<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)
COMSTOCK BANCORP
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
205667 10 8
(CUSIP Number)
Larry A. Platz
c/o Comstock Bancorp
P.O. Box 7610
Reno, Nevada 89510-7610
(775) 824-7100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 28, 1998
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following pages)
(Page 1 of 6 Pages)
<PAGE>
==============================================================================
CUSIP No. 205667 10 8 13D Page 2 of 6 Pages
==============================================================================
- ------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Larry A. Platz
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)
(b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF and OO
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES --
BENEFICIALLY ----------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 277,254
REPORTING ----------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH --
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
277,254
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
277,254
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.43%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------------------------------------------------------------------------
<PAGE>
==============================================================================
CUSIP No. 205667 10 8 13D Page 3 of 6 Pages
==============================================================================
- ------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
The Larry A. Platz Trust
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)
(b)
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC and OO
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e)
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES --
BENEFICIALLY ----------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 277,254
REPORTING ----------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH --
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
277,254
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
277,254
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.43%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------------------------------------------------------------------------
<PAGE>
This Amendment No. 1 to Schedule 13D Statement (this "Statement") is filed
for the purpose of reporting the acquisition by Mr. Larry A. Platz of 233,200
shares of common stock, par value $.01 per share, of Comstock Bancorp, a Nevada
corporation ("Comstock"), pursuant to exercise of options. This Amendment No. 1
is also being filed to report that all of Mr. Platz's shares of Comstock are
held by The Larry A. Platz Trust, of which Mr. Larry A. Platz is trustee, and to
report certain events and circumstances described hereinafter.
ITEM 2. IDENTITY AND BACKGROUND
Item 2 is amended and supplemented as follows:
(a). This Statement is being filed by Larry A. Platz and by The Larry A.
Platz Trust. Larry A. Platz is the sole trustee of The Larry A. Platz Trust.
(b), (c) and (f). Mr. Platz's principal occupation is President and
Secretary of Comstock and its wholly owned subsidiary, Comstock Bank. Mr.
Platz's business address is 6275 Neil Road, Reno, Nevada 89511. Mr. Platz is a
citizen of the United States of America.
The Larry A. Platz Trust is a personal trust formed under Nevada law for
estate planning purposes by Mr. Larry A. Platz. The address of The Larry A.
Platz Trust is 4415 Wild Eagle Terrace, Reno, Nevada 89511.
(d) and (e). During the past five years, neither Mr. Platz nor The Larry
A. Platz Trust has been convicted in any criminal proceeding (excluding traffic
violations or similar misdemeanors) or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was not or is not subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is amended and supplemented as follows:
The shares reported herein as having been acquired by Mr. Platz were
acquired by exercise of options previously granted to Mr. Platz under stock
option plans of Comstock. A total of 233,200 shares of common stock of Comstock
were acquired by Mr. Platz by exercise of options.
Funds for the exercise of options and payment of associated taxes were
obtained by Mr. Platz from personal funds, working capital and unsecured
borrowings from Mr. Robert N. Barone, Chairman and Chief Executive Officer of
Comstock. The aggregate exercise price paid by Mr. Platz upon exercise of
options was approximately $563,235. Taxes paid with respect thereto were
approximately $678,214, for total borrowings of $1,140,000 relating to the
exercise of options and payment of associated taxes.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is amended and supplemented as follows:
Larry A. Platz exercised his options for personal financial planning
reasons. Mr. Platz and The Larry A. Platz Trust hold the shares of Comstock
common stock for investment purposes.
As reported in Comstock's Form 8-K Current Report filed with the
Securities and Exchange Commission on January 13, 1999 (Commission File No.
0-22391), Comstock and First Security Corporation, a Delaware corporation and
<PAGE>
bank holding company headquartered in Salt Lake City, Utah, entered into an
Agreement and Plan of Reorganization dated as of January 12, 1999. The
Agreement and Plan of Reorganization provides that Comstock will, upon
receipt of stockholder and regulatory approvals and satisfaction of the other
conditions stated in the Agreement and Plan of Reorganization, merge with and
into First Security Corporation. First Security Corporation will be the
surviving entity in that merger. A copy of the Agreement and Plan of
Reorganization is attached hereto as Exhibit 4.1. Hovde Financial, Inc. has
acted as financial advisor to Comstock in connection with the pending
acquisition by First Security Corporation and will receive compensation
therefor.
Mr. Platz and the other directors of Comstock entered into a Shareholder
Voting Agreement with First Security Corporation in connection with execution of
the Agreement and Plan of Reorganization. The Shareholder Voting Agreement
provides that each of the directors executing the Shareholder Voting Agreement,
including Mr. Platz:
- is required to vote his Comstock common stock in favor of the
merger with First Security Corporation;
- may not sell, agree to sell or grant a proxy to vote any Comstock
common stock owned by him or thereafter acquired by him, except
for a proxy in favor of First Security Corporation or in favor of
the merger; and
- may not solicit or encourage a competing acquisition proposal or
furnish information to or cooperate with a competing bidder for
Comstock.
However, the Shareholder Voting Agreement provides that the directors executing
the Shareholder Voting Agreement are not required to take any action that would,
in the reasonable opinion of their legal counsel, violate any duties imposed by
law. The obligations represented by the Shareholder Voting Agreement terminate
on the earlier to occur of termination of the Agreement and Plan of
Reorganization or consummation of the merger contemplated thereby. A copy of
the Shareholder Voting Agreement is included herewith as Exhibit 4.2.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 is amended and supplemented as follows:
(a). Larry A. Platz and The Larry A. Platz Trust are the beneficial
owners of 277,254 shares (5.43% of the outstanding shares) of common stock of
Comstock. The number of shares of common stock beneficially owned by Mr.
Platz and The Larry A. Platz Trust and the percentage of outstanding shares
of common stock represented thereby have been computed in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended. Comstock
has 5,108,400 shares of common stock issued and outstanding as of the date
hereof.
(b). As trustee of The Larry A. Platz Trust, Mr. Platz shares with the
other trustee(s) the power to (i) vote or direct the voting of, and (ii) dispose
or direct the disposition of the 277,254 shares of common stock reported herein
as beneficially owned by him and The Larry A. Platz Trust.
(c). A total of 233,200 shares of common stock of Comstock were acquired
by Mr. Platz pursuant to exercise of options, as follows:
<TABLE>
<CAPTION>
Number of Shares
Acquired by Option Exercise Price
Exercise Date of Exercise Per Share
- ------------------ ---------------- --------------
<S> <C> <C>
95,700 December 28, 1998 $3.436
137,500 December 28, 1998 $1.705
</TABLE>
<PAGE>
(d). Not applicable.
(e). Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Item 6 is amended and supplemented as follows:
Reference is hereby made to the (i) the Agreement and Plan of
Reorganization attached hereto as Exhibit 4.1 and (ii) the Shareholder Voting
Agreement attached hereto as Exhibit 4.2.
ITEM 7. EXHIBITS
Item 7 is amended and supplemented as follows:
Exhibit 4.1 --- Agreement and Plan of Reorganization and Merger dated
as of January 12, 1999 by and between Comstock Bancorp,
Comstock Bank, First Security Corporation and First
Security Bank of Nevada
Exhibit 4.2 --- Shareholder Voting Agreement dated as of January 12,
1999 by and among First Security Corporation, First
Security Bank of Nevada and the directors of Comstock
Bancorp
Exhibit 7.1 --- Cognovit Promissory Note dated December 31, 1998
Exhibit 7.2 --- Agreement of Joint Filing
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 18, 1999 /s/ Larry A. Platz
--------------------
LARRY A. PLATZ
THE LARRY A. PLATZ TRUST
/s/ Larry A. Platz
--------------------
LARRY A. PLATZ, TRUSTEE
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JANUARY 12, 1999
BY AND AMONG
FIRST SECURITY CORPORATION,
FIRST SECURITY BANK OF NEVADA,
COMSTOCK BANCORP
AND
COMSTOCK BANK
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.2 Directors and Officers of the Surviving Corporation . . . . . . . . . . . .4
1.3 Subsequent Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE II THE BANK MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.1 The Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.2 Directors and Officers of the Surviving Bank. . . . . . . . . . . . . . . .6
2.3 Subsequent Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.4 Conversion of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
ARTICLE III CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . .7
3.1 Conversion of Common Stock of Merging Entities. . . . . . . . . . . . . . .7
(a) Conversion of Bancorp Common Stock . . . . . . . . . . . . . . . . .7
(b) Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . .7
(c) FSC Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.2 The Merging Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(a) FSB Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . .9
(b) Bank Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . .9
3.3 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.4 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Exchange of Shares and Certificates . . . . . . . . . . . . . . . . . . . 11
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Exchange Procedures; Transfer of Shares. . . . . . . . . . . . . . 11
(c) Distributions with Respect to Unexchanged Shares . . . . . . . . . 12
(d) No Further Ownership Rights in Bancorp Common
Stock; No Transfer Following the Closing Date. . . . . . . . . . . 13
(e) Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . . . 14
(g) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Investment of Exchange Fund. . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV COVENANTS OF BANCORP AND BANK. . . . . . . . . . . . . . . . . . . . . 15
4.1 Conduct of Business Pending the Closing . . . . . . . . . . . . . . . . . 15
(a) Change in Capital Stock; Issuance of Shares. . . . . . . . . . . . 16
(b) Options, Warrants, and Rights. . . . . . . . . . . . . . . . . . . 16
(c) Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . 16
(e) Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
i
<PAGE>
(f) Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . 17
(g) Acquisitions and Mergers . . . . . . . . . . . . . . . . . . . . . 17
(h) Liens; Indebtedness; Increase in Compensation, etc.. . . . . . . . 17
(i) Amendments to Charter, etc.. . . . . . . . . . . . . . . . . . . . 18
4.2 Investigation; Access . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 Termination of Employee Benefit Plans . . . . . . . . . . . . . . . . . . 20
4.5 Information for Proxy Statement . . . . . . . . . . . . . . . . . . . . . 20
4.6 Environmental Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.7 Notification of Actions . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BANCORP AND BANK . . . . . . . . . . 21
5.1 Organization, Conduct of Business, etc. . . . . . . . . . . . . . . . . . 22
5.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Options, SARs, Warrants, etc. . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Authorization; Validity of Agreement. . . . . . . . . . . . . . . . . . . 23
5.5 Bancorp and Bank Reports. . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6 Bancorp and Bank Financial Statements; No Undisclosed Liabilities . . . . 24
5.7 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8 Loan Loss Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.10 Absence of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.11 Absence of Material Adverse Changes. . . . . . . . . . . . . . . . . . . 28
5.12 Actions, Proceedings and Investigations. . . . . . . . . . . . . . . . . 29
5.13 Absence of Brokerage Commissions, etc. . . . . . . . . . . . . . . . . . 29
5.14 Material Contracts.. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.15 Compliance With Laws; Documentation. . . . . . . . . . . . . . . . . . . 30
5.16 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.17 Repurchase Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.18 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.19 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.21 Section 280G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.22 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI COVENANTS, REPRESENTATIONS AND WARRANTIES OF FSC AND FSB . . . . . . . 38
6.1 Organization, Conduct of Business, etc. . . . . . . . . . . . . . . . . . 38
6.2 Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . 39
6.3 FSC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.4 FSC Financial Statements; Tax Returns . . . . . . . . . . . . . . . . . . 39
6.5 Absence of Material Adverse Changes . . . . . . . . . . . . . . . . . . . 40
6.6 Absence of Defaults Under Agreements. . . . . . . . . . . . . . . . . . . 40
6.7 Actions, Proceedings, and Investigations. . . . . . . . . . . . . . . . . 41
ii
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6.8 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.9 FSC Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.10 Registration of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.11 Notification of Actions. . . . . . . . . . . . . . . . . . . . . . . . . 42
6.12 NASDAQ/NMS Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.13 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.14 Ongoing Credit Review. . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.15 Limitations on FSC's Conduct Prior to the Effective Time . . . . . . . . 44
6.16 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.17 FSB Board Position . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.18 Federal Home Loan Bank Membership. . . . . . . . . . . . . . . . . . . . 45
ARTICLE VII PROXY STATEMENT; SHAREHOLDER MEETINGS. . . . . . . . . . . . . . . . 45
7.1 Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.2 Bancorp Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.3 Bank and FSB Action By Unanimous Written Consent. . . . . . . . . . . . . 47
ARTICLE VIII CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . 47
8.1 Conditions of Closing For All Parties . . . . . . . . . . . . . . . . . . 47
(a) Regulatory Approval. . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Registration Statement, etc. . . . . . . . . . . . . . . . . . . . 48
(c) No Injunction, etc.. . . . . . . . . . . . . . . . . . . . . . . . 48
(d) Tax Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(e) Section 280G . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.2 Conditions of Closing For FSC and FSB . . . . . . . . . . . . . . . . . . 49
(a) Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Bancorp and Bank Resolutions; Corporate Documents. . . . . . . . . 49
(c) Bancorp and Bank Representations and Warranties. . . . . . . . . . 49
(d) Comfort Letters. . . . . . . . . . . . . . . . . . . . . . . . . . 50
(e) Opinion of Bancorp and Bank Counsel. . . . . . . . . . . . . . . . 50
(f) Affiliate's Letter . . . . . . . . . . . . . . . . . . . . . . . . 50
(g) Condition of Bank. . . . . . . . . . . . . . . . . . . . . . . . . 50
(h) Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . 53
(i) Condition of Properties. . . . . . . . . . . . . . . . . . . . . . 53
(j) Options and Warrants . . . . . . . . . . . . . . . . . . . . . . . 53
(k) Cafeteria Plan Issues. . . . . . . . . . . . . . . . . . . . . . . 53
8.3 Conditions of Closing For Bancorp and Bank. . . . . . . . . . . . . . . . 54
(a) FSC and FSB Representations and Warranties . . . . . . . . . . . . 54
(b) Opinion of FSC Counsel . . . . . . . . . . . . . . . . . . . . . . 54
(c) FSC Resolutions; Corporate Documents. . . . . . . . . . . . . . . 54
(d) Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . 55
(e) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 55
iii
<PAGE>
ARTICLE IX CLOSING OF MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.2 Filing of Certificate of Merger and Articles of Merger. . . . . . . . . . 55
ARTICLE X TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XI ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.1 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.2 Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.3 Instruments of Transfer, etc.. . . . . . . . . . . . . . . . . . . . . . 60
11.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.9 Exclusive Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . 63
11.10 Public Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.12 Nonsurvival of Representations, Warranties and Agreements . . . . . . . 65
11.13 Alternative Structure . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.14 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.15 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.16 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.17 Definition of Material Adverse Effect . . . . . . . . . . . . . . . . . 66
</TABLE>
EXHIBITS
Exhibit A - Certificate of Merger (Delaware)
Exhibit B - Articles of Merger (Nevada)
<TABLE>
SCHEDULES
<S> <C>
Schedule 2.2 Directors of FSB
Schedule 4.1(d) -- Purchase of Shares
Schedule 4.2 -- Investigation, Access
Schedule 5.1 -- Organization, Conduct of Business
Schedule 5.2 -- Capitalization
Schedule 5.3 -- Options
Schedule 5.5 -- Bank Reports
Schedule 5.6 -- Financial Statements
Schedule 5.7 -- Environmental Matters
iv
<PAGE>
Schedule 5.9 -- Title to Properties
Schedule 5.10 -- Absence of Defaults
Schedule 5.11 -- Material Adverse Changes
Schedule 5.12 -- Litigation, Etc.
Schedule 5.14 -- Material Contracts
Schedule 5.15 -- Compliance with Law
Schedule 5.16 -- Employee Benefit Plans
Schedule 5.18 -- Taxes
Schedule 5.19 -- Consents
Schedule 5.20 -- Insurance
Schedule 8.1(d) -- Form of Tax Opinion
Schedule 8.2(d) -- Comfort Letters
Schedule 8.2(e) -- Opinion of Bank and Bancorp
Schedule 8.2(f) -- Affiliate's Letter
Schedule 8.2(h-1) -- Barone Employment Agreement
Schedule 8.2(h-2) -- Platz Employment Agreement
Schedule 8.3(b) -- Opinion of FSC and FSB
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of the 12th day of
January, 1999 (this "AGREEMENT"), is made and entered into by and among FIRST
SECURITY CORPORATION, a Delaware corporation ("FSC"), FIRST SECURITY BANK OF
NEVADA, a bank organized under the laws of Nevada ("FSB"), COMSTOCK BANCORP, a
Nevada corporation ("Bancorp"), and COMSTOCK BANK, a bank organized under the
laws of Nevada ("BANK").
