SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of Earliest Event Reported)
August 4, 1995
HAWKEYE BANCORPORATION
(Exact Name of Registrant as Specified in its Charter)
Iowa 0-4742 42-0926317
(State of Other (Commission) (IRS Employer)
Jurisdiction of File Numbers) Identification No.)
Incorporation)
222 Equitable Building
604 Locust Street
Des Moines, IA 50309
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(515) 284-1930)<PAGE>
Item 5-Other Events
On August 4, 1995, Hawkeye Bancorporation ("Hawkeye") and
Mercantile Bancorporation, Inc., a Missouri corporation
("Mercantile") entered into a definitive Agreement and Plan of
Reorganization (the "Merger Agreement"), which provides, among
other things, for the merger ("Merger") of Hawkeye with and into
a wholly owned subsidiary of Mercantile.
Under the terms of the Merger Agreement, each share of the
common stock, without par value ("Hawkeye Common Stock"), of
Hawkeye issued and outstanding immediately prior to the effective
time of the Merger shall be converted into 0.585 of a share of
common stock, par value $5.00 per share, of Mercantile, subject
to the terms and conditions of the Merger Agreement.
On August 4, 1995, as a condition to Mercantile's entering
into the Merger Agreement, Hawkeye entered into an Stock Option
Agreement (the "Stock Option Agreement") pursuant to which
Mercantile was granted an option to purchase, under certain
circumstances, 2,678,000 shares of Hawkeye Common Stock (19.9% of
the number of such shares then outstanding), at a per share
exercise price of $22.
On August 4, 1995, persons who are directors of Hawkeye
entered into agreements (the "Voting and Support Agreements")
pursuant to which they agreed, among other things, to vote or
cause to be voted the shares of Hawkeye Common Stock owned of
record or beneficially by them in favor of the Merger Agreement.
Consummation of the Merger is subject to certain conditions,
including: (i) receipt of requisite approval of the shareholders
of Hawkeye of the Merger Agreement as requested by Iowa law; (ii)
receipt of approval of the Federal Reserve Board and the Iowa
Division of Banking, and any other applicable regulatory
authority; (iii) registration of the shares of Mercantile Common
Stock to be issued pursuant to the Merger under the Securities
Act of 1933, as amended, and all applicable state securities
laws: (iv) receipt of opinions of counsel that the Merger will
qualify as a tax-free reorganization under the Internal Revenue
Code of 1986, as amended, and (v) satisfaction of certain other
closing conditions.
Copies of the Merger Agreement, the Stock Option Agreement
and the form of Voting and Support Agreement are attached as
Exhibits hereto and are incorporated by reference herein. The
foregoing summaries of such documents are qualified in their
entirety by reference to the actual documents.
Item 7 - Financial Statements, Pro Forma Financial Information
and Exhibits
c. Exhibits
the exhibits listed on the Exhibit Index of this Form
8-K are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
HAWKEYE BANCORPORATION
(Registrant)
By: Brent Johnson
_____________________________
Brent Johnson
Chief Financial Officer
Dated August 14 ,1995
________________
EXHIBIT INDEX
Exhibit No. Description
2 Agreement and Plan of Reorganization dated August
4, 1995 by and between Mercantile Bancorporation
Inc. and Hawkeye Bancorporation. *
99.1 Stock Option agreement Dated August 4, 1995
between Mercantile Bancorporation Inc. and Hawkeye
Bancorporation.
99.2 Form of Voting and Support Agreement dated August
4, 1995.
99.3 Press Release dated August 4, 1995.
* The schedules to the Agreement and Plan of Reorganization
have been omitted. These are:
Schedule Description
2.02 Seller's Subsidiaries
2.03 Seller's Stock Plans
2.04(B) Authorizations
2.05 Seller Financial Schedules
2.10(A) Commitments and Contracts
2.11 Litigation
2.12 Insurance
2.13(C) Regulatory Compliance
2.15(B) Insider Loans
2.17(A) Human Resources and Benefits Plans
2.17(C) Pension Plans
2.17(D) Post-Retirement Benefits
2.17(F) Material Payments
2.18 Conduct of Seller to Date
2.20 Registration Obligations
2.23 Brokers and Finders
2.24(A) Other Activities
2.24(B) Trust Activities
2.25(A) Interest Rate Risk
4.02 Forbearances
Registrant agrees to furnish supplementally a copy of any
committed schedule to the Commission upon request.
August 4, 1995
Mercantile Bancorporation Inc.
Mercantile Tower
St. Louis, MO 63166
Dear Sirs:
The undersigned understands that Mercantile Bancorporation
("Mercantile"), and Hawkeye Bancorporation ("Seller") are
entering into an Agreement and Plan of Reorganization (the
"Agreement") providing for, among other things, a merger between
a wholly owned subsidiary of Mercantile, and Seller (the
"Merger"), in which all of the outstanding shares of capital
stock of Seller will be exchanged for shares of common stock, par
value $5.00 per share, of Mercantile.
The undersigned is a stockholder of Seller (the
"Stockholder") and is entering into this letter agreement to
induce you to enter into the Agreement and to consummate the
transactions contemplated thereby.
The undersigned confirms its agreement with you as follows:
1. The undersigned represents, warrants and agrees that
Schedule I annexed hereto sets forth shares of the capital stock
of Seller of which the undersigned is the record or beneficial
owner (the "Shares") and that the undersigned is on the date
hereof the lawful owner of the number of shares set forth in
Schedule I, free and clear of all liens, charges, encumbrances,
voting agreements and commitments of every kind, except as
disclosed in Schedule I. Except as set forth in the Schedule,
the undersigned does not own or hold any rights to acquire any
additional shares of the capital stock of Seller (by exercise of
stock options or otherwise) or any interest therein or any voting
rights with respect to any additional shares, other than as
previously disclosed to you.
2. The undersigned agrees that the undersigned will not,
and will not permit any company, trust or other entity controlled
by the undersigned to, contract to sell, sell or otherwise
transfer or dispose of any of the Shares of any interest therein
or securities convertible thereunto or any voting rights with
respect thereto, other than (i) pursuant to the Merger, or (ii)
with your prior written consent.
3. The undersigned agrees that all of the Shares
beneficially owned by the undersigned, or over which the
undersigned has voting power or control, directly or indirectly,
at the record date for any meting of stockholders of Seller
called to consider and vote to approve the Agreement and/or the
transactions contemplated thereby will be voted by the
undersigned in favor thereof.
Mercantile Bancorporation Inc.
August 4, 1995
Page 2
4. The undersigned agrees to, and will cause any company,
trust or other entity controlled by the undersigned to, cooperate
fully with you in connection with the Agreement and the
transactions contemplated thereby. The undersigned agrees that
the undersigned will not, and will not permit any such company,
trust or other entity to directly, or indirectly (including
through its officers, directors, employees or other
representatives) initiate, solicit or encourage any discussions,
inquiries or proposals with any third party relating to the
disposition of any significant portion of the business or assets
of Seller or the acquisition of any capital stock or other
securities of Seller or the business combinations, merger or
consolidation of Seller with any person or any similar
transaction (each such transaction being referred to herein as an
"Acquisition Transaction"), or provide any such person with
information or assistance or negotiate with any such person with
respect to an Acquisition Transaction or agree to or otherwise
assist in the effectuation of any Acquisition Transaction.
The undersigned has all necessary power and authority to
enter into this letter agreement. This agreement is the legal,
valid and binding agreement of the undersigned, and is
enforceable against the undersigned in accordance with its terms.
This letter agreement may be terminated at the option of any
party at any time after the earlier of (i) termination of the
Agreement and (ii) the day following the Closing Date (as defined
in the Agreement). Please confirm that the foregoing correctly
states the understanding between us by signing and returning to
us a counterpart thereof.
Nothing herein shall be construed to require the undersigned
or any company, trust or other entity controlled by the
undersigned to take any action or fail to take any action in
violation of applicable law, rule or regulation.
Very truly yours,
By: ___________________________
Stockholder
Confirmed on the date first above written.
MERCANTILE BANCORPORATION INC.
By: _______________________
For immediate Release: August 4, 1995
Contact: Patrick Strickler
(314) 425-3835
(314) 425-8335
NYSE Symbol: MTL
In newspaper stock tables generally MercBc or MercBcpMO
MERCANTILE ANNOUNCES PLAN TO MERGE
WITH HAWKEYE BANCORPORATION
ST. LOUIS -- Mercantile Bancorporation Inc., the $15.3-
billion asset St. Louis-based bank holding company, announced
today that it plans to expand its presence in Iowa through a
merger with Hawkeye Bancorporation.
The merger would move Mercantile into a major position in
deposit market share in Iowa, where Hawkeye currently has a
market leadership position in most of the banking markets it
serves. None of those markets overlaps with existing Mercantile
banks in Iowa.
Hawkeye, which operates 23 banks with 65 branches serving a
total of 47 Iowa communities, had approximately $2-billion in
assets as of June 30. Mercantile, with a total of 54 locally-
managed banks in five Midwestern states, already has established
a presence in the Iowa markets of Waterloo and Davenport.
"This merger with Hawkeye dramatically moves Mercantile into
a market leadership position in Iowa," said Thomas H. Jacobsen,
Mercantile's Chairman and Chief Executive Officer. "It also
reflects Mercantile's established expansion strategy of securing
a significant presence in strong Midwestern markets."
He added, "Hawkeye's network of community banks complements
existing Mercantile markets in Iowa, and we believe the
combination of our two organizations creates a very competitive
banking organization to serve the customers of Iowa."
"We are extremely pleased to have found a partner in
Mercantile who shares our own community-oriented banking
philosophy," said Robert W. Murray, President and CEO of Hawkeye.
"Mercantile's commitment to local bank management and decision
making is a real fit with how we do business."
Murray added, "Everyone benefits from this merger. The
capital strength and range of services provided by Mercantile
will be a real asset in all the communities we serve. We will be
retaining the service and personal relationships that our
customers, employees and shareholders value and expect of us."
Murray, who will have an ongoing management responsibility
in the merged operations of Hawkeye and Mercantile, will be
nominated to the Mercantile Bancorporation Board of Directors as
part of the merger agreement. "The management structure has not
yet been fully determined," he said, "but I will continue in my
management responsibilities within the new Mercantile banking
organization here in Iowa."
The proposed transaction will be structured as a pooling of
business interests. Under the terms of the agreement, Hawkeye
shareholders will receive 0.585 shares of Mercantile stock for
each share of Hawkeye common stock. The transaction has an
aggregate market value of approximately $351-million.
In connection with the merger agreement, Hawkeye also
granted Mercantile an option to acquire a number of shares equal
to 19.9 percent of the outstanding stock of Hawkeye, exercisable
under certain circumstances relating to the transaction. In
addition, Mercantile may repurchase up to 10 percent of the
shares issued in the transaction.
The merger is subject to approval by Hawkeye shareholders
and all appropriate regulatory agencies, a process that normally
takes approximately six months to complete. Conversion of
products, services, and the identity of individual banks to
Mercantile normally occurs within three to four months after the
merger has been completed.
Mercantile Bancorporation had assets of $15.3-billion as of
June 30, 1995, and owns 54 banks in Missouri, Iowa, Kansas,
Illinois and Arkansas. Mercantile's non-bank subsidiaries
include companies providing brokerage services, asset-based
lending, investment advisory services and credit life insurance.
___________________________________________________________
___________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
between
MERCANTILE BANCORPORATION INC.,
as Buyer,
and
HAWKEYE BANCORPORATION,
as Seller
________________________________________
Dated August 4, 1995
___________________________________________________________
___________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
____________________________________
This AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered into on August 4, 1995 by and
between MERCANTILE BANCORPORATION INC., a Missouri corporation
("Buyer"), and HAWKEYE BANCORPORATION, an Iowa corporation
(together with its predecessors, "Seller").
W I T N E S S E T H:
___________________
WHEREAS, Buyer is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the
"Holding Company Act"); and
WHEREAS, Seller is a registered bank holding company
under the Holding Company Act; and
WHEREAS, the Board of Directors of Seller and the
Executive Committee of the Board of Directors of Buyer have
approved the merger (the "Merger") of Seller with and into a
wholly owned subsidiary of Buyer organized or to be organized
under the laws of Iowa ("Merger Sub") pursuant to the terms
and subject to the conditions of this Agreement; and
WHEREAS, as a condition to, and immediately after
the execution of this Agreement, Buyer and each director of
Seller will enter into Support Agreements (the "Support
Agreements") in the form attached hereto as Exhibit A; and
WHEREAS, as a condition to, and immediately prior to
execution of this Agreement, Buyer and Seller will enter into
a stock option agreement (the "Stock Option Agreement") in the
form attached hereto as Exhibit B; and
WHEREAS, the parties desire to provide for certain
undertakings, conditions, representations, warranties and cov-
enants in connection with the transactions contemplated by
this Agreement.
NOW THEREFORE, in consideration of the premises
and the representations, warranties and agreements herein
contained, the parties agree as follows:
ARTICLE I
_________
THE MERGER
1.01. The Merger. (a) Subject to the terms and
conditions of this Agreement, Seller shall be merged with
and into Merger Sub in accordance with the Iowa Business
Corporation Act (the "Iowa Act") and the separate corporate
existence of Seller shall cease. Merger Sub shall be the
surviving corporation of the Merger (sometimes referred to
herein as the "Surviving Corporation") and shall continue to
be governed by the laws of the State of Iowa.
1.02. Closing. The closing (the "Closing") of
the Merger shall take place at 10:00 a.m., local time, on
the date that the Effective Time (as defined in Section
1.03) occurs, or at such other time, and at such place, as
Buyer and Seller shall agree (the "Closing Date").
1.03. Effective Time. The Merger shall become
effective on the date and at the time (the "Effective Time")
on which appropriate documents in respect of the Merger are
filed with the Secretary of State of the State of Iowa in
such form as required by, and in accordance with, the rel-
evant provisions of the Iowa Act. Subject to the terms and
conditions of this Agreement, the Effective Time shall occur
on such date as Buyer shall notify Seller in writing (such
notice to be at least five business days in advance of the
Effective Time) but (i) not earlier than the satisfaction of
all conditions set forth in Section 6.01(a) and 6.01(b) (the
"Approval Date") and (ii) subject to clause (i), not later
than the first business day of the first full calendar month
commencing at least five business days after the Approval
Date. As soon as practicable following the Effective Time,
Buyer and Seller shall cause a certificate or plan of merger
reflecting the terms of this Agreement to be delivered for
filing and recordation with other appropriate state or local
officials in the State of Iowa in accordance with the Iowa
Act.
1.04. Additional Actions. If, at any time after
the Effective Time, Buyer or the Surviving Corporation shall
consider or be advised that any further deeds, assignments
or assurances or any other acts are necessary or desirable
to (b) vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in,
to or under any of the rights, properties or assets of
Seller or Merger Sub or (c) otherwise carry out the purposes
of this Agreement, Seller and Merger Sub and each of their
respective officers and directors, shall be deemed to have
granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such deeds, assignments
or assurances and to do all acts necessary or desirable to
vest, perfect or confirm title and possession to such
rights, properties or assets in the Surviving Corporation
and otherwise to carry out the purposes of this Agreement,
and the officers and directors of the Surviving Corporation
are authorized in the name of Seller or otherwise to take
any and all such action.
1.05. Articles of Incorporation and Bylaws. The
Articles of Incorporation and Bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the
Articles of Incorporation and Bylaws of the Surviving
Corporation following the Merger until otherwise amended or
repealed.
1.06. Boards of Directors and Officers. At the
Effective Time, the directors and officers of Merger Sub im-
mediately prior to the Effective Time shall be directors and
officers, respectively, of the Surviving Corporation follow-
ing the Merger; such directors and officers shall hold
office in accordance with the Surviving Corporation's Bylaws
and applicable law.
1.07. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the
part of Buyer, Seller or the holder of any of the following
securities:
(i) Each share of the common stock, par value
$.01 per share, of Merger Sub that is issued and outstanding
immediately prior to the Effective Time shall remain out-
standing and shall be unchanged after the Merger and shall
thereafter constitute all of the issued and outstanding
capital stock of the Surviving Corporation; and
(ii) Each share of the common stock, without par
value ("Seller Common Stock"), of Seller issued and out-
standing immediately prior to the Effective Time, other than
any Dissenting Shares (as defined in Section 1.09), shall
cease to be outstanding and shall be converted into and be-
come the right to receive 0.585 (the "Exchange Ratio") of a
share of common stock, par value $5.00 per share ("Buyer
Common Stock"), of Buyer; provided, however, that any shares
of Seller Common Stock held by Seller or any of its wholly
owned Subsidiaries (as defined in Rule 1-02 of Regulation S-
X promulgated by the Securities and Exchange Commission (the
"SEC")), or Buyer or any of its wholly owned Subsidiaries,
in each case other than in a fiduciary capacity or as a
result of debts previously contracted, shall be cancelled
and shall not represent capital stock of the Surviving
Corporation and shall not be exchanged for shares of Buyer
Common Stock.
