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______________________________________________________________________________
______________________________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
by and between
▇▇▇▇▇ SAVINGS BANK OF BRIGHTON
and
WASHINGTON BANCORP,
an Iowa corporation
Dated June 24, 1997
______________________________________________________________________________
______________________________________________________________________________
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AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
PAGE
ARTICLE ONE
TERMS OF THE MERGER AND CLOSING
Section 1.1. Formation of Interim Bank.....................................1
Section 1.2. The Merger....................................................1
Section 1.3. Merging Banks.................................................1
Section 1.4. Surviving Bank; Charter and Bylaws; Directors and Officers....2
Section 1.5. Effect of the Merger..........................................2
Section 1.6. Conversion of Shares..........................................2
Section 1.7. The Closing...................................................3
Section 1.8. Exchange Procedure; Surrender of Certificate..................3
Section 1.9. Closing Date; Effective Times.................................5
Section 1.10. Actions At Closing............................................5
Section 1.11. Reservation of Right to Revise Transaction....................6
ARTICLE TWO
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ▇▇▇▇▇
Section 2.1. Organization and Authority....................................6
Section 2.2. Capitalization................................................7
Section 2.3. Authorization.................................................7
Section 2.4. ▇▇▇▇▇ Financial Statements....................................8
Section 2.5. ▇▇▇▇▇ Reports.................................................8
Section 2.6. Properties and Leases.........................................8
Section 2.7. Taxes.........................................................9
Section 2.8. Material Adverse Change.......................................9
Section 2.9. Commitments and Contracts.....................................9
Section 2.10. Litigation and Other Proceedings.............................10
Section 2.11. Insurance....................................................11
Section 2.12. Compliance with Laws.........................................11
Section 2.13. Labor........................................................12
Section 2.14. Material Interests of Certain Persons........................12
Section 2.15. Allowance for Loan Losses; Adjustments.......................13
Section 2.16. Employee Benefit Plans.......................................13
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Section 2.17. Conduct to Date.............................................14
Section 2.18. Regulatory Filings..........................................15
Section 2.19. Registration Obligations....................................15
Section 2.20. Takeover Provisions Not Applicable..........................16
Section 2.21. Regulatory, Tax and Accounting Matters......................16
Section 2.22. Brokers and Finders.........................................16
Section 2.23. Accuracy of Information.....................................16
Section 2.24. Community Reinvestment Act Compliance.......................16
Section 2.25. Governmental Approvals and Other Conditions.................16
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Section 3.1. Organization and Capital Stock..............................17
Section 3.2. Authorization...............................................17
Section 3.3. Subsidiaries................................................18
Section 3.4. Financial Information.......................................18
Section 3.5. Absence of Changes..........................................19
Section 3.6. Litigation..................................................19
Section 3.7. Compliance With Laws........................................19
Section 3.8. Statements True and Correct.................................19
ARTICLE FOUR
AGREEMENTS OF TARGET BANK
Section 4.1. Conduct of Business Prior to the Effective Time.............19
Section 4.2. Forbearances................................................20
Section 4.3. Breaches....................................................21
Section 4.4. Submission of Merger to Stockholders........................21
Section 4.5. Consents to Contracts and Leases............................21
Section 4.6. Conforming Accounting and Reserve Policies; Restructuring
Expenses...................................................21
Section 4.7. Consummation of Agreement...................................22
Section 4.8. Access to Information.......................................22
ARTICLE FIVE
AGREEMENTS OF ACQUIROR
Section 5.1. Regulatory Matters..........................................22
Section 5.2. Current Information.........................................22
Section 5.3. Expenses....................................................23
Section 5.4. Miscellaneous Agreements and Consents.......................23
Section 5.5. Press Releases..............................................23
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Section 5.6. Takeover Provisions.........................................23
Section 5.7. Third Parties...............................................23
Section 5.8. Insurance Policy Claims.....................................24
Section 5.9. Employment Agreement; Benefits and Related Matters..........24
Section 5.10. Updated Schedules...........................................24
ARTICLE SIX
CONDITIONS PRECEDENT TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger.....................................................25
Section 6.2. Conditions to Obligations of ▇▇▇▇▇ to Effect the Merger.....25
Section 6.3. Conditions to Obligations of Washington to Effect
the Merger.................................................26
ARTICLE SEVEN
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination.................................................27
Section 7.2. Effect of Termination.......................................27
Section 7.3. Amendment...................................................27
Section 7.4. Severability................................................28
Section 7.5. Waiver......................................................28
ARTICLE EIGHT
GENERAL PROVISIONS
Section 8.1. Nonsurvival of Representations and Warranties...............28
Section 8.2. Notices.....................................................28
Section 8.3. Miscellaneous...............................................30
EXHIBIT LIST
EXHIBIT A - Stockholder Agreement
EXHIBIT B - Subsidiary Agreement and Plan of Merger
EXHIBIT C - ▇▇▇▇ ▇▇▇▇▇▇▇ Employment Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made June
24, 1997, by and between ▇▇▇▇▇ SAVINGS BANK OF BRIGHTON, Brighton, Iowa
("▇▇▇▇▇"), and WASHINGTON BANCORP, an Iowa corporation ("Washington").
WHEREAS, Washington and ▇▇▇▇▇ wish to provide for the acquisition of
▇▇▇▇▇ by Washington by means of the merger into ▇▇▇▇▇ of an Iowa-chartered
interim bank which is a wholly owned subsidiary of Washington, and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a material inducement and condition to Washington's willingness to
enter into this Agreement, each of Rubio's directors and certain other
shareholders of ▇▇▇▇▇ have entered into written agreements in the form
attached hereto as Exhibit A (each a "Shareholder Agreement") pursuant to
which they have agreed to vote the outstanding shares of ▇▇▇▇▇ common stock
owned, controlled or for which they have voting power in favor of this
Agreement and the transactions contemplated herein.
NOW THEREFORE, in consideration of the foregoing and of the
representations, warranties, agreements and conditions set forth in this
Agreement, the parties hereby agree as follows:
ARTICLE ONE
TERMS OF THE MERGER AND CLOSING
Section 1.1. Formation of Interim Bank. Washington shall organize an
Iowa-chartered, stock form interim bank as a wholly owned subsidiary of
Washington ("Interim Bank").
Section 1.2. The Merger. Pursuant to the terms and provisions of this
Agreement, the Bank Holding Company Act of 1956, as amended (the "BHCA"), and
the regulations of the Board of Governors of the Federal Reserve System (the
"FBR") promulgated thereunder, the Federal Deposit Insurance Act, ("FDIA"),
the
rules and regulations of the Iowa Department Building and the Iowa Business
Corporation Act (the "Iowa Act") (together, the "Corporate Law"), (i) ▇▇▇▇▇
and Interim Bank, at such time as it shall be lawful to do so, shall duly
authorize and execute a plan of merger in the form attached hereto as Exhibit
B (the "Plan of Merger"), and, as provided herein and therein, Interim Bank
shall merge with and into ▇▇▇▇▇ (the "Merger").
Section 1.3. Merging Banks. Interim Bank shall be the merging bank in
the Merger. The corporate identity and existence of Interim Bank, separate and
apart from ▇▇▇▇▇, shall cease on consummation of the Merger.
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Section 1.4. Surviving Bank; Charter and Bylaws; Directors and
Officers. ▇▇▇▇▇ shall be the surviving bank in the Merger. The charter and
bylaws of the ▇▇▇▇▇, as in effect immediately prior to the Merger, shall be
the charter and bylaws of ▇▇▇▇▇, as in effect immediately prior to the Merger,
shall be the charter and bylaws of ▇▇▇▇▇ as the surviving bank in the Merger.
The directors and officers of ▇▇▇▇▇ immediately prior to the Effective Time
shall be the directors and officers of ▇▇▇▇▇, as the surviving corporation of
the Merger, with the addition of ▇▇▇▇ ▇▇▇▇▇▇▇ as a director on the Board,
until their respective successors shall be duly elected and qualified or
otherwise duly selected. The separate corporate identity and name recognition
of ▇▇▇▇▇ are intended to be maintained by Washington following completion of
the Merger, and shall be maintained by Washington following completion of the
Merger for a period of at least five years, subject to business
considerations, regulatory requirements or changes to regulations or statutes
which would materially effect Washington or ▇▇▇▇▇. In addition, to the extent
qualified individuals can be found following completion of the Merger, it is
intended that a majority of the Board of ▇▇▇▇▇ shall reside or maintain their
principal place of business within Rubio's assessment area delineated pursuant
to the Community Reinvestment Act of 1977, except for that portion of
Washington County north of 290th Street.
Section 1.5. Effect of the Merger. The Merger shall have all of the
effects provided by the Corporate Law.
Section 1.6. Conversion of Shares.
(a) At the Merger Effective Time (as defined in Section 1.9 hereof),
each record holder of issued and outstanding shares of common stock, par value
one hundred dollars per share, of ▇▇▇▇▇ (the "▇▇▇▇▇ Common"), other than the
holders that have duly exercised and perfected their dissenters' rights under
the Corporate Law ("Dissenting Shareholders"), shall be entitled to receive
the merger consideration ("Merger Consideration") consisting of $2,300.50 in
cash (or in the form of a five year note of Washington bearing interest at the
prime rate of interest as set forth in the Wall Street Journal), multiplied by
the number of shares of ▇▇▇▇▇ Common held by such record holder immediately
prior to the Merger Effective Time, provided if the Merger Effective Time does
not occur by September 30, 1997 unless due to the fault of ▇▇▇▇▇, then the
applicable cash or note amount shall be increased by the net income (as
determined in accordance with generally accepted accounting principles) earned
by ▇▇▇▇▇ during the three months ended June 30, 1997 (excluding any non-
interest income during such period which is of a non-recurring nature or
inconsistent with that generated in prior periods; and further excluding any
dividends paid to ▇▇▇▇▇ shareholders during the three months ended June 30,
1997).
(b) At the Merger Effective Time, all of the issued and outstanding
shares of ▇▇▇▇▇ Common, by virtue of the Merger and without any action on the
part of the holders thereof, shall no longer be outstanding and shall be
cancelled and retired and shall cease to exist, and each holder of any
certificate or certificates which immediately prior to the Merger Effective
Time represented outstanding shares of ▇▇▇▇▇ Common (the "Certificates") shall
thereafter cease to have any rights with respect to such shares, except the
right of such holders to receive, without interest, the Merger
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Consideration with respect to the shares represented by the Certificate or
Certificates upon the surrender of such Certificate or Certificates in
accordance with Section 1.8 hereof and the right of Dissenting Shareholders
provided under Section 1.6(e) hereof, as applicable.
(c) At the Merger Effective Time, each share of ▇▇▇▇▇ Common, if
any, held in the treasury of ▇▇▇▇▇ (other than shares held in trust accounts
for the benefit of others or in other fiduciary, nominee or similar
capacities) immediately prior to the Merger Effective Time shall be canceled.
(d) Each share of common stock, par value one cent ($.01) per share,
of Interim Bank outstanding immediately prior to the Merger Effective Time
shall be converted into and become one share of ▇▇▇▇▇ Common.
(e) Any issued and outstanding shares of ▇▇▇▇▇ Common held by a
Dissenting Shareholder shall not be converted as described in Section 1.6(a)
but from and after the Merger Effective Time shall represent only the right to
receive such value as may be determined to be due to such a Dissenting
Shareholder pursuant to the Corporate Law; provided, however, that each share
of ▇▇▇▇▇ Common outstanding immediately prior to the Merger Effective Time and
held by a Dissenting Shareholder who shall, after the Merger Effective Time,
withdraw his or her demand for payment of value or lose his or her right to so
object shall have only such rights as are provided under the Corporate Law.
Section 1.7. The Closing. The closing of the Merger (the "Closing")
shall take place at such place and at such time on the Closing Date (as
defined in Section 1.9 below) as are designated by Washington.
Section 1.8. Exchange Procedure; Surrender of Certificate.
(a) Washington shall act as, or retain a financial institution
reasonably acceptable to ▇▇▇▇▇ to act as, the exchange agent (the "Exchange
Agent") in the Merger. Within one business day after the Merger Effective
Time, Washington shall deliver the Merger Consideration to the Exchange Agent
and the cash portion thereof shall be tendered in immediately available funds.
