa Bank described in Schedule 5.01(c)
of the Disclosure Statement shall not constitute an Acquisition
Proposal.
“Affiliate”
shall mean, when used with reference to a specified Person, any Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with the specified Person, and as
to
any Person who is a natural Person, shall also include any trust or other estate
in which such natural Person has a beneficial interest or as to which such
natural Person serves as a trustee or in a similar fiduciary capacity and any
Family of such natural Person. For purposes of this definition, the
term “controls” or “controlled by” or “under common
control” means (a) possession of ten percent (10%) or more of the
voting rights of the specified Person or the right to appoint a majority of
the
managers or directors of the specified Person or (b) the direct or indirect
beneficial ownership of ten percent (10%) or more of any equity or other
economic interest of the specified Person, and the term “Family” means
the natural Person’s spouse or former spouse(s), or any other natural Person who
is related to the natural Person or the natural Person’s spouse within the
second degree, and any other natural Person who resides with such natural
Person.
“Aggregate
Merger Consideration” shall mean an amount sufficient in the aggregate to
make the payments contemplated by Section 2.04(a) hereof and Section 2.07(b)
hereof.
“Anti-Money
Laundering Laws” shall mean the USA Patriot Act of 2001 and all other
anti-money laundering Laws.
“Business
Day” shall mean any day other than (a) a Saturday or Sunday or
(b) any other day on which banks in the City of Chicago, Illinois are
permitted or required to be closed.
“Code”
shall mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations related thereto.
“Commercially
Reasonable Efforts” shall mean the efforts that a reasonable Person
desirous of achieving a result would use in similar circumstances to achieve
such result in a reasonably prompt manner; provided however, an
obligation to use Commercially Reasonable Efforts under this Agreement does
not
require the Person subject to the obligation (a) to take actions that would
result in a material change in the benefits to such Person of this Agreement
and
the transactions contemplated hereby (including the Merger) or (b) unless
otherwise expressly provided herein, to incur any additional financial
obligation (x) in excess of normal and usual filing and processing fees, if
any,
or (y) which is significant in the context of the particular benefit or
objective to be obtained (or significant on an aggregate basis for all such
financial obligations).
2
“Common
Equivalent Shares” shall mean the number of shares of Company Common Stock
issued and outstanding as of immediately prior to the Effective Time, treating
all Stock Options as having been fully exercised as of such time.
“Company
Certificate” shall mean a stock certificate evidencing ownership of
share(s) of Company Common Stock.
“Company
Earnings” shall mean the amount at a given point in time by which the
income accrued by the Company in accordance with GAAP since March 31, 2007
exceeds the expenses accrued by the Company in accordance with GAAP since March
31, 2007.
“CRA”
shall mean the Community Reinvestment Act of 1977, as amended, and the
regulations promulgated thereunder.
“Dissenting
Share” shall mean a share of Company Common Stock held by a Person who
properly exercises (including timely delivery of a notice of intent to demand
payment for shares and timely compliance with all other requirements under
the
applicable provisions of the WBCL) any appraisal or dissenters’ rights or any
right to demand the payment of fair value under the applicable provisions of
the
WBCL with respect to such share.
“Encumbrance”
shall mean any charge, claim, community property interest, mortgage, easement,
encumbrance, servitude, right of way, deed of trust, deed to secure debt,
condition, equitable interest, lien, option, pledge, security interest, right
of
first refusal or other restriction of any kind, including any restriction on
use, voting, transfer, receipt of income or exercise of any other attribute
of
ownership.
“Environmental
Condition” shall mean (a) an above ground storage tank, underground
storage tank, subsurface structure or container, and its associated piping,
which is present at any Phase I Property and which violates any
Environmental Law; (b) a Hazardous Substance present in an improvement to,
or the soil and/or groundwater at, any Phase I Property which violates any
Environmental Law (for the avoidance of doubt, the presence of friable asbestos
shall be deemed a violation of Environmental Law for purposes of this Agreement
and conversely the presence of non-friable asbestos in good repair and the
presence of mold shall be deemed not to violate Environmental Law for purposes
of this Agreement); (c) a discharge, emission or release of a Hazardous
Substance related to a Phase I Property which violates any Environmental
Law; (d) an event or condition that likely has occurred or exists with
respect to any Phase I Property which constitutes a violation of any
Environmental Law; or (e) any groundwater or soil
contamination related to any Phase I Property that requires cleanup,
remediation, abatement or restoration under Environmental
Law.
3
“Environmental
Laws” shall mean all Laws that: (a) regulate air, water,
soil, and solid waste management, including the generation, release,
containment, storage, handling, transportation, disposition, or management
of
any Hazardous Substance; (b) regulate or prescribe requirements for air,
water, or soil quality; (c) are intended to protect public health or the
environment; or (d) establish liability for the investigation, removal, or
cleanup of, or damage caused by, any Hazardous Substance.
“ERISA
Affiliate” shall mean any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under Section
414
of the Code or under principles of applicable law.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations related thereto.
“FDIC”
shall mean the Federal Deposit Insurance Corporation.
“Federal
Reserve Board” shall mean the Board of Governors of the Federal Reserve
System.
“Financial
Statements” shall mean the consolidated balance sheet and consolidated
statement of financial condition of a Person and its Subsidiaries, and the
related consolidated statements of income, changes in shareholders’ equity and
cash flow.
“GAAP”
shall mean the generally accepted accounting principles in the United States
of
America consistently applied.
“Governmental
Approvals” shall mean all consents, approvals, authorizations or Orders of,
and all expirations of waiting periods imposed or administered by, any
Governmental Entity which are necessary for the consummation of the Merger,
including all consents, approvals and authorizations requested by the Regulatory
Applications.
“Governmental
Authorization” shall mean any approval, consent, license, permit, waiver or
other authorization issued, granted, given or otherwise made available by or
under the authority of any Governmental Entity or pursuant to any
Law.
“Governmental
Entity” shall mean any federal, state, local, municipal, foreign or
multinational court, administrative agency, arbitrator, instrumentality or
commission or other governmental or quasi-governmental authority, including
any
banking, insurance, securities or other regulatory authorities.
“Hazardous
Substance” shall have the meaning set forth in Section 9601 of the
Comprehensive Environmental Response Compensation and Liability Act of 1980,
42 U.S.C.A., Section 9601 et seq., and also includes any
substance now regulated by or subject to any Environmental Laws.
“HOEPA” shall
mean the Home Ownership Equity Protection Act of 1994, as amended.
4
“IDB”
shall mean the Iowa Division of Banking.
“Intercompany
Agreement” shall mean all agreements between (a) the Company, on the
one hand, and any Subsidiary or Affiliate of the Company, on the other hand,
and
(b) any Subsidiary of the Company, on the one hand, and any other
Subsidiary of the Company or any Affiliate of the Company, on the other
hand.
“IRS”
shall mean the Internal Revenue Service.
“Knowledge”
or “to the Knowledge of” shall mean, unless otherwise expressly
provided herein, with respect to the Buyer, the actual knowledge of the officer
executing this Agreement on behalf of the Buyer after due and diligent inquiry
into the matter asserted, with respect to NewCo, the actual knowledge of the
officer executing this Agreement on behalf of NewCo after due and diligent
inquiry into the matter asserted, and with respect to the Company, the actual
knowledge of any of the Company’s Chairman and Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer or General Counsel and Chief Risk
Officer after due and diligent inquiry into the matter asserted. For
purposes hereof, with respect to the Company, “due and diligent inquiry into the
matter asserted” shall mean an inquiry that a reasonably prudent person in the
position of any of the officers of the Company identified in the previous
sentence would make of those management level employees of the Company or any
of
its Subsidiaries who (a) have responsibility for the matter in question and
(b) such officer reasonably determines could be informed of the
transactions contemplated by this Agreement prior to the public announcement
of
the execution of this Agreement, provided that (x) such employee
is the only source of information as to the matter in question, (y) the
information may only be obtained from the employee if the officer informs the
employee of the transactions contemplated by this Agreement and (z) the
officer, after consulting with external legal counsel, has reasonably concluded
that the employee, in light of the desire of the parties to maintain the
confidentiality of the transactions contemplated by this Agreement prior to
their public announcement, should not be informed of the transactions
contemplated by this Agreement in order to obtain such information.
“Law”
shall mean any federal, state, local, municipal, foreign, international,
multinational, or other administrative Order, constitution, law, ordinance,
principle of common law, rule, regulation, statute, or treaty.
“Liability”
shall mean all of the obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due) arising
out
of transactions or events heretofore entered into, or any action or inaction,
including Taxes with respect to or based upon transactions or events heretofore
occurring.
“Loan”
shall mean any loan or other extension of credit (including letters of credit
and letter of credit reimbursement obligations) held by the Company or any
Subsidiary of the Company, whether originated by, purchased or otherwise
acquired by the Company or any Subsidiary of the Company.
5
“Material
Adverse Effect” shall mean (a) with respect to the Company, any
change, event or effect, that is, or will reasonably likely be, materially
adverse to (i) the business, assets (including intangible assets), financial
condition or results of operations of the Company and the Subsidiaries of the
Company, taken as a whole or (ii) the ability of the Company to consummate
the transactions contemplated hereby on a timely basis; provided, however,
that a Material Adverse Effect with respect to the Company shall
not
include any changes, events and effects (A) relating to conditions
affecting the banking or financial industry as a whole, including changes in
general interest rates and deposit rates, the United States economy as a whole,
the capital markets in general or the geographical markets in which the Company
or any of its Subsidiaries operates, provided such changes, events or
effects are not disproportionately adverse to the Company and its Subsidiaries
compared to the banking or financial industry as a whole, (B) resulting
from the execution of this Agreement or the announcement or consummation of
the
transactions contemplated herein, including the effects, if any, resulting
from
Transaction Expenses, including the payment of any amounts due to, or the
provision of any benefits to, any officer or employee under employment
contracts, benefit plans, severance agreements, consulting agreements or other
arrangements in existence as of the date hereof and disclosed in the Disclosure
Statement and the costs of any litigation defending any of the transactions
contemplated herein, (C) relating to changes in GAAP, provided
such changes, events or effects are not disproportionately adverse to the
Company and its Subsidiaries compared to the banking and financial industry
as a
whole, (D) relating to changes in Law, Orders, or other binding directives
issued by any Governmental Entity, provided such changes, events or
effects are not disproportionately adverse to the Company and its Subsidiaries
when compared to the banking and financial industries as a whole, (E) relating
to the commencement, continuation or escalation of a war, material armed
hostilities or other material international or national calamity or act of
terrorism directly or indirectly involving the United States, provided
such changes, events or effects are not disproportionately adverse to the
Company and its Subsidiaries compared to the banking or financial industry
as a
whole or (F) actions or omissions taken or not taken by the Company or any
of its Subsidiaries in compliance with this Agreement, and, (b) shall mean
with respect to the Buyer and/or NewCo, any change, event or effect that is,
or
will reasonably likely be, materially adverse to the ability of the Buyer and/or
NewCo to consummate the transactions contemplated hereby on a timely
basis.
“MDC”
shall mean the Minnesota Department of Commerce.
“Mortgaged
Premises” shall mean each (a) real property interest (including any
fee or leasehold interest) which is encumbered or affected by any mortgage,
deed
of trust, deed to secure debt or other similar document or instrument granting
to either the Company or any Subsidiary of the Company (as applicable) a lien
on
or security interest in such real property interest and (b) any other real
property interest upon which is situated assets or other property affected
or
encumbered by any document or instrument granting to either the Company or
any
Subsidiary of the Company (as applicable) a lien thereon or security interest
therein.
“Non-Bank
Subsidiary” shall mean, with respect to the Company, any Subsidiary that is
not a Bank.
6
“Order”
shall mean any award, decision, injunction, judgment, order, decree, ruling,
subpoena or verdict entered, issued, made or rendered by any Governmental
Entity.
“Ordinary
Course of Business” shall mean the action or inaction of a Person that is
consistent with the past practices of such Person and that is taken or not
taken
in the ordinary course of the normal day-to-day operations of such
Person.
“Organizational
Documents” shall mean (a) the articles or certificate of incorporation
and the bylaws of a corporation; (b) the partnership agreement and any
statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate or articles of limited partnership
of
a limited partnership; (d) the limited liability partnership agreement and
the
certificate or articles of limited liability partnership of a limited liability
partnership; (e) the operating agreement or limited liability company
agreement and the articles of organization or certificate of formation of a
limited liability company; (f) the charter and the articles of association
or articles of incorporation and the bylaws of a bank; (g) any charter or
similar document adopted or filed in connection with the creation, formation
or
organization of a Person; and (h) any amendment to any of the
foregoing.
“OSFI”
shall mean the Office of the Superintendent of Financial Institutions or such
replacement supervisory or administrative body or Governmental Entity as may
be
established pursuant to the Bank Act (Canada).
“OTCBB”
shall mean the OTC Bulletin Board.
“Participating
Facility” shall mean any property in which either the Company or any
Subsidiary of the Company (as applicable) participates in the management of
such
property and, where the context requires, includes the owner or operator of
such
property.
“Paying
Agent” shall mean Computershare Trust Company of New York, or such other
Person appointed by the Buyer to act as Paying Agent under this
Agreement.
“Payment
Amount” shall mean an amount in cash equal to the Per Share Merger
Consideration multiplied by the total number of shares of Participating Company
Common Stock immediately prior to the Effective Time.
“Per
Share Merger Consideration” shall mean an amount in cash equal to $37.30,
as adjusted herein.
“Person”
shall mean any individual, corporation, limited liability company, business
or
other trust, association, general, limited or limited liability partnership,
joint venture or other entity, or any Government Entity.
“Proceeding”
shall mean any action, claim, dispute, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, asserted, brought, conducted or heard
by
or before, or otherwise involving, any Governmental Entity.
7
“Records”
shall mean all documents microfiche, microfilm and computer records (including
magnetic tape, disc storage, card forms and printed copy).
“Representatives”
shall mean a Person’s, and such Person’s Subsidiaries’, directors, officers,
employees, agents, advisors (including any investment banker or other financial
advisor, attorney or accountant), consultants or other
representatives.
“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act” shall mean the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
“SEC”
shall mean the United States Securities and Exchange Commission.
“Securities
Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations related thereto.
“Shareholders”
shall mean the shareholders of record of the Company.
“Subsidiary”
shall mean with respect to any Person (the “Parent”), any Person of
which the Parent owns or controls twenty percent (20%) or more of the
outstanding equity securities of, or other proprietary interest in, or a
quantity of equity securities or other proprietary interests having the right
to
elect a majority of such Person’s board of directors or similar governing body
or otherwise having the power to direct the business and policies of such
Person, either directly or through an unbroken chain of Subsidiaries of the
Parent, provided, however, there shall not be included any such Person
acquired in good faith through foreclosure, or any such Person to the extent
that the equity securities or other proprietary interests of such Person are
owned or controlled by the Parent in a bona fide fiduciary capacity;
provided, further, that the Person listed in subsection (v) of
item 1. of Schedule 4.07(a) of the Disclosure Statement shall not be
included in the definition of “Subsidiary” set forth in this
Agreement.
“Superior
Proposal” shall mean any bona fide written Acquisition Proposal which the
Board of Directors of the Company determines in its good faith judgment (after
taking into account: (a) the advice of the Company's financial
advisor; (b) all the material terms and conditions of such Acquisition
Proposal, including any break-up fees, expense reimbursement provisions and
conditions to consummation (including any financing conditions); (c) the
likelihood and anticipated timing of consummation; (d) all material legal,
financial, regulatory and other aspects of such Acquisition Proposal; and
(e) the reputation of the Person making such Acquisition Proposal), is, in
the aggregate, more favorable from a financial point of view to the
Shareholders, than the Per Share Merger Consideration, this Agreement and the
Merger taken as a whole.
“Tax”
shall mean any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, prohibited transaction, stamp,
occupation, premium, property or windfall profits, environmental, customs duty,
capital stock, franchise, withholding, social security, unemployment,
disability, workers’ compensation, employment-related insurance, real property,
personal property, sales, use, transfer, value added, alternative or add-on
minimum tax, fee or assessment imposed by a Governmental Entity or pursuant
to
any Law, including any interest, penalties or additional amounts in respect
of
the foregoing.
8
“Threatened”
shall mean any demand or statement made (orally or in writing), any notice
given
(orally or in writing) or the occurrence of any other event or the existence
of
any other circumstance that would lead a prudent Person to conclude that a
claim, Proceeding, dispute, action or other matter is reasonably likely to
be
asserted, commenced, taken or otherwise pursued in the future.
“Transaction
Expense” shall mean any cost, fee or expense paid or incurred at any time,
either directly or indirectly, by the Company or any of its Subsidiaries (or
by
their Shareholders, directors, officers, employees or agents, to the extent
such
expenses are payable by the Company or any of its Subsidiaries) in connection
with, relating to, arising out of or resulting from the Merger or any
transaction or action taken with respect to the Merger or otherwise contemplated
by this Agreement or any document contemplated hereby or the negotiation and
preparation hereof or thereof, including (a) the costs, fees and expenses
of lawyers, agents, investment bankers, accountants, consultants and advisors
and (b) any other cost, fee or expense identified or otherwise described as
a Transaction Expense herein. Notwithstanding the forgoing,
Transaction Expenses shall exclude the items identified as expenses or costs
of
the Company or its Subsidiaries in Sections 6.02 and 6.03 hereof.
“Trust
or Agency Agreements” shall mean any instrument, indenture, declaration,
agreement, will, contract, resolution or other document under which a Person
acts as an executor, trustee, fiduciary, Representative, agent (including a
custodian, paying agent or escrow agent) conservator, guardian or in a similar
capacity.
“WBCL” shall
mean the Wisconsin business corporation law, as amended.
“WDFI”
shall mean the Wisconsin Department of Financial Institutions.
Section 1.02.Principles
of Construction. In this Agreement, unless otherwise stated or
the context otherwise requires, the following usages
apply: (a) actions permitted but not required under this
Agreement may be taken at any time, and from time to time, in the actor’s sole
discretion; (b) in computing periods from a specified date to a later
specified date, the words “from” and “commencing on” (and the like) mean “from
and including,” and the words “to,” “until” and “ending on” (and the like) mean
“to, and including”; (c) headings are inserted for convenience of reference
only and are not a part of, nor shall they affect any construction or
interpretation of this Agreement; (d) unless otherwise specified,
indications of time of day mean Chicago, Illinois time; (e) all references
to Articles, Sections, Schedules, Appendices and Exhibits are to Articles,
Sections, Schedules, Appendices and Exhibits in or to this Agreement unless
otherwise specified; (f) references to a statute shall refer to the
statute, any successor statute, and to all regulations and rules promulgated
under or implementing the statute or successor and any amendments thereto,
as in
effect at the relevant time; (g) references to a Governmental Entity shall
also refer to a Governmental Entity that succeeds to the functions of the
Governmental Entity; (h) “including” shall mean “including, but not limited
to;” (i) unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the plural, all
words in the plural number shall extend to and include the singular and all
words in any gender shall extend to and include all genders; (j) any
reference to a document or set of documents in this Agreement, and the rights
and obligations of the parties under any such documents, shall mean such
document or documents as amended from time to time, and any and all
modifications, extensions, renewals, substitutions or replacements thereof;
(k) all references to dollars ($) shall mean United States currency;
(l) words such as “herein,” “hereinafter,” “hereof,” “hereto,” and
“hereunder” refer to this Agreement as a whole unless the context requires
otherwise; (m) unless otherwise provided herein, all accounting terms used
but not specifically defined herein shall be construed in accordance with GAAP;
and (n) unless otherwise provided herein, any references to specific acts,
Laws, facts or circumstances contained in any provision hereof which could
reasonably be construed to be addressed in a more general provision hereof
shall
be intended as an amplification of (and not a limitation of) such general
provision. This Agreement and the other instruments and documents to
be delivered pursuant hereto shall not be construed more favorably against
one
party than the other based on who drafted the same, it being acknowledged that
all parties hereto contributed meaningfully to the drafting of this
Agreement.
9
Article
II
The
Merger
Section 2.01.The
▇▇▇▇▇▇.▇▇ accordance with the terms and subject to the conditions of this
Agreement, the Buyer, NewCo and the Company shall cause the Merger to be
consummated, pursuant to which NewCo will be merged with and into the Company
and the separate corporate existence of NewCo shall thereupon cease, and the
Company shall be the surviving corporation of the Merger (the “Surviving
Corporation”).
Section 2.02.Closing;
Effective Time.Subject to the provisions of this Agreement, the closing of
the Merger (the “Closing”) shall occur on a date that is mutually
agreed upon by the parties, which date shall be no later than the twentieth
(20th) Business Day following the date on which all the conditions set forth
in
Article VII hereof (except those which by their terms can only be satisfied
at the Closing) have been satisfied or waived (the “Closing
Date”). The Closing shall take place at the offices of ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇ LLP, located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at a
time
to be mutually agreed upon by the parties. Prior to the Closing Date,
the parties hereto shall cause articles of merger with respect to the Merger
(“Articles of Merger”) to be drafted and executed in accordance with
the applicable provisions of the WBCL. The Merger shall become
effective on the Closing Date (or on such day thereafter as is permitted by
Law
and as the Buyer and the Company may agree upon in writing and provide for
in
the Articles of Merger), at a time mutually agreed upon by the parties and
provided for in the Articles of Merger (the “Effective Time”), upon the
filing of the Articles of Merger on the Closing Date with the WDFI in accordance
with the applicable provisions of the WBCL.
Section 2.03.Effects
of Merger. (a) At and after the Effective Time, the
Surviving Corporation shall be governed by the laws of the State of Wisconsin
with all of its rights, privileges, powers and franchises unaffected by the
Merger, and shall possess all assets and property of every description, whether
real, personal or mixed, and every interest in the assets and property,
contingent or otherwise, wherever located, and the rights, privileges,
immunities, powers, franchises and authority, of a public as well as a private
nature, of each of NewCo and the Company, including all debts due on whatever
account, all choses in action, and each and every interest of or belonging
or
due to each of NewCo and the Company, all of which shall vest in the Surviving
Corporation without further act or deed; and the title to all real estate,
or
any interest therein, vested in any of such corporations shall not revert or
in
any way be impaired by the Merger. At and after the Effective Time,
the Merger shall have the further effects as set forth in the applicable
provisions of the WBCL (including Chapter 180, Section 1106
thereof).
10
(b) At the Effective Time, the articles of incorporation of the Surviving
Corporation shall be amended and restated as set forth in Exhibit 2.03(b)
attached hereto and shall be the articles of incorporation of the Surviving
Corporation until amended in accordance with the applicable provisions thereof
and the WBCL.
(c) At the Effective Time, the bylaws of the Surviving Corporation shall
be amended and restated as set forth in Exhibit 2.03(c) attached hereto and
shall be the bylaws of the Surviving Corporation until altered, amended or
repealed as provided therein, or in accordance with the articles of
incorporation of the Surviving Corporation and the WBCL.
(d) At the Effective Time, (i) the directors of the Surviving Corporation
shall be the Persons who were directors of NewCo immediately prior to the
Effective Time, and (ii) the officers of the Surviving Corporation shall be
the
Persons who were officers of NewCo immediately prior to the Effective
Time.
Section
2.04Conversion of Capital Stock. Subject to the
provisions of this Agreement, at the Effective Time:
(a)
Each issued and outstanding share of Company Common Stock that does not qualify
as a Dissenting Share or is not cancelled pursuant to Section 2.04(b)
(“Participating Company Common Stock”) shall, ipso facto and without
any action on the part of any holder thereof, become and be converted into
the
right to receive the Per Share Merger Consideration from either the Buyer or
from NewCo or its successor. No interest shall accrue or be payable
with respect to the Per Share Merger Consideration. At and after the
Effective Time, each Company Certificate representing share(s) of Participating
Company Common Stock, until surrendered as provided in Section 2.06 hereof,
shall represent only the right to receive from either the Buyer or from NewCo
or
its successor the Per Share Merger Consideration with respect to each share
of
Participating Company Common Stock represented thereby.
(b)
Each share of issued and outstanding Company Common Stock owned of record
immediately prior to the Effective Time by the Company, the Buyer or NewCo
or
any of their respective Subsidiaries, including treasury stock, shall be
canceled and retired, and no cash or other consideration shall be payable with
respect thereto; provided, however, that shares of Company Common Stock
owned of record immediately prior to the Effective Time by the Company, the
Buyer or NewCo or any of their respective Subsidiaries (i) in a fiduciary
or similar capacity (“Trust Account Shares”) or (ii) in respect of
a debt previously contracted (“DPC Shares”) shall not be cancelled and
retired as provided above.
11
(c)
Each issued and outstanding share of the common stock of NewCo shall, ipso
facto
and without any action on the part of the holder thereof, become and be
converted into one (1) issued and outstanding share of the common stock of
the Surviving Corporation (“Surviving Corporation Common Stock”), and
all of such shares of Surviving Corporation Common Stock shall be owned by
the
Buyer. The certificates representing share(s) of common stock of
NewCo issued and outstanding immediately prior to the Effective Time of the
Merger shall be deemed to represent an identical number of shares of Surviving
Corporation Common Stock.