1.08. Exchange Procedures. (d) As soon as prac-
ticable after the Effective Time, holders of record of cer-
tificates formerly representing shares of Seller Common
Stock (the "Certificates") shall be instructed to tender
such Certificates to Buyer pursuant to a letter of
transmittal that Buyer shall deliver or cause to be
delivered to such holders. Such letters of transmittal
shall specify that risk of loss and title to Certificates
shall pass only upon delivery of such Certificates to Buyer.
(b) Subject to Section 1.10, after the Effective
Time, each previous holder of a Certificate that surrenders
such Certificate to the Buyer or, at the election of Buyer,
an exchange agent designated by Buyer (the "Exchange Agent")
will, upon acceptance thereof by Buyer or the Exchange
Agent, be entitled to a certificate or certificates repre-
senting the number of full shares of Buyer Common Stock
into which the Certificate so surrendered shall have been
converted pursuant to this Agreement and any distribution
theretofore declared and not yet paid with respect to such
shares of Buyer Common Stock, without interest.
(c) Buyer or, at the election of Buyer, the Ex-
change Agent shall accept Certificates upon compliance with
such reasonable terms and conditions as Buyer or the
Exchange Agent may impose to effect an orderly exchange
thereof in accordance with customary exchange practices.
Certificates shall be appropriately endorsed or accompanied
by such instruments of transfer as Buyer or the Exchange
Agent may require.
(d) Each outstanding Certificate shall until duly
surrendered to Buyer or the Exchange Agent be deemed to evi-
dence ownership of the consideration into which the stock
previously represented by such Certificate shall have been
converted pursuant to this Agreement.
(e) After the Effective Time, holders of Certifi-
cates shall cease to have rights with respect to the stock
previously represented by such Certificates, and their sole
rights shall be to exchange such Certificates for the con-
sideration provided for in this Agreement. After the Effec-
tive Time, there shall be no further transfer on the records
of Seller of Certificates, and if such Certificates are pre-
sented to Seller for transfer, they shall be cancelled
against delivery of the consideration provided therefor in
this Agreement. Buyer shall not be obligated to deliver the
consideration to which any former holder of Seller Common
Stock is entitled as a result of the Merger until such
holder surrenders the Certificates as provided herein. No
dividends declared will be remitted to any person entitled
to receive Buyer Common Stock under this Agreement until
such person surrenders the Certificate representing the
right to receive such Buyer Common Stock, at which time such
dividends shall be remitted to such person, without interest
and less any taxes that may have been imposed thereon.
Certificates surrendered for exchange by any person
constituting an "affiliate" of Seller for purposes of Rule
145 of the Securities Act of 1933, as amended (together with
the rules and regulations thereunder, the "Securities Act"),
shall not be exchanged for certificates representing Buyer
Common Stock until Buyer has received a written agreement
from such person in the form attached as Exhibit C. Neither
the Exchange Agent nor any party to this Agreement nor any
affiliate thereof shall be liable to any holder of stock
represented by any Certificate for any consideration paid to
a public official pursuant to applicable abandoned property,
escheat or similar laws. Buyer and the Exchange Agent shall
be entitled to rely upon the stock transfer books of Seller
to establish the identity of those persons entitled to
receive consideration specified in this Agreement, which
books shall be conclusive with respect thereto. In the
event of a dispute with respect to ownership of stock
represented by any Certificate, Buyer and the Exchange Agent
shall be entitled to deposit any consideration represented
thereby in escrow with an independent third party and there-
after be relieved with respect to any claims thereto.
1.09. Dissenting Shares. (a) "Dissenting
Shares" means any shares held by any holder who becomes
entitled to payment of the fair value of such shares under
the Iowa Act. Any holders of Dissenting Shares shall be
entitled to payment for such shares only to the extent
permitted by and in accordance with the provisions of the
Iowa Act; provided, however, that if, in accordance with the
Iowa Act, any holder of Dissenting Shares shall forfeit such
right to payment of the fair value of such shares, such
shares shall thereupon be deemed to have been converted into
and to have become exchangeable for, as of the Effective
Time, the right to receive the consideration provided in
this Article I.
(b) Seller shall give Buyer (i) prompt notice of
any written objections to the Merger and any written demands
for the payment of the fair value of any shares, withdrawals
of such demands, and any other instruments served pursuant
to the Iowa Act received by Seller and (ii) the opportunity
to direct all negotiations and proceedings with respect to
such demands under the Iowa Act. Seller shall not
voluntarily make any payment with respect to any demands for
payment of fair value and shall not, except with the prior
written consent of Buyer, settle or offer to settle any such
demands.
1.10. No Fractional Shares. Notwithstanding any
other provision of this Agreement, neither certificates nor
scrip for fractional shares of Buyer Common Stock shall be
issued in the Merger. Each holder who otherwise would have
been entitled to a fraction of a share of Buyer Common Stock
shall receive in lieu thereof cash (without interest) in an
amount determined by multiplying the fractional share inter-
est to which such holder would otherwise be entitled by the
Closing Price per share of Buyer Common Stock on the last
business day preceding the Effective Time. With respect to
a share of stock, "Closing Price" shall mean: the closing
price as reported on the Consolidated Tape (as reported in
The Wall Street Journal or in the absence thereof, by any
other authoritative source). No such holder shall be en-
titled to dividends, voting rights or any other rights in
respect of any fractional share.
1.11. Anti-Dilution Adjustments. If prior to the
Effective Time Buyer shall declare a stock dividend or make
distributions upon or subdivide, split up, reclassify or
combine Buyer Common Stock or declare a dividend or make a
distribution on Buyer Common Stock in any security convert-
ible into Buyer Common Stock, appropriate adjustment or ad-
justments will be made to the Exchange Ratio.
1.12. Reservation of Right to Revise Transaction.
Buyer may at any time change the method of effecting the ac-
quisition of Seller or Seller's Subsidiaries by Buyer (includ-
ing without limitation the provisions of this Article I) if
and to the extent it deems such change to be desirable,
including without limitation to provide for a merger of Seller
directly into Buyer, in which Buyer is the surviving corpora-
tion, provided, however, that no such change shall (A) alter
or change the amount or kind of consideration to be issued to
holders of Seller Common Stock as provided for in this Agree-
ment (the "Merger Consideration"), (B) adversely affect the
tax treatment to Seller's stockholders as a result of
receiving the Merger Consideration or (C) materially impede or
delay receipt of any approval referred to in Section 6.01(b)
or the consummation of the transactions contemplated by this
Agreement.
ARTICLE II
__________
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
Seller represents and warrants to and covenants
with Buyer as follows:
2.01. Organization and Authority. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Iowa is duly quali-
fied to do business and is in good standing in all jurisdic-
tions where its ownership or leasing of property or the con-
duct of its business requires it to be so qualified and has
corporate power and authority to own its properties and as-
sets and to carry on its business as it is now being con-
ducted. Seller is registered as a bank holding company with
the Board of Governors of the Federal Reserve System (the
"Board") under the Holding Company Act. True and complete
copies of the Restated Articles of Incorporation and the By-
laws of Seller and, to the extent requested in writing by
Buyer, of the Articles of Incorporation and Bylaws of the
Seller Subsidiaries (as defined in Section 2.02), each as in
effect on the date of this Agreement, have been provided to
Buyer.
2.02. Subsidiaries. Schedule 2.02 sets forth,
among other things, a complete and correct list of all of
Seller's Subsidiaries (each a "Seller Subsidiary" and col-
lectively the "Seller Subsidiaries"), all outstanding Equity
Securities of each of which, except as set forth on Schedule
2.02, are owned directly or indirectly by Seller. "Equity
Securities" of an issuer means capital stock or other equity
securities of such issuer, options, warrants, scrip, rights
to subscribe to, calls or commitments of any character what-
soever relating to, or securities or rights convertible
into, shares of any capital stock or other Equity Securities
of such issuer, or contracts, commitments, understandings or
arrangements by which such issuer is or may become bound to
issue additional shares of its capital stock or other Equity
Securities of such issuer, or options, warrants, scrip or
rights to purchase, acquire, subscribe to, calls on or com-
mitments for, or stock appreciation or similar rights in re-
spect of, any shares of its capital stock or other Equity
Securities. Except as set forth on Schedule 2.02, all of
the outstanding shares of capital stock of the Seller
Subsidiaries are validly issued, fully paid and
nonassessable, and those shares owned by Seller are owned
free and clear of any lien, claim, charge, option,
encumbrance, agreement, mortgage, pledge, security interest
or restriction (a "Lien") with respect thereto. Each of the
Seller Subsidiaries is a corporation or association duly
incorporated or organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation
or organization, and has corporate power and authority to
own or lease its properties and assets and to carry on its
business as it is now being conducted. Each of the Seller
Subsidiaries is duly qualified to do business in each
jurisdiction where its ownership or leasing of property or
the conduct of its business requires it so to be qualified,
except where the failure to so qualify would not have a
material adverse effect on the financial condition, results
of operations or business (collectively, the "Condition") of
Seller and its Subsidiaries, taken as a whole. Except as
set forth on Schedule 2.02, Seller does not own
beneficially, directly or indirectly, five percent or more
of any shares of any class of Equity Securities or similar
interests of any corporation, bank, business trust,
association or similar organization. All of Seller's bank
Subsidiaries (the "Banks") are either state banking associa-
tions chartered under the laws of the State of Iowa or na-
tional banking associations chartered by the Office of the
Comptroller of the Currency. The deposits of each of the
Banks are insured by the Bank Insurance Fund ("BIF") or, to
the extent transferred to a Bank by the Resolution Trust
Corporation, by the Savings Association Insurance Fund, of
the Federal Deposit Insurance Corporation (the "FDIC"). The
aggregate "adjusted attributable deposit amount" (as defined
in 12 U.S.C. S 1815) of the Banks, as of June 30, 1995, is
$54,866,000. The Banks identified as such on Schedule 2.02
are members in good standing of the Federal Reserve System.
Except as set forth on Schedule 2.02, neither Seller nor any
Seller Subsidiary holds any interest in a partnership or
joint venture of any kind.
2.03. Capitalization. The authorized capital
stock of Seller consists of (i) 200,000,000 shares of Seller
Common Stock, of which, as of June 30, 1995, 13,461,373
shares were issued and outstanding, (ii) 200,000,000 shares
of Preference Stock, without par value, of which no shares
are issued and outstanding, (iii) 5,000,000 shares of Pre-
ferred Stock, par value $1.00 per share, of which no shares
are issued and outstanding. As of June 30, 1995, Seller had
reserved 208,630 shares of Seller Common Stock for issuance
under Seller's stock option and incentive plans, a list of
which is set forth on Schedule 2.03 (the "Seller Stock
Plans"), pursuant to which options ("Seller Stock Options")
covering 208,630 shares of Seller Common Stock and 65,000
stock appreciation rights were outstanding as of June 30,
1995. Since June 30, 1995, no Equity Securities of Seller
have been issued other than shares of Seller Common Stock
which may have been issued upon the exercise of Seller Em-
ployee Stock Options. Except as set forth above, there are
no other Equity Securities of Seller outstanding. All of
the issued and outstanding shares of Seller Common Stock are
validly issued, fully paid, and nonassessable, and have not
been issued in violation of any preemptive right of any
stockholder of Seller. Seller maintains no dividend rein-
vestment or similar plan.
2.04. Authorization. (e) Seller has the corpo-
rate power and authority to enter into this Agreement and,
subject to the approval of this Agreement by the
stockholders of Seller, to carry out its obligations
hereunder. The only stockholder vote required for Seller to
approve this Agreement is the affirmative vote of the
holders of at least a majority of the votes entitled to be
cast on the Agreement by the holders of shares of Seller
Common Stock. The execution, delivery and performance of
this Agreement by Seller and the consummation by Seller of
the transactions contemplated hereby have been duly
authorized by the Board of Directors of Seller. Subject to
approval by the stockholders of Seller, this Agreement is a
valid and binding obligation of Seller enforceable against
Seller in accordance with its terms.
(b) Except as set forth on Schedule 2.04B,
neither the execution nor delivery nor performance by Seller
of this Agreement, nor the consummation by Seller of the
transactions contemplated hereby, nor compliance by Seller
with any of the provisions hereof, will (i) violate,
conflict with, or result in a breach of any provisions of,
or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance
required by, or result in a right of termination or
acceleration of, or result in the creation of, any Lien upon
any of the material properties or assets of Seller or any
Seller Subsidiary under any of the terms, conditions or
provisions of (x) its articles or certificate of
incorporation or bylaws or (y) any material note, bond,
mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Seller
or any Seller Subsidiary is a party or by which it may be
bound, or to which Seller or any Seller Subsidiary or any of
the material properties or assets of Seller or any Seller
Subsidiary may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in paragraph
(c) of this Section 2.04, to the best knowledge of Seller,
violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Seller or
any Seller Subsidiary or any of their respective material
properties or assets.
(c) Other than in connection or in compliance
with the provisions of the Iowa Act, the Securities Act, the
Securities Exchange Act of 1934 and the rules and
regulations thereunder (the "Exchange Act"), the securities
or blue sky laws of the various states or filings, consents,
reviews, authorizations, approvals or exemptions required
under the Holding Company Act, and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), or any
required approvals of or filings with the Superintendant of
the Banking Division of the Commerce Department of the State
of Iowa (the "State Bank Regulator"), no notice to, filing
with, exemption or review by, or authorization, consent or
approval of, any public body or authority is necessary for
the consummation by Seller of the transactions contemplated
by this Agreement.
2.05. Seller Financial Statements. The consoli-
dated and parent-company only balance sheets of Seller and
its Subsidiaries as of December 31, 1994, 1993 and 1992 and
related consolidated statements of income, cash flows and
changes in stockholders' equity for each of the three years
in the three-year period ended December 31, 1994, together
with the notes thereto, audited by Deloitte & Touche LLP and
included in an annual report on Form 10-K as filed with the
SEC, and the unaudited consolidated balance sheets of Seller
and its Subsidiaries as of March 31 and June 30, 1995 and
the related unaudited consolidated statements of income and
cash flows for the periods then ended included in quarterly
reports on Form 10-Q (each a "Seller Form 10-Q") as filed
with the SEC (collectively, the "Seller Financial
Statements"), have been prepared in accordance with
generally accepted accounting principles applied on a
consistent basis ("GAAP"), present fairly the consolidated
financial position of Seller and its Subsidiaries at the
dates and the consolidated results of operations, cash flows
and changes in stockholders' equity of Seller and its
Subsidiaries for the periods stated therein and are derived
from the books and records of Seller and its Subsidiaries,
which are complete and accurate in all material respects and
have been maintained in all material respects in accordance
with applicable laws and regulations. Neither Seller nor
any of its Subsidiaries has any material contingent
liabilities that are not described in the financial
statements described above. The Seller Financial Statements
are set forth on Schedule 2.05.
2.06. Seller Reports. Since January 1, 1992,
each of Seller and the Seller Subsidiaries has filed all
material reports, registrations and statements, together
with any required material amendments thereto, that it was
required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy
statements, (ii) the Board, (iii) the FDIC, (iv) the State
Bank Regulator, and (v) any other federal, state, municipal,
local or foreign government, securities, banking, savings
and loan, insurance and other governmental or regulatory
authority and the agencies and staffs thereof (the entities
in the foregoing clauses (i) through (v) being referred to
herein collectively as the "Regulatory Authorities" and
individually as a "Regulatory Authority"). All such
reports and statements filed with any such Regulatory
Authority are collectively referred to herein as the "Seller
Reports." As of its respective date, each Seller Report
complied in all material respects with all the rules and
regulations promulgated by the applicable Regulatory
Authority and did not contain any untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading.
2.07. Properties and Leases. Except as may be
reflected in the Seller Financial Statements, except for any
Lien for current taxes not yet delinquent and except with
respect to assets classified as real estate owned, Seller
and its Subsidiaries have good title free and clear of any
material Lien to all the real and personal property
reflected in Seller's consolidated balance sheet as of June
30, 1995 included in the most recent Seller Form 10-Q and,
in each case, all real and personal property acquired since
such date, except such real and personal property as has
been disposed of in the ordinary course of business. All
leases material to Seller or any Seller Subsidiary pursuant
to which Seller or any Seller Subsidiary, as lessee, leases
real or personal property, are valid and effective in
accordance with their respective terms, and there is not,
under any of such leases, any material existing default by
Seller or any Seller Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a
material default. Substantially all of Seller's and Seller
Subsidiaries' buildings, structures and equipment in regular
use have been well maintained and are in good and
serviceable condition, normal wear and tear excepted.