As soon as reasonably practicable after the Merger Effective Time, the
Exchange Agent shall mail to each record holder of any Certificate or
Certificates whose shares were converted into the right to receive the Merger
Consideration, a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Washington or the Exchange
Agent may reasonably specify) (each such letter, the "Letter of Transmittal")
and instructions for effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender to the Exchange Agent of a
Certificate, together with a Letter of Transmittal duly executed and of other
required documents, the holder of such Certificate shall be entitled to
promptly receive in exchange therefor solely the Merger Consideration. No
interest on the Merger Consideration issuable upon the surrender of the
Certificates shall be paid or accrued for the benefit
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of holders of Certificates. After the Merger Effective Time, there shall be no
further registration or transfers on the records of ▇▇▇▇▇ of shares of ▇▇▇▇▇
Common and, if a Certificate is presented for transfer, it shall be cancelled
in exchange for the Merger Consideration (except as provided in Sections
1.8(b) and 1.8(c) hereof). Neither the Exchange Agent nor any party to this
Agreement shall be liable to any holder or former holder of a share or shares
of ▇▇▇▇▇ Common (or to anyone claiming through such a holder) with respect to
amounts to which such holder would have been entitled as a consequence of the
Merger if such amounts have been paid or are payable to any public official
pursuant to any abandoned property, escheat or similar laws. All costs and
expenses of the Exchange Agent shall be borne by Washington.
(b) Notwithstanding the provisions of Section 1.8(a), any record
holder of at least one hundred shares of ▇▇▇▇▇ Common shall be entitled on the
date of the Merger Effective Time or by 11:00 A.M. Eastern Time on the next
business day thereafter to tender his, her or its Certificate(s) endorsed in
blank or with a separately executed stock power containing a signature
guaranty together with a completed IRS Form W-9 and written wire instructions
to the Exchange Agent and Washington shall cause the Exchange Agent to effect
a wire transfer of the Merger Consideration (to the extent the holder has
elected to receive cash) payable with respect to the Certificate(s) tendered,
less any required withholding to such record holder on the business day next
following the Merger Effective Time in accordance with the written wire
instructions.
(c) If the Merger Consideration is to be issued to a person other
than a person in whose name a surrendered Certificate is registered, it shall
be a condition of issuance that the surrendered Certificate shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such issuance shall pay to the Exchange Agent or Washington any
required transfer or other taxes or establish to the satisfaction of the
Exchange Agent or Washington that such tax has been paid or is not applicable.
(d) In the event any Certificate shall have been lost, stolen or
destroyed, the owner of such lost, stolen or destroyed Certificate shall
deliver to the Exchange Agent or Washington an affidavit stating such fact, in
form reasonably satisfactory to the Exchange Agent and/or Washington, and, at
the Exchange Agent's or Washington's discretion, a bond in such reasonable sum
as the Exchange Agent or Washington may direct as indemnity against any claim
that may be made against the Exchange Agent, Washington, or ▇▇▇▇▇ or their
successors or any other party with respect to the Certificate alleged to have
been lost, stolen or destroyed. Upon such delivery, the owner shall have the
right to receive the Merger Consideration with respect to the shares
represented by the lost, stolen or destroyed Certificate.
(e) At any time following six months after the Merger Effective
Time, Washington shall be entitled to terminate the Exchange Agent
relationship, and thereafter holders of Certificates shall be entitled to look
only to Washington (subject to abandoned property, escheat or other similar
laws) with respect to the Merger Consideration issuable upon surrender of
their Certificates.
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Section 1.9. Closing Date; Effective Times. The Closing shall take
place as soon as practicable but not later than the tenth business day after
the day on which the last of the approvals from applicable regulatory
authorities and shareholders has been received relating to the Merger and any
applicable waiting periods have expired, but subject to the satisfaction or
written waiver of the conditions set forth in Article Six below (the "Closing
Date"). The effective time of the Merger (the "Merger Effective Time") shall
occur upon the date and time that the articles of combination concerning the
Merger are endorsed by the Iowa Department of Banking. The parties shall use
their best efforts to cause such endorsements to occur on the Closing Date.
Section 1.10. Actions At Closing.
(a) At the Closing, ▇▇▇▇▇ shall deliver to Washington:
(i) a certified copy of the charter and bylaws of ▇▇▇▇▇
including all amendments;
(ii) a certificate signed by an appropriate officer of ▇▇▇▇▇
stating that all of the conditions set forth in Sections 6.3(a), (b), (d), (g)
and (i) have been satisfied or waived as provided therein;
(iii) a certified copy of the resolutions of Rubio's Board of
Directors as required for valid approval of the execution of this Agreement
and the Plan of Merger and a certified copy of the resolutions of Rubio's
shareholders as required for the consummation of the Merger;
(iv) a certificate from the State of Iowa, dated a recent date,
as to the good standing and corporate existence of ▇▇▇▇▇ and a certificate
from the Federal Deposit Insurance Corporation ("FDIC"), dated a recent date,
as to the existence of deposit insurance of ▇▇▇▇▇;
(v) the Plan of ▇▇▇▇▇▇, executed by ▇▇▇▇▇ in proper form for
filing with the Iowa Department of Banking;
(vi) articles of combination relating to the Merger, executed
by ▇▇▇▇▇ in proper form for filing with the Iowa Department of Banking;
(vii) a legal opinion from counsel for ▇▇▇▇▇, in form reasonably
acceptable to Washington's counsel; and
(b) At the Closing, Washington shall deliver to ▇▇▇▇▇:
(i) a certificate signed by an appropriate officer of
Washington stating that all of the conditions set forth in Sections 6.2(a) and
(b) have been satisfied;
(ii) a certified copy of the resolutions of Washington's Board
of Directors authorizing the execution of this Agreement and the consummation
of the transactions contemplated hereby;
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(iii) a certified copy of the resolutions of Interim Bank's
Board of Directors and stockholder, as required for valid approval of the
execution of the Acquisition Plan of Merger and the consummation of the
transactions contemplated hereby and thereby;
(iv) the Plan of Merger, executed by Interim Bank, in proper
form for filing with the Iowa Department of Banking;
(vi) articles of combination relating to the Merger, executed by
Interim Bank, in proper form for filing with the Iowa Department of Banking;
and
(vii) a legal opinion from counsel for Washington, in form
reasonably acceptable to Rubio's counsel; and
(viii) confirmation that the Merger Consideration has been
delivered to the Exchange Agent, as provided in Section 1.8 hereof.
Section 1.11. Reservation of Right to Revise Transaction. Washington
shall have the unilateral right to change the method of structuring the
Merger, to the extent permitted by applicable law and to the extent it deems
such change to be desirable; provided, however, that no such change shall (a)
alter or change the amount or kind of Merger Consideration, (b) materially
impede or delay the consummation of the Merger or (c) adversely affect the tax
treatment of ▇▇▇▇▇ shareholders as a result of receiving the Merger
Consideration, Washington may exercise this right of revision by giving
written notice thereof in the manner provided in Section 8.2 of this
Agreement.
ARTICLE TWO
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ▇▇▇▇▇
▇▇▇▇▇ represents and warrants to and covenants with Washington as
follows:
Section 2.1. Organization and Authority. ▇▇▇▇▇ is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Iowa, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, except where the failure to be so
qualified would not have a material adverse effect on the financial condition,
assets, deposit liabilities, results of operations or business (collectively,
the "Condition") of ▇▇▇▇▇, and has the corporate power and authority to own
its properties and assets and to carry on its business as it is now being
conducted. Except as set forth on Schedule 2.1(b), ▇▇▇▇▇ does not own
beneficially, directly or indirectly, any shares of any class of Equity
Securities (as defined in Section 2.2) or similar interests of any
corporation, trust company, bank, business trust, association or similar
organization. ▇▇▇▇▇ is a state bank chartered by the State of Iowa. The
deposits of ▇▇▇▇▇ are insured up to applicable limits by the Bank Insurance
Fund ("BIF") of the Federal Deposit Insurance Corporation (the "FDIC"). True
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and complete copies of the Articles of Incorporation and Bylaws of ▇▇▇▇▇, as
in effect on the date of this Agreement, together with all amendments thereto,
are set forth in Schedule 2.1(a) hereto.
Section 2.2. Capitalization. The authorized capital stock of ▇▇▇▇▇
consists of 2,000 shares of ▇▇▇▇▇ Common Stock, par value $100.00 per share
all of which shares, as of the date hereof, are issued and outstanding. The
issued and outstanding shares of ▇▇▇▇▇ Common Stock comprise all of the
outstanding Equity Securities issued by ▇▇▇▇▇. "Equity Securities" of an
issuer means capital stock or other equity securities of such issuer, options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, shares of
any capital stock or other equity securities of such issuer, or contracts,
commitments, understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock or other equity
securities of such issuer, or options, warrants, scrip or rights to purchase,
acquire, subscribe to, calls on or commitments for any shares of its capital
stock or other equity securities. All of the issued and outstanding shares of
▇▇▇▇▇ Common Stock are validly issued, fully paid and nonassessable, and have
not been issued in violation of any preemptive right of any shareholder of
▇▇▇▇▇.
Section 2.3. Authorization.
(a) ▇▇▇▇▇ has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The only shareholder
vote required for ▇▇▇▇▇ to approve this Agreement and the Merger is the vote
required under Iowa Code Section 490.1103. The execution, delivery and
performance of this Agreement by ▇▇▇▇▇ and the consummation by ▇▇▇▇▇ of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of ▇▇▇▇▇; subject to the receipt of required approval by the
shareholders of ▇▇▇▇▇. Subject to the receipt of such shareholder approval
and approvals of Regulatory Authorities (as defined in Section 2.5) as may be
required by statute or regulation, this Agreement is a valid and binding
obligation of ▇▇▇▇▇ enforceable against ▇▇▇▇▇ in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other similar laws of
general applicability affecting creditors' rights and to general equity
principles.
(b) Neither the execution, delivery or performance by ▇▇▇▇▇ of this
Agreement, nor the consummation by ▇▇▇▇▇ of the transactions contemplated
hereby, nor compliance by ▇▇▇▇▇ with any of the provisions hereof, will
(i) violate or conflict with any term, condition or provision of the articles
of incorporation and bylaws of ▇▇▇▇▇, (ii) violate, conflict with, or result
in a breach of any provisions of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of any Lien upon any of the properties or assets of ▇▇▇▇▇ under any of the
terms, conditions or provisions of, any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
▇▇▇▇▇ is a party or by which it may be bound, or to which ▇▇▇▇▇ or any of its
properties or assets may be subject, or (iii) subject to compliance with the
statutes and regulations referred to in subsection (c) of this Section 2.3, to
the best knowledge of the senior officers and directors of ▇▇▇▇▇
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(the "Best Knowledge of ▇▇▇▇▇"), violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to ▇▇▇▇▇ or any of
its properties or assets.
(c) Other than in connection or in compliance with the provisions of
the Iowa Act, or filings, consents, reviews, authorizations, approvals or
exemptions required under the BHCA and the Iowa Banking Act and regulations
under such statutes, no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public body or authority or third
party is necessary on the part of ▇▇▇▇▇ for the consummation of the
transactions contemplated by this Agreement.
Section 2.4. ▇▇▇▇▇ Financial Statements. Except as disclosed on
Schedule 2.4, the balance sheet of ▇▇▇▇▇ as of June 30, 1996 and the related
statement of income and statements of changes in stockholders equity and cash
flows for the year then ended, all as previously provided to Washington
(collectively, the "▇▇▇▇▇ Financial Statements"), have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis ("GAAP"), present fairly the financial position of the
entities indicated therein at the dates indicated therein and are derived from
the books and records of ▇▇▇▇▇ and the ▇▇▇▇▇ Subsidiaries, which are complete
and accurate in all material respects and have been maintained since January
1, 1990 in accordance with good business practices. ▇▇▇▇▇ has no material
contingent liabilities that are not described in the ▇▇▇▇▇ Financial
Statements.
Section 2.5. ▇▇▇▇▇ Reports. Since January 1, 1990, ▇▇▇▇▇ has filed all
material reports, registrations and statements, together with any required
material amendments thereto, that it was required to file with (i) the
Superintendent of Banking of the State of Iowa (the "Superintendent"),
(ii) the Board of Governors of the Federal Reserve System (the "FRB"), (iii)
the FDIC, and (iv) any other federal, state, municipal, local or foreign
government, securities, banking, other governmental or regulatory authority
and the agencies and staffs thereof (the entities in the foregoing clauses (i)
through (iv) together with the Office of Thrift Supervision ("OTS") being
referred to herein collectively as the "Regulatory Authorities" and
individually as a "Regulatory Authority"). All such reports and statements
filed with any such Regulatory Authority are collectively referred to herein
as the "▇▇▇▇▇ Reports." As of its respective date, each ▇▇▇▇▇ Report complied
in all material respects with all of the rules and regulations promulgated by
the applicable Regulatory Authority and did not contain any untrue statement
of a material fact or omit to state a 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.