Section 2.05.Deposit
of Payment Amount. At the Effective Time, the Buyer shall
deliver, or shall cause to be delivered, to the Paying Agent, the Payment Amount
to be deposited in an account, segregated from all other accounts, for the
benefit of the holders of Company Certificates (the “Payment Account”),
for exchange in accordance with this Article II. Any interest
earned on the Payment Account shall accrue and be paid to the
Buyer. If a former shareholder of the Company becomes a Participating
Shareholder after the Effective Time, the Buyer shall deliver, or cause to
be
delivered, on the date the Surviving Corporation or its successor receives
actual notice of such former shareholder’s status as a Participating
Shareholder, an amount in cash equal to the Per Share Merger Consideration
multiplied by the number of shares of Company Common Stock represented by such
former shareholder’s Company Certificate(s) to the Paying Agent to be deposited
in the Payment Account. The Buyer or NewCo shall be responsible for paying
all
fees and expenses of the Paying Agent.
Section ▇.▇▇.▇▇▇▇▇▇▇▇
of Shares. (a) Promptly after the receipt of Shareholder
Approval (but not less than three (3) Business Days prior to the Effective
Time), the Company shall use Commercially Reasonable Efforts to cause its
exchange or transfer agent to deliver to the Buyer, in an electronic format
satisfactory to the Buyer, a list, certified by such exchange or transfer agent,
of each then holder of Company Common Stock that does not constitute a
Dissenting Share (each, a “Participating Shareholder”) setting forth
(i) the legal name of each such Participating Shareholder, (ii) the
number of shares of Company Common Stock held by each such Participating
Shareholder, (iii) the social security number or other Tax identification
number of each such Participating Shareholder, (iv) a list of each Company
Certificate held by each such Participating Shareholder, setting forth
(A) the certificate number of each such Company Certificate, (B) the
number of shares of Company Common Stock represented by each such Company
Certificate and (C) the date of issuance of each such Company Certificate,
(v) the most recent address of each such Participating Shareholder
according to the books and records of the Company or its exchange or transfer
agent and (vi) any other information with respect to such Participating
Shareholders reasonably requested by the Buyer or its Representatives (the
“Participating Shareholder List”). From time to time after
delivery of the Participating Shareholder List through the Closing Date, the
Company shall supplement or amend the Participating Shareholder List promptly
after it becomes aware of any fact or the occurrence of any event (including
any
transfer of shares of Company Common Stock or a shareholder of the Company
becoming a Participating Shareholder by losing or withdrawing dissenter’s or
appraisal rights under the applicable provisions of the WBCL) which would render
the Participating Shareholder List inaccurate or incomplete in any
respect.
12
(b) Subject to the Buyer’s receipt of the Participating Shareholder List,
the Buyer shall use Commercially Reasonable Efforts to cause the Paying Agent,
as soon as reasonably practicable after the Effective Time (but in no event
later than three (3) Business Days after the Effective Time), to send via
regular U.S. mail to each holder of a Company Certificate(s) which immediately
prior to the Effective Time represented shares of Company Common Stock (other
than the Buyer, the Company or any of their respective Subsidiaries with respect
to shares held by such entities other than Trust Account Shares and DPC
Shares): (i) a letter of transmittal, which shall be prepared by
the Buyer, shall specify that delivery shall be effected and risk of loss and
title to any Company Certificates shall pass only upon actual delivery of the
same to the Paying Agent, and shall be in such form and contain such other
provisions as the Buyer deems necessary or desirable for use in effecting the
surrender of the Company Certificates (the “Letter of Transmittal”),
(ii) instructions for completing the Letter of Transmittal and effecting
the surrender of the Company Certificates pursuant to the provisions of this
Agreement and (iii) other appropriate materials required to complete the
exchange of the Company Certificates pursuant to this
Agreement. Prior to the Effective Time, the Buyer shall provide the
Company with a reasonable opportunity to review the form Letter of Transmittal
and instructions thereto.
(c) Upon proper surrender of a Company Certificate for exchange and
cancellation to the Paying Agent, together with the applicable Letter of
Transmittal and related materials, in each case as duly executed and properly
completed, the holder of such Company Certificate shall be entitled to receive
from the Paying Agent in exchange for each share represented thereby the Per
Share Merger Consideration, and the Company Certificate so surrendered shall
forthwith be canceled. No interest shall accrue or be paid on the
consideration payable upon the surrender of any Company Certificate for the
benefit of the holder of such Company Certificate. If payment of
consideration pursuant hereto is to be made to a Person other than the Person
in
whose name the surrendered Company Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
Company Certificate so surrendered shall be endorsed properly or otherwise
be in
proper form for transfer and that the Person requesting such payment shall
have
paid all transfer and other Taxes required by reason of the payment of such
consideration to a Person other than the registered holder of the Company
Certificate surrendered or shall have established to the satisfaction of the
Buyer and the Paying Agent that such taxes either have been paid or are not
applicable.
(d)
If any holder of a Company Certificate requests payment by means of a wire
transfer in his, her or its duly executed and completed Letter of Transmittal,
the Paying Agent shall make payment of the consideration such Person is entitled
to hereunder by wire transfer in accordance with such request and the cost
of
any such wire transfer sent pursuant to such request shall be charged to the
account of and deducted from the proceeds paid to such Person
hereunder.
(e) The Buyer, NewCo, the Surviving Corporation and the Paying Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement such amounts as the Buyer, NewCo and the Surviving
Corporation or the Paying Agent is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of state, local
or foreign Tax Law or Order. To the extent that amounts are so
withheld by the Buyer, NewCo, the Surviving Corporation or the Paying Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holders of the shares of Company Common Stock in respect
to whom such deduction and withholding was made by the Buyer, NewCo, the
Surviving Corporation or the Paying Agent.
13
(f) At any time following the expiration of the sixth (6th) month after
the Effective Time, the Surviving Corporation or its successor in interest
shall
be entitled to any funds which have not been disbursed to former holders of
shares of Company Common Stock (including, without limitation, all interest
and
other income in respect of the Per Share Merger Consideration), and thereafter
such holders shall be entitled to look to the Surviving Corporation or its
successor in interest (subject to applicable abandoned property, escheat or
similar Laws) only as general creditors thereof with respect to any
consideration that may be payable upon due surrender of the Company Certificates
held by them.
(g) From and after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock which
were issued and outstanding immediately prior to the Effective
Time. From and after the Effective Time, the holders of shares of
Company Common Stock shall cease to have any rights with respect to such shares
except as otherwise provided herein or by applicable Law. If, after
the Effective Time, any Company Certificate representing such share(s) of
Company Common Stock is presented for transfer to the Surviving Corporation
or
the Paying Agent, such Company Certificate shall be canceled and exchanged
as
provided in this Article II.
(h) Neither the Buyer, NewCo nor the Company nor any of their successors
or any other Person shall be liable to any former holder of shares of Company
Common Stock for any shares or any dividends or distributions with respect
thereto or any consideration delivered in respect of any such shares properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar Laws.
(i) In the event any Company Certificate shall have been lost, stolen or
destroyed, upon receipt of appropriate evidence as to such loss, theft or
destruction and to the ownership of such Company Certificate by the Person
claiming such Company Certificate to be lost, stolen or destroyed, and the
receipt by the Buyer and the Paying Agent of appropriate and customary
indemnification, the owner of such Company Certificate shall be entitled to
the
payment of the consideration such Person would be entitled to hereunder if
such
Person surrendered such Company Certificate to the Paying Agent as provided
herein.
Section 2.07.Employee
Stock Options. (a) Prior to the Closing Date, the Company shall take or
cause to be taken such action as is necessary: (i) to cause any unexercisable
options to purchase shares of Company Common Stock (each, a “Stock
Option”) granted under any stock option plans or other equity-related plans
of the Company, including the Merchants & Manufacturers Bancorporation, Inc.
1996 Incentive Stock Option Plan and the Merchants & Manufacturers
Bancorporation, Inc. 2006 Stock Incentive Plan (collectively, the “Company
Stock Option Plans”) to be accelerated and become exercisable in full
effective immediately prior to the Effective Time; (ii) to effectuate the
termination upon the Effective Time of all Stock Options outstanding at such
time (without regard to the exercise price of such Stock Options); and (iii)
to
cause, pursuant to the Company Stock Option Plans, each outstanding Stock Option
to represent upon the Effective Time solely the right to receive, in accordance
with this Section 2.07, a lump sum cash payment in the amount of the Option
Consideration, if any, with respect to such Stock Option and to no longer
represent the right to purchase Company Common Stock or any other equity
security of the Company, the Buyer, NewCo, the Surviving Corporation or any
other Person or any other consideration.
14
(b) Each holder of a Stock Option shall receive from the Buyer or from
NewCo or its successor, in respect and in consideration of each Stock Option
so
cancelled, as soon as reasonably practicable following the Effective Time,
an
amount equal to the product of (i) the excess, if any, of (A) the Per
Share Merger Consideration over (B) the exercise price per share of such
Stock Option, multiplied by (ii) the total number of shares of Company
Common Stock covered by such Stock Option (whether or not then vested or
exercisable), without any interest thereon (the “Option
Consideration”), which cash payment shall be treated as compensation
and shall be net of any applicable federal or state withholding tax;
provided, however, the payment of the Option Consideration shall be
conditioned on an option-holder executing an acknowledgment that the Option
Consideration represents the full amount due for all Stock Options held by
such
option-holder. In the event that the exercise price of any Stock
Option is equal to or greater than the Per Share Merger Consideration, the
Option Consideration for such Stock Option shall be zero and such Stock Option
shall be cancelled and have no further force or effect.
(c) As soon as reasonably practicable following the execution of this
Agreement, the Company shall mail to each Person who is a holder of Stock
Options a letter describing the treatment of and payment for such Stock Options
pursuant to this Section 2.07 and providing instructions for use in obtaining
payment for such Stock Options.
(d) The Company hereby represents and warrants to the Buyer that the
maximum number of shares of Company Common Stock subject to issuance pursuant
to
the exercise of Stock Options is not and shall not be at or prior to the
Effective Time more than 100,113 shares.
Section 2.08.Dissenting
Shares. The holder of any Dissenting Share shall have the
rights, subject to the limitations, provided by the applicable provisions of
the
WBCL. If at any time a holder of a Dissenting Share shall lose or
withdraw such holder’s dissenters’ rights or rights to appraisal with respect to
such holder’s shares of Company Common Stock, then each such share shall be
converted into the right to receive the consideration such Person is entitled
to
hereunder. The Company shall give the Buyer (a) prompt notice of
any notice of intent to demand payment for shares, any demand for payment,
any
withdrawal of demand for payment and any other instruments received by the
Company in connection with the exercise by Shareholders of their dissenters’
rights pursuant to the applicable provisions of the WBCL and (b) the right
to direct all negotiations and Proceedings with respect to notices of intent
to
demand payment for shares and demand for payment under the applicable provisions
of the WBCL. The Company shall not, except with the prior written
consent of the Buyer, (y) make any payment with respect to any such notice
of intent to demand payment for shares or demand for payment or (z) offer
to settle or settle any such notice of intent to demand payment for shares
or
demand for payment.
15
Section 2.09.Aggregate
Merger Consideration; Adjustments to Prevent
Dilution. (a) Notwithstanding anything herein to the
contrary, the Buyer and the Company hereby agree that (i) under no
circumstances shall the Aggregate Merger Consideration, without taking into
account any adjustment to the Per Share Merger Consideration pursuant to Section
6.21 hereof, exceed $139,000,000 (assuming all in the
money Company Stock Options are exercised prior to the Effective Time) or
$137,160,000 (assuming no Company Stock Options are exercised prior to the
Effective Time) and (ii) the Per Share Merger Consideration shall be decreased,
as needed, in order to effectuate the provisions of Section 2.09(a)(i)
above.
(b) In the event that the Company changes the number of shares of Company
Common Stock or securities convertible or exchangeable into or exercisable
for
shares of Company Common Stock issued and outstanding prior to the Effective
Time as a result of reclassification, stock split (including reverse stock
split), stock dividend or distribution, recapitalization, merger, issuer tender
or exchange offer, or other similar transaction in accordance with the
provisions hereof, the Per Share Merger Consideration shall be equitably
adjusted.
Section 2.10.Plan
of Merger. The parties hereto hereby agree that the provisions
of Article II hereof shall be the provisions of the plan of merger required
to be set forth in the Articles of Merger pursuant to the applicable provisions
of the WBCL.
Article
III
Representations
and Warranties of the Buyer and NewCo
The
Buyer
and NewCo hereby represent and warrant to the Company that:
Section 3.01.Organization. The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. NewCo is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Wisconsin. Each of the Buyer and NewCo has all requisite
power and authority, corporate and otherwise, to own, operate and lease its
assets, properties and businesses and to carry on its businesses substantially
as they have been and are now being conducted. Each of the Buyer and
NewCo is duly qualified to do business and is in good standing in each
jurisdiction where the character of the properties owned or leased by it or
the
nature of the business transacted by it requires that it be so qualified, except
for such failures to be so duly qualified and in good standing that would not
have a Material Adverse Effect on the Buyer or NewCo.
Section 3.02.Authorization. Each
of the Buyer and NewCo has the corporate power and authority to enter into
this
Agreement and to carry out the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by each of the Buyer and NewCo have been duly
authorized and approved by all necessary corporate action on the part of the
Buyer and NewCo and this Agreement constitutes the legal, valid and binding
obligation of the Buyer and NewCo enforceable in accordance with its terms
(except to the extent that enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles and doctrines).
16
Section 3.03.Conflicts. Subject
to the second sentence of this Section 3.03, the execution and delivery of
this Agreement by the Buyer and NewCo do not, and the consummation of the
transactions contemplated hereby will not, violate or conflict with any
provision of the Organizational Documents of the Buyer or NewCo (as the case
may
be), or any mortgage, indenture, lease, obligation agreement, Governmental
Authorization, Order or Law or other instrument or document applicable to the
Buyer or NewCo (as the case may be) or their respective properties, other than
any of the foregoing which will be cured or waived prior to
Closing. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by
or with respect to the Buyer or NewCo (as the case may be) in connection with
the execution and delivery of this Agreement by the Buyer or NewCo, or the
consummation of the transactions contemplated hereby, except
for: (a) the filing of the Regulatory Applications with the
appropriate Governmental Entities; (b) the receipt of the Governmental
Approvals from the appropriate Governmental Entities; and (c) the filing of
the Articles of Merger with the WDFI.
Section 3.04.Litigation. There
is no Proceeding, pending or, to the Knowledge of the Buyer or NewCo (as the
case maybe), Threatened against or affecting the Buyer or NewCo, or any of
their
respective officers, directors, employees or agents, in their capacities as
such, which, if adversely determined, would materially affect the ability of
the
Buyer or NewCo (as the case maybe) to consummate the transactions contemplated
herein or which is seeking to enjoin the consummation of the transactions
provided for herein or to obtain other relief in connection with this Agreement
or the transactions contemplated hereby, nor is there any Order of any
Governmental Entity outstanding as of the date hereof against the Buyer or
NewCo
or any of the Buyer’s or NewCo's respective officers, directors, employees or
agents, in their capacities as such, having, or which, insofar as reasonably
can
be foreseen in the future, would have any such effect.
Section 3.05.Fees. Other
than the financial advisory services performed for the Buyer and NewCo by an
Affiliate, neither the Buyer nor NewCo nor any of their respective officers,
directors, employees or agents, has employed a broker or finder or incurred
any
liability for any financial advisory fees, brokerage fees, commissions, or
finder’s fees, and no broker or finder has acted directly or indirectly for the
Buyer or NewCo in connection with this Agreement or the transactions
contemplated hereby.
Section 3.06.Non-Reportable
Transaction of the Buyer or NewCo. To the Knowledge of the Buyer
and NewCo, the transactions contemplated by this Agreement (including the
Merger) do not constitute one or more reportable transactions under Treas.
Reg. § 1.6011-4 as promulgated under the Code.
Section 3.07.Financing. The
Buyer has, and will have at the Effective Time, sufficient funds and available
capital to carry out its obligations under this Agreement and to consummate
the
transactions contemplated hereby.
17
Section 3.08.Anti-Takeover
Laws. Neither the Buyer nor NewCo was, immediately prior to the
execution of this Agreement, a "significant shareholder" within the meaning
of
Section 180.1130 of the WBCL or an "interested stockholder" within the
meaning of Section 180.1140 of the WBCL.
Section ▇.▇▇.▇▇
Other Representation or Warranty. Except as expressly set forth
in this Article III, neither the Buyer nor NewCo has made any other
representation or warranty, express or implied, at law or in
equity.
Article
IV
Representations
and Warranties of the Company
The
Company delivered to the Buyer on the date hereof as an appendix to this
Agreement a disclosure statement (the “Disclosure Statement”) composed
of schedules (a) setting forth information that is disclosed either
(i) in response to an express disclosure requirement contained in a
provision of this Article IV or (ii) as an exception to one or more
representations, warranties or covenants contained in this Article IV or in
Article V hereof and (b) referencing, in each case, the specific
section, subsection or paragraph of Article IV or Article V hereof
relating to such item of disclosure. The Disclosure Statement
attached hereto as Appendix I is incorporated herein and made a part of
this Agreement. Disclosure of any fact or item in the Disclosure
Statement referenced by a particular paragraph or section of this Agreement
shall, should the existence of the fact or item or its contents be relevant
to
any other paragraph or section, be deemed to be disclosed with respect to that
other paragraph or section to which its relevance is reasonably
apparent. Subject to the Disclosure Statement, the Company hereby
represents and warrants to the Buyer and NewCo that:
Section 4.01.Organization. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Wisconsin and has all requisite power and
authority, corporate, and otherwise, to own, operate and lease its assets,
properties and businesses and to carry on its businesses substantially as they
have been and are now being conducted. The Company is duly qualified
to do business and is in good standing in each jurisdiction where the character
of the properties owned or leased by it or the nature of the business transacted
by it requires that it be so qualified, except for such failures to be so duly
qualified and in good standing that would not have a Material Adverse Effect
on
the Company. The Company is duly registered with the Federal Reserve
Board as a bank holding company under the Bank Holding Company Act of 1956
and
it is implementing Regulation Y (12 C.F.R. 225.1, et
seq.).
Section 4.02.Authorization. The
Company has the corporate power and authority to enter into this Agreement
and,
subject to Shareholder Approval, to carry out the transactions contemplated
hereby. The execution and delivery by the Company of this Agreement
and, subject to Shareholder Approval, the consummation by the Company of the
transactions contemplated hereby have been duly authorized and approved by
all
necessary corporate action on the part of the Company and this Agreement
constitutes the legal, valid and binding obligation of the Company enforceable
in accordance with its terms (except to the extent that enforceability hereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles or doctrines). This Agreement
and the transactions contemplated thereby, including the Merger and the Plan
of
Merger shall be adopted and approved by the requisite vote of the Shareholders
under applicable Law and the Company’s Organizational Documents if at least a
majority of the shares of Company Common Stock are voted in favor of approving
this Agreement and the transactions contemplated hereby including the Merger
and
Plan of Merger (“Shareholder Approval”).
18
Section 4.03.Conflicts. Subject
to the second sentence of this Section 4.03, the execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby will not, result in the creation of any Encumbrance on any property
or
assets of the Company or any Subsidiary of the Company or conflict with or
result in any violation, breach or termination of, or default or loss of a
benefit under, or permit the acceleration of, any provision of the
Organizational Documents of the Company or any Subsidiary of the Company, or
any
mortgage, indenture, lease, obligation, agreement, Governmental Authorization,
Order, Law or other instrument or document applicable to, the Company or any
Subsidiary of the Company, or their respective properties, in any material
respect, other than any of the foregoing which (a) will be cured or waived
prior to the Closing Date or (b) are disclosed in Schedule 4.03 of the
Disclosure Statement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to any Shareholder, the Company or any Subsidiary
of
the Company in connection with the execution and delivery of this Agreement
or
the consummation by the Company of the transactions contemplated hereby except
for: (w) the filing of the Regulatory Applications with the
appropriate Governmental Entities; (x) the receipt of the Governmental
Approvals from the appropriate Governmental Entities; (y) the filing of the
Articles of Merger with the WDFI; and (z) the filing of the Proxy Statement
with
the SEC as provided in Section 6.05
Section
4.04.Capitalization of the Company. (a) The authorized
capital stock of the Company consists of 25,000,000 shares
of common stock, par value $1.00 per share (“Company Common Stock”), of
which 3,662,416 shares (the “Shares”) are issued and outstanding and
107,834 shares of Company Common Stock are held as treasury shares as of the
date of this Agreement. All issued and outstanding shares of Company
Common Stock are certificated. Except for Trust Account Shares
and DPC Shares, no shares of Company Common Stock are held by the Company’s
Subsidiaries. As of the date hereof, there are 100,113 shares of
Company Common Stock reserved for issuance upon exercise of outstanding Stock
Options. All issued and outstanding shares of Company Common Stock
(i) have been duly and validly authorized and issued and are fully paid and
non-assessable, except as provided in Section 180.0622(2)(b) of the WBCL
(such section, including judicial interpretations thereof and
Section 180.40(6), its predecessor statute, are referred to herein as
“Section 180.0622(2)(b) of the WBCL”); (ii) have not been issued in
violation of any preemptive rights of any current or past Shareholder, with
no
personal liability attaching to the ownership thereof; and (iii) have been
issued in material compliance with all applicable Laws. Except as set
forth in this Section 4.04 or Schedule 4.04(a) of the Disclosure Statement,
there are no shares of capital stock or other securities of the Company
authorized or issued and outstanding.
19
(b) Except for the Company Stock Option Plans (which includes director and
employee stock options), the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments, rights
agreements or agreements of any character calling for the Company to issue,
deliver or sell, or cause to be issued, delivered or sold, any shares of Company
Common Stock or any other equity security of the Company or any Subsidiary
of
the Company or any securities convertible into, exchangeable for or representing
the right to subscribe for, purchase or otherwise receive any shares of Company
Common Stock or any other equity security of the Company or any Subsidiary
of
the Company or obligating the Company or any such Subsidiary to grant, extend
or
enter into any such subscriptions, options, warrants, calls, commitments, rights
agreements or other similar agreements. Except as set forth on
Schedule 4.04(b)(i) of the Disclosure Statement, there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of capital stock of, or other equity interests in, the
Company or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary of the
Company. Schedule 4.04(b)(ii) of the Disclosure Statement sets
forth as of the date hereof, and will set forth as of the Closing Date,
(i) the name of each holder of a Stock Option, (ii) the date each
Stock Option was granted, (iii) the number of shares subject to each such
Stock Option, (iv) the expiration date of each such Stock Option, and
(v) the price at which each such Stock Option may be
exercised. Each Stock Option (w) was granted in material
compliance with all applicable Laws and all of the terms and conditions of
the
Company Stock Option Plan pursuant to which it was issued, (x) that is
currently outstanding and vested has an exercise price per share of Company
Common Stock equal to or greater than the fair market value of a share of
Company Common Stock on the date of such grant, (y) that is currently
outstanding and vested has a grant date identical to the date on which the
Board
of Directors of the Company or compensation committee actually awarded such
Stock Option, and (z) qualifies for the tax and accounting treatment
afforded to such Stock Option in the Company’s tax returns and the Company
Reports, respectively. There are no Shares outstanding which are
subject to vesting over time or upon the satisfaction of any condition
precedent, or which are otherwise subject to any right or obligation of
repurchase or redemption on the part of the Company. Except as set
forth on Schedule 4.04(b)(iii) of the Disclosure Statement, to the
Knowledge of the Company, there are no contracts, agreements or other
commitments in force or effect restricting the transfer of shares of Company
Common Stock, relating to the manner in which shares of Company Common Stock
can
be voted or otherwise affecting any attribute of ownership of shares of Company
Common Stock.
(c) To the Company’s Knowledge, except as disclosed on
Schedule 4.04(c) of the Disclosure Statement, no shares of Company Common
Stock are issued and outstanding to a Person that is the beneficial owner,
directly or indirectly, of five percent (5%) or more of the voting power of
the
Company Common Stock.
(d) The Company Common Stock is duly registered under Section 12(g) of the
Exchange Act.
Section
4.05.Capitalization of the Banks. (a) The Company or one of its
wholly-owned Subsidiaries owns all of the issued and outstanding capital stock
of Lincoln State Bank, Grafton State Bank, Community Bank Financial, Fortress
Bank, The Reedsburg Bank, Wisconsin State Bank and Fortress Bank of Cresco
(collectively the “Banks” and each a “Bank”) and, except with
respect to Fortress Bank of Cresco as provided in Schedule 5.01(c) of the
Disclosure Statement, will own all of such capital stock as of the Effective
Time.
20
(b) The authorized capital stock of Lincoln State Bank consists of 112,500
shares of common stock, par value $10.00 per share (“Lincoln State Bank
Common Stock”). As of the date hereof, (i) 112,500 shares
of Lincoln State Bank Common Stock are issued and outstanding, all of which
are
owned directly by the Company and are duly authorized, validly issued, fully
paid, non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof and (ii) no shares of Lincoln State Bank
Common Stock are held in treasury. Each share of Lincoln State Bank
Common Stock owned by the Company is free and clear of all Encumbrances of
any
nature whatsoever and all, options, rights of first refusal, agreements, and
restrictions effecting any attribute of ownership, including
voting.
(c) The authorized capital stock of Grafton State Bank consists of 10,000
shares of common stock, par value $100.00 per share (“Grafton State Bank
Common Stock”). As of the date hereof, (i) 10,000 shares of
Grafton State Bank Common Stock are issued and outstanding, all of which are
owned directly by Merchants Merger Corp. and are duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof and (ii) no shares of
Grafton State Bank Common Stock are held in treasury. Each share of
Grafton State Bank Common Stock owned by Merchants Merger Corp. is free and
clear of all Encumbrances of any nature whatsoever and all, options, rights
of
first refusal, agreements, and restrictions effecting any attribute of
ownership, including voting.