2.08. Taxes. Except as previously disclosed,
Seller and each Seller Subsidiary have timely filed or will
timely (including extensions) file all material tax returns
required to be filed at or prior to the Closing Date
("Seller Returns"). Each of Seller and its Subsidiaries has
paid, or set up adequate reserves on the Seller Financial
Statements for the payment of, all taxes required to be paid
in respect of the periods covered by such returns and has
set up adequate reserves on the most recent financial
statements Seller has filed under the Exchange Act for the
payment of all taxes anticipated to be payable in respect of
all periods up to and including the latest period covered by
such financial statements. Neither Seller nor any Seller
Subsidiary will have any liability material to the Condition
of Seller and the Seller Subsidiaries, taken as a whole, for
any such taxes in excess of the amounts so paid or reserves
so established and no material deficiencies for any tax,
assessment or governmental charge have been proposed,
asserted or assessed (tentatively or definitely) against any
of Seller or any Seller Subsidiary which would not be
covered by existing reserves. Neither Seller nor any Seller
Subsidiary is delinquent in the payment of any material tax,
assessment or governmental charge, nor, except as previously
disclosed, has it requested any extension of time within
which to file any tax returns in respect of any fiscal year
which have not since been filed and no requests for waivers
of the time to assess any tax are pending. The federal and
state income tax returns of Seller and the Seller Subsidiar-
ies have been audited and settled by the Internal Revenue
Service (the "IRS") or appropriate state tax authorities for
all periods ended through December 31, 1981. There is no
deficiency or refund litigation or matter in controversy
with respect to Seller Returns. Neither Seller nor any
Seller Subsidiary has extended or waived any statute of
limitations on the assessment of any tax due that is
currently in effect.
2.09. Material Adverse Change. Since December
31, 1994, there has been no material adverse change in the
Condition of Seller and its Subsidiaries, taken as a whole,
except as may have resulted or may result from changes to
laws and regulations or changes in economic conditions
applicable to banking institutions generally or in general
levels of interest rates affecting banking institutions
generally.
2.10. Commitments and Contracts. (f) Except as
set forth on Schedule 2.10A, neither Seller nor any Seller
Subsidiary is a party or subject to any of the following
(whether written or oral, express or implied):
(i) any material agreement, arrangement
or commitment (A) not made in the ordinary course
of business or (B) pursuant to which Seller or any
of its Subsidiaries is or may become obligated to
invest in or contribute capital to any Seller Sub-
sidiary;
(ii) any agreement, indenture or other
instrument not disclosed in the Seller Financial
Statements relating to the borrowing of money by
Seller or any Seller Subsidiary or the guarantee
by Seller or any Seller Subsidiary of any such
obligation (other than trade payables or
instruments related to transactions entered into
in the ordinary course of business by any Seller
Subsidiary, such as deposits and Fed Funds
borrowings);
(iii) any contract, agreement or under-
standing with any labor union or collective bar-
gaining organization;
(iv) any contract containing covenants
which limit the ability of Seller or any Seller
Subsidiary to compete in any line of business or
with any person or which involve any restriction
of the geographical area in which, or method by
which, Seller or any Seller Subsidiary may carry
on its business (other than as may be required by
law or any applicable Regulatory Authority);
(v) any other contract or agreement
which is a "material contract" within the meaning
of Item 601(b)(10) of Regulation S-K promulgated
by the SEC; or
(vi) any lease with annual rental
payments aggregating $250,000 or more.
(b) Neither Seller nor any Seller Subsidiary is in
violation of its charter documents or bylaws or in default un-
der any material agreement, commitment, arrangement, lease,
insurance policy, or other instrument, whether entered into in
the ordinary course of business or otherwise and whether writ-
ten or oral, and there has not occurred any event that, with
the lapse of time or giving of notice or both, would
constitute such a default, except, in all cases, where such
default would not have a material adverse effect on the Con-
dition of Seller and its Subsidiaries, taken as a whole.
2.11. Litigation and Other Proceedings. Except
as set forth on Schedule 2.11, neither Seller nor any Seller
Subsidiary is a party to any pending or, to the best knowl-
edge of Seller, threatened claim, action, suit,
investigation or proceeding, or is subject to any order,
judgment or decree, except for matters which, in the
aggregate, will not have, or reasonably could not be
expected to have, a material adverse effect on the Condition
of Seller and its Subsidiaries, taken as a whole, or which
purports or seeks to enjoin or restrain the transactions
contemplated by this Agreement. Without limiting the
generality of the foregoing, there are no actions, suits, or
proceedings pending or, to the best knowledge of Seller,
threatened against Seller or any Seller Subsidiary or any of
their respective officers or directors by any stockholder of
Seller or any Seller Subsidiary (or any former stockholder
of Seller or any Seller Subsidiary) or involving claims
under the Securities Act, the Exchange Act, the Community
Reinvestment Act of 1977, as amended, or the fair lending
laws.
2.12. Insurance. Set forth on Schedule 2.12 is a
list of all insurance policies maintained by or for the ben-
efit of Seller or its Subsidiaries or their directors, of-
ficers, employees or agents.
2.13. Compliance with Laws. (g) Seller and each
of its Subsidiaries have all permits, licenses, authoriza-
tions, orders and approvals of, and have made all filings,
applications and registrations with, all Regulatory Authori-
ties that are required in order to permit them to own or lease
their properties and assets and to carry on their business as
presently conducted and that are material to the business of
Seller and its Subsidiaries; all such permits, licenses,
certificates of authority, orders and approvals are in full
force and effect and, to the best knowledge of Seller, no
suspension or cancellation of any of them is threatened; and
all such filings, applications and registrations are current.
(b) Except for failures to comply or defaults
which individually or in the aggregate would not have a ma-
terial adverse effect on the Condition of Seller and its
Subsidiaries, taken as a whole, (i) each of Seller and its
Subsidiaries has complied with all laws, regulations and or-
ders (including without limitation zoning ordinances, build-
ing codes, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and securities, tax, environmen-
tal, civil rights, and occupational health and safety laws
and regulations and including without limitation in the case
of any Seller Subsidiary that is a bank or savings associa-
tion, banking organization, banking corporation or trust
company, all statutes, rules, regulations and policy state-
ments pertaining to the conduct of a banking, deposit-
taking, lending or related business, or to the exercise of
trust powers) and governing instruments applicable to them
and to the conduct of their business, and (ii) neither
Seller nor any Seller Subsidiary is in default under, and no
event has occurred which, with the lapse of time or notice
or both, could result in the default under, the terms of any
judgment, order, writ, decree, permit, or license of any
Regulatory Authority or court, whether federal, state,
municipal, or local and whether at law or in equity. Except
for liabilities which individually or in the aggregate would
not have a material adverse effect on the Condition of
Seller and its Subsidiaries, taken as a whole, neither
Seller nor any Seller Subsidiary is subject to or reasonably
likely to incur a liability as a result of its ownership,
operation, or use of any Property (as defined below) of
Seller (whether directly or, to the best knowledge of
Seller, as a consequence of such Property being part of the
investment portfolio of Seller or any Seller Subsidiary) (A)
that is contaminated by or contains any hazardous waste,
toxic substance, or related materials, including without
limitation asbestos, PCBs, pesticides, herbicides, and any
other substance or waste that is hazardous to human health
or the environment (collectively, a "Toxic Substance"), or
(B) on which any Toxic Substance has been stored, disposed
of, placed, or used in the construction thereof. "Property"
of a person shall include all property (real or personal,
tangible or intangible) owned or controlled by such person,
including without limitation property under foreclosure,
property held by such person or any Subsidiary of such
person in its capacity as a trustee and property in which
any venture capital or similar unit of such person or any
Subsidiary of such person has an interest. No claim,
action, suit, or proceeding is pending against Seller or any
Seller Subsidiary relating to Property of Seller before any
court or other Regulatory Authority or arbitration tribunal
relating to hazardous substances, pollution, or the
environment, and there is no outstanding judgment, order,
writ, injunction, decree, or award against or affecting
Seller or any Seller Subsidiary with respect to the same.
Except for statutory or regulatory restrictions of general
application, no Regulatory Authority has placed any restric-
tion on the business of Seller or any Seller Subsidiary
which reasonably could be expected to have a material
adverse effect on the Condition of Seller and its
Subsidiaries, taken as a whole.
(c) From and after January 1, 1992, neither Seller
nor any Seller Subsidiary has received any notification or
communication which has not been resolved from any Regulatory
Authority (i) asserting that any Seller or any Subsidiary of
Seller, is not in substantial compliance with any of the stat-
utes, regulations or ordinances that such Regulatory Authority
enforces, except with respect to matters which (A) are set
forth on Schedule 2.13(c) or in any writing previously fur-
nished to Buyer or (B) reasonably could not be expected to
have a material adverse effect on the Condition of Seller and
its Subsidiaries, taken as a whole, (ii) threatening to revoke
any license, franchise, permit or governmental authorization
that is material to the Condition of Seller and its Subsidiar-
ies, taken as a whole, including without limitation such
company's status as an insured depositary institution under
the Federal Deposit Insurance Act, or (iii) requiring or
threatening to require Seller or any of its Subsidiaries, or
indicating that Seller or any of its Subsidiaries may be
required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting
or limiting or purporting to direct, restrict or limit in any
manner the operations of Seller or any of its Subsidiaries,
including without limitation any restriction on the payment of
dividends. No such cease and desist order, agreement or
memorandum of understanding or other agreement is currently in
effect.
(d) Neither Seller nor any Seller Subsidiary is
required by Section 32 of the Federal Deposit Insurance Act
to give prior notice to any federal banking agency of the
proposed addition of an individual to its board of directors
or the employment of an individual as a senior executive of-
ficer.
2.14. Labor. No work stoppage involving Seller or
any Seller Subsidiary, is pending or, to the best knowledge of
Seller, threatened. Neither Seller nor any Seller Subsidiary
is involved in, or, to the best knowledge of Seller,
threatened with or affected by, any labor dispute, arbitra-
tion, lawsuit or administrative proceeding which reasonably
could be expected to have a material adverse affect on the
Condition of Seller and its Subsidiaries, taken as a whole.
Employees of neither Seller nor any Seller Subsidiary, are
represented by any labor union or any collective bargaining
organization.
2.15. Material Interests of Certain Persons. (h)
Except as set forth in Seller's Proxy Statement for its 1995
Annual Meeting of Stockholders, to the best knowledge of
Seller, no officer or director of Seller or any Subsidiary
of Seller, or any "associate" (as such term is defined in
Rule l4a-1 under the Exchange Act) of any such officer or
director, has any material interest in any material contract
or property (real or personal, tangible or intangible), used
in, or pertaining to the business of, Seller or any
Subsidiary of Seller, which in the case of Seller is
required to be disclosed by Item 404 of Regulation S-K
promulgated by the SEC or in the case of any such Subsidiary
would be required to be so disclosed if such Subsidiary had
a class of securities registered under Section 12 of the
Exchange Act.
(b) Except as set forth in Seller's Proxy State-
ment for its 1995 Annual Meeting of Stockholders or on
Schedule 2.15B, as of June 30, 1995, there are no loans from
Seller or any Seller Subsidiary to any present officer, di-
rector, employee or any associate or related interest of any
such person which was or would be required under any rule or
regulation to be approved by or reported to Seller's or
Seller Subsidiary's Board of Directors ("Insider Loans"),
and no Insider Loans in excess of $500,000 have been made
since June 30, 1995. All outstanding Insider Loans from
Seller or any Seller Subsidiary were approved by or reported
to the appropriate board of directors in accordance with
applicable law and regulations.
2.16. Allowance for Loan and Lease Losses; Non-
performing Assets. (i) The allowances for loan and lease
losses contained in the Seller Financial Statements were es-
tablished in accordance with the past practices and expe-
riences of Seller and its Subsidiaries, and the allowance
for loan losses shown on the consolidated condensed balance
sheet of Seller and its Subsidiaries contained in the most
recent Seller Form 10-Q is adequate in all material respects
under the requirements of GAAP to provide for possible
losses on loans (including without limitation accrued
interest receivable) and credit commitments (including
without limitation stand-by letters of credit) outstanding
as of the date of such balance sheet.
(b) The aggregate amount of all Nonperforming
Assets (as defined below) on the books of Seller and its
Subsidiaries does not exceed $5,498,000. "Nonperforming
Assets" shall mean (i) all loans and leases (A) that are
contractually past due 90 days or more in the payment of
principal and/or interest, (B) that are on nonaccrual status,
(C) where the interest rate terms have been reduced and/or the
maturity dates have been extended subsequent to the agreement
under which the loan was originally created due to concerns
regarding the borrower's ability to pay in accordance with
such initial terms, (D) that have been classified "doubtful",
"loss" or the equivalent thereof by any Regulatory Authority,
and (ii) all assets classified as real estate acquired through
foreclosure or repossession and other assets acquired through
foreclosure or repossession.
2.17. Employee Benefit Plans. (a) Except as set
forth in Schedule 2.17A, neither Seller nor any Seller Sub-
sidiary is a party to any existing employment, management,
consulting, deferred compensation, change-in-control or
other similar contract. "Seller Employee Plans" means all
pension, retirement, supplemental retirement, savings,
profit sharing, stock option, stock purchase, stock
ownership, stock appreciation right, deferred compensation,
consulting, bonus, medical, disability, workers'
compensation, vacation, group insurance, severance and other
material employee benefit, incentive and welfare policies,
contracts, plans and arrangements, and all trust agreements
related thereto, maintained (currently or at any time in the
last five years) by or contributed to by Seller or any
Seller Subsidiary in respect of any of the present or former
directors, officers, or other employees of and/or
consultants to Seller or any Seller Subsidiary. Schedule
2.17A lists all Seller Employee Plans currently in effect.
Seller has furnished Buyer with the following documents with
respect to each Seller Employee Plan: (i) a true and
complete copy of all written documents comprising such
Seller Employee Plan (including amendments and individual
agreements relating thereto) or, if there is no such written
document, an accurate and complete description of the Seller
Employee Plan; (ii) the most recent Form 5500 or Form 5500-C
(including all schedules thereto), if applicable; (iii) the
most recent financial statements and actuarial reports, if
any; (iv) the summary plan description currently in effect
and all material modifications thereof, if any; and (v) the
most recent Internal Revenue Service determination letter,
if any. Without limiting the generality of the foregoing,
Seller has furnished Buyer with true and complete copies of
each form of stock option grant or stock option agreement
that is outstanding under any stock option plan of Seller or
any Seller Subsidiary.
(b) Except as set forth in Schedule 2.17A, all
Seller Employee Plans have been maintained and operated ma-
terially in accordance with their terms and with the
material requirements of all applicable statutes, orders,
rules and final regulations, including without limitation
ERISA and the Internal Revenue Code. All contributions
required to be made to Seller Employee Plans have been made.
(c) With respect to each of the Seller Employee
Plans which is a pension plan (as defined in Section 3(2) of
ERISA) (the "Pension Plans"): (i) each Pension Plan which
is intended to be "qualified" within the meaning of Section
401(a) of the Internal Revenue Code has been determined to
be so qualified by the Internal Revenue Service and, to the
knowledge of Seller, such determination letter may still be
relied upon, and each related trust is exempt from taxation
under Section 501(a) of the Internal Revenue Code; (ii) the
present value of all benefits vested and all benefits
accrued under each Pension Plan which is subject to Title IV
of ERISA, valued using the assumptions in the most recent
actuarial report, did not, in each case, as of the last ap-
plicable annual valuation date (as indicated on Schedule
2.17A), exceed the value of the assets of the Pension Plan
allocable to such vested or accrued benefits; (iii) to the
best knowledge of Seller, there has been no "prohibited
transaction," as such term is defined in Section 4975 of the
Internal Revenue Code or Section 406 of ERISA, which could
subject any Pension Plan or associated trust, or the Seller
or any Seller Subsidiary, to any material tax or penalty;
(iv) except as set forth on Schedule 2.17C, no Pension Plan
subject to Title IV of ERISA or any trust created thereunder
has been terminated, nor have there been any "reportable
events" with respect to any Pension Plan, as that term is
defined in Section 4043 of ERISA on or after January 1,
1985; and (v) no Pension Plan or any trust created
thereunder has incurred any "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA
(whether or not waived). No Pension Plan is a "multi-
employer plan" as that term is defined in Section 3(37) of
ERISA. With respect to each Pension Plan that is described
in Section 4063(a) of ERISA (a "Multiple Employer Pension
Plan"): (i) neither Seller nor any Seller Subsidiary would
have any liability or obligation to post a bond under
Section 4063 of ERISA if Seller and all Seller Subsidiaries
were to withdraw from such Multiple Employer Pension Plan;
and (ii) neither Seller nor any Seller Subsidiary would have
any liability under Section 4064 of ERISA if such Multiple
Employer Pension Plan were to terminate.
(d) Except as set forth on Schedule 2.17D,
neither Seller nor any Seller Subsidiary has any liability
for any post-retirement health, medical or similar benefit
of any kind whatsoever, except as required by statute or
regulation.
(e) Neither Seller nor any Seller Subsidiary has
any material liability under ERISA or the Internal Revenue
Code as a result of its being a member of a group described
in Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code.
(f) Except as set forth on Schedule 2.17F,
neither the execution nor delivery of this Agreement, nor
the consummation of any of the transactions contemplated
hereby, will (i) result in any material payment (including
without limitation severance, unemployment compensation or
golden parachute payment) becoming due to any director or
employee of Seller or any Seller Subsidiary from any of such
entities, (ii) materially increase any benefit otherwise
payable under any of the Seller Employee Plans or (iii)
result in the acceleration of the time of payment of any
such benefit. No holder of an option to acquire stock of
Seller has or will have at any time through the Effective
Time the right to receive any cash or other payment (other
than the issuance of stock of Seller) in exchange for or
with respect to all or any portion of such option. Seller
shall use its best efforts to insure that no amounts paid or
payable by Seller, Seller Subsidiaries or Buyer to or with
respect to any employee or former employee of Seller or any
Seller Subsidiary will fail to be deductible for federal
income tax purposes by reason of Section 280G of the
Internal Revenue Code. No Seller Employee Stock Option has
an associated "Additional Option Right" or similar "re-load"
feature.