R E C I T A L S:
A. FSC is a corporation duly organized and existing under the laws of
the State of Delaware, with its principal place of business located in Salt
Lake City, Utah. FSC is authorized by its Articles of Incorporation, as
amended, to issue (i) 400,000 shares of preferred stock, each of no par value
("FSC PREFERRED STOCK"), 18,052 of which are designated as Class A Preferred
Stock, of which 9,361 were issued and outstanding on November 30, 1998, and
(ii) 600,000,000 shares of common stock, each of $1.25 par value ("FSC COMMON
STOCK"), of which as of November 30, 1998, there were 188,440,989 (net of
Treasury) shares issued and outstanding ("BASIC SHARES").
B. FSB is a bank duly organized under the laws of the State of
Nevada, with its principal place of business located in Las Vegas, Nevada.
FSB is authorized by its Articles of Incorporation to issue 5,000,000 shares
of common stock, each of $1.00 par value ("FSB COMMON STOCK"), of which as of
the date of this Agreement there were 4,329,161 shares issued and
outstanding. FSC owns beneficially and of record all of the issued and
outstanding shares of FSB Common Stock.
C. Bancorp is a corporation duly organized and existing under the
laws of the State of Nevada, with its principal place of business located in
Reno,
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Nevada. Bancorp is authorized by its Articles of Incorporation to issue
15,000,000 shares of common stock, $.01 par value ("BANCORP COMMON STOCK"),
of which, as of November 30, 1998, there were (i) 4,481,368 shares issued and
outstanding, (ii) options outstanding for 651,732 shares as of such date (the
"OPTIONS") and (iii) warrants outstanding for 52,800 shares (the "WARRANTS").
D. Bank is a bank incorporated under the laws of the State of Nevada,
having its principal place of business located in Reno, Nevada. Bank is
authorized by its Articles of Incorporation to issue 6,000,000 shares of
common stock, each of $.50 par value ("BANK COMMON STOCK"), of which as of
the date of this Agreement there were 2,210,834 shares issued and
outstanding. Bancorp owns beneficially and of record all of the issued and
outstanding shares of Bank Common Stock.
E. The parties hereto desire that Bancorp be merged with and into FSC
(the "MERGER") pursuant to this Agreement and that certain Certificate of
Merger in the form attached hereto as EXHIBIT A (the "CERTIFICATE OF MERGER")
and that immediately after the Merger, Bank be merged with and into FSB (the
"BANK MERGER") pursuant to this Agreement and those certain Articles of
Merger attached hereto as EXHIBIT B (the "BANK ARTICLES OF MERGER").
A G R E E M E N T:
NOW, THEREFORE, in consideration of foregoing and the respective
representations, warranties, covenants, agreements and conditions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
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<PAGE>
ARTICLE I
THE MERGER
1.1 THE MERGER.
(a) Pursuant to the laws of the States of Delaware and Nevada,
and subject to the terms and conditions of this Agreement, at the effective time
of the Certificate of Merger (the "EFFECTIVE TIME"), FSC and Bancorp (sometimes
referred to herein as the "MERGING ENTITIES") shall consummate the Merger
pursuant to which (a) Bancorp shall be merged with and into FSC, and the
separate corporate existence of Bancorp shall thereupon cease; (b) FSC shall be
the successor or surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Delaware (the "SURVIVING CORPORATION"); and
(c) the separate corporate existence of FSC with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this Article I. FSC, as the Surviving Corporation, shall
thereupon and thereafter possess all the rights, privileges, powers and
franchises, of a public as well as a private nature, and shall be subject to all
restrictions, disabilities and duties of the Merging Entities; and all property,
real, personal and mixed and all debts due to the Merging Entities on whatever
account, including subscriptions for shares and all other things in action or
belonging to the Merging Entities shall be taken and deemed to be vested in FSC
without further act or deed. FSC shall thenceforth be responsible for all the
debts, liabilities and duties of each of the Merging Entities and may be
prosecuted to judgment as if the Merger had not taken place, or FSC may be
substituted in place of the Merging Entities and neither the rights of creditors
nor any liens upon any property of either shall be impaired by the Merger.
(b) As of the Effective Time, the certificate of incorporation
of FSC as in effect immediately prior to the Merger shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
-3-
<PAGE>
by law and such certificate of incorporation. As of the Effective Time, the
bylaws of FSC as in effect immediately prior to the Effective Time shall be the
bylaws of the Surviving Corporation until thereafter amended as provided by law
and such bylaws of the Surviving Corporation.
1.2 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and officers of the Surviving Corporation at the Effective Time shall
be the directors and officers of FSC as of immediately prior to the Effective
Time, and shall serve in their respective positions until their successors shall
have been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the certificate of incorporation and
the bylaws of the Surviving Corporation.
1.3 SUBSEQUENT ACTIONS. If, at any time after the Merger, FSC shall
consider or be advised that any deeds, bills of sale, assignments, assurances,
or any other actions or things are necessary or desirable to vest, perfect, or
confirm of record or otherwise in FSC its right, title, or interest in, to, or
under any of the rights, properties, or assets of Bancorp acquired or to be
acquired by FSC as a result of or in connection with the Merger, or otherwise to
carry out this Agreement, the officers and directors of FSC shall be authorized
to execute and deliver, in the name and on behalf of Bancorp or otherwise, all
such deeds, bills of sale, assignments, and assurances, and to make and do, in
the name and on behalf of Bancorp or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect, or confirm any right,
title, and interest in, to, and under such rights, properties, or assets in FSC
or otherwise to carry out this Agreement.
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<PAGE>
ARTICLE II
THE BANK MERGER
2.1 THE BANK MERGER.
(a) Immediately after but essentially concurrently with the
Merger, and pursuant to the laws of the State of Nevada, and subject to the
terms and conditions of this Agreement, at the time that the Bank Articles of
Merger become effective, FSB and Bank (sometimes collectively referred to herein
as the "MERGING BANKS") shall consummate the Bank Merger pursuant to which (a)
the Bank shall be merged with and into FSB, immediately after but essentially
concurrently with the Merger, and the separate corporate existence of Bank shall
thereupon cease; (b) FSB shall be the successor or surviving bank in the Merger
and shall continue to be governed by the laws of the State of Nevada (sometimes
referred to herein as the "SURVIVING BANK"); and (c) the separate corporate
existence of FSB with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Bank Merger, except as set forth in
this Article II. FSB, as the Surviving Bank, shall thereupon and thereafter
possess all the rights, privileges, powers and franchises, of a public as well
as a private nature, and shall be subject to all restrictions, disabilities and
duties of the Merging Banks, and all property, real, personal and mixed and all
debts due to the Merging Banks on whatever account, including subscriptions for
shares and all other things in action or belonging to the Merging Banks shall be
taken and deemed to be vested in FSB without further act or deed. FSB shall
thenceforth be responsible for all the debts, liabilities and duties of each of
the Merging Banks and may be prosecuted to judgment as if the Bank Merger had
not taken place, or FSB may be substituted in place of the Merging Banks and
neither the rights of creditors nor any liens upon any property of either shall
be impaired by the Bank Merger.
(b) As of the effective time of the Bank Merger, the articles
of incorporation of FSB as in effect immediately prior to the Bank Merger shall
be
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<PAGE>
the articles of incorporation of the Surviving Bank without amendment until
thereafter amended as provided by law and such articles of incorporation. As of
the effective time of the Bank Merger, the bylaws of FSB as in effect
immediately prior to the Bank Merger shall be the bylaws of the Surviving Bank
without amendment until thereafter amended as provided by law and such bylaws.
2.2 DIRECTORS AND OFFICERS OF THE SURVIVING BANK. The directors of
the Surviving Bank shall be as set forth on Schedule 2.2 attached hereto and
such individuals shall serve for a twelve month period from and after the
Closing Date or until their successors are duly elected and qualified or until
their earlier death, resignation or removal in accordance with the articles of
incorporation and the bylaws of the Surviving Bank. The officers of the
Surviving Bank at the effective time of the Bank Merger shall be the officers of
FSB as of immediately prior to the Bank Merger and shall serve in their
respective positions until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the articles of incorporation and the bylaws of the Surviving
Bank.
2.3 SUBSEQUENT ACTIONS. If, at any time after the Bank Merger, FSB
shall consider or be advised that any deeds, bills of sale, assignments,
assurances, or any other actions or things are necessary or desirable to vest,
perfect, or confirm of record or otherwise in FSB its right, title, or interest
in, to, or under any of the rights, properties, or assets of Bank acquired or to
be acquired by FSB as a result of or in connection with the Bank Merger, or
otherwise to carry out this Agreement, the officers and directors of FSB shall
be authorized to execute and deliver, in the name and on behalf of Bank or
otherwise, all such deeds, bills of sale, assignments, and assurances, and to
make and do, in the name and on behalf of Bank or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect, or confirm
any right, title, and interest in, to, and under such rights, properties, or
assets in FSB or otherwise to carry out this Agreement.
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<PAGE>
2.4 CONVERSION OF SHARES. The manner and basis of converting the
shares of the Merging Banks shall be as set forth in Article III, below.
ARTICLE III
CONVERSION OF SECURITIES
3.1 CONVERSION OF COMMON STOCK OF MERGING ENTITIES.
(a) CONVERSION OF BANCORP COMMON STOCK. In accordance with
this Agreement, as of the Effective Time, by virtue of the Merger and without
any further action on the part of the holders of any shares of Bancorp Common
Stock, each issued and outstanding share of Bancorp Common Stock (of which there
shall be no more than 5,185,900 shares fully diluted and assuming all Options
and Warrants shall have been exercised or terminated) other than shares as to
which dissenters' rights are perfected ("DISSENTING SHARES"), and all rights in
respect thereof, shall be converted, IPSO FACTO, into the right to receive the
Merger Consideration.
As of the Effective Time, all such shares of Bancorp Common Stock,
including all Option and Warrant shares, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist. Each
holder of a certificate representing any shares of Bancorp Common Stock shall
cease to have any rights with respect thereto, except the right to receive, upon
the surrender of any such certificates, the Merger Consideration upon the terms
and subject to the conditions set forth herein.
(b) CERTAIN DEFINITIONS
"AVERAGE FSC SHARE PRICE" shall mean the average of the last sales
prices per share of FSC Common Stock on the Nasdaq National Market
for the ten (10) consecutive trading days preceding the
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<PAGE>
Closing Date (such period referred to herein as the "CLOSING
CALCULATION PERIOD"); subject to the following:
(i) if the Average FSC Share Price is greater
than or equal to $24.05, the Average FSC Share Price shall
be $24.05; and
(ii) if the Average FSC Share Price is less than
or equal to $18.70, the Average FSC Share Price shall be
$18.70.
"BANCORP SHARE PRICE" shall mean, subject to adjustment pursuant
to Section 8.2(g) below, $65,000,000 divided by (i) the total
number of issued and outstanding shares of Bancorp Common Stock,
plus (ii) the total number of shares of Bancorp Common Stock
subject to all Vested Options, plus (iii) the total number of
shares of Bancorp Common Stock subject to all Warrants.
"EXCHANGE RATIO" shall mean (in each case, rounded to four digits
to the right of the decimal point) that number of shares of FSC
Common Stock (rounded to the nearest one thousandth) determined as
follows:
Bancorp Share Price
-------------------
Average FSC Share Price
"MERGER CONSIDERATION" for each share of Bancorp Common Stock
being converted into shares of FSC Common Stock shall mean that
number of duly authorized, validly issued, fully paid and
nonassessable shares of FSC Common Stock equal to the Exchange
Ratio; PROVIDED, HOWEVER, if, prior to the Effective Time, FSC
should split, reclassify or combine the FSC Common Stock,
-8-
<PAGE>
or pay a stock dividend or other stock distribution in FSC
Common Stock, as of a record date prior to the Effective
Time, appropriate adjustment or adjustments (rounded to
four digits to the right of the decimal point) will be
made to the Exchange Ratio and the total number of shares
of FSC Common Stock to be issued in the transaction so as
to maintain the proportional interest in FSC Common
Stock which the shareholders of Bancorp would otherwise
have received.
(c) FSC STOCK. All shares of FSC Common Stock which are
outstanding immediately prior to the Merger shall continue to be outstanding
after the Merger.
3.2 THE MERGING BANKS.
(a) FSB COMMON STOCK. All shares of FSB Common Stock which are
outstanding immediately prior to the Bank Merger shall continue to be
outstanding immediately after the Bank Merger
(b) BANK COMMON STOCK. As of the Effective Time, each issued
and outstanding share of Bank Common Stock and all rights in respect thereof
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no FSB Common Stock or FSC Common Stock shall be
delivered in exchange therefore.
3.3 OPTIONS. Immediately prior to the Effective Time, each then
outstanding Option issued under each stock option plan, program, agreement or
arrangement of Bancorp (each a "BANCORP STOCK PLAN") that has previously vested
prior to the Merger (a "VESTED OPTION") shall be exercised pursuant to a
cashless exercise procedure whereby each holder of a Vested Option shall be
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<PAGE>
entitled to receive on a net basis that number of shares of Bancorp Common Stock
equal to X in the following formula:
X = A(B - C)
-------
B
Where A equals the number of shares of Bancorp Common Stock subject to such
Vested Option, B equals the Bancorp Share Price and C equals the strike price of
such Vested Option. The aggregate number of shares so issuable with respect to
all Vested Options shall be referred to herein as the "BANCORP OPTION SHARES."
At the Effective Time, each Bancorp Option Share shall be converted into shares
of FSC Common Stock pursuant to Sections 3.1 and 3.5 for the account of the
holder of such Vested Option.
3.4 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, Dissenting Shares shall not be converted into or represent a right to
receive the Merger Consideration pursuant to Section 3.1 hereof, but the holder
thereof shall be entitled to only such rights as are granted by the NGCL.
(b) Notwithstanding the provisions of Section 3.4. (a) above,
if any holder of shares of Bancorp Common Stock who demands appraisal of such
holder's shares of Bancorp Common Stock under the NGCL effectively withdraws or
loses (through failure to perfect or otherwise) his or her right to appraisal,
then as of the Effective Time or the occurrence of such event, whichever later
occurs, such holder's shares of Bancorp Common Stock shall automatically be
converted into and represent only the right to receive the Merger Consideration
as provided in Section 3.1. hereof, without interest, upon surrender of the
certificate or certificates representing such shares of Bancorp Common Stock
pursuant to Section 3.5 hereof.
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<PAGE>
(c) Bancorp shall give FSC (i) prompt notice of any written
demands for appraisal or payment of the fair value of any shares of Bancorp
Common Stock, withdrawals of such demands, and any other instruments served
on the Bancorp pursuant to the NGCL. Except with the prior written consent
to FSC, Bancorp shall not voluntarily make any payment with respect to any
demands for appraisal, settle or offer to settle any such demands.
3.5 EXCHANGE OF SHARES AND CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, FSC shall
deposit with First Chicago Trust Company of New York or such other bank or
trust company as may be designated by FSC (the "EXCHANGE AGENT"), for the
benefit of the holders of shares of Bancorp Common Stock, for exchange in
accordance with this Article III, through the Exchange Agent, (i) cash in an
amount sufficient to pay cash in lieu of fractional shares, and (ii)
certificates representing the shares of FSC Common Stock issuable pursuant to
Section 3.1. hereof in exchange for outstanding shares of Bancorp Common
Stock (the "EXCHANGE FUND").
(b) EXCHANGE PROCEDURES; TRANSFER OF SHARES. As soon as
reasonably practicable after the Effective Time, the Exchange Agent shall
mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Bancorp Common Stock (the "CERTIFICATES") whose shares were converted into
the right to receive shares of FSC Common Stock pursuant to Section 3.1.
hereof (i) 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 delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as FSC may reasonably specify and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of FSC Common
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<PAGE>
Stock, and cash in lieu of fractional shares of FSC Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by FSC, together with documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor (i) a
certificate representing that whole number of shares which such holder has
the right to receive pursuant to the provisions of this Article III and (ii)
cash in lieu of any fractional number of shares as contemplated by this
Section 3.5, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Bancorp Common Stock which is not
registered in the transfer records of Bancorp, a certificate representing the
proper number of shares of FSC Common Stock may be issued to a person other
than the person in whose name the Certificate so surrendered is registered,
if such Certificate shall be properly endorsed or otherwise be in proper form
for transfer and the person requesting such payment shall pay any transfer or
the taxes required by reason of the issuance of shares of FSC Common Stock to
a person other than the registered holder of such Certificate or establish to
the satisfaction of FSC that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.5, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration and cash in lieu of any
fractional shares of FSC Common Stock as contemplated by this Section 3.5.