(d) The authorized capital stock of Community Bank Financial consists of
4,000 shares of common stock, par value $320.00 per share (“Community Bank
Financial Common Stock”). As of the date hereof, (i) 4,000
shares of Community Bank Financial Common Stock are issued and outstanding,
all
of which are owned directly by Merchants Merger Corp. and are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof and (ii) no shares
of Community Bank Financial Common Stock are held in treasury. Each
share of Community Bank Financial Common Stock owned by Merchants Merger Corp.
is free and clear of all Encumbrances of any nature whatsoever and all, options,
rights of first refusal, agreements, and restrictions effecting any attribute
of
ownership, including voting.
(e) The authorized capital stock of Fortress Bank consists of 15 shares of
common stock, par value $20,000.00 per share (“Fortress Bank Common
Stock”). As of the date hereof, (i) 15 shares of Fortress
Bank Common Stock are issued and outstanding, all of which are owned directly
by
Merchants Merger Corp. and are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof and (ii) no shares of Fortress Bank
Common Stock are held in treasury. Each share of Fortress Bank Common
Stock owned by Merchants Merger Corp. is free and clear of all Encumbrances
of
any nature whatsoever and all, options, rights of first refusal, agreements,
and
restrictions effecting any attribute of ownership, including
voting.
21
(f) The authorized capital stock of The Reedsburg Bank consists of 40,000
shares of common stock, par value $10.00 per share (“The Reedsburg Bank
Common Stock”). As of the date hereof, (i) 40,000 shares of
The Reedsburg Bank Common Stock are issued and outstanding, all of which are
owned directly by Merchants New Merger Corp. and are duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof and (ii) no shares of
The Reedsburg Bank Common Stock are held in treasury. Each share of
The Reedsburg Bank Common Stock owned by Merchants New Merger Corp. is free
and
clear of all Encumbrances of any nature whatsoever and all, options, rights
of
first refusal, agreements, and restrictions effecting any attribute of
ownership, including voting.
(g) The authorized capital stock of Wisconsin State Bank consists of 1,000
shares of common stock, par value $100.00 per share (“Wisconsin State Bank
Common Stock”). As of the date hereof, (i) 1,000 shares of
Wisconsin State Bank Common Stock are issued and outstanding, all of which
are
owned directly by Merchants Merger Corp. and are duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof and (ii) no shares of
Wisconsin State Bank Common Stock are held in treasury. Each share of
Wisconsin State Bank Common Stock owned by Merchants Merger Corp. is free and
clear of all Encumbrances of any nature whatsoever and all, options, rights
of
first refusal, agreements, and restrictions effecting any attribute of
ownership, including voting.
(h) The authorized capital stock of Fortress Bank of Cresco consists of
1,000 shares of common stock, par value $100.00 per share (“Fortress Bank of
Cresco Common Stock”). As of the date hereof, (i) 1,000
shares of Fortress Bank of Cresco Common Stock are issued and outstanding,
all
of which are owned directly by Merchants Merger Corp. and are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof and (ii) no shares
of Fortress Bank of Cresco Common Stock are held in treasury. Each
share of Fortress Bank of Cresco Common Stock owned by Merchants Merger Corp.
is
free and clear of all Encumbrances of any nature whatsoever and all, options,
rights of first refusal, agreements, and restrictions effecting any attribute
of
ownership, including voting.
Section ▇.▇▇.▇▇▇▇▇▇▇
Financial Statements. The Company has previously made available
to the Buyer copies of the following Financial
Statements: (a) the audited consolidated statements of
condition, audited consolidated balance sheets, audited consolidated statements
of income, audited consolidated statements of changes in stockholders equity
and
audited consolidated statements of cash flows of the Company and its
Subsidiaries as of and for the fiscal years ended December 31, 2004,
December 31, 2005 and December 31, 2006 (including any related notes
thereto), and its unaudited consolidated balance sheet, unaudited consolidated
statement of financial condition, unaudited consolidated statement of income,
unaudited consolidated statement of changes in shareholders’ equity and
comprehensive income and unaudited consolidated statement of cash flows as
of
and for the three (3) months ended March 31, 2007 (each, a
“Company Financial Statement” and, collectively, the “Company
Financial Statements”) and (b) the Reports of Income and Reports of
Condition for each Bank for the years ended December 31, 2004,
December 31, 2005 and December 31, 2006, and for the three (3)
months ended March 31, 2007 (the “Bank
Reports”). The Company Financial Statements (x) have been
prepared in accordance with GAAP except as may be noted therein, and comply
in
all material respects with applicable accounting requirements and 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 (except in the case of
unaudited Financial Statements, as permitted by Form 10-Q of the SEC and subject
to normal year-end audit adjustments consistent with past experience); and
(y) fairly present in all material respects the consolidated financial
position and the consolidated results of operations of the Company and its
Subsidiaries as of the respective dates or for the periods referred to in such
Company Financial Statements, except as may be indicated in the notes thereto
and subject to normal year-end non-material audit adjustments in amounts
consistent with past experience in the case of the unaudited Company Financial
Statements. The Bank Reports (z) are true and complete in all
material respects; (aa) have been prepared in accordance with GAAP except
as may be noted therein, as modified by banking regulations; and
(bb) fairly present in all material respects the financial position and the
results of operations of each Bank as of the respective dates of and for the
periods referred to in such Bank reports, subject to normal year-end audit
adjustments consistent with past experience in the case of each Bank Report
dated March 31, 2007. No Financial Statements of any Person other
than the Subsidiaries of the Company are required by GAAP to be included in
the
Company Financial Statements.
22
Section 4.07.Subsidiaries
of the Company. (a) Each Subsidiary of the Company is
listed on Schedule 4.07(a) of the Disclosure Statement. The
capitalization of each Subsidiary of the Company, other than the Banks, is
listed on Schedule 4.07(a) of the Disclosure Statement. Except
as set forth in Schedule 4.07(a) of the Disclosure Statement, neither the
Company nor any Subsidiary of the Company owns directly or indirectly any debt
(other than the Loans) or equity securities, or other proprietary interest
in
any other corporation, joint venture, partnership, bank, bank holding company,
entity, association or other Person; provided, however, there shall not
be included in the forgoing (i) any marketable securities that can be
readily converted into cash, (ii) any security or proprietary interest
acquired in good faith through foreclosure, and (iii) any security or
proprietary interest to the extent that it is owned or controlled by the Company
or a Subsidiary of the Company in a bona fide fiduciary or similar
capacity.
(b) Each Non-Bank Subsidiary of the Company is duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and has all requisite power and authority to own, operate and lease it assets
and properties and to carry on its business substantially as they have been
and
are now being conducted. Each Non-Bank Subsidiary of the Company is
duly qualified to do business and is in good standing in each jurisdiction
where
the character of the properties owned or leased by it and the nature of the
business transacted by it requires that it be so qualified. All of
the issued and outstanding shares of the capital stock or other proprietary
interests of each Subsidiary of the Company have been duly and validly
authorized and issued, and are fully paid and non-assessable, except, where
applicable, as provided in Section 180.0622(2)(b) of the WBCL. Except
as disclosed on Schedule 4.07(b)(i) of the Disclosure Statement, none of
the outstanding shares of capital stock of any Subsidiary of the Company are
subject to any preemptive rights of any current or past shareholders of such
Subsidiary. No capital stock or other proprietary interests of any
Subsidiary of the Company is or may become required to be issued by reason
of
any options, warrants, scrip, rights to subscribe to, calls, or commitments
of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of the capital stock of such
Subsidiary. Except as disclosed on Schedule 4.07(b)(ii) of the
Disclosure Statement, there are no contracts, commitments, understandings or
arrangements relating to the rights of the Company or any Subsidiary of the
Company to vote or to dispose of shares of the capital stock or any other
proprietary interest of any Subsidiary of the Company or except as otherwise
provided herein. Except as disclosed on Schedule 4.07(b)(iii) of
the Disclosure Statement, all of the shares of capital stock or any other
proprietary interest of any Subsidiary of the Company are owned free and clear
of any Encumbrance.
23
(c)(i) Each of Lincoln State Bank, Grafton State Bank, Community Bank
Financial, Fortress Bank, The Reedsburg Bank and Wisconsin State Bank (the
“Wisconsin Banks”) is a Wisconsin state bank and is duly organized,
validly existing and in good standing under the laws of the state of Wisconsin
and the applicable rules and regulations of the WDFI Division of Banking and
is
duly qualified to do business and is in good standing with the WDFI Division
of
Banking and any other Governmental Entity having jurisdiction over it and in
each jurisdiction where the character of the properties owned or leased by
it or
the nature of the business transacted by it requires it to be so
qualified. Each Wisconsin Bank has the power and authority necessary
for it to own, operate or lease its assets and properties and to carry on its
businesses substantially as they have been and are now being
conducted. Each Wisconsin Bank has trust powers as granted by the
WDFI Division of Banking which are in full force and effect. Each
Wisconsin Bank is a member in good standing of the Federal Reserve System and
the Federal Home Loan Bank System. All deposit accounts with each of
the Wisconsin Banks are insured by the FDIC with respect to all eligible
amounts.
(ii)
Fortress Bank of Cresco (the “Iowa Bank”) is an Iowa state bank and is
duly organized, validly existing and in good standing under the laws of the
state of Iowa and the applicable rules and regulations of the IDB and is duly
qualified to do business and is in good standing with the IDB and any other
Governmental Entity having jurisdiction over it and in each jurisdiction where
the character of the properties owned or leased by it or the nature of the
business transacted by it requires it to be so qualified. The Iowa
Bank has the power and authority necessary for it to own, operate or lease
its
assets and properties and to carry on its businesses substantially as they
have
been and are now being conducted. The Iowa Bank has trust powers as
granted by the IDB which are in full force and effect. The Iowa Bank
is a member in good standing of the Federal Reserve System and the Federal
Home
Loan Bank System. All deposit accounts with the Iowa Bank are insured
by the FDIC with respect to all eligible amounts.
(iii)
Effective June 7, 2007, pursuant to the terms of a Purchase and Assumption
Agreement dated January 4, 2007 by and between Fortress Minnesota Bank (the
“Minnesota Bank”) and Eastwood Bank, as amended by a first amendment
dated as of March 22, 2007, the Minnesota Bank sold substantially all of
its assets to Eastwood Bank, and effective June 8, 2007 the Minnesota Bank
was
merged with and into Lincoln State Bank.
24
(d) Schedule 4.07(d) of the Disclosure Statement lists all
Intercompany Agreements through the date of this Agreement. All
Intercompany Agreements are in compliance with Federal Reserve Act
Sections 23A and 23B and Federal Reserve Board Regulation W and all
other applicable Laws.
(e) The Company and each of the Banks are in full compliance with
applicable minimum capital requirements prescribed by the Federal Reserve Board,
the FDIC, the WDFI Division of Banking, the IDB and any other bank regulatory
authority having jurisdiction over the Company or any Bank, as the case may
be,
and each of the Banks are “well capitalized” within the meaning of such term as
used in Section 38(b) of the Federal Deposit Insurance Act, as amended, and
the applicable regulations promulgated thereunder.
Section ▇.▇▇.▇▇▇▇▇▇▇
Reports; ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. (a) Since December 31,
2004, the Company and each Subsidiary of the Company has filed or furnished,
as
applicable, on a timely basis, and will continue to file or furnish, as
applicable, on a timely basis through the Closing Date, all forms, statements,
certifications, reports and documents, together with any amendment or supplement
required to be made with respect thereto, that it was, or will be, required
to
file or furnish, as applicable, with (a) the SEC, including any report
filed on Form 10-K, Form 10-Q, Form 8-K and all proxy statements (the “SEC
Reports”), (b) the Federal Reserve Board, (c) the FDIC, (d) the
WDFI Division of Banking, (e) the MDC and (f) the IDB (collectively, the
“Company Reports”). Except as set forth in
Schedule 4.08(a) of the Disclosure Statement, as of their respective dates
(and without giving effect to any amendments or modifications filed after the
date of this Agreement with respect to reports and documents filed before the
date of this Agreement), each of the Company Reports, including the Financial
Statements, exhibits, and schedules thereto, complied, and with respect to
Company Reports filed or furnished, as applicable, after the date of this
Agreement, will at the date of filing or furnishing, as applicable, comply,
in
all material respects with all of the Laws enforced or promulgated by the
Governmental Entity with which they were filed or furnished, as applicable,
and
did not contain, and with respect to Company Reports filed or furnished, as
applicable, after the date of this Agreement, will not on the date of filing
or
furnishing, as applicable, contain, any untrue statement of a material fact
or
omit to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Except for normal examinations conducted by a
Governmental Entity in the regular course of the business of the Company or
any
Subsidiary of the Company, no Governmental Entity has initiated any Proceeding
or investigation into the business or operations or financial reporting of
the
Company or any Subsidiary of the Company within the past three (3)
years. There is no unresolved issue, violation, criticism, comment
letter or exception by the Federal Reserve Board, the FDIC, the WDFI Division
of
Banking, the MDC, the IDB, the SEC or any local taxing authority, or other
Governmental Entity with respect to any report, examination or statement
referred to herein.
(b) Neither the Company nor any Subsidiary of the Company is a party to
any contract or agreement with any exchange or other securities market,
including the OTCBB.
25
(c) The Company has designed and maintains a system of internal control
over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
Exchange Act) sufficient to provide reasonable assurance regarding the
reliability of financial reporting, and, to the Company’s Knowledge, such system
is effective in providing such assurance. The Company (i) has
designed and maintains disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms and is accumulated and
communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure and, to the Company’s Knowledge, such
controls and procedures are effective in ensuring such disclosures and
communications, and (ii) has disclosed, based on the most recent evaluation
of its chief executive officer and its chief financial officer prior to the
date
hereof, to the Company’s auditors and the audit committee of the Board of
Directors of the Company (and made summaries of such disclosures available
to
the Buyer) (A) (l) any significant deficiencies in the design or
operation of internal control over financial reporting that would adversely
affect in any material respect the Company’s ability to record, process,
summarize and report financial information and (2) any material weakness in
internal control over financial reporting, and (B) any fraud, whether or
not material, that involves management or other employees who have a significant
role in the Company’s internal control over financial reporting. The
Company is in compliance in all material respects with all effective provisions
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company has made available to the
Buyer any written reports and other material correspondence from December 31,
2004 provided by the Company’s external auditors to the audit committee required
or contemplated by the audit committee’s charter or professional standards of
the Public Company Accounting Oversight Board. From December 31,
2004, to the Company’s Knowledge, no material complaints from any source
regarding questionable accounting or auditing matters have been received by
the
Company. The Company has made available to the Buyer a summary of all
complaints or concerns made from December 31, 2004 through the Company’s
whistleblower hot-line or equivalent system for receipt of employee concerns
regarding possible violations of Law, which relate to financial reporting,
internal controls and related matters.
(d) Each of the principal executive officer of the Company and the
principal financial officer of the Company (or each former principal executive
officer of the Company and each former principal financial officer of the
Company, as applicable) has made all certifications required by Rule 13a-14
or
15d-14 under the Exchange Act or Sections 302 and 906 of the Sarbanes Oxley
Act
and the rules and regulations of the SEC promulgated thereunder with respect
to
the SEC Reports, and the statements contained in such certifications are true
and correct. For purposes of this Section 4.07(d), “principal
executive officer” and “principal financial officer” shall have the meanings
given to such terms in the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. Neither the Company nor any
Subsidiary of the Company has outstanding, or has arranged any outstanding,
“extensions of credit” to directors or executive officers within the meaning of
Section 402 of the Sarbanes Oxley-Act, other than extensions of credit to
which Section 13(k)(3) of the Exchange Act applies.
(e) Neither the Company nor any Subsidiary of the Company nor, to the
Company’s Knowledge, any director, officer, or internal or external auditor of
the Company or any of the Subsidiaries of the Company has received or otherwise
had or obtained actual knowledge of any substantive and material complaint,
allegation, assertion or claim, whether written or oral, that the Company or
any
Subsidiary of the Company has engaged in questionable accounting or auditing
practices. No current or former attorney representing the Company or
any Subsidiary of the Company has reported evidence of a material violation
of
securities laws, breach of fiduciary duty or similar violation by the Company
or
any of its officers, directors, employees or agents to the current Board of
Directors of the Company or any committee thereof or to any current director
or
executive officer of the Company.
26
(f) To the Company’s Knowledge, no employee of the Company or any
Subsidiary of the Company has provided information to any law enforcement agency
regarding the commission or possible commission of any crime or the violation
or
possible violation of any applicable Laws described in Section 806 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act by the Company or any Subsidiary of the Company.
Section 4.09.Compliance
with Laws. (a) Except as disclosed in Schedule 4.09(a)
of the Disclosure Statement, the businesses of the Company and any Subsidiary
of
the Company are not being conducted in material violation of, and since
December 31, 2004 neither the Company nor any Subsidiary of the Company has
materially violated, any applicable Law or Order.
(b) The policies, programs and practices of the Company and the
Subsidiaries of the Company relating to wages, hours of work, and other terms
and conditions of employment are in compliance in all material respects with
all
applicable Laws governing employment and terms and conditions of
employment. Except as set forth in Schedule 4.09(b) of the Disclosure
Statement, there are no disputes, claims, or charges pending or, to the
Knowledge of the Company, Threatened, against the Company or any Subsidiary
of
the Company alleging breach of any express or implied employment contract or
commitment, or material breach of any applicable Law relating to employment
or
terms and conditions of employment, and, to the Knowledge of the Company, there
is no basis for any valid claim or charge with regard to such
matters.
(c) Except as disclosed in Schedule 4.09(c) of the Disclosure
Statement, no investigation or review by the Federal Reserve Board, the FDIC,
the WDFI Division of Banking, the MDC, the IDB, the SEC or any other regulator
of the Company or any Subsidiary of the Company with respect to the Company
or
any Subsidiary of the Company is pending, or to the Knowledge of the Company,
Threatened, nor, to the Knowledge of the Company, has any Governmental Entity
indicated to the Company or any Subsidiary of the Company an intention to
conduct the same, other than normal bank regulatory examinations.
(d) Each of the Company and its Subsidiaries is, where applicable, in
material compliance with the applicable provisions of the CRA. Except
as disclosed in Schedule 4.09(d)(i) of the Disclosure Statement, neither
the Company nor any Subsidiary of the Company has any written or oral agreements
with nongovernmental Persons regarding CRA activities (each, a “CRA
Agreement,” and collectively, the “CRA
Agreements”). The Company and each Subsidiary of the Company is
in material compliance with the terms of each CRA Agreement, if
any. As of the date of this Agreement, except as disclosed in
Schedule 4.09(d)(ii) of the Disclosure Statement, neither the Company nor
any Subsidiary of the Company has been advised or given notice of (i) the
existence of any fact or circumstance or set of facts or circumstances which,
if
true, would cause the Company or any Subsidiary of the Company to fail to be
in
full compliance with the provisions of CRA or (ii) any protest filed
against the Company or any Subsidiary of the Company under CRA or the existence
of any fact that would cause the Company or any Subsidiary of the Company to
believe any transaction involving the Company or any Subsidiary of the Company
will be the subject of a CRA protest. None of the Banks have ever
received a CRA rating from the applicable regulatory authority which is less
than “satisfactory” since January 1, 2000.
27
(e) The CRA rating of each Bank as of the date hereof is listed on
Schedule 4.09(e) of the Disclosure Statement.
(f) Each Bank has developed and implemented a privacy policy in material
compliance with applicable Laws (including the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) with
respect to personal customer information and has provided a copy of such privacy
policy to all Persons entitled to receive such policy in material compliance
with all applicable Laws. Each Bank has obtained any and all
necessary consents from its customers with regard to the collection and
dissemination by it of personal customer information in connection with its
business in accordance with its privacy policy and any applicable
Laws. Each Bank’s practices regarding the collection and use of
personal customer information in connection with its business are and have
been
in accordance with such privacy policy and with such applicable
Laws. Each Bank has obtained all necessary agreements and assurances
from its third party service providers used in connection with its business
that
such service providers are in material compliance with any applicable privacy
Laws.
(g) Except as set forth in Schedule 4.09(g)(i) of the Disclosure
Statement, neither the Company nor any Subsidiary of the Company is a party
to
any agreement or consent decree with, or directive, letter or order issued
by
the Federal Reserve Board, the FDIC, the WDFI Division of Banking, the MDC,
the
IDB, the SEC or any other Governmental Entity which imposes any restrictions
or
requirements with respect to the conduct of the Company or a Subsidiary of
the
Company’s business. Set forth on Schedule 4.09(g)(ii) of the
Disclosure Statement is a list of all pending requests of the Company or any
Subsidiary of the Company to the Federal Reserve Board, the FDIC, the WDFI
Division of Banking, the MDC, the IDB, the SEC or any other Governmental Entity
seeking authority to perform any action or approval of any filing.
(h) Except as set forth in Schedule 4.09(h) of the Disclosure
Statement, the Company and each Subsidiary of the Company has obtained and
holds
each material Governmental Authorization required to be obtained and held by
the
Company or any Subsidiary of the Company to operate the business of, or hold
any
of the assets owned or used by, the Company or any Subsidiary of the Company,
and each such Governmental Authorization is valid and in full force and effect
and has never been suspended or revoked for any reason.
Section 4.10.Litigation. Except
as disclosed in Schedule 4.10 of the Disclosure Statement, there is no
Proceeding pending or, to the Knowledge of the Company, Threatened against
the
Company or any Subsidiary of the Company, or any of their respective officers,
directors, employees or agents, in their capacities as such, which is seeking
damages in excess of $50,000 against the Company, any
Subsidiary of the Company, or any of their respective officers, directors,
employees or agents, in their capacities as such or seeking removal of any
such
officer, director, employee or agent, or which, if adversely determined, would
materially affect the ability of the Shareholders or the Company to consummate
the transactions contemplated herein or which is seeking to enjoin the
consummation of the transactions provided for herein or to obtain other relief
in connection with this Agreement or the transactions contemplated hereby,
nor
is there any Order of any Governmental Entity outstanding against the Company
or
any Subsidiary of the Company or any of the Company’s or any of its
Subsidiaries’ respective officers, directors, employees or agents, in their
capacities as such or, to the Knowledge of the Company, the Shareholders,
having, or which, insofar as reasonably can be foreseen in the future, would
have any such effect.
28
Section 4.11.Intellectual
Property. The Company and its Subsidiaries have the unrestricted
right and authority, and the Surviving Corporation and its Subsidiaries will
have the unrestricted right and authority from and after the Effective Time,
to
use all material patents, trademarks, servicemarks, software, licenses,
know-how, and other proprietary rights as is necessary to enable them to conduct
and to continue to conduct all phases of the businesses of the Company and
its
Subsidiaries in the manner presently conducted by them, and, to the Knowledge
of
the Company, such use does not, and will not, conflict with, infringe on or
violate any patent, copyright, trademark, service ▇▇▇▇, trade name or any other
right of any Person.
Section 4.12.Taxes. (a) Except
as disclosed in Schedule 4.12(a)(i) of the Disclosure Statement, the
Company and each Subsidiary of the Company have each timely filed all Tax and
information returns required to be filed (all such returns are true and complete
in all material respects). The Company and each Subsidiary of the
Company and have paid (or the Company has paid on behalf of a Subsidiary of
the
Company), or have accrued on their respective books and set up an adequate
reserve for the payment of, all Taxes reflected on such returns in respect
of
the periods covered by such returns and have accrued on their respective books
and set up an adequate reserve for the payment of all income and other Taxes
required to be paid in respect of periods through the end of the calendar month
next preceding the date hereof and at Closing, as of the Closing
Date. Neither the Company nor any Subsidiary of the Company is
delinquent in the payment of any Tax, assessment or governmental
charge. No deficiencies for any Taxes have been assessed or, to the
Knowledge of the Company, proposed or asserted against the Company or any
Subsidiary of the Company that have not been resolved or settled and no requests
for waivers of the time to assess any such Tax are pending or have been agreed
to. Except as disclosed in Schedule 4.12(a)(ii) of the
Disclosure Statement, the Tax returns of the Company and each Subsidiary of
the
Company have not been audited by the IRS or any similar state or local
agency. Neither the Company nor any Subsidiary of the Company is a
party to any Proceeding by any Governmental Entity for the assessment or the
collection of Taxes. All deferred Taxes of the Company and each
Subsidiary of the Company have been accounted for in accordance with GAAP
consistently applied. The Company and each Subsidiary of the Company
have properly accrued for all real estate taxes in accordance with
GAAP.
(b) The Company has not filed any consolidated federal income tax return
with an “affiliated group” (within the meaning of Section 1504 of the Code)
where the Company was not the common parent of the group. Neither the
Company nor any Subsidiary of the Company is, or has been, a party to any Tax
allocation agreement or arrangement pursuant to which it has any contingent
or
outstanding liability to anyone other than the Company or any Subsidiary of
the
Company.
(c) The Company and each Subsidiary of the Company have each withheld
amounts from its employees, the Shareholders, borrowers and holders of public
deposit accounts in material compliance with the Tax withholding provisions
of
applicable Laws; filed all federal, state and local returns and reports for
all
years for which any such return or report would be due with respect to employee
income tax withholding, social security and unemployment taxes, income and
other
taxes and all payments or deposits with respect to such taxes have been timely
made; and notified all employees, Shareholders and holders of public deposit
accounts of their obligations to file all forms, statements or reports with
it
in material compliance with applicable Tax Laws.