2.18. Conduct of Seller to Date. From and after
January 1, 1995 through the date of this Agreement, except
as set forth on Schedule 2.18 or in Seller Financial
Statements: (i) Seller and the Seller Subsidiaries have
conducted their respective businesses in the ordinary and
usual course consistent with past practices; (ii) Seller has
not issued, sold, granted, conferred or awarded any of its
Equity Securities (except shares of Seller Common Stock upon
exercise of Seller Employee Stock Options), or any corporate
debt securities which would be classified under GAAP as
long-term debt on the balance sheets of Seller; (iii) Seller
has not effected any stock split or adjusted, combined,
reclassified or otherwise changed its capitalization; (iv)
Seller has not declared, set aside or paid any dividend
(other than its regular quarterly or regular semi-annual
common dividends) or other distribution in respect of its
capital stock, or purchased, redeemed, retired, repurchased,
or exchanged, or otherwise acquired or disposed of, directly
or indirectly, any of its Equity Securities, whether
pursuant to the terms of such Equity Securities or
otherwise; (v) neither Seller nor any Seller Subsidiary has
incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or
liabilities incurred in the ordinary course of business, or
subjected to Lien any of its assets or properties other than
in the ordinary course of business consistent with past
practice; (vi) neither Seller nor any Seller Subsidiary has
discharged or satisfied any material Lien or paid any
material obligation or liability (absolute or contingent),
other than in the ordinary course of business; (vii) neither
Seller nor any Seller Subsidiary has sold, assigned,
transferred, leased, exchanged, or otherwise disposed of any
of its properties or assets other than for a fair consider-
ation in the ordinary course of business; (viii) except as
required by contract or law, neither Seller nor any Seller
Subsidiary has (A) increased the rate of compensation of, or
paid any bonus to, any of its directors, officers, or other
employees, except merit or promotion increases in accordance
with existing policy, (B) entered into any new, or amended
or supplemented any existing, employment, management,
consulting, deferred compensation, severance, or other
similar contract, (C) entered into, terminated, or sub-
stantially modified any of the Seller Employee Plans or (D)
agreed to do any of the foregoing; (ix) neither Seller nor
any Seller Subsidiary has suffered any material damage, de-
struction, or loss, whether as the result of fire, explo-
sion, earthquake, accident, casualty, labor trouble, requi-
sition, or taking of property by any Regulatory Authority,
flood, windstorm, embargo, riot, act of God or the enemy, or
other casualty or event, and whether or not covered by
insurance; (x) neither Seller nor any Seller Subsidiary has
cancelled or compromised any debt, except for debts charged
off or compromised in accordance with the past practice of
Seller and its Subsidiaries, and (xi) neither Seller nor any
Seller Subsidiary has entered into any material transaction,
contract or commitment outside the ordinary course of its
business.
2.19. Proxy Statement, etc. None of the informa-
tion regarding Seller or any Seller Subsidiary supplied or
to be supplied by Seller for inclusion or included in (i)
the registration statement on Form S-4 to be filed with the
SEC by Buyer for the purpose of registering the shares of
Buyer Common Stock to be exchanged for shares of Seller
Common Stock pursuant to the provisions of this Agreement
(the "Registration Statement"), (ii) the proxy or
information statement (the "Proxy Statement") to be mailed
to Seller's stockholders in connection with the transactions
contemplated by this Agreement or (iii) any other documents
to be filed with any Regulatory Authority in connection with
the transactions contemplated hereby will, at the respective
times such documents are filed with any Regulatory Authority
and, in the case of the Registration Statement, when it
becomes effective and, with respect to the Proxy Statement,
when mailed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary
in order to make the statements therein not misleading or,
in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the meeting of
Seller's stockholders referred to in Section 5.03 (the
"Meeting") (or, if no Meeting is held, at the time the Proxy
Statement is first furnished to Seller's stockholders), be
false or misleading with respect to any material fact, or
omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the
solicitation of any proxy for the Meeting. All documents
which Seller or any Seller Subsidiary is responsible for
filing with any Regulatory Authority in connection with the
Merger will comply as to form in all material respects with
the provisions of applicable law.
2.20. Registration Obligations. Except as set
forth on Schedule 2.20, neither Seller nor any Seller Sub-
sidiary is under any obligation, contingent or otherwise to
register any of its securities under the Securities Act.
2.21. State Takeover Statutes. The transactions
contemplated by this Agreement are not subject to any appli-
cable state takeover law under the laws of the State of
Iowa.
2.22. Accounting, Tax and Regulatory Matters.
Neither Seller nor any Seller Subsidiary has taken or agreed
to take any action or has any knowledge of any fact or cir-
cumstance that would (i) prevent the transactions contem-
plated hereby from qualifying (A) for pooling-of-interests
accounting treatment or (B) as a reorganization within the
meaning of Section 368 of the Internal Revenue Code or (ii)
materially impede or delay receipt of any approval referred
to in Section 6.01(b) or the consummation of the
transactions contemplated by this Agreement.
2.23. Brokers and Finders. Except for Donaldson,
Lufkin & Jenrette Securities Corporation, neither Seller nor
any Seller Subsidiary nor any of their respective officers,
directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, bro-
kerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for Seller or any
Seller Subsidiary in connection with this Agreement or the
transactions contemplated hereby. Schedule 2.23 discloses a
bona fide estimate of the aggregate amount of all fees and
expenses expected to be paid by Seller to all attorneys, ac-
countants or investment bankers in connection with the
Merger ("Merger Fees").
2.24. Other Activities. (j) Except as set forth
on Schedule 2.24A, neither Seller nor any of its
Subsidiaries engages in any insurance activities other than
acting as a principal, agent or broker for insurance that is
directly related to an extension of credit by Seller or any
of its Subsidiaries and limited to assuring the repayment of
the balance due on the extension of credit in the event of
the death, disability or involuntary unemployment of the
debtor.
(b) Except as set forth on Schedule 2.24B, to the
knowledge of Seller's management: each Subsidiary that is a
bank that performs personal trust, corporate trust and other
fiduciary activities ("Trust Activities") has done so with
requisite authority under applicable law of Regulatory Au-
thorities and in material accordance with the agreements and
instruments governing such Trust Activities, sound fiduciary
principles and applicable law and regulation (specifically
including but not limited to Section 9 of Title 12 of the
Code of Federal Regulations); there is no investigation or
inquiry by any governmental entity pending or threatened
against Seller or any of its Subsidiaries thereof relating
to the compliance by Seller or any of its Subsidiaries with
sound fiduciary principles and applicable law and regula-
tions; and each employee of any such bank had the authority
to act in the capacity in which such employee acted with re-
spect to Trust Activities in each case in which such
employee was held out as a representative of such bank; and
such bank has established policies and procedures for the
purpose of complying with applicable laws of governmental
entities relating to Trust Activities, has followed such
policies and procedures in all material respects and has
performed appropriate internal audit reviews of Trust
Activities, which audits have disclosed no material viola-
tions of applicable laws of governmental entities or such
policies and procedures.
2.25. Interest Rate Risk Management Instruments.
(k) Set forth on Schedule 2.25A is a list of all interest
rate swaps, caps, floors, and option agreements and other
interest rate risk management arrangements to which Seller
or any of its Subsidiaries is a party or by which any of
their properties or assets may be bound.
(b) All interest rate swaps, caps, floors and op-
tion agreements and other interest rate risk management ar-
rangements to which Seller or any of its Subsidiaries is a
party or by which any of their properties or assets may be
bound were entered into in the ordinary course of business
and in accordance with prudent banking practice and appli-
cable rules, regulations and policies of Regulatory Authori-
ties and with counterparties believed to be financially re-
sponsible at the time and are legal, valid and binding obli-
gations and are in full force and effect. Seller and each
of its Subsidiaries has duly performed in all material
respects all of its obligations thereunder to the extent
that such obligations to perform have accrued, and there are
no material breaches, violations or defaults or allegations
or assertions of such by any party thereunder.
2.26. Accuracy of Information. The statements of
Seller contained in this Agreement, the Schedules and any
other written document executed and delivered by or on
behalf of Seller pursuant to the terms of this Agreement are
true and correct in all material respects, and such
statements and documents do not omit any material fact
necessary to make the statements contained therein not
misleading.
ARTICLE III
___________
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents, and warrants to and covenants
with Seller as follows:
3.01. Organization and Authority. Buyer and each
of its Subsidiaries is a corporation, bank, trust company or
other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of organization,
is duly qualified to do business and is in good standing in
all jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so
qualified and has corporate power and authority to own its
properties and assets and to carry on its business as it is
now being conducted, except, in the case of the Buyer
Subsidiaries, where the failure to be so qualified would not
have a material adverse effect on the Condition of Buyer and
its Subsidiaries, taken as a whole. Buyer is registered as
a bank holding company with the Board under the Holding
Company Act. True and complete copies of the Articles of
Incorporation and Bylaws of Buyer, each in effect on the
date of this Agreement, have been provided to Seller.
3.02. Capitalization of Buyer. The authorized
capital stock of Buyer consists of (i) 100,000,000 shares of
Buyer Common Stock, of which, as of July 31, 1995,
54,423,205 shares were issued and outstanding and (ii)
5,000,000 shares of preferred stock, no par value ("Buyer
Preferred Stock"), issuable in series, of which 5,306 shares
of Series B-1 Preferred Stock and 9,500 shares of Series B-2
Preferred Stock are issued or outstanding. Buyer has
designated 1,000,000 shares of Buyer Preferred Stock as
"Series A Junior Participating Preferred Stock" and has
reserved such shares under a Rights Agreement dated May 23,
1988 (the "Buyer Rights Agreement"), between Buyer and
Mercantile Bank of St. Louis National Association, as Rights
Agent. As of July 31, 1995 Buyer had reserved (i) 4,515,373
shares of Buyer Common Stock for issuance under various
stock option and incentive plans ("Buyer Stock Options"),
(ii) 322,000 shares of Buyer Common Stock for issuance upon
the acquisition of Security Bank of Conway, FSB ("Conway")
pursuant to an Agreement and Plan of Reorganization dated
July 7, 1995, (iii) 675,000 shares of Buyer Common Stock for
issuance upon the acquisition of Southwest Bancshares, Inc.
("Southwest") pursuant to an Agreement and Plan of Merger
dated January 27, 1995, (iv) 661,385 shares of Buyer Common
Stock for issuance upon the acquisition of AmeriFirst
Bancorporation Inc. ("AmeriFirst") pursuant to an Agreement
and Plan of Merger dated February 16, 1995, and (v) 521,424
shares of Buyer Common Stock for issuance upon the
acquisition of First Sterling Bancorp, Inc. ("Sterling")
pursuant to an Agreement and Plan of Merger dated July 24,
1995. From July 31, 1995 through the date of this
Agreement, no shares of Buyer Common Stock or other Equity
Securities of Buyer have been issued excluding any such
shares which may have been issued pursuant to stock-based
employee benefit or incentive plans and programs, or
pursuant to the foregoing agreements. Buyer continually
evaluates possible acquisitions and may prior to the Effec-
tive Time enter into one or more agreements providing for,
and may consummate, the acquisition by it of another bank,
association, bank holding company, savings and loan holding
company or other company (or the assets thereof) for consid-
eration that may include equity securities. In addition,
prior to the Effective Time, Buyer may, depending on market
conditions and other factors, otherwise determine to issue
equity, equity-linked or other securities for financing pur-
poses. Notwithstanding the foregoing, Buyer will not take
any action that would (i) prevent the transactions contem-
plated hereby from qualifying (A) for pooling-of-interests
accounting treatment or (B) as a reorganization within the
meaning of Section 368 of the Internal Revenue Code or (ii)
materially impede or delay receipt of any approval referred
to in Section 6.01(b) or the consummation of the
transactions contemplated by this Agreement. Except as set
forth above and except for securities to be issued in
connection with Buyer's pending acquisitions of Conway and
Sterling and except pursuant to the Buyer Rights Agreement,
there are no other Equity Securities of Buyer outstanding.
All of the issued and outstanding shares of Buyer Common
Stock are validly issued, fully paid, and nonassessable, and
have not been issued in violation of any preemptive right of
any stockholder of Buyer. At the Effective Time, the Buyer
Common Stock to be issued in the Merger will be duly
authorized, validly issued, fully paid and non-assessable,
and will not be issued in violation of any preemptive right
of any stockholder of Buyer.
3.03. Authorization. (l) Buyer has the
corporate power and authority to enter into this Agreement
and to carry out its obligations hereunder. No stockholder
vote is required for Buyer to approve this Agreement. The
execution, delivery and performance of this Agreement by
Buyer and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by all
requisite corporate action of Buyer. This Agreement is a
valid and binding obligation of Buyer enforceable against
Buyer in accordance with its terms.
(b) Neither the execution, delivery and perfor-
mance by Buyer of this Agreement, nor the consummation by
Buyer of the transactions contemplated hereby, nor
compliance by Buyer with any of the provisions hereof, will
(i) violate, conflict with or result in a breach of any
provisions of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a
default) or result in the termination of, or accelerate the
performance required by, or result in a right of termination
or acceleration of, or result in the creation of, any Lien
upon any of the material properties or assets of Buyer or
any Buyer Subsidiary under any of the terms, conditions or
provisions of (x) its articles or certificate of
incorporation or bylaws, or (y) any material note, bond,
mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Buyer
or any of the material properties or assets of Buyer is a
party or by which it may be bound, or to which Buyer may be
subject, or (ii) subject to compliance with the statutes and
regulations referred to in paragraph (c) of this Section
3.03, to the best knowledge of Buyer, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or any of its Subsidiaries or
any of their respective material properties or assets.
(c) Other than in connection with or in
compliance with the provisions of The General and Business
Corporation Law of Missouri (the "Missouri Act"), the Iowa
Act, the Securities Act, the Exchange Act, the securities or
blue sky laws of the various states or filings, consents,
reviews, authorizations, approvals or exemptions required
under the Holding Company Act, and the HSR Act, or any
required approvals of any other Regulatory Authority, no
notice to, filing with, exemption or review by, or authori-
zation, consent or approval of, any public body or authority
is necessary for the consummation by Buyer of the transac-
tions contemplated by this Agreement.
3.04. Buyer Financial Statements. The supple-
mental consolidated and parent company only balance sheets
of Buyer and its Subsidiaries as of December 31, 1994, 1993
and 1992 and related supplemental consolidated and parent
company only statements of income, cash flows and changes in
stockholders' equity for each of the three years in the
three-year period ended December 31, 1994, together with the
notes thereto, audited by KPMG Peat Marwick ("Buyer
Auditors") and included in Buyer's current report on Form 8-
K dated May 31, 1995 as filed with the SEC, and the
unaudited consolidated balance sheets of Buyer and its
Subsidiaries as of March 31 and June 30, 1995 and the
related unaudited consolidated statements of income and cash
flows for the periods then ended included in quarterly
reports on Form 10-Q as filed with the SEC (collectively,
the "Buyer Financial Statements"), have been prepared in
accordance with GAAP, present fairly the consolidated
financial position of Buyer and its Subsidiaries at the
dates and the consolidated results of operations, changes in
stockholders' equity and cash flows of Buyer and its
Subsidiaries for the periods stated therein and are derived
from the books and records of Buyer and its Subsidiaries,
which are complete and accurate in all material respects and
have been maintained in all material respects in accordance
with applicable laws and regulations. Neither Buyer nor any
of its Subsidiaries has any material contingent liabilities
that are not described in the financial statements described
above.
3.05. Buyer Reports. Since January 1, 1992, each
of Buyer and the Buyer Subsidiaries has filed all material
reports, registrations and statements, together with any re-
quired material amendments thereto, that it was required to
file with any Regulatory Authority. All such reports and
statements filed with any such Regulatory Authority are col-
lectively referred to herein as the "Buyer Reports." As of
its respective date, each Buyer Report complied in all mate-
rial respects with all the rules and regulations promulgated
by the applicable Regulatory Authority and did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the cir-
cumstances under which they were made, not misleading.
3.06. Material Adverse Change. Since December
31, 1994, there has been no material adverse change in the
Condition of Buyer and its Subsidiaries, taken as a whole,
except as may have resulted or may result from changes to
laws and regulations or changes in economic conditions
applicable to banking institutions generally or in general
levels of interest rates affecting banking institutions gen-
erally.