Section 2.6. Properties and Leases. Except (i) as may be reflected in
the ▇▇▇▇▇ Financial Statements, (ii) any Lien for current taxes not yet
delinquent and (iii) with respect to assets classified as other real estate
owned, ▇▇▇▇▇ has good and marketable title free and clear of any material Lien
to all the real and personal property reflected in the Historical Balance
Sheets (described above) as of June 30, 1996 and, in each case, all real and
personal property acquired since such date, except such real and personal
property as has been disposed of since such date for fair value in the
ordinary course of business. All leases material to ▇▇▇▇▇, pursuant to which
▇▇▇▇▇ is a lessee or lessor of real
9
or personal property, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any material
existing default by ▇▇▇▇▇ or any event which, with notice or lapse of time or
both, would constitute a material default by ▇▇▇▇▇. Except as disclosed on
Schedule 2.6, all of Rubio's buildings, structures and equipment in regular
use have been well maintained and are in good and serviceable condition,
normal wear and tear excepted. None of the buildings, structures and equipment
of ▇▇▇▇▇ violates or fails to comply with any applicable health, fire,
environmental, safety, zoning or building laws or ordinances or any
restrictive covenant pertaining thereto.
Section 2.7. Taxes. During the past seven years (and to the Best
Knowledge of ▇▇▇▇▇, at all times prior thereto), ▇▇▇▇▇ has timely (including
extensions) filed all required tax returns and reports, and they will timely
(including extensions) file all tax returns and reports required to be filed
at or prior to the Closing Date ("Rubio's Returns"). ▇▇▇▇▇ has paid, or set up
adequate reserves on the ▇▇▇▇▇ Financial Statements for the payment of, all
taxes required to be paid or accrued in respect of the periods covered by such
returns and reports. ▇▇▇▇▇ will not have any material liability for any such
taxes in excess of the amounts so paid or reserves so established and no
deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or definitely) against ▇▇▇▇▇ which
would not be covered by existing reserves. ▇▇▇▇▇ is not delinquent in the
payment of any tax, assessment or governmental charge, nor has it requested
any extension of time within which to file any tax returns or reports which
have not since been filed and no requests for waivers of the time to assess
any tax are pending. The federal income tax returns of ▇▇▇▇▇ have not been
audited by the Internal Revenue Service (the "IRS") during the past seven
years. The state income tax returns of ▇▇▇▇▇ have not been audited during the
past seven years. There is no deficiency or refund litigation or matter in
controversy with respect to Rubio's Returns. ▇▇▇▇▇ (i) has not extended or
waived any statute of limitations on the assessment of any tax due; (ii) is a
party to any agreement providing for the allocation or sharing of taxes (other
than the allocation of federal income taxes as provided by regulation 1.1552-
1(a)(1) under the Code); (iii) is not required to include in income any
adjustment pursuant to Section 481(a) of the Code, by reason of a voluntary
change in accounting method (nor to the Best Knowledge of ▇▇▇▇▇ has the IRS
proposed any such adjustment or change of accounting method); and (iv) has not
filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply.
Section 2.8. Material Adverse Change. Except as set forth on
Schedule 2.8, since June 30, 1996, there has been no material adverse change
in the Condition of ▇▇▇▇▇, except as may have resulted or may result from
changes to laws and regulations, generally accepted accounting principles or
regulatory accounting principles or changes in economic conditions applicable
to depository institutions generally.
Section 2.9. Commitments and Contracts.
(a) Except as set forth in Schedule 2.9, ▇▇▇▇▇ is not a party or
subject to any of the following (whether written or oral, express or implied):
10
(i) any agreement, arrangement or commitment (A) not made in
the ordinary course of business, (B) by virtue of which the consent or
approval of any third party (other than Regulatory Authorities) is required
for or in connection with the execution, delivery and performance of this
Agreement or the consummation of the Merger or (C) pursuant to which ▇▇▇▇▇ is
or may become obligated to invest in or contribute capital to any ▇▇▇▇▇
entity;
(ii) any agreement, indenture or other instrument not disclosed
in the ▇▇▇▇▇ Financial Statements relating to the borrowing of money by ▇▇▇▇▇
or the guarantee by ▇▇▇▇▇ of any such obligation (other than trade payables or
instruments related to transactions entered into in the ordinary course of
business by ▇▇▇▇▇, such as deposits, Fed Funds borrowings and repurchase
agreements);
(iii) any contract, agreement or understanding with any labor
union or collective bargaining organization;
(iv) any contract containing covenants which limit the ability
of ▇▇▇▇▇ to compete in any line of business or with any person or containing
any restriction of the geographical area in which, or method by which, ▇▇▇▇▇
may carry on its business (other than as may be required by law or any
applicable Regulatory Authority);
(v) any off-balance sheet financial instruments, including
without limitation letters of credit, unfunded commitments (other than
unfunded commitments made in the ordinary course of business and consistent
with past practice) and derivative financial instruments; or
(vi) any contract or agreement that (A) has a remaining term as
of the date hereof in excess of six months, (B) is not terminable by ▇▇▇▇▇ on
30 or fewer days' notice without penalty or premium and (C) involves a
monetary obligation on the part of ▇▇▇▇▇ in excess of $10,000.00.
(b) ▇▇▇▇▇ is not in violation of its organizational documents or
bylaws or in material default under any agreement, commitment, arrangement,
lease, insurance policy, or other instrument, whether entered into in the
ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that, with the lapse of time or giving of
notice or both, would constitute such a material default.
Section 2.10. Litigation and Other Proceedings. Other than as set
forth on Schedule 2.10, there is no claim, action, suit, investigation or
proceeding, pending or, to the Best Knowledge of ▇▇▇▇▇, threatened against
▇▇▇▇▇, nor are any of them subject to any order, judgment or decree, except
for matters which do not involve a claim for damages for more than $10,000.00,
but not excepting any actions, suits or proceedings which request non-monetary
relief or purport or seek to enjoin or restrain the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, except as
set forth on Schedule 2.10 there are no actions, suits, protests or
proceedings pending or, to the Best Knowledge of ▇▇▇▇▇, threatened against
▇▇▇▇▇ or any of its officers or directors by any shareholder of ▇▇▇▇▇ (or by
any former shareholder of ▇▇▇▇▇
relating to
11
or arising out of such person's status as a shareholder or former shareholder)
or involving claims under federal or state banking or securities laws, the
Community Reinvestment Act of 1977 (the "CRA") or the fair lending laws.
Section 2.11. Insurance. Set forth on Schedule 2.11 is a list of all
insurance policies (excluding policies maintained on one- to four-family
residential properties acquired through foreclosure or on properties in which
▇▇▇▇▇ has no interest other than as collateral for mortgage loans held by
▇▇▇▇▇) maintained by or for the benefit of ▇▇▇▇▇ or its directors, officers,
employees or agents. ▇▇▇▇▇ has not, during the past two years, had an
insurance policy canceled or been denied insurance coverage for which it has
applied. To the best knowledge of ▇▇▇▇▇, there is no pending or potential
claim, suit, action, investigation or proceeding pursuant to which any
director or officer of ▇▇▇▇▇ may be liable.
Section 2.12. Compliance with Laws.
(a) ▇▇▇▇▇ has all material permits, licenses, authorizations, orders
and approvals of, and have made all material filings, applications and
registrations with, all Regulatory Authorities that are required in order to
permit it to own or lease its properties and assets and to carry on their
business as presently conducted; all such permits, licenses, authorizations,
orders and approvals are in full force and effect; and, to the Best Knowledge
of ▇▇▇▇▇, no suspension or cancellation of any of them is threatened and all
such filings, applications and registrations are current.
(b) (i) Each of ▇▇▇▇▇ and the ▇▇▇▇▇ Subsidiaries has complied with
all laws, regulations and orders (including without limitation zoning
ordinances, building codes, the Employee Retirement Income Security Act of
1974 ("ERISA"), and securities, tax, environmental, civil rights, and
occupational health and safety laws and regulations (and including without
limitation, in the case of ▇▇▇▇▇, all statutes, rules, regulations and policy
statements pertaining to the conduct of a banking, deposit-taking, lending or
related business) and governing instruments applicable to them and to the
conduct of their business, except such noncompliance as would not have a
material adverse effect on the Condition of ▇▇▇▇▇ and ▇▇▇▇▇ has not engaged in
any activities which would cause it to be subject to Division X of Iowa Code
Section 524, and
(ii) ▇▇▇▇▇ is not in default under, and no event has occurred which,
with the lapse of time or notice or both, could result in a default under, the
terms of any judgment, order, writ, decree, permit, or license of any
Regulatory Authority, other administrative agency or court, whether federal,
state, municipal, or local and whether at law or in equity. Except that to
the best knowledge of the directors and officers of ▇▇▇▇▇ (without
investigation), Rubio's office properties located in Brighton, Iowa, are not
contaminated by and do not contain any lead-based paint, radon or asbestos,
nor has any such substance been stored, disposed of or placed on such
property, nor used in the construction thereof, and except as set forth in
Schedule 2.12B, ▇▇▇▇▇ is not subject to or reasonably likely to incur any
liability as a result of its past or present ownership, operation, or use of
any Property (as defined below) of ▇▇▇▇▇ (whether directly or, to the Best
Knowledge of ▇▇▇▇▇, as a consequence of such Property being collateral for any
loan or investment made by ▇▇▇▇▇) (A) that is contaminated
12
by or contains any hazardous waste, toxic substance, or related materials,
including without limitation asbestos, PCBs, pesticides, herbicides, and any
other substance or waste that is hazardous to human health or the environment
(collectively, a "Toxic Substance") or (B) on which any Toxic Substance has
been stored, disposed of, placed, or used in the construction thereof; and
which, in any such case or in the aggregate, reasonably could be expected to
have a material adverse effect on the Condition of ▇▇▇▇▇, taken as a whole.
"Property" of a person shall include all property (real or personal) owned,
leased or controlled by such person, including without limitation property
under foreclosure, property held by such person or any Subsidiary of such
person in its capacity as a trustee and property in which any venture capital
or similar unit of such person or any Subsidiary of such person has an
interest. No claim, action, suit, or proceeding is pending against ▇▇▇▇▇
relating to Property of ▇▇▇▇▇ before any court, administrative agency or
arbitration tribunal relating to Toxic Substances, pollution, or the
environment, and there is no outstanding judgment, order, writ, injunction,
decree, or award against or affecting ▇▇▇▇▇ with respect to the same. Except
for statutory or regulatory restrictions of general application or as set
forth in Schedule 2.12B, no Regulatory Authority has currently in effect any
restriction on the business of ▇▇▇▇▇.
(c) During the past seven years, except as set forth in
Schedule 2.12C, ▇▇▇▇▇ has not received any notification or communication as to
any matter which has not been resolved from any Regulatory Authority
(i) asserting that ▇▇▇▇▇ is not in substantial compliance with any of the
statutes, regulations or ordinances that such Regulatory Authority enforces,
(ii) threatening to revoke any license, franchise, permit or governmental
authorization that is material to the Condition of ▇▇▇▇▇, including without
limitation Rubio's status as an insured depository institution under the
Federal Deposit Insurance Act ("FDIA"), (iii) requiring or threatening to
require ▇▇▇▇▇, or indicating that ▇▇▇▇▇ may be required, to enter into any
order, agreement or memorandum of understanding or any other agreement
restricting or limiting or purporting to direct, restrict or limit in any
manner the operations of ▇▇▇▇▇, including without limitation any restriction
on the payment of dividends. Except as set forth in Schedule 2.12B or C and
specifically noted therein, no such order, agreement, memorandum of
understanding or other agreement or directive is currently in effect.
(d) ▇▇▇▇▇ is not required by Section 32 of the FDIA or under Iowa
law to give prior notice to any federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer.
Section 2.13. Labor. No work stoppage involving ▇▇▇▇▇ is pending or,
to the Best Knowledge of ▇▇▇▇▇, threatened. ▇▇▇▇▇ is not involved in, or, to
the Best Knowledge of ▇▇▇▇▇, threatened with or affected by, any labor
dispute, arbitration, lawsuit or administrative proceeding which reasonably
could be expected to have a material adverse effect on the Condition of ▇▇▇▇▇.
No employees of ▇▇▇▇▇ are represented by any labor union or any collective
bargaining organization.
Section 2.14. Material Interests of Certain Persons.
(a) Except as set forth in Schedule 2.14A, to the Best Knowledge of
▇▇▇▇▇, no officer or director of ▇▇▇▇▇, or any "associate," as such term is
defined in Rule 14a-1 under the Securities
13
Exchange Act of 1934 (the "Exchange Act"), of any such officer or director,
has any material interest in any material contract or property (real or
personal, tangible or intangible), used in or pertaining to the business of
▇▇▇▇▇, which would be required to be so disclosed if ▇▇▇▇▇ had a class of
securities registered under Section 12 of the Exchange Act.
(b) Except as set forth in Schedule 2.14B, there are no loans in
excess of $10,000.00 from ▇▇▇▇▇ to any present officer, director, employee or
any associate or related interest of any such person which was or would be
required under any rule or regulation to be approved by or reported to Rubio's
Board of Directors ("Insider Loans"). All outstanding Insider Loans from
▇▇▇▇▇ were approved by or reported to the appropriate board of directors in
accordance with applicable law and regulations.