29
(d) The Company has disclosed on its federal income Tax returns all
positions taken therein that could give rise to a substantial understatement
of
Federal income tax within the meaning of Section 6662 of the
Code. The Company has not filed a consent under Section 341(f)
of the Code concerning collapsible corporations. The Company has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(A)(ii) of the Code. Neither the Company nor any
Subsidiary of the Company has any Liability for Taxes owed by any Person (other
than the Company or a Subsidiary of the Company), including, without limitation,
(i) as a transferee, assignee or other successor or (ii) pursuant to a
Tax sharing agreement or other contract. The Company has neither
agreed to nor is required to make any adjustment under Section 481 of the
Code (or any comparable provision of state, local or foreign law) by reason
of a
change in accounting methods or otherwise.
(e) Neither the Company nor any Subsidiary of the Company has participated
in any transaction required to be disclosed pursuant to Treasury Regulations
Section 1.6011-4. Neither the Company nor any Subsidiary of the
Company has acted as a Tax shelter organizer for the purposes of Code
Section 6111 and Section 6112. Except as disclosed on
Schedule 4.12(e) of the Disclosure Statement, neither the Company nor any
Subsidiary of the Company has invested in any transactions requiring
registration under Code Section 6111 or requiring list maintenance under
Section 6112.
(f) The Company has never elected under Section 1362 of the Code (or
under any analogous or similar provision of state or local law in any
jurisdiction where the Company files its Tax returns) to be treated as an
“S” Corporation for the state(s) or federal tax purposes.
Section ▇.▇▇.▇▇▇▇▇▇▇▇▇. The
Company and each Subsidiary of the Company maintains in effect all insurance
required to be carried by Law or by any agreement by which they are
bound. All material claims under all policies of insurance maintained
by the Company and each Subsidiary of the Company have been filed in due and
timely fashion. Neither the Company nor any Subsidiary of the Company
has had an insurance policy canceled by the issuer of the policy within the
past
five (5) years. Schedule 4.13 of the Disclosure Statement
contains a description of all individual claims in
excess of $50,000, and aggregate annual claims of
more than $50,000, filed by the Company or any Subsidiary of the Company in
the
past five (5) years from the date hereof.
30
Section ▇.▇▇.▇▇▇▇▇;
Investments. (a) Except as otherwise disclosed in
Schedule 4.14(a)(i) of the Disclosure Statement, (i) each Loan
originated by the Company or one of its Subsidiaries is evidenced by written
documentation issued in the Ordinary Course of Business of the Company or a
Subsidiary of the Company, (ii) each Loan constitutes the legal, valid and
binding obligation of the Company or a Subsidiary of the Company (as the case
may be) and, to the Knowledge of the Company, each obligor named therein, and
is
enforceable in accordance with its terms except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws or equitable principles or doctrines and
(iii) to the Knowledge of the Company, no obligor named in any Loan is
seeking to avoid the enforceability of the terms thereof under any bankruptcy,
insolvency, reorganization, moratorium or similar Laws or equitable principles
or doctrines and no Loan is subject to any valid and enforceable defense, offset
or counterclaim. Except as otherwise disclosed in
Schedule 4.14(a)(ii) of the Disclosure Statement, all Loans originated by
the Company or any Subsidiary of the Company, and to the Knowledge of the
Company, all Loans originated by any Person other than the Company or any
Subsidiary of the Company, were originated in material compliance with all
applicable Laws in accordance with the customary lending standards of the
originator thereof, and the industry in which the originator operated and in
the
Ordinary Course of Business of the originator thereof. In
underwriting, purchasing, servicing, collecting and discharging Loans, either
for its account or the account of others, the Company and each Subsidiary has
complied in all material respects with all applicable Laws and has performed
such function in the Ordinary Course of Business. Except as set forth
in Schedule 4.14(a)(iii) of the Disclosure Statement, all Loans are, and at
the Closing Date will be, free and clear of any Encumbrance other than an
Encumbrance in favor of the Company or a Subsidiary of the Company, and the
Company and each Subsidiary of the Company, as applicable, has complied, and
at
the Closing Date will have complied, in all material respects, with all Laws
relating to the Loans. The Company has not and does not engage in
predatory lending or make predatory loans. All Loans that
are secured are evidenced by appropriate and sufficient ancillary security
documents and are so secured by valid, perfected and enforceable
Encumbrances. Except as set forth on Schedule 4.14(a)(iv) of the
Disclosure Statement, there are no Loans or other assets of the Company or
any
Subsidiary of the Company that have been classified by examiners or otherwise
as
“Other Assets Specially Mentioned,” “Substandard,” “Doubtful”, “Loss” or words
of similar impact as of the date hereof. Except as set forth on
Schedule 4.14(a)(v) of the Disclosure Statement, the Company has no “Other
Real Estate Owned” (“OREO”) as of the date hereof.
(b) All guarantees of indebtedness owed to the Company or any Subsidiary
of the Company, including those of the Federal Housing Administration, the
Small
Business Administration, and other Governmental Entities, are legal, valid
and
enforceable with respect to the Company or a Subsidiary of the Company and,
to
the Knowledge of the Company, the other party thereto, except to the extent
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws or equitable principles or
doctrines.
31
(c) Except as set forth on Schedule 4.14(c) of the Disclosure
Statement, neither the Company nor any Subsidiary of the Company is a party
to
any interest rate swaps, caps, floors and option agreements and other interest
rate risk management arrangements.
(d) Except as set forth in Schedule 4.14(d)(i) of the Disclosure
Statement and except for pledges to secure public and trust deposits and
repurchase agreements entered into in the Ordinary Course of Business, none
of
the investments reflected in the Company’s balance sheet dated as of December
31, 2006, and none of the investments made by the Company or any Subsidiary
of
the Company since December 31, 2006, is subject to any restriction, whether
contractual or statutory, which impairs the ability of the Company or any
Subsidiary of the Company freely to dispose of such investment at any
time. With respect to all repurchase agreements to which the Company
or any Subsidiary of the Company is a party, the Company or a Subsidiary of
the
Company (as applicable) 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 amount of the obligations secured by such
collateral under such agreement. Except as set forth in
Schedule 4.14(d)(ii) of the Disclosure Statement, neither the Company nor
any Subsidiary of the Company 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 the Company or any Subsidiary
of
the Company to repurchase or otherwise reacquire any such assets. Set
forth on Schedule 4.14(d)(iii) of the Disclosure Statement is a complete
and accurate list of each investment in debt securities, mortgage-backed and
related securities, marketable equity securities and securities purchased under
agreements to resell owned by the Company or any Subsidiary of the Company,
showing as of December 31, 2006, the carrying values and the gross carrying
values of the mortgage-backed and related securities and the estimated cost
of
the marketable equity securities.
Section 4.15.Allowance
for Loan Losses. The allowance for loan losses shown on the
Company Financial Statements dated as of December 31, 2006, as of such date
was in the reasonable judgment of the Company’s management adequate based upon
the requirements of GAAP and all applicable Governmental Entities to provide
for
possible or specific losses, net of recoveries relating to loans previously
charged off, on Loans outstanding, and contained an additional amount of
unallocated reserves for unanticipated future losses at a level considered
adequate under the standards applied by applicable Governmental
Entities.
Section 4.16.Investment
Management and Related Activities. Except as disclosed in
Schedule 4.16(a) of the Disclosure Statement, neither the Company, nor any
Subsidiary, or former Subsidiary of the Company within the last five years,
has
been or is a party to any agreement, contract or other arrangement through
which
the Company or its Subsidiaries, or former Subsidiaries within the last five
years, formerly or currently provide investment advisory services to any
Person. Except as disclosed in Schedule 4.16(b) of the
Disclosure Statement, none of the Company, any of its Subsidiaries or the
Company’s or its Subsidiaries’ directors, officers or employees is required to
be registered, licensed or authorized as an investment adviser, a broker,
dealer, an insurance agency or company, a commodity trading adviser, a commodity
pool operator, a futures commission merchant, an introducing broker, a
registered representative or associated person, investment adviser,
representative or solicitor, a counseling officer, an insurance agent, a sales
person or in any similar capacity with a Governmental Entity.
32
Section ▇.▇▇.▇▇▇▇▇
or Agency Agreements. (a)
(i)
Except as provided in Schedule 4.17(a)(i) of the Disclosure Statement,
neither the Company nor any Subsidiary of the Company has taken any action,
nor
omitted to take any action, which would, or with the giving of notice or the
passage of time or both could, constitute a material default or a material
violation of any fiduciary duty under any Trust or Agency Agreement or cause
the
Company or any Subsidiary of the Company to be subject to claims for material
damages, material surcharge, disqualification or removal from any capacity
which
anyone of them now occupies with respect to any Trust or Agency Agreement,
nor
has the Company nor any Subsidiary of the Company been so subject to claims
for
material damages, material surcharged, disqualified or removed from any such
capacity;
(ii)
Except as provided in Schedule 4.17(a)(ii) of the Disclosure Statement,
each Trust or Agency Agreement, and any amendment or modification thereto,
in
effect as of the date hereof was duly executed and delivered (or accepted)
by,
and constitutes a legal, valid and binding obligation of, the Company or one
of
the its Subsidiaries and, to the Knowledge of the Company, each other party
thereto, and is enforceable against the Company or one of its Subsidiaries
as
the case may be and, to the Knowledge of the Company, each other party thereto
in accordance with its terms;
(iii)
Except as provided in Schedule 4.17(a)(iii) of the Disclosure Statement, no
claim has been made against the Company or any Subsidiary of the Company and
no
notice has been received by the Company or any Subsidiary of the Company
questioning the validity or enforceability of any Trust or Agency Agreement
in
effect as of the date hereof or asserting any default or violation of any duty
thereunder; and
(iv)
Except as provided in Schedule 4.17(a)(iv) of the Disclosure Statement, to
the Knowledge of the Company, (A) there has been no event of default or
violation of any duty by any other party to any Trust or Agency Agreement in
effect as of the date hereof, and (B) no event has occurred (including the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein) which would, or with the giving of notice
or
the passage of time or both could, constitute a material default or material
violation of any duty by any other party to any Trust or Agency Agreement in
effect as of the date hereof.
(b) The Company and each Subsidiary of the Company is eligible and
qualified to act under each Trust or Agency Agreement in effect as of the date
hereof to which it is a party and is not prohibited by applicable Law from
performing its respective duties and obligations under any Trust or Agency
Agreement in effect as of the date hereof.
Section ▇.▇▇.▇▇▇▇▇
or Agency Records. All Records maintained by the Company and its
Subsidiaries relating to or in connection with Trust or Agency Agreements
(“Trust or Agency Records”) have been kept in compliance with the
Company’s customary practice and in material compliance with applicable Law and
the applicable Trust or Agency Agreement. The Company and each of its
Subsidiaries has maintained all material Trust or Agency Records that it is
required to maintain pursuant to applicable Law or the applicable Trust or
Agency Agreement.
33
Section ▇.▇▇.▇▇▇▇▇
or Agency Standards. (a) The Trust or Agency Records are
retained, protected and duplicated in material compliance with prudent fiduciary
practices, reasonable and customary industry practices, and applicable legal
and
regulatory requirements. The Trust or Agency Records reflect all
material dispositions and acquisitions of assets and receipt and disbursement
of
funds, and the Company or any Subsidiary of the Company, as the case may be,
maintains a system of internal accounting controls, policies and procedures
sufficient to make it reasonable to expect that (i) such transactions are
executed in accordance with management’s general or specific authorizations, and
(ii) such transactions are recorded in conformity in all material respects
with any applicable accounting principles and in such a manner as to permit
preparation of financial statements in accordance with any applicable accounting
principles and fiduciary standards and any other criteria applicable to such
statements and to maintain accountability for assets.
(b) Neither the Company nor any Subsidiary of the Company has performed a
custody audit. Except as set forth in Schedule 4.19(b) of the
Disclosure Statement, all assets held pursuant to the Trust or Agency Agreements
have been transferred to the bank listed on Schedule 4.19(b) of the
Disclosure Statement (the “Trust Business Successor”) and the
liabilities associated with such Trust or Agency Agreements have been assumed
by
the Trust Business Successor. Schedule 4.19(b) of the Disclosure
Statement describes the status and anticipated disposition of the assets the
Company or one of its Subsidiaries presently holds pursuant to a Trust or Agency
Agreement, if any.
(c) The data and transaction processing services of the Company or any
Subsidiary of the Company, as the case may be, are of the quality generally
maintained by businesses similarly situated and are adequate in all material
respects for the performance of the business of the Company or any Subsidiary
of
the Company, as the case may be.
Section 4.20.Compliance
with Law; Trust or Agency Agreements. The Company and its
Subsidiaries are in material compliance with all requirements and obligations
applicable to them under the Trust or Agency Agreements and under all Laws
and
Orders applicable to the Trust or Agency Agreements or the conduct of the
business of the Company and its Subsidiaries.
Section ▇.▇▇.▇▇▇▇▇▇▇
Benefit Plans. (a) Schedule 4.21(a)(i) of
the Disclosure Statement contains a true and complete list, including all
amendments thereto, of each compensation, consulting, restricted stock, pay
roll
practice, employment, termination or collective bargaining agreement, and each
stock option, stock purchase, stock ownership, stock appreciation right, phantom
stock right, recognition and retention, life, health, accident or other
insurance, bonus, deferred or incentive compensation, severance or separation
agreement and any agreement providing any payment or benefit resulting from
a
change in control, profit sharing, retirement, or other employee benefit plan,
practice, policy or arrangement of any kind, oral or written, covering
employees, former employees, directors or former directors of the Company or
any
Subsidiary of the Company or their respective beneficiaries, including any
employee benefit plans within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
rules and regulations promulgated thereunder from time to time in effect
(“ERISA”), which the Company, the Surviving Corporation any Subsidiary
of the Company or an ERISA Affiliate maintains, to which the Company, any
Subsidiary of the Company or an ERISA Affiliate contributes, or under which
any
employee, former employee, director or former director of the
34
Company,
any Subsidiary of the Company or an ERISA Affiliate is covered or has benefit
rights and pursuant to which any Liability of the Company, any Subsidiary of
the
Company or an ERISA Affiliate exists or is reasonably likely to occur (the
“Company Benefit Plans”). The Company has made available to
the Buyer true and correct copies of (a) each written Company Benefit Plan
(and
all amendments thereto), (b) current summary plan description, trust agreement
and insurance contracts with respect to any Company Benefit Plan, and (c) the
most recent actuarial reports and valuations, financial statements and IRS
Form 5500 or 5500-C with respect to any Company Benefit
Plan. Except as set forth in Schedule 4.21(a)(ii) of the
Disclosure Statement, neither the Company, any Subsidiary of the Company nor
an
ERISA Affiliate maintains nor has entered into any Company Benefit Plan or
other
document, plan or agreement which contains any change in control provisions
which would cause an increase or acceleration of benefits or benefit
entitlements to any employee or former employee or director or former director
of the Company, any Subsidiary of the Company or an ERISA Affiliate or their
respective beneficiaries, or other provisions, which would cause an increase
in
the Liability of the Company, the Surviving Corporation, any Subsidiary of
the
Company or an ERISA Affiliate or the Buyer, as a result of the transactions
contemplated by this Agreement or any related action thereafter (a “Change
in Control Benefit”). The term “Company Benefit Plans” as used
herein refers to all plans contemplated under the preceding sentences of this
Section 4.21, provided that the term “Plan” or “Plans” is used in
this Agreement for convenience only and does not constitute an acknowledgment
that a particular arrangement is an employee benefit plan within the meaning
of
Section 3(3) of ERISA. Except as disclosed in
Schedule 4.21(a)(iii) of the Disclosure Statement, no Company Benefit Plan
or benefit plan of an ERISA Affiliate is a multi-employer plan within the
meaning of Section 3(3) of ERISA. All payments and other
compensation paid or payable by the Company, any Subsidiary of the Company
or of
an ERISA Affiliate under this Agreement, the Company Benefit Plans or benefit
plan of an ERISA Affiliate or otherwise, to or for the benefit of any employee
or director or former employee or director of the Company, any Subsidiary of
the
Company or of an ERISA Affiliate, are in material compliance with all applicable
Laws.
(b) Except as set forth on Schedule 4.21(b)(i) of the Disclosure
Statement, each of the Company Benefit Plans that is intended to be a pension,
profit sharing, stock bonus, thrift, savings or employee stock ownership plan
that is intended to be qualified under Section 401(a) of the Code
(“Company Qualified Plans”) has been determined by the IRS to qualify
under Section 401(a) of the Code, or an application for determination of
such qualification has been timely made to the IRS prior to the end of the
applicable remedial amendment period under Section 401(b) of the Code (a
copy of each such determination letter or pending application is included in
Schedule 4.21(b)(ii) of the Disclosure Statement), and there exist no
circumstances likely to adversely affect the qualified status of any such
Company Qualified Plan. All such Company Qualified Plans or other
benefit plans or programs established or maintained by the Company or any
Subsidiary of the Company or to which the Company, any Subsidiary of the Company
or ERISA Affiliates contribute are in material compliance with all applicable
requirements of ERISA, and are in material compliance with all applicable
requirements (including qualification and non-discrimination requirements in
effect as of the Closing Date) of the Code for obtaining the tax benefits the
Code thereupon permits with respect to such Company Qualified Plans or Qualified
Plans of a Subsidiary of the Company or of an ERISA
Affiliate. Neither the Company, any Subsidiary of the Company nor an
ERISA Affiliate maintains or has maintained within the last five years, a
defined benefit pension plan which is subject to Title IV of
ERISA. All accrued contributions and other payments required to be
made by the Company, any Subsidiary of the Company or an ERISA Affiliate to
the
Company Benefit Plans or other benefit plans have been made or reserves adequate
for such purposes have been set aside through the date hereof and at Closing,
through the Closing Date. Except as set forth in Schedule
4.21(b)(iii) of the Disclosure Statement, neither the Company, any Subsidiary
of
the Company nor an ERISA Affiliate is in default in performing any of its
respective contractual obligations under any of the Company Benefit Plans or
other benefit plans or any related trust agreement or insurance contract, and
there are no outstanding Liabilities of any such Company Benefit Plan or other
benefit plans other than Liabilities for benefits to be paid to participants
in
such Company Benefit Plan or other benefit plans and their beneficiaries in
accordance with the terms of such Company Benefit Plan or other benefit
plans.
35
(c) There is no pending or, to the Knowledge of the Company, Threatened
Proceeding (other than benefit claims made in the Ordinary Course of Business)
by or on behalf of or against any of the Company Benefit Plans (or with respect
to the administration of any of such Plans) now or heretofore maintained by
the
Company, any Subsidiary of the Company or an ERISA Affiliate which allege
violations of applicable Law which are reasonably likely to result in a
liability on the part of the Company, any Subsidiary of the Company or an ERISA
Affiliate or any such plan.
(d) The Company and each Subsidiary of the Company and, to the Knowledge
of the Company, all other Persons having fiduciary or other responsibilities
or
duties with respect to the Company Benefit Plans are and have since the
inception of each such Plan been in material compliance with, and each such
Plan
is and has been operated in material compliance with, its provisions and in
material compliance with the applicable Laws governing such Plan, including
the
rules and regulations promulgated by the Department of Labor, the Pension
Benefit Guaranty Corporation and the IRS under ERISA, the Code or any other
applicable Law. Except as set forth in Schedule 4.21(d) of the
Disclosure Statement, no Company Benefit Plan has engaged in or been a party
to
a “prohibited transaction” (as defined in Section 406 of ERISA or
Section 4975(c) of the Code) that is not subject to a statutory or other
exemption under Section 408 of ERISA or Section 4975 of the
Code. All Company Benefit Plans that are group health plans have been
operated in material compliance with the group health plan continuation
requirements of Section 4980B of the Code and Section 601 of ERISA and
other applicable Law.
(e) Neither the Company, any Subsidiary of the Company nor an ERISA
Affiliate has incurred, nor to the Knowledge of the Company is reasonably likely
to incur, any material liability under Title IV of ERISA in connection with
any plan subject to the provisions of Title IV of ERISA now or heretofore
maintained or contributed to by the Company, any Subsidiary of the Company
or an
ERISA Affiliate.
36
(f) Except as set forth on Schedule 4.21(f) of the Disclosure
Statement, neither the Company nor any Subsidiary of the Company has made any
payments, or is or has been a party to any agreement (including the Company
Benefit Plans) that under any circumstances could obligate the Company or any
Subsidiary of the Company to make payments that are or will not be deductible
because of Section 280G of the Code.
(g) Subject to any requirements or prohibitions under the Health Insurance
Portability and Accountability Act, Schedule 4.21(g)(i) of the Disclosure
Statement describes any obligation that the Company or any Subsidiary of the
Company has to provide health or welfare benefits to retirees or other former
employees, directors or their dependents (other than rights under
Section 4980B of the Code or Section 601 of ERISA), including
information as to the number of retirees, other former employees or directors
and dependents entitled to such coverages and their ages. Except as
set forth on Schedule 4.21(g)(ii) of the Disclosure Statement, there are no
amounts payable by the Company for post-retirement health care
benefits. Except as set forth in Schedule 4.21(g)(iii) of the
Disclosure Statement, no individuals are eligible for post-retirement health
care benefits from the Company or any Subsidiary of the Company.
(h) Schedule 4.21(h) of the Disclosure Statement lists each officer
of the Company and each Subsidiary of the Company and each director of the
Company who is eligible to receive a Change in Control Benefit, showing the
good
faith estimate of the Company of the present value of each such Change in
Control Benefit as of June 30, 2007.
(i) The Company and each Subsidiary of the Company have filed or caused to
be filed, and will continue to file or cause to be filed, in a timely manner,
all filings pertaining to each Company Benefit Plan with the IRS and the
Department of Labor, as prescribed by the Code or ERISA, or regulations issued
thereunder. All such filings, as amended, were complete and accurate
in all material respects as of the dates of such filings, and there were no
misstatements or omissions in any such filing.
(j) Since December 31, 2001, neither the Company nor any Subsidiary of the
Company has maintained, contributed to or participated in any employee/stock
ownership plan of the Company.
(k) No work stoppage involving the Company or any of its Subsidiaries is
pending or, to the Knowledge of the Company, Threatened. Neither the
Company nor any of its Subsidiaries is involved in, or, to the Knowledge of
the
Company, Threatened with any dispute, arbitration, lawsuit or administrative
proceeding relating to labor or employment matters which might reasonably be
expected to interfere in any material respect with the respective business
activities of the Company or any of its Subsidiaries. No employees of
the Company or any of its Subsidiaries are represented by any labor union,
and,
to the Knowledge of the Company, no labor union is attempting to organize
employees of the Company or any of its Subsidiaries. Schedule 4.21(k)
of the Disclosure Statement sets forth a list of all material Orders or
settlement agreements arising out of or relating to the labor and employment
practices or decisions of the Company or any Subsidiary of the Company which,
by
their terms, continue to bind or affect the Company or any Subsidiary of the
Company.
37
(l) Except as set forth on Schedule 4.21(l), of the Disclosure
Statement, the Company has not, since October 3, 2004, (i) granted to any Person
an interest in a nonqualified deferred compensation plan (as defined in Code
Section 409A(d)(1)) which interest has been or, upon the lapse of a substantial
risk of forfeiture with respect to such interest, will be subject to the Tax
imposed by Code Sections 409A(a)(1)(B) or (b)(4)(A), or (ii) modified the
terms of any nonqualified deferred compensation plan in a manner that could
cause an interest previously granted under such plan to become subject to the
Tax imposed by Code Sections 409A(a)(1)(B) or (b)(4).
(m) Neither the Company nor any of its Subsidiaries maintains or
contributes to a plan that is the subject of Internal Revenue Code Section
501(c)(9).
Section 4.22.Compliance
with Environmental Laws. (a) To the Knowledge of the
Company and except as set forth in Schedule 4.22(a) of the Disclosure
Statement: (i) the operations of the Company and each Subsidiary
of the Company comply in all material respects with all applicable Environmental
Laws; (ii) none of the operations of the Company or any Subsidiary of the
Company, no assets currently or formerly owned or leased by the Company or
any
Subsidiary of the Company and no Participating Facility or Mortgaged Premises
are subject to any Proceedings alleging the violation of any past or present
Environmental Law; nor are they the subject of any claims alleging damages
to
health or property, pursuant to which the Company, any Subsidiary of the Company
or any owner of a Participating Facility or any Mortgaged Premises would be
liable in law or equity; (iii) none of the operations of the Company or any
Subsidiary of the Company, no assets currently owned or formerly owned by the
Company or any Subsidiary of the Company and no Participating Facility or
Mortgaged Premise are the subject of any Proceeding evaluating whether any
remedial action is needed to respond to a release or potential release of any
Hazardous Substance, or any other substance into the environment, nor has the
Company or any Subsidiary of the Company, or any owner of a Participating
Facility or a Mortgaged Premises been directed to conduct such Proceeding,
formally or informally, by any Governmental Entity, nor have any of them agreed
with any Governmental Entity or private Person to conduct any such Proceeding;
and (iv) neither the Company nor any Subsidiary of the Company nor any
owner of a Participating Facility or a Mortgaged Premises has filed, or become
required to file, any notice under any Environmental Law indicating past or
present treatment, storage or disposal of a Hazardous Substance or reporting
a
spill or release of a Hazardous Substance, or any other substance into the
environment.
