PLAN AND AGREEMENT OF MERGER AND REORGANIZATION
Plan and Agreement of Merger and Reorganization (hereinafter
referred to as "Agreement"), made as of the 10th day of June,
1997 by and between F & M Bancorporation, Inc., a Wisconsin
Corporation, Clear Lake Bancorp., Inc., a Wisconsin corporation
and F & M Merger Corporation, a Wisconsin corporation.
1. Definitions.
The following definitions shall apply in this Plan and
Agreement of Merger and Reorganization:
1.1 "Agreement" shall mean this Plan and Agreement of
Merger and Reorganization.
1.2 "BANK" shall mean Landmark Bank, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.3 "BANK Stock" shall mean BANK's voting capital stock
$100.00 par value.
1.4 "Closing Date" shall mean the date set by mutual
agreement of CLB and F & M and will not occur prior to the
satisfaction or the waiver of all of the conditions to the
transaction.
1.5 "Effective Time" shall mean the date on which the
Articles of Merger are filed with the State of Wisconsin
Department of Financial Institutions. A copy of the proposed
Articles of Merger is attached as Exhibit 1.5 and is incorporated
herein by reference. The Articles of Merger shall be filed as
soon as possible after the conditions precedent to this merger
have been met or waived by F & M and CLB, but not prior to the
Closing Date.
1.6 "CLB" shall mean Clear Lake Bancorp., Inc., ▇.▇. ▇▇▇
▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.7 "CLB Common" shall mean CLB's voting common stock, no
par value.
1.8 "CLB Counsel" shall mean ▇▇▇▇▇▇▇▇▇ & Vennem, P.L.L.P.,
4200 IDS Center, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇,
Attn: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇.
1.9 "CLB Shareholders" shall mean the shareholders of CLB
shown on the attached Exhibit 1.9.
1.10 "Exchange Ratio" shall mean the ratio determined as of
the Closing Date by dividing CLB Share Price by the F & M Common
Price..
1.11 "F & M" shall mean F & M Bancorporation, Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.12 "F & M Common" shall mean F & M's voting common stock,
$1.00 par value.
1.13 "F & M Common Price" shall mean the average closing
price, as quoted on the NASDAQ National Market System ("NASDAQ"),
for F & M Common for the fifteen (15) trading days on which F & M
Common is actually traded, immediately preceding the five (5)
calendar days prior to the Closing Date of the transaction.
1.14 "F & M Counsel" shall mean McCarty, Curry, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
1.15 "Registration Statement" shall mean the Registration
Statement of F & M pursuant to which the shares of F & M Common
to be issued in the merger will be registered with the Securities
and Exchange Commission ("SEC"), and which shall include the
prospectus of F & M relating to the F & M Common issuable in the
transaction and the proxy statement of CLB to its shareholders
relating to approval of the merger (the "Prospectus/Proxy
Statement").
1.16 "Securities Counsel" shall mean ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
1.17 "Subsidiary" shall mean F & M Merger Corporation, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.18 "Valuation Date" shall mean the last day of the month
prior to the Closing Date.
2. Preamble.
F & M and Subsidiary are multi-bank holding companies with
subsidiaries located in Wisconsin. Subsidiary is a wholly-owned
subsidiary of F & M. CLB is a one-bank holding company which
presently owns 98.17% of the issued and outstanding stock of
BANK. F & M, Subsidiary and CLB, by their respective employees
and agents have had the opportunity to make such review and
investigation of the other as they deem appropriate and to
negotiate the terms and conditions of this Agreement. F & M,
Subsidiary and CLB each believe that this transaction is in their
best interests and in the best interests of their shareholders
and desire to set forth their agreement and understanding in this
Agreement.
The parties have considered the proposed merger and believe
that a merger between CLB and Subsidiary will be in the best
interest of their respective corporations and shareholders. The
merger of CLB into Subsidiary is intended to constitute a
reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended.
In consideration of the foregoing and the terms, conditions
and covenants of this Agreement and in reliance on the warranties
and representations contained herein, the parties adopt this Plan
and Agreement of Merger and Reorganization and agree as follows:
3. Merger of CLB into Subsidiary.
3.1 Surviving Corporation. At the Effective Time of the
merger, CLB shall be merged into Subsidiary in accordance with
the laws of the State of Wisconsin. Subsidiary will be the
surviving corporation and the separate corporate existence,
identity and organization of CLB, except as specifically provided
by law and this Agreement, shall cease. As the surviving
corporation, Subsidiary shall succeed to and possess all the
assets, properties, powers, privileges, rights and immunities of
CLB and shall be subject to all liabilities, obligations,
limitations and duties of CLB as described in this Agreement.
3.2 Subsidiary Stock Subscription. Subject to the
fulfilling of the conditions precedent to the closing of this
transaction set forth below, F & M will transfer to Subsidiary
such shares of F & M Common and cash as may be necessary to
effect the merger, as described under paragraph 3.3 below.
3.3 Exchange of CLB Common. At the Effective Time, the
shares of CLB Common shall be converted into shares of F & M
Common as follows:
(a) All CLB Shareholders will receive shares of F & M
Common based upon the Exchange Ratio. The Exchange Ratio shall
be calculated by dividing the F & M Stock Consideration by the
number of shares of CLB Common issued and outstanding as of the
Closing Date to establish the price per share of CLB Common ("CLB
Share Price"). The CLB Share Price shall be divided by the F & M
Common Price to establish the Exchange Ratio. The Exchange Ratio
shall be multiplied by the number of shares of CLB Common held by
each CLB Shareholder on the Closing Date to determine the number
of shares of F & M Common to be issued to that CLB Shareholder.
(b) The F & M Stock Consideration will be two and
one-half (2.50) times 98.17% of the BANK's Adjusted Equity plus any
cash or cash equivalents of CLB as of the Closing Date and the
non-bank assets of CLB described on the attached Exhibit
3.3(b), less the amount of any liability (including accrued
interest) of CLB for indebtedness as of the Closing Date.
BANK's Adjusted Equity will be the sum of BANK's equity
as of the Valuation Date determined in accordance with generally
accepted accounting principles, with the exception that (i) any
impact upon BANK's equity due to FASB 115 will be eliminated;
(ii) any vacation pay accrual, net of tax effect, reflected in
BANK's equity at the request of F & M [as shown on Exhibit
3.3(b)] will be added back to BANK's equity; (iii) an amount
equal to the estimated earnings, net of tax effect, of BANK from
the Valuation Date to the Closing Date equal to the number of
days in such period multiplied by the average daily earnings of
BANK from January 1, 1997, to the Valuation Date will be added to
BANK's Equity; (iv) the cost of any audit required by F & M,
net of tax effect, as described in paragraph 6.5 will be added to
BANK's Equity, and (v) the amount of the reserve for loan and
lease losses in excess of 1.30% of loans and leases, net of tax
effect, will be added to BANK's Equity.
(c) No fractional shares of F & M Common shall be
issued; all fractional shares will be converted to cash in an
amount equal to the fractional share determined in accordance
with the formula set forth above multiplied by F & M Common
price.
(d) F & M shall repay CLB's indebtedness as of the
Closing Date to M&I Community State Bank, to the extent such
indebtedness reduces the amount of the F & M Stock Consideration.
(e) As a part of this transaction, and conditioned
upon it being consummated, BANK shall purchase the land and
improvements used for the operation of BANK's Hudson, Wisconsin,
branch at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, from Landmark Leasing Company
("Seller"). The fair market value of the Hudson office will be
based upon the September 8, 1990 appraisal of ▇▇▇▇ ▇▇▇▇▇. This
purchase will be made pursuant to the agreement between BANK and
Seller attached hereto as Exhibit 3.3(e).