Section 2.15. Allowance for Loan Losses; Adjustments.
(a) The allowances for loan losses contained in the ▇▇▇▇▇ Financial
Statements as of June 30, 1996 were established in accordance with the past
practices and experiences of ▇▇▇▇▇, are in compliance with the requirements of
GAAP and the rules, regulations and policies of the Superintendent and the
FDIC and are, in the opinion of management of ▇▇▇▇▇, adequate to provide for
possible losses on loans (including without limitation accrued interest
receivable) and credit commitments (including without limitation stand-by
letters of credit) outstanding as of the date thereof.
(b) ▇▇▇▇▇ agrees (subject to its independent accountant's not
unreasonably objecting) that, at the request of Washington, it shall make such
adjustments to the values of its assets and liabilities, and take such
reserves and accruals, as Washington may reasonably request from time to time
in order to cause such values, reserves and accruals to conform to GAAP.
Section 2.16. Employee Benefit Plans.
(a) Schedule 2.16A lists all pension, retirement, supplemental
retirement, stock option, restricted stock, stock purchase, stock ownership,
savings, stock appreciation right, profit sharing, employment, incentive
compensation, deferred compensation, consulting, bonus, medical, disability,
workers' compensation, vacation, group insurance, severance and other material
employee benefit, incentive and welfare policies, contracts, plans and
arrangements, and all trust or loan agreements or arrangements related
thereto, maintained, sponsored or contributed to by ▇▇▇▇▇ in respect of any of
the present or former directors, officers, or other employees of and/or
consultants to ▇▇▇▇▇ (collectively, the "▇▇▇▇▇ Employee Plans").
(b) All of the ▇▇▇▇▇ Employee Plans have been maintained and
operated materially in accordance with their terms and with the material
requirements of all applicable statutes, orders, rules and final regulations,
including without limitation ERISA and the Code. All contributions required
to be made to the ▇▇▇▇▇ Employee Plans have been made.
14
(c) With respect to each of the ▇▇▇▇▇ Employee Plans which is a
pension plan (as defined in Section 3(2) of ERISA) (the "Pension Plans"):
(i) each Pension Plan which is intended to be "qualified" within the meaning
of Section 401(a) of the Code is so qualified and, to the extent a
determination letter has been received from the IRS with respect to any such
Pension Plan, such determination letter may still be relied upon, and each
related trust is exempt from taxation under Section 501(a) of the Code;
(ii) the present value of all benefits vested and all benefits accrued under
each Pension Plan which is subject to Title IV of ERISA, valued using the
assumptions in the most recent actuarial report, did not, in each case, as of
the last applicable annual valuation date, exceed the value of the assets of
the Pension Plan allocable to benefits on a plan termination basis;
(iii) there has been no "prohibited transaction," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, which could subject any
Pension Plan or associated trust, or ▇▇▇▇▇, to any material tax or penalty;
(iv) no Pension Plan or any trust created thereunder has been terminated, nor
have there been any "reportable events" with respect to any Pension Plan, as
that term is defined in Section 4043 of ERISA since January 1, 1986; and
(v) no Pension Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA (whether or not waived). No Pension Plan is a "multiemployer plan" as
that term is defined in Section 3(37) of ERISA. With respect to each Pension
Plan that is described in Section 4063(a) of ERISA (a "Multiple Employer
Pension Plan"): (i) ▇▇▇▇▇ would not have any liability or obligation to post
a bond under Section 4063 of ERISA if ▇▇▇▇▇ were to withdraw from such
Multiple Employer Pension Plan; and (ii) ▇▇▇▇▇ would not have any liability
under Section 4064 of ERISA if such Multiple Employer Pension Plan were to
terminate.
(d) ▇▇▇▇▇ has no liability for any post-retirement health, medical
or similar benefit of any kind whatsoever except as required by statute.
(e) ▇▇▇▇▇ has no material liability under ERISA or the Code as a
result of its being a member of a group described in Sections 414(b), (c), (m)
or (o) of the Code.
(f) ▇▇▇▇▇ has no material liability under the continuation of health
care provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
or any comparable state law.
(g) Neither the execution nor delivery of this Agreement, nor the
consummation of any of the transactions contemplated hereby, will (i) result
in any material payment (including without limitation severance, unemployment
compensation or golden parachute payment) becoming due to any current or
former director or employee of ▇▇▇▇▇ from any of such entities, (ii) increase
any benefit otherwise payable under any of the ▇▇▇▇▇ Employee Plans or
(iii) result in the acceleration of the time of payment of any such benefit.
No amounts paid or to become payable by ▇▇▇▇▇ or its successors interest to or
with respect to any current or former director or employee of ▇▇▇▇▇ will fail
to be deductible for federal income tax purposes by reason of Section 280G or
162(m) of the Code or otherwise.
Section 2.17. Conduct to Date. From and after June 30, 1996 through
the date of this Agreement, except as set forth on Schedule 2.17: (i) ▇▇▇▇▇
has conducted its respective businesses
15
in the ordinary and usual course consistent with past practices; (ii) ▇▇▇▇▇
has not issued, sold, granted, conferred or awarded any of its Equity
Securities or any corporate debt securities which would be classified under
GAAP as long term debt on the Balance Sheet of ▇▇▇▇▇; (iii) ▇▇▇▇▇ has not
effected any stock split or adjusted, combined, reclassified or otherwise
changed its capitalization; (iv) ▇▇▇▇▇ has not declared, set aside or paid any
dividend or other distribution in respect of its capital stock, or purchased,
redeemed, retired, repurchased, or exchanged, or otherwise acquired or
disposed of, directly or indirectly, any of its Equity Securities, whether
pursuant to the terms of such Equity Securities or otherwise; (v) ▇▇▇▇▇ has
not incurred any material obligation or liability (absolute or contingent),
except normal trade or business obligations or liabilities incurred in the
ordinary course of business, or subjected to Lien any of its assets or
properties other than in the ordinary course of business, (vi) ▇▇▇▇▇ has not
discharged or satisfied any material Lien or paid any material obligation or
liability (absolute or contingent), other than in the ordinary course of
business; (vii) ▇▇▇▇▇ has not sold, assigned, transferred, leased, exchanged,
or otherwise disposed of any of its properties or assets other than for fair
consideration (in the reasonable opinion of management) and in the ordinary
course of business; (viii) ▇▇▇▇▇ has not (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or
other employees, except merit or promotion increases applicable to individual
employees and annual increases applicable to employees generally, all in
accordance with past practice, (B) entered into any new, or amended or
supplemented any existing, employment, management, consulting, compensation,
severance, or other similar contract, (C) entered into, terminated, or
substantially modified any of the ▇▇▇▇▇ Employee Plans or (D) agreed to do any
of the foregoing; (ix) ▇▇▇▇▇ has not suffered any material damage,
destruction, or loss, whether as the result of fire, explosion, earthquake,
accident, casualty, labor trouble, requisition, or taking of property by any
Regulatory Authority, flood, windstorm, embargo, riot, act of God or the
enemy, or other casualty or event, and whether or not covered by insurance;
(x) other than in the ordinary course of business consistent with past
practice, ▇▇▇▇▇ has not canceled or compromised any debt; (xi) ▇▇▇▇▇ has not
entered into any material transaction, contract or commitment outside the
ordinary course of its business and (xii) ▇▇▇▇▇ has not made or guaranteed any
loan to any of the ▇▇▇▇▇ Employee Plans.
Section 2.18. Regulatory Filings. None of the information regarding
▇▇▇▇▇ supplied or to be supplied by ▇▇▇▇▇ for inclusion or included in any
documents to be filed with any Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective times such documents
are filed with any Regulatory Authority and, as of the Effective Time, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not
misleading. All documents which ▇▇▇▇▇ is responsible for filing with any
Regulatory Authority in connection with the Merger will comply as to form in
all material respects with the provisions of applicable law.
Section 2.19. Registration Obligations. ▇▇▇▇▇ is not under any
obligation, contingent or otherwise, to register any of its securities under
the Securities Act or other federal or state securities laws or regulations.
16
Section 2.20. Takeover Provisions Not Applicable. This Agreement and
the Merger are not otherwise subject to any anti-takeover protection
applicable to ▇▇▇▇▇. ▇▇▇▇▇ and the ▇▇▇▇▇ Subsidiaries are not subject to any
agreement, arrangement or legal requirement restricting the ownership or
acquisition of their securities or imposing any "fair price" or supermajority
director or shareholder vote requirements.
Section 2.21. Regulatory, Tax and Accounting Matters. ▇▇▇▇▇ has not
taken or agreed to take any action, nor does it have knowledge of any fact or
circumstance, that would (i) materially impede or delay the consummation of
the transactions contemplated by this Agreement or the ability of the parties
to obtain any approval of any Regulatory Authority required for the
transactions contemplated by this Agreement or to perform their covenants and
agreements under this Agreement or (ii) prevent the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code.
Section 2.22. Brokers and Finders. ▇▇▇▇▇ nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees in connection with this Agreement or the transactions
contemplated hereby.
Section 2.23. Accuracy of Information. The statements of ▇▇▇▇▇
contained in this Agreement, the Schedules hereto and any other written
document executed and delivered by or on behalf of ▇▇▇▇▇ pursuant to the terms
of this Agreement are true and correct in all material respects.
Section 2.24. Community Reinvestment Act Compliance. ▇▇▇▇▇ is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and, as of the date hereof, ▇▇▇▇▇ has a
CRA rating of satisfactory or better from the FDIC. To the Best Knowledge of
▇▇▇▇▇, there is no fact or circumstance or set of facts or circumstances which
would cause the CRA rating of ▇▇▇▇▇ to fall below satisfactory.
Section 2.25. Governmental Approvals and Other Conditions. To the Best
Knowledge of ▇▇▇▇▇, there is no reason relating specifically to ▇▇▇▇▇ why
(a) the approvals that are required to be obtained from Regulatory Authorities
having approval authority in connection with the transactions contemplated
hereby should not be granted, (b) such regulatory approvals should be subject
to a condition which would be unduly burdensome to Washington or any of its
Subsidiaries or would differ from conditions customarily imposed by such
Regulatory Authorities in orders approving acquisitions of the type
contemplated hereby or (c) any of the conditions precedent as specified in
Article VI hereof to the obligations of any of the parties hereto to
consummate the transactions contemplated hereby are unlikely to be fulfilled
within the applicable time period or periods required for satisfaction of such
condition or conditions.
17
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF WASHINGTON
Washington hereby makes the following representations and warranties:
Section 3.1. Organization and Capital Stock.
(a) Washington is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Iowa with full corporate
power and authority to own all of its assets and properties, to incur all of
its liabilities and to carry on its business as it is now being conducted.
True and complete copies of the certificate of incorporation and bylaws of
Washington as in effect on the date of this Agreement have been provided to
▇▇▇▇▇. The minute books of Washington and those of each of its significant
subsidiaries (as defined in Section 3.3) contain complete and accurate records
of all meetings and other corporate actions of their respective boards of
directors and stockholders, including committees of boards of directors.
(b) The authorized capital stock of Washington consists of (i)
40,000,000 shares of Washington common stock, par value $.01 per share, of
which, as of March 31, 1997, 657,519 shares were issued and outstanding, and
(ii) 1,000,000 shares of preferred stock, par value $.01 per share, none of
which have been issued or are outstanding. All of the issued and outstanding
shares of Washington Common are duly and validly issued and outstanding and
are fully paid and non-assessable. None of the outstanding shares of
Washington Common has been issued in violation of any preemptive rights of the
current or past stockholders of Washington. Except as disclosed in Section
3.1(b) of that certain confidential writing delivered by Washington to ▇▇▇▇▇
concurrently with the delivery and execution of this Agreement (the
"Washington Disclosure Schedule"), each certificate representing shares of
Washington Common issued by Washington in replacement of any certificate
theretofore issued by it which was claimed by the record holder thereof to
have been lost, stolen or destroyed was issued by Washington only upon receipt
of an affidavit of lost stock certificate and a bond sufficient to indemnify
Washington against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such replacement certificate.
Section 3.2. Authorization.
(a) Washington has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by Washington and the consummation
by Washington of the transactions contemplated hereby have been duly
authorized by all requisite corporate action of Washington. Subject to the
receipt of such approvals of the Regulatory Authorities as may be required by
statute or regulation, this Agreement is a valid and binding obligation of
Washington enforceable against it in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency and other similar laws of general
applicability affecting creditors' rights and to general equity principles.
18
(b) Neither the execution, delivery or performance by Washington of
this Agreement, nor the consummation by Washington of the transactions
contemplated hereby, nor compliance by Washington with any of the provisions
hereof, will (i) violate or conflict with any term, condition or provision of
the certificate of incorporation, charter or bylaws of Washington or any
subsidiary, (ii) violate, conflict with or result in a breach of any
provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of any Lien
upon any of the material properties or assets of Washington or any subsidiary
under any of the terms, conditions or provisions of, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
material instrument or obligation to which Washington or any subsidiary is a
party or by which it may be bound, or to which Washington or any subsidiary or
any of their material property or assets may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in subsection (c) of
this Section 3.2, to the best knowledge of the senior officers and directors
of Washington (the "Best Knowledge of Washington"), violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Washington or any of the subsidiaries or any of their respective
material properties or assets.