(b) To the Knowledge of the Company and except as disclosed in
Schedule 4.22(b) of the Disclosure Statement, with respect to (i) the
real estate currently or formerly owned (other than OREO) or leased by the
Company or any Subsidiary of the Company; and (ii) OREO currently or
formerly held by the Company or any Subsidiary of the Company (collectively,
the
“Company Premises”): (x) no part of the Company
Premises has been used for the generation, manufacture, handling, storage,
or
disposal of Hazardous Substances; (y) the Company Premises do not contain,
and have never contained, an underground storage tank; and (z) the Company
Premises do not contain and are not contaminated by any quantity of a Hazardous
Substance from any source.
38
(c) Except as disclosed in Schedule 4.22(c) of the Disclosure
Statement, the Company has delivered to the Buyer copies of all Phase I and
Phase II environmental assessments in its or any of its Subsidiaries’
possession pertaining to any real property currently or formerly owned or leased
by the Company or any of its Subsidiaries or securing any outstanding
Loans.
Section 4.23.Recent
Acquisitions and Divestitures. Except as set forth in
Schedule 4.23 of the Disclosure Statement, neither the Company nor any
Subsidiary of the Company has any material liability or obligation of any nature
(whether accrued, absolute, contingent, or otherwise and whether due or to
become due) arising out of or relating to any acquisition or divestiture which
has not been adequately provided for, reflected or disclosed in the Company
Financial Statements for the fiscal year ended December 31, 2006.
Section 4.24.Agreements,
Contracts, Commitments and Obligations.
(a)
Schedule 4.24(a) of the Disclosure Statement sets forth a list of each
outstanding Insider Loan, as well as a listing of all deposits or deposit
surrogates, including the amount, type and interest being paid thereon, to
which
the Company or any Subsidiary of the Company is a party under which it may
(contingently or otherwise) have any liability involving any Regulation O
officer (as designated by the board of directors of the Company and its
Subsidiaries, respectively) or director of the Company or any Subsidiary of
the
Company.
(b)
Schedule 4.24(b) of the Disclosure Statement sets forth a list of each
(i) outstanding Loan or other extension of credit or commitment for a Loan
or other extension of credit and (ii) outstanding letter of credit and each
commitment to issue a letter of credit to which the Company or any Subsidiary
of
the Company is a party and/or under which it may (contingently or otherwise)
have any liability, including, but not limited to, those issued in connection
with real estate construction.
(c)
Schedule 4.24(c) of the Disclosure Statement sets forth a list of each contract
or commitment (other than Permitted Liens) to which the Company or any of its
Subsidiaries is a party or, to the Knowledge of the Company, to which neither
the Company nor any of its Subsidiaries is a party, affecting ownership of,
title to, use of, or any interest in any Company Real Property or Company
Lease.
(d)
Schedule 4.24(d) of the Disclosure Statement sets forth a list of all fees,
salaries, bonuses and other forms of compensation including country club
memberships, automobiles available for personal use, and credit cards available
for personal use, provided by the Company or any Subsidiary of the Company
to
any employee or officer or former employee or officer of the Company or any
Subsidiary of the Company who earned in excess of $60,000 in 2006 (or who is
expected to earn in excess of $60,000 in 2007) or to any director or former
director of the Company or any Subsidiary of the Company.
(e)
Schedule 4.24(e) of the Disclosure Statement sets forth a list of each
commitment made by the Company or any Subsidiary of the Company to or with
any
director, officer or employee of the Company or any Subsidiary of the Company
extending for a period of more than six (6) months from
the date hereof or providing for earlier termination only upon the payment
of a
penalty or equivalent thereto.
39
(f)
Schedule 4.24(f) of the Disclosure Statement sets forth a list of each contract
or commitment providing for payment based in any manner upon outstanding Loans,
results, or profits of the Company or any Subsidiary of the
Company.
(g)
Schedule 4.24(g) of the Disclosure Statement sets forth a list of all powers
of
attorney granted by the Company or any Subsidiary of the Company which are
currently in force.
(h)
Schedule 4.24(h) of the Disclosure Statement sets forth a list of all current
policies of insurance currently maintained by the Company or any Subsidiary
of
the Company.
(i)
Schedule 4.24(i) of the Disclosure Statement sets forth a list of all collective
bargaining agreements to which the Company or any Subsidiary of the Company
is a
party and all affirmative action plans or programs covering employees of the
Company or any Subsidiary of the Company, as well as all employee handbooks,
policy manuals, rules and standards of employment promulgated by the Company
or
any Subsidiary of the Company.
(j)
Schedule 4.24(j) of the Disclosure Statement sets forth a list of all leases
or
licenses with respect to real or personal property, whether as lessor, lessee,
licensor or licensee, with annual rental or other payments due thereunder in
excess of $50,000 to which the Company or any Subsidiary of the Company is
a
party, which does not expire within six (6) months from the date hereof and
cannot be terminated upon sixty (60) days (or less) written notice without
penalty.
(k)
Schedule 4.24(k) of the Disclosure Statement sets forth a list of all
(i) consulting and professional services contracts and (ii) employment
agreements to which the Company or any Subsidiary of the Company is a
party.
(l)
Schedule 4.24(l) of the Disclosure Statement sets forth a list of all Orders
or
settlement agreements arising out of or relating to the labor and employment
practices or decisions of the Company or any Subsidiary of the Company which,
by
their terms, continue to bind or affect the Company or any Subsidiary of the
Company.
(m)
Schedule 4.24(m) of the Disclosure Statement sets forth a list of all Orders,
memorandums, agreements or understandings with regulatory agencies or any other
Governmental Entity binding upon or affecting the current operations of the
Company or any Subsidiary of the Company or any of their directors or officers
in their capacities as such.
40
(n)
Schedule 4.24(n) of the Disclosure Statement sets forth a list of (i) all
registered trademarks, trade names, service marks, patents, or copyrights,
(ii)
all material unregistered trademarks, trade names or service marks and (iii)
all
applications by the Company or any of its Subsidiaries for registration of
any
trademarks, trade names, service marks, patents, or copyrights, which are owned
by the Company or any Subsidiary of the Company or are licensed from a third
party and require the Company or any Subsidiary of the Company to pay annual
license fee in excess of $50,000 (including computer
software programs, codes and related materials, but not including any retail
software programs subject to “shrinkwrap” licenses).
(o)
Schedule 4.24(o) of the Disclosure Statement sets forth a list of any security
or proprietary interest acquired by the Company or a Subsidiary of the Company
since December 31, 2006 in good faith through foreclosure.
(p)
Schedule 4.24(p) of the Disclosure Statement sets forth a list of all agreements
of guaranty or indemnification running to any Person which individually during
its remaining term could commit the Company or any Subsidiary of the Company
to
an expenditure (either individually or in the aggregate) in excess of
$50,000.
(q)
Schedule 4.24(q) of the Disclosure Statement sets forth a list of all agreements
containing any covenant limiting the right of the Company or any Subsidiary
of
the Company to engage in any line of business or to compete with any
Person.
(r)
Schedule 4.24(r) of the Disclosure Statement sets forth a list of all licenses,
permits and similar matters that are necessary to the operations of the Company
or any Subsidiary of the Company (including agreements with respect to
outsourced credit programs, computer software programs, source codes and related
materials, but not including any retail software programs subject to
“shrinkwrap” licenses).
(s)
Schedule 4.24(s) of the Disclosure Statement sets forth a list of all material
agreements which require the consent or approval of or notice to any Person
in
order to consummate the transactions contemplated hereby.
(t)
Schedule 4.24(t) of the Disclosure Statement sets forth a list of all agreements
relating to the servicing of loans and all mortgage forward commitments and
similar agreements pursuant to which the Company or any Subsidiary of the
Company sells mortgages which it originates to any other Person.
(u)
Schedule 4.24(u) of the Disclosure Statement sets forth a list of all contracts
relating to the purchase or sale of financial or other futures, or any put
or
call option relating to cash, securities or commodities and all interest rate
swap agreements or other agreements relating to the hedging of interest rate
risks and all agreements or arrangements described in Section 4.14(c)
hereof.
41
(v)
Schedule 4.24(v) of the Disclosure Statement sets forth a list of all contracts
or agreements, including contracts or agreements pursuant to which the Company
or any Subsidiary of the Company has sold, transferred, assigned or agreed
to
service any loan, which provide for any recourse, indemnification or similar
obligation on the part of the Company or any Subsidiary of the Company,
indicating the name and address of each Person which might or could be entitled
to recourse against or indemnification from the Company or any Subsidiary of
the
Company and, if ascertainable, the monetary amount of each actual or potential
recourse or indemnification obligation under each such contract or
agreement.
(w)
Schedule 4.24(w) of the Disclosure Statement sets forth a list of all agreements
providing data processing services or operational support to the Company or
any
Subsidiary of the Company.
(x)
Schedule 4.24(x) of the Disclosure Statement sets forth a list of all agreements
relating to the servicing of deposit products and checking accounts, but not
including any agreements with deposit customers entered into in the Ordinary
Course of Business.
(y)
Schedule 4.24(y) of the Disclosure Statement sets forth a list of all credit
card association membership agreements and all ATM and debit card network
agreements, agent bank or similar relationship agreements dealing with debit
or
credit cards.
(z)
Schedule 4.24(z) of the Disclosure Statement sets forth a list of all other
contracts, agreements or commitments to which the Company or any Subsidiary
of
the Company is a party which individually during its remaining term could commit
the Company or any Subsidiary of the Company to an expenditure (either
individually or through a series of installments) in excess of
$100,000.
Section 4.25.Defaults. Except
as set forth in Schedule 4.25 of the Disclosure
Statement: (a) neither the Company nor any of its Subsidiaries
has breached, violated or defaulted under, or received notice that it has
breached, violated or defaulted under, any term or condition of any contract,
license, agreement or commitment to which it is a party or by which it is
obligated and which is the subject of Section 4.24 hereto (each a,
“Company Contract”); (b) neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby,
nor, to the Knowledge of the Company, any other event has occurred that, with
the giving of notice or the passage of time or both constitutes a breach,
violation or default on the part of the Company or any Subsidiary of the Company
or, to the Knowledge of the Company, on the part of any other party to any
Company Contract, in each case in such a manner as would permit any party to
(i) cancel or terminate such Company Contract, (ii) seek damages or
change the amount or terms of any payment in connection with such Company
Contract, or (iii) exercise any right of amendment, renegotiation,
cancellation or acceleration, and (c) each Company Contract is valid,
binding and enforceable against the Company and its Subsidiaries (as the case
may be) and, to the Knowledge of the Company, each other party thereto, except
to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles or doctrines.
42
Section 4.26.Operations
Since December 31, 2006. Between December 31, 2006, and the date
hereof, there has not been:
(a)
Except as set forth on Schedule 4.26(a) of the Disclosure Statement, any
increase in the compensation payable or to become payable by the Company or
any
Subsidiary of the Company to any officer or director thereof that are
inconsistent with past practices or outside the Ordinary Course of Business
of
the Company and its Subsidiaries;
(b)
Except as set forth on Schedule 4.26(b) of the Disclosure Statement,
(i) any payment of dividends by the Company or any Subsidiary of the
Company or (ii) any distribution by the Company or any Subsidiary of the
Company, whether directly or indirectly, of any assets of any kind whatsoever,
on or in redemption or as the purchase price of, any of their respective capital
stock, except for the payment by the Company of its regular quarterly cash
dividend of $0.18 per share and except for any such payment or distribution
from
any Subsidiary of the Company;
(c)
Except as set forth on Schedule 4.26(c) of the Disclosure Statement, any
Encumbrance on any asset, tangible or intangible, of the Company or any
Subsidiary of the Company, except the following (each a “Permitted
Lien”): (i) Encumbrances arising out of judgments or awards
in respect of which the Company or any Subsidiary of the Company is in good
faith prosecuting an appeal or Proceedings for review and in respect of which
it
has secured a subsisting stay of execution pending such appeal or Proceedings;
(ii) Encumbrances for Taxes, assessments, and other governmental charges or
levies, the payment of which is not past due, or as to which the Company or
any
Subsidiary of the Company is diligently contesting in good faith and by
appropriate Proceedings either the amount thereof or the liability therefore
or
both; (iii) deposits, liens or pledges to secure payments of worker's
compensation, unemployment insurance, pensions, or other social security
obligations, or the performance of bids, tenders, leases, contracts (other
than
contracts for the payment of money), public or statutory obligations, surety,
stay or appeal bonds, or similar obligations arising in the ordinary course
of
business; (iv) zoning restrictions on the use of real property, or any interest
therein, or minor irregularities in title thereto, which do not
materially impair the use of such operation of the business of Company or any
of
its Subsidiaries or the merchantability or the value of such property or
interest therein for the purpose of such business; (v) purchase money mortgages
or other purchase money or vendor's liens or security interests (including
finance leases), provided that no such mortgage, lien or security interest
shall
extend to or cover any other property of Company or any Subsidiary of the
Company other than that so purchased; (vi) pledges and liens given to secure
deposits and other liabilities of Company or any of its Subsidiaries arising
in
the Ordinary Course of Business; and (vii) Encumbrances that do not
materially adversely affect the Company’s or its Subsidiaries’ use or ownership
of, or the marketability of, any real property or any interest
therein;
(d)
Except as set forth on Schedule 4.26(d) of the Disclosure Statement, any
creation or assumption of indebtedness (including the extension or renewal
of
any existing indebtedness, or the increase thereof), by the Company or any
Subsidiary of the Company for borrowed money, or otherwise, other than by a
Bank
in the Ordinary Course of Business;
43
(e)
Except as set forth on Schedule 4.26(e) of the Disclosure Statement, the
establishment of any new, or increase in the formula for contributions to or
benefits under, any existing, retirement, pension, profit sharing, stock bonus,
savings or thrift plan, or any similar plan of deferred compensation, whether
funded or unfunded and whether qualified or unqualified (within the meaning
of
the Code) by the Company or any Subsidiary of the Company;
(f)
Except as set forth on Schedule 4.26(f) of the Disclosure Statement, any
action by the Company or any Subsidiary of the Company seeking any cancellation
of, or decrease in the insured limit under, or increase in the deductible amount
or the insured’s retention (whether pursuant to coinsurance or otherwise) of or
under, any policy of insurance maintained directly or indirectly by the Company
or any Subsidiary of the Company on any of their respective assets or
businesses, including without limitation fire and other hazard insurance on
its
assets, automobile liability insurance, general public liability insurance,
and
directors and officers liability insurance;
(g)
Except as set forth on Schedule 4.26(g) of the Disclosure Statement, any
change in the Company’s independent auditors, historic methods of accounting
(other than as required by past practices or regulatory accounting principles),
or in its system for maintaining its equipment and real estate;
(h)
Except as set forth on Schedule 4.26(h) of the Disclosure Statement, any
purchase, whether for cash or secured or unsecured obligations (including
finance leases), by the Company or any Subsidiary of the Company of any fixed
asset which either (i) has a purchase price individually or in the
aggregate in excess of $50,000 or (ii) is outside of the Ordinary Course of
Business;
(i)
Except as set forth on Schedule 4.26(i) of the Disclosure Statement, any
sale or transfer of any asset in excess of $100,000 of the Company or any
Subsidiary of the Company or outside of the Ordinary Course of Business with
the
exception of loans and marketable securities sold in the Ordinary Course of
Business at market prices;
(j)
Except as set forth on Schedule 4.26(j) of the Disclosure Statement, any
cancellation or compromise of any debt to, claim by or right of, the Company
or
any Subsidiary of the Company except in the Ordinary Course of
Business;
(k)
Except as set forth on Schedule 4.26(k) of the Disclosure Statement, any
amendment, modification or termination of any contract or commitment which
is
the subject of Section 4.24 to which the Company or any Subsidiary of the
Company is a party, other than in the Ordinary Course of Business;
44
(l)
Except as set forth on Schedule 4.26(l) of the Disclosure Statement, any
Material Adverse Effect with respect to the Company; and
(m)
Except as set forth on Schedule 4.26(m) of the Disclosure Statement, any
material change in the types of products or services offered by the Company
or
any Subsidiary of the Company.
Section 4.27.Corporate
Records. The corporate record books, transfer books and stock
ledgers of the Company and each Subsidiary of the Company are complete and
accurate in all material respects and reflect all meetings, consents and other
actions of the organizers, incorporators, Shareholders, boards of directors
and
committees of the boards of directors of the Company and each Subsidiary of
the
Company, and all transactions in their respective capital stocks, since their
respective inceptions.
Section 4.28.Undisclosed
Liabilities. Neither the Company nor any Subsidiary of the
Company has any Liabilities of a character required to be reflected on a balance
sheet prepared in accordance with GAAP except (a) Liabilities reflected on
the consolidated balance sheet of the Company and its Subsidiaries as of
March 31, 2007 referred to in Section 4.06, (b) Liabilities
incurred since March 31, 2007 in the Ordinary Course of Business in
customary amounts or (c) as disclosed in the Schedule 4.28 of the
Disclosure Statement.
Section 4.29.Assets. (a) Schedule
4.29(a)(i) of the Disclosure Statement identifies all real properties, including
any leaseholds and ground leases, owned by the Company or any Subsidiary of
the
Company (“Company Real Property”), and lists the addresses of each
Bank’s main office and the address of each branch maintained by such
Bank. The Company or a Subsidiary of the Company has good and
marketable title to each Company Real Property (excluding the Company Leases)
and all other assets and properties reflected as owned by the Company or any
Subsidiary of the Company on the audited consolidated balance sheet of the
Company, dated as of December 31, 2006, free and clear and discharged of
any and all Encumbrances except for (i) assets and properties disposed of
since such date in the Ordinary Course of Business, (ii) Permitted Liens,
(iii) the matters set forth in Schedule 4.24(c) of the Disclosure
Statement, (iv) the matters set forth in Schedule 4.26(c) of the Disclosure
Statement and (v) as set forth in Schedule 4.29(a)(ii) of the Disclosure
Statement. All of the buildings, structures, fixtures and
improvements on or to each Company Real Property (whether owned or leased by
the
Company or any Subsidiary of the Company) are in good operating condition and
have been adequately maintained, reasonable wear and tear
excepted. Except for the Company Leases for real property, title to
all Company Real Property is held by the Company or a Subsidiary of the Company
in fee simple. Neither the Company nor any Subsidiary of the Company
has any ownership interest in any real property other than the Company Real
Property. All Company Real Property and the use thereof complies in
all material respects with all applicable zoning, building, use, operation
and
other restrictions. The Company and its Subsidiaries collectively
hold all material permits, Governmental Authorizations, licenses and approvals
necessary for the present use and occupancy of all Company Real
Property. The Company and each Subsidiary of the Company have title
or other rights to all their other assets sufficient in all material respects
for the conduct of their respective businesses as currently conducted, and,
except for the matters referred to under items (ii), (iii) and (iv) above,
free, clear and discharged of and from any and all Encumbrances other than
Permitted Liens.
45
(b) All leases pursuant to which the Company or any Subsidiary of the
Company, as lessee, leases real or personal property (“Company Leases”)
are to the Knowledge of the Company valid, effective, and enforceable against
the lessor in accordance with their respective terms and are identified on
Schedule 4.29(b) of the Disclosure Statement. There is not under
any Company Lease any existing default, or any event which with notice or lapse
of time or both would constitute a default, with respect to either the Company
or any Subsidiary of the Company, or to the Knowledge of the Company, the other
party or parties thereto.
(c) Except as disclosed in Schedule 4.29(c) of the Disclosure
Statement: (i) none of the Company Leases contains any provision
which would preclude the Company or any Subsidiary of the Company, or any
successor by merger thereto, from possessing and using the leased real or
personal property for the same purposes and upon the same rental and other
terms
upon or subsequent to the consummation of the transactions contemplated hereby
as are applicable to the possession and use by the Company or any Subsidiary
of
the Company as of the date of this Agreement; and (ii) neither the Company
nor any Subsidiary of the Company has made a prior assignment for collateral
purposes of any Company Lease.
Section 4.30.Indemnification. To
the Knowledge of the Company, no action or failure to take action by any
director, officer, employee or agent of the Company or any Subsidiary of the
Company has occurred which has given rise to a claim by any such Person for
indemnification from the Company or any Subsidiary of the Company under the
corporate indemnification provisions of the Company or any Subsidiary of the
Company or an insurance policy covering the same in effect on the date of this
Agreement, other than any claim relating to this Agreement or the transactions
contemplated hereby.
Section 4.31.Shareholder
Rights Plan and Anti-takeover Mechanisms. The Company and each
of its Subsidiaries have taken all actions required to exempt the Buyer, NewCo,
the Surviving Corporation, the Agreement and the Merger from (a) any
provisions of an anti-takeover nature contained in the Company’s or any of its
Subsidiaries’ Organizational Documents (b) the provisions of any rights
plan adopted by the board of directors of the Company or its Subsidiaries and
(c) the provisions of any “anti-takeover,” “fair price,” “moratorium,”
“control share acquisition,” business combination restrictions or similar
provisions contained in the provisions of any applicable Laws (including, for
the avoidance of doubt, the applicable provisions of the WBCL including Sections
180.1130 through 180.1134 and 180.1140 through 180.1144 thereof).
Section ▇.▇▇.▇▇▇▇▇▇▇
Board Recommendation and Fairness Opinion. (a) As of the
date hereof, the board of directors of the Company deems the Merger advisable
and, by at least a majority vote, adopts, approves, and recommends that the
Shareholders approve, this Agreement and the transactions contemplated hereby,
including the Merger and the Plan of Merger (the “Company Board
Recommendation”).
46
(b) The Company has received the written opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
Company, Incorporated dated within five (5) days of the
date hereof to the effect that, as of the date thereof or hereof, the
consideration to be received in the Merger by the Shareholders is fair to the
Shareholders from a financial point of view (the “Fairness
Opinion”). A true and correct copy of the Fairness Opinion is
set forth on Schedule 4.32 of the Disclosure Statement.
Section 4.33.Insider
Interests. All outstanding Loans and other contractual
(including deposit relationships, mortgages, pledge agreements, or other similar
commitments to extend credit) or compensation arrangements (including all items
identified in Section 4.24(e) hereof) between the Company or any Subsidiary
of the Company and any officer, director or insider of the Company or any
Subsidiary of the Company (each, an “Insider Loan”) conform in all
material respects to all applicable Laws (including Federal Reserve Board
Regulation O) and to all policies of the Company and its Subsidiaries which
were in effect when such Loans and other contractual arrangements were entered
into. Except as set forth in Schedule 4.33 of the Disclosure
Statement, no officer, director or employee of the Company or any Subsidiary
of
the Company has any interest in any material property, real or personal,
tangible or intangible, used in or pertaining to the business of the Company
or
any Subsidiary of the Company.
Section 4.34.Fees. Except
as set forth in Schedule 4.34 of the Disclosure Statement, neither the
Company nor any Subsidiary of the Company, nor any of their respective officers,
directors, employees or agents, has employed a broker or finder or incurred
any
liability for any financial advisory fees, brokerage fees, commissions, or
finder’s fees, and no broker or finder has acted directly or indirectly for the
Company or any Subsidiary of the Company in connection with this Agreement
or
the transactions contemplated hereby.
Section
4.35.Non-Reportable Transaction of the Company. To the
Knowledge of the Company, the transactions contemplated by this Agreement
(including without limitation the Merger and the Plan of Merger) do not
constitute one or more reportable transactions under Treas. Reg. § 1.6011-4
as promulgated under the Code.
Section 4.36.Disclosure. (a) None
of the information supplied or to be supplied by the Company for inclusion
or
incorporation by reference in the Proxy Statement or the Regulatory Applications
will, at the date of mailing to the Shareholders and at the time of the
Shareholders Meeting with respect to the Proxy Statement, and at the time of
filing with respect to the Regulatory Applications, 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. The Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC
thereunder. No representation or warranty is made by the Company with
respect to statements made or incorporated by reference in the Proxy Statement
or the Regulatory Applications based on information supplied by the
Buyer.
(b) The Company has delivered to the Buyer true, correct and complete
copies of: (i) the Organizational Documents of the Company and
each Subsidiary of the Company and (ii) all contracts, agreements,
instruments, leases, licenses, plans, arrangements and other documents to which
the Company or any Subsidiary of the Company is a party or subject and which
are
or should be disclosed, described, listed on or referred to in the Disclosure
Statement.
47
Section 4.37.Transaction
Expense Estimate. The Company has advised the Buyer in writing
of the Company’s estimate of all Transaction Expenses (the “Transaction
Expense Estimate”). The Transaction Expense
Estimate: (a) was made by the Company in good faith and
(b) to the Knowledge of the Company is accurate in all material respects
based on circumstances as of the date of this
Agreement.
Section
▇.▇▇.▇▇ Other Representation or Warranty. Except as
expressly set forth in this Article IV, the Company has not made any other
representation or warranty, express or implied at law or in equity.