3.4 Modification of Adjusted Equity. F & M shall have the
right to modify the calculation of BANK's Adjusted Equity and to
the calculation of the F & M Stock Consideration as of the
Closing Date to reflect the following:
(a) For any loans or leases which are considered as,
or have the probability of becoming, losses as a result of an
adverse change in the condition of such loans after March 25,
1997. CLB will have the right to review the loans and leases
which F & M considers as, or have the probability of becoming,
losses prior to the Closing Date and may elect to purchase such
loans at 100% of book value from BANK and assign them to a third
party. No adjustment to equity will be made for any such loans
or leases so purchased.
(b) In the event BANK's loan loss reserve is less than
1.30% of loans and leases as of the Closing Date, by the amount
necessary to increase such reserve to 1.30% of loans and leases.
(c) As the result of a material adverse change in the
business of CLB or BANK or an increase in their liabilities
(exclusive of deposits) which accrues after March 25, 1997,
which is not otherwise reflected in either the calculation of
BANK's Adjusted Equity or CLB's stated liabilities as of the
Closing Date. The parties agreement as to the amount of any such
adjustment shall be a condition precedent to the parties
obligation to close.
(d) The amount of any obligation to any employee,
officer, director or shareholder which may become payable after
the Closing Date at the option of the employee, officer, director
or shareholder as a result of the transaction contemplated by
this Agreement.
(e) For the amount of any expenses incurred by CLB or
BANK in connection with this transaction which have not been
accrued and accounted for prior to the Closing Date.
3.5 Articles of Incorporation. The Articles of
Incorporation of Subsidiary in effect immediately prior to the
Effective Time of the merger shall continue in full force and
effect as the Articles of Incorporation of the surviving
corporation.
3.6 Bylaws. The Bylaws of Subsidiary in effect immediately
prior to the Effective Time of the merger, shall continue in full
force and effect as the bylaws of the surviving corporation.
3.7 Officers and Directors. The officers and directors of
Subsidiary at the Effective Time of the merger shall remain as
the officers and directors of the surviving corporation.
4. Representations and Warranties of CLB. CLB, by its duly
authorized officers, directors or other agents makes the
following representations and warranties to F & M each of which
is true and correct as of the date hereof, and shall remain true
and correct to and including the Closing Date, and shall be
unaffected by any investigation heretofore or hereafter made by
or any notice to F & M. These representations and warranties
shall not survive the closing.
4.1 Ownership and Authority. The current CLB Shareholders
are listed on the attached Exhibit 1.9.
4.2 CLB Organization and Authority.
(a) CLB is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Wisconsin with all requisite corporate power and authority to
own, operate and lease its properties and to carry on its
business as now being conducted and to enter into and perform its
obligations under this Agreement upon receiving the necessary
shareholder and regulatory approval. CLB is duly registered and
authorized to operate as a bank holding company. CLB is only
qualified to do business in the State of Wisconsin.
(b) CLB has good and marketable title to Eleven
Thousand Three Hundred Twenty-eight (11,328) shares of BANK
Stock, free and clear of any and all claims, mortgages, liens,
security interests, pledges or other encumbrances of any kind
whatsoever, except for the pledge made by CLB to secure a loan to
CLB by M & I Community State Bank.
(c) CLB is presently authorized to issue Twenty
Thousand (20,000) shares of CLB Common. CLB presently has Seven
Thousand Four Hundred Seven (7,407) shares of CLB Common validly
and legally issued and outstanding, all of which are fully paid
and nonassessable, except as provided by Wis. Stats. Section
180.0622(2)(b). Treasury shares will not participate in this
exchange. CLB has not issued, and does not have outstanding, any
option, warrant or convertible securities or other right to
purchase or convert any obligation into such corporation's
securities and has not agreed to issue or sell any additional
securities of any type, except for such shares as may be approved
by F & M in exchange for the real estate presently used by BANK's
Hudson, Wisconsin office.
(d) The execution, delivery and performance of this
Agreement and the consummation of the transaction contemplated
under it have been duly authorized by appropriate corporate
approval and will not violate any provision of CLB's articles of
incorporation or bylaws or any provisions of, or result in the
acceleration of any obligation under the mortgage, lien, lease,
agreement, instrument, court order, arbitration award, judgment
or decree to which CLB is a party, or by which CLB is bound and
will not require the consent, authorization or approval of any
other public or private person or entity other than the approval
by CLB's shareholders and the appropriate federal and state
securities and banking regulatory agencies and will not violate
any other restriction of any kind or character to which CLB is
subject.
4.3 BANK Organization and Authority.
(a) BANK is duly organized, validly existing and in good
standing under the laws of the State of Wisconsin and has all
requisite banking and corporate power and authority to own,
operate and lease its properties and to carry on its business as
now being conducted. BANK has its main office in Clear Lake,
Wisconsin and it has three branch offices: two in Hudson,
Wisconsin and one in Amery, Wisconsin. All necessary corporate
approval and authorization and regulatory approval for BANK's
present operations has been given and remains in full force and
effect and in good standing. BANK also owns 100% of the issued
and outstanding stock of Badgerland Investment Corporation, a
Nevada corporation which serves as an investment subsidiary.
(b) BANK is authorized to issue Eleven Thousand Five
Hundred Thirty-nine (11,539) shares of BANK Stock, BANK's only
class of stock. BANK has Eleven Thousand Five Hundred Thirty-nine
(11,539) shares of BANK Stock issued and outstanding, all of
which are legally and validly issued, fully paid and
nonassessable.
(c) BANK has not issued and does not have outstanding
any option, warrant or convertible securities or other right to
purchase or convert any obligation into BANK's securities and has
not agreed to issue or sell any additional securities of any
type.
(d) The execution, delivery and performance of this
Agreement and the consummation of the transaction contemplated
under it have been duly authorized by appropriate corporate
approval and will not violate any provision of BANK's articles of
incorporation or bylaws or any provisions of, or result in the
acceleration of any obligation under the mortgage, lien, lease,
agreement, instrument, court order, arbitration award, judgment
or decree to which BANK is a party, or by which BANK is bound and
will not require the consent, authorization or approval of any
other public or private person or entity other than the approval
by BANK's shareholders and the appropriate federal and state bank
regulatory agencies and will not violate any other restriction of
any kind or character to which BANK is subject.
(e) Badgerland Investment Corporation, is duly
organized, validly existing and in good standing under the laws
of the State of Nevada and had and continues to have all
requisite corporate power and authority and regulatory approvals
to carry on its business as conducted in the past and as
presently conducted.
4.4 Financial Matters.
(a) True copies of CLB's consolidated financial
statements, consisting of consolidated balance sheets,
consolidated statements of operations and consolidated statements
of stockholders' equity as of the close of business on
December 31, 1996, 1995, and 1994 have been delivered by CLB to
F & M ("CLB's Financial Statements"). All of CLB's Financial
Statements are true and correct in all material respects and
present an accurate and complete disclosure of the financial
condition of CLB as of their respective dates, and the earnings
for the periods covered, all determined in accordance with
generally accepted accounting principles, applied on a consistent
basis.
(b) CLB and BANK have good marketable title to all of
their assets, business and properties including, without
limitation, all such properties reflected in CLB's Financial
Statements as of December 31, 1996, free and clear of any
mortgage, lien, pledge, security interest, assessment, levy,
charge, claim or other encumbrance, except for real estate and
personal property taxes for 1997 which are not yet due. CLB and
BANK do not have any notice of any special assessment which will
be levied or assessed against any real property owned or leased
by them. All real property owned, operated and leased by CLB and
BANK is in full compliance in all material respects with all
applicable federal, state and local statutes and regulations
including, but not limited to, any building codes, safety codes,
OSHA regulations, environmental laws and regulations, the
Americans with Disabilities Act, zoning ordinances and other
similar codes, ordinances, and regulations and neither CLB nor
BANK has received any citations, notices, charges or other
complaints claiming a violation of the foregoing nor are CLB or
BANK aware of any investigation of any alleged violation.