(c) Other than in connection with or in compliance with the
provisions of the Iowa Act, the Iowa Banking Act, consents, reviews,
authorizations, approvals or exemptions required under the BHCA, the FDIA, the
Home Owners' Loan Act and regulations under such statutes, or any required
approvals of any Regulatory Authority, no notice to, filing with, exemption or
review by, or authorization, consent or approval of, any public body or
authority or third party is necessary on the part of Washington for the
consummation by it of the transactions contemplated by this Agreement.
Section 3.3. Subsidiaries. Each of Washington's significant
subsidiaries (as such term is defined under regulations promulgated by the
SEC) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power to own
its respective properties and assets, to incur its respective liabilities and
to carry on its business as now being conducted. All of the outstanding shares
of capital stock of each significant subsidiary of Washington are owned by
Washington, directly or indirectly, free and clear of any liens, encumbrances,
or security interests of third parties. All of the issued and outstanding
shares of each significant subsidiary are duly and validly issued and
outstanding and are fully paid and nonassessable.
Section 3.4. Financial Information. The consolidated balance sheet of
Washington and its subsidiaries as of December 31, 1996 and the related
unaudited consolidated income statement and statements of changes in
stockholders' equity and cash flows for the six (6) months then ended included
in Washington's Quarterly Report on Form 10-QSB for the quarter then ended, as
currently on file with the SEC (together, the "Washington Financial
Statements"), have been prepared in accordance with GAAP except as disclosed
therein and fairly present in all material respects the consolidated financial
position and the consolidated results of operations, changes in stockholders'
19
equity and cash flows of Washington and its consolidated subsidiaries as of
the date and for the period indicated (subject to normal, recurring year-end
adjustments, none of which are material, and the absence of footnotes).
Section 3.5. Absence of Changes. Since December 31, 1996 to the date
hereof, Washington has not experienced or suffered a Material Adverse Change.
Washington is not aware of any event or circumstance, or series of events or
circumstances, which are reasonably likely to result in a Material Adverse
Change to Washington.
Section 3.6. Litigation. There is no litigation, claim or other
proceeding pending or, to the knowledge of Washington, threatened, against
Washington or any of its significant subsidiaries, or to which the property of
Washington or any of its significant subsidiaries is or would be subject,
which involves an amount in excess of twenty thousand dollars or requests
equitable relief.
Section 3.7. Compliance With Laws. Washington and its significant
subsidiaries have all licenses, franchises, permits and other government
authorizations that are legally required to enable them to conduct their
respective businesses and are in substantial compliance with all applicable
laws and regulations.
Section 3.8. Statements True and Correct. None of the information
supplied or to be supplied by Washington for inclusion in the proxy statement
and any document to be filed with any regulatory or governmental authority in
connection with the transactions contemplated hereby, will, at the respective
times such documents are filed, and, with respect to the Proxy Statement, if
applicable, when first mailed to the shareholders of ▇▇▇▇▇, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading, or, in
the case of the proxy statement or any amendment thereof or supplement
thereto, at the time of the Shareholders' Meeting and thereafter be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Shareholders' Meeting. All
documents that Washington is responsible for filing with the FRB or any other
regulatory authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable law and any rules and regulations thereunder.
ARTICLE FOUR
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
Section 4.1. Conduct of Businesses Prior to the Effective Time. During
the period from the date of this Agreement to the Effective Time, ▇▇▇▇▇ shall
conduct its business only in the ordinary and usual course consistent with
past practices and shall, and shall use its best efforts to maintain and
preserve its business organization, employees and advantageous business
relationships and retain the services of its officers and key employees.
20
Section 4.2. Forbearances. Except as expressly provided herein, during
the period from the date of this Agreement to the Effective Time, without the
prior written consent of Washington, ▇▇▇▇▇ shall not:
(a) declare, set aside or pay any dividends or other distributions,
directly or indirectly, in respect of its capital stock, except for cash
dividends consistent in amount and timing with past practices (however,
increases in dividends may not exceed the average dividend increase since
January 1, 1994, and may not result in a dividend to net income ratio higher
than that experienced for the twelve months ended December 31, 1996;
(b) enter into or amend any employment, severance or similar
agreement or arrangement with any director or officer or employee, or modify
any of the ▇▇▇▇▇ Employee Plans or security acquisition loans relating thereto
(or prepay in whole or in part any such loans) or grant any salary or wage
increase or materially increase any employee benefit (including incentive or
bonus payments), except normal individual bonuses and increases in
compensation to employees, in each case and in the aggregate consistent with
past practice or to the extent required by law;
(c) negotiate, authorize, recommend, propose or announce an
intention to authorize, so recommend or propose, or enter into any discussion
or an agreement in principle with respect to, any merger, consolidation or
business combination (other than the Merger), any acquisition of a material
amount of assets or securities, any disposition of a material amount of assets
or securities or any release or relinquishment of any material contract
rights;
(d) except as may be required to facilitate the consummation of the
transactions contemplated herein, propose or adopt any amendments to its
articles of incorporation or bylaws;
(e) issue, sell, grant, confer or award any of its Equity Securities
or effect any stock split or adjust, combine, reclassify or otherwise change
its capitalization as it exists on the date of this Agreement;
(f) purchase, redeem, retire, repurchase, or exchange, or otherwise
acquire or dispose of, directly or indirectly, any of its Equity Securities,
whether pursuant to the terms of such Equity Securities or otherwise;
(g) (i) change its underwriting policies relating to lending
activities, (ii) change its deposit-taking policies, (iii) create any new
lending or deposit products, or (iv) engage in a new line of business;
(h) take any action that would (A) materially impede or delay the
consummation of the transactions contemplated by this Agreement or the ability
of Washington or ▇▇▇▇▇ to obtain any approval of any Regulatory Authority
required for the transactions contemplated by this Agreement or to perform its
covenants and agreements under this Agreement or (B) prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code;
21
(i) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other entity; or
(j) agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or take or omit
to take any other act which would make any of the representations and
warranties in Article II of this Agreement untrue or incorrect in any material
respect if made anew after engaging in such activity, entering into such
transaction, or taking or omitting such other act.
(k) ▇▇▇▇▇ shall permit at least one representative of Washington to
attend each meeting of the Board of Directors of ▇▇▇▇▇ and its executive
committee.
(l) ▇▇▇▇▇ shall provide to Washington such reports on litigation
involving ▇▇▇▇▇ as Washington shall reasonably request; provided that ▇▇▇▇▇
shall not be required to divulge information to the extent that, in the good
faith opinion of its counsel, by doing so, it would risk waiver of the
attorney-client privilege to its detriment.
Section 4.3. Breaches. In the event that either party to this
Agreement obtains knowledge of the occurrence, or impending or threatened
occurrence, of any event or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any of its representations, warranties or
agreements contained or referred to herein, it shall give prompt written
notice thereof to the other party and use its best efforts to prevent or
promptly remedy the same.
Section 4.4. Submission of Merger to Stockholders.
▇▇▇▇▇ shall cause to be duly called and held, on a timely basis, a
special meeting of its stockholders (the "Stockholders' Meeting") for
submission of this Agreement, the Plan of Merger and the Merger for approval
of such stockholders as required by applicable law. Subject to receipt by
▇▇▇▇▇ of all information concerning Washington and its significant
subsidiaries as ▇▇▇▇▇ may reasonably request, ▇▇▇▇▇ shall prepare a proxy
statement (the "Proxy Statement"), and, after providing Washington and
Washington's counsel reasonable opportunity to comment on the Proxy Statement,
▇▇▇▇▇ shall deliver it to its stockholders.
Section 4.5. Consents to Contracts and Leases. ▇▇▇▇▇ shall use its
best efforts to obtain all necessary consents with respect to all interests in
any material leases, licenses, contracts, instruments and rights which require
the consent of another person for their transfer or assumption pursuant to the
Merger, if any.
Section 4.6. Conforming Accounting and Reserve Policies; Restructuring
Expenses. At the request of Washington, ▇▇▇▇▇ shall (subject to its
independent accountant's not unreasonably
22
objecting) on or before or effective as of the date specified by Washington,
establish and take such reserves and accruals as Washington reasonably shall
request to conform Rubio's loan, accrual, reserve and other accounting
policies to Washington's policies.
Section 4.7. Consummation of Agreement. ▇▇▇▇▇ shall use its best
efforts to perform and fulfill all conditions and obligations to be performed
or fulfilled under this Agreement by it and to effect the Merger in accordance
with the terms and provisions hereof and of the Plan of Merger. ▇▇▇▇▇ shall
furnish to Washington in a timely manner all information, data and documents
in the possession of ▇▇▇▇▇ requested by Washington as may be required to
obtain regulatory approvals or other necessary approvals of the Merger. ▇▇▇▇▇
shall otherwise cooperate fully with Washington to carry out the purpose and
intent of this Agreement.
Section 4.8. Access to Information. ▇▇▇▇▇ shall permit Washington
reasonable access to its properties in a manner which will avoid undue
disruption or interference with Rubio's normal operations and shall disclose
and make available to Washington all books, documents, papers and records
relating to its assets, 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 stockholders'
meetings, organizational documents, material contracts and agreements, loan
files, filings with any regulatory authority, accountants' workpapers,
litigation files, plans affecting employees, and any other business activities
or prospects in which Washington may have a reasonable and legitimate interest
in furtherance of the transactions contemplated by this Agreement.
Notwithstanding anything to the contrary contained herein, ▇▇▇▇▇ will include
in the Disclosure Schedule all available environmental information, including
without limitation environmental and regulatory reports, studies, notices and
claims. Washington will hold any such information which is nonpublic in
confidence in accordance with the provisions of Section 8.1 hereof.
ARTICLE FIVE
ADDITIONAL AGREEMENTS
Section 5.1. Regulatory Matters. ▇▇▇▇▇ and Washington shall cooperate
and use their respective best efforts to promptly prepare all documentation,
to effect all filings and to obtain all permits, consents, approvals and
authorizations of Regulatory Authorities necessary to consummate the
transactions contemplated by this Agreement and, as and if directed by
Washington, to consummate such other mergers, consolidations or asset
transfers or other transactions by and among the Washington Subsidiaries and
▇▇▇▇▇ concurrently with or following the Effective Time, provided that such
actions do not materially impede or delay the consummation of the transactions
contemplated by this Agreement.
Section 5.2. Current Information. During the period from the
date of this Agreement to the Effective Time, each party shall promptly
furnish the other with copies of all monthly and other interim financial
statements as the same become available and shall cause one or more of its
23
designated representatives to confer on a regular and frequent basis with
representatives of the other party. Each party shall promptly notify the
other party of any material change in its business or operations, of any fact,
omission or condition which makes untrue or misleading or shows to have been
untrue or misleading the information supplied by it for inclusion in the Proxy
Statement and of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the
institution or the threat of material litigation involving such party or any
of its Subsidiaries, as applicable, and shall keep the other party fully
informed of such events.
Section 5.3. Expenses. Each party hereto shall bear its own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger.
Section 5.4. Miscellaneous Agreements and Consents. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
its respective best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as possible,
including without limitation using its respective best efforts to lift or
rescind any injunction or restraining order adversely affecting the ability of
the parties to consummate the transactions contemplated hereby. Each party
shall use its best efforts to obtain consents of Regulatory Authorities
necessary or, in the reasonable opinion of Washington, desirable for the
consummation of the transactions contemplated by this Agreement.
Section 5.5. Press Releases. The initial press release concerning this
Agreement shall be as previously agreed upon by Washington and ▇▇▇▇▇. Except
as ▇▇▇▇▇ ▇▇▇▇▇ necessary to comply with applicable law after consultation with
its counsel, ▇▇▇▇▇ shall not issue any press release or written statement for
general public circulation relating to this Agreement or any transactions
contemplated hereby without the prior written consent of Washington, which
consent shall not be unreasonably withheld or delayed.
Section 5.6. Takeover Provisions. ▇▇▇▇▇ has taken or will take all
steps necessary to render the transactions contemplated by this Agreement
permissible under any applicable Iowa takeover or similar law and under any
takeover or similar provision in the organizational documents or bylaws of
▇▇▇▇▇ restricting the ownership, acquisition or voting of securities or
imposing any "fair price" or supermajority director or shareholder vote
requirements.
Section 5.7. Third Parties. ▇▇▇▇▇ shall (i) immediately terminate all
negotiations or discussions with parties other than Washington concerning any
transaction by which ▇▇▇▇▇ would be acquired by or merged into any other
person or any portion of their assets or liabilities would be purchased or
assumed by any person other than Washington except in the ordinary course of
business and consistent with Article IV hereof and (ii) enforce the terms of
all confidentiality agreements with such other parties.