Article
V
Conduct
of the Company Prior to Closing
Section 5.01.Conduct
of Business. During the period from the date of this Agreement
to the earlier of the Effective Time or the termination of this Agreement
pursuant to the terms hereof, the Company, NewCo and the Buyer agree (except
as
expressly contemplated by this Agreement, or to the extent that the Buyer and
NewCo shall otherwise consent in writing) that:
(a)
The
Company will and will cause each Subsidiary of the Company to (i) carry on
their
respective businesses in material compliance with all applicable Laws (including
the Anti-Money Laundering Laws, HOEPA, any applicable truth-in lending Laws,
and
the Fair and Accurate Credit Transactions Act of 2003) and in, and only in,
the
Ordinary Course of Business, (ii) use Commercially Reasonable Efforts to
maintain their respective books in accordance with past practices, conduct
their
respective businesses and operations only in accordance with safe and sound
banking and business practices, and to the extent consistent with such
businesses, and (iii) except as set forth in Schedule 5.01(a) of the
Disclosure Statement, use Commercially Reasonable Efforts to (A) preserve intact
their present business organizations, (B) generally keep available the services
of their present officers and employees and (C) preserve their relationships
with customers, suppliers and others having business dealings with them to
the
end that their respective goodwill and going business shall be unimpaired at
the
Closing Date.
(b)
The
Company will not declare or pay any dividends on or make other distributions
in
respect of its capital stock, except for the payment by the Company of its
regular quarterly cash dividend of $0.18 per share; provided, however,
prior to the declaration or payment of any such regular quarterly cash dividend,
the Company shall deliver to the Buyer, in writing, notice that it has elected
to pay each of its regular quarterly cash dividends pursuant to this Section
5.01(b) and that it is not deferring payment of its regular quarterly cash
dividends until the Aggregate Response Estimate Amount has been determined
pursuant to the provisions hereof provided further, however, that if
the Company shall deliver notice to the Buyer, in writing, that it has elected
to defer the payment of all regular quarterly cash dividends until after the
Aggregate Response Estimate Amount has been determined, the Company may declare
and pay a dividend after the Aggregate Response Estimate Amount has been
determined equal to the aggregate amount of the regular quarterly cash dividends
that have been deferred minus any amount of the Aggregate Response Estimate
Amount that shall be deducted pursuant to Section 6.21(b)(ii);
48
(c)
Except as set forth on Schedule 5.01(c) to the Disclosure Statement, the Company
will not, and will not permit any Subsidiary of the Company to, sell, lease
or
otherwise dispose of any material assets, except in the Ordinary Course of
Business.
(d)
The
Company will not, and will not permit any Subsidiary of the Company to,
(i) merge or consolidate with any Person, (ii) purchase the assets of or
assume the liabilities of any Person that is outside the Ordinary Course of
Business, or (ii) approve, enter into or execute a letter of intent or similar
document or any agreement or commitment relating to an Acquisition Proposal,
except as provided in Section 5.04.
(e)
Except as set forth in Schedule 5.01(e) of the Disclosure Statement, the
Company will not, and will not permit any Subsidiary of the Company to, issue,
sell, authorize or propose the issuance of, or purchase or propose the purchase
of, permit the conversion of or otherwise acquire or transfer for any
consideration any shares of the capital stock of any class of the Company or
any
Subsidiary of the Company or securities convertible into, or rights, warrants
or
options to acquire, any such shares or other convertible securities, or to
increase or decrease the number of shares of capital stock by split-up,
reclassification, reverse split, issuer tender or exchange offer, merger stock
dividend, change in par or stated value, except as contemplated herein;
provided, however, that the Company may issue shares of Company Common
Stock in connection with the exercise of any Stock Options outstanding as of
the
date of this Agreement.
(f)
The
Company will not, and will not permit any Subsidiary of the Company to,
(i) incur any indebtedness for money borrowed or issue or sell any debt
securities other than by the Company or its Subsidiaries in the Ordinary Course
of Business (including inter-company borrowings) or (ii) permit the
imposition of any Encumbrance on any equity securities held by the Company
or by
any Subsidiary of the Company except in the Ordinary Course of
Business.
(g)
The
Company will not, and will not permit any Subsidiary of the Company to, grant
to
any director, officer or employee any increase in compensation (except in
accordance with existing policies, plans or agreements or as otherwise
consistent with past practices), or pay or agree to pay any bonus (except in
accordance with existing policies, plans or agreements or as otherwise
consistent with past practices) or change of control payment or increase in
any
severance or termination pay, or enter into or amend any employment or severance
agreement with any such Person, except as contemplated herein.
49
(h)
Except as provided otherwise in this Agreement or as set forth in
Schedule 5.01(h) of the Disclosure Statement, neither the Company nor any
Subsidiary of the Company will enter into, renew, amend or terminate any
acquisition or divestiture agreement to which the Company or one of its
Subsidiaries is a party, including the Purchase and Assumption Agreement between
the Minnesota Bank and Eastwood Bank, dated January 4, 2007, as amended, or
any
lease or license with respect to any property, whether real, personal or mixed,
any material contract, agreement or commitment or any contract, agreement or
commitment which involves the payment by the Company or any Subsidiary of the
Company of more than $100,000 in the aggregate and which payment would be
classified as non-interest expense or capital expenditure in accordance with
GAAP.
(i)
Except as contemplated herein or as set forth in Schedule 5.01(i) of the
Disclosure Statement, the Company will not, and will not permit any Subsidiary
of the Company to, adopt or amend any Company Benefit Plan or any other
collective bargaining, employee pension, profit-sharing, retirement, insurance,
incentive compensation, severance, vacation, stock option, or other plan,
agreement, trust, fund or arrangement for the benefit of employees, whether
written or oral, except as contemplated herein (including Section 5.01(g) above)
or as required by applicable Law or as necessary to avoid the creation of any
liability under Section 409A of the Code.
(j)
The
Company will, and will cause each Subsidiary of the Company to, use Commercially
Reasonable Efforts to maintain the respective properties and assets of the
Company and each Subsidiary of the Company in their present state of repair,
order and condition, reasonable wear and tear excepted, and to maintain and
keep
in full force and effect all policies of insurance currently in effect,
including the insurance of accounts with the FDIC. The Company will,
and will cause each Subsidiary of the Company to, take all requisite action
(including the making of claims and the giving of notices) pursuant to its
directors’ and officers’ liability insurance policy or policies in order to
preserve all rights thereunder with respect to all matters which, to the
Knowledge of the Company, could reasonably give rise to a claim prior to the
Closing Date.
(k)
The
Company will not, and will not permit any Subsidiary of the Company to (i),
amend its Organizational Documents, except as contemplated herein or (iii)
abandon or relinquish any charter.
(l)
The
Company will not, and will not permit any Subsidiary of the Company
to: (i) enter into, renew or increase any loan or credit
commitment (including letters of credit) to, or invest or agree to invest in,
any Person, or modify any of the material provisions of or renew or otherwise
extend the maturity date of any existing Loan or credit commitment
(collectively, “Lend to”), in an amount equal to or in excess of
$5,000,000 with respect to any renewal or increase of an existing Loan or
$1,500,000 with respect to any new loan or in any amount which, when aggregated
with any and all Loans or credit commitments of the Company and/or any
Subsidiary of the Company to such Person, would be equal to or in excess of
$5,000,000 with respect to any renewal or increase of any existing Loan or
$1,500,000 with respect to any new loan; (ii) Lend to any Person other than
in accordance with lending policies as in effect on the date hereof and
(iii) Lend to any Person if such loan or extension or investment is
reasonably likely to be
50
classified
by any Governmental Entity or otherwise as “Non-Performing,” “Other Loans of
Concern,” “Substandard,” “Doubtful,” “Loss” or similar designation, or
reasonably likely to be placed on a “watch list,” “problem loan list,”
“renegotiated restructuring list,” “90 day non-accrual list” or similar
internal report of the Company or a Bank; provided, however, that in
the case of clause (i) above the Company or a Bank may Lend to any Person,
notwithstanding the amount of the Loan, in the event (A) the Company or a
Bank has delivered to the Buyer a notice of its intention to do so and such
information as the Buyer may reasonably require in respect thereof and
(B) the Buyer shall not have reasonably objected to the same by giving
written or facsimile notice of such objection within two (2) Business Days
following the delivery to the Buyer of the notice of intention and information
as aforesaid; provided, further, that nothing in this subsection shall
prohibit the Company or a Bank from honoring any contractual obligation in
existence on the date of this Agreement. Notwithstanding anything
herein to the contrary, the concurrence of the Chief Credit Officer of the
Company shall be obtained prior to (y) renewing or increasing the amount of
any Loan if the amount of such Loan, when aggregated with any and all Loans
or
credit commitments of the Company and/or any of its Subsidiaries to such Person,
is greater than $1,500,000 and less than $5,000,000 and (z) making any new
loan if the amount of such loan, when aggregated with any and all Loans or
credit commitments of the Company and/or any of its Subsidiaries to such Person,
is greater than $1,000,000 and less than
$1,500,000.
(m)
The
Company will not, and will not permit any Subsidiary of the Company to,
materially restructure or change its investment securities portfolio, through
purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported, or execute individual investment transactions of greater
than $1,000,000.
(n)
The
Company will not, and will not permit any Subsidiary of the Company to, enter
into any new, or modify, amend or extend the terms of any existing, contracts
relating to the purchase or sale of financial or other futures, or any put
or
call option relating to cash, securities or commodities or any interest rate
swap agreements or other agreements relating to the hedging of interest rate
risks.
(o)
The
Company will not, and will not permit any Subsidiary of the Company to,
materially change the products or services offered by the Company or any
Subsidiary of the Company, offer new deposit or lending products that are
materially different from the deposit or lending products offered as of the
date
hereof or make any material changes to its Website or internet banking
activities, including those relating to the setting of interest
rates.
51
(p)
Notwithstanding anything herein to the contrary, the Company will not, and
will
not permit any Subsidiary of the Company to, enter into, increase or renew
any
Loan or credit commitment (including letters of credit) to any officer or
director of the Company or any Subsidiary of the Company, any holder of at
least
five percent (5%) of the equity securities of the Company or any Subsidiary
of
the Company, or any Person controlled, directly or indirectly, by any of the
foregoing or engage in any transaction with any of the foregoing prohibited
by
12 U.S.C. 371c and 12 U.S.C. 371c-1; provided, however, the
Company and its Subsidiaries shall be permitted to renew any Loan or credit
commitment (including letters of credit) to any officer or director of the
Company or any of its Subsidiaries or any holder of at least five percent (5%)
of the equity securities of the Company, or any Person controlled, directly
or
indirectly, by any of the foregoing that is consistent with applicable Law
and
with past practice and on terms as in existence on the date
hereof. For purposes of this Section, “control” shall have the
meaning associated with that term under 12 U.S.C. 371c.
(q)
The
Company will, and will cause each Subsidiary of the Company to, use Commercially
Reasonable Efforts to cooperate with the Buyer with respect to the planning
and
implementation of the conversion of the systems of the Company and its
Subsidiaries into the systems of the Buyer or one of its Affiliates which shall
be effectuated after the Closing Date.
(r)
The
Company will not, and will not permit any Subsidiary of the Company to, make
any
grant of exclusive rights to any third party which involves a payment to the
Company or any Subsidiary of the Company in excess of $100,000 and which has
a
term of longer than six (6) months.
(s)
The
Company will not, and will not permit any Subsidiary of the Company to, change
any of its accounting principles or procedures, except as required by GAAP
or
any applicable Law. The Buyer shall be given reasonable advance
written notice of any change of the Company’s or any of its Subsidiary’s
accounting principles or procedures required by GAAP or any applicable
Law.
(t)
Except as set forth on Schedule 5.01(t) to the Disclosure Statement, the Company
will not, and will not permit any Subsidiary of the Company to, make, pledge
or
otherwise commit to make any contributions or donations to any political,
charitable, social or other committee, group, association or organization,
other
than charitable donations of not more than $50,000, individually, and $100,000,
in the aggregate.
(u)
The
Company will not, and will not permit any Subsidiary of the Company to, make
any
Tax election, change an annual Tax accounting period, adopt or change any Tax
accounting method, file any amended Tax return, enter into any closing
agreement, settle any Tax claim or assessment relating to the Company or any
Subsidiary of the Company, surrender any right to claim a refund of Taxes,
consent to any extension or waiver of the limitation period applicable to any
Tax claim or assessment relating to the Company or any Subsidiary of the
Company, or take any other similar action relating to the filing of any Tax
return or the payment of any Tax, if such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action would have the effect
of materially increasing the Tax liability of the Company or any Subsidiary
of
the Company for any period ending after the Effective Time.
52
(v)
The
Company will not, and will not permit any Subsidiary of the Company to, enter
into any material agreement, whether written or oral, relating to any real
property, other than taking of security interests therein in the Ordinary Course
of Business, without the prior written consent of the Buyer.
(w)
The
Company will not, and will not permit any Subsidiary of the Company to, settle
any Proceeding for any amount in excess of $50,000 or in a manner which would
restrict in any material respects the operations or business of the Company
or
its Subsidiaries.
(x)
The
Company will not, and will not permit any of its Subsidiaries to, authorize
or
agree to, or make any commitment to, take any of the actions prohibited by
this
Section 5.01.
Section 5.02.Current
Information. During the period from the date of this Agreement
to the earlier of the Closing or the termination of this Agreement pursuant
to
the terms hereof, the Company shall cause one or more of its officers or other
appropriate Representatives to confer on a regular and frequent basis, but
not
less frequently than weekly, with Representatives of the Buyer and to report
the
general status of the Company’s and its Subsidiaries’ ongoing
operations.
Section 5.03.Access
to Properties and Records. During the period from the date of
this Agreement to the earlier of the Closing or the termination of this
Agreement according to its terms, the Company shall permit (and the Company
shall cause its Subsidiaries to permit) the Buyer and its authorized
Representatives full and complete access to the Company’s and its Subsidiaries’
respective properties between the hours of 9:00 a.m. and 5:00 p.m. on
any Business Day (including access for the purpose of conducting Phase I or
other environmental reviews pursuant to Section 6.03 and access for the
purpose of obtaining real property title insurance commitments and title
policies and conducting land surveys pursuant to Section 6.02) and shall
disclose and make available to the Buyer all books, papers and records relating
to their assets (including without limitation Loans), stock, ownership,
properties, operations, obligations and liabilities, including, but not limited
to, all books of account (including the general ledger), Tax Records, minute
books of directors’ and Shareholders’ meetings, Organizational Documents,
contracts and agreements, filings and correspondence with and notices or other
documents from or to any Governmental Entity, accountants’ reports to
management, litigation files, plans affecting employees, and any other business
activities or prospects in which the Buyer may have a reasonable
interest. This right of access is, however, subject to the Buyer
giving reasonable notice to the Company of its desire to conduct such due
diligence and is further subject to such other reasonable and customary
restrictions upon the conduct of such due diligence. No Person shall
be required to provide access to or to disclose information where such access
or
disclosure would violate or prejudice the rights of any customer or would
contravene any Law, Order, or where such access or disclosure would result
in
the loss of attorney-client privilege or attorney work-product immunity or
(unless specifically provided for herein) where such access would unreasonably
interfere with or be disruptive to the conduct of business and operations of
the
Company and its Subsidiaries. The parties will use Commercially
Reasonable Efforts to make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence
apply. All information furnished by each party to the other party in
connection with transactions contemplated by this Agreement or pursuant hereto
shall be treated as the sole property of the party furnishing such
information. Neither the Buyer nor any of its authorized
Representatives shall have the right to contact, make inquiries of, or solicit
any information from the Company’s customers, accountants, professionals,
advisors, vendors or other parties with whom the Company has dealings, unless
and until the Company has consented to such contacts and subject to such
reasonable restrictions as the Company may impose.
53
Section ▇.▇▇.▇▇
Solicitation. (a) The Company agrees that, during the term
of this Agreement, it shall not, and neither its board of directors nor its
Chairman of the Board shall authorize any of its Subsidiaries or any of its
or
its Subsidiaries’ Representatives to, directly or indirectly, do any of the
following: (i) solicit, initiate, knowingly encourage or take any action to
facilitate or assist any Acquisition Proposal; (ii) disclose or furnish
nonpublic information in furtherance of any Acquisition Proposal; or (iii)
participate in any discussions or negotiations with, or provide any information
to, any Person or group (other than the Buyer and its Affiliates or
Representatives) concerning any Acquisition Proposal; provided, however,
that prior to the receipt of Shareholder Approval, the Company or
its
Representatives may disclose or furnish, or cause to be disclosed or furnished,
information to, and negotiate or otherwise engage in discussions with, any
Person or group that delivers a bona fide written unsolicited Acquisition
Proposal to the Company after the date hereof if, but only if, (y) the
board of directors of the Company determines in good faith by a majority vote,
after consultation with its outside legal counsel and its financial advisor,
that (1) it is required to take such action in order to act in a manner
consistent with its fiduciary duties under applicable Law and (2) such
Acquisition Proposal is or would be reasonably likely to result in a Superior
Proposal and (z) prior to furnishing any information to such Person or
group, the Company shall enter into a confidentiality agreement with such Person
that is no less restrictive, in any material respect, than the Confidentiality
Agreement dated as of an even date herewith by and between the Buyer and the
Company (“Confidentiality Agreement”).
(b) The Company agrees that, during the term of this Agreement, neither it
nor any of its Subsidiaries, nor its board of directors nor any committee
thereof, shall, as applicable, do any of the following: (i) withdraw, qualify
or
modify, or propose publicly to withdraw, modify or qualify, in a manner adverse
to the Buyer or NewCo, the Company Board Recommendation; (ii) approve, endorse
or recommend, or propose publicly to approve, endorse or recommend, any
Acquisition Proposal; or (iii) enter into any definitive agreement, letter
of
intent, arrangement or understanding relating to an Acquisition Proposal or
requiring the Company to abandon, terminate or fail to consummate the Merger
or
any other transaction contemplated hereby, or compensating the Company or any
of
its Subsidiaries under such circumstances; provided, however, prior to
the receipt of Shareholder Approval, the Company and the board of directors
of
the Company may take the actions prohibited under items (i) and (ii) of this
Section 5.04(b), as applicable, if, but only if, either: (y) the Company
receives an unsolicited Acquisition Proposal and (1) after consultation with
the
Company’s outside legal counsel and its financial advisor, the board of
directors of the Company determines in good faith by a majority vote that (A)
it
is required to take such action in order to act in a manner consistent with
its
fiduciary duties under applicable Law and (B) such Acquisition Proposal is
a
Superior Proposal; (2) the board of directors of the Company has given the
Buyer three (3) Business Days’ prior written notice of its intention to
take any such action; (3) the Company’s board of directors has considered
any changes to the Per Share Merger Consideration and to this Agreement (if
any)
proposed by the Buyer; and (4) the Company’s board of directors has
determined in good faith by a majority vote, after consultation with the
Company’s outside legal counsel and its financial advisor, that such Acquisition
Proposal remains a Superior Proposal even after the changes proposed by the
Buyer; or (z) other than in connection with an Acquisition Proposal, if, after
consultation with the Company’s outside legal counsel, the board of directors of
the Company determines in good faith by a majority vote that it is required
to
take such action in order to act in a manner consistent with its fiduciary
duties under applicable Law, provided, that the foregoing shall in no
way limit or otherwise affect the Buyer’s right to terminate this Agreement
pursuant to Section 8.01(b)(iv) hereof)
54
(c) The Company immediately will cease, and shall cause its
Representatives and Subsidiaries and its Subsidiaries’ Representatives to cease,
all existing activities, discussions and negotiations with any Person conducted
heretofore with respect to any Acquisition Proposal and request the return
or
destruction of all confidential information regarding the Company or its
Subsidiaries provided to any such Person prior to the date of this Agreement
pursuant to the terms of any confidentiality agreements, and the Company shall
enforce, and shall not waive, any of the provisions of any such confidentiality
agreement.
(d) From and after the execution of this Agreement, the Company shall
promptly (but in any case within one (1) Business Day) advise the Buyer of
the
receipt, directly or indirectly, of any Acquisition Proposal (including a
summary of the material terms and conditions thereof to the extent the Company
is permitted to provide such information to the Buyer), or its receipt of any
request for information from the Federal Reserve Board, the WDFI Division of
Banking, the MDC, the IDB, the SEC or any other Governmental Entity with respect
to any Acquisition Proposal, and promptly furnish to the Buyer a copy of any
such request for information or written Acquisition Proposal to the extent
the
Company is permitted to provide such information to the Buyer. In
addition, the Company shall immediately advise the Buyer, in writing, if the
board of directors of the Company shall make any determination as to any
Acquisition Proposal as contemplated by Section 5.04(a)
hereof.
(e) Subject to Section 5.04(b) hereof, nothing in this Agreement shall
prohibit the Company from at any time taking and disclosing to its shareholders
a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act
or
making any disclosure required by Rule 14a-9 under the Exchange
Act.
Article
VI
Additional
Covenants
Section 6.01.Confidentiality. (a) The
Company, NewCo and the Buyer agree that certain information (“Confidential
Information”) has been disclosed, will be disclosed, or will be discovered
concerning the Company, NewCo and the Buyer and their respective employees,
Representatives, owners, agents, customers, assets and other non-specified
items/issues, which is either non-public, confidential or proprietary in nature,
including customer lists and accounts, in the form not only of written
information but also information which may be transmitted orally, visually,
electronically, on computer disk, or by other means by any Person or any
Representative or advisor of the Company, NewCo or the Buyer or one or more
of
their respective Representatives, agents, individuals, entities or
interested/non-interested parties containing or based on, the information
prepared for the purpose of the discussions and transactions contemplated
between the Company, NewCo and the Buyer herein. The Company, NewCo
and the Buyer agree that all the Confidential Information
55
prepared
in the course of or for the purpose of the discussions between the Company,
NewCo and the Buyer and the consummation of the transactions contemplated herein
shall not be used by the Buyer, NewCo or the Company or their respective
Representatives or Affiliates in any manner whatsoever or for any purpose unless
specified herein or agreed to in writing by the parties. The Buyer,
NewCo and the Company will each keep confidential all such information in
accordance and subject to the terms of the Confidentiality
Agreement. In the event of a conflict or an inconsistency between the
terms of this Agreement and the Confidentiality Agreement, the terms of this
Agreement shall govern. No investigation by the Buyer, NewCo or the
Company shall affect the representations, warranties or covenants of the other
and each such representation, warranty and covenants shall survive any such
investigation.
(b) Notwithstanding anything else herein to the contrary, any party to
this Agreement (and any Representative or Affiliate) may disclose to any and
all
Persons, without limitation of any kind, the Tax treatment and Tax structure
of
the Merger and all materials of any kind (including opinions or other Tax
analyses) that are provided to such other party relating to such Tax treatment
and Tax structure; provided, however, that such disclosure may not be
made until the earlier of (i) the date of the public announcement of
discussions relating to the Merger, (ii) the date of the public
announcement of the Merger, or (iii) the date of the execution of an
agreement to enter into the Merger.
(c) The Company shall allow a Representative of the Buyer to attend as an
observer all meetings of the board of directors and committees of the board
of
directors of the Company, other than such meetings or portions of such meetings
that are designated for the discussion of the terms of or compliance with this
Agreement. The Company shall give reasonable notice to the Buyer of
any such meeting and, if known, the agenda for or business to be discussed
at
such meeting. The Company shall provide to the Buyer all information
provided to its directors in connection with all such meetings, and shall
provide any other financial reports or other analysis prepared for senior
management of the Company, in each case excluding information which is
privileged or is subject to any restriction on disclosure. It is
understood by the parties that the Buyer’s Representative will not have any
voting rights with respect to matters discussed at these meetings and that
the
Buyer is not managing the business or affairs of the Company or any Subsidiary
of the Company. All information obtained by the Buyer at these
meetings shall be treated in confidence as provided in Section 6.01(a)
hereof. Notwithstanding the foregoing, the Buyer shall not be
permitted to attend any portion of a meeting and the Company shall not be
required to provide the Buyer with any materials, in violation of applicable
Law
or that relates to an Acquisition Proposal, or that involve matters protected
by
the attorney-client privilege.
Section 6.02.Title
Insurance and Surveys. (a) Reasonably
promptly after the date hereof, the Buyer may order, and the Company shall
use
its Commercially Reasonable Efforts to assist the Buyer in obtaining, with
respect to each real property (“Real Property”) listed on Exhibit 6.02
attached hereto:
56
(i)
A
commitment for an ALTA 2006 Owner’s title insurance policy issued by Chicago
Title Insurance Company, or another title company agreed to in writing by the
Buyer and the Company (the “Title Insurer”), insuring the fee simple
title or the leasehold interest of the Company or one of its Subsidiaries,
as
applicable, in such Real Property, including any easements appurtenant thereto,
in the amount of the fair market value of such Real Property, with an extended
coverage endorsement insuring over all general or standard exceptions
customarily contained in such policies and such other endorsements as may be
specified by Buyer in its reasonable discretion (each, a “Title
Commitment”);
(ii)
Legible copies of all documents cited, raised as exceptions or noted with
respect to each Real Property in the applicable Title Commitment (“Title
Documents”); and
(iii)
A
survey of each Real Property prepared in accordance with current ALTA/ACSM
land
survey standards by ▇▇▇▇ & ▇▇▇▇▇, or another registered land surveyor agreed
to in writing by the Buyer and the Company and licensed in the state in which
such Real Property is located (the “Surveyor”), showing with respect to
such Real Property: (A) the legal description; (B) all buildings,
structures and improvements thereon and all “setback” lines, restrictions of
record and other restrictions that have been established by any applicable
zoning or building code or ordinance and all easements or rights of way;
(C) all encroachments, if any, upon such parcel by buildings, structures,
improvements or easements; (D) access to such parcel from public streets
and easements; (E) all easements of record affecting the use of such parcel
or the improvements located thereon; (F) the flood plain in which such real
estate is located, if any, (G) the applicable zoning; (H) the number of parking
spaces located thereon and (I) certifying the number of square feet to not
less
than two decimal places (each, a “Survey”).
