U.S. 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): November 20, 1996
FIRST FINANCIAL BANCORPORATION
Commission File Number: 0-14280
Incorporated in Iowa I.R.S. Employer Identification
No. 42-1259867
204 E. WASHINGTON STREET, IOWA CITY, IOWA 52244
Telephone Number: (319) 356-9000
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Item 5. Other Events
On November 18, 1996, First Financial Bancorporation ("First Financial")
and the owners ("Sellers") of all of the issued and outstanding common stock
(being the only class of capital stock thereof) of West Branch Bancorp, Inc.
("West Branch") entered into a definitive Stock Purchase Agreement (the
"Agreement") which provides, among other things, for the acquisition by First
Financial of all of the issued and outstanding common stock of West Branch owned
by the Sellers. Under the terms of the Agreement, First Financial will pay to
the Sellers an amount equal to the net assets of West Branch, with its
investment in West Branch State Bank, West Branch, Iowa ("Bank"), its wholly
owned subsidiary bank, being valued as the sum of the Book Value of the Bank as
of the close of business of the month preceding the projected closing date, plus
$2,235,000.00. "Book Value," as defined in the Agreement, means the sum of the
common stock, capital, surplus, and undivided profits account of the Bank,
including its year-to-date net income after income taxes and franchise taxes,
but excluding the Bank's allowance for loan and lease losses, except that
portion of the allowance which, on an after-tax basis, is in excess of an amount
equal to 2 percent of the total booked loans of the Bank. The total purchase
price is estimated to be approximately $7,500,000. Consummation of the
transaction contemplated by the Agreement is subject to certain conditions,
including: (i) receipt of approvals of the Federal Reserve Board and the Iowa
Division of Banking, and any other applicable regulatory authority; and (ii)
satisfaction of certain closing conditions as described in the Agreement. The
transaction is expected to be consummated during the second quarter of 1997.
A copy of the Agreement is attached as an exhibit hereto and
incorporated by reference herein. The foregoing summary of provisions of that
Agreement is qualified in its entirety by reference to the actual document.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits
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(c) Exhibits in accordance with the provisions of Item 601 of Regulation S-K
Exhibit 2 Stock Purchase Agreement dated November 18, 1996,
between First Financial Bancorporation and each share-
holder of West Branch Bancorp, Inc.
Exhibit 99 News Release of First Financial Bancorporation dated
November 20, 1996.
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 hereunto duly authorized.
First Financial Bancorporation
November 20, 1996 /s/ A. Russell Schmeiser
------------------------
A. Russell Schmeiser,
Executive Vice President
and Chief Operating Officer
(Principal Financial Officer)
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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INDEX TO EXHIBITS
TO FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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FIRST FINANCIAL BANCORPORATION
204 East Washington Street
Iowa City, Iowa 52244
Exhibit No. Item
2 Stock Purchase Agreement dated November 18,1996, between First
Financial Bancorporation and each shareholder of West Branch
Bancorp, Inc.
99 News Release of First Financial Bancorporation dated November 20,
1996.
The appendices to the Stock Purchase Agreement have been omitted.
These are:
Appendix Description
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A Form of Promissory Note
B Form of Receipt of Purchase Price
C Call Report for September 30, 1996, of West Branch
State Bank and Federal Reserve System Report Form FR
Y-9SP as of June 30, 1996, for West Branch Bancorp,
Inc.
D West Branch State Bank Insurance Policies, Proofs of
Loss, and Notification of Potential Claims
E Contracts, Arrangements, Obligations, and Commitments
of West Branch State Bank
F Commitments of West Branch State Bank
Registrant agrees to furnish supplementally a copy of any
omitted appendix to the Commission upon request.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made and entered into as of the 18th day of
November, 1996, by and between First Financial Bancorporation, an Iowa
corporation and registered bank holding company ("Buyer"), and John Kofoed,
Audrey Kofoed, Chris Kofoed, Laurie Dauber, and Karen Suchomel (f/k/a Karen
Moon) (collectively, "Sellers") who collectively own of record 43,150 shares
(100%) of the issued and outstanding $1.00 par value per share common stock
("Company Common Stock") of West Branch Bancorp, Inc., West Branch, Iowa
("Company"), an Iowa corporation and registered bank holding company which owns
40 shares (100%) of the issued and outstanding $5,000 par value per share common
stock ("Bank Common Stock") of West Branch State Bank, West Branch, Iowa
("Bank"), and will continue to own all such shares of Bank Common Stock through
the Closing Date (as defined below), witnesseth as follows:
R E C I T A L S
WHEREAS, Sellers collectively own all of the shares of Company Common Stock
and individually own that number of shares of Company Common Stock, as set forth
on the signature page hereto; and
WHEREAS, pursuant to the terms and conditions set forth herein, Sellers
desire to sell and Buyer desires to purchase all of the issued and outstanding
shares of Company Common Stock owned by Sellers.
NOW, THEREFORE, in consideration of the respective covenants,
representations, warranties, and agreements herein contained, it is hereby
agreed by and among the parties hereto that they shall carry out the following
Stock Purchase Agreement ("Agreement").
ARTICLE I
Section 1.1 Purchase of Shares of Company Common Stock. On the Closing Date
(as defined in Section 1.5 below), Buyer agrees to purchase and Sellers agree to
sell all 43,150 of the shares of Company Common Stock owned by Sellers for the
Purchase Price, as defined and determined in accordance with the provisions of
Section 1.2 below.
Section 1.2 Purchase Price.
(a) In consideration of the sale by Sellers to Buyer of the Company Common
Stock, Buyer shall pay to Sellers