No interest shall be paid or accrue on any cash payable in lieu of any
fractional shares of FSC Common Stock.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions with respect to FSC Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of FSC Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall
be paid to any such holder
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<PAGE>
pursuant to Section 3.5(e) hereof, until the surrender of such Certificate in
accordance with this Article III. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be applied to the
holder of the certificate representing whole shares of FSC Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
FSC Common Stock to which such holder is entitled pursuant to Section 3.5(e)
and the amount of dividends or other distributions with a record date after
the Effective Time theretofore paid with respect to such whole shares of FSC
Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to such surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of FSC Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN BANCORP COMMON STOCK; NO
TRANSFER FOLLOWING THE CLOSING DATE. All shares of FSC Common Stock issued
upon the surrender for exchange of Certificates in accordance with the terms
of this Article III (including any cash paid pursuant to Section 3.5(e)
hereof) shall be deemed to have been issued (and paid) in full satisfaction
of all rights pertaining to the shares of Bancorp Common Stock theretofore
represented by such Certificates, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Bancorp Common Stock which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented
to the Surviving Corporation or the Exchange Agent for any reason, they shall
be canceled and exchanged as provided in this Article III, except as
otherwise provided by law.
(e) FRACTIONAL SHARES.
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<PAGE>
(i) No certificates representing fractional shares of FSC
Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests shall not entitle the
owner thereof to vote or to any other rights of a stockholder of FSC.
(ii) Notwithstanding any other provision of this
Agreement, each holder of shares of Bancorp Common Stock converted
pursuant to the Merger who would otherwise have been entitled to receive
a fraction of a share of FSC Common Stock (after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof,
cash (without interest) in an amount equal to (A) such fraction
multiplied by (B) the Average FSC Share Price.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund which remains undistributed to the holders of the Certificates
for six months after the Effective Time shall be delivered to FSC, upon
demand, and any holders of the Certificates who have not theretofore complied
with this Article III shall thereafter look only to FSC for payment of their
Bancorp Common Stock, any cash in lieu of fractional shares of FSC Common
Stock and any dividends or distributions with respect to FSC Common Stock.
(g) NO LIABILITY. None of FSC, FSB, Bancorp, Bank or the
Exchange Agent shall be liable to any person in respect of any shares of FSC
Common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the Effective
Time, or immediately prior to such earlier date on which any shares of FSC
Common Stock, any cash in lieu of fractional shares of FSC Common Stock, or
any dividends or distributions with respect to FSC Common Stock in respect of
such Certificate would
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<PAGE>
otherwise escheat to or become the property of any Governmental Entity, any
such shares, cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation free and clear of all claims or interest of any person
previously entitled thereto.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by FSC, on a daily
basis. Any interest and other income resulting from such investments shall
be paid to FSC.
ARTICLE IV
COVENANTS OF BANCORP AND BANK
4.1 CONDUCT OF BUSINESS PENDING THE CLOSING. Except as otherwise
contemplated hereby, between the date hereof and the Effective Time, or the
time when this Agreement terminates as provided herein, each of Bancorp and
Bank shall conduct its respective operations and business in the usual and
ordinary course of business and consistent with past practice and use their
commercially reasonable efforts to retain for the benefit of FSC and FSB the
continuing services of the present officers and employees of Bank and
Bancorp, to preserve the goodwill of customers and others having business
relations with Bank and Bancorp, to preserve the deposit levels of Bank, to
preserve the benefits of all contractual relationships with others and to
keep in force at least at their present limits all policies of insurance
currently in effect. Without limiting the generality of the foregoing, and
except as otherwise specifically permitted by this Agreement, during the
period from the date hereof to the Effective Time, neither Bank nor Bancorp
shall, without the prior written authorization of the Chairman, President or
Chief Financial Officer of FSC:
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<PAGE>
(a) CHANGE IN CAPITAL STOCK; ISSUANCE OF SHARES. Make any
change in their authorized capital stock, or issue, agree to issue or permit
Bank or Bancorp to become obligated to issue any shares of their capital
stock, or securities convertible into their capital stock, except that
Bancorp may issue shares of Bancorp Common Stock upon the exercise of
outstanding Options or Warrants described in Schedule 5.3;
(b) OPTIONS, WARRANTS, AND RIGHTS. Grant or issue any
options, warrants or other rights, including stock appreciation rights, of
any kind relating to the purchase of shares of their capital stock, or
securities convertible into their capital stock (except for the Options and
Warrants outstanding as of the date hereof described in Schedule 5.3, Bancorp
and Bank hereby represent and warrant that no options, warrants, stock
appreciation rights or other rights to purchase shares of their capital stock
are outstanding on the date hereof);
(c) DIVIDENDS. Declare or pay any dividends or other
distributions on any shares of their capital stock; PROVIDED, however, that
Bank may declare dividends to Bancorp in accordance with normal practices and
to cover expenses associated with the transactions hereunder in an amount not
to exceed $3,530,278 (see lines 11 and 20 on Schedule 8.2(g) attached hereto);
(d) PURCHASE OF SHARES. Purchase or otherwise acquire, or
agree to acquire, any shares of their stock, other than in a fiduciary
capacity;
(e) BENEFIT PLANS. Except as required by law, or, with the
consent of FSC, to terminate the employee benefit plans identified in Section
5.16 incident to the integration of Bank's employees into the employee
benefit plans offered by FSC or FSB, enter into or amend any pension,
retirement, stock option, stock appreciation, profit sharing, deferred
compensation, consultant, bonus, group insurance or similar benefit plan
(other than the cafeteria plan identified in Schedule 5.16) in respect of any
of their directors, officers or other employees;
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(f) CONDUCT OF BUSINESS. Except as contemplated by this
Agreement, take or omit to take any action which (i) causes Bancorp or Bank
not to conduct their respective businesses in a manner consistent with normal
business practices, including with respect to the securities or asset
portfolios of Bank, (ii) has a Material Adverse Effect on the financial
condition (present or prospective), businesses, properties, assets or
operations of Bancorp and Bank (the parties hereto recognize that the
operation of Bancorp and Bank until the Effective Time is the responsibility
of Bancorp and Bank and their respective Boards of Directors and officers;
nevertheless, Bancorp and Bank shall keep FSC advised of all important
changes in the financial condition (present or prospective), business,
properties, assets or operations of Bancorp and Bank);
(g) ACQUISITIONS AND MERGERS. Acquire or merge with any
other company or acquire any branch or other significant part of the assets
of any other company;
(h) LIENS; INDEBTEDNESS; INCREASE IN COMPENSATION, ETC.
Except in the ordinary course of business, (i) mortgage, pledge or subject to
a lien or any other encumbrance any of their respective assets, dispose of
any of their respective assets, incur or cancel any indebtedness or claims,
purchase or lease any assets having a purchase price or lease cost, in the
aggregate, of more than $20,000.00, other than the pending property purchase
and the parking lot renovation at 6275 Neil Road, Reno, Nevada identified in
Schedule 5.14 or (ii) except for the two Agreements for Change-in-Control
Severance Benefits set forth in Schedule 5.16 hereto, increase any
compensation or benefits payable to their respective officers or employees,
except to pay routine merit increases in accordance with past practices and
costs associated with the transactions contemplated under this Agreement (the
parties hereto recognize that Bank has in the ordinary course of business
routinely pledged up to $45,000,000 of mortgage loan assets and U.S.
government and agency securities as collateral for
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borrowings from the Federal Home Loan Bank of San Francisco and that Bank may
continue to pledge residential mortgage loans and U.S. government and agency
securities to the Federal Home Loan Bank of San Francisco to secure
borrowings in an aggregate amount up to $35,000,000 through the Closing
Date). Notwithstanding the restrictions contained in this section, Bancorp or
Bank may grant individual annual increases to officers and employees for 1999
in accordance with past practices up to a maximum aggregate total of 6% of
the total annual compensation of all officers and employees, which amount
shall not in any event exceed $378,902, and continue during 1999 incentive
compensation arrangements in accordance with past practices.
(i) AMENDMENTS TO CHARTER, ETC. Amend their respective
Articles of Incorporation or make any material amendments to their respective
Bylaws which would interfere in any manner with the transactions contemplated
by this Agreement.
4.2 INVESTIGATION; ACCESS. Each of Bancorp and Bank shall
diligently endeavor to (i) take or cause to be taken all action required
under this Agreement on its part to be taken as promptly as practicable so as
to permit the consummation of the transactions contemplated by this Agreement
at the earliest possible date and cooperate fully with FSC and FSB to that
end, including, without limitation, providing to FSC and FSB, and their
respective employees, accountants and counsel, access to Bancorp's and Bank's
books, records, reports, tax returns and facilities and to its employees,
accountants, and counsel; PROVIDED, however, that such investigation to be
conducted by FSC and FSB shall be performed in such a manner which will not
unreasonably interfere with the normal operations, or customer or employee
relations, of Bancorp and Bank and shall be in accordance with procedures
established by the parties having due regard for the foregoing, and (ii)
furnish all necessary information for inclusion in any
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applications relating to the consents, approvals and permissions of
regulatory authorities referred to in Article VIII.
Bancorp and Bank have delivered to FSC, as Schedule 4.2, (i) a list
setting forth all of the classified, criticized and non-performing assets of
Bank ("CLASSIFIED ASSETS") as identified by Bank or by the most recent
examination by Bank's federal or state bank examiner, along with an
explanation of management's response for dealing with such assets, (ii) a
list of all loans which are more than thirty (30) days past due ("PAST DUE
LOANS"), and (iii) Bank management's analysis of expected losses to be
incurred with respect to the loans (assets) identified in items (i) and (ii).
From execution of the Agreement until Closing, Bancorp and Bank shall
deliver to FSC (i) monthly reports which summarize the loan and lease and the
deposit activity of Bank for the previous month, and (ii) a report detailing
any changes to the Classified Assets or Past Due Loans.
FSC covenants and agrees that FSC and its representatives, counsel,
accountants, agents and employees will hold in strict confidence all
documents and information concerning Bancorp and Bank received from any of
them (except to the extent that such documents or information are a matter of
public record or require disclosure in the Proxy Statement/Prospectus, the
Registration Statement on Form S-4 to be filed by FSC pursuant to Section
6.10, or any of the public information of any applications required to be
filed with any governmental or regulatory agency to obtain the approvals and
consents required to effect the transactions contemplated hereby), and if the
transactions contemplated herein are not consummated, such confidence shall
be maintained and all such documents shall be returned to Bancorp.
4.3 REGULATORY APPROVALS. Bancorp and Bank shall (i) use their
best efforts in good faith to assist FSC in obtaining all necessary
regulatory approvals
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and taking or causing to be taken all other action required under this
Agreement on its or their part to be taken as promptly as practicable so as
to permit the consummation of the transactions contemplated by this Agreement
at the earliest possible date, and cooperate fully with FSC and FSB to that
end, and (ii) furnish all necessary information for inclusion in any
applications relating to the consents, approvals, and permissions of
regulatory authorities referred to in Article VIII. Bancorp and Bank shall
have the right to review all applications to such regulatory authorities
before the filing thereof and to comment upon the form of such applications
and the information contained therein. Bancorp and Bank know of no reasons
why the transactions contemplated by this Agreement should not be approved by
the regulatory authorities.
4.4 TERMINATION OF EMPLOYEE BENEFIT PLANS. On or before the
Effective Time, Bancorp and FSC shall determine whether it is in the best
interests of the parties hereto and the employees of Bancorp and Bank to
terminate the employee benefit plans (as described in Section 5.16) or to
merge such plans into an appropriate FSC benefit plan. FSC will cooperate in
such determination to either freeze the Plans or transfer such benefits under
the Plans (in a plan-to-plan transfer) into an existing benefit plan
maintained by FSC as to which such benefits may be transferred without
necessity of material amendment to, or adverse effect on qualification of,
such FSC plan and provided further that FSC incurs no expense or other
adverse result in allowing such rollover of benefits.
4.5 INFORMATION FOR PROXY STATEMENT. Upon request by FSC, Bancorp
and Bank shall timely prepare and deliver to FSC, in such form required by
rules and regulations of the United States Securities and Exchange Commission
(the "SEC"), all information, descriptions, accounting reports and schedules
(including audited financial statements in the form required by Regulation
S-X of the SEC, as may be required) and other materials required for
preparation and
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filing of the Registration Statement contemplated by Section 6.10 of this
Agreement.
4.6 ENVIRONMENTAL REPORTS. Within twenty (20) days of execution of
this Agreement, Bancorp and Bank shall cause to be prepared, by firms reasonably
acceptable to FSC, Phase I Environmental Reports with respect to real property
owned by Bancorp and Bank, including Bank's branch facilities. In the event a
Phase I report indicates that Bancorp or Bank may be a potentially liable party
for remedial action under any environmental laws (as such term is defined in
Section 5.7 below), then Bancorp and Bank shall cause Phase II Environmental
Reports to be prepared detailing any possible exposure under such laws. The
cost of said Phases I and II Environmental Reports and the cost of any remedial
action determined to be necessary by such reports shall be borne by Bancorp and
Bank. Bank shall make available to FSC any Phase I Environmental Reports which
it has obtained on real property-secured loans.
4.7 NOTIFICATION OF ACTIONS. Bancorp and Bank covenant and agree to
immediately notify FSC and FSB in the event of any action which materially
affects any of the covenants set forth in this Article IV.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BANCORP AND BANK
As an inducement to FSC and FSB to enter into this Agreement, and in
addition to any representations and warranties made elsewhere in this Agreement,
Bancorp and Bank jointly and severally represent and warrant to and agree with
FSC and FSB as of the date of this Agreement and as of the Closing Date as
follows:
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5.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. Each of Bancorp and Bank
(i) is duly organized and validly existing and in good standing under the laws
of the State of Nevada, (ii) has all requisite power and authority (corporate
and other) to own its properties and conduct its business as now being
conducted, (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where failure to so qualify would not have a Material Adverse
Effect, as defined in Section 11.17, below, on Bancorp or Bank or their
respective businesses, operations, properties, assets or condition (financial or
otherwise), and (iv) is not transacting business, or operating any properties
owned or leased by it in violation of any provision of federal or state law or
any rule or regulation promulgated thereunder, which violation would have a
Material Adverse Effect on Bancorp or Bank or their respective businesses,
operations, properties, assets or condition (financial or otherwise). Other
than Bancorp's ownership of Bank and except as set forth in Schedule 5.1,
neither Bancorp nor Bank owns any equity interest in any other business
organization and neither Bancorp nor Bank is a party to any joint venture or
similar enterprise.
5.2 CAPITALIZATION. The authorized capital stock of Bank consists
solely of 6,000,000 shares of Bank Common Stock. As of the date hereof, there
are 2,210,834 shares of Bank Common Stock issued and outstanding. Bancorp owns,
beneficially and of record, all of the issued and outstanding shares of Bank
Stock. The authorized capital stock of Bancorp consists solely of 15,000,000
shares of Bancorp Common Stock. As of the date hereof, there are 5,035,500
shares of Bancorp Common Stock issued and outstanding, net of 8,000 shares of
treasury stock. The outstanding shares of Bancorp Common Stock and the holders
of record thereof are identified on Schedule 5.2 hereto. All of the outstanding
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shares of capital stock of each of Bank and Bancorp have been duly authorized
and are validly issued, fully paid and nonassessable.
5.3 OPTIONS, SARS, WARRANTS, ETC. Schedule 5.3 identifies (i) the
holders of each of the Options, the number of Options held by each holder of
Options and the Option exercise price with respect thereto and (ii) the holders
of each of the Warrants, the number of Warrants held by each holder of Warrants
and the Warrant exercise price with respect thereto. Except for the Options and
the Warrants, there are no outstanding stock appreciation rights or options,
warrants, calls, units or commitments of any kind relating to the issuance,
sale, purchase or redemption of, or securities convertible into, capital stock
of Bank or Bancorp. Except for the stock option plans disclosed on Schedule
5.16, neither Bancorp nor Bank maintain a plan relating to the issuance, sale,
purchase or redemption of capital stock of Bancorp or Bank.