(b) With respect to each Real Property, the Buyer shall a have a period of
twenty (20) Business Days from its receipt of the later of the applicable Title
Commitment, Title Documents and Survey for such Real Property in which to
complete its review of such Title Commitment, Survey and Title Documents and
to
deliver to the Company notice of any objections thereto with respect to matters
that would materially and adversely affect the Company’s or its applicable
Subsidiary’s use and ownership of or the marketability of such Real
Property (each, a “Buyer’s Objection
Notice”). The Company shall use Commercially Reasonable Efforts
to cure all objections relating to each Buyer’s Objection Notice.
(c) All of the costs and fees payable to the Title Insurer and Surveyor
for the Title Commitments, Title Documents and Surveys shall be shared equally
by the Company and the Buyer, paid by each party as incurred reasonably promptly
after receipt of any invoice therefor.
57
Section 6.03.Environmental
Reports. (a) As soon as reasonably practicable after the date
hereof, the Buyer may engage, or cause to be engaged, an environmental
consultant or contractor reasonably satisfactory to the Company to conduct
a
preliminary environmental assessment (“Phase I”) of any real
properties (including the improvements thereto) owned by the Company or its
Subsidiaries (including for the avoidance of doubt OREO), that the Buyer deems
appropriate or desirable (such determination to be made by the Buyer in its
sole
discretion) to, among other things, investigate the possible presence of an
Environmental Condition. The costs and expenses associated with the
Phase I’s performed pursuant to this Section 6.03 shall be split
equally by the Buyer and the Company, paid by each party as incurred reasonably
promptly after receipt of any invoice therefor. With respect to each
such property on which a Phase I is performed (each, a “Phase I
Property”), the Buyer shall a have a period of ten (10) Business Days
from its receipt of the complete Phase I report (each, a “Phase I
Review Period”) in which to review and examine such Phase I report
and, if in the reasonable opinion of the environmental consultant or contractor
that conducted the Phase I, any Environmental Condition is found, reasonably
suspected or reasonably indicated by such Phase I report, to deliver to the
Company, at the Buyer’s election, notice of such Environmental Condition (each,
a “Phase II Notice”). Upon the Company’s receipt of a
Phase II Notice, the Company shall use Commercially Reasonable Efforts to
reasonably promptly engage, or cause to be engaged, an environmental consultant
or contractor reasonably acceptable to the Buyer to perform a physical
examination and investigation of each Environmental Condition listed on the
Phase II Notice (each, a “Phase II”). The fees and
expenses of the consultant or contractor with respect to any Phase II shall
be split equally by the Buyer and the Company, paid by each party as incurred
reasonably promptly after receipt of any invoice therefor. The
subject, scope, manner and method of any Phase II will be subject to the
Buyer’s prior review and reasonable approval. At all times the Buyer
shall have access to all field data, analytical data and analytical results
obtained or generated in connection with a Phase II. Upon the
Company’s receipt of a final written report with respect to a Phase II, the
Company shall promptly deliver to the Buyer a copy of such Phase II report
and all written reports, analytical data, correspondence, notices or other
materials relating thereto (collectively, each a “Phase II
Report”).
(b) In the event a Phase II Report identifies an Environmental
Condition with respect to a Phase I Property, the Company shall use
Commercially Reasonable Efforts to promptly obtain from the environmental
consultants or contractors that performed the Phase II on such Phase I
Property a good faith estimate (reasonably acceptable to the parties) of the
cost and expense necessary in order to respond to such Environmental Condition
(a “Response Estimate”) based upon the standard that would reasonably
be required to obtain closure, a no action letter, an offsite letter or a
determination of no liability with regard to the Environmental Condition from
a
Governmental Entity with jurisdiction based on the present use of the
Phase I Property. For purposes of illustration and
clarification, an Environmental Condition does not arise or exist, and does
not
require a response, by virtue of the presence of a Hazardous Substance if
applicable Environmental Law would permit the Hazardous Substance to remain
on,
in, at, under or from the applicable Phase I Property. For example
and without limitation, the parties acknowledge and agree that the presence
of
any Hazardous Substance in, around or under a capped surface such as, by way
of
example and not limitation, a floor slab, driveway or sidewalk that does not
pose a significant risk to human health or the environment does not require
a
response, in each case if applicable Environmental Law would permit the
Hazardous Substance to remain in such state. The parties acknowledge
and agree that such Response Estimate with regard to the Environmental
Conditions shall permit, to the extent allowed by applicable Environmental
Law
(i) institutional controls (such as web-based GIS registrations and deed
notices or restrictions) and (ii) Hazardous Substances to remain on, in,
at, under or from the Phase I Property. The parties further
acknowledge and agree that neither non-friable asbestos in good repair nor
mold
constitutes an Environmental Condition requiring a Response
Estimate. The costs and expenses of the consultant or contractor with
respect to any Response Estimate shall be split equally by the Company and
the
Buyer, paid by each party as incurred reasonably promptly after receipt of
any
invoice therefor.
58
Section 6.04.Shareholders
Meeting; Board of Directors Recommendation. (a) As soon as
reasonably practicable after the date hereof, the Company shall cause a meeting
of the Shareholders to be called and held in accordance with all applicable
Law
and the Organizational Documents of the Company (the “Shareholders
Meeting”) for the purpose of adopting and approving this Agreement and the
transactions contemplated hereby (including the Merger and the Plan of Merger)
as required by applicable Law (including, for the avoidance of doubt, the WBCL);
provided, however, the Company shall not be required to call or hold
the Shareholders Meeting until (i) either the final determination of the
Aggregate Response Estimate Amount or the Buyer’s agreement in writing that no
amount of any Response Estimate shall be deducted from the Per Share Merger
Consideration and (ii) the SEC has cleared the Proxy
Statement. Subject to the provisions hereof, the Board of Directors
of the Company will not condition its submission of this Agreement and the
transactions contemplated hereby (including the Merger and the Plan of Merger)
to the Shareholders on any basis not specifically provided for
herein.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall withdraw or modify, or propose publicly to withdraw or modify,
in
a manner adverse to the Buyer, the approval, adoption or recommendation by
such
Board of Directors or such committee of this Agreement or any transaction
contemplated hereby (including the Merger and the Plan of Merger), except as
provided in Section 5.04 hereof. If the recommendation of the
Board of Directors of the Company shall have been withdrawn or modified as
provided in Section 5.04, the Company may postpone or cancel the
Shareholders Meeting if, but only if, after consultation with the Company’s
outside legal counsel, the Board of Directors of the Company determines in
good
faith by a majority vote that it is required to do so in order to act in a
manner consistent with its fiduciary duties under applicable Law.
Section 6.05.Proxy
Statement. (a) As promptly as reasonably practicable following
the date of this Agreement (but in any case within thirty (45) days of the
date
of this Agreement), the Company shall prepare and shall cause to be filed with
the SEC a proxy statement (together with any amendments thereof or supplements
thereto, the "Proxy Statement") relating to the Shareholders Meeting to
be held to consider the adoption and approval of this Agreement and the
transactions contemplated hereby (including the Merger and the Plan of
Merger). The Company shall include, except to the extent permitted by
Sections 5.04 and 6.04 hereof, the text of this Agreement, the Company Board
Recommendation and any other documents required to be included in the Proxy
Statement pursuant to applicable Law.
59
(b) The Buyer covenants and agrees that none of the information provided
by it with respect to the Buyer or its Subsidiaries to be included in the Proxy
Statement will, at the time of the mailing of the Proxy Statement or any
amendments or supplements thereto, and at the time of the Shareholders Meeting,
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.
(c) The Company, the Buyer and NewCo shall cooperate and consult with each
other in preparation of the Proxy Statement, and the Company will provide the
Buyer a reasonable opportunity for review and comment on the Proxy Statement
prior to the filing thereof with the SEC, and the Proxy Statement shall be
mutually satisfactory to the Buyer and the Company. Without limiting
the generality of the foregoing, each of the Buyer and NewCo will furnish to
the
Company the information relating to it required by the Exchange Act and the
rules and regulations promulgated thereunder to be set forth in the Proxy
Statement. Each of the Company and the Buyer shall promptly (i)
notify the other of the receipt of any comments from the SEC with respect to
the
Proxy Statement and of any request by the SEC for amendments of, or supplements
to, the Proxy Statement, and (ii) provide the other with copies of all filings
made with the SEC and all correspondence between the Company and the SEC with
respect to the Proxy Statement. The Company shall use Commercially
Reasonable Efforts to respond to and resolve all comments from the SEC with
respect to the Proxy Statement as promptly as reasonably
practicable.
(d) As promptly as reasonably practicable after (i) the Proxy Statement
has been cleared by the SEC and (ii) either the final determination of the
Aggregate Response Estimate Amount or the Buyer’s agreement in writing that no
amount of any Response Estimate shall be deducted from the Per Share Merger
Consideration, the Company shall mail the Proxy Statement to the holders of
Company Common Stock and, unless the Board of Directors of the Company withdraws
or modifies the Company Board Recommendation in accordance with Sections 5.04
and 6.04 hereof, shall use Commercially Reasonable Efforts to solicit proxies
and votes in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby (including the Merger and the Plan of
Merger). If at any time prior to the Effective Time any event or
circumstance relating to the Company or the Buyer or any of either the Company
or Buyer's Subsidiaries, or their respective officers or directors, should
be
discovered by the Company or the Buyer, respectively, which, pursuant to the
Securities Act or Exchange Act, should be set forth in an amendment or a
supplement to the Proxy Statement, such party shall promptly inform the
other. Each of the Buyer, NewCo and the Company agree to correct any
information provided by it for use in the Proxy Statement which shall have
become false or misleading. All documents that each of the Company
and the Buyer is responsible for filing with the SEC in connection with the
transactions contemplated hereby will comply as to form in all material
respects, and will be distributed to the Shareholders in compliance with all
applicable Law.
Section 6.06.Public
Disclosure. The Buyer and the Company shall jointly make a
mutually agreed press release with respect to the Merger and this Agreement
promptly upon execution and delivery of this Agreement, and the Company shall
file a Form 8-K with the SEC containing a copy of such press release and this
Agreement. The Buyer, NewCo and the Company will consult with each
other before issuing any other press release or otherwise making any other
public statement with respect to this Agreement and the transactions
contemplated hereby and will not issue any such press release or make any such
public statement prior to obtaining the consent of the other; provided,
however, that such consent shall not be required where such release or
public statement is required by applicable Law (including the rules and
regulations of the SEC) or in accordance with any actions required to be taken
pursuant to this Agreement.
60
Section ▇.▇▇.▇▇▇▇▇
Requirements. Except as otherwise provided herein, the Buyer,
NewCo and the Company will take all reasonable actions necessary or desirable
to
comply promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions contemplated by this Agreement
(including obtaining all consents from any third party required to fully effect
the transactions contemplated by this Agreement and furnishing all information
required in connection with approvals by or filings with any Governmental
Entity, and prompt resolution of any litigation prompted hereby) and will
promptly and reasonably cooperate with and furnish information to any party
hereto necessary in connection with any such filings with or investigations
by
any Governmental Entity and any other such requirements imposed upon any of
them
or their respective Subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement.
Section 6.08.FIRPTA. At
or prior to the Closing, the Company shall provide to the Buyer the
certification described in Treasury Regulation Section 1.897-2(g)(1)(ii)
and, if requested by the Buyer, shall deliver to the IRS a notice that no share
of Company Common Stock is a “U.S. Real Property Interest” as defined and in
accordance with the requirements of Treasury Regulation
Section 1.897-2(h)(2).
Section 6.09.Commercially
Reasonable Efforts and Further Assurances. Subject to the
respective rights and obligations of the Buyer, NewCo and the Company under
this
Agreement, each of the parties to this Agreement will use Commercially
Reasonable Efforts to effectuate the transactions contemplated hereby and to
fulfill and cause to be fulfilled the conditions to Closing under this
Agreement. Subject to the foregoing, each party hereto, at the
reasonable request of another party hereto, will execute and deliver such other
documents or instruments and do and perform such other acts and things as may
be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.
Section 6.10.Director
and Officer Indemnification and Liability Coverage. (a) The
Buyer agrees to provide to or cause to be provided to each of the directors
and
officers of the Company and each of the Company's Subsidiaries after the Closing
Date substantially the same coverage against personal liability for actions
taken after the Closing Date as is provided to directors and officers of the
Buyer. The Buyer further agrees to cause the Company, or its
successor in interest, for a period of six (6) years after the Closing Date
to indemnify the current and past directors and officers of the Company and
each
of the Company's Subsidiaries for all actions taken by them prior to the Closing
Date in their respective capacities as directors and officers of the Company
and
each such Subsidiary to the same extent as the indemnification provided by
the
Company and each such Subsidiary to such directors and officers immediately
prior to the Closing Date.
61
(b) The Buyer agrees that for a period of six (6) years after the Closing
Date, the Buyer shall cause to be maintained in effect the Company’s and each of
the Banks’ current policies (as in effect on the Closing Date) of directors’ and
officers’ liability insurance maintained by the Company with respect to actions
and omissions occurring on or prior to the Closing Date, subject to the
following conditions:
(i)
The
Company’s and the each of the Banks’ current directors’ and officers’ liability
insurer shall agree to maintain such coverage from and after the Closing
Date. In the event such insurer terminates or declines to continue
such coverage after the Closing Date, the Buyer shall use Commercially
Reasonable Efforts, with the cooperation of the former directors and officers
of
the Company, to identify and obtain or cause to be obtained similar coverage
from another insurance carrier of substantially similar size and reputation
to
that of such former insurer, if such coverage is reasonably obtainable from
the
marketplace. If after such Commercially Reasonable Efforts another
such insurance carrier is unable or unwilling to provide such similar coverage,
the Buyer shall obtain or cause to be obtained the best coverage available,
in
the reasonable judgment of the Buyer, for a cost up to but not exceeding the
Maximum Amount.
(ii)
The Buyer may substitute or cause to be obtained therefor policies of at least
the same coverage and amount containing terms and conditions which are
substantially no less advantageous.
(iii)
In no event shall the Buyer be obligated to expend or cause to be expended,
in
order to maintain or provide insurance coverage pursuant to this
Section 6.11(b), any amount, in the aggregate, in excess of
$200,000 (the “Maximum Amount”).
(iv)
Prior to the Closing Date, the Company shall notify the appropriate directors’
and officers’ liability insurers of the Merger and of all pending or, to the
Knowledge of the Company, Threatened Proceedings asserted or claimed against
any
officer or director of the Company or any Bank, in accordance with the terms
and
conditions of the applicable policies.
(v)
When the amount of the aggregate premiums paid to maintain or procure such
insurance coverage exceeds the Maximum Amount, then, notwithstanding any other
provision contained herein, the Buyer’s obligations under this Section 6.10(b)
shall cease.
(vi)
The Company and its directors and officers shall use reasonable and diligent
efforts to cooperate with the Buyer in obtaining the above-described insurance
coverages.
Section
6.11.Notification of Certain Other
Matters. (a) Each party shall use Commercially Reasonable
Efforts to give prompt notice to the other party of (i) the occurrence or
failure to occur of any event or the discovery of any information, which
occurrence, failure or discovery would be likely to cause any representation
or
warranty on its part contained in this Agreement to be untrue, inaccurate or
incomplete in any material respect after the date hereof or, in case of any
representation or warranty given as of a specific date, would be likely to
cause
any such representation or warranty on its part contained in this Agreement
to
be untrue, inaccurate or incomplete in any material respect as of such specific
date; (ii) any failure of such party to comply with or satisfy in any
material respect any covenant or agreement to be complied with or satisfied
by
it hereunder; and (iii) any event or series of events which creates a
Material Adverse Effect.
62
(b) On a monthly basis, not later than the last day of each month after
the date of this Agreement and on or immediately prior to the Closing Date,
the
Company shall use Commercially Reasonable Efforts to supplement or amend any
of
its representations and warranties contained in Article IV hereto relating
to the period after the date hereof by delivering a supplemental Disclosure
Statement (“Supplemental Disclosure Statement”) to the Buyer with
respect to any matter hereafter arising which, to the Company’s Knowledge, would
render any such representation or warranty after the date of this Agreement
inaccurate or incomplete, in any material respect.
Section
6.12.Regulatory Applications. The Buyer shall file as
promptly as reasonably practicable following the date of this Agreement (but
in
any case within forty-five (45) days from the date
hereof) all applications, notices, requests for authorization or other documents
with the appropriate federal, state or foreign bank regulatory authorities,
including OSFI, the FDIC, the Federal Reserve Board, the WDFI Division of
Banking and the IDB, necessary to consummate the transactions contemplated
by
this Agreement, including, but not limited to, the Merger and the Plan of Merger
(the “Regulatory Applications”). The Company shall cooperate
and assist (and shall cause each Subsidiary of the Company to cooperate and
assist) with the Buyer in all respects with respect to the preparation and
filing of all Regulatory Applications. The Buyer shall respond as
promptly as reasonably practicable to all inquiries received concerning the
Regulatory Applications and shall use Commercially Reasonable Efforts to satisfy
all conditions that may be required for the approval or authorization of the
Regulatory Applications; provided, however, that the Buyer shall have
no obligation to accept non-standard conditions or restrictions with respect
to
the approval or authorization of the Regulatory Applications if it shall
reasonably be determined by the Buyer that such conditions or restrictions
would
create a Material Adverse Effect with respect to the Company or the Buyer or
materially lessen the benefits of the transactions
contemplated by this Agreement. In the event of an adverse or
unfavorable determination by any Governmental Entity, or in the event the Merger
is challenged or opposed by any Proceeding, whether by the United States
Department of Justice or otherwise, the Buyer and the Company shall cooperate
in
determining whether or to what extent to seek appeal or review, administrative
or otherwise, or other appropriate remedies shall be made consistent with their
obligations in Section 6.09. The Buyer shall deliver a final copy of
the public portions of all Regulatory Applications containing information
applicable to the Company or a Subsidiary of the Company to the Company promptly
after such applications are filed with the appropriate Governmental
Entity. The Buyer shall advise the Company periodically of the status
of the Regulatory Applications upon request.
Section 6.13.Control
of the Company’s Business. Nothing contained in this Agreement
shall give the Buyer, directly or indirectly, the right to control or direct
the
operations of the Company or any of its Subsidiaries prior to the Effective
Time. Prior to the Effective Time, the Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control
and
supervision over its and its Subsidiaries’ operations.
63
Section 6.14.Employee
Benefits. (a) The Company shall take all action
necessary to terminate the Company Stock Option Plans, the Company’s 401(k)
Salary Saving Plan (the “Company 401(k) Plan”) and any other Company
Qualified Plan (collectively, the “Termination Plans”) effective as of
immediately prior to the Closing Date. Prior to the Closing Date, the
Company shall be permitted to make such changes to any Termination Plan as
it
deems appropriate to carry out the provisions of this
Section 6.14. As soon as reasonably practicable after receipt of
a favorable determination letter from the IRS with respect to the termination
of
any Termination Plan, the assets of such Termination Plan shall be distributed
to the participants or beneficiaries thereof or transferred pursuant to an
eligible rollover distribution as a participant or beneficiary may direct
(including a rollover into a qualified plan of the Buyer, if approved by the
Buyer, in which the individual is then participating).
(b) Prior to the Closing, the Company and its Subsidiaries will accrue as
liabilities all payments, contributions and expenses incurred or required to
be
made prior to the Effective Time pursuant to any Company Benefit
Plan.
(c) Each employee of the Company or a Subsidiary of the Company that is
employed by the Buyer or a Subsidiary or Affiliate of the Buyer after the
Closing (each, a “Continuing Employee”) shall receive credit for the
time he or she was employed dating to their most recent hire date by the Company
or a Subsidiary of the Company prior to the Closing Date; provided, however,
a Continuing Employee shall not receive credit for the time he or
she was
employed by the Company or a Subsidiary of the Company prior to the Closing
Date
for purposes of determining benefit service or benefit accrual under the defined
benefit retirement plans and retiree health plans of the Buyer or a Subsidiary
or Affiliate of the Buyer in which such Continuing Employee is entitled to
participate after the Closing Date. After the Closing Date, neither
the Buyer nor any Subsidiary nor Affiliate of the Buyer shall impose and they
shall cause to be waived, except with respect to short and long term disability
coverage for Continuing Employees who have been employed by the Company or
a
Subsidiary of the Company for less than six (6) months prior to the Closing
Date, any eligibility waiting period or pre-existing condition limitation or
exclusion for any health benefit or other insurance or insurance-type plan
in
which any Continuing Employee (or the spouse or eligible dependent of any
Continuing Employee) is entitled to participate and, to the extent that the
initial period of coverage for any Continuing Employees under any self-insured
medical health benefit plan that is an “employee welfare benefit plan” as
defined in Section 3(1) of ERISA is not a full 12-month period of coverage,
such Continuing Employees shall be given credit under the applicable
self-insured medical health benefit plan for any deductibles by such Continuing
Employees under the Company medical health benefit plan during the balance
of
such 12-month period of coverage. After the Closing Date, Continuing
Employees shall be eligible to participate in the employee benefit plans of
the
Buyer subject to the terms, conditions, and overall administration of such
plans
applicable to similarly situated employees.
(d) Except as provided in the agreements disclosed in Schedule
4.21(a)(ii) of the Disclosure Statement, notwithstanding anything to the
contrary contained in this Agreement, in no event shall the Company, the Buyer,
the Surviving Corporation, or any of their respective Subsidiaries, take any
action or make any payments that would result, either individually or in the
aggregate, in the payment of a “parachute payment” within the meaning of Code
Section 280G or that would result, either individually or in the aggregate,
in payments that would be nondeductible pursuant to Code
Section 162(m). The Company and the Buyer shall use Commercially
Reasonable Efforts to resolve matters relating to any of the
foregoing.
64
(e) No provision of this Section 6.14 shall create any third party
beneficiary rights in any employee or former employee (including any beneficiary
or dependent thereof) of the Company or any of its Subsidiaries in respect
of
continued employment (or resumed employment) with the Buyer or any of its
Affiliates and no provision of this Section 6.14 shall create such rights
in any such Persons in respect of any benefits that may be provided, directly
or
indirectly, under any employee program or any plan or arrangement which may
be
established by the Buyer or any of its Affiliates. Neither this
Agreement nor any provision hereof shall be construed as amending any employee
benefit plan or employee program or arrangement or shall constitute a limitation
on the rights to amend, modify or terminate after the Effective Time any such
plans, programs or arrangements of the Buyer or any of its
Affiliates.
(f) Prior to making any written communications to the
employees of the Company or any of its Subsidiaries pertaining to compensation
or benefit matters that are affected by the transactions contemplated hereby,
the Company shall provide the Buyer with a copy of the intended communication,
the Buyer shall have a reasonable period of time to review and comment on the
communication, and the Buyer and the Company shall cooperate in providing any
such mutually agreeable communication.
(g) On or within a reasonable time prior to the date set forth opposite
each Person’s name listed on Exhibit 6.14(g) attached hereto (each, a
“Notice Recipient”), the Company hereby agrees to give each Notice
Recipient notice that the term of the employment agreement listed next to his
or
her name on Exhibit 6.14(g) shall expire pursuant to the terms set forth in
such
employment agreement. Each such notice shall be given in accordance
with the listed employment agreement and shall state that the expiration of
such
employment agreement’s term shall be subject to the consummation of the
transactions contemplated by this Agreement. The Company shall use
its Commercially Reasonable Efforts to provide the Buyer a copy of each notice
sent pursuant to this Section 6.14(g).
(h) As soon as reasonably practicable after the date hereof (but in
any event within a reasonable time prior to the giving of notice of the
Shareholders Meeting in accordance with the terms hereof), the Company shall
take all action necessary to amend the Company 401(k) Plan to provide: (i)
that
the participants will be entitled to direct the Company 401(k) Plan fiduciaries
to vote the shares of Company Common Stock allocated to their accounts at any
meeting or with respect to any action of the Shareholders of the Company
(including the Shareholders Meeting) and (ii) that the shares of Company Common
Stock held by the Company 401(k) Plan but unallocated to participant accounts
and the Company Common Stock allocated to individual accounts of participants
in
the Company 401(k) Plan for which such participants do not provide timely voting
instructions with respect thereto shall be voted by the plan fiduciaries in
the
same proportion (including at the Shareholders Meeting, "FOR" or "AGAINST"
this Agreement and the transactions contemplated hereby (including without
limitation the Merger and the Plan of Merger) as those shares for which
participants provided timely voting instructions.
65
(i) For purposes of calculating the parachute payment subject to Code
section 280G and the amount which may be paid under various employment
agreements, the Buyer will exclude from the amount subject to Tax and any
contractual restrictions, the non-competition payments for each affected
employee equal to the amount of the employee's annual compensation multiplied
by
the number of years (or fraction thereof) that such employee is restricted
from
entering into competition with the Buyer or its Affiliates or from soliciting
customers or others as provided in the employee’s employment
agreement. The Buyer will not restrict, reduce or eliminate an
employee's right to payment under an employment related agreement in order
to
avoid application of Code section 280G, unless a restriction on payment is
required by the employee's employment agreement and the payment is contingent
on
a change in control as described in Code section 280G(b)(2)(A)(i).