(c) All property and assets owned or currently in use
by CLB and BANK, or in which they have an interest (excluding
interests which arise in collateral given to secure loans made by
BANK or because of a security interest granted to BANK) or which
are in their possession, are in good operating condition and
repair subject only to normal wear and tear, except as described
on the attached Exhibit 4.4(c). A schedule of all real and
personal property owned by CLB and BANK is described on Exhibit
4.4(c). If CLB or BANK lease any real or personal property, a
separate schedule clearly identifying such leased property will
be included in the Schedules delivered by CLB to F & M. As of
the Closing Date, all such property and assets will be in the
condition represented above.
4.5 Changes Since December 31, 1996. Since December 31,
1996, with respect to CLB and BANK there have not been:
(a) Any loss, damage, destruction or failure to
maintain the tangible assets of CLB or BANK (whether or not
covered by insurance), or affecting their business or properties,
which will materially adversely affect the financial condition or
operations CLB or BANK.
(b) Any lapse, revocation, failure to maintain in full
force and effect or other event which, through the passage of
time or the giving of notice, or both could render any insurance
coverage previously maintained by CLB or BANK ineffective in
whole or in part.
(c) Any acquisition by CLB or BANK of a capital asset
at a cost in excess of Ten Thousand Dollars ($10,000.00) without
prior approval of F & M, except as listed on the attached Exhibit
4.5(c).
(d) Any amendment to their Articles of Incorporation
or Bylaws.
(e) Any change in accounting procedures, practices or
methods from those used by CLB and BANK in prior years except as
may be necessary to prepare CLB's and BANK's 1996 Financial
Statements in accordance with generally accepted auditing
standards.
(f) Any increase in or agreement to increase salaries,
wages, fringe benefits, benefits under any plan subject to ERISA,
or other compensation of any officers, directors, employees or
agents of CLB or BANK, except that for 1997, CLB and BANK may
grant wage and/or salary increases consistent with past practices
which do not exceed, in the aggregate, four percent (4%) of the
wages and salaries being paid as of December 31, 1996.
(g) Any issuance, or agreement to issue, on or before
the Closing Date or thereafter, directly or indirectly, any
additional shares of stock of CLB or BANK.
(h) Any declaration, setting aside or payment of any
dividend or any distribution in respect to CLB's stock or any
redemption, purchase or other acquisition by CLB or BANK of any
stock or any other repayments to the shareholders of CLB or BANK.
(i) Any sale, transfer, or other
disposition, prior to maturity, of any security or other earning
asset (exclusive of loans and leases).
(j) Any borrowings or other indebtedness (excluding
deposit liabilities) in excess of the amounts disclosed by CLB's
and BANK's December 31, 1996 Financial Statements, provided,
however, that the total outstanding balances of such borrowings
shall not exceed the total amount historically borrowed by BANK
for similar purposes.
(k) Any mortgage, lien, pledge, security interest,
assessment, levy, charge, claim or other encumbrance made with
respect to any of the properties or assets of CLB or BANK in
addition to those disclosed by CLB's and BANK's December 31, 1996
Financial Statements and except as required by regulation to
secure loans from the FHLB, to secure tax deposits transferred
through the Federal Reserve Bank of Chicago and as may be
necessary in the ordinary course of business to secure municipal
deposits.
(l) Any sale, transfer or other disposition of assets
of CLB or BANK except in the normal course of business and
consistent with past practices, provided, however, that CLB or
BANK may not dispose of any securities prior to maturity without
the prior consent of F & M.
(m) Any material change in the manner in which
business was being conducted by CLB or BANK prior to December 31,
1996, or other material failure by CLB or BANK to use their best
efforts to maintain its present business organization (subject to
the terms of this Agreement), employees and customers.
(n) Any loan or commitment to make a loan by BANK with
an interest rate, repayment term, collateral or security
requirements or other conditions which are materially different
from those upon which BANK made loans prior to December 31, 1996,
except to the extent such difference is in response to
competitive conditions encountered by BANK.
(o) Any other materially adverse change in CLB's
prospects, financial condition, assets, liabilities, properties
or business.
4.6 Liabilities.
(a) Neither CLB nor BANK have any liabilities, whether
accrued, absolute, contingent or otherwise, which arose or relate
to any transaction or occurrence involving CLB or BANK or their
respective officers, directors, employees, agents or servants
prior to the date of this Agreement which are not disclosed by
CLB's or BANK's Financial Statements described above, to the
extent such liabilities are required to be disclosed under GAAP.
To the best of their knowledge, after due and diligent inquiry,
as of the date hereof, no known circumstances, conditions,
happenings, events or arrangements, contractual or otherwise,
exist which may hereafter give rise to any such liabilities of
CLB or BANK.
(b) To the best of their knowledge, all parties with
whom CLB and BANK have contractual arrangements are in compliance
therewith, except for those loan customers of BANK identified on
the attached Exhibit 4.6(b). Neither CLB nor BANK has declared,
and is not prepared to declare, any such parties in default under
any such contractual arrangements. Neither CLB nor BANK is in
default in any material respect under any contracts to which it
is a party, nor has any event occurred, which through the passage
of time or the giving of notice or both, would constitute a
default under any such contract or obligation or cause the
acceleration of any obligation of CLB or BANK or result in the
creation of a lien, charge, assessment, encumbrance or other
claim whatsoever upon any asset of CLB or BANK. None of the
contracts to which CLB or BANK is a party will be adversely
affected by the transaction contemplated by this Agreement.
(c) To the best of their knowledge, CLB and BANK are
in compliance in all material respects with all applicable
federal, state, county and local statutes, ordinances,
regulations, decrees, orders, or other laws. Neither CLB nor
BANK has received notice of any alleged violation of any such
statutes, ordinances, regulations, decrees, orders or other laws,
except as set forth in the attached Exhibit 4.6(c).
(d) No legal, administrative or other proceedings,
investigations or inquiries or other claims, judgments, consent
decrees, stipulations, injunctions or restrictions are either
pending or outstanding, or to the best of their knowledge,
threatened against or involving CLB or BANK or affecting their
assets, properties or business. CLB and BANK do not know, or have
any grounds to know of any basis for any such proceedings,
investigations or inquiries or other claims, judgments, consent
decrees, stipulations, injunctions or restrictions, except for
normal foreclosure, repossession and collection litigation
described in the attached Exhibit 4.6(d).
(e) CLB and BANK have maintained normal and customary
bonds and policies of insurance for institutions engaged in the
business of commercial banking and/or as a bank holding company
in Wisconsin with similar types of assets, liabilities and risks
as CLB and BANK and all premiums thereon have been paid in a
timely manner and are paid to date and all bonds have been
acquired and maintained on all employees, agents, officers and
directors of CLB or BANK required to be bonded. The limits of
coverage, deductibles and other material nonstandard provisions
of such insurance and bonds are disclosed in the attached Exhibit
4.6(e). Said insurance and bonds, including but not limited to,
general comprehensive (commercial) public liability insurance
covering personal injuries, death and property damage, fidelity
bonds and worker's compensation insurance is currently in full
force and effect and has been in full force and effect for at
least the past five (5) years.
4.7 Taxes. CLB and BANK have filed all federal, state and
local tax returns and reports covering income, sales, use, real
or personal property or other taxes of any type required to be
filed and have paid all taxes including any interest, penalties
and assessments which are due and required to be paid. The taxes
provided for in CLB's Financial Statements and which will be
accrued prior to the Closing Date will be adequate for the
payment of any unpaid taxes as of the Closing Date. CLB's and
BANK's income tax returns have never been audited. Neither CLB
nor BANK has waived any restrictions on the assessment or
collection of taxes or consented to the extension of any statute
of limitations relating to any tax liability. Neither CLB nor
BANK have determined or been advised that CLB or BANK may be
liable for a material deficiency or other liability in respect to
any state or federal income tax returns or other tax returns
previously filed by CLB or BANK.