5.4 AUTHORIZATION; VALIDITY OF AGREEMENT. Each of Bancorp and Bank
has the corporate power and authority to execute and deliver this Agreement.
This Agreement has been duly and validly approved by the Board of Directors of
Bancorp and Bank, has been duly executed and delivered on behalf of Bancorp and
Bank, and, subject to approval by the shareholders of Bancorp, constitutes a
valid and binding agreement of Bancorp and Bank, enforceable against each in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, liquidation, receivership, conservatorship, insolvency,
moratorium or other similar laws affecting the rights of creditors generally and
by general equitable principles.
5.5 BANCORP AND BANK REPORTS. Since January 1, 1995, each of Bancorp
and Bank has filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that were required to be
filed with the Board of Governors of the Federal Reserve System (the "FEDERAL
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RESERVE BOARD"), Federal Deposit Insurance Corporation (the "FDIC") and the
Nevada Financial Institutions Division (the "DIVISION"). All such reports and
statements filed by Bancorp or Bank with the Federal Reserve Board, the FDIC,
the Division and other applicable state securities or banking authorities are
collectively referred to herein as the "BANK REPORTS." As of their respective
dates, the Bank Reports complied in all material respects with all the statutes,
rules and regulations enforced or promulgated by the regulatory authority with
which they were filed and did not and as of the date hereof do 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 are made, not misleading. Except as set
forth on Schedule 5.5, since January 1, 1995, no regulatory agency, including
the Federal Reserve Board, the FDIC and the Division, has criticized, in any
significant manner, the management or operation of Bancorp or Bank, cited
Bancorp or Bank for a violation of law, or imposed any mandatory action by
Bancorp or Bank to bring such party in compliance with applicable rules and
regulations.
5.6 BANCORP AND BANK FINANCIAL STATEMENTS; NO UNDISCLOSED
LIABILITIES. Bancorp's audited Balance Sheets as of December 31, 1996 and
December 31, 1997, and its audited Statements of Income and Statements of
Cash Flow for the years ended December 31, 1996 and December 31, 1997, and
Bancorp's unaudited interim Balance Sheet for the period ended September 30,
1998, heretofore delivered to FSC (hereinafter the "FINANCIAL STATEMENTS"),
were prepared in accordance with generally accepted accounting principles
consistently applied (except for such interim statement which requires
year-end adjustments) and present fairly Bancorp's and Bank's financial
condition, results of operations and changes in cash flow as of such dates.
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Bancorp and Bank will provide to FSC on a monthly basis prior to the
Effective Time all interim financial statements relating to Bancorp and Bank
customarily prepared by Bancorp or Bank.
Except as and to the extent stated in the Financial Statements delivered
or to be delivered pursuant to this Section 5.6 and in Schedule 5.6, and except
for those liabilities incurred in the normal course of Bancorp's or Bank's
business or as contemplated by this Agreement, neither Bancorp nor Bank has any
material liabilities or obligations, secured or unsecured (whether accrued,
absolute, contingent or otherwise), and whether due or to become due, including
but not limited to liabilities on account of taxes, other governmental charges
or lawsuits subsequently brought. Except as set forth on Schedule 5.6, there
are no suits, actions or proceedings pending or, to the knowledge of Bancorp or
Bank or any of their directors or officers, threatened, or any contingent
liability which would give rise to any right of indemnification on the part of
any director or officer of Bancorp or Bank or his or her heirs, executors or
administrators, as against Bancorp or Bank or any successor to the business of
Bancorp or Bank.
5.7 ENVIRONMENTAL MATTERS. For purposes of this Section 5.7, the term
"environmental laws" shall include all state and federal laws designed to
protect human health or the environment, as amended from time to time, and all
regulations promulgated thereunder, including, without limitation, the Clean Air
Act, 42 U.S.C.A. Sections 7401, ET SEQ., the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.A. Sections 9601, ET SEQ.,
the Federal Water Pollution Control Act, 33 U.S.C.A. Sections 1251, ET SEQ.,
the Resource Conservation and Recovery Act, 42 U.S.C.A. Sections 6901, ET SEQ.,
and the Toxic Substances Control Act, 15 U.S.C.A. Sections 2601, ET SEQ.
"Hazardous substance" shall include all petroleum products as well as any toxic
or hazardous material, hazardous waste or other hazardous or regulated substance
defined in or regulated by any environmental law, provided that hazardous
substance shall not include
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commercially available consumer products reasonably appropriate for use in or
for routine maintenance or upkeep of an office of a financial institution as
long as such products are used in accordance with label instructions.
Except as set forth in Schedule 5.7, to the best knowledge of Bancorp and
Bank after due inquiry, neither Bancorp or Bank, nor any property of Bancorp or
Bank, is subject to any pending or potential claim, liability or obligation to
any person arising under any environmental law. With respect to the real
property owned or leased by Bancorp and Bank (including other real estate), to
the best knowledge of Bancorp and Bank after due inquiry:
(a) No such property is presently contaminated by, and no
such property has ever been used or is presently being used by any person to
generate, manufacture, refine, transport, treat, store, handle or dispose of,
any hazardous substance in any regulated form or quantity.
(b) No such property has ever contained or presently contains,
or has been used or is being used by any person for storage of, asbestos,
ureaformaldehyde foam insulation, PCB's, dioxins, mercury, lead or uranium (or
other heavy metal) products or tailings, or any other hazardous substance in any
regulated form or quantity, whether contained in construction or fill materials
or used or stored thereon or therein.
(c) Neither Bancorp, Bank nor any other tenant or occupant of
any such property has received a summons, citation, directive, letter, notice of
violation, request for information or other communication, written or oral, from
any local, state or federal agency concerning any possible intentional or
unintentional action or omission on the part of any person which has resulted in
the possible release of any hazardous substance affecting such property or
concerning any other possible violation of any environmental law affecting the
property.
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(d) To the extent any permit, approval or registration is or
has been required to be obtained or maintained under any environmental law with
respect to any such property, any improvement of or on any such property or any
activity occurring on any such property, each such permit, approval or
registration has been obtained and is in good standing. In addition, all such
permits, approvals and registrations have been disclosed to FSC in writing.
(e) No such property contains or has ever contained any storage
tank used or intended for use to store any hazardous substance.
5.8 LOAN LOSS RESERVES. The reserves for possible loan losses and net
loan charge-offs of Bank as established from time to time by Bank are adequate
under generally accepted accounting principles. Such reserves comply in all
material respects with all loan loss requirements or guidelines applied to Bank
by any governmental authorities having jurisdiction with respect thereto.
5.9 TITLE TO PROPERTIES. Except as reflected in the Financial
Statements delivered or to be delivered pursuant to Section 5.6, and except as
set forth on Schedule 5.9, Bancorp and Bank own, free and clear of any liens,
claims, charges, options, or other encumbrances, all of the property, real,
personal or mixed, reflected in the Financial Statements and all property
acquired since such date. Except as set forth in Schedule 5.9, neither Bancorp
nor Bank has received any notice of violation of any applicable zoning
regulation, ordinance or other law, order, regulation or requirement relating to
its operations or its properties. To Bank's knowledge, there are no such
violations of material nature and all buildings and structures used by Bancorp
and Bank substantially conform with all applicable ordinances, codes and
regulations. Except as set forth in Schedule 5.9 hereto, in Bancorp's and
Bank's opinion, all such properties which are material to the business or
operations of Bancorp and Bank are in a good state of maintenance and repair and
are adequate for its current uses and purposes. During each of the
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past three calendar years, Bancorp and Bank and their properties have been
insured for customary risks with customary limits, deductibles, and
exclusions, including but not limited to Bankers Blanket Bond, and such
insurance protection continues in effect as of the date hereof. Bancorp and
Bank have delivered to FSC true and correct copies of all deeds, title
insurance policies and surveys each has with respect to the real property
owned by them and copies of all leases with respect to real property leased
by them.
5.10 ABSENCE OF DEFAULTS. The execution of this Agreement and the
Bank Articles of Merger does not and performance of the transactions
contemplated by them will not (assuming Bancorp shareholder approval and
applicable regulatory approval) (a) violate the provisions of the Articles of
Incorporation or Bylaws of either Bancorp or Bank, or (b), except as set
forth in Schedule 5.10, violate the provisions of or place either Bancorp or
Bank in default under any agreement, indenture, mortgage, lien, lease,
contract, instrument, order, judgment, decree, ordinance, statute, or
regulation to which either Bancorp or Bank is subject, to which any property
of either Bancorp or Bank is subject, or to which either Bancorp or Bank is a
party, which violations or defaults would in the aggregate have a Material
Adverse Effect on the business, operations, properties, assets, or condition
(financial or otherwise) of either Bancorp or Bank.
5.11 ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth on
Schedule 5.11, since December 31, 1997, there has been no change, and no
development involving a reasonably foreseeable prospective change, in or
affecting the financial condition (present or prospective), businesses,
properties, assets or operations (present or prospective) of Bancorp and Bank
that either individually or in the aggregate has had or is likely to have a
Material Adverse Effect on Bancorp or Bank. Since December 31, 1997, Bancorp
and Bank have conducted their respective businesses only in the ordinary
course and consistent with past banking standards.
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5.12 ACTIONS, PROCEEDINGS AND INVESTIGATIONS. Set forth in Schedule
5.12 hereto is a complete and accurate listing of all litigation,
administrative or other proceeding to which Bancorp or Bank is a party,
except for such proceedings in which Bank is seeking to collect on a loan or
lease transaction and no counterclaim or similar claim has been filed against
Bank. There are no actions, proceedings or investigations pending, or, to
the knowledge of the executive officers of Bank and Bancorp, threatened or
contemplated against or relating to Bancorp or Bank or any of their
respective properties or assets (and said officers are not aware of any facts
that would give rise to any such claim), which would have a Material Adverse
Effect on the financial condition (present or prospective), businesses,
properties, assets or operations (present or prospective) of Bancorp or Bank,
or the ability of Bancorp or Bank to consummate the Merger and Bank Merger
contemplated hereby.
5.13 ABSENCE OF BROKERAGE COMMISSIONS, ETC. Except for Bancorp's
agreement with Hovde Financial, Inc., the details of which have been
disclosed to FSC in Schedule 5.13, all negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Bancorp and Bank directly with FSC and FSB without the participation or
intervention of any other person, firm or corporation employed or engaged by
or on behalf of Bancorp and Bank in such a manner as to give rise to any
valid claim against Bancorp or Bank, or FSC or FSB, for a brokerage
commission, finder's fee or like payment.
5.14 MATERIAL CONTRACTS. Except for those documents listed on Schedule
5.14 hereto, copies of which documents have been provided by Bancorp and Bank to
FSC, each of Bancorp and Bank is not a party to or bound by any commitment,
agreement or other instrument which (i) is material to the business, operations,
properties, assets or financial condition of Bancorp or Bank; (ii) limits the
freedom of Bancorp or Bank to compete in any line of business or with any
person; or (iii) requires Bank to transfer funds (other than in the ordinary
course
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of business) to, make an investment in or guarantee the debt of any entity.
Except as set forth in Schedule 5.14, neither Bancorp or Bank is a party to
any contract or agreement, including but not limited to any lease, service
contract or employment agreement which (i) provides for a remaining term in
excess of two (2) years from and after the date hereof, and (ii) provides for
a total payment thereunder in excess of $20,000.00. Neither Bancorp or Bank
is in default, and there has not occurred any event that with the lapse of
time or giving of notice or both would constitute such a default, in any
respect which has or may have a Material Adverse Effect on the business,
operations, properties, assets or financial condition of Bancorp or Bank
under any of the agreements or other instruments referred to in this Section
5.14.
5.15 COMPLIANCE WITH LAWS; DOCUMENTATION.
(a) Except as set forth on Schedule 5.15, to the best knowledge
of Bancorp and Bank, after due inquiry: the conduct by Bancorp and Bank of
their respective businesses does not violate or infringe any domestic or foreign
laws, statutes, ordinances, rules or regulations, the enforcement of which,
individually or in the aggregate, would have a Material Adverse Effect on the
business, operations, properties, assets or condition (financial or otherwise)
of Bancorp or Bank; and Bancorp and Bank each has complied in all material
respects with every local, state or federal law or ordinance, and every
regulation or order issued thereunder, now in effect and applicable to Bancorp
and Bank governing or pertaining to fair housing, anti-redlining, equal credit
opportunity, truth-in-lending, real estate settlement procedures, fair credit
reporting and every other prohibition against unlawful discrimination in
residential lending, or governing consumer credit, including, but not limited
to, the Consumer Credit Protection Act, Truth-in-Lending Law, and in particular
Regulation Z promulgated by the Federal Reserve Board, and the Real Estate
Settlement Procedures Act of 1974.
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(b) All loans, leases, contracts and accounts receivable
(billed and unbilled), security agreements, guarantees and recourse
agreements of Bank as held in its portfolio, or as sold into the secondary
market, represent and are valid and binding obligations of their respective
parties and debtors, enforceable in accordance with their respective terms,
each is based on a valid, binding and enforceable contract(s) or
commitment(s), each of which has been executed and delivered in full
compliance, in form and substance, with any and all federal, state or local
laws applicable to Bank, or to the other party or parties to the contract(s)
or commitment(s), including without limitation the Truth-in-Lending Act,
Regulations Z and U of the Federal Reserve Board, laws and regulations
providing for non-discriminatory practices in the granting of loans or
credit, applicable usury laws, laws imposing lending limits, and each has
been administered in full compliance with all applicable federal, state or
local laws or regulations. Except as set forth on Schedule 5.15, all Uniform
Commercial Code filings, or filings of trust deeds, or of lien or other
security interest documentation that are required by any applicable federal,
state or local government laws and regulations to perfect the security
interests referred to in any and all of such documents or other security
agreements have been made, and all security interests under such deeds,
documents or security agreements have been perfected, and all contracts have
been entered into or assumed in full compliance with all applicable material
legal or regulatory requirements.
(c) To the best knowledge of Bancorp and Bank, all loan
files of Bank are complete and accurate in all material respects and have
been maintained in accordance with good banking practice.
(d) All notices of default, foreclosure proceedings or
repossession proceedings against any real or personal property collateral
have been issued, initiated and conducted by Bank in full formal and
substantive compliance with all applicable federal, state or local laws and
regulations, and no
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loss or impairment of any security interest, or exposure to meritorious
lawsuits or other proceedings against Bancorp and Bank, has been or will be
suffered or incurred by Bancorp and Bank.
(e) To the best knowledge of Bancorp and Bank, Bank is not
in violation of any applicable servicer or other requirement of the FHA, VA,
FNMA, GNMA, FHLMC or any private mortgage insurer which insures any loans
owned by Bank or as to which Bank has sold to other investors, the effect of
which violation, individually or in the aggregate, would have a Material
Adverse Effect on the business, operations, properties, assets or condition
(financial or other) of Bank, and with respect to such mortgage loans Bank
has not done or failed to do, or caused to be done or omitted to be done, any
act the effect of which act or omission impairs or invalidates (i) any FHA
insurance or commitments of the FHA to insure, (ii) any VA guarantee or
commitment of the VA to guarantee, (iii) any private mortgage insurance or
commitment of any private mortgage insurer to insure, (iv) any title
insurance policy, (v) any hazard insurance policy, or (vi) any flood
insurance policy required by the National Flood Insurance Act of 1968, as
amended, to the material detriment of Bank.
(f) Bank is not knowingly engaged principally, or as one of
its important activities, in the business of extending credit for the purpose
of purchasing or carrying any margin stock.
5.16 EMPLOYEE BENEFITS.
(a) Schedule 5.16 contains a true and complete list of each
employee benefit, compensation or welfare benefit plan, program or agreement
maintained or contributed to or required to be contributed to by Bancorp or Bank
(the "PLANS"). Neither Bancorp nor Bank has any formal plan or commitment,
whether legally binding or not, to create any additional Plan or modify or
change
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any existing Plan that would affect any employee or terminated employee of
Bancorp or Bank.
(b) Except as set forth in Schedule 5.16, there are no
employment agreements entered into by Bancorp or Bank and no other deferred
compensation or salary continuation agreements or commitments maintained or
agreed to by Bancorp or Bank.