Section 6.15.Third
Party Consents and Notices. As soon as reasonably practicable
following the date hereof, the Company shall use Commercially Reasonable Efforts
to provide any notice to, and to obtain all consents, waivers and approvals
from, any Person required to be made or obtained under any contract, agreement
or other instrument that the Company or any of its Subsidiaries or Affiliates
is
a party as a result of the consummation of the transactions contemplated hereby
(“Third Party Consents and Notices”), and the Buyer shall cooperate
with the Company in connection therewith as reasonably requested.
Section ▇.▇▇.▇▇▇▇▇▇▇▇▇
Statements and Reports. From the date of this Agreement and
prior to the Effective Time and to the extent permitted by applicable Law,
the
Company will deliver to the Buyer any and all reports filed by the Company
and
any Bank with the FDIC, the Federal Reserve Board, the WDFI Division of Banking,
the MDC, the IDB and the SEC as soon as reasonably practicable after the filing
of any such report.
Section 6.17.Action
by The Reedsburg Bank Board of Directors. Prior to the Closing
Date, the Company shall cause the Board of Directors of The Reedsburg Bank
to
take all action necessary (including adopting a resolution by at least a
majority vote) to authorize The Reedsburg Bank to merge with and into ▇▇▇▇▇▇
▇.▇. under the title and charter of ▇▇▇▇▇▇ ▇.▇. and to declare the provisions
of
Section 6.11 of that certain Agreement and Plan of Reorganization by and among
the Company, Merchants New Merger Corp. and Reedsburg Bancorporation, Inc.,
dated as of April 24, 2003, to be of no effect.
Section ▇.▇▇.▇▇▇▇▇▇▇▇
Act Deregistration. Prior to the Closing Date, the Company shall
cooperate with the Buyer and use Commercially Reasonable Efforts to take, or
cause to be taken, all actions, and do or cause to be done all things,
reasonably necessary, proper or advisable on its part under applicable Laws
to
enable the deregistration of the shares of Company Common Stock under the
Exchange Act as promptly as practicable after the Effective Time, and in any
event no more than ten (10) days after the Closing Date.
Section 6.19.Transaction
Expense Update. From time to time prior to the Closing, upon the
Buyer’s reasonable request, the Company shall update the Transaction Expense
Estimate.
66
Section 6.20.Transfer
of Seller Debt Obligations. Prior to the Closing, the Seller
shall take or cause to be taken all actions, including obtaining and delivering
all certificates, opinions and consents and passing all resolutions, necessary
in order to transfer all debt obligations of the Seller, including all
debentures related to any trust preferred securities to the Surviving
Corporation at the Effective Time.
Section 6.21.Adjustments
in Respect of the Aggregate Response Estimate
Amount. (a) If the Company has elected to pay its
regular quarterly cash dividend pursuant to Section 5.01(b) hereof, then
reasonably promptly after the aggregate amount of all Response Estimates (the
“Aggregate Response Estimate Amount”) has been determined, but in any
event prior to the Closing, the following deductions in respect of the Aggregate
Response Estimate Amount shall be made: (i) the amount of the Aggregate Response
Estimate Amount up to $500,000 shall deducted from the Company’s Earnings and
(ii) the amount of the Aggregate Response Estimate Amount in excess of $500,000
up to $3,500,000, divided by the total number of Common Equivalent Shares
(rounding to the nearest whole cent), shall be deducted from the Per Share
Merger Consideration.
(b) If the Company has elected to defer the payment of all regular
quarterly cash dividends until after the Aggregate Response Estimate Amount
has
been determined, then reasonably promptly after the determination of the
Aggregate Response Estimate Amount, but in any event prior to the Closing,
the
following deductions in respect of the Aggregate Response Estimate Amount shall
be made: (i) the amount of the Aggregate Response Estimate Amount up to $500,000
shall deducted from the Company’s Earnings; (ii) the amount of the Aggregate
Response Estimate Amount in excess of $500,000 up to $1,500,000 shall be
deducted from the total amount of all of the Company’s regular quarterly cash
dividends payable pursuant to Section 5.01(b) hereof; and (iii) the amount
of
the Aggregate Response Estimate Amount in excess of $1,500,000 up to $3,500,000,
divided by the total number of Common Equivalent Shares (rounding to the nearest
whole cent), shall be deducted from the Per Share Merger
Consideration.
(c) Notwithstanding anything herein to the contrary, if the Company has
elected to pay its regular quarterly cash dividend pursuant to Section 5.01(b)
hereof and the Aggregate Response Estimate Amount is greater than $3,500,000,
then either the Buyer or the Company may terminate this Agreement; provided,
however, the Company shall not be entitled to terminate this Agreement
under this Section 6.21(c) if the Buyer agrees in writing to limit the
aggregate amount of the deductions to the Per Share Merger Consideration to
$3,000,000; provided, further, the Buyer shall not be entitled to
terminate this Agreement pursuant to this Section 6.21(c) if the Company agrees
in writing that the aggregate amount of the deductions to the Per Share Merger
Consideration shall not be limited to $3,000,000, but instead shall be equal
the
entire amount of the Aggregate Response Estimate Amount (or such lesser amount
agreed upon in writing by the parties) in excess of $500,000.
67
(d) Notwithstanding anything herein to the contrary, if the Company has
elected to defer the payment of all regular quarterly cash dividends until
after
the Aggregate Response Estimate Amount has been determined and the Aggregate
Response Estimate Amount is greater than $3,500,000, then either the Buyer
or
the Company may terminate this Agreement; provided, however, the
Company shall not be entitled to terminate this Agreement under this
Section 6.21(d) if the Buyer agrees in writing to limit the aggregate
amount of the deductions to the Per Share Merger Consideration to $2,000,000;
provided, further, the Buyer shall not be entitled to terminate this
Agreement pursuant to this Section 6.21(d) if the Company agrees in writing
that
the aggregate amount of the deductions to the Per Share Merger Consideration
shall not be limited to $2,000,000, but instead shall be equal the entire amount
of the Aggregate Response Estimate Amount (or such lesser amount agreed upon
in
writing by the parties) in excess of $1,500,000.
(e) Notwithstanding anything herein to the contrary, the aggregate amount
of the portion of the Aggregate Response Estimate Amount to be deducted from
the
Per Share Merger Consideration pursuant to this Section 6.21 (the “Purchase
Price Reduction Amount”) shall be reduced by the aggregate amount of any
Tax deductions which may be taken by the Buyer, the Surviving Corporation or
any
of the Surviving Corporation's Subsidiaries solely in respect of such Purchase
Price Reduction Amount assuming that the Buyer, the Surviving Corporation or
the
Surviving Corporation's Subsidiaries can utilize 100% of such Tax deductions
to
offset income that would otherwise be subject to Tax at the assumed combined
marginal federal and state income tax rate of thirty-five percent (35%).
Article
VII
Conditions
Section 7.01.Conditions
to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Closing
Date
that:
(a)
No
Governmental Entity shall have enacted, issued, promulgated, enforced or entered
any Law or Order (whether temporary, preliminary or permanent) which is in
effect and which has the effect of making the Merger illegal or otherwise
prohibiting the consummation of the transactions contemplated hereby, including
the Merger.
(b)
All
Governmental Approvals shall have been received in accordance with the
applicable provisions hereof and all required waiting periods shall have
expired, and no such Governmental Approvals shall contain any material condition
which is not reasonably satisfactory to the Buyer.
(c)
Shareholder Approval shall have been received.
68
Section 7.02.Additional
Conditions to Obligations of the Company. The obligation of the
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by the Company:
(a)
The
representations and warranties of the Buyer and NewCo contained in
Article III of this Agreement shall be true and correct in all respects as
of the time immediately prior to the Closing as though made on and as of such
time (other than those representations and warranties that address matters
only
as of a particular date or with respect to a specific period of time, which
need
only be true and correct as of such date or with respect to such period), except
where the failure or failures of all such representations and warranties to
be
so true and correct, either individually or in the aggregate, do not create
a
Material Adverse Effect with respect to the Buyer or NewCo.
(b)
Each of the Buyer and NewCo shall have performed in all material respects all
of
their respective obligations and shall have complied in all material respects
with all agreements and covenants required by this Agreement to be performed
or
complied with by them on or before the Closing Date.
(c)
The
Company shall have received a certificate signed by duly authorized officers
of
the Buyer and NewCo, in substantially the form of Exhibit 7.02(c) attached
hereto dated as of the Closing Date, certifying that the conditions set forth
in
Sections 7.02(a) and (b) have been satisfied.
Section 7.03.Additional
Conditions to the Obligations of Buyer and NewCo. The
obligations of the Buyer and NewCo to consummate and effect the Merger shall
be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
the
Buyer and NewCo:
(a)
The
representations and warranties of the Company contained in Article IV of this
Agreement shall be true and correct in all respects as of the time immediately
prior to the Closing as though made on and as of such time (other than those
representations and warranties that address matters only as of a particular
date
or only with respect to a specific period of time, which need only be true
and
correct as of such date or with respect to such period), except where the
failure or failures of all such representations and warranties to be so true
and
correct, either individually or in the aggregate, do not create a Material
Adverse Effect with respect to the Company. This Section 7.03(a)
shall give effect to any additions, deletions or other modifications to the
Disclosure Statement that may be included in any Supplemental Disclosure
Statement if (a) such additions, deletions or other modifications were accepted
in writing or deemed accepted by the Buyer (a Supplemental Disclosure Statement
shall be deemed accepted by the Buyer if the Buyer fails to give written notice
of the rejection of such Supplemental Disclosure Statement to the Company within
ten (10) Business Days of receipt by the Buyer of such Supplemental Disclosure
Statement), (b) such additions, deletions or other modifications do not,
together with any other breaches of the representations and warranties of the
Company contained in Article IV, individually or in the aggregate, create a
Material Adverse Effect with respect to the Company or (c) the Closing
occurs.
69
(b)
The
Company shall have performed in all material respects all obligations and shall
have complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it prior to
or at
the Closing Date; provided, however, a breach of Section 6.11 hereof
shall not constitute a basis for asserting a failure of satisfaction of this
Section 7.03(b) unless such breach was willful.
(c)
Since the date hereof, a Material Adverse Effect with respect to the Company
shall not have occurred.
(d)
If
as of the Closing Date, the Company or any Subsidiary of the Company is a party
to any agreement with, or directive or Order issued by, any Governmental Entity
that regulates banks or bank holding companies, including the Federal Reserve
Board, the FDIC, the WDFI Division of Banking, or the IDB, which imposes any
material restrictions or requirements not generally applicable to banks or
bank
holding companies regulated by the applicable Governmental Entity with respect
to the conduct of the Company’s or a Subsidiary of the Company’s business, the
Buyer shall have received written confirmation from each Governmental Entity
which has entered into such an agreement with the Company or a Subsidiary of
the
Company or which has issued such a directive or Order, in form and substance
reasonably satisfactory to the Buyer, to the effect that such agreement,
directive or Order will not be binding, in any way, on the Company, a Subsidiary
of the Company, the Surviving Corporation, the Buyer or any Subsidiary of the
Buyer or an Affiliate thereof following the Closing Date.
(e)
At
the Closing, the Company and each of the Banks shall be respectively considered
“well capitalized” under Regulation Y, 12 C.F.R. §225.2(r), and the Federal
Deposit Insurance Act, as amended, 12 USC §1831(o), and the applicable
regulations promulgated thereunder.
(f)
Each Phase I Review Period shall have expired, a Phase II with respect
to each Phase II Notice shall have been performed, a Response Estimate with
respect to each Environmental Condition identified in a Phase II Report shall
have been obtained and the aggregate amount of all Response Estimates shall
be
determined.
(g)
The
aggregate number of Dissenting Shares shall not exceed fifteen percent (15%)
of
the issued and outstanding shares of Company Common Stock immediately prior
to
the Closing.
(h)
All
Third Party Consents and Notices set forth in Exhibit 7.03(h) attached hereto
shall have been given or obtained, as applicable.
(i)
The
Buyer shall have received a certificate signed by the Chairman and Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer and General
Counsel of the Company in substantially the form of Exhibit 7.03(i) attached
hereto, dated as of the Closing Date, certifying that the conditions set forth
in Sections 7.03(a), (b), (c), (e), (g) and (h) hereof have been
satisfied.
70
Article
VIII
Termination;
Amendment; Waiver
Section 8.01.Termination. This
Agreement may be terminated as follows:
(a) by mutual written consent duly authorized by the Buyer and the
Company; or
(b) by the Buyer:
(i)
if
any condition set forth in Sections 7.03 of this Agreement has not been
satisfied or waived in writing (if capable of waiver) and the satisfaction
of
such condition has become impossible, unless the failure to satisfy such
condition is due to a material breach of this Agreement by the
Buyer;
(ii)
if
any representation or warranty made by the Company is discovered to be or to
have become untrue, incomplete or misleading and such breach (A) would
result in the failure to satisfy the condition set forth in Section 7.03(a)
hereof and (B) if capable of cure, remains uncured for a period of
thirty (30) days after notice of such breach;
(iii)
if the Company shall have breached one or more agreements or covenants contained
in this Agreement in any respect and such breach (A) would result in the
failure to satisfy the condition set forth in Section 7.03(b) hereof and
(B) if capable of cure, remains uncured for a period of thirty (30) days
after notice of such breach; or
(iv)
if
the board of directors of the Company (A) fails to recommend approval of
this Agreement and the transactions contemplated hereby (including the Merger
and the Plan of Merger) to the Shareholders or (B) withdraws, modifies,
changes, alters or qualifies its favorable recommendation of this Agreement
and
the transactions contemplated hereby (including the Merger and the Plan of
Merger) to the Shareholders in any manner adverse to the Buyer or
(C) approves, endorses or recommends, or proposes publicly to approve,
endorse or recommend, any Acquisition Proposal.
(c) by the Company:
(i)
if
any condition set forth in Section 7.02 of this Agreement has not been
satisfied or waived in writing (if capable of waiver) and the satisfaction
of
such condition has become impossible, unless the failure to satisfy such
condition is due to a material breach of this Agreement by the
Company;
71
(ii)
if
any representation or warranty made by the Buyer and NewCo is discovered to
be
or to have become untrue, incomplete or misleading and such breach
(A) would result in the failure to satisfy the condition set forth in
Section 7.02(a) hereof, and (B) if capable of cure, remains uncured
for a period of thirty (30) days after notice of such breach;
or
(iii)
if the Buyer shall have breached one or more agreements or covenants contained
in this Agreement in any respect and such breach (A) would result in the
failure to satisfy the condition set forth in Section 7.02(b) hereof, and
(B) if capable of cure, remains uncured for a period of thirty (30)
days after notice of such breach;
(iv)
if
the Board of Directors of the Company shall have approved a Superior Proposal
in
accordance with Section 5.04(b);
(d) by either the Buyer or the Company:
(i)
if
any condition set forth in Section 7.01 of this Agreement has not been
satisfied and the satisfaction of such conditions has become impossible, unless
the failure to satisfy such condition is due to a breach of this Agreement
by
the party seeking termination;
(ii)
if
the Closing has not occurred on or before the nine (9) month anniversary of
the date hereof, unless the failure of the Closing to occur on or before such
date is due to a breach of this Agreement by the party seeking termination;
or
(iii)
pursuant to Section 6.21 hereof.
Section 8.02.Notice
of Termination; Effect of Termination. Any termination of this
Agreement pursuant to the terms hereof shall be effective immediately upon
the
delivery of written notice of the terminating party to the other parties
hereto. In the event of the termination of this Agreement as provided
herein, this Agreement shall be of no further force or effect, except for
Section 6.01, this Section 8.02, Section 8.03, Section 8.04
and Article IX hereof, each of which shall survive the termination of this
Agreement. If this Agreement is terminated for any reason under
Section 8.01 or the Closing otherwise does not occur, no party to this Agreement
shall have any liability relating to this Agreement or the transactions
contemplated hereby of any nature whatsoever (in tort, contract or otherwise,
whether known or unknown, whether accrued, absolute, contingent or otherwise)
except for (a) the Company's obligation to pay the Termination Fee if and to
the
extent required by Section 8.04 hereof or (b) any liability or damage to the
extent related to or arising from any knowing and willful
breach of any provisions of this Agreement.
72
Section 8.03.Expenses. Except
as provided elsewhere herein, the Buyer and the Company shall each bear and
pay
all costs and expenses incurred by it and its respective Affiliates or on its
or
its respective Affiliates behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own Representatives
and the Representatives of its respective Affiliates.
Section 8.04.Termination
Fee. (a) The Buyer shall be entitled to a one time payment
of $4,500,000 (the “Termination Fee”) in cash
from the Company, not as a penalty but as an agreed upon termination fee and
liquidated damages and as the sole and exclusive remedy of the Buyer against
the
Company and each party to the Voting Agreement upon the occurrence of any of
the
following:
(i)
the
Buyer terminates this Agreement pursuant to Section 8.01(b)(iv)
hereof;
(ii)
the Buyer terminates this Agreement pursuant to Section 8.01(b)(iii) (A)
because of a breach of Section 6.04 hereof but only if (1) the Company
shall have failed to call the Shareholders Meeting and mail the Proxy Statement
to the holders of the Company Common Stock within ten (10) Business Days after
the last to occur of (a) the final determination of the Aggregate Response
Estimate Amount and (b) the clearance of the Proxy Statement by the SEC or
(2) the Company shall have failed to hold the Shareholders Meeting within
sixty (60) days after the last to occur of (a) the final determination of the
Aggregate Response Estimate Amount and (b) the clearance of the Proxy Statement
by the SEC; or (B) because of a material breach of Section 5.04
hereof;
(iii)
either the Buyer or the Company terminates this Agreement pursuant to
Section 8.01(d)(i) hereof because of the impossibility of satisfaction of
the condition to the Closing specified in Section 7.01(c) hereof, and
(A) prior to such termination a material breach of Section 5.04 or Section
6.04 hereof has occurred or (B)(1) at any time after the date of this Agreement
and prior to such termination, an Acquisition Proposal has been announced
(publicly or in a manner calculated to inform the Shareholders generally) and
(2) prior to or within twelve (12) months after such termination
(a) the Company or any Subsidiary of the Company shall have entered into a
definitive agreement relating to an Acquisition Proposal or (b) a
transaction relating to an Acquisition Proposal shall have been consummated;
or
(iv) the Company terminates this Agreement pursuant to Section 8.01(c)(iv)
hereof.
(b)
If the Company is required to pay the Termination Fee under Section 8.04(a),
then the Company shall make payment of the Termination Fee in immediately
available funds within two (2) Business Days after termination of this Agreement
in the case of the occurrence of any event described in Section 8.04(a)(i),
(ii), (iii)(A) or (iv) and within two (2) Business Days after a definitive
agreement is entered into by the Company or any Subsidiary relating to an
Acquisition Proposal or a transaction relating to an Acquisition Proposal is
consummated in the case of Section 8.04(a)(iii)(B).
73
Section 8.05.Amendment. This
Agreement may be amended by the parties hereto by action taken by the board
of
directors of the Buyer, the board of directors of NewCo and the board of
directors of the Company at any time before or after Shareholder Approval;
provided, however, no amendment shall be made after the receipt of
Shareholder Approval which by Law requires further approval of the Shareholders
unless such further approval is obtained. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. The Buyer, NewCo and the Company may without approval
of their respective Boards of Directors, make such technical changes to this
Agreement, not inconsistent with the purposes hereof, as may be required to
effect or facilitate any governmental approval or acceptance of the Merger
or of
this Agreement or to effect or facilitate any filing or recording required
for
the consummation of any of the transactions contemplated hereby.
Section 8.06.Waiver. Any
term, provision or condition of this Agreement may be waived in writing at
any
time by the party which is entitled to the benefits hereof; provided,
however, after the receipt of Shareholder Approval, no waiver of any term,
provision or condition hereof shall be made which by Law requires further
approval of the Shareholders unless such further approval is
obtained. Each and every right granted to any party hereunder, or
under any other document delivered in connection herewith or therewith, and
each
and every right allowed it by law or equity, shall be cumulative and may be
exercised from time to time. The failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
such party’s right at a later time to enforce the same. No waiver by
any party of a condition or of the breach of any term, agreement, covenant,
representation or warranty contained in this Agreement, whether by conduct
or
otherwise, in any one or more instances shall be deemed to be or construed
as a
further or continuing waiver of any such condition or breach or a waiver of
any
other condition or of the breach of any other term, agreement, covenant,
representation or warranty of this Agreement.
Article
IX
General
Provisions
Section 9.01.Notices. Unless
otherwise specifically provided herein, all notices, consents, requests, demands
and other communications hereunder shall be in writing and shall be deemed
duly
given to any party or parties (a) upon delivery to the address of the party
or the parties as specified below if delivered in person or by an
internationally recognized commercial delivery service or if sent by certified
or registered mail (return receipt requested) or (b) upon dispatch if
transmitted by telecopy or other means of facsimile transmission and such
transmission is confirmed successfully by the transmitting machine,
provided that such transmission is received during normal business
hours on a Business Day and that any transmission received after normal business
hours shall be deemed to be received at the start of the next Business Day,
in
each case addressed as follows (or at such other address for a party as shall
be
specified by such party in writing):
74
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if
to the Buyer, NewCo or
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the
Surviving
Corporation:
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| ▇▇▇▇▇▇ Bankcorp, Inc. |
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▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
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with
a copy
to:
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| ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP |
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▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
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| if to the Company: |
Merchants
and Manufacturers
Bancorporation, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
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▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
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with
a copy
to:
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| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Van Deuren S.C. |
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
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Notices
shall be given to such other addressee or address, or both, as a particular
party may from time to time designate by written notice to the other parties
hereto. Notice given to a party hereto by any other method shall only
be deemed to be given and received when actually received in writing by such
party.
Section 9.02.Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to
the
other party, it being understood that all parties need not sign the same
counterpart.
Section 9.03.Entire
Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein (a) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, and (b) are not intended
to confer upon any other Person any rights or remedies hereunder; provided,
however, (i) the respective Representatives of the parties hereto
shall be entitled to rely upon the respective representations and warranties
of
the parties hereto contained in Sections 3.06 and 4.35 hereof,
(ii) the provisions of Article II may be enforced by the applicable
shareholders and option holders entitled to receipt of the Aggregate Merger
Consideration thereunder and their heirs and/or representatives and
(iii) the provisions of Section 6.10 may be enforced by the applicable
directors and officers and their heirs and/or
representatives. Notwithstanding the foregoing, the parties hereto
shall have no monetary liability to any Representative of a party if any of
the
transactions contemplated hereby (including the Merger and the Plan of Merger)
are reportable under Treas. Reg. § 1.6011-4 as promulgated under the Code;
and each party hereto agrees to reasonably cooperate with all Representatives
of
a party hereto, and to provide all information necessary, in order for such
Representative to comply with all applicable disclosure requirements under
the
Code.
75
Section 9.04.Severability. In
the event that any provision of this Agreement or the application thereof
becomes or is declared by a court of competent jurisdiction to be illegal,
void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other Persons or
circumstances will be interpreted so as reasonably to effect the intent of
the
parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
Section 9.05.Surviving
Provisions. All representations, warranties, covenants and
agreements of the parties in this Agreement shall not survive after the Closing,
except that any provisions contained in this Agreement which by their terms
survive or are to be performed after the Closing Date shall survive for their
respective periods specified, or if no such period is specified, for a
reasonable time under the circumstances.
Section 9.06.Other
Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby
or
by Law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States of America or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
Section 9.07.Assignment. No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other
parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Notwithstanding the
foregoing, the Buyer may assign any or all of its rights and obligations under
this Agreement to any of its Affiliates (each a “Permitted Assignee”)
upon not less than five (5) days prior written notice to the
Company. The Buyer’s assignment to a Permitted Assignee as
contemplated hereby shall not release or relieve the Buyer from any liability
under this Agreement. Contemporaneously with such assignment, the
Permitted Assignee shall execute a counterpart of this Agreement and a
certificate containing the representations and warranties set forth in
Article III conformed to be applicable to such Permitted
Assignee.
76
Section 9.08.Governing
Law. The Merger and Plan of Merger shall be governed by and
construed in accordance with the laws of the State of Wisconsin. All
other provisions in 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 conflicts of
law. Unless the parties agree in writing otherwise, any appraisal,
arbitration, claim or other Proceeding shall be held in Chicago,
Illinois. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of any state or federal court located in the respective
location described in the foregoing sentence, agrees that process may be served
upon them in any manner authorized by the Law of such jurisdiction and waives
and covenants not to assert or plead any objection which they might otherwise
have to such jurisdiction and such process.
Section ▇.▇▇.▇▇▇▇▇▇▇▇
on Tax Advisers. Except as explicitly provided in this
Agreement, each party hereto shall seek the advice of its own Tax advisers
relating to the proper characterization of the transactions contemplated by
this
Agreement (including the Merger and the Plan of Merger) and no party hereto
shall be entitled to rely upon e-mails, messages, oral communications or other
informal statements from the Representative of any other party hereto for the
purpose of avoiding penalties that may be imposed upon the recipient of any
such
informal statements.
[Signature
Page Follows]
77
In
Witness Whereof, the parties hereto have caused this Agreement to be executed
by
their duly authorized respective officers as of the date first written
above.
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Bankcorp, Inc.
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By
/s/ ▇▇▇▇ ▇.
▇▇▇▇▇▇
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Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
Executive Vice President and General
Counsel
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Boundary
Acquisition Corporation
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By
/s/ ▇▇▇▇ ▇.
▇▇▇▇▇▇
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Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
Senior Vice President
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Merchants
and Manufacturers Bancorporation,
Inc.
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By
/s/ ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title:
Chairman and CEO
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78