4.8 Contracts and Commitments. Neither CLB nor BANK have
any contracts or commitments, either oral or written, with any
officer, director, shareholder, employee, customer, depositor,
supplier of goods or services or any other entity or person which
contain any terms or conditions which are not usual and customary
under the circumstances and which may have a material adverse
effect on the operations, profitability or net worth of CLB or
BANK.
4.9 Reporting and Withholding on Payment of Interest. To
the best of their knowledge, after due and diligent inquiry, CLB
and BANK have fully complied with the Internal Revenue Code (the
"Code"), and all rules and regulations of the Internal Revenue
Service ("IRS") issued thereunder, with respect to the reporting
of payments of interest and other payments by them, and have
complied with all provisions requiring the withholding for income
taxes on such amounts when required. CLB and BANK have
instituted adequate procedures to assure compliance with such
provisions. To the best of their knowledge, all reporting to the
IRS required of CLB and BANK has been done in a timely manner via
proper medium. Neither CLB nor BANK have been advised of any
violation or potential violation with respect to such reporting
requirements.
4.10 Employees and Employee Benefits.
(a) CLB and BANK are not parties to or bound by any
written or oral (i) employment or employment-related consulting
contract which is not terminable at will by CLB or BANK, as the
case may be without penalty, except as set forth in the attached
Exhibit 4.10(a), (ii) plan or agreement providing for any
employee bonus, deferred compensation, pension, profit sharing,
retirement benefits, stock purchase, stock option, employee
pension benefit plan or employee welfare benefit plan except as
set forth in the on the attached Exhibits 4.10(b) and 4.10(c).
(b) All pension, profit sharing, or other employee
pension benefit plans of CLB and BANK ("the Plans") are described
in Exhibit 4.10(b) and are now, and will continue until the
Closing Date to be, qualified Plans under Section 401(a) of the
Code, in full compliance with the Employee Retirement Income
Security Act of 1974 as amended ("ERISA"). To CLB's and BANK's
best knowledge, after due and diligent inquiry, all premiums,
notices, reports and other filings required to be delivered or
filed under applicable law with respect to such Plans have been
duly and timely delivered or filed. Neither CLB nor BANK have
knowledge of any fact or circumstance which would materially and
adversely affect such Plans' qualified status or compliance as
above described, or of any "reportable event" (as such term is
defined in Section 4043(c) of ERISA) or any "prohibited
transaction" (as such term is defined in Section 406 of ERISA and
Section 4975(c) of the Code) which has occurred since the date on
which said sections first became applicable to the Plans. The
Plans satisfy the minimum funding standards set forth in the Code
and ERISA. As of the Closing Date there will be no unfunded
vested liability of the Plans, except for the obligation of CLB
and BANK for contributions for the current year which are not yet
due and payable but for which adequate amounts are being accrued
on a monthly basis.
(c) All employee welfare benefit plans of CLB and BANK
(the "Welfare Plans") are described in Exhibit 4.10(c) and are
now, and will continue until the Closing Date to be, in full
compliance with the Code and the Employee Retirement Income
Security Act of 1974 as amended ("ERISA"). To CLB's and BANK's
best knowledge, all notices, reports and other filings required
to be delivered or filed under applicable law with respect to
such Welfare Plans have been duly and timely delivered or filed.
Neither CLB nor BANK have knowledge of any fact or circumstance
which would adversely affect such Welfare Plans' compliance as
above described or any "prohibited transaction" (as such term is
defined in Section 406 of ERISA and Section 4975(c) of the Code)
which has occurred since the date on which said sections first
became applicable to the Welfare Plans.
(d) No person or governmental agency has any pending
or threatened claim against CLB or BANK or their directors,
officers, employees or agents arising out of any statute,
ordinance or regulation alleging that CLB or BANK (i) has
discriminated against applicants for employment, employees or the
public, (ii) has any employment practices, policies or procedures
which are discriminatory or have been breached, (iii) failed to
comply with federal and state wage and hour laws, rules or
regulations, (iv) violated occupational safety and health
statutes, regulations or standards or (v) has committed an unfair
labor practice(s).
4.11 Environmental Matters.
(a) To the knowledge of CLB and BANK, there has been
no release of any hazardous substance, as defined in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") nor any release of oil or hazardous
substance as provided under Wis. Stats. Section 144.76, on,
upon or into the real property owned or leased to CLB or BANK.
(b) To the knowledge of CLB and BANK, there have been
no such releases on, upon or into any real property adjoining or
in the vicinity of the property described in paragraph 4.11(a)
above, which through air, soil or groundwater migration could
have come to be located upon any property owned or leased by CLB
or BANK, or which secures a loan made by CLB or BANK or may be
acquired by CLB or BANK in foreclosure.
4.12 Accuracy of All Statements. No representation or
warranty by CLB or BANK in this Agreement or otherwise, in any of
CLB's or BANK's Financial Statements, or in any other statement,
certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of CLB or BANK pursuant to this
Agreement, nor any document or certificate delivered to F & M
pursuant to this Agreement or in connection with actions
contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact
necessary to make the statement contained therein not misleading.
4.13 Prospectus/Proxy Statement. The parts of the
Prospectus/Proxy Statement which were provided or reviewed by CLB
and BANK with respect to CLB and BANK will not, at the date it is
first mailed or delivered to CLB's Shareholders, and will not, at
the date or dates of the meeting of CLB's Shareholders called to
approve the Merger, as then amended or supplemented, contain any
statements that are, at the time at which, and in light of the
circumstances under which they are made, be false or misleading
with respect to any material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein not false or misleading.
Notwithstanding the foregoing, CLB makes no representation
or warranty regarding and shall have no responsibility for the
accuracy of any information with respect to F & M or Subsidiary
or any of their affiliates or subsidiaries contained in the
Prospectus/Proxy Statement.
4.14 Financial Adviser. CLB has not engaged, consented to
engage, or authorized any financial adviser, broker, investment
banker, or similar third party to act on its behalf, directly or
indirectly, in connection with the transaction contemplated by
this Agreement.
5. Representations and Warranties of F & M.
F & M, by its duly authorized officers, employees or other
agents makes the following representations to CLB, each of which
is true and correct as of the date hereof and shall remain true
and correct to and including the Closing Date, shall be
unaffected by any investigation heretofore or hereafter made by
or any notice to CLB except as set forth herein. These
representations and warranties shall not survive the closing.
5.1 Organization and Authority.
(a) F & M is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Wisconsin with all requisite corporate power and authority to
own, operate and lease its properties and to carry on its
business as now being conducted and to enter into and perform its
obligations under this Agreement, upon receiving the necessary
approval from the federal and state regulatory authorities.
F & M is only qualified to do business in the State of Wisconsin
and has received approval from the Federal Reserve Bank of
Chicago to engage in business as a bank holding company.
(b) Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Wisconsin with all requisite corporate power and authority to
own, operate and lease its properties and to carry on its
business as now being conducted and to enter into and perform its
obligations under this Agreement, upon receiving the approval of
its shareholders and the federal and state regulatory
authorities. Subsidiary is only qualified to do business in the
State of Wisconsin.
(c) F & M is authorized to issue Twenty Million
(20,000,000) shares of F & M Common and has Seven Million, Six
Hundred Seven Thousand (7,607,600) shares issued and outstanding
as of March 31, 1997. F & M anticipates that additional shares
of F & M Common may be issued by it prior to the Closing Date.
All outstanding shares and those to be issued, will be legally
and validly issued and fully paid and nonassessable except as
provided by Wis. Stats. Section 180.0622(2)(b).