(c) With respect to each of the Plans, Bancorp and Bank have
heretofore delivered to FSC true and complete copies of each of the following
documents: (i) each Plan and related trust, if any (including all amendments
thereto); (ii) annual report and actuarial report, if required to be filed
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), for the last two (2) years and the latest financial statement, if
any, for each such Plan; (iii) the most recent summary plan description,
together with each summary of material modifications, required under ERISA;
(iv) the most recent determination letter received from the Internal Revenue
Service ("IRS") with respect to each Plan that is intended to be qualified
under Section 401 of the Internal Revenue Code of 1986, as amended (the
"CODE"); and (v) information which identifies (x) all asserted or unasserted
claims arising under any Plan, (y) all claims presently outstanding against
any Plan, (z) a description of any future compliance action required with
respect to any Plan under ERISA, or federal or state law.
(d) All required contributions have been, or will be, made
with respect to each Plan on or prior to the date of this Agreement and have
been properly recorded on the Financial Statements. Except as disclosed on
Schedule 5.16, each trust associated with the Plans, if any, is fully funded
as of the date of this Agreement. Schedule 5.16 sets forth the amount of
monthly payments due and owing for each month that the 401(k) Plan, Bank
Payroll Stock Deduction Purchase Plan, Deferred Compensation Plan and two
Salary Continuation
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Agreements for Robert N. Barone ("MR. BARONE") and Larry A.Platz ("MR.
PLATZ") are continued and the amount of liability for claims if Bancorp or
Bank were to terminate the Plans and the costs involved in any such
termination. Except as disclosed in Schedule 5.16, there are no other
material liabilities that would be incurred in connection with the
termination of the Plans.
(e) Except as disclosed on Schedule 5.16, each of the Plans
has been operated and administered since inception in all material respects
in accordance with applicable laws, including, but not limited to, ERISA and
the Code and each of the Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified. The Plans are legally
valid and binding and in full force and effect.
(f) All amendments required under the Code have been made by
Bancorp or Bank and approved by the IRS with respect to each Plan on or prior
to the date of this Agreement.
(g) Except as set forth in Schedule 5.16, no Plan provides
benefits, including, without limitation, death or medical benefits (whether
or not insured), with respect to current or former employees beyond their
retirement or other termination of service (other than (A) coverage mandated
by applicable law, (B) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA,
(C) deferred compensation benefits accrued as liabilities on the books of
Bancorp or Bank, or (D) benefits the full cost of which is borne by the
current or former employee (or his or her beneficiary)).
(h) There are no pending or, to Bancorp's or Bank's
knowledge, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts related
thereto.
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(i) Except as set forth in Schedule 5.16, the consummation
of the transactions contemplated by this Agreement will not (either alone or
upon the occurrence of any additional acts or events) (A) entitle any current
or former employee of Bancorp or Bank to severance pay, employment
compensation or any other payment, benefit or award, or (B) accelerate or
modify the time of payment or vesting, or increase the amount of any benefit,
award or compensation due any such employee.
(j) Neither Bancorp nor Bank has ever had liabilities to the
Pension Benefit Guaranty Corporation ("PBGC"). No material liability to the
PBGC has been or will be incurred by Bank or other trade or business under
"common control" with Bancorp or Bank (as determined under Section 414(c) of
the Code) (each a "COMMON CONTROL ENTITY") on account of any termination of a
Plan subject to Title IV of ERISA. On and after September 2, 1974, no filing
has been made by Bancorp or Bank (or any Common Control Entity) with the PBGC
(and no proceeding has been commenced by the PBGC) to terminate any Plan
subject to Title IV of ERISA maintained, or wholly or partially funded, by
Bank (or any Common Control Entity). Neither Bancorp, Bank nor any Common
Control Entity, has (i) ceased operations at a facility so as to become
subject to the provisions of Section 4062(e) of ERISA, (ii) withdrawn as a
substantial employer so as to become subject to the provisions of Section
4063 of ERISA, (iii) ceased making contributions on or before the Closing
Date to any Plan subject to Section 4064(a) of ERISA to which Bancorp or Bank
(or any Common Control Entity) made contributions during the five years prior
to the Closing Date, or (iv) made a complete or partial withdrawal from a
multi-employer plan (as defined in Section 3(37) of ERISA) so as to incur
withdrawal liability as defined in Section 4201 of ERISA (without regard to
subsequent reduction or waiver of such liability under Section 4207 or 4208
of ERISA).
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5.17 REPURCHASE AGREEMENTS. Bank has, as of the date hereof, and as
of the Closing Date will have, valid and perfected first position security
interests in all government securities subject to repurchase agreements, and,
to the knowledge of Bancorp and Bank, as of the date hereof, the value of the
collateral securing each such repurchase agreement equals or exceeds the
amount of the debt secured by such collateral under such agreement.
5.18 TAXES AND TAX RETURNS. Bancorp and Bank each has delivered (or
will deliver within five (5) days of execution of this Agreement) true and
correct copies of all tax returns filed for the years ending 1995, 1996, and
1997. Bancorp and Bank have filed all federal, state and local tax returns
and forms (including but not limited to forms 1099), which are required by
law to be filed or delivered as of the date hereof and have paid all taxes
which have become due. Except as set forth in Schedule 5.18, to the best
knowledge of Bancorp and Bank, after due inquiry, Bank has timely filed all
currency transaction reports required by the Bank Secrecy Act, as amended,
has timely filed all information returns required by Sections 6041, 6041A,
6042, 6045, 6049, 6050H, and 6050J of the Code; and has exercised due
diligence in obtaining certified taxpayer identification numbers as required
pursuant to Treasury Regulation 35a.9999. Where payment of such taxes is not
required to be made as of the date hereof, Bancorp and Bank have set up an
adequate reserve or accrual for the payment of all taxes required to be paid
in respect of the periods covered by such returns.
5.19 CONSENTS AND APPROVALS. Except for (i) the filing of
applications and notices, as applicable, with the State of Nevada, the FDIC
and/or the Federal Reserve Board and approval of such applications, (ii) the
filing of the Bank Articles of Merger with the Nevada Secretary of State and
the filing of the Certificate of Merger with the respective Secretaries of
State of Delaware and Nevada, (iii) the filing with the SEC of a proxy
statement in definitive form relating to the meeting of Bancorp's
stockholders to be held in connection with
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this Agreement and the transactions contemplated hereby (the "PROXY
STATEMENT"), and (iv) the consents and approvals set forth in SCHEDULE 5.19,
no consents or approvals of, or filings or registration with, any
governmental entity or with any third party are necessary in connection with
(A) the execution and delivery by Bancorp and Bank of this Agreement or (B)
the consummation by Bancorp and Bank of the transactions contemplated by this
Agreement.
5.20 INSURANCE. SCHEDULE 5.20 contains a true, complete and
correct description of all material policies of fire, liability, production,
completion bond, errors and omissions, workmen's compensation and other forms
of insurance owned or held by Bancorp and Bank, copies of which have
previously been delivered to FSC. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy. During the
last three years neither Bancorp nor Bank has been refused any insurance with
respect to its assets or operations, nor has its coverage been limited, by
any insurance carrier to which it has applied for any such insurance or with
which it has carried insurance.
5.21 SECTION 280G. No payment received by any person as a result of
the transactions contemplated hereby shall constitute an "excess parachute
payment" within the meaning of section 280G of the Code.
5.22 DISCLOSURE. No representation or warranty by Bancorp or Bank
contained in this Agreement, nor any statement or certificate furnished or to
be furnished by Bancorp or Bank to FSC or FSB or their representatives in
connection herewith or pursuant hereto, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material
fact required to make the statements herein or therein contained not
misleading or necessary in order to provide a prospective purchaser of the
business of Bancorp
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and Bank with adequate information as to Bancorp and Bank and their condition
(financial or otherwise), properties, assets, liabilities, business and
prospects, and Bancorp and Bank have disclosed to FSC and FSB in writing all
material adverse facts known to them relating to same.
ARTICLE VI
COVENANTS, REPRESENTATIONS AND WARRANTIES OF FSC AND FSB
As an inducement to Bancorp and Bank to enter into this Agreement, and
in addition to any representations and warranties made elsewhere in this
Agreement, FSC and FSB jointly and severally covenant, represent and warrant
to and agree with Bancorp and Bank as of the date of this Agreement and as of
the Closing Date as follows:
6.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. FSC and FSB (i) are
each duly organized and validly existing and in good standing under the laws
of Delaware (in the case of FSC), or the State of Nevada (in the case of
FSB), (ii) have all requisite power and authority (corporate and other) to
own their respective properties and conduct their respective businesses as
now being conducted, (iii) are each duly qualified to do business and are in
good standing in each jurisdiction in which the character of the properties
owned or leased by them therein or in which the transaction of their
respective businesses makes such qualification necessary, except when failure
to so qualify would not have a Material Adverse Effect on FSC and its
consolidated subsidiaries, and (iv) are not transacting business, or
operating any properties owned or leased by any of them, in violation of any
provision of federal or state law or any rule or regulation promulgated
thereunder, which violation would have a Material Adverse Effect on FSC and
its consolidated subsidiaries.
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6.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. FSC and FSB each have
the corporate power and authority to execute and deliver this Agreement.
This Agreement has been duly and validly approved by the Executive Committee
of the Board of Directors of FSC and the Board of Directors of FSB, has been
duly executed and delivered on their behalf, and constitutes a valid and
binding agreement of each of FSC and FSB, enforceable in accordance with its
terms, subject to approval of the sole shareholder of FSB and ratification by
the Board of Directors of FSC.
6.3 FSC REPORTS. Since January 1, 1995, FSC and its consolidated
subsidiaries have filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that were
required to be filed with (i) the SEC, including but not limited to Form
10-K, Form 10-Q, Form 8-K and proxy statements, (ii) the Federal Reserve
Board, (iii) the Office of the Comptroller of the Currency (the "OCC"), (iv)
the FDIC, and (v) other applicable state securities or banking authorities.
All such reports and statements filed with the SEC, the Federal Reserve
Board, the OCC, the FDIC, and other applicable state securities or banking
authorities are collectively referred to herein as the "FSC REPORTS." As of
their respective dates, to the best knowledge of the officers of FSC, the FSC
Reports complied in all material respects with all the statutes, rules and
regulations enforced or promulgated by the regulatory authority with which
they were filed 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 are made, not misleading.
6.4 FSC FINANCIAL STATEMENTS; TAX RETURNS. FSC's Consolidated
Balance Sheets as of December 31, 1996 and December 31, 1997, and its
Consolidated Statements of Income and Consolidated Statements of Cash Flow
for the years then ended, heretofore delivered to Bancorp and Bank, were
prepared
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in accordance with generally accepted accounting principles consistently
applied and present fairly its consolidated financial condition, results of
operations and changes in financial position as of such dates and for such
periods. FSC will provide a copy of its Consolidated Balance Sheet and its
Consolidated Statement of Income and Consolidated Statement of Cash Flow as
of December 31, 1998 when available. FSC has filed all federal, state and
local tax returns and forms (including but not limited to Forms 1099), which
are required by law to be filed or delivered as of the date hereof and have
paid all taxes which have become due. Where payment of such taxes is not
required to be made as of the date hereof, FSC has set up an adequate reserve
or accrual for the payment of all taxes required to be paid in respect of the
periods covered by such returns.
Except as and to the extent stated in the FSC Financial Statements
provided by FSC to Bancorp and Bank and except for those liabilities incurred
in the normal course of FSC's or any of its subsidiaries' respective
businesses, FSC and its consolidated subsidiaries do not have any material
liabilities or obligations, secured or unsecured (whether accrued, absolute,
contingent or otherwise).
6.5 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1997,
there has been no change, and no development involving a reasonably
foreseeable prospective change, in or affecting the financial condition
(present or prospective), businesses, properties or operations of FSC and its
consolidated subsidiaries that either individually or in the aggregate has
had or is likely to have a Material Adverse Effect on FSC and its
consolidated subsidiaries.
6.6 ABSENCE OF DEFAULTS UNDER AGREEMENTS. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with or result in a breach of or constitute
a default under any provision of FSC's or FSB's respective Articles of
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Incorporation, Bylaws, or any agreement to which FSC or FSB is a party or by
which either of them is bound or to which any of their respective properties
is subject, or result in the creation of any liens or encumbrances upon their
respective assets, and no consents or waivers thereunder are required to be
obtained in connection with the transactions contemplated hereby, except for
the approval of required regulatory authorities and of the shareholders of
FSB and Bank.
6.7 ACTIONS, PROCEEDINGS, AND INVESTIGATIONS. Except as set forth in
FSC's filings with the SEC, there are no actions, proceedings or
investigations pending, or to the knowledge of the executive officers of FSC,
threatened or contemplated, against or relating to FSC or any of its
consolidated subsidiaries, or any of their respective properties, which would
have a Material Adverse Effect on the financial condition (present or
prospective), businesses, properties or operations of FSC and its
consolidated subsidiaries, or the ability of FSC or FSB to consummate the
Merger contemplated hereby.
6.8 REGULATORY APPROVALS. FSC and FSB shall (i) use their best
efforts in good faith to obtain all necessary regulatory approvals and to
take or cause to be taken all other action required under this Agreement on
their part to be taken as promptly as practicable so as to permit the
consummation of the transactions contemplated by this Agreement at the
earliest possible date, and cooperate fully with Bancorp and Bank to that
end, and (ii) furnish all necessary information for inclusion in any
applications relating to the consents, approvals, and permissions of
regulatory authorities referred to in Article VIII. FSC knows of no reasons
why the transactions contemplated by this Agreement should not be approved by
the regulatory authorities. FSC shall give Bancorp prompt notice of receipt
of the regulatory approvals referred to in Section 8.1(a) and shall provide
Bancorp with copies of any written comments by any regulatory authorities
regarding or relating
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to the non-confidential portions of the regulatory applications filed in
connection with the transactions contemplated hereby.
6.9 FSC COMMON STOCK. All of the outstanding FSC Common Stock is
duly authorized and validly issued, fully paid and nonassessable. The FSC
Common Stock to be issued and delivered pursuant to the Merger, when issued
as contemplated hereby, shall be duly authorized, validly issued, fully paid
and nonassessable.
6.10 REGISTRATION OF SHARES. FSC will use its best efforts to cause
a Registration Statement on Form S-4 or other appropriate form (the
"REGISTRATION STATEMENT") to be filed and declared effective under the
Securities Act of 1933, as amended (the "1933 ACT"), with respect to the FSC
Common Stock which is to be issued in connection with the transactions
contemplated by this Agreement, which Registration Statement, at the time it
becomes effective, and at the Effective Time, shall in all material respects
conform to the requirements of the 1933 Act and the General Rules and
Regulations of the SEC under said Act (the "1933 RULES"), and the FSC Common
Stock to be issued by FSC in connection with the Merger shall be duly
qualified or exempted, as the case may be, under applicable state Blue Sky
securities laws in those states in which Bancorp has informed FSC that its
shareholders reside. FSC will furnish to Bancorp, its counsel, investment
banker and accountants drafts of Registration Statement filings sufficiently
in advance of filing so as to afford a reasonable opportunity for review and
comment.
6.11 NOTIFICATION OF ACTIONS. FSC and FSB covenant and agree to
immediately notify Bancorp and Bank in the event of the breach of any of the
covenants set forth in this Article VI.
6.12 NASDAQ/NMS LISTING. FSC shall take all actions necessary to
assure that the shares of FSC Common Stock to be issued in the Merger will be
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approved for listing on the National Association of Security Dealers
Automatic Quotation, National Market System ("NASDAQ/NMS") prior to the
Closing Date.
6.13 INDEMNIFICATION. FSC agrees that all rights to indemnification
or exculpation now existing in favor of the directors and officers of Bancorp
and Bank as provided in their respective charters, bylaws, indemnification
agreements or otherwise in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall, to the greatest extent
permitted by Delaware law and the organizational documents of FSC as in
effect, survive the Merger and shall continue in full force and effect for a
period of three (3) years. If FSC or any of its successors or assigns
(i) shall consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) shall transfer all or substantially all of
its properties and assets to any individual, corporation or other entity,
then, and in each such case, FSC shall use its commercially reasonable
efforts to cause such successor and assigns of FSC to assume the obligations
set forth in this Section 6.13.