24
Section 5.8. Insurance Policy Claims. ▇▇▇▇▇ shall inform Washington no
later than the Effective Time of any material unfiled, insurance claims of
▇▇▇▇▇ which it has knowledge and for which it believes coverage exists.
Section 5.9. Employment Agreement; Benefits and Related Matters.
(a) At the time of the execution of this Agreement, Washington
shall cause ▇▇▇▇▇ to execute an employment agreement with Mr. ▇▇▇▇ ▇▇▇▇▇▇▇ in
the form of Exhibit C hereto in cancellation and replacement of any existing
employment agreement or arrangement that ▇▇. ▇▇▇▇▇▇▇ has with ▇▇▇▇▇, subject
to ▇▇. ▇▇▇▇▇▇▇ executing an original counterpart thereof at such time, which
employment agreement shall become effective at the Merger Effective Time.
(b) From and after the Merger Effective time, to the extent
permitted by applicable law, ▇▇▇▇▇ employees shall be eligible to participate
in any employee benefit plan, program or practice made available by Washington
including, but not limited to, medical, vacation, sic-pay and qualified
retirement plans; provided, however, that such participation will not result
in a duplication of benefits as reasonably determined by ▇▇▇▇▇ and provided,
further, that participation of ▇▇▇▇▇ employees in the Washington Bancorp
Employee Stock Ownership Plan may only occur after the effective date, if any,
for the cessation of benefit accruals under the ▇▇▇▇▇ Savings Bank Employees'
Pension Trust. For the purposes of eligibility, participation and vesting
(but not benefit accruals) under any employee benefit plan, program, or
practice maintained by Washington, a ▇▇▇▇▇ employee will receive credit for
all service performed with ▇▇▇▇▇ before and after the Merger Effective Time.
Washington will take every action required to permit participation of ▇▇▇▇▇
employees in Washington employee benefit plans, programs, and practices as
provided by this Agreement, including any required amendment to the terms of
such plans, programs, and practices.
(c) At the Merger Effective Time, ▇▇▇▇ ▇▇▇▇▇▇▇ shall become a
member of the Board of Directors of Washington until the Annual Meeting. He
will be included in the management slate of Directors for election to a new
three-year term at the Annual Meeting.
Section 5.10. Updated Schedules. If, subsequent to the date of
this Agreement and prior to the Effective Time, any events occur which renders
untrue any representation or warranty of ▇▇▇▇▇ or Washington made at the date
of this Agreement or renders incomplete or inaccurate any Schedule or
Schedules delivered upon execution of this Agreement or Updated Schedules (as
defined below) delivered later (a "Trigger Event"), ▇▇▇▇▇ or Washington, as
the case may be, shall promptly deliver to the other a supplemental writing
(an "Updated Schedule") which shall contain a detailed description of any and
all such matters. An Updated Schedule shall be delivered by within four
business days after ▇▇▇▇▇ or Washington learns of the Trigger Event but in no
event later than before the Closing. The submission of an Updated Schedule
and the matters therein contained shall not constitute a default or breach by
▇▇▇▇▇ or Washington of any of its respective representations and warranties
under this Agreement, provided that this Section 5.9 is not intended to permit
▇▇▇▇▇ or Washington to alter or amend its representations and warranties as
made herein (including the
25
Schedules) as of the date of this Agreement, and any Updated Schedule shall
not cure the inaccuracy thereof as of the date of this Agreement for any
purpose under this Agreement.
ARTICLE SIX
CONDITIONS
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment or waiver at or prior to the Effective Time of
the following conditions:
(a) All requisite approvals of this Agreement and the transactions
contemplated hereby shall have been received from the Regulatory Authorities
having approval authority with respect to the Merger and all applicable
waiting periods shall have expired.
(b) Neither Washington nor ▇▇▇▇▇ shall be subject to any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger.
Section 6.2. Conditions to Obligations of ▇▇▇▇▇ to Effect the Merger.
The obligations of ▇▇▇▇▇ to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of Washington set forth in Article Three of this Agreement shall be
true and correct as of the date of this Agreement and except as updated
pursuant to Section 5.10, in all material respects as of the Effective Time
(as though made on and as of the Effective Time), except (i) to the extent
such representations and warranties are by their express provisions made as of
a specified date and (ii) for the effect of transactions contemplated by this
Agreement), and ▇▇▇▇▇ shall have received a certificate of the president and
chief executive officer of Washington to that effect, dated the Closing Date.
(b) Performance of Obligations. Washington shall have performed in
all material respects all obligations required to be performed by it under
this Agreement prior to the Effective Time, and ▇▇▇▇▇ shall have received a
certificate of the president and chief executive officer of Washington to that
effect, dated the Closing Date.
(c) Opinion of Counsel. ▇▇▇▇▇ shall have received an opinion of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to Washington, dated the Closing
Date, substantially in the form attached as Exhibit D, provided that, in the
event that Washington exercises its right under Section 1.6 of this Agreement,
the form and substance of such form of legal opinion shall be appropriately
modified, subject to the reasonable satisfaction of Rubio's counsel as listed
in Section 8.2 of this Agreement.
26
Section 6.3. Conditions to Obligations of Washington to Effect the
Merger. The obligations of Washington to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Effective Time of the
following additional conditions:
(a) Representations and Warranties. The representations and
warranties of ▇▇▇▇▇ set forth in Article Two of this Agreement shall be true
and correct as of the date of this Agreement and, except as updated pursuant
to Section 5.10, as of the Effective Time (as though made on and as of the
Effective Time, except (i) to the extent such representations and warranties
are by their express provisions made as of a specific date and (ii) for the
effect of transactions contemplated by this Agreement, and Washington shall
have received a certificate of the president and chief executive officer of
▇▇▇▇▇ to that effect, dated the Closing Date.
(b) Performance of Obligations. ▇▇▇▇▇ shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Effective Time, and Washington shall have received a
certificate of the president and chief executive officer of ▇▇▇▇▇ to that
effect, dated the Closing Date.
(c) Opinion of Counsel. Washington shall have received an opinion
from ▇▇▇▇▇▇▇▇▇▇, Appel, Powers & ▇▇▇▇▇▇▇ LLP, counsel to ▇▇▇▇▇, dated the
Closing Date, substantially in the form attached as Exhibit E, provided that
in the event that Washington exercises its right to restructure the Merger
pursuant to Section 1.11 of this Agreement, such form of legal opinion shall
be appropriately modified, subject to the reasonable satisfaction of
Washington's counsel.
(d) Shareholder Agreement. The shareholders of ▇▇▇▇▇ set forth in
Schedule 6.3(d) shall have executed the Shareholder Agreement and delivered an
executed original of such Agreement to Washington as of the date hereof,
together with evidence, reasonably satisfactory to Washington, of the
authority of each person who executes such agreement on behalf of a
shareholder of ▇▇▇▇▇ which is not a natural person (a "Corporate Shareholder")
to execute such document on behalf of such Corporate Shareholder. Washington
shall have received copies of the resolutions of the board of directors of
▇▇▇▇▇ approving this Agreement and the Merger, with a certification, dated the
Closing Date, signed by the Secretary of ▇▇▇▇▇ and stating that such
resolutions have not been modified or rescinded since they were adopted.
(e) No Unduly Burdensome Condition or Commercial Banking Power
Restriction. No regulatory approval obtained in connection with the
transactions contemplated herein shall (i) contain a condition which
Washington reasonably determines is unduly burdensome to Washington or any
subsidiary (including ▇▇▇▇▇) or (ii) limit or restrict the powers of ▇▇▇▇▇.
(f) Significant Restriction on Activities. The consummation of the
Merger will not result in any significant restriction on the activities of, or
significant limitation upon the conduct of business by, any existing
Washington Subsidiary, other than a significant restriction or limitation that
can be cured by having another Washington Subsidiary perform such activity or
conduct such business in the manner theretofore performed or conducted.
27
(g) Capital of ▇▇▇▇▇. At the Closing Date, (i) the capital, surplus
and undivided profits of shall be at least $3,106,000, and (ii) ▇▇▇▇▇ shall be
"well capitalized" as defined in 12 C.F.R. Section 325.103(b)(1).
(h) Dissenters. The holders of no more than 25% of the outstanding
▇▇▇▇▇ Common Stock shall be Dissenters as defined in Iowa Code Section
490.1301.3.
ARTICLE SEVEN
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after any requisite shareholder
approval:
(a) by mutual consent of the Boards of Directors of Washington and
▇▇▇▇▇;
(b) by the Board of Directors of Washington or the Board of
Directors of ▇▇▇▇▇ (i) at any time after January 31, 1998, if the Merger shall
not theretofore have been consummated (provided that the terminating party is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein) or (ii) if any Regulatory Authority denies
approval of the Merger.
(c) by the Board of Directors of Washington in the event of a
material breach by ▇▇▇▇▇ of any representation, warranty, covenant or other
agreement contained in this Agreement, which breach is not cured within 30
days after written notice thereof to ▇▇▇▇▇ by Washington.
(d) by the Board of Directors of ▇▇▇▇▇ in the event of a material
breach by Washington of any representation, warranty, covenant or other
agreement contained in this Agreement, which breach is not cured within 30
days after written notice thereof is given to Washington by ▇▇▇▇▇;
Section 7.2. Effect of Termination. In the event of termination of
this Agreement as provided in Sections 7.1(a) or 7.1(b) hereof, this Agreement
shall forthwith become void and there shall be no liability under this
Agreement on the part of Washington or ▇▇▇▇▇ or their respective officers or
directors except as set forth in the third sentence of Section 4.8. In the
event of a termination of this Agreement pursuant to Section 7.1(c) or 7.1(d),
based upon a material breach by a party, the non-breaching party shall be
entitled to such relief and remedies against the breaching party as are
available at law or in equity, including but not limited to, specific
performance, it being agreed by the parties that the remedies of a party for a
material breach by the other party are inadequate at law.
Section 7.3. Amendment. This Agreement and the Schedules hereto may be
amended by the parties hereto, by action taken by or on behalf of their
respective Boards of Directors, at any time before or after approval of this
Agreement by the shareholders of ▇▇▇▇▇; provided, however, that,
28
after approval by the shareholders of ▇▇▇▇▇, no such modification shall
(i) alter or change the amount or kind of consideration to be received by
holders of ▇▇▇▇▇ Common Stock as provided in this Agreement or (ii) adversely
affect the tax treatment to ▇▇▇▇▇ shareholders of the Merger Consideration,
without securing the approval of the ▇▇▇▇▇ shareholders by the vote required
under the Iowa Act. Washington may make, and Rubio's Board of Directors shall
approve and its duly authorized representative shall execute, such amendments
as are permitted by Section 1.6 hereof. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of Washington and
▇▇▇▇▇.
Section 7.4. Severability. Any term, provision, covenant or
restriction contained in this Agreement held by a court or a Regulatory
Authority of competent jurisdiction to be invalid, void or unenforceable,
shall be ineffective to the extent of such invalidity, voidness or
unenforceability, but neither the remaining terms, provisions, covenants or
restrictions contained in this Agreement nor the validity or enforceability
thereof in any other jurisdictions shall be affected or impaired thereby. Any
term, provision, covenant or restriction contained in this Agreement that is
so found to be so broad as to be unenforceable shall be interpreted to be as
broad as is enforceable.
Section 7.5. Waiver. Any term, condition or provision of this
Agreement may be waived in writing at any time by the Board of Directors of
the party which is, or whose shareholders are, entitled to the benefits
thereof.
ARTICLE EIGHT
GENERAL PROVISIONS
Section 8.1. Non-Survival of Representations, Warranties and
Agreements. No investigation by the parties hereto made heretofore or
hereafter shall affect the representations and warranties of the parties which
are contained herein and each such representation and warranty shall survive
such investigation. All representations, warranties, covenants and agreements
in this Agreement of the parties or in any instrument delivered by a party
pursuant to or in connection with this Agreement shall not survive at the
Effective Time or the termination of this Agreement in accordance with its
terms, except (i) in the case of consummation of the Merger, the obligations
of Washington which are specifically contemplated to be performed after the
Effective Time shall survive, (ii) in the case of the termination of this
Agreement, the agreements contained in or referred to in the third sentence of
Section 4.8 and in Section 7.2 shall survive such termination, and
(iii) representations and warranties contained in the Shareholder Agreement
shall survive the Merger.