3.07. Compliance with Laws. (m) Each of Buyer
and its Subsidiaries has complied with all laws,
regulations, and orders (including without limitation zoning
ordinances, building codes, ERISA, and securities, tax,
environmental, civil rights, and occupational health and
safety laws and regulations and including without limitation
in the case of any Buyer Subsidiary that is a bank, banking
organization, thrift, banking corporation or trust company,
all statutes, rules and regulations, pertaining to the
conduct of a banking, deposit-taking or lending or related
business or to the exercise of trust powers) and governing
instruments applicable to them and to the conduct of their
business, except where such failure to comply would not have
a material adverse effect on the Condition of Buyer and its
Subsidiaries, taken as a whole, and (ii) neither Buyer nor
any Buyer Subsidiary is in default under, and no event has
occurred which, with the lapse of time or notice or both,
could result in the default under, the terms of any
judgment, order, writ, decree, permit, or license of any
Regulatory Authority or court, whether federal, state,
municipal, or local and whether at law or in equity, except
where such default would not have a material adverse effect
on the Condition of Buyer and its Subsidiaries, taken as a
whole. Neither Buyer nor any Buyer Subsidiary is subject to
or reasonably likely to incur a liability as a result of its
ownership, operation, or use of any Property of Buyer
(whether directly or, to the best knowledge of Buyer, as a
consequence of such Property being part of the investment
portfolio of Buyer or any Buyer Subsidiary) (A) that is
contaminated by or contains any Toxic Substance, or (B) on
which any Toxic Substance has been stored, disposed of,
placed, or used in the construction thereof; and which, in
each case, reasonably could be expected to have a material
adverse effect on the Condition of Buyer and its Subsidiar-
ies, taken as a whole. Except for statutory or regulatory
restrictions of general application, no Regulatory Authority
has placed any restriction on the business of Buyer or any
Buyer Subsidiary which reasonably could be expected to have
a material adverse effect on the Condition of Buyer and its
Subsidiaries, taken as a whole. No claim, action, suit, or
proceeding is pending against Buyer or any Buyer Subsidiary
relating to Property of Buyer before any court or other
Regulatory Authority or arbitration tribunal relating to
hazardous substances, pollution, or the environment, and
there is no outstanding judgment, order, writ, injunction,
decree, or award against or affecting Buyer or any Buyer
Subsidiary with respect to the same.
(b) Buyer and each of its Subsidiaries have all
permits, licenses, authorizations, orders and approvals of,
and have made all filings, applications and registrations
with, all Regulatory Authorities that are required in order
to permit them to own or lease their properties and assets
and to carry on their business as presently conducted and
that are material to the business of Buyer and its Subsid-
iaries; all such permits, licenses, certificates of author-
ity, orders and approvals are in full force and effect and,
to the best knowledge of Buyer, no suspension or
cancellation of any of them is threatened; and all such
filings, applications and registrations are current.
(c) From and after January 1, 1992, neither Buyer
nor any Buyer Subsidiary has received any notification or
communication which has not been resolved from any
Regulatory Authority (i) asserting that any Buyer or any
Subsidiary of Buyer, is not in substantial compliance with
any of the statutes, regulations or ordinances that such
Regulatory Authority enforces, except with respect to
matters which (A) are set forth on Schedule 3.07 or in any
writing previously furnished to Buyer or (B) reasonably
could not be expected to have a material adverse effect on
the Condition of Buyer and its Subsidiaries, taken as a
whole, (ii) threatening to revoke any license, franchise,
permit or governmental authorization that is material to the
Condition of Buyer and its Subsidiaries, taken as a whole,
including without limitation such company's status as an
insured depositary institution under the Federal Deposit
Insurance Act, or (iii) requiring or threatening to require
Buyer or any of its Subsidiaries, or indicating that Buyer
or any of its Subsidiaries may be required, to enter into a
cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting
or purporting to direct, restrict or limit in any manner the
operations of Buyer or any of its Subsidiaries, including
without limitation any restriction on the payment of
dividends. No such cease and desist order, agreement or
memorandum of understanding or other agreement is currently
in effect.
3.08. Registration Statement, etc. None of the in-
formation regarding Buyer or any of its Subsidiaries supplied
or to be supplied by Buyer for inclusion or included in (i)
the Registration Statement, (ii) the Proxy Statement, or (iii)
any other documents to be filed with any Regulatory Authority
in connection with the transactions contemplated hereby will,
at the respective times such documents are filed with any
Regulatory Authority and, in the case of the Registration
Statement, when it becomes effective and, with respect to the
Proxy Statement, when mailed (or furnished to stockholders of
Seller), be false or misleading with respect to any material
fact, or omit to state any material fact necessary in order to
make the statements therein not misleading or, in the case of
the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Meeting, be false or misleading
with respect to any material fact, or omit to state any mate-
rial fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy
for the Meeting. All documents which Buyer or any of its
Subsidiaries are responsible for filing with any Regulatory
Authority in connection with the Merger will comply as to form
in all material respects with the provisions of applicable
law.
3.09. Brokers and Finders. Neither Buyer nor any
of its Subsidiaries nor any of their respective officers,
directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, bro-
kerage fees, commissions or finder's fees, and no broker or
finder has acted directly or indirectly for Buyer or any of
its Subsidiaries in connection with this Agreement or the
transactions contemplated hereby.
3.10. Commitments and Contracts. Neither Buyer
nor any Buyer Subsidiary is in violation of its charter
documents or bylaws or in default under any material agree-
ment, commitment, arrangement, lease, insurance policy, or
other instrument, whether entered into in the ordinary
course of business or otherwise and whether written or oral,
and there has not occurred any event that, with the lapse of
time or giving of notice or both, would constitute such a
default, except, in all cases, where such default would not
have a material adverse effect on the Condition of Buyer and
its Subsidiaries, taken as a whole.
3.11. Litigation and Other Proceedings. Neither
Buyer nor any Buyer Subsidiary is a party to any pending or,
to the best knowledge of Buyer, threatened claim, action,
suit, investigation or proceeding, or is subject to any or-
der, judgment or decree, except for matters which, in the
aggregate, will not have, or reasonably could not be
expected to have, a material adverse effect on the Condition
of Buyer and its Subsidiaries, taken as a whole, or which
purports or seeks to enjoin or restrain the transactions
contemplated by this Agreement. Without limiting the
generality of the foregoing, there are no actions, suits, or
proceedings pending or, to the best knowledge of Buyer,
threatened against Buyer or any Buyer Subsidiary or any of
their respective officers or directors by any stockholder of
Buyer or any Buyer Subsidiary (or any former stockholder of
Buyer or any Buyer Subsidiary) or involving claims under the
Securities Act, the Exchange Act, the Community Reinvestment
Act of 1977, as amended, or the fair lending laws.
3.12. Interest Rate Risk Management Instruments.
All interest rate swaps, caps, floors and option agreements
and other interest rate risk management arrangements to
which Buyer or any of its Subsidiaries is a party or by
which any of their properties or assets may be bound were
entered into in the ordinary course of business and in
accordance with prudent banking practice and applicable
rules, regulations and policies of Regulatory Authorities
and with counterparties believed to be financially re-
sponsible at the time and are legal, valid and binding obli-
gations and are in full force and effect. Buyer and each of
its Subsidiaries has duly performed in all material respects
all of its obligations thereunder to the extent that such
obligations to perform have accrued, and there are no mate-
rial breaches, violations or defaults or allegations or as-
sertions of such by any party thereunder.
3.13. Taxes. Buyer and each Buyer Subsidiary have
timely filed or will timely (including extensions) file all
material tax returns required to be filed at or prior to the
Closing Date ("Buyer Returns"). Each of Buyer and its Subsid-
iaries has paid, or set up adequate reserves on the Buyer Fi-
nancial Statements for the payment of, all taxes required to
be paid in respect of the periods covered by such returns and
has set up adequate reserves on the most recent financial
statements Buyer has filed under the Exchange Act for the
payment of all taxes anticipated to be payable in respect of
all periods up to and including the latest period covered by
such financial statements. Neither Buyer nor any Buyer
Subsidiary will have any liability material to the Condition
of Buyer and the Buyer Subsidiaries, taken as a whole, for any
such taxes in excess of the amounts so paid or reserves so
established and no material deficiencies for any tax,
assessment or governmental charge have been proposed, asserted
or assessed (tentatively or definitely) against any of Buyer
or any Buyer Subsidiary which would not be covered by existing
reserves. Neither Buyer nor any Buyer Subsidiary is
delinquent in the payment of any material tax, assessment or
governmental charge, nor, except as previously disclosed, has
it requested any extension of time within which to file any
tax returns in respect of any fiscal year which have not since
been filed and no requests for waivers of the time to assess
any tax are pending. The federal and state income tax returns
of Buyer and the Buyer Subsidiaries have been audited and
settled by the Internal Revenue Service (the "IRS") or
appropriate state tax authorities for all periods ended
through December 31, 1988. There is no deficiency or material
refund litigation or matter in controversy with respect to
Buyer Returns. Neither Buyer nor any Buyer Subsidiary has
extended or waived any statute of limitations on the assess-
ment of any tax due that is currently in effect.
3.14. Accounting, Tax and Regulatory Matters. Nei-
ther Buyer nor any Buyer Subsidiary has taken or agreed to
take any action or has any knowledge of any fact or circum-
stance that would (i) prevent the transactions contemplated
hereby from qualifying (A) for pooling-of-interests accounting
treatment or (B) as a reorganization within the meaning of
Section 368 of the Internal Revenue Code or (ii) materially
impede or delay receipt of any approval referred to in Section
6.01(b) or the consummation of the transactions contemplated
by this Agreement.
3.15. Accuracy of Information. The statements of
Buyer contained in this Agreement, the Schedules and in any
other written document executed and delivered by or on behalf
of Buyer pursuant to the terms of this Agreement are true and
correct in all material respects, and such statements and
documents do not omit any material fact necessary to make the
statements contained herein or therein not misleading.
ARTICLE IV
__________
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.01. Conduct of Businesses Prior to the
Effective Time. During the period from the date of this
Agreement to the Effective Time, each of Buyer and Seller
shall, and shall cause each of their respective Subsidiaries
to, conduct its business according to the ordinary and usual
course consistent with past practices and shall, and shall
cause each such Subsidiary to, use its best efforts to
maintain and preserve its business organization, employees
and advantageous business relationships and retain the
services of its officers and key employees.
4.02. Forbearances. Except as set forth on
Schedule 4.02 or as otherwise contemplated by this
Agreement, during the period from the date of this Agreement
to the Effective Time, Seller shall not and shall not permit
any of its Subsidiaries to, without the prior written
consent of Buyer:
(a) declare, set aside or pay any dividends or
other distributions, directly or indirectly, in respect
of its capital stock (other than dividends from a Sub-
sidiary of Seller to Seller or another Subsidiary of
Seller), except that Seller may declare and pay cash
dividends on the Seller Common Stock of not more than
(x) for dividends payable in 1995, $.17 per share per
quarterly period and (y) for dividends payable in 1996,
per quarterly period, $.19 per share; provided, that
Seller shall not declare or pay any dividends on Seller
Common Stock for any period in which its stockholders
will be entitled to receive any regular quarterly divi-
dend on the shares of Buyer Common Stock to be issued
in the Merger; or,
(b) enter into or amend any employment, severance
or similar agreement or arrangement with any director
or officer or employee, or materially modify any of the
Seller Employee Plans or grant any salary or wage in-
crease or materially increase any employee benefit (in-
cluding incentive or bonus payments), except normal in-
dividual increases in compensation to employees consis-
tent with past practice, or as required by law or con-
tract; or,
(c) authorize, recommend (subject to the
fiduciary duties of Seller's Board of Directors, based
upon written advice of counsel to Seller, which counsel
is reasonably acceptable to Buyer), propose or announce
an intention to authorize, so recommend or propose, or
enter into an agreement in principle with respect to,
any merger, consolidation or business combination
(other than the Merger), any acquisition of a material
amount of assets or securities, any disposition of a
material amount of assets or securities or any release
or relinquishment of any material contract rights; or
(d) propose or adopt any amendments to its ar-
ticles of incorporation, association or other charter
document or bylaws; or
(e) issue, sell, grant, confer or award any of
its Equity Securities (except shares of Seller Common
Stock issued upon exercise of Seller Employee Stock
Options outstanding on the date of this Agreement) or
effect any stock split or adjust, combine, reclassify
or otherwise change its capitalization as it existed on
the date of this Agreement; or
(f) purchase, redeem, retire, repurchase, or ex-
change, or otherwise acquire or dispose of, directly or
indirectly, any of its Equity Securities, whether pur-
suant to the terms of such Equity Securities or other-
wise; or
(g) (i) without first consulting with Buyer, en-
ter into, renew or increase any loan or credit commit-
ment (including stand-by letters of credit) to, or in-
vest or agree to invest in any person or entity or
modify any of the material provisions or renew or oth-
erwise extend the maturity date of any existing loan or
credit commitment (collectively, "Lend to") in an
amount in excess of $1,500,000 or in an amount which,
or when aggregated with any and all loans or credit
commitments to such person or entity, would be in
excess of $1,500,000; (ii) without first obtaining the
written consent of Buyer, lend to any person or entity
in an amount in excess of $3,000,000 or in an amount
which, when aggregated with any and all loans or credit
commitments to such person or entity, would be in
excess of $3,000,000; (iii) Lend to any person other
than in accordance with lending policies as in effect
on the date hereof; provided that in the case of
clauses (ii) and (iii) Seller or any Seller Subsidiary
may make any such loan in the event (A) Seller or any
Seller Subsidiary has delivered to Buyer or its
designated representative a notice of its intention to
make such loan and such information as Buyer or its
designated representative may reasonably require in
respect thereof and (B) Buyer or its designated
representative shall not have reasonably objected to
such loan by giving written or facsimile notice of such
objection within two business days following the
delivery to Buyer of the notice of intention and
information as aforesaid; or (iv) Lend to any person
or entity any of the loans or other extensions of
credit to which or investments in which are on a "watch
list" or similar internal report of Seller or any
Seller Subsidiary (except those denoted "pass"
thereon), in an amount in excess of $500,000; provided,
however, that nothing in this paragraph shall prohibit
Seller or any Seller Subsidiary from honoring any con-
tractual obligation in existence on the date of this
Agreement. Notwithstanding clauses (i) and (ii) of
this Section 4.02(g), Seller shall be authorized
without first consulting with Buyer or obtaining
Buyer's prior written consent, to increase the
aggregate amount of any credit facilities theretofore
established in favor of any person or entity (each a
"Pre-Existing Facility"), provided that the aggregate
amount of any and all such increases with respect to
any Pre-Existing Facility shall not be in excess of the
lesser of ten percent (10%) of such Pre-Existing
Facility or $250,000; or
(h) directly or indirectly (including through its
officers, directors, employees or other
representatives) initiate, solicit or encourage any
discussions, inquiries or proposals with any third
party relating to the disposition of any significant
portion of the business or assets of Seller or any
Seller Subsidiary or the acquisition of Equity
Securities of Seller or any Seller Subsidiary or the
merger of Seller or any Seller Subsidiary with any
person (other than Buyer) or any similar transaction
(each such transaction being referred to herein as an
"Acquisition Transaction"), or provide any such person
with information or assistance or negotiate with any
such person with respect to an Acquisition Transaction,
and Seller shall promptly notify Buyer orally of all
the relevant details relating to all inquiries,
indications of interest and proposals which it may
receive with respect to any Acquisition Transaction; or
(i) take any action that would (A) materially
impede or delay the consummation of the transactions
contemplated by this Agreement or the ability of Buyer or
Seller to obtain any approval of any Regulatory Authority
required for the transactions contemplated by this
Agreement or to perform its covenants and agreements
under this Agreement or (B) prevent the transactions
contemplated hereby from qualifying as a reorganization
within the meaning of Section 368 of the Internal Revenue
Code; or
(j) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for
borrowed money, assume, guarantee, endorse or otherwise
as an accommodation become responsible or liable for the
obligations of any other individual, corporation or other
entity, or, without prior approval of Buyer, which shall
not be unreasonably withheld, pay any Merger Fees in ex-
cess of the amount set forth on Schedule 2.23; or
(k) restructure or materially change its investment
securities portfolio, through purchases, sales or other-
wise, or the manner in which the portfolio is classified
or reported, or execute any individual investment trans-
action (i) in United States Treasury securities in excess
of $5,000,000 and (ii) in any other investment securities
in excess of $1,000,000; or
(l) agree in writing or otherwise to take any of
the foregoing actions or engage in any activity, enter
into any transaction or take or omit to take any other
act which would make any of the representations and
warranties in Article II of this Agreement untrue or
incorrect in any material respect if made anew after
engaging in such activity, entering into such transac-
tion, or taking or omitting such other act.
ARTICLE V
_________
ADDITIONAL AGREEMENTS
5.01. Access and Information. (n) Buyer and its
Subsidiaries, on the one hand, and Seller and its Subsidiar-
ies, on the other hand, shall each afford to each other, and
to the other's accountants, counsel and other representa-
tives, full access during normal business hours, during the
period prior to the Effective Time, to all their respective
properties, books, contracts, commitments and records and,
during such period, each shall furnish promptly to the other
(i) a copy of each report, schedule and other document filed
or received by it during such period pursuant to the re-
quirements of federal and state securities laws and (ii) all
other information concerning its business, properties and
personnel as such other party may reasonably request. Each
party hereto shall, and shall cause its advisors and repre-
sentatives to, (A) hold confidential all information
obtained in connection with any transaction contemplated
hereby with respect to the other party which is not
otherwise public knowledge, (B) return all documents
(including copies thereof) obtained hereunder from the other
party to such other party and (C) use its best efforts to
cause all information obtained pursuant to this Agreement or
in connection with the negotiation of this Agreement to be
treated as confidential and not use, or knowingly permit
others to use, any such information unless such information
becomes generally available to the public.
(b) Each party promptly following the date of
this Agreement shall commence its review of the other and
the respective operations, business affairs, prospects and
financial conditions of each, including, without limitation,
those matters which are the subject of Seller's representa-
tions and warranties (the "Due Diligence Review"). Each
party shall conclude such review by not later than thirty
(30) business days after the date of this Agreement (the
"Due Diligence Period"), but the pendency of such Due
Diligence Review shall not delay Buyer's obligation pursuant
to Section 5.02 of this Agreement to file a Registration
Statement with the SEC and all other necessary applications
and filings with the appropriate federal and state
regulatory agencies. Each party shall promptly advise the
other of any situation, event, circumstance of other matter
which first came to the attention of such party after the
date hereof which could result in the termination of this
Agreement pursuant to Section 7.01 hereof, or, if
applicable, of the absence of any situation, event,
circumstance or other matter. Notwithstanding anything
herein or implied to the contrary, the Due Diligence Review
shall not limit, restrict or preclude, or be construed to
limit, restrict or preclude, either party, at any time or
from time to time thereafter, from conducting such further
reviews or from exercising any rights available to it here-
under as a result of the existence or occurrence prior to
the Due Diligence Period of any event or condition which was
not detected in the Due Diligence Review and which would
constitute a breach of any representation, warranty or
agreement under this Agreement.
5.02. Registration Statement; Regulatory Matters.
(o) Buyer shall prepare and, subject to the review and
consent of Seller with respect to matters relating to Seller,
file with the SEC as soon as is reasonably practicable the
Registration Statement (or the equivalent in the form of
preliminary proxy material) with respect to the shares of
Buyer Common Stock to be issued in the Merger. Buyer shall
prepare and file an application with the Federal Reserve Board
as soon as reasonably practicable. Buyer shall use all
reasonable efforts to cause the Registration Statement to
become effective. Buyer shall also take any action required
to be taken under any applicable state blue sky or securities
laws in connection with the issuance of such shares, and
Seller and its Subsidiaries shall furnish Buyer all
information concerning Seller and its Subsidiaries and the
stockholders thereof as Buyer may reasonably request in
connection with any such action.
(b) Seller and Buyer shall cooperate and use
their respective best efforts to prepare all documentation,
to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Regu-
latory Authorities necessary to consummate the transactions
contemplated by this Agreement and, as and if directed by
Buyer, to consummate such other mergers, consolidations or
asset transfers or other transactions by and among Buyer's
Subsidiaries and Seller's Subsidiaries concurrently with or
following the Effective Time.
5.03. Stockholder Approval. Seller shall call a
meeting of its stockholders to be held as soon as
practicable for the purpose of voting upon the Merger or
take other action for stockholders to authorize the Merger.
In connection therewith, Buyer shall prepare the Proxy
Statement and, with the approval of each of Buyer and
Seller, the Proxy Statement shall be filed with the SEC and
mailed to the stockholders of Seller. The Board of
Directors of Seller shall submit for approval of Seller's
stockholders the matters to be voted upon in order to
authorize the Merger. The Board of Directors of Seller
hereby does and (subject to the fiduciary duties of Seller's
Board of Directors, based upon written advice of counsel to
Seller, which counsel is reasonably acceptable to Buyer)
will recommend this Agreement and the transactions
contemplated hereby to stockholders of Seller and will use
its best efforts to obtain any vote of Seller's stockholders
that is necessary for the approval and adoption of this
Agreement and consummation of the transactions contemplated
hereby.
5.04. Current Information. During the period
from the date of this Agreement to the Effective Time, each
party shall promptly furnish the other with copies of all
monthly and other interim financial information or reports
as the same become available and shall cause one or more of
its designated representatives to confer on a regular and
frequent basis with representatives of the other party.
Each party shall promptly notify the other party of any
material change in its business or operations and of any
governmental complaints, investigations or hearings (or
communications indicating that the same may be
contemplated), or the institution or the threat of material
litigation involving such party, and shall keep the other
party fully informed of such events.
5.05. Agreements of Affiliates. As soon as prac-
ticable after the date of this Agreement, Seller shall de-
liver to Buyer a letter identifying all persons whom Seller
believes to be, at the time this Agreement is submitted to a
vote of the stockholders of Seller, "affiliates" of Seller
for purposes of Rule 145 under the Securities Act. Seller
shall use its best efforts to cause each person who is so
identified as an "affiliate" to deliver to Buyer as soon as
practicable thereafter, and in any event no later than the
publication of notice in the Federal Register of Buyer's ap-
plication with the Federal Reserve Board referred to in Sec-
tion 5.02, a written agreement providing that from the date
of such agreement each such person will agree not to sell,
pledge, transfer or otherwise dispose of any shares of stock
of Seller held by such person or any shares of Buyer Common
Stock to be received by such person in the Merger except in
compliance with the applicable provisions of the Securities
Act and until such time as financial results covering at
least 30 days of combined operations of Buyer and Seller
shall have been published. Prior to the Effective Time,
Seller shall amend and supplement such letter and use its
best efforts to cause each additional person who is identi-
fied as an "affiliate" to execute a written agreement as set
forth in this Section 5.05.
5.06. Expenses. Each party hereto shall bear its
own expenses incident to preparing, entering into and carry-
ing out this Agreement and to consummating the Merger.
5.07. Miscellaneous Agreements and Consents. (a)
Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its respective best efforts
to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as
expeditiously as possible, including without limitation
using its respective best efforts to lift or rescind any
injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the
transactions contemplated hereby. Each party shall, and
shall cause each of its respective subsidiaries to, use its
best efforts to obtain consents of all third parties and
Regulatory Authorities necessary or, in the opinion of
Buyer, desirable for the consummation of the transactions
contemplated by this Agreement.
(b) Seller, prior to the Effective Time, shall
(i) consult and cooperate with Buyers regarding the
implementation of those policies and procedures established
by Buyer for its governance and that of its Subsidiaries and
not otherwise referenced in Section 5.16 hereof, including,
without limitation, policies and procedures pertaining to
the accounting, asset/liability management, audit, credit,
human resources, treasury and legal functions, and (ii) at
the request of Buyer, conform Seller's existing policies and
procedures in respect of such matters to Buyer's policies
and procedures or, in the absence of any existing Seller
policy or procedure regarding any such function, introduce
Buyer's policies or procedures in respect thereof, unless to
do so would cause Seller or any of the Seller Subsidiaries
to be in violation of any law, rule or regulation of any
Regulatory Authority having jurisdiction over Seller and/or
the Seller Subsidiary affected thereby.
5.08. Employee Benefits. (p) The provisions of
the Seller Stock Plans and of any other plan, program or ar-
rangement providing for the issuance or grant of any other
interest in respect of the capital stock of Seller or any
Seller Subsidiary shall be deleted and terminated as of the
Effective Time, and Seller shall ensure that following the
Effective Time no holder of Seller Employee Stock Options or
any participant in any Seller Stock Plan shall have any
right thereunder to acquire any securities of Seller or any
Seller Subsidiary.
(b) Except as set forth in Section 5.08(a)
hereof, the Seller Employee Plans shall not be terminated by
reason of the Merger but shall continue thereafter as plans
of the Surviving Corporation until such time as the
employees of the Seller and the Seller Subsidiaries are
integrated into Buyer's employee benefit plans that are
available to other employees of Buyer and Buyer
Subsidiaries, subject to the terms and conditions specified
in such plans and to such changes therein as may be
necessary to reflect the consummation of the Merger. Buyer
shall take such steps as are necessary or required to
integrate the employees of Seller and the Seller
Subsidiaries in Buyer's employee benefit plans available to
other employees of Buyer and Buyer Subsidiaries as soon as
practicable after the Effective Time, with (i) full credit
for prior service with Seller or any of the Seller
Subsidiaries for purposes of vesting and eligibility for
participation (but not benefit accruals under any defined
benefit plan), and co-payments and deductibles, and (ii)
waiver of all waiting periods and pre-existing condition ex-
clusions or penalties.
5.09. Employee Stock Options. At the Effective
Time, all rights with respect to Seller Common Stock pursuant
to Seller Employee Stock Options that are outstanding at the
Effective Time, whether or not then exercisable, shall be con-
verted into and become rights with respect to Buyer Common
Stock, and Buyer shall assume each Seller Employee Stock
Option in accordance with the terms of the stock option plan
under which it was issued and the stock option agreement by
which it is evidenced. From and after the Effective Time, (i)
each Seller Employee Stock Option assumed by Buyer shall be
exercised solely for shares of Buyer Common Stock, (ii) the
number of shares of Buyer Common Stock subject to each Seller
Employee Stock Option shall be equal to the number of shares
of Seller Common Stock subject to such Seller Employee Stock
Option immediately prior to the Effective Time multiplied by
the Exchange Ratio and (iii) the per share exercise price
under each Seller Employee Stock Option shall be adjusted by
dividing the per share exercise price under such Seller
Employee Stock Option by the Exchange Ratio and rounding down
to the nearest cent; provided, however, that the terms of each
Seller Employee Stock Option shall, in accordance with its
terms, be subject to further adjustment as appropriate to
reflect any stock split, stock dividend, recapitalization or
other similar transaction subsequent to the Effective Time.
It is intended that the foregoing assumption shall be under-
taken in a manner that will not constitute a "modification" as
defined in the Internal Revenue Code, as to any Seller Em-
ployee Stock Option that is an "incentive stock option."
5.10. Press Releases. Except as may be required
by law, Seller and Buyer shall consult and agree with each
other as to the form and substance of any proposed press re-
lease relating to this Agreement or any of the transactions
contemplated hereby.
5.11. State Takeover Statutes. Seller will take
all steps necessary to exempt the transactions contemplated
by this Agreement and any agreement contemplated hereby
from, and if necessary challenge the validity of, any
applicable state takeover law.
5.12. D&O Indemnification. Buyer agrees that the
Merger shall not affect or diminish any of Seller's duties
and obligations of indemnification existing as of the Effec-
tive Time in favor of employees, agents, directors or offic-
ers of Seller or its Subsidiaries arising by virtue of their
respective Articles of Incorporation or Bylaws in the form
in effect at the date of this Agreement or arising by
operation of law or arising by virtue of any contract,
resolution or other agreement or document existing at the
date of this Agreement, and such duties and obligations
shall continue in full force and effect for so long as they
would (but for the Merger) otherwise survive and continue in
full force and effect.
5.13. Best Efforts. Each of Buyer and Seller un-
dertakes and agrees to use its best efforts to cause the
Merger (i) to qualify (A) for pooling-of-interests
accounting treatment and (B) as a reorganization within the
meaning of Section 368 of the Internal Revenue Code
(including, if necessary, to take reasonable steps to
restructure the transactions contemplated by this Agreement
to so qualify) and (ii) to occur as soon as practicable.
Each of Buyer and Seller agrees to not take any action that
would materially impede or delay the consummation of the
transactions contemplated by this Agreement or the ability
of Buyer or Seller to obtain any approval of any Regulatory
Authority required for the transactions contemplated by this
Agreement or to perform its covenants and agreements under
this Agreement.
5.14. Insurance. As soon as practicable
following the date hereof, Seller shall, and Seller shall
cause its Subsidiaries to, use its best efforts to maintain
its existing insurance and, if not already obtained, obtain
(and maintain through the Effective Time) insurance with
respect to employee benefit matters and umbrella insurance
in respect of automobile fleet coverage for amounts as
reasonably requested by Buyer with financially sound and
reputable insurance companies.
5.15. Bank Minority Shares. As soon as reason-
ably practicable, Seller shall use all reasonable efforts to
cooperate with Buyer in respect of each person holding
capital stock of any of the Banks (other than Seller or any
of the Seller Subsidiaries), whether as qualifying shares or
otherwise, with the goal of purchasing such shares at any
time and/or from time to time, at a price reasonably
acceptable to Buyer.
5.16. Conforming Entries. (a) Notwithstanding
that Seller believes that Seller and the Seller Subsidiaries
have established all reserves and taken all provisions for
possible loan losses required by GAAP and applicable laws,
rules and regulations, Seller recognizes that Buyer may have
adopted different loan, accrual and reserve policies (in-
cluding loan classifications and levels of reserves for pos-
sible loan losses). From and after the date of this Agree-
ment to the Effective Time, Seller and Buyer shall consult
and cooperate with each other with respect to conforming the
loan, accrual and reserve policies of Seller and the Seller
Subsidiaries to those policies of Buyer, as specified in
each case in writing to Seller, based upon such consultation
and as hereinafter provided.
(b) In addition, from and after the date of this
Agreement to the Effective Time, Seller and Buyer shall con-
sult and cooperate with each other with respect to determin-
ing appropriate Seller accruals, reserves and charges to es-
tablish and take in respect of excess equipment write-off or
write-down of various assets and other appropriate charges
and accounting adjustments taking into account the parties'
business plans following the Merger, as specified in each
case in writing to Seller, based upon such consultation and
as hereinafter provided.
(c) Seller and Buyer shall consult and cooperate
with each other with respect to determining, as specified in
a written notice from Buyer to Seller, based upon such con-
sultation and as hereinafter provided, the amount and the
timing for recognizing for financial accounting purposes
Seller's expenses of the Merger and the restructuring
charges relating to or to be incurred in connection with the
Merger.
(d) At the request of Buyer, Seller shall (i) es-
tablish and take such reserves and accruals as Buyer shall
request to conform Seller's loan, accrual and reserve poli-
cies to Buyer's policies, and (ii) establish and take such
accruals, reserves and charges in order to implement such
policies in respect of excess facilities and equipment ca-
pacity, severance costs, litigation matters, write-off or
write-down of various assets and other appropriate
accounting adjustments, and to recognize for financial
accounting purposes such expenses of the Merger and
restructuring charges related to or to be incurred in
connection with the Merger, in each case at such times as
are requested by Buyer in a written notice to Seller, in
accordance with the following objective. It is the
objective of Buyer and Seller that such reserves, accruals
and charges referred to in this Section 5.16 to be taken as
at or immediately prior to December 31, 1995, provided that
if such reserves, accruals and charges are to be taken as at
or prior to December 31, 1995 and the Closing Date is to
occur thereafter, Buyer shall certify to Seller on or prior
to December 31, 1995, that the bank regulatory approval
conditions to its obligations contemplated by Section
6.01(b) have been satisfied or waived (except to the extent
that any waiting period associated therewith may then have
commenced but not expired) and Buyer and Seller shall have
mutually agreed by December 31, 1995 to the scheduling of
the Closing Date; and provided, further, that Seller shall
not be required to take any such action that is not consis-
tent with GAAP.
5.17. Environmental Reports. Seller shall
provide to Buyer as soon as reasonably practicable, but not
later than ninety (90) days after the date hereof, a report
of a phase one environmental investigation on all real
property owned, leased or operated by Seller or any of the
Seller Subsidiaries as of the date hereof (but excluding
"other real estate owned," property held in trust or in a
fiduciary capacity and space in retail or similar
establishments leased by Seller or any of the Seller
Subsidiaries for automatic teller machines or bank branch
facilities where the space leased comprises less than 20% of
the total space leased to all tenants of such property) and
within ten (10) days after the acquisition or lease of any
real property acquired or leased by Seller or any of the
Seller Subsidiaries after the date hereof (but excluding
space in retail and similar establishments leased by Seller
or any of the Seller Subsidiaries for automatic teller ma-
chines or bank branch facilities where the space leased com-
prises less than 20% of the total space leased to all
tenants of such property). If advisable in light of the
phase one report with respect to any parcel of real property
referred to above, in the reasonable opinion of Buyer,
Seller shall also provide to Buyer a phase two investigation
report on such designated parcels. Buyer shall have fifteen
(15) business days from the receipt of any such phase two
investigation report to notify Seller of any dissatisfaction
with the contents of such report. If the estimated costs of
all remedial or other corrective actions or measures with
regard to the real properties referred to above required by
applicable law exceed $5,000,000 in the aggregate, as
reasonably estimated by an environmental expert retained for
such purpose by Seller, at Seller's expense, upon Buyer's
reasonable request, or if such cost cannot be so reasonably
estimated by such expert to be such amount or less with any
reasonable degree of certainty, then Buyer, after providing
Seller with written notice of Buyer's intent to do so and
allowing Seller a six-month period from the date of such no-
tice to take and complete, to the reasonable satisfaction of
Buyer, all such remedial or other corrective actions and
measures (the aggregate cost of which incurred by Seller
and the Seller Subsidiaries shall not exceed $5,000,000),
shall have the right pursuant to Section 7.01(h) hereof to
terminate this Agreement, which shall be Buyer's sole remedy
in such event.
ARTICLE VI
__________
CONDITIONS
6.01. Conditions to Each Party's Obligation To
Effect the Merger. The respective obligations of each party
to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following
conditions:
(a) This Agreement shall have received the requi-
site approval of stockholders of Seller.
(b) All requisite approvals of this Agreement and
the transactions contemplated hereby shall have been
received from the Federal Reserve Board, the State Bank
Regulator and any other Regulatory Authority.
(c) The Registration Statement shall have been
declared effective and shall not be subject to a stop
order or any threatened stop order.
(d) Neither Seller nor Buyer shall be subject to
any order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the
consummation of the Merger.
(e) Each of Buyer and Seller shall have received,
from counsel reasonably satisfactory to it, an opinion
reasonably satisfactory in form and substance to it to
the effect that the Merger will constitute a reorgani-
zation within the meaning of Section 368 of the
Internal Revenue Code and that no gain or loss will be
recognized by the stockholders of Seller to the extent
they receive Buyer Common Stock solely in exchange for
shares of Seller Common Stock.
6.02. Conditions to Obligations of Seller To Effect
the Merger. The obligations of Seller to effect the Merger
shall be subject to the fulfillment or waiver at or prior to
the Effective Time of the following additional conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Buyer set forth in Article
III of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and
as of the Effective Time (as though made on and as of
the Effective Time except (i) to the extent such repre-
sentations and warranties are by their express provi-
sions made as of a specified date or period and (ii)
for the effect of transactions contemplated by this
Agreement) and Seller shall have received a certificate
of the chairman or chief financial officer of Buyer to
that effect.
(b) Performance of Obligations. Buyer shall have
performed in all material respects all obligations re-
quired to be performed by it under this Agreement prior
to the Effective Time, and Seller shall have received a
certificate of the chairman or chief financial officer
of Buyer to that effect.
6.03. Conditions to Obligations of Buyer To
Effect the Merger. The obligations of Buyer to effect the
Merger shall be subject to the fulfillment or waiver at or
prior to the Effective Time of the following additional
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Seller set forth in
Article II of this Agreement shall be true and correct
in all material respects as of the date of this
Agreement and as of the Effective Time (as though made
on and as of the Effective Time except (i) to the
extent such representations and warranties are by their
express provisions made as of a specific date or period
and (ii) for the effect of transactions contemplated by
this Agreement) and Buyer shall have received a
certificate of the chairman of Seller and a
certificate of the president and chief executive
officer of Seller to that effect.
(b) Performance of Obligations. Seller shall
have performed in all material respects all obligations
required to be performed by it under this Agreement
prior to the Effective Time, and Buyer shall have
received a certificate of the chairman of Seller and a
certificate of the president and chief executive
officer of Seller to that effect.
(c) Auditors' Opinion. Buyer shall have received
an opinion of Buyer Auditors addressed to Buyer, satis-
factory in form and substance to Buyer, that the Merger
will qualify for pooling-of-interests accounting treat-
ment, which opinion shall not have been withdrawn.
ARTICLE VII
___________
TERMINATION, AMENDMENT AND WAIVER
7.01. Termination. This Agreement may be termi-
nated at any time prior to the Effective Time, whether
before or after any requisite stockholder approval:
(a) by mutual consent by the Executive Committee
of the Board of Directors of Buyer and the Board of Di-
rectors of Seller;
(b) by the Executive Committee of the Board of
Directors of Buyer or the Board of Directors of Seller
at any time after the date that is twelve months after
the date of this Agreement if the Merger shall not
theretofore have been consummated (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement
contained herein);
(c) by the Executive Committee of the Board of
Directors of Buyer or the Board of Directors of Seller
if (i) the Federal Reserve Board has denied approval of
the Merger and such denial has become final and nonap-
pealable or (ii) stockholders of Seller shall not have
approved this Agreement at the Meeting following a fa-
vorable recommendation of Seller's Board of Directors;
(d) by the Executive Committee of the Board of
Directors of Buyer in the event of a material breach by
Seller of any representation, warranty, covenant or
other agreement contained in this Agreement, which
breach is not cured within 30 days after written notice
thereof to Seller by Buyer;
(e) by the Executive Committee of the Board of
Directors of Buyer in the event that (i) Buyer's Due
Diligence Review of Seller and its Subsidiaries dis-
closes matters the impact of which affects Seller and
its Subsidiaries, taken as a whole, except as may have
resulted from changes to laws and regulations or
changes in economic conditions applicable to banking
institutions generally, or in general interest rates
that affect Seller and its Subsidiaries, taken as a
whole, consistent with the manner in which changes in
the general levels of interest rates since December 31,
1994 have affected Seller and its Subsidiaries, taken
as a whole, which the Executive Committee of the Board
of Directors of Buyer in the good faith exercise of its
reasonable judgment believes either (A) to be inconsis-
tent in any material and adverse respect with any of
the representations or warranties of Seller, or (B) (x)
to be of such significance as to materially and
adversely affect the Condition of Seller and its
Subsidiaries, taken as a whole, or (y) to deviate
materially and adversely from the financial statements
for the year ended December 31, 1994 of Seller, (ii)
Buyer notifies Seller of such matters within 5 business
days of the expiration of the Due Diligence Period, and
(iii) such matters (A) are not capable of being cured
or (B) have not been cured within 30 days after written
notice thereof to Seller by Buyer;
(f) by the Board of Directors of Seller in the
event that (i) Seller's Due Diligence Review of Buyer and
its Subsidiaries discloses matters the impact of which
affects Buyer and its Subsidiaries, taken as a whole, ex-
cept as may have resulted from changes to laws and regu-
lations or changes in economic conditions applicable to
banking institutions generally, or in general levels of
interest rates that affect Buyer and its Subsidiaries,
taken as a whole, consistent with the manner in which
changes in the general levels of interest rates since De-
cember 31, 1994 has affected Buyer and its Subsidiaries,
taken as a whole, which the Board of Directors of Seller
in the good faith exercise of its reasonable judgment be-
lieve either (A) to be inconsistent in any material and
adverse respect with any of the representations or war-
ranties of Buyer, or (B) (x) to be of such significance
as to materially and adversely affect the Condition of
Buyer and its Subsidiaries, taken as a whole, or (y) to
deviate materially and adversely from the financial
statement for the year ended December 31, 1994 of Buyer,
(ii) Seller notifies Buyer of such matters within 5
business days of the expiration of the Due Diligence
Period, and (iii) such matters (A) are not capable of
being cured or (B) have not been cured within 30 days
after written notice thereof to Buyer;
(g) by the Board of Directors of Seller in the
event of a material breach by Buyer of any
representation, warranty, covenant or other agreement
contained in this Agreement, which breach is not cured
within 30 days after written notice thereof is given to
Buyer by Seller; or
(h) by the Executive Committee of the Board of Di-
rectors of Buyer pursuant to and in accordance with the
provisions of Section 5.17 hereof.
7.02. Effect of Termination. In the event of ter-
mination of this Agreement as provided in Sections 7.01(a)
through 7.01(c) and Sections 7.01(e), 7.01(f) and 7.01(h)
above, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Buyer or
Seller or their respective officers or directors except as set
forth in the second sentence of Section 5.01(a) and in Section
5.06.
7.03. Amendment. This Agreement and the
Schedules hereto may be amended by the parties hereto, by
action taken by or on behalf of their respective Boards of
Directors, at any time before or after approval of this
Agreement by the stockholders of Seller; provided, however,
that after any such approval by the stockholders of Seller
no such modification shall alter or change the amount or
kind of consideration to be received by holders of Seller
Common Stock as provided in this Agreement. This Agreement
may not be amended except by an instrument in writing signed
on behalf of each of Buyer and Seller.
7.04. Severability. Any term, provision,
covenant or restriction contained in this Agreement held by
a court or a Regulatory Authority of competent jurisdiction
to be invalid, void or unenforceable, shall be ineffective
to the extent of such invalidity, voidness or
unenforceability, but neither the remaining terms,
provisions, covenants or restrictions contained in this
Agreement nor the validity or enforceability thereof in any
other jurisdiction shall be affected or impaired thereby.
Any term, provision, covenant or restriction contained in
this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is
enforceable.
7.05. Waiver. Any term, condition or provision
of this Agreement may be waived in writing at any time by
the party which is, or whose stockholders are, entitled to
the benefits thereof.
ARTICLE VIII
____________
GENERAL PROVISIONS
8.01. Non-Survival of Representations, Warranties
and Agreements. No investigation by the parties hereto made
heretofore or hereafter shall affect the representations and
warranties of the parties which are contained herein and
each such representation and warranty shall survive such
investigation. Except as set forth below in this Section
8.01, all representations, warranties and agreements in this
Agreement of Buyer and Seller or in any instrument delivered
by Buyer or Seller pursuant to or in connection with this
Agreement shall expire at the Effective Time or upon
termination of this Agreement in accordance with its terms
or, in the case of any other such instrument, in accordance
with the terms of such instrument. In the event of
consummation of the Merger, the agreements contained in or
referred to in Sections 5.02(b), 5.07, 5.08, 5.09 and 5.12
shall survive the Effective Time. In the event of
termination of this Agreement in accordance with its terms,
the agreements contained in or referred to in the second
sentence of Section 5.01(a), Section 5.06 and Section 7.02
shall survive such termination.
8.02. Notices. All notices and other communica-
tions hereunder shall be in writing and shall be deemed to
be duly received (i) on the date given if delivered
personally or (ii) upon confirmation of receipt, if by
facsimile transmission or (iii) on the date received if
mailed by registered or certified mail (return receipt
requested), or (iv) on the business date after being
delivered to a reputable overnight delivery service, if by
such service, to the parties at the following addresses (or
at such other address for a party as shall be specified by
like notice):
(i) if to Buyer:
Mercantile Bancorporation Inc.
Mercantile Tower
P.O. Box 524
St. Louis, Missouri 63166-0524
Attention: John W. Rowe
Executive Vice President,
Mercantile Bank of St. Louis,
National Association
Copies to:
Jon W. Bilstrom, Esq.
General Counsel
Mercantile Bancorporation Inc.
Mercantile Tower
P.O. Box 524
St. Louis, Missouri 63166-0524
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Edward D. Herlihy, Esq.
Telecopy: (212) 403-2000
(ii) if to Seller:
Hawkeye Bancorporation
222 Equitable Building
604 Locust Street
Des Moines, Iowa 50309-3723
Attention: Robert W. Murray
President and Chief Executive
Officer
Copies to:
Baird, Holm, McEachen, Pedersen,
Hamann & Strasheim
1500 Woodmen Tower
Omaha, Nebraska 68102-2068
Attention: John S. Zeilinger, Esq.
8.03. Miscellaneous. This Agreement (including
the Schedules and other written documents referred to herein
or provided hereunder) (i) constitutes the entire agreement
and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof,
including any confidentiality agreement between the parties
hereto, (ii) is not intended to confer upon any person not a
party hereto any rights or remedies hereunder, (iii) shall
not be assigned by operation of law or otherwise and (iv)
shall be governed in all respects by the laws of the State
of Missouri, except as otherwise specifically provided
herein or required by the Iowa Act. Nothing in this
Agreement shall be construed to require any party (or any
subsidiary or affiliate of any party) to take any action or
fail to take any action in violation of applicable law, rule
or regulation. This Agreement may be executed in
counterparts which together shall constitute a single
agreement.
IN WITNESS WHEREOF, Buyer and Seller have caused
this Agreement to be signed and, by such signature, acknowl-
edged by their respective officers thereunto duly
authorized, and such signatures to be attested to by their
respective officers thereunto duly authorized, all as of the
date first written above.
Attest: MERCANTILE BANCORPORATION INC.
______
/s/ Jon W. Bilstrom By:/s/ Thomas H. Jacobsen
___________________ ______________________
Name: Jon W. Bilstrom Name: Thomas H. Jacobsen
Title: General Counsel Title: Chairman, President &
Chief Executive Officer
Attest: HAWKEYE BANCORPORATION
______
/s/ R. Douglas Fisher By: /s/ Robert W. Murray
_____________________ _____________________
Name: R. Douglas Fisher Name: Robert W. Murray
Title: Senior Vice President, Title: Chief Executive Officer,
Credit Administration Chief Operating Officer &
Secretary Chief Financial Officer
STOCK OPTION AGREEMENT
______________________
STOCK OPTION AGREEMENT ("Option Agreement") dated
August 4, 1995, between MERCANTILE BANCORPORATION INC.
("Buyer"), a Missouri corporation registered as a bank hold-
ing company under the Bank Holding Company Act of 1956, as
amended (the "Holding Company Act"), and HAWKEYE BANCORPORA-
TION ("Seller"), an Iowa corporation registered as a bank
holding company under the Holding Company Act.
W I T N E S S E T H:
___________________
WHEREAS, the Executive Committee of the Board of
Directors of Buyer and the Board of Directors of Seller have
approved an Agreement and Plan of Reorganization dated as of
even date herewith (the "Merger Agreement") providing for
the merger of Seller with and into a wholly owned subsidiary
of Buyer;
WHEREAS, as a condition to Buyer's entering into
the Merger Agreement, Buyer has required that Seller agree,
and Seller has agreed, to grant to Buyer the option set
forth herein to purchase authorized but unissued shares of
Seller Common Stock;
NOW, THEREFORE, in consideration of the premises
herein contained, the parties agree as follows:
1. Definitions.
___________
Capitalized terms used but not defined herein
shall have the same meanings as in the Merger Agreement.
2. Grant of Option.
_______________
Subject to the terms and conditions set forth
herein, Seller hereby grants to Buyer an option (the "Op-
tion") to purchase up to 2,678,000 authorized and unissued
shares of Seller Common Stock at a price of $22 per share
(the "Purchase Price") payable in cash as provided in
Section 4 hereof.
3. Exercise of Option.
__________________
(a) Buyer may exercise the Option, in whole or in
part, at any time or from time to time if a Purchase Event
(as defined below) shall have occurred; provided, however,
that (i) to the extent the Option shall not have been exer-
cised, it shall terminate and be of no further force and ef-
fect upon the earliest to occur of the Effective Time of the
Merger and the termination of the Merger Agreement in ac-
cordance with Sections 7.01(a) through 7.01(c) thereof, pro-
vided that if such termination follows an Extension Event
(as defined below), the Option shall not terminate until the
date that is 12 months following such termination; (ii) if
the Option cannot be exercised on such day because of any
injunction, order or similar restraint issued by a court of
competent jurisdiction, the Option shall expire on the 30th
business day after such injunction, order or restraint shall
have been dissolved or when such injunction, order or re-
straint shall have become permanent and no longer subject to
appeal, as the case may be; and (iii) that any such exercise
shall be subject to compliance with applicable law,
including the Holding Company Act.
(b) As used herein, a "Purchase Event" shall mean
any of the following events:
(i) Seller or any of its Subsidiaries, without
having received prior written consent from Buyer, shall
have entered into, authorized, recommended, proposed or
publicly announced its intention to enter into, autho-
rize, recommend, or propose, an agreement, arrangement
or understanding with any person (other than Buyer or
any of its Subsidiaries) to (A) effect a merger or con-
solidation or similar transaction involving Seller or
any of its Subsidiaries, (B) purchase, lease or other-
wise acquire 15% or more of the assets of Seller or any
of its Subsidiaries or (C) purchase or otherwise
acquire (including by way of merger, consolidation,
share exchange or similar transaction) Beneficial
Ownership of securities representing 10% or more of the
voting power of Seller or any of its Subsidiaries;
(ii) any person (other than Buyer or any
Subsidiary of Buyer, or Seller or any Subsidiary of
Seller in a fiduciary capacity) shall have acquired
Beneficial Ownership or the right to acquire Beneficial
Ownership of 10% or more of the voting power of Seller;
or
(iii) Seller's Board of Directors shall have with-
drawn or modified in a manner adverse to Buyer the rec-
ommendation of Seller's Board of Directors with respect
to the Merger Agreement, in each case after an
Extension Event; or
(iv) the holders of Seller Common Stock shall not
have approved the Merger Agreement at the Meeting, or
such Meeting shall not have been held or shall have
been cancelled prior to termination of the Merger
Agreement in accordance with its terms, in each case
after an Extension Event.
(c) As used herein, the term "Extension Event"
shall mean any of the following events:
(i) a Purchase Event of the type specified in
clauses (b)(i) and (b)(ii) above;
(ii) any person (other than Buyer or any of its
Subsidiaries) shall have "commenced" (as such term is
defined in Rule 14d-2 under the Exchange Act), or shall
have filed a registration statement under the
Securities Act with respect to, a tender offer or
exchange offer to purchase shares of Seller Common
Stock such that, upon consummation of such offer, such
person would have Beneficial Ownership (as defined
below) or the right to acquire Beneficial Ownership of
10% or more of the voting power of Seller; or,
(iii) any person (other than Buyer or any
Subsidiary of Buyer, or Seller or any Subsidiary of
Seller in a fiduciary capacity) shall have publicly
announced its willingness, or shall have publicly
announced a proposal, or publicly disclosed an
intention to make a proposal, (x) to make an offer de-
scribed in clause (ii) above or (y) to engage in a
transaction described in clause (i) above.
(d) As used herein, the terms "Beneficial Owner-
ship" and "Beneficially Own" shall have the meanings
ascribed to them in Rule 13d-3 under the Exchange Act.
(e) In the event Buyer wishes to exercise the Op-
tion, it shall deliver to Seller a written notice (the date
of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it intends to pur-
chase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60
calendar days from the Notice Date for the closing of such
purchase (the "Closing Date").
4. Payment and Delivery of Certificates.
____________________________________
(a) At the closing referred to in Section 3
hereof, Buyer shall pay to Seller the aggregate purchase
price for the shares of Seller Common Stock purchased pursu-
ant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by
Seller.
(b) At such closing, simultaneously with the de-
livery of cash as provided in Section 4(a), Seller shall de-
liver to Buyer a certificate or certificates representing
the number of shares of Seller Common Stock purchased by
Buyer, registered in the name of Buyer or a nominee
designated in writing by Buyer, and Buyer shall deliver to
Seller a letter agreeing that Buyer shall not offer to sell,
pledge or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) If at the time of issuance of any Seller Com-
mon Stock pursuant to any exercise of the Option, Seller
shall have issued any share purchase rights or similar secu-
rities to holders of Seller Common Stock, then each such
share of Seller Common Stock shall also represent rights
with terms substantially the same as and at least as
favorable to Buyer as those issued to other holders of
Seller Common Stock.
(d) Certificates for Seller Common Stock
delivered at any closing hereunder shall be endorsed with a
restrictive legend which shall read substantially as
follows:
The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Hawkeye Bancorporation, a copy of which is on file
at the principal office of Hawkeye Bancorporation,
and to resale restrictions arising under the Secu-
rities Act of 1933 and any applicable state secu-
rities laws. A copy of such agreement will be
provided to the holder hereof without charge upon
receipt by Hawkeye Bancorporation of a written re-
quest therefor.
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without
such legend if Buyer shall have delivered to Seller an
opinion of counsel, in form and substance reasonably
satisfactory to Seller and its counsel, to the effect that
such legend is not required for purposes of the Securities
Act and any applicable state securities laws.
5. Authorization, etc.
__________________
(a) Seller hereby represents and warrants to
Buyer that:
(i) Seller has full corporate authority to
execute and deliver this Option Agreement and, subject
to Section 11(i), to consummate the transactions
contemplated hereby;
(ii) such execution, delivery and consummation
have been authorized by the Board of Directors of
Seller, and no other corporate proceedings are
necessary therefor;
(iii) this Option Agreement has been duly and val-
idly executed and delivered and represents a valid and
legally binding obligation of Seller, enforceable
against Seller in accordance with its terms; and
(iv) Seller has taken all necessary corporate ac-
tion to authorize and reserve and, subject to Section
11(i), permit it to issue and, at all times from the
date hereof through the date of the exercise in full or
the expiration or termination of the Option, shall have
reserved for issuance upon exercise of the Option,
shares of Seller Common Stock, all of
which, upon issuance pursuant hereto, shall be duly
authorized, validly issued, fully paid and nonassess-
able, and shall be delivered free and clear of all
claims, liens, encumbrances, restrictions (other than
federal and state securities restrictions) and security
interests and not subject to any preemptive rights.
(b) Buyer hereby represents and warrants to
Seller that:
(i) Buyer has full corporate authority to execute
and deliver this Option Agreement and, subject to Sec-
tion 11(i), to consummate the transactions contemplated
hereby;
(ii) such execution, delivery and consummation
have been authorized by all requisite corporate action
by Buyer, and no other corporate proceedings are
necessary therefor;
(iii) this Option Agreement has been duly and val-
idly executed and delivered and represents a valid and
legally binding obligation of Buyer, enforceable
against Buyer in accordance with its terms; and
(iv) any Seller Common Stock or other securities
acquired by Buyer upon exercise of the Option will not
be taken with a view to the public distribution thereof
and will not be transferred or otherwise disposed of
except in compliance with the Securities Act.
6. Adjustment upon Changes in Capitalization.
__________________________________________
In the event of any change in Seller Common Stock
by reason of stock dividends, split-ups, recapitalizations
or the like, the type and number of shares subject to the
Option, and the purchase price per share, as the case may
be, shall be adjusted appropriately. In the event that any
additional shares of Seller Common Stock are issued after
the date of this Option Agreement (other than pursuant to an
event described in the preceding sentence or pursuant to
this Option Agreement), the number of shares of Seller
Common Stock subject to the Option shall be adjusted so
that, after such issuance, it equals at least 19.9% of the
number of shares of Seller Common Stock then issued and
outstanding (without considering any shares subject to or
issued pursuant to the Option).
7. Repurchase.
__________
(a) Subject to Section 11(i), at the request of
Buyer at any time commencing upon the occurrence of a Pur-
chase Event and ending 13 months immediately thereafter (the
"Repurchase Period"), Seller (or any successor entity
thereof) shall repurchase the Option from Buyer together
with all (but not less than all, subject to Section 10)
shares of Seller Common Stock purchased by Buyer pursuant
thereto with respect to which Buyer then has Beneficial
Ownership, at a price (per share, the "Per Share Repurchase
Price") equal to the sum of:
(i) The exercise price paid by Buyer for any
shares of Seller Common Stock acquired pursuant to the
Option;
(ii) The difference between (A) the "Market/Tender
Offer Price" for shares of Seller Common Stock (defined
as the higher of (x) the highest price per share at
which a tender or exchange offer has been made for
shares of Seller Common Stock or (y) the highest
closing mean of the "bid" and the "ask" price per share
of Seller Common Stock reported by NASDAQ, the
automated quotation system of the National Association
of Securities Dealers, Inc., for any day within that
portion of the Repurchase Period which precedes the
date Buyer gives notice of the required repurchase
under this Section 7) and (B) the exercise price as
determined pursuant to Section 2 hereof (subject to
adjustment as provided in Section 6), multiplied by the
number of shares of Seller Common Stock with respect to
which the Option has not been exercised, but only if
the Market/Tender Offer Price is greater than such
exercise price;
(iii) The difference between the Market/Tender
Offer Price and the exercise price paid by Buyer for
any shares of Seller Common Stock purchased pursuant to
the exercise of the Option, multiplied by the number of
shares so purchased, but only if the Market/Tender
Offer Price is greater than such exercise price; and
(iv) Buyer's reasonable out-of-pocket expenses in-
curred in connection with the transactions contemplated
by the Merger Agreement, including, without limitation,
legal, accounting and investment banking fees.
(b) In the event Buyer exercises its rights under
this Section 7, Seller shall, within 10 business days there-
after, pay the required amount to Buyer by wire transfer of
immediately available funds to an account designated by
Buyer and Buyer shall surrender to Seller the Option and
the certificates evidencing the shares of Seller Common
Stock purchased thereunder with respect to which Buyer then
has Beneficial Ownership, and Buyer shall warrant that it
has sole record and Beneficial Ownership of such shares and
that the same are free and clear of all liens, claims,
charges, restrictions and encumbrances of any kind
whatsoever.
(c) In determining the Market/Tender Offer Price,
the value of any consideration other than cash shall be de-
termined by an independent nationally recognized investment
banking firm selected by Buyer and reasonably acceptable to
Seller.
8. Repurchase at Option of Seller and First Re-
____________________________________________
fusal.
_____
(a) Except to the extent that Buyer shall have
previously exercised its rights under Section 7, at the re-
quest of Seller during the six-month period commencing 13
months following the first occurrence of a Purchase Event,
Seller may repurchase from Buyer, and Buyer shall sell to
Seller, all (but not less than all, subject to Section 10)
of the Seller Common Stock acquired by Buyer pursuant hereto
and with respect to which Buyer has Beneficial Ownership at
the time of such repurchase at a price per share equal to
the greater of (i) 110% of the Market/Tender Offer Price per
share, (ii) the Per Share Repurchase Price or (iii) the sum
of (A) the aggregate Purchase Price of the shares so repur-
chased plus (B) interest on the aggregate Purchase Price
paid for the shares so repurchased from the date of purchase
to the date of repurchase at the highest rate of interest
announced by Buyer as its prime or base lending or reference
rate during such period, less any dividends received on the
shares so repurchased, plus (C) Buyer's reasonable out-of-
pocket expenses incurred in connection with the transactions
contemplated by the Merger Agreement, including, without
limitation, legal, accounting and investment banking fees.
Any repurchase under this Section 8(a) shall be consummated
in accordance with Section 7(b).
(b) If, at any time after the occurrence of a
Purchase Event and prior to the earlier of (i) the
expiration of 18 months immediately following such Purchase
Event or (ii) the expiration or termination of the Option,
Buyer shall desire to sell, assign, transfer or otherwise
dispose of the Option or all or any of the shares of Seller
Common Stock acquired by it pursuant to the Option, it shall
give Seller written notice of the proposed transaction (an
"Offeror's Notice"), identifying the proposed transferee,
and setting forth the terms of the proposed transaction. An
Offeror's Notice shall be deemed an offer by Buyer to
Seller, which may be accepted within 10 business days of
the receipt of such Offeror's Notice, on the same terms and
conditions and at the same price at which Buyer is proposing
to transfer the Option or such shares to a third party. The
purchase of the Option or any such shares by Seller shall be
closed within 10 business days of the date of the acceptance
of the offer and the purchase price shall be paid to Buyer
by wire transfer of immediately available funds to an
account designated by Buyer. In the event of the failure or
refusal of Seller to purchase the Option or all the shares
covered by the Offeror's Notice or if the Board or any other
Regulatory Authority disapproves Seller's proposed purchase
of the Option or such shares, Buyer may, within 60 days from
the date of the Offeror's Notice, sell all, but not less
than all, of the Option or such shares to such third party
at no less than the price specified and on terms no more
favorable to the purchaser than those set forth in the
Offeror's Notice. The requirements of this Section 8(b)
shall not apply to (i) any disposition as a result of which
the proposed transferee would Beneficially Own not more than
2% of the voting power of Seller or (ii) any disposition of
Seller Common Stock by a person to whom Buyer has sold
shares of Seller Common Stock issued upon exercise of the
Option.
9. Registration Rights.
___________________
At any time after a Purchase Event, Seller shall,
if requested by any holder or beneficial owner of shares of
Seller Common Stock issued upon exercise of the Option (ex-
cept any beneficial holder who acquired all of such holder's
shares in a transaction exempt from the requirements of Sec-
tion 8(b) by reason of clause (i) thereof) (each a
"Holder"), as expeditiously as possible file a registration
statement on a form for general use under the Securities Act
if necessary in order to permit the sale or other
disposition of the shares of Seller Common Stock that have
been acquired upon exercise of the Option in accordance with
the intended method of sale or other disposition requested
by any such Holder (it being understood and agreed that any
such sale or other disposition shall be effected on a widely
distributed basis so that, upon consummation thereof, no
purchaser or transferee shall Beneficially Own more than 2%
of the shares of Seller Common Stock then outstanding).
Each such Holder shall provide all information reasonably
requested by Seller for inclusion in any registration
statement to be filed hereunder. Seller shall use its best
efforts to cause such registration statement first to become
effective and then to remain effective for such period not
in excess of 180 days from the day such registration
statement first becomes effective as may be reasonably
necessary to effect such sales or other dispositions. The
registration effected under this Section 9 shall be at
Seller's expense except for underwriting commissions and the
fees and disbursements of such Holders' counsel attributable
to the registration of such Seller Common Stock. In no
event shall Seller be required to effect more than one
registration hereunder. The filing of the registration
statement hereunder may be delayed for such period of time
as may reasonably be required to facilitate any public
distribution by Seller of Seller Common Stock or if a
special audit of Seller would otherwise be required in
connection therewith. If requested by any such Holder in
connection with such registration, Seller shall become a
party to any underwriting agreement relating to the sale of
such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting
agreements for parties similarly situated. Upon receiving
any request for registration under this Section 9 from any
Holder, Seller agrees to send a copy thereof to any other
person known to Seller to be entitled to registration rights
under this Section 9, in each case by promptly mailing the
same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
10. Severability.
____________
Any term, provision, covenant or restriction con-
tained in this Option Agreement held by a court or a Regula-
tory Authority of competent jurisdiction to be invalid, void
or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions con-
tained in this Option Agreement nor the validity or enforce-
ability thereof in any other jurisdiction shall be affected
or impaired thereby. Any term, provision, covenant or re-
striction contained in this Option Agreement that is so
found to be so broad as to be unenforceable shall be
interpreted to be as broad as is enforceable. If for any
reason such court or Regulatory Authority determines that
applicable law will not permit Buyer or any other person to
acquire, or Seller to repurchase or purchase, the full
number of shares of Seller Common Stock provided in Section
2 hereof (as adjusted pursuant to Section 6 hereof), it is
the express intention of the parties hereto to allow Buyer
or such other person to acquire, or Seller to repurchase or
purchase, such lesser number of shares as may be
permissible, without any amendment or modification hereof.
11. Miscellaneous.
_____________
(a) Expenses. Each of the parties hereto shall
pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial con-
sultants, investment bankers, accountants and counsel,
except as otherwise provided herein.
(b) Entire Agreement. Except as otherwise ex-
pressly provided herein, this Option Agreement and the
Merger Agreement contain the entire agreement between the
parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral.
(c) Successors; No Third Party Beneficiaries.
The terms and conditions of this Option Agreement shall
inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted
assigns. Nothing in this Option Agreement, expressed or
implied, is intended to confer upon any party, other than
the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations, or liabilities
under or by reason of this Option Agreement, except as
expressly provided herein.
(d) Assignment. Other than as provided in Sec-
tions 8 and 9 hereof, neither of the parties hereto may
sell, transfer, assign or otherwise dispose of any of its
rights or obligations under this Option Agreement or the
Option created hereunder to any other person (whether by
operation of law or otherwise), without the express written
consent of the other party.
(e) Notices. All notices or other communications
which are required or permitted hereunder shall be in
writing and sufficient if delivered in accordance with
Section 8.02 of the Merger Agreement (which is incorporated
herein by reference).
(f) Counterparts. This Option Agreement may be
executed in counterparts, and each such counterpart shall be
deemed to be an original instrument, but both such counter-
parts together shall constitute but one agreement.
(g) Specific Performance. The parties hereto
agree that if for any reason Buyer or Seller shall have
failed to perform its obligations under this Option Agree-
ment, then either party hereto seeking to enforce this
Option Agreement against such non-performing party shall be
entitled to specific performance and injunctive and other
equitable relief, and the parties hereto further agree to
waive any requirement for the securing or posting of any
bond in connection with the obtaining of any such injunctive
or other equitable relief. This provision is without
prejudice to any other rights that either party hereto may
have against the other party hereto for any failure to
perform its obligations under this Option Agreement.
(h) Governing Law. This Option Agreement shall
be governed by and construed in accordance with the laws of
the State of Missouri applicable to agreements made and en-
tirely to be performed within such state. Nothing in this
Option Agreement shall be construed to require any party (or
any subsidiary or affiliate of any party) to take any action
or fail to take any action in violation of applicable law,
rule or regulation.
(i) Regulatory Approvals; Section 16(b). If, in
connection with (A) the exercise of the Option under Sec-
tion 3 or a sale by Buyer to a third party under Section 8,
(B) a repurchase by Seller under Section 7 or a repurchase
or purchase by Seller under Section 8, prior notification to
or approval of the Board or any other Regulatory Authority
is required, then the required notice or application for ap-
proval shall be promptly filed and expeditiously processed
and periods of time that otherwise would run pursuant to
such Sections shall run instead from the date on which any
such required notification period has expired or been
terminated or such approval has been obtained, and in either
event, any requisite waiting period shall have passed. In
the case of clause (A) of this subsection (i), such filing
shall be made by Buyer, and in the case of clause (B) of
this subsection (i), such filing shall be made by Seller,
provided that each of Buyer and Seller shall use its best
efforts to make all filings with, and to obtain consents of,
all third parties and Regulatory Authorities necessary to
the consummation of the transactions contemplated hereby,
including without limitation applying to the Board under the
Holding Company Act for approval to acquire the shares
issuable hereunder. Periods of time that otherwise would
run pursuant to Sections 3, 7 or 8 shall also be extended to
the extent necessary to avoid liability under Section 16(b)
of the Exchange Act.
(j) No Breach of Merger Agreement Authorized.
Nothing contained in this Option Agreement shall be deemed
to authorize Seller to issue any shares of Seller Common
Stock in breach of, or otherwise breach any of, the provi-
sions of the Merger Agreement.
(k) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is en-
titled to the benefits of such provision. This Option
Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has
executed this Option Agreement as of the date first written
above.
MERCANTILE BANCORPORATION INC.
By: /s/ John W. Rowe
___________________________
Name: John W. Rowe
Title: Executive Vice President
Mercantile Bank of St. Louis
National Association
HAWKEYE BANCORPORATION
By: /s/ Robert W. Murray
___________________________
Name: Robert W. Murray
Title: Chief Executive Officer,
Chief Operating Officer
& Chief Financial Officer