FSC shall use its commercially reasonable efforts to cause the persons
serving as officers and directors of Bancorp and Bank immediately prior to
the Effective Time to be covered for a period of three (3) years after the
Effective Time by the current policies of directors' and officers' liability
insurance maintained by Bank with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers and
directors in their capacity as such (provided that FSC may substitute
therefor policies of at least the same coverage and amounts containing terms
and conditions which are no less advantageous to such officers and
directors); PROVIDED, however, that FSC shall not be obligated to make annual
premium payments for such insurance to the extent such premiums exceed 150%
of the premiums paid as of the date hereof by Bank for such insurance.
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6.14 ONGOING CREDIT REVIEW. With respect to its ongoing credit
review of Bank between the date hereof and the Effective Time, FSC covenants
and agrees that it shall apply the same credit review procedures and credit
standards it used in the initial credit review and that in its ongoing credit
review it will only seek a change of a grade on a Bank loan (or lease) from
the initial review if there has been a demonstrable adverse change in the
credit, or the borrower or guarantor (or collateral supporting the credit)
has suffered a Material Adverse Effect.
6.15 LIMITATIONS ON FSC'S CONDUCT PRIOR TO THE EFFECTIVE TIME.
Between the date hereof and the Effective Time or the time when this
Agreement terminates as provided herein, FSC shall not, without prior written
consent of Bancorp, take any action which would or is reasonably likely to
(i) adversely affect the ability of FSC to obtain any necessary approvals of
any governmental entity required for the transactions contemplated hereby;
(ii) adversely affect FSC's ability to perform its covenants and agreements
under this Agreement; or (iii) result in any of the conditions to the
performance of FSC's obligations hereunder not being satisfied.
6.16 ACCESS TO INFORMATION. Upon reasonable request by Bancorp, Brad D.
Hardy, Executive Vice President & Chief Financial Officer, or Jay S. Bachman,
Senior Vice President, Corporate Development, shall be available in Salt Lake
City, Utah, to Bancorp and its representatives, counsel, accountants and
agents to discuss FSC's operations, and FSC shall provide to Bancorp and its
representatives, at their request, copies of all filings made with the SEC
between the date hereof and the Closing. Bancorp covenants and agrees that
it and its representatives, counsel, accountants and agents will hold in
strict confidence all documents and information concerning FSC or any of its
subsidiaries so obtained (except to the extent that such documents or
information are a matter of public record or require disclosure in the Form S-4
or any of the public information of
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any application required to be filed with any governmental or regulatory
agency to obtain the approvals and consents required to effect the
transactions contemplated hereby), and if the transactions contemplated
herein are not consummated, such confidence shall be maintained and all such
documents shall be returned to FSC.
6.17 FSB BOARD POSITION. FSC hereby agrees to elect Robert N. Barone
to serve as a member of the Board of Directors of FSB for a term of one (1)
year from and after the Effective Time. FSC further agrees to take no action
to remove Mr. Barone as a director during such period unless such removal is
for cause or results from Mr. Barone's inability to serve by reason of his
physical or mental illness or incapacity.
6.18 FEDERAL HOME LOAN BANK MEMBERSHIP. FSC hereby agrees to
maintain Bank's membership, or obtain on behalf of FSB a membership, in the
San Francisco Federal Home Loan Bank for one (1) year from and after the
Effective Time; PROVIDED, however, that such membership may be terminated at
any time during such period in the event that the Management Committee of
First Security Bank, N.A. determines that there exist compelling business
reasons to do so (such that FSB's continued membership and investment in the
FHLB exposes FSB to unacceptable financial risk).
ARTICLE VII
PROXY STATEMENT; SHAREHOLDER MEETINGS
7.1 PROXY STATEMENT. FSC (with the assistance of Bancorp and Bank)
shall prepare the Registration Statement, as provided in Paragraph 6.10
above, which Registration Statement will include a Proxy Statement to be used
with respect to providing the shareholders of Bancorp with notice of the
shareholder meeting for Bancorp. Bancorp and Bank represent and warrant that
the information they provide for use in the Proxy Statement will comply in
all
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material respects with the requirements of the Securities Exchange Act of
1934 (the "1934 ACT") and the applicable rules and regulations promulgated by
the SEC under such Act (the "1934 RULES"), and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading, except that Bancorp and Bank make no representation with respect
to information furnished by FSC or FSB expressly for inclusion in the Proxy
Statement. FSC and FSB represent and warrant that the Proxy Statement will
comply in all material respects with the requirements of the 1934 Act and the
applicable 1934 Rules, and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading, except
that FSC and FSB make no representation with respect to information furnished
in writing by Bancorp and Bank expressly for inclusion in the Proxy Statement.
7.2 BANCORP MEETING. This Agreement shall be submitted for approval,
ratification and confirmation by the shareholders of Bancorp at a meeting
thereof to be called in accordance with the applicable provisions of law and
held as promptly as practicable after the execution of this Agreement and in
no event later than the expiration of forty-five (45) days, or in the event
of an SEC comment period, the expiration of such SEC comment period, if
applicable, without the filing of any post-effective amendment to the
Registration Statement to be filed by FSC pursuant to Paragraph 6.10,
following the effectiveness of said Registration Statement. Bancorp will
mail the Proxy Statement prepared by FSC as part of the Registration
Statement to its shareholders for purposes of the meeting of its
shareholders. Consistent with the exercise of their fiduciary duties to
shareholders, the Board of Directors of Bancorp shall recommend to the
shareholders that the shareholders approve the Agreement and the transactions
contemplated therein.
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7.3 BANK AND FSB ACTION BY UNANIMOUS WRITTEN CONSENT. This Agreement
shall be submitted to the sole shareholder of each of Bank and FSB for
approval, ratification and confirmation pursuant to an Action by Unanimous
Written Consent in accordance with the applicable provisions of law as
promptly as practicable after the execution of this Agreement, and in no
event later than the expiration of forty-five (45) days without the filing of
any post-effective amendment to the Registration Statement to be filed by FSC
pursuant to Paragraph 6.10, following the effectiveness of said Registration
Statement. FSC owns beneficially and of record all of the issued and
outstanding shares of FSB Common Stock and will vote all of such shares in
favor of this Agreement. Bancorp owns all of the issued and outstanding
shares of Bank Common Stock and will vote all of such shares in favor of this
Agreement.
ARTICLE VIII
CONDITIONS OF CLOSING
8.1 CONDITIONS OF CLOSING FOR ALL PARTIES.
The consummation of the transactions contemplated by this Agreement is
conditioned upon the following:
(a) REGULATORY APPROVAL. All consents, approvals and
permissions and the satisfaction of all of the requirements prescribed by
law, including but not limited to the consents, approvals and permissions of
all applicable regulatory authorities which are necessary to the carrying out
of the Bank Merger and Merger as described in this Agreement, shall have been
procured; PROVIDED, however, the approvals referred to in this subparagraph
(a) shall not have imposed any significant conditions which FSC and FSB on
the one hand, or Bancorp and Bank, on the other, reasonably deem to be
materially disadvantageous or burdensome. An approval shall be deemed to be
materially
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disadvantageous or burdensome if the approval includes a condition which, in
the reasonable opinion of the Board of Directors of FSC, would have a
Material Adverse Effect on the anticipated economic and business benefits to
FSC of the transactions contemplated by this Agreement.
(b) REGISTRATION STATEMENT, ETC. The FSC Common Stock to be
issued by FSC hereunder shall be the subject of the Registration Statement
and to qualification or exemption under state securities laws as appropriate.
The Registration Statement shall have been declared effective and shall not
be subject to a stop order or any threatened stop order. Such FSC Common
Stock shall have been included for listing in the NASDAQ/NMS subject to
official notice of issuance.
(c) NO INJUNCTION, ETC. There shall not have been instituted
any litigation, regulatory proceeding or other matter which challenges the
legality or effectiveness of the transactions contemplated hereby or seeks an
order, decree or injunction enjoining or prohibiting the consummation of the
Merger.
(d) TAX OPINIONS. FSC and Bancorp shall have received from Ray,
Quinney & Nebeker, counsel to FSC, an opinion reasonably satisfactory to FSC
and Bancorp in the form of Schedule 8.1(d), respectively, to the general
effect that the Merger shall not result in the recognition of gain or loss
for federal income tax purposes by Bancorp or FSC, nor shall the issuance of
the FSC Common Stock result in the recognition of gain or loss by the holders
of Bancorp Common Stock who receive such stock in connection with the Merger.
The opinion shall be dated prior to the date the Prospectus is first mailed
to the shareholders of Bancorp and such opinion shall not have been withdrawn
or modified in any material respect.
(e) SECTION 280G. There shall have been no payments received by
any person as a result of the transactions contemplated hereby that would
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constitute an "excess parachute payment" within the meaning of Section 280G
of the Code.
8.2 CONDITIONS OF CLOSING FOR FSC AND FSB. The obligation of FSC and
FSB, respectively, to consummate the transactions contemplated by this
Agreement is conditioned upon the following:
(a) SHAREHOLDER APPROVAL. A majority of the shareholders of
Bancorp shall have approved this Agreement and the Merger contemplated hereby
(unless a higher percentage of the outstanding shares of Bancorp must approve
the transaction under the Articles of Incorporation or Bylaws of Bancorp).
Bancorp, as the sole shareholder of Bank, shall approve the Agreement and the
Bank Merger.
(b) BANCORP AND BANK RESOLUTIONS; CORPORATE DOCUMENTS. Each of
Bancorp and Bank shall have delivered to FSC and FSB (i) a copy of its
Articles of Incorporation as certified by the Nevada Secretary of State;
(ii) a copy of its bylaws certified by its corporate secretary, (iii) a
certificate of good standing dated as of the Closing Date, issued by the
appropriate governmental agency, (iv) certified copies of resolutions duly
adopted by its Board of Directors approving this Agreement and, in the case
of the Board of Directors of Bancorp, directing the submission thereof to a
vote of the shareholders of Bancorp, and (v) certified copies of resolutions
duly adopted by the shareholders of Bancorp (owning the outstanding shares as
required by subparagraph (a) above) approving this Agreement and the Merger,
all as contemplated hereby.
(c) BANCORP AND BANK REPRESENTATIONS AND WARRANTIES. Unless
waived in writing by FSB and FSC, the representations and warranties of
Bancorp and Bank contained in this Agreement shall be true and correct on and
as of the Closing Date with the same effect as though made on and as of such
date. Except as otherwise contemplated by this Agreement, Bancorp and Bank
shall each have
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performed in all material respects all of its obligations and agreements
hereunder theretofore to be performed by it. FSC and FSB shall have received
at the Closing a certificate to the foregoing effect dated as of the Closing
Date and executed on behalf of Bancorp and Bank by one of their duly
authorized executive officers.
(d) COMFORT LETTERS. FSC shall have received letters from
Kafoury, Armstrong & Co., dated (i) the effective date of the Registration
Statement and (ii) shortly prior to the Effective Time, in form and substance
satisfactory to FSC, with respect to Bancorp's and Bank's financial
condition, which letters shall be based upon customary specified procedures
undertaken by such firm. The "comfort letters" contemplated hereby shall
include, but not be limited to, those matters identified in Schedule 8.2(d)
attached hereto.
(e) OPINION OF BANCORP AND BANK COUNSEL. Unless waived in
writing by FSC and FSB, FSC and FSB shall have received at the Closing from
Grady & Associates, special counsel to Bancorp and Bank, and other counsel to
Bancorp and Bank acceptable to FSC, written opinions, dated the Closing Date,
substantially in the form of Schedule 8.2(e) hereto.
(f) AFFILIATE'S LETTER. Unless waived in writing by FSC, FSC
shall have received a letter from each person who, in the opinion of Bancorp
and its counsel (who shall be entitled to rely on written certificates of
such persons), is an "affiliate" (as that term is defined in Rule 405
promulgated by the SEC under the 1933 Act) of Bancorp in the form attached
hereto as Schedule 8.2(f). Such "affiliate's" letter shall include covenants
with respect to compliance with the rules and regulations of the SEC for any
public reoffering or sale of the FSC Common Stock to be issued under the
terms of this Agreement to such affiliate.
(g) CONDITION OF BANK. FSB shall have determined, based on an
audit and review by its officers, accountants and legal counsel, conducted
prior
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to the execution of this Agreement and updated as of the Closing Date, as
provided below, that (i) the assets, books, records and operations of Bank
are in reasonably satisfactory condition and will not adversely impact FSB
after consummation of the Merger; (ii) based on the review of the assets,
books, records and operations of Bank by FSC, there are no liabilities
(existing, threatened or contingent) which FSC, in its discretion, determines
to be unacceptable, as determined by reference to Articles IV and V of this
Agreement; (iii) the methodology for determining and the allowance for loan
and lease losses of Bank as determined by the grading of Bank loans and
leases by FSC, is adequate in all material respects; (iv) the net earnings
after taxes for the years ended 1995, 1996, 1997 and 1998 are as reported in
the Financial Statements delivered to FSC pursuant to Section 5.6; and (v) as
of the Closing Date, the net worth of Bancorp and Bank, calculated in
accordance with generally accepted accounting principles and as more
specifically set forth in Schedule 8.2(g) attached hereto, will exceed
$16,658,575, exclusive of unrealized securities gains or losses pursuant to
FASB 115 (see line 23 on Schedule 8.2(g)). The net worth test shall be
calculated after accrual or payment of the expenses incurred by Bancorp and
Bank with respect to the Bank Merger and Merger, including but not limited to
investment banker's, auditor's and attorney's fees and expenses incurred with
respect to employee severance payments and/or termination or freezing of any
employee Plan, as defined in Section 5.16 (provided that all of such expenses
collectively shall not exceed an aggregate total of $2,782,183 after tax (see
lines 11 and 22 on Schedule 8.2(g) attached hereto)), but before pay-in of
the exercise strike price, including any tax effects of such exercise, for
the Options and Warrants, all of which shall inure to the benefit of FSC in
addition to the equity target stated herein, as more specifically set forth
in Schedule 8.2(g). Such net worth target assumes a Closing Date of March 31,
1999 and shall be increased by $190,000 per month (on a pro-rated basis) if
the Closing Date were to occur after March 31, 1999. In the event that
Bancorp and Bank incur costs as a result
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of Phase II remediation related to the Carson City, Nevada, property of Five
Hundred Thousand Dollars ($500,000) or less, the parties agree that the
purchase price shall be decreased on a dollar-for-dollar (after-tax) basis.
Should the remediation costs exceed $500,000, the parties shall have the
right to renegotiate the terms of this transaction.
In the event FSB determines, and Bank agrees, that certain loans or
assets should be written down or charged off or that additions to the
provision for loan losses should be made, as contemplated by subparagraphs (ii)
and (iii) of this Section 8.2(g), Bank agrees to take such actions as are
appropriate under the circumstances and the net worth requirement set forth
in this paragraph as a condition to Closing shall be determined after the
taking of such actions.
Any charge-offs, other asset write-downs or additions to the allowance
for loan loss or other financial adjustments at or prior to the Closing made
at the request, in writing, of FSC or FSB, for the convenience of FSC or FSB,
and not required by said subparagraphs (ii) and (iii) of this 8.2(g), which
charge-offs or additions Bank agrees to make, shall not reduce net worth for
purposes of satisfaction of the net worth condition set forth in this
Section 8.2(g).
With respect to the credit review to be conducted by FSC and FSB
hereunder, FSC and FSB covenant and agree that the update credit review of
Bank by FSC and FSB shall be conducted approximately fifteen (15) business
days prior to the Closing Date. In conducting the update credit review, FSC
and FSB agree that they shall apply the same credit review procedures and
credit standards they used in the initial credit review and that in their
update review they will only seek a change of a grade on a Bank loan (or
lease) from the initial review if there has been a demonstrable adverse
change in the credit, or the borrower or guarantor (or collateral supporting
the credit) has suffered a material adverse
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event. A demonstrable adverse change or a material adverse event shall be
defined by reference to the term Material Adverse Effect.
(h) EMPLOYMENT AGREEMENTS. Each of Mr. Barone and Mr. Platz
shall have executed and delivered an Employment Agreement in the form set
forth as Schedules 8.2(h-1) and 8.2(h-2), respectively, attached hereto and
incorporated herein.
(i) CONDITION OF PROPERTIES. FSC shall have determined, based
on the Phase I and Phase II Environmental Reports, as provided in Section 4.6
above, that there are no liabilities (existing, threatened or outright)
associated with the real properties owned by Bancorp or Bank which are
unacceptable. Such determination shall be made by FSC within forty-five (45)
days of receipt of such Phase I and Phase II Environmental Reports delivered
to FSC under Section 4.6, above.
(j) OPTIONS AND WARRANTS. All Options and Warrants shall have
been exercised or cancelled (and no additional Options or Warrants shall have
been issued as of the Closing Date) and each of the Bancorp Stock Option
Plans and agreements related thereto and the warrants covered by the Warrant
Agreement provided under cover of Schedule 5.3 shall have been redeemed.
(k) CAFETERIA PLAN ISSUES. Bank shall have (i) caused a
Cafeteria Plan document under Section 125 of the Code to be in place;
(ii) caused Forms 5500-C/Rs for the years 1993 through 1997 to be filed with
the Department of Labor and the Internal Revenue Service under the Delinquent
Filer Voluntary Compliance Program ("DVCP"), and (iii) paid all penalties
associated with such DVCP filings. Payment of the penalties in connection
with such filings shall have no impact on the net worth test set forth in
Section 8.2(g).
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8.3 CONDITIONS OF CLOSING FOR BANCORP AND BANK. The obligation of
Bancorp and Bank to consummate the transactions contemplated by this
Agreement is conditioned upon the following:
(a) FSC AND FSB REPRESENTATIONS AND WARRANTIES. Unless waived
in writing by Bancorp and Bank, the representations and warranties of FSC and
FSB contained in this Agreement shall be correct on and as of the Closing
Date with the same effect as though made on and as of such date, except for
changes which are not, in the aggregate, material and adverse to the
financial condition, businesses, properties or operations of FSC and its
consolidated subsidiaries, and, except as otherwise contemplated by this
Agreement, FSC and FSB shall have performed in all material respects all of
their obligations and agreements hereunder theretofore to be performed by
them. Bancorp and Bank shall have received at the Closing a certificate to
the foregoing effect dated the Closing Date and executed on behalf of FSC and
FSB by one of their duly authorized executive officers.
(b) OPINION OF FSC COUNSEL. Unless waived in writing by Bancorp
and Bank, Bancorp and Bank shall have received at the Closing from Ray,
Quinney & Nebeker, a written opinion, dated the Closing Date, substantially
in the form of Schedule 8.3(b) hereto.
(c) FSC RESOLUTIONS; CORPORATE DOCUMENTS. FSC shall have
delivered to Bancorp a certified copy of resolutions duly adopted by the
Board of Directors of FSC approving this Agreement, the Merger and the Bank
Merger, all as contemplated hereby. FSC shall deliver to Bancorp (i) a copy
certified by the Delaware Secretary of State's Office of FSC's Certificate of
Incorporation; (ii) a copy of FSC's Bylaws certified by the Corporate
Secretary, and (iii) a certificate of good standing dated as of a recent
date, issued by the Delaware Secretary of State's office.
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(d) SHAREHOLDER APPROVAL. Under the Delaware General
Corporation Law, FSC shareholder approval is not required for the Merger.
FSC, as the sole shareholder of FSB, shall approve the Agreement and the Bank
Merger. A majority of the shareholders of Bancorp shall have approved this
Agreement and the Merger.
(e) FAIRNESS OPINION. Bancorp shall have previously received a
letter from Hovde Financial, Inc. dated as of a date within five (5) days of
the mailing of the Bancorp Proxy Statement to the shareholders of Bancorp, to
the effect that the transactions contemplated by this Agreement are fair from
a financial point of view to the shareholders of Bancorp.
ARTICLE IX
CLOSING OF MERGER
9.1 CLOSING. Unless the Agreement is earlier terminated in
accordance with Article X, below, the closing of the transactions
contemplated herein (the "CLOSING") shall take place at 10:00 a.m. on a date
to be agreed upon by the parties, and if such date is not agreed upon by the
parties, the Closing shall occur on the fifth business day after satisfaction
or waiver of all of the conditions precedent set forth in Article VIII and
the expiration of the required waiting period following approval of FSC's
application to the Federal Reserve Bank of San Francisco and the Nevada
Financial Institutions Division, if any, relating to the Merger and the Bank
Merger but in no event later than thirty (30) days after the expiration of
such period (the "CLOSING DATE"), at the offices of Ray, Quinney & Nebeker,
79 South Main Street, Salt Lake City, Utah 84111.
9.2 FILING OF CERTIFICATE OF MERGER AND ARTICLES OF MERGER.
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(a) Bancorp and FSC shall execute a Certificate of Merger and
Articles of Merger in substantially the forms attached hereto as EXHIBITS A-1
and A-2 and shall cause such Certificate of Merger and Articles of Merger to
be filed with the Delaware Secretary of State's Office and the Nevada
Secretary of State's Office, respectively, on the Closing Date or as soon
thereafter as practicable. The Effective Time of the Merger shall be on such
date as the Delaware Secretary of State and the Nevada Secretary of State,
under their respective rules and regulations, deem the Merger effective.
(b) Bank and FSB shall execute articles of merger in
substantially the form attached hereto as EXHIBIT B and shall cause such
articles of merger to be approved by the Nevada Financial Institutions
Division and filed with the Nevada Secretary of State's office, on the
Closing Date or as soon thereafter as practicable. The Bank Merger shall
take effect on such date as the Nevada Secretary of State, under rules and
regulations governing such office, deems the Bank Merger effective, but in
any event shall be effective after the Effective Time of the Merger.
ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual consent of the Executive Committee and Board of
Directors of FSC and FSB, respectively, and the Boards of Directors of
Bancorp and Bank; or
(b) by the Boards of Directors of FSC and FSB, respectively, or
the Boards of Directors of Bancorp and Bank at any time after the expiration
of
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nine (9) months from the date hereof, if the Bank Merger and Merger shall not
theretofore have been consummated by the failure to satisfy the conditions to
Closing not within the control of the electing party; or
(b) by Bancorp and Bank, upon written notice to FSC and FSB at
any time if any representation or warranty of FSC and FSB contained in this
Agreement was materially incorrect when made or becomes materially incorrect
on or prior to the Closing Date, or if FSC or FSB fail to comply with any of
their respective covenants contained in this Agreement, and the same is not
cured within thirty (30) days after notice of such inaccuracy or
noncompliance; or
(c) by FSC and FSB upon written notice to Bancorp and Bank at
any time if any representation or warranty of Bancorp and Bank contained in
this Agreement was materially incorrect when made or becomes materially
incorrect on or prior to the Closing Date, or if Bancorp and Bank fail to
comply with any of their covenants contained in this Agreement, and the same
is not cured within thirty (30) days after notice of such inaccuracy or
noncompliance; or
(d) by FSC and FSB, upon written notice to Bancorp and Bank at
any time if a majority of Bancorp's shareholders (or such higher level
mandated by the Articles of Incorporation or Bylaws of Bancorp) does not
approve the Merger contemplated hereby, or if such Merger is disapproved by
any governmental authority whose approval is necessary; or
(e) by either Bancorp or FSC, if Bancorp shall have failed to
act or refrain from doing any act as required under this Agreement pursuant
to Section 11.9.
10.2 EFFECT OF TERMINATION. In the event of termination and
abandonment hereof pursuant to the provisions of Section 10.1, this Agreement
shall become void and have no force or effect, except that Sections 10.2, 11.2,
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11.9 and 11.11 shall survive the termination. Such termination shall not
relieve any party of any liability for damages arising out of its willful
breach of any provision of this Agreement for any default prior to such
termination.
ARTICLE XI
ADDITIONAL COVENANTS
11.1 EMPLOYEE MATTERS. FSC shall use its best efforts to effect a
conversion of Bancorp/Bank employees who become FSB employees to FSC benefit
plans within twelve (12) months of the Effective Date (the "CONVERSION
PERIOD"). During the Conversion Period, FSC shall continue only the following
Plans described in Section 5.16, for the benefit of the employees of
Bancorp/Bank who become FSB employees pending termination or merger of the
Plans into FSC benefit plans:
(a) The Bank 401(k) plan; and
(b) The Bank Welfare Benefit Plans listed as or in items 4(a),
(b), (c), (d), (e), (f), (g), (h), and (j) of Schedule 5.16 hereto.
Upon conversion to FSC benefit plans, Bancorp/Bank employees who are
still employed at such time shall cease participation in the Plans described
in Section 5.16 and shall be entitled to participate in such FSC benefit
plans in accordance with the terms thereof and in accordance with FSC policy.
For purposes of determining each such Bancorp/Bank employee's eligibility
and vesting under such FSC benefit plans, FSC shall recognize such
Bancorp/Bank employee's service with Bank beginning on the date such Bank
employee commenced employment with Bank; PROVIDED, however, that with
respect to the FSC 401(k) plan, prior service credit shall be given only for
such period as Bank's 401(k) plan has been in existence; and, PROVIDED
FURTHER that prior service credit
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shall not be given for purposes of accrual of benefits under the FSC
retirement plan.
FSC also covenants and agrees that any pre-existing condition,
limitation or exclusion in its health plans shall not apply to Bancorp or
Bank employees or their covered dependents who are covered under similar
Bancorp or Bank health plans on the Closing Date and who elect coverage under
FSC's health plans at the time such Bancorp or Bank employees are first given
the option to enroll in FSC's health plans.
FSC will use its best efforts to either freeze the Plans or transfer
such benefits under the Plans (in a plan-to-plan transfer) into an existing
benefit plan maintained by FSC as to which such benefits may be transferred
without cost to FSC, or necessity of material amendment to, or adverse effect
on qualifications of, such FSC plan; PROVIDED, however, that no accounts
shall be permitted to roll-over to FSC's 401(k) plan without the express
written consent of the trustee and sponsor of FSC's 401(k) plan, in its sole
discretion, to such roll-over, which approval shall not be given in any event
without receipt of such documentation from Bancorp and Bank as may be
requested by FSC prior to Closing, including, without limitation, an Internal
Revenue Service ruling obtained by Bancorp approving the roll-over and
ensuring the qualification of the FSC 401(k) plan if the FSC 401(k) plan
accepts such roll-overs.
Each of Mr. Barone and Mr. Platz have entered into a Salary
Continuation Agreement dated April 30, 1997 with Bancorp (the "SERP
AGREEMENT") which provides for certain payments to each of Mr. Barone and
Mr. Platz, respectively, upon a change in control of Bank as set forth
therein. FSC agrees that, notwithstanding the date of the Effective Time,
each of Mr. Barone and Mr. Platz shall be entitled to the April 30, 1999
benefit under the SERP Agreement.
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No provision of this Agreement shall be construed to prohibit FSC from
having the right to terminate the employment of any employee, with or without
cause, or to amend or terminate after the Closing Date any employee benefit
plan established, maintained or contributed to by FSC or its subsidiaries.
11.2 COSTS. Each of the parties to this Agreement shall pay its own
charges and costs incurred or to be incurred in connection with the execution
and performance of this Agreement. In the event of a willful breach of a
material agreement or covenant contained herein by either Bancorp and Bank,
on the one hand, or FSC and FSB, on the other, which breach either directly
or indirectly results or would result in a failure to consummate the Bank
Merger and Merger, and which breach cannot be cured or is not cured within
thirty (30) days after written notice of such breach is given to the party
committing such breach, the party causing such breach shall be liable to the
other party for damages for an amount not to exceed $2,500,000; PROVIDED,
further, that in the event of a termination of this Agreement under
Section 10.1(f), above, Bancorp shall pay to FSC a termination fee of
$2,000,000. Either party may elect to forego the recovery of damages and
pursue its right to the specific performance or enforcement of the terms and
provisions of this Agreement.
11.3 INSTRUMENTS OF TRANSFER, ETC. Each of the parties hereto shall
cooperate with the other parties in every way in carrying out the
transactions contemplated herein, in delivering instruments to perfect the
conveyances, assignments and transfers contemplated herein, and in delivering
all documents and instruments reasonably deemed necessary or useful by
counsel for any party hereto.
11.4 NOTICES. All notices, requests, consents and demands shall be
given to or made upon the parties at their respective addresses set forth
below, or at such other address as a party may designate in writing delivered
to the other
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parties. Unless otherwise agreed in this Agreement, all notices, requests,
consents and demands shall be given or made by personal delivery, by
confirmed air courier, by facsimile transmission ("FAX"), with a copy to
follow by first class mail, or by certified first class mail, return receipt
requested, postage prepaid, to the party or parties addressed as aforesaid.
If sent by confirmed air courier, such notice shall be deemed to be given
upon the earlier to occur of the date upon which it is actually received by
the addressee or the business day upon which delivery is made at such address
as confirmed by the air courier (or if the date of such confirmed delivery is
not a business day, the next succeeding business day). If mailed, such
notice shall be deemed to be given upon the earlier to occur of the date upon
which it is actually received by the addressee or the second business day
following the date upon which it is deposited in a first-class postage-prepaid
envelope in the United States mail addressed as aforesaid. If given by fax,
such notice shall be deemed to be given upon the date it is actually received
by the addressee, as confirmed by the fax activity report generated upon
transmission of such fax.
(a) IF TO FSC AND FSB, TO:
First Security Bank of Nevada
530 Las Vegas Blvd. S
Las Vegas, Nevada 89101
Attn: David J. Smith, President
and Chief Executive Officer
Fax Number (702) 385-8705
WITH A COPY TO:
First Security Corporation
79 South Main Street
Salt Lake City, Nevada 84111
Attn: Brad D. Hardy, Esq.
Executive Vice-President & General Counsel
Fax Number: (801) 359-6928
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WITH A COPY TO:
Sylvia I. Iannucci, Esq.
Ray, Quinney & Nebeker
400 Deseret Building
79 South Main Street
Salt Lake City, Utah 84111
Fax Number: (801) 532-7543
(b) IF TO BANCORP AND BANK, TO:
Comstock Bank
6275 Neil Road
Reno, Nevada 89511
Attn: Robert N. Barone, Chief Executive Officer
Fax Number: (775) 828-0377
WITH A COPY TO:
Comstock Bancorp
6275 Neil Road
Reno, Nevada 89511
Attn: Robert N. Barone, Chief Executive Officer
Fax Number: (775) 828-0377
WITH A COPY TO:
Francis X. Grady, Esq.
Grady & Associates
20800 Center Ridge Road, Suite 116
Rocky River, Ohio 44116-4306
Fax Number: (440) 356-7254
Each party hereto shall notify promptly the other in writing of the
occurrence of any event which will or may result in the failure to satisfy
the conditions specified in Article VIII hereof. Between the date of this
Agreement and the Closing Date, each party hereto will advise the other of
the satisfaction of such conditions as they occur.
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11.5 AMENDMENTS. Prior to the Effective Time, any provision of this
Agreement, except for Section 3.1 which establishes the Exchange Ratio, may
be amended or modified at any time, either before or after its approval, if
any, by the shareholders of any party to this Agreement, by an agreement in
writing between the parties hereto approved by their respective Boards of
Directors (or Executive Committee in the case of FSC) and executed in the
same manner as this Agreement.
11.6 ENTIRE AGREEMENT. This Agreement and all exhibits and schedules
hereto and other documents incorporated or referred to herein, contain the
entire agreement of the parties and there are no representations, inducements
or other provisions other than those expressed in writing. No modification,
waiver or discharge of any provision of or breach of this Agreement shall
(i) be effective unless it is executed in writing by the party effecting such
modification, waiver or discharge, or (ii) affect the right of either party
hereto thereafter to enforce any other provision or to exercise any right or
remedy in the event of a breach by a party hereto, whether or not similar.
11.7 ASSIGNMENT. This Agreement may not be assigned by any party
hereto except with the prior written consent of the other parties.
11.8 COUNTERPARTS. Any number of counterparts of this Agreement may
be signed and delivered and each shall be considered an original and together
they shall constitute one agreement.
11.9 EXCLUSIVE MERGER AGREEMENT. Bancorp, Bank, and the Board of
Directors of Bancorp covenant and agree that, between the date hereof and the
date of the meeting of the shareholders of Bancorp described in Article VII
hereof, they will not, either directly or indirectly, solicit or attempt to
procure offers relating to the merger or acquisition of Bancorp or Bank with
or by any entity not a party to this Agreement, or negotiate or enter into
any agreements
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relating to the merger or acquisition of Bancorp or Bank with or by any such
third party, and such persons further agree to use his or her best efforts to
obtain the approval of the Merger by the shareholders of Bancorp.
Notwithstanding the foregoing, neither Bancorp, Bank nor any of their
respective officers or directors shall be required by this Section 11.9 to
take or refrain from taking any action if to do so would, in the written
opinion of Bancorp's legal counsel, violate the duties imposed by law on the
Bancorp directors or officers to the Bancorp shareholders.
11.10 PUBLIC STATEMENTS. No party to this Agreement shall issue any
press release or other public statement concerning the transactions
contemplated by this Agreement without first providing the other parties
hereto with a written copy of the text of such release or statement and
obtaining the consent of the other parties respecting such release or
statement, which consent will not be unreasonably withheld. The consent
provided for in this Section 11.10 shall not be required if the delay
necessary to obtain such consent would preclude the timely issuance of a
press release or public statement as required by law. The provisions of this
Section 11.10 shall not be construed as prohibiting the filing of copies of
this Agreement or descriptions of this Agreement with (i) regulatory agencies
as to which regulatory approvals are contemplated by this Agreement or
(ii) the SEC consistent with Bancorp's obligations as a company whose shares
are registered pursuant to the Securities Exchange Act of 1934.
11.11 CONFIDENTIALITY. Each party shall use all information that it
obtains from the others pursuant to this Agreement solely for the
effectuation of the transactions contemplated by this Agreement or for other
purposes consistent with the intent of this Agreement and shall not use any
of such information for any other purpose, including, without limitation, the
competitive detriment of the other parties. Each party shall maintain as
strictly confidential all information it learns from the others and shall,
upon expiration or termination of this Agreement, return promptly to the
other parties all documentation (and copies
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thereof) provided by them or made available by third parties. Each party may
disclose such information to its respective affiliates, counsel, accountants,
tax advisors and consultants. This provision shall not prohibit the use or
disclosure of confidential information pursuant to court order or which has
otherwise become publicly available.
11.12 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties and agreements in this Agreements or
in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for the agreements contained in Sections 3.1(a), 3.4,
3.5, 6.10, 6.13, 6.17, 6.18, 11.1, 11.10 and 11.11, the Employment Agreements
in the form of Schedules 8.2(h-1) and 8.2(h-2), and the agreements of the
Affiliates contained in the letters referred to in Section 8.2(f).
11.13 ALTERNATIVE STRUCTURE. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Closing, the parties may
mutually agree to revise the structure of the Bank Merger and the Merger and
related transactions provided that each of the transactions comprising such
revised structure shall (i) not change the amount or form of consideration to
be received by the holders of Bancorp Common Stock, (ii) be capable of
consummation in as timely a manner as the structure contemplated herein and
(iii) not otherwise be prejudicial to the interest of the stockholders of
Bancorp. This Agreement and any related documents shall be appropriately
amended in order to reflect any such revised structure.
11.14 THIRD PARTIES. Except with respect to Article III, Sections
6.13, 6.17, 6.18 and 11.1 which are intended to benefit the shareholders,
employees, officers and directors of Bancorp, each party hereto intends that
this Agreement shall not benefit or create any right or cause of action to
any person other than
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parties hereto. As used in this Agreement, the term "parties" shall refer
only to FSC, FSB, Bancorp or Bank as the context may require.
11.15 SEVERABILITY. Except to the extent that application of this
Section 11.15 would have a Material Adverse Effect on either party, any term
or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement
is so broad as to be unenforceable, the provisions shall be interpreted to be
only so broad as is enforceable.
11.16 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
11.17 DEFINITION OF "MATERIAL ADVERSE EFFECT". As used in this
Agreement, "Material Adverse Effect" shall mean with respect to a person, a
Material Adverse Effect upon (A) the business, financial condition,
operations, or prospects of such person, or (B) the ability of such person to
timely perform its obligations under the Agreement and to timely consummate
the Merger; PROVIDED, however, that in determining whether a Material Adverse
Effect has occurred there shall be excluded any effect on the referenced
party the cause of which is (i) any change in banking or similar laws, rules
or regulations of general applicability or interpretations thereof by courts
or governmental authorities, (ii) any change in generally accepted accounting
principles or regulatory accounting principles applicable to banks or their
holding companies generally, (iii) any action or omission of FSC or Bancorp
or any subsidiary of either of them taken with the prior written consent of
FSC or Bancorp, as applicable, or permitted by this
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Agreement, and (iv) any changes in general economic conditions affecting
banks or their holding companies generally.
[This Space Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
FIRST SECURITY CORPORATION
By
---------------------------------
Morgan J. Evans, President and
Chief Operating Officer
FIRST SECURITY BANK OF NEVADA
By
---------------------------------
David J. Smith, President and
Chief Executive Officer
COMSTOCK BANCORP
By
---------------------------------
Robert N. Barone, Chairman and
Chief Executive Officer
COMSTOCK BANK
By
---------------------------------
Robert N. Barone, Chairman and
Chief Executive Officer
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<PAGE>
SHAREHOLDER VOTING AGREEMENT
AGREEMENT, dated as of January __, 1999, by and among First Security
Bank of Nevada, a Nevada bank ("FSB"), First Security Corporation, a Delaware
corporation ("FSC"), and each of the persons executing this Agreement as
shareholders of Comstock Bancorp, a bank holding company organized under the
laws of the State of Nevada (each such person being referred to as the
"SHAREHOLDER" and all such persons being referred to collectively as the
"SHAREHOLDERS").
The Shareholders are directors and/or significant shareholders owning
outstanding shares of common stock, $.01 par value (the "SHARES") and/or
stock options ("OPTIONS") and/or warrants ("WARRANTS") of Comstock Bancorp
("BANCORP"). Bancorp is the sole shareholder of Comstock Bank, a bank
organized under the laws of the State of Nevada ("BANK"). Each Shareholder
desires to induce (i) FSB and FSC and each other Shareholder to enter into
this Agreement and (ii) FSC and FSB to enter into an Agreement and Plan of
Reorganization (the "MERGER AGREEMENT") with Bancorp and Bank which provides
for a merger of Bank with and into FSB and of Bancorp with and into FSC
(collectively, the "MERGERS"), subject to the conditions set forth in the
Merger Agreement.
NOW, THEREFORE, the parties agree as follows:
1. SALE OF SHARES.
1.1 Except as provided in Section 1.2 hereof, each Shareholder
severally agrees that such Shareholder will not sell, transfer or otherwise
dispose of, or enter into any contract, option, or other arrangement or
understanding with respect to the sale, transfer or other disposition of, or
grant a proxy to vote, any Shares now owned or hereafter acquired by such
Shareholder, other than to or in favor of FSC or an affiliate of FSC, or
pursuant to or in favor of the Merger Agreement.
1.2 Notwithstanding anything in Section 1.1 to the contrary, each
Shareholder may: (i) donate Shares to any bona fide tax-exempt charitable
organization; provided that such charitable organization shall first agree in
writing to be bound by all of the terms and subject to all of the conditions
of this Agreement, (ii) transfer Shares by gift to a member of such
Shareholder's family; provided that such family member shall first agree in
writing to be bound by all of the terms and subject to all of the conditions
of this Agreement.
2. VOTING.
Each Shareholder severally agrees to vote all of the Shares over which
such Shareholder has the power to vote in favor of adoption and approval of
the Merger Agreement and the transactions contemplated thereby. The parties
hereby acknowledge and agree that nothing contained herein is intended to
restrict a Shareholder from voting on any matter, or
<PAGE>
otherwise from acting, in the Shareholder's capacity as a director of Bancorp
with respect to any matter, including but not limited to, the management or
operation of Bancorp.
3. NO SOLICITATION.
Each Shareholder will not solicit, initiate or encourage any
"Acquisition Proposal" (as defined below) or furnish any information to, or
cooperate with, any person, corporation, firm, or other entity with respect
to an Acquisition Proposal. As used herein, "ACQUISITION PROPOSAL" means a
proposal for a merger or other business combination involving Bancorp and/or
Bank or for the acquisition of a substantial equity interest in, or a
substantial portion of the assets of, Bancorp and/or Bank, other than as
provided under the Merger Agreement.
4. LIMITATION OF OBLIGATIONS; TERMINATION.
Notwithstanding any term or condition of this Agreement, Shareholder
shall not be required to take any action which would, in the reasonable
opinion of Shareholder's legal counsel, violate the duties imposed by law on
Shareholder. The obligations of the parties under this Agreement shall
terminate upon the earliest of (i) the termination of the Merger Agreement,
or (ii) the consummation of the Mergers. Upon any such termination, the
obligations of each party to this Agreement shall be extinguished.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
Each Shareholder severally represents and warrants, subject to the
provisions of Section 1.2 and Section 4 hereof, that such Shareholder has the
full right and authority to enter into this Agreement and that this Agreement
has been duly and validly executed and delivered by such Shareholder and
constitutes a valid and binding obligation of such Shareholder enforceable
against such Shareholder in accordance with its terms.
6. SURVIVAL.
All rights and authority granted herein by each Shareholder shall
survive the death or incapacity of such Shareholder. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, personal representatives, successors and assigns. FSC may,
without the consent of any (but with notice to each) of the Shareholders,
assign its rights hereunder only to any directly or indirectly wholly owned
subsidiary of FSC.
7. NOTICES. Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given upon personal
delivery, confirmed telex or facsimile transmission, or upon the third
business day after deposit with the United States Post Office, by registered
or certified mail, postage prepaid, addressed as follows:
-2-
<PAGE>
TO FSC AND FSB:
First Security Corporation
79 South Main Street
Salt Lake City, Utah 84111
Attention: Brad D. Hardy, Esq.
Executive Vice President and General Counsel
Fax: (801) 359-6928
First Security Bank of Nevada
530 Las Vegas Blvd., S.
Las Vegas, Nevada 89101
Attention: David J. Smith
President and Chief Executive Officer
Fax: (702) 386-8705
WITH A COPY TO:
Sylvia I. Iannucci, Esq.
Ray, Quinney & Nebeker
P.O. Box 45835
Salt Lake City, Utah 84145-0385
Fax: (801) 532-7543
TO ANY SHAREHOLDER:
At the addresses set forth at the end of this Agreement.
WITH A COPY TO:
Comstock Bancorp
6275 Neil Road
Reno, Nevada 89511-1138
Attention: Robert N. Barone
Chairman and Chief Executive Officer
Fax: (775) 828-0377
AND A COPY TO:
Francis X. Grady, Esq.
Grady & Associates
20800 Center Ridge Road, Suite 116
Rocky River, Ohio 44116-4306
Fax: (440) 356-7254
-3-
<PAGE>
8. SEVERAL OBLIGATIONS.
All of the obligations of the Shareholders under this Agreement shall be
several and not joint and execution of this Agreement by each Shareholder
shall not be deemed to be evidence for any purpose that they are acting as a
group or in concert.
9. EXECUTION AND COUNTERPARTS.
This Agreement may be executed by facsimile and in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single agreement. This Agreement shall be deemed
fully executed and binding when all of the parties hereto have executed this
Agreement, at which time this Agreement shall have the same force and effect
as if all signatures appeared on one and the same original.
10. INCORPORATION OF RECITALS.
All of the above recitals are and shall be considered and deemed to be
incorporated in and made an integral part of this Agreement.
11. REGISTRATION STATEMENT.
Each of the Shareholders acknowledges that a Registration Statement on
Form S-4 is in preparation and will be filed by FSC with the Securities and
Exchange Commission. The Registration Statement will include a prospectus of
FSC and a proxy statement of Bancorp, which proxy statement will be used to
solicit proxies of shareholders of Bancorp for use at the Bancorp Meeting.
Each of the Shareholders acknowledges and agrees that (a) he is an accredited
investor, within the meaning of Securities and Exchange Commission Rule 501(a),
or that he has had and continues to have, either alone or together with his
representatives, (i) access to all of the information the Registration
Statement and prospectus and proxy statement therein will provide and
(ii) sufficient opportunity to make inquiries of FSC and Bancorp concerning
such information, (b) on his own or together with his representatives, he is
able to evaluate and has evaluated the merits and risks of approval of the
Merger Agreement and the Mergers contemplated thereby and investment in FSC
common stock and (c) each of FSC and Bancorp has relied and may rely upon
these representations in connection with its execution of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-4-
<PAGE>
IN WITNESS WHEREOF, FSC, FSB and each Shareholder have caused this
Agreement to be executed as of the date first above written.
FIRST SECURITY CORPORATION
By
---------------------------------
Morgan J. Evans, President and
Chief Operating Officer
FIRST SECURITY BANK OF NEVADA
By
---------------------------------
David J. Smith, President
-5-
<PAGE>
THE SHAREHOLDERS
Edward E. Allison
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
Robert N. Barone
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
Stephen C. Benna
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
John A. Coombs
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
Michael W. Dyer
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
[Signatures Continue on Next Page]
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<PAGE>
Mervyn J. Matorian
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
Samual P. McMullen
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
Larry A. Platz
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
Ronald E. Zideck
c/o Comstock Bank
P.O. Box 7610
Reno, Nevada 89510-7610
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<PAGE>
EXHIBIT 7.1
COGNOVIT PROMISSORY NOTE
$1,140,000 December 31, 1998
FOR VALUE RECEIVED, Larry Platz (hereinafter referred to as "Maker"), promises
to pay to the order of Robert Barone the principal amount of One Million One
Hundred Forty Thousand and 00/100 Dollars ($1,140,000) with interest on the
unpaid principal balance from the date hereof at the rate of nine percent (9%)
per annum. This Note will be payable within 10 business days of the closing of
the acquisition of Comstock Bank/Bancorp by First Security or six months,
whichever occurs first. The interest on this Note will be payable at maturity.
All installments shall be applied first to payment of accrued interest and
second to payment of principal. Principal and interest may be prepaid, in whole
or in part, at any time without penalty.
In case of default in the payment of any installment of interest or principal or
other default under the terms of this Note, holder may, at its option and
without notice, declare the entire principal and accrued interest of this Note
immediately due and payable and may proceed to enforce the collection thereof.
The undersigned shall pay all court costs incurred in the collection of this
Note.
No extension of this Note, no release of any collateral given for security of
this Note or any guaranty of this Note, no release of any person primarily or
secondarily liable on this Note, and no delay in the enforcement of the payment
of this Note or any guaranty of this Note shall affect the liability of Maker or
any endorser of this Note.
Presentment for payment, notice of dishonor, protest of dishonor, and notice of
protest are expressly waived by all parties liable hereunder, their heirs, legal
representatives, successors and assigns.
This Note shall be governed by and construed in accordance with the laws of the
State of Nevada.
Maker agrees that any suit to enforce this Note or to obtain any remedy with
respect to this Note shall be brought in the United States District Court for
Northern Nevada or in the Washoe County District and for such purposes, Maker
expressly and irrevocably consents to the exclusive jurisdiction and venue of
such courts. Maker consents to personal jurisdiction within Washoe County,
Nevada in connection with any such proceeding.
In the event that any provision or clause of this Note is found to be void or
unenforceable to any extent and for any reason, all remaining provisions of this
Note shall remain in full force and effect to the maximum extent permitted and
this Note shall be enforceable as if such void or unenforceable provision had
never been made a part hereof. To this end, the provisions of this Note are
declared to be severable.
Any attorney-at-law may appear at any time after the debt hereby evidenced
becomes due, whether by acceleration or otherwise, in any court of record of the
State of Nevada or any other State in the United States, and waive the issuing
and service of process and confess judgment in favor of the legal holder hereof
against Maker for the amount of principal and interest then appearing due upon
this Note, together with the costs of suit, and thereupon release all errors and
waive all right of appeal.
Maker acknowledges that this Note does not arise out of a consumer loan or
transaction.
<PAGE>
WARNING
- -------
BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU
DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR
KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS
OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR, WHETHER FOR RETURNED GOODS,
FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.
/s/ Larry A. Platz
-------------------------
Larry A. Platz, "Maker"
<PAGE>
EXHIBIT 7.2
AGREEMENT OF JOINT FILING
Pursuant to Rule 13d-1(k) under the Securities Exchange Act of 1934, the
undersigned persons hereby agree to file with the Securities and Exchange
Commission, Amendment No. 1 to the Statement on Schedule 13D (the "Statement")
to which this Agreement of Joint Filing is attached as an exhibit, and agree
that such Statement, as so filed, is filed on behalf of each of them.
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original, and all of which together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement of Joint
Filing.
Dated: February 18, 1999 LARRY A. PLATZ
/s/ Larry A. Platz
-------------------------
Larry A. Platz
THE LARRY A. PLATZ TRUST
By: /s/ Larry A. Platz
-------------------------
Larry A. Platz
Trustee