Section 8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to be duly received (i) on the date
given if delivered personally or (ii) upon confirmation of receipt if by
facsimile transmission or (iii) on the date received if mailed by registered
or certified mail (return receipt requested), in each case to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
29
(i) if to Washington:
Washington Bancorp
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief
Executive Officer
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to:
Silver, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
7th Floor East
Washington, D.C. 20005
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, P.C.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to ▇▇▇▇▇:
▇▇▇▇▇ Savings Bank of Brighton
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
President
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Rothgerber, ▇▇▇▇▇, Powers & ▇▇▇▇▇▇▇ LLP
Suite 3000, One ▇▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
30
Section 8.3. Miscellaneous. This Agreement (including the Schedules
referred to herein) (i) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof, including
any confidentiality agreement between the parties hereto, (ii) except as
expressly provided herein, is not intended to confer upon any person not a
party hereto any rights or remedies hereunder, (iii) shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns and (iv) shall be governed in all respects by the laws
of the State of Iowa, except as otherwise specifically provided herein or
required by federal law or regulation. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. This
Agreement may be executed in counterparts which together shall constitute a
single agreement.
Washington and ▇▇▇▇▇ have caused this Agreement to be duly executed by
their authorized representatives on the date first above written.
▇▇▇▇▇ SAVINGS BANK OF BRIGHTON WASHINGTON BANCORP
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- ----------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, President ▇▇▇▇ ▇▇▇▇▇▇▇, President and
Chief Executive Officer
ATTESTED: ATTESTED:
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------- ----------------------------
--------------, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇, Secretary
A-1
EXHIBIT A
SHAREHOLDER AGREEMENT
The undersigned (the "Stockholder"), who is a Shareholder of ▇▇▇▇▇ SAVINGS
BANK OF BRIGHTON (the "Company"), or who is the voting trustee of certain
shares of the common stock of the Company, has executed this Shareholder
Agreement to be effective as of the 24th day of June, 1997.
A. The Shareholder owns or has the power to vote _________ shares of
the common stock, one hundred dollars par value per share, of the Company
(together with all shares of such stock which the Shareholder subsequently
acquires or obtains the power to vote, the "Shares").
B. The Company proposes to enter into a certain Agreement and Plan of
Reorganization with Washington Bancorp, an Iowa corporation ("Acquiror"), of
even date herewith (the "Agreement").
C. Under the terms of the Agreement, the Company has agreed to call a
meeting of its Shareholders for the purpose of voting upon the approval of
the Merger (together with any adjournments thereof, the "Shareholders'
Meeting").
D. The Company and Acquiror have made it a condition to their
entering into the Agreement that certain Shareholders of the Company, and
other persons who have voting control over certain shares of the common stock
of the Company, including the Shareholder, shall have agreed to vote the
shares of common stock of the Company favor of the Agreement and the
Acquisition Merger.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1. Agreement to Vote. The Shareholders agrees, subject to Section 2
below, to vote the Shares as follows:
(a) in favor of the adoption of the Agreement and the approval
of the Plan of Merger and ▇▇▇▇▇▇ at the Shareholders' Meeting;
(b) against the approval of any proposal relating to a competing
merger or business combination involving an acquisition of the Company or
the purchase of all or a substantial portion of the assets of the Company
by any person or entity other than Acquiror or another affiliate of
Acquiror; and
A-2
(c) against any other transaction which is inconsistent with the
obligation of the Company to consummate the Merger in accordance with the
Agreement.
2. Termination. This Shareholder Agreement shall terminate on the
earlier of (a) the date on which the Agreement is terminated in accordance
with Article Seven of the Agreement or (b) the date on which the Merger is
consummated.
3. Representations, Warranties and Additional Covenants of the
Shareholder. The Shareholder hereby represents and warrants to Acquiror that
(a) the Shareholder has the capacity and all necessary power and authority to
vote the Shares, and (b) this Shareholder Agreement constitutes a legal,
valid, and binding obligation of the Shareholder, enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency, or similar
laws affecting enforcement of creditors rights generally. The Shareholder
further agrees that, during the term of this Shareholder Agreement, the
Shareholder will not sell, pledge, or otherwise voluntarily dispose of any of
the Shares which are owned by the Shareholder or take any other voluntary
action which would have the effect of removing the Shareholder's power to vote
the Shares or which would be inconsistent with this Shareholder Agreement.
4. Specific Performance. The undersigned hereby acknowledges that
damages would be an inadequate remedy for any breach of the provisions of this
Shareholder Agreement and agrees that the obligations of the Shareholder shall
be specifically enforceable and that Acquiror shall be entitled to injunctive
or other equitable relief upon such a breach by the Shareholder. The
Shareholder further agrees to waive any bond in connection with the obtaining
of any such injunctive or equitable relief. This provision is without
prejudice to any other rights that Acquiror may have against the Shareholder
for any failure to perform his obligations under this Shareholder Agreement.
5. Governing Law. This Shareholder Agreement shall be construed and
enforced in accordance with the laws of the State of Iowa without regard to
any of its conflict of laws principles.
6, Binding Effect. This Shareholder Agreement and the obligations
of the Shareholder herein shall be binding upon the Shareholder's estate,
personal representatives, heirs and successors in interest.
7. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings attributed to such terms in the Agreement.
A-3
IN WITNESS WHEREOF, the undersigned has executed this Stockholder
Agreement as of the day and year first above written.
WITNESS: SHAREHOLDER:
__________________________________ __________________________________
Signature
__________________________________
Print Name
(If Shareholder is a trust,
identify trust)
B-1
Exhibit B
SUBSIDIARY AGREEMENT AND PLAN OF MERGER
SUBSIDIARY AGREEMENT AND PLAN OF MERGER(this "Agreement") dated ________,
1997 by and between New ▇▇▇▇▇ Savings Bank of Brighton ("New ▇▇▇▇▇") and ▇▇▇▇▇
Savings Bank of Brighton ("▇▇▇▇▇").
WHEREAS, the Board of Directors of Washington Bancorp (as the sole
stockholder of New ▇▇▇▇▇), New ▇▇▇▇▇ and ▇▇▇▇▇ have approved this Agreement,
and deem it advisable and in the best interests of their respective
stockholders to consummate the merger of New ▇▇▇▇▇ with and into ▇▇▇▇▇ (the
"Bank Merger").
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Bank Merger. Subject to the provisions of this
Agreement, the Bank Merger shall become effective upon the filing of the
articles of merger (the "Articles of Merger") with the Iowa Secretary of State
on the Closing Date or as otherwise specified in the Articles of Merger in
accordance with Iowa law.
1.2 Effects of the Merger. (a) At the Merger Effective Time, (i) the
separate existence of New ▇▇▇▇▇ shall cease and New ▇▇▇▇▇ shall be merged with
and into ▇▇▇▇▇ (▇▇▇▇▇ is sometimes referred to herein as the "Surviving
Bank"); (ii) the Articles of Incorporation of ▇▇▇▇▇ as in effect immediately
prior to the Merger Effective Time shall be the Articles of Incorporation of
the Surviving Bank unless and until duly amended in accordance with applicable
law, and the name of the Surviving Bank shall be "▇▇▇▇▇ Savings Bank of
Brighton"; (iii) the Bylaws of ▇▇▇▇▇ as in effect immediately prior to the
Merger Effective Time shall be the Bylaws of the Surviving Bank unless and
until duly amended in accordance with applicable law; (iv) the directors and
officers of ▇▇▇▇▇ immediately prior to the Merger Effective Time shall be the
directors and officers of the Surviving Bank with the addition of ▇▇▇▇ ▇▇▇▇▇▇▇
as a director of the Surviving Bank, each to hold office in accordance with
the Articles of Incorporation and Bylaws of the Surviving Bank until their
respective successors are duly elected or appointed and have qualified; and
(v) as otherwise provided in Iowa law and that certain Agreement and Plan of
Reorganization, dated ___________, 1997, by and between Washington Bancorp and
▇▇▇▇▇ (the "Parent Merger Agreement").
B-2
ARTICLE II
EFFECT OF THE BANK MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT BANKS; EXCHANGE OF CERTIFICATES
2.1 New ▇▇▇▇▇ Stock. At the Merger Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
common stock, $1.00 par value, of New ▇▇▇▇▇ ("New ▇▇▇▇▇ Common Stock"), all
shares of New ▇▇▇▇▇ Common Stock shall automatically be cancelled and retired
and shall cease to exist and no consideration shall be delivered in exchange
therefor.
2.2 ▇▇▇▇▇ Stock. The shares of common stock, $100.00 par value, of ▇▇▇▇▇
issued and outstanding immediately prior to the Merger Effective Time shall
remain outstanding.
ARTICLE III
TERMINATION AND AMENDMENT
3.1 Termination. This Agreement may be terminated at any time prior to
the Merger Effective Time by the written mutual consent of New ▇▇▇▇▇ and
▇▇▇▇▇, provided the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board.
3.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 3.1, this Agreement shall forthwith become
void and there shall be no liability or obligation under this Agreement on the
part of New ▇▇▇▇▇, ▇▇▇▇▇ or their respective officers, directors or
affiliates.
3.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
ARTICLE IV
GENERAL PROVISIONS
4.1 Definitions. All capitalized terms which are used but not defined
herein shall have the meanings set forth in the Parent Merger Agreement.
4.2 Nonsurvival of Agreements. None of the agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Merger Effective Time.
4.3 Entire Agreement. Except as otherwise set forth in this Agreement or
the Parent Merger Agreement (including the documents and the instruments
referred to herein or therein), this Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
B-3
4.4 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Iowa.
IN WITNESS WHEREOF, each of New ▇▇▇▇▇ and ▇▇▇▇▇ has caused this Agreement
to be executed by its duly authorized officers as of the date first above
written.
ATTEST: NEW ▇▇▇▇▇ SAVINGS BANK
OF BRIGHTON
By: _________________________ ____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Secretary President and
Chief Executive Officer
ATTEST: ▇▇▇▇▇ SAVINGS BANK
OF BRIGHTON
By: _________________________ ____________________________
______________, Secretary ▇▇▇▇ ▇▇▇▇▇▇▇
President
C-1
EXHIBIT C
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this ___ day of __________, 199_, by and between ▇▇▇▇▇ Savings Bank of
Brighton, Brighton, Iowa (the "Bank"), and ▇▇▇▇ ▇▇▇▇▇▇▇ (the "Employee").
WHEREAS, the Employee is currently serving as President and Chief
Executive Officer of the Bank; and
WHEREAS, the Bank is a wholly owned subsidiary of Washington Bancorp (the
"Holding Company"); and
WHEREAS, the board of directors of the Bank ("Board of Directors")
recognizes that, as is the case with publicly held corporations generally, the
possibility of a change in control of the Holding Company and/or the Bank may
exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of key
management personnel to the detriment of the Bank, the Holding Company and
their respective stockholders; and
WHEREAS, the Board of Directors believes it is in the best interests of
the Bank to enter into this Agreement with the Employee in order to assure
continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to the Employee's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Holding Company or
the Bank, although no such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution
of this Agreement with the Employee to take effect as stated in Section 2
hereof;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means (1) an event of a nature
that (i) would require the filing of an application or notice under Section 3
of the Bank Holding Company Act of 1956, as amended, or the Change in Bank
Control Act of 1978, as amended, or any successor thereto; (ii) would be
required to be reported in response to Item 1 of the current report on Form 8-
K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); (2) any person (as the
term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly of securities of the Bank or the Holding Company
representing 20% or more of the Bank's or the Holding Company's outstanding
securities; (3) individuals who are members of the board of directors of the
Holding Company on the date hereof
C-2
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's stockholders was approved by the nominating committee
serving under an Incumbent Board, shall be considered a member of the
Incumbent Board; or (4) a reorganization, merger, consolidation, sale of all
or substantially all of the assets of the Bank or the Holding Company or a
similar transaction in which the Bank or the Holding Company is not the
resulting entity. The term "Change in Control" shall not include an
acquisition of securities by an employee benefit plan of the Bank or the
Holding Company or the acquisition of securities of the Bank by the Holding
Company.
(b) The term "Commencement Date" means __________________.
(c) The term "Date of Termination" means the date on which
employment shall cease as specified in a notice of termination pursuant to
Section 7(f) of this Agreement.
(d) The term "Involuntary Termination" means termination of the
employment of Employee without the Employee's express written consent, and
shall include a material diminution of or interference with the Employee's
duties, responsibilities and benefits as President and Chief Executive Officer
of the Bank, including (without limitation) any of the following actions
unless consented to in writing by the Employee: (1) a change in the principal
workplace of the Employee to a location outside of the state of Iowa; (2) a
material demotion of the Employee; (3) a material reduction in the number or
seniority of other Bank personnel reporting to the Employee or a material
reduction in the frequency with which, or in the nature of the matters with
respect to which, such personnel are to report to the Employee, other than as
part of a Bank- or Holding Company-wide reduction in staff; (4) a material
adverse change in the Employee's salary, perquisites, benefits, contingent
benefits or vacation, other than as part of an overall program applied
uniformly and with equitable effect to all members of the senior management of
the Bank or the Holding Company; and (5) a material permanent increase in the
required hours of work or the workload of the Employee. The term "Involuntary
Termination" does not include Termination for Cause or termination of
employment due to retirement, death, disability or suspension or temporary or
permanent prohibition from participation in the conduct of the Bank's affairs
under Section 8 of the Federal Deposit Insurance Act ("FDIA").