5.2 Performance of this Agreement. The execution, delivery
and performance of this Agreement and the consummation of the
transaction contemplated under it have been duly authorized by
appropriate corporate approval and will not violate any provision
of F & M's or Subsidiary's articles of incorporation or bylaws or
any provisions of, or result in the acceleration of any
obligation under any mortgage, lien, lease, agreement,
instrument, court order, arbitration award, judgment or decree to
which F & M or Subsidiary is a party, or by which F & M or
Subsidiary is bound and will not require the consent,
authorization or approval of any other public or private person
or entity other than the approval by F & M as the sole
shareholder of Subsidiary and the appropriate federal and state
securities and banking regulatory agencies and will not violate
any other restriction of any kind or character to which F & M or
Subsidiary are subject except as set forth in this Agreement. F&
M does not know of any reason why all necessary regulatory
approval of this transaction would not be granted.
5.3 Legality of Shares to be Issued. The shares of F & M
Common to be delivered pursuant to this Agreement, when so
delivered, will have been duly and validly authorized and issued
by F & M and will be fully paid and nonassessable, except as
provided by Wis. Stats. Section 180.0622(2)(b).
5.4 Financial Statements. True copies of the audited
consolidated financial statements of F & M consisting of
consolidated balance sheets, consolidated statements of income,
consolidated statements of stockholder's equity and consolidated
statements of cash flows as of the close of business on December
31, 1996, 1995 and 1994, have been delivered by F & M to CLB
(F & M's Financial Statements). All of F & M's Financial
Statements are true and correct in all material respects and
present an accurate and complete disclosure of the financial
condition of F & M as of their respective dates and of the
earnings for the periods covered, in accordance with generally
accepted accounting principles applied on a consistent basis.
5.5 No Warranty or Representation as to Tax Consequences.
CLB expressly understands and agrees that neither F & M nor
Subsidiary nor their respective directors, officers, employees,
agents, attorneys or accountants (acting on behalf of F & M or
Subsidiary) have made or are expected to make any warranty,
representation, covenant or agreement, expressed or implied, as
to the tax consequences of the transactions contemplated by this
Agreement or the tax consequences to the CLB Shareholders of any
action in furtherance of, pursuant to or in any way related to
this Agreement. The CLB Shareholders assume any and all
responsibility for any tax consequences to them for this
transaction and waive any and all claims in any way related to
the tax consequences of this transaction against F & M or
Subsidiary and their respective directors, officers, employees,
agents, attorneys or accountants (acting on behalf of F & M or
Subsidiary). In the event F & M or Subsidiary receives actual
notice from the IRS challenging the tax-free nature of this
reorganization or any prior reorganizations, F & M or Subsidiary
will inform the CLB Shareholders of such notice. F & M and
Subsidiary have not sought and will not seek a private letter
ruling from the IRS regarding the tax consequences of this
transaction.
5.6 Litigation. There are no legal, administrative or
other proceedings, investigations or inquiries or other claims,
judgments, consent decrees, stipulations, injunctions or
restrictions which may have a material adverse effect on F & M or
Subsidiary either threatened, pending or outstanding against or
involving F & M or Subsidiary or their properties, or business,
nor do F & M or Subsidiary know, or have reasonable grounds to
know, of any basis for any such proceedings, investigations or
inquiries, or other claims, judgments, consent decrees,
stipulations, injunctions or restrictions.
5.7 Directors, Officers and Employees of BANK. Neither
F & M nor Subsidiary or their respective directors, officers,
employees, agents, attorneys or accountants have made or will
make any representations or warranties as to any further
positions with BANK, F & M or Subsidiary following the
consummation of the transaction contemplated by this Agreement to
any director, officer or employee of CLB or BANK, except as
expressly set forth herein.
5.8 Accuracy of All Statements. No representation or
warranty by F & M or Subsidiary in this Agreement or otherwise,
nor any financial statements, statement, certificate, schedule or
exhibit hereto furnished or to be furnished by or on behalf of
F & M or Subsidiary pursuant to this Agreement, nor any document
or certificate delivered to CLB pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall
omit a material fact necessary to make the statement contained
therein not misleading.
5.9 Prospectus/Proxy Statement. The Prospectus/Proxy
Statement will not, at the date it is first mailed or delivered
to CLB's shareholders, and will not, at the date or dates of the
meeting of the CLB Shareholders called to approve the Merger, as
then amended or supplemented, contain any statements that are at
the time at which, and in light of the circumstances under which
they are made, false or misleading with respect to any material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
false or misleading. Notwithstanding the foregoing, F & M and
Subsidiary make no representation or warranty and shall have no
responsibility for the accuracy of any information contained in
or omitted from the Prospectus/Proxy Statement in so far as it
describes the CLB and BANK.
5.10 No Broker. All negotiations relative to this
Agreement and the transaction contemplated hereby have been
carried on directly by F & M and Subsidiary with CLB without the
intervention of any broker or third party on behalf of F & M and
Subsidiary. F & M and Subsidiary have not engaged, consented to
engage, or authorized any broker, investment banker, or third
party to act on its behalf, directly or indirectly, in any
capacity in connection with the transaction contemplated by this
Agreement.
6. Covenants of CLB.
CLB hereby covenants and agrees as follows:
6.1 Access to Information. F & M and its authorized
representatives shall have full access during normal business
hours to all properties, books, records, contracts and documents
of CLB and BANK and CLB and BANK shall furnish or cause to be
furnished to F & M or its authorized representatives all
information with respect to the affairs and business of CLB and
BANK as F & M may reasonably request.
6.2 Actions Prior to Closing. From and after the date of
this Agreement and until the Closing Date, CLB and BANK:
(a) Shall carry on their business diligently and
substantially in the same manner as heretofore and CLB and BANK
shall not engage in or institute any unusual or novel methods of
doing business and shall inform F & M in advance before either
introducing any new products or services or modifying any
existing products or services.
(b) Shall not (i) grant any increase in the rates of
pay, salary or compensation provided to its officers, directors
or employees, which in combination with all increases granted
since January 1, 1997 exceed in the aggregate four percent (4%)
of the total compensation paid to the officers, directors or
employees of CLB and BANK as of December 31, 1996, and (ii) shall
not increase or decrease the benefits provided under, the
contribution to, the cost sharing allocation, or the expense or
cost to CLB of any employee fringe benefit or of any of the
benefit plans described in Exhibits 4.10(b) and 4.10(c), except
for normal adjustments imposed by third party providers.
(c) Shall not enter into any contract or commitment or
engage in any transaction which is not in the normal course of
business and which is not consistent with CLB's and BANK's past
business practices.
(d) Shall not create any indebtedness other than (i)
short term indebtedness incurred in the normal course of
business, (ii) indebtedness incurred pursuant to an existing
contract previously disclosed to F & M or (iii) indebtedness
other than as necessary to do the acts and things contemplated by
this Agreement.
(e) Shall not declare or pay any cash dividend, stock
dividend or make any other distribution in respect of its stock,
or directly or indirectly redeem, purchase or otherwise acquire
any of its own stock, or grant any stock warrant, stock options
or issue directly or indirectly any shares of common or preferred
stock or any other security of any type whatsoever or in any way
dispose of any shares of its own stock or any other security,
except for the payment of dividends from BANK to CLB for CLB's
normal operations consistent with past practices.
(f) Shall not amend their Articles of Incorporation or
Bylaws or make any changes in authorized or issued stock.
(g) Shall maintain current insurance in effect and
acquire such additional insurance as may be reasonably required
by increased business and risks, and operate, maintain and repair
all property in a normal business manner.
(h) Shall make adequate provision for any income and
property (real and personal) taxes which will be due with respect
to any 1997 earnings and shall file all tax reports or returns
and pay all income, franchise, real estate, personal property,
sales, use, excise or other taxes on or before the date on which
such reports, returns, or payments are due.
(i) Shall pay all liabilities in a timely manner on or
before their due dates and shall make adequate provision or
accruals for all liabilities of CLB.
(j) Shall not sell, dispose of, transfer, pledge or
encumber any shares of BANK Stock owned by CLB or take any action
to reduce the number of shares of BANK Stock to be acquired by F
& M and Subsidiary in this transaction below 98.17% of the
outstanding shares of BANK Stock as of the Closing Date.
(k) Shall use their best efforts (without making any
commitments on behalf of F & M) to preserve their business
organization intact, to keep available to F & M the present key
officers and employees of CLB and BANK and to preserve for F & M
the present relationships of CLB and BANK with their suppliers,
customers and others having business relations with them.
(l) Shall not sell or dispose of any property or
assets except in the normal course of business, including but not
limited to, selling or disposing of any securities held by CLB or
BANK prior to their normal maturity dates.
(m) Shall promptly notify F & M of any lawsuits,
claims, proceedings, regulatory actions or investigations that
may be threatened, brought, asserted or commenced against it or
its officers, directors, employees or agents involving in any way
the business, properties or assets of CLB or BANK, except for
routine collection litigation which is initiated by BANK and is
not expected to result in any loss to BANK, provided that if any
counterclaim, cross-claim or third-party claim is asserted in
such litigation, F & M shall be given notice thereof.
(n) Shall not make loans or grant credit to any
customer on terms materially more favorable than those which are
available under BANK's current underwriting guidelines. F & M,
CLB and BANK understand that BANK, in order to meet market
conditions may need to offer terms more favorable than those
currently offered but that BANK will not be a market leader in
this regard.
(o) Shall not allow BANK's primary capital to asset
ratio (12 C.F.R. Part 325 method), determined in accordance with
accepted accounting standards applicable to preparation of
Reports of Condition required to be filed with the Federal
Deposit Insurance Corporation, applied on a consistent basis, to
drop by more than twenty-five (25) basis points.
(p) Shall remain in compliance with all agreements,
commitments, understandings, undertakings or other obligations to
the Division of Banking, the FRB, the FDIC or any other
regulatory agency having jurisdiction over CLB and BANK.
(q) Shall cooperate fully and completely with F & M in
the preparation and filing of the Registration Statement, and
shall provide to F & M such information as may be required for
use therein pertaining to CLB and BANK, or their businesses or
operations.
(r) Shall not take any action which would be
reasonably likely to make unavailable either the pooling of
interest accounting treatment of the merger or to cause the
merger not to qualify as a tax-free reorganization.
6.4 Stock Records. Prior to the special shareholders
meeting to approve the Merger, the Board of Directors of CLB, in
accordance with its bylaws, shall take such steps as are
necessary to close its stock transfer books and establish a
record date for such meeting after the close of the transfer
books, furnish F & M with a current shareholder list as of such
record date and validly call a special shareholders' meeting or
obtain unanimous consent of shareholders as provided by statute
and CLB's bylaws.
6.5 Audited Financial Statements. If audited financial
statements of CLB and/or BANK to permit the shares of F & M
Common to be registered with the SEC are required, CLB agrees to
furnish such statements for the required years to F & M,
provided, however, that the expenses of preparing such statements
shall not be considered in determining BANK's Adjusted Equity
under paragraph 3.4(b).
6.6 Reserves for Loan and Lease Losses. Prior to the
Valuation Date, BANK shall increase its reserve for loan and
lease losses to one and 30/100 percent (1.30%) of loans and
leases and shall take such action as may be necessary to maintain
this reserve at this level until the Closing Date.
7. Covenants of F & M. F & M and Subsidiary hereby covenant
and agree as follows:
(a) As promptly as practicable after the execution of
this Agreement, F & M and Subsidiary, with the cooperation of
CLB, shall prepare and file with the SEC the Registration
Statement. As promptly as practicable after comments, if any,
are received from the SEC on such preliminary Registration
Statement, F & M and Subsidiary, with the cooperation of CLB,
shall file with the SEC an amendment to the Registration
Statement responding to such comments, and shall seek to have
such Registration Statement declared effective. F & M and
Subsidiary shall also use their best efforts to qualify under the
blue sky laws of the various states in which common shareholders
of CLB are located the shares of F & M Common Stock to be issued
pursuant to this transaction and shall file the NASD Listing
Application in a timely manner. F & M and Subsidiary shall pay
the expenses of preparing and delivering the joint
Prospectus/Proxy Statement for CLB's Shareholders.
(b) As promptly as practicable after the execution of
that Agreement, F & M and Subsidiary shall take action to obtain
regulatory approval of this transaction.
(c) F & M and Subsidiary shall not take any
action which would be reasonably likely to make unavailable
either the pooling of interest accounting treatment of the merger
or to cause the merger not to qualify as a tax-free
reorganization.
(d) F & M and CLB will jointly issue any public
announcements regarding the proposed transaction. F & M and
Subsidiary shall notify CLB, at the time of any public
announcement, of any tender offer by another financial
institution or holding company to acquire F & M Common, or of
F & M's intention to enter into a merger agreement with another
financial institution or holding company.
(e) F & M and CLB will jointly issue any public
announcements regarding the proposed transaction. CLB and its
authorized representatives shall have full access during normal
business hours to all properties, books, records, contracts and
documents of F & M, and F & M shall furnish or caused to be
furnished to CLB or its authorized representatives all
information with respect to the affairs and businesses of F & M
or CLB may reasonably request.
8. Conditions Precedent to F & M's Obligation. Each and every
obligation of F & M and Subsidiary to be performed on the Closing
Date shall be subject to the satisfaction prior thereto of the
following conditions:
8.1 Truth of Representations and Warranties. The
representations and warranties made in this Agreement or given on
behalf of CLB and BANK hereunder, shall have been continuously
true and correct from the date of execution of this Agreement to
the Closing Date, and shall be true and correct on and as of the
Closing Date with the same effect as though such representations
and warranties had been made or given on and as of the Closing
Date and CLB and BANK shall have complied with all other terms,
conditions and covenants of this Agreement.
8.2 Compliance with Covenants. Except as expressly set
forth in paragraph 8.7, CLB and BANK shall have performed all of
their obligations, and complied with all of the covenants under
this Agreement which are to be performed or complied with by them
from the date of this Agreement through and as of the Closing
Date, including the delivery of the closing documents specified
in paragraph 10.3.
8.3 Absence of Suit. No action, suit or proceeding before
any court or any governmental or regulatory authority shall have
been commenced or threatened, and no investigation by any
governmental or regulatory authority shall have been commenced,
against F & M, Subsidiary, CLB or BANK, or any of the affiliates,
associates, officers, directors or employees of any of them,
seeking to restrain, prevent or change the transaction
contemplated hereby, or questioning the validity or legality of
any such transaction, or seeking damages in connection with any
of such transaction.
8.4 CLB's Director and Shareholder Authorization. The
merger contemplated by this Agreement shall have been duly and
validly authorized by CLB's directors and shareholders in
accordance with the laws of the State of Wisconsin.
8.5 Receipt of Approvals. All approvals, consents and/or
waivers, including any approvals required by any federal or state
governmental regulatory agency, that are necessary to effect the
transactions contemplated hereby shall have been received and all
waiting periods thereunder shall have expired.
8.6 Accuracy of Financial Statements. F & M and Subsidiary
and their representatives shall be reasonably satisfied as to the
accuracy of all interim balance sheets, statements of income and
other financial statements of CLB or BANK furnished to F & M and
Subsidiary for periods ended after December 31, 1996.
8.7 Legal Opinion. F & M shall have received the opinion
of CLB Counsel referred to in subparagraph 10.3(d).
8.8 Time Limit on Closing. Closing shall have taken
place by December 31 , 1997.
8.9 Proceedings and Instruments Satisfactory;
Certificates. All proceedings, corporate or otherwise, to be
taken in connection with the transactions contemplated by this
Agreement shall have occurred and all appropriate documents
incident thereto as F & M and Subsidiary may reasonably request
shall have been delivered to F & M and Subsidiary. CLB and BANK
shall have delivered certificates in such detail as F & M may
reasonably request as to compliance with the conditions set forth
in this Article 8.
8.10 Securities Matters. The Registration Statement
shall have been declared effective under the Securities Act of
1933 by the SEC. No stop order suspending the effectiveness of
the Registration Statement shall have been issued by the SEC and
no proceedings for that purpose shall, to the knowledge of F & M
or Subsidiary, on or prior to the Effective Time, have been
initiated or threatened by the SEC. F & M and Subsidiary shall
have received all other federal or state securities permits,
exemptions, registrations or other authorizations necessary to
issue the F & M Common in exchange for the CLB Stock to
consummate the merger.
8.11 Prospectus/Proxy Statement. The Prospectus/Proxy
Statement will not contain any untrue statement of a material
fact or omit any material fact regarding CLB or BANK required to
be stated therein or necessary to make the statements contained
therein, in the light of the circumstances under which they were
made, not misleading.
8.12 Exchange of Stock Certificates. As a condition of
delivery of the consideration required by this Agreement, the CLB
Shareholders shall have executed and delivered documents
assigning their shares of CLB Stock to F & M and/or Subsidiary
containing appropriate representations regarding tax matters,
ownership, authority to act, residency and such other matters as
F & M shall request.
8.13 Affiliates of CLB. Each person who shall be
deemed to be an "affiliate" of CLB within the meaning of the
Securities Act of 1933 and Rule 145 promulgated by the SEC
thereunder shall have executed and delivered to F & M an
Affiliate's Undertaking, in the form attached hereto as Exhibit
8.13, dated as of the Effective Time.
8.14 Pooling Accounting. The merger contemplated
herein shall be treated as and qualify for accounting using the
pooling of interests method provided that this condition shall be
deemed waived if the disqualification is the result of an
omission by F & M.
8.15 Tax Status. No information has been discovered or
made known to F & M or Subsidiary to indicate that the IRS has
challenged or intends to challenge the status of this transaction
as a tax-free reorganization.
8.16 Dissenters' Rights. That no more than ten percent
(10%) of the total consideration paid by F & M in this
transaction, determined in accordance with the accounting rules
applicable to the pooling of interests accounting treatment,
shall be paid in cash, including amounts paid for fractional
shares and amounts paid to CLB Shareholders who exercise their
dissenters' rights under Wis. Stats. Section 180.1301 et seq.
8.17 Subsidiary. Badgerland Investment Corporation shall be
a wholly-owned subsidiary of BANK.
9. Conditions Precedent to CLB's Obligations.
Each and every obligation of CLB to be performed on the
Closing Date shall be subject to the satisfaction prior thereto
of the following conditions:
9.1 Truth of Representations and Warranties. The
representations and warranties made by F & M and Subsidiary in
this Agreement or given on their behalf hereunder, shall be true
and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given
on and as of the Closing Date.
9.2 F & M's and Subsidiary's Compliance. F & M and
Subsidiary shall have performed and complied with all of its
obligations under this Agreement which are to be performed or
complied with by them prior to or as of the Closing Date,
including delivery of the closing documents.
9.3 Absence of Suit. No action, suit or proceeding before
any court or any governmental or regulatory authority shall have
been commenced or be threatened and, no investigation by any
governmental or regulatory authority shall have been commenced,
against F & M, Subsidiary, CLB or BANK, or any of the affiliates,
associates, officers, directors, or employees of any of them,
seeking to restrain, prevent, or change the transactions
contemplated hereby, or questioning the validity or legality of
any such transactions, or seeking damages in connection with any
of such transactions.
9.4 Proceedings and Instruments Satisfactory; Certificates.
All proceedings, corporate or otherwise, to be taken by F & M and
Subsidiary in connection with the transaction contemplated by
this Agreement shall have occurred and all appropriate documents
incident thereto as CLB may reasonably request shall have been
delivered to CLB. F & M and Subsidiary shall have delivered
certificates in such detail as CLB may reasonably request to
comply with the conditions set forth in this Article 9.
9.5 Receipt of Approvals. All approvals, consents and
or waivers, including any approvals required by any federal or
state governmental regulatory agency and shareholder approval
which CLB shall make a good faith, best efforts to obtain, that
are necessary to effect the transactions contemplated hereby
shall have been received, and all waiting periods shall have
expired provided the failure to obtain the same was not the
result of an act or omission by CLB or BANK.
9.6 Time Limit on Closing. Closing shall have taken
place by December 31, 1997.
9.7 Legal Opinion. CLB shall have received the
opinion of F & M Counsel referred to in subparagraph 10.4(d).
9.8 Prospectus/Proxy Statement. The Prospectus/Proxy
Statement will not contain any untrue statement of material fact
or omit any material fact required to be stated therein or
necessary to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
9.9 Tax Status. No information has been discovered or
made known to CLB to indicate that the IRS has challenged or
intends to challenge the status of this transaction as a tax-free
reorganization.
10. Closing.
10.1 Time and Place. The closing of this transaction
("Closing") shall take place at the offices of F & M (or such
other place as the parties may agree) on the Closing Date.
10.2 Rights of CLB Shareholders After the Effective Time.
After the Effective Time and until the surrender of a stock
certificate representing shares of CLB Common, each such
outstanding certificate, which prior to the Effective Time
represented shares of CLB Common, shall be deemed for all
purposes, subject to the further provisions of this Agreement, to
evidence the ownership of the number of full shares of F & M
Common into which such shares have been converted; provided,
however, that unless and until any such certificates representing
CLB Common shall be so surrendered, the stock certificate
representing the shares, any dividends or other distributions of
any kind payable in respect of shares of F & M Common into which
such CLB Common has been converted, shall be withheld by F & M.
Upon the subsequent surrender and exchange of such CLB Common
certificates, such holder of record of the certificates formerly
representing shares of CLB Common (or such holder's assignee)
shall be paid the amount of any such cash dividends or other
distributions, without interest, which became payable under this
Agreement to holders of record of shares of F & M Common on or
after the Effective Time and prior to the surrender and exchange
of the certificates. Delivery of certificates representing
shares of F & M Common to former CLB Shareholders who have
tendered their certificates for their shares of CLB Common at or
before the Effective Time shall be made as soon as reasonably
possible after the Effective Time.
10.3 Documents to be Delivered by CLB. At the time of or
prior to the closing, CLB shall deliver the following documents:
(a) A certificate by the chairman, vice-chairman or
president of CLB and BANK (i) that the representations and
warranties made by CLB or BANK as the case may be in this
Agreement are true and correct on as of the Closing Date with the
same effect as though such representations and warranties had
been made on or given on and as of the Closing Date, (ii) that
CLB and BANK have performed and complied with all of their
obligations under this Agreement which are to be performed or
complied with by or prior to or on the Closing Date, and (iii)
that all Schedules and Exhibits delivered by CLB to F & M prior
or as of the Closing Date are true, correct and complete as of
the Closing Date.
(b) An Incumbency Certificate for the officers
executing the documents in connection with the transaction
contemplated hereby.
(c) Copies of the Articles of Incorporation and Bylaws
of CLB and BANK, duly certified by their respective custodians as
true, correct and complete copies thereof, including any
amendments as of the Closing Date.
(d) A written opinion from CLB counsel dated as of the
Closing Date addressed to F & M and F & M Counsel, in form and
substance substantially in the form attached hereto as Exhibit
10.3(d).
(e) Certified copies of resolutions adopted by CLB's
board of directors to the effect that the execution, delivery and
performance of this Agreement and the transactions contemplated
by it have been duly and validly authorized in accordance with
the laws of the State of Wisconsin.
(f) Such other documents of transfer, certificates or
authority and other documents as F & M may reasonably request.
10.4 Documents to be Delivered by F & M and Subsidiary. As
of the Closing Date, F & M and Subsidiary shall deliver the
following documents:
(a) Certificates for shares of F & M Common and cash
payments as determined under Article 3 of this Agreement. Such
certificates will be in the name of CLB Shareholders entitled to
the same in accordance with their interest in CLB as of the
Effective Time provided, however, that any certificates need not
be delivered until such time as the provisions of paragraph 10.2
have been complied with by such Shareholders.
(b) An Incumbency Certificate relating to all parties
executing documents relating to any of the transactions
contemplated hereby on behalf of F & M and Subsidiary.
(c) A certificate by an officer of F & M and
Subsidiary that, to the best of such officer's knowledge, (i) the
representations and warranties made by F & M and Subsidiary in
this Agreement are true and correct as of the Closing Date, (ii)
that F & M and Subsidiary have performed and complied with all of
their obligations which are to be performed or complied with by
or prior to or as of the Closing Date and (iii) that all
Schedules and Exhibits delivered by F & M to CLB are true,
correct and complete as of the Closing Date.
(d) A written opinion from counsel for F & M and
Subsidiary dated as of the Closing Date addressed to CLB and CLB
Counsel in form and substance substantially in the form attached
hereto as Exhibit 10.4(d).
(e) A written opinion from Securities Counsel
dated as of the Effective Time addressed to F & M and CLB,
reasonably satisfactory in form and substance to F & M Counsel,
to the effect that the shares of F & M Common issuable in the
transaction are the subject of an effective Registration
Statement with the SEC, and that no stop order relating to such
Registration Statement has been issued by the SEC and that, to
the knowledge of such counsel, no proceedings for that purpose
shall have been initiated or threatened by the SEC.
(f) Certified copies of the resolutions adopted by
F & M's and Subsidiary's boards of directors and shareholders to
the effect that the execution, delivery and performance of this
Agreement and the transactions contemplated by it have been duly
and validly authorized in accordance with the laws of the State
of Wisconsin.
11. Law Governing.
This Agreement shall be construed and interpreted according
to the laws of the State of Wisconsin.
12. Assignment.
This Agreement may not be assigned in whole or in part
without the written consent of all parties, provided, however,
that Subsidiary's participation in this transaction shall not
require any further consent or authorization.
13. Amendment and Modification.
This Agreement may only be amended or modified by a written
agreement signed by the duly authorized representatives of F & M,
Subsidiary and CLB.
14. Abandonment.
This Agreement may be terminated and the transaction
provided for by this Agreement may be abandoned at any time
before the Closing Date:
(a) By mutual consent of F & M, Subsidiary and CLB;
(b) By F & M and Subsidiary, pursuant to paragraph
3.4, or if any of the conditions provided for in Article 8 of
this Agreement have not been met and have not been waived in
writing by F & M or Subsidiary.
(c) By CLB if any of the conditions provided for in
Article 9 of this Agreement have not been met and have not been
waived in writing by CLB.
(d) In the event of a breach of this Agreement, by
notice from the non-breaching party to the breaching party as set
forth below.
In the event of termination and abandonment by any party as
provided in this Article, written notice shall be given to the
other party setting forth the breach of this Agreement or the
default in performance which has occurred, or the condition which
has not been met. The party to whom the notice is directed
shall, if such party is able to effect a satisfaction or cure,
have ten (10) days after such notice is given to satisfy such
condition or cure such breach or default, provided that if such
ten (10) day period is not sufficient and the party is making a
diligent effort to satisfy such condition or cure such breach or
default, the time to do so may be extended for such period as the
parties may agree not to exceed thirty (30) days provided
however, that the F & M Per Share Price shall be the higher of
the price as of the date of the notice or as of the date on which
the default is satisfied or cured. The termination and/or
abandonment of this Agreement shall not alter or diminish the
liability of the party that failed to comply with the conditions
of this Agreement, provided, however, that termination pursuant
to paragraph 3.4 shall be without liability of any party to any
other party. Each party shall pay its own expenses incident to
preparation for the consummation of this Agreement and the
transactions contemplated hereunder. In the event F & M
declares, after the date of this Agreement, a stock dividend or
stock split, the F & M Stock Consideration shall be adjusted
proportionately based upon the stock dividend or split.
If the transaction contemplated by this Agreement is not
consummated other than as a result of a failure to satisfy the
conditions set forth herein, the party causing the failure to
consummate shall pay $50,000.00 in liquidated damages to the
other party.
15. Notices.
All notices, requests, demands, and other communications
hereunder shall be deemed to have been duly given, upon actual
delivery, if delivered by hand; or upon receipt by the addressee,
if given by mail (certified mail - return receipt requested with
postage prepaid is required for notice by mail); or upon receipt
by the addressee, if by private courier; or upon receipt of the
transmission by the addressee if by telecopy (with a copy sent by
first class mail):
(a) If to CLB, to Clear Lake Bancorp., Inc., ▇.▇. ▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX: ▇▇▇-▇▇▇-▇▇▇▇, with a copy to
▇▇▇▇▇▇▇▇▇ & Vennem, P.L.L.P., 4200 IDS Center, ▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn.: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
Esq., FAX: ▇▇▇-▇▇▇-▇▇▇▇.
(b) If to F & M or Subsidiary, to ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, FAX: ▇▇▇-▇▇▇-▇▇▇▇,
with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., McCarty, Curry, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
FAX: ▇▇▇-▇▇▇-▇▇▇▇.
The place to which notice is to be given may be changed by
notice given in accordance with this Article.
16. Entire Agreement.
This Agreement with Exhibits embodies the entire agreement
between the parties hereto with respect to the transaction
contemplated herein and supersedes all prior agreements, written
or oral, express or implied and all negotiations, discussions or
other matters between the parties and there have been and are no
agreements representations or warranties between the parties
other than those set forth or provided for herein.
17. Counterparts.
This Agreement may be executed in two (2) or more partially
or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together
shall constitute but one and the same instrument.
18. Binding Effect.
This Agreement shall inure to the benefit of and bind the
parties and their respective heirs, beneficiaries, transferees,
successors, and assigns.
19. Headings.
The headings of this Agreement are inserted for convenience
only and shall not constitute a part hereof.
20. Confidentiality.
Except as necessary to take action pursuant to this
Agreement, each party agrees that all information and documents
received from the other party regarding the proposed transaction
shall be held in confidence and that all documents containing
such information will be returned upon request if the parties
abandon the transaction. The parties further agree to use such
information only in connection with the proposed transaction
contemplated by this Agreement. This paragraph shall not apply
to information or documents which are, or by law must be made,
publicly available. The parties agree to not publicly disclose
this Agreement or its Exhibits or any of the provisions hereof,
except as a part of regulatory filings or pursuant to press
releases and other public statements approved by F & M and CLB.
21. Further Documents.
F & M, Subsidiary, and CLB agree to execute any and all
other documents and to take such other action or corporate
proceedings as may be reasonably necessary or desirable to carry
out the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the day and year first
above written.
F & M BANCORPORATION, INC. ("F & M")
By:________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CEO and Chairman of the Board
ATTEST:
By:______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
F & M MERGER CORPORATION ("SUBSIDIARY")
By:____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ATTEST:
By:__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇, Secretary
CLEAR LAKE BANCORP., INC. ("CLB")
By:____________________________________
▇.▇. ▇▇▇▇▇▇▇▇, Chairman of the Board
ATTEST:
By:____________________________________
___________________, Secretary