(e) The terms "Termination for Cause" and "Terminated for Cause"
mean termination of the employment of the Employee because of the Employee's
personal dishonesty, incompetence, willful misconduct, breach of a fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. No act or failure to act on the
part of the Employee shall be considered "willful" unless done or omitted to
be done by the Employee not in good faith and without reasonable belief that
his act omission was in the best interest of the Bank. The Employee shall not
be deemed to have been Terminated for Cause unless and until there shall have
been delivered to the Employee a copy of a resolution, duly adopted by the
affirmative vote of not less than three-fourths of the entire membership of
the Board of Directors at a meeting of the Board called and
C-3
held for such purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be
heard before the Board), stating that in the good faith opinion of the Board
the Employee has engaged in conduct described in the preceding sentence and
specifying the particulars thereof in detail.
2. Term. The term of this Agreement shall be a period of three years
commencing on the Commencement Date, subject to earlier termination as
provided herein.
3. Employment. The Employee is employed as President and Chief
Executive Officer of the Bank. As such, the Employee shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties of an officer of the Bank as the Board of Directors may prescribe from
time to time.
4. Compensation.
(a) Salary. The Bank agrees to pay the Employee during the term
of this Agreement the salary established by the Board of Directors, which
shall be at least $___________ per year. The amount of the Employee's salary
shall be reviewed annually by the Board of Directors, beginning not later than
the first anniversary of the Commencement Date. Adjustments in salary or
other compensation shall not limit or reduce any other obligation of the Bank
under this Agreement. The Employee's salary in effect from time to time
during the term of this Agreement shall not thereafter be reduced.
(b) Discretionary Bonuses. The Employee shall be entitled to
participate in an equitable manner with all other executive officers of the
Bank in discretionary bonuses as authorized and declared by the Board of
Directors to its executive employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such bonuses when and as declared by the Board of Directors.
(c) Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in
performing services under this Agreement in accordance with the policies and
procedures applicable to the executive officers of the Bank, provided that the
Employee accounts for such expenses as required under such policies and
procedures.
5. Benefits.
(a) Participation in Retirement and Employee Benefit Plans. The
Employee shall be entitled to participate in all plans relating to pension,
thrift, profit-sharing, group life insurance, medical and dental coverage,
education, cash bonuses, and other retirement or employee benefits or
combinations thereof, in which the Bank's executive officers participate.
C-4
(b) Fringe Benefits. The Employee shall be eligible to
participate in, and receive benefits under, any fringe benefit plans which are
or may become applicable to the Bank's executive officers.
6. Vacations; Leave. The Employee shall be entitled to annual paid
vacation in accordance with the policies established by the Bank's Board of
Directors for executive officers and to voluntary leave of absence, with or
without pay, from time to time at such times and upon such conditions as the
Board of Directors may determine in its discretion.
7. Termination of Employment.
(a) Involuntary Termination. The Board of Directors may
terminate the Employee's employment at any time, but, except in the case of
Termination for Cause, termination of employment shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. In
the event of Involuntary Termination other than in connection with or within
12 months after a Change in Control, (1) the Bank shall pay to the Employee
during the remaining term of this Agreement, so long as the Employee is
living, the Employee's salary at the rate in effect immediately prior to the
Date of Termination, payable in such manner and at such times as such salary
would have been payable to the Employee under Section 4(a) if the Employee had
continued to be employed by the Bank, and (2) the Bank shall provide to the
Employee during the remaining term of this Agreement, so long as the Employee
is living, health benefits as maintained by the Bank for the benefit of its
executive officers from time to time during the remaining term of the
Agreement or substantially the same health benefits as the Bank maintained for
its executive officers immediately prior to the Date of Termination. If the
Employee elects within 30 days after the Date of Termination, the Bank shall
pay him the amount of salary payable under clause (1) of the preceding
sentence in a lump sum. Salary paid or payable under clause (1) of the first
sentence of this Section 7(a) shall be reduced by the amounts of income, if
any, earned by the Employee from employment other than by the Bank or any of
its affiliates during the term of this Agreement.
(b) Termination for Cause. In the event of Termination for
Cause, the Bank shall pay the Employee the Employee's salary through the Date
of Termination, and the Bank shall have no further obligation to the Employee
under this Agreement.
(c) Voluntary Termination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon written notice to the
Bank pursuant to Section 7(f) of this Agreement. In the event of such
voluntary termination, the Bank shall be obligated to continue to pay to the
Employee the Employee's salary and benefits only through the Date of
Termination, at the time such payments are due, and the Bank shall have no
further obligation to the Employee under this Agreement. Notwithstanding the
foregoing, in the event of such voluntary termination in the absence of a
Change in Control and of Termination for Cause, the Board of Directors may,
solely in its discretion, elect to pay to the Employee severance pay which in
the aggregate shall not exceed three times his annual salary in effect prior
to the Date of Termination. Such severance pay shall be payable in equal
monthly installments during the remaining term of this Agreement, while the
Employee is living, unless within 30 days after the Date of Termination, the
Employee elects to receive such severance pay in a lump sum.
C-5
(d) Change in Control. In the event that the Employee resigns at
any time during the term of this Agreement following a Change in Control, the
Bank shall, subject to Section 8 of this Agreement, (1) pay to the Employee in
a lump sum in cash within 25 business days after the Date of Termination an
amount equal to 299% of the Employee's "base amount" as defined in Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"); and (2)
provide to the Employee during the remaining term of this Agreement, while the
Employee is living, such health benefits as are maintained for executive
officers of the Bank from time to time during the remaining term of this
Agreement or substantially the same health benefits as the Bank maintained for
its executive officers immediately prior to the Date of Termination. Salary
paid or payable under clause (1) of the first sentence of this Section 7(d)
shall be reduced by the amounts of income, if any, earned by the Employee from
employment other than by the Bank or any of its affiliates during the term of
this Agreement.
(e) Death; Disability. In the event of the death of the Employee
while employed under this Agreement and prior to any termination of
employment, the Employee's estate, or such person as the Employee may have
previously designated in writing, shall be entitled to receive from the Bank
the salary of the Employee through the last day of the calendar month in which
the Employee died. If the Employee becomes disabled as defined in the Bank's
then current disability plan, if any, or if the Employee is otherwise unable
to serve as President and Chief Executive Officer, the Employee shall be
entitled to receive group and other disability income benefits of the type, if
any, then provided by the Bank for executive officers.
(f) Notice of Termination. In the event that the Bank desires to
terminate the employment of the Employee during the term of this Agreement,
the Bank shall deliver to the Employee a written notice of termination,
stating whether such termination constitutes Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered except in the case of
Termination for Cause. In the event that the Employee determines in good
faith that he has experienced an Involuntary Termination of his employment, he
shall send a written notice to the Bank stating the circumstances that
constitute such Involuntary Termination and the date upon which his employment
shall have terminated due to such Involuntary Termination. In the event that
the Employee desires to terminate his employment voluntarily, he shall deliver
a written notice to the Bank, stating the date upon which his employment shall
terminate, which date shall be at least 90 days after the date upon which the
notice is delivered, unless the parties agree to a date sooner.
8. Certain Reduction of Payments by the Bank.
(a) Notwithstanding any other provision of this Agreement, if the
value and amounts of benefits under this Agreement, together with any other
amounts and the value of benefits received or to be received by the Employee
in connection with a Change in Control would cause any amount to be
nondeductible by the Bank or the Holding Company for federal income tax
purposes pursuant to Section 280G of the Code, then amounts and benefits under
this Agreement shall be reduced (not less than zero) to the extent necessary
so as to maximize amounts and the value of benefits to the Employee without
causing any amount to become nondeductible
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by the Bank or the Holding Company pursuant to or by reason of such Section
280G. The Employee shall determine the allocation of such reduction among
payments and benefits to the Employee.
(b) Any payments made to the Employee pursuant to this Agreement,
or otherwise, are subject to and conditioned upon their compliance with 12
U.S.C. 1828(k) and any regulations promulgated thereunder.
9. No Mitigation. Except as provided in Section 7(a) and Section 7(c)
of this Agreement, the Employee shall not be required to mitigate the amount
of any salary or other payment or benefit provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned
by the Employee as the result of employment by another employer, by retirement
benefits after the Date of Termination or otherwise.
10. Post-Termination Obligations.
(a) Any other provision of this Agreement to the contrary
notwithstanding, all payments and benefits to the Employee under this
Agreement shall be subject to his compliance with this Section 10 during the
term of this Agreement and for five full years after the expiration thereof,
and his compliance with Section 11 of this Agreement. The provisions of this
Section 10 and Section 11 of this Agreement shall survive termination of this
Agreement for any reason.
(b) The Employee shall, upon reasonable notice, furnish such
information and assistance to the Bank as may reasonably be required by the
Bank in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party.
11. Non-Competition.
(a) Upon any termination of the Employee's employment, the
Employee agrees not to compete with the Bank or any of its affiliates for a
period of one year following the Date of Termination in any city, town or
country in which the Bank or any of its affiliates has an office or, as of the
Date of Termination, has filed an application for regulatory approval to
establish an office, except as agreed to pursuant to a resolution duly adopted
by the Board of Directors. The Employee agrees that during such period, the
Employee shall not directly or indirectly, render personal services as an
independent contractor or director, advisory director, employee, consultant or
advisor of or to any entity whose business materially competes with the
depository, lending or other business activities of the Bank or any of its
affiliates within said cities, towns and counties. The parties hereto,
recognizing that irreparable injury will result to the Bank and its
affiliates, their business and property in the event of the Employee's breach
of this Section 11, agree that in the event of any such breach by the
Employee, the Bank will be entitled, in addition to any other remedies and
damages available, to an injunction to restrain the violation hereof by the
Employee, his partners, agents, servants, employers, employees and all persons
acting for or with him. Nothing herein shall be construed as prohibiting the
Bank from pursuing any other remedies
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available to the Bank for such breach or threatened breach, including the
recovery of damages from the Employee.
(b) The Employee recognizes and acknowledges that the knowledge of
the business activities and plans for business activities of the Bank and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Bank. The Employee shall not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Bank or affiliates
thereof to any person, firm, corporation, or other entity for any reason or
purpose whatsoever, except with the Bank's consent. Notwithstanding the
foregoing, the Employee may disclose a knowledge of banking, financial and/or
economic principles, concepts or ideas which are not derived from the business
plans and activities of the Bank or its affiliates, and the Employee may
disclose any information regarding the Bank and its affiliates which is
otherwise publicly available. In the event of a breach or threatened breach
by the Employee of the provisions of this Section 11, the Bank shall be
entitled to an injunction restraining the Employee from disclosing, in whole
or in part, the knowledge of the past, present, planned or considered business
activities of the Bank or affiliates thereof, or from rendering any services
to any person, firm, corporation, other entity to whom such knowledge, in
whole or in part has been disclosed or its threatened to be disclosed.
Nothing herein will be construed as prohibiting the Bank from pursuing any
other remedies available to the Bank for such breach or threatened breach,
including the recovery of damages from the Employee.
12. Attorneys Fees. In the event the Bank exercises its right of
Termination for Cause, but it is determined by a court of competent
jurisdiction or by an arbitrator pursuant to Section 19 that cause did not
exist for such termination, or if in any event it is determined by any such
court or arbitrator that the Bank has failed to make timely payment of any
amounts owed to the Employee under this Agreement, the Employee shall be
entitled to reimbursement for all reasonable costs, including attorneys' fees,
incurred in challenging such termination or collecting such amounts. Such
reimbursement shall be in addition to all rights to which the Employee is
otherwise entitled under this Agreement.
13. Assignments.
(a) This Agreement is personal to each of the parties hereto, and
neither party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other party;
provided, that the Bank shall require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Bank, and that the
Employee may assign his right of payment under this Agreement to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Bank would be required to perform it if no such succession or assignment
had taken place.
(b) This Agreement and all rights of the Employee hereunder shall
inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amounts would still be payable to the Employee hereunder if the Employee had
C-8
continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to the Employee's
devisee, legatee or other designee or if there is no such designee, to the
Employee's estate.
14. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Bank at its home
office, to the attention of the Board of Directors with a copy to the
Secretary of the Bank, or, if to the Employee, to such home or other address
as the Employee has most recently provided in writing to the Bank.
15. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
16. Headings. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
17. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State
of Iowa.
19. Arbitration. Except with respect to an alleged breach of Sections
10 or 11 of this Agreement, any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
▇▇▇▇▇ Savings Bank of Brighton
___________________________
By:
Its:
Employee
____________________________
▇▇▇▇ ▇▇▇▇▇▇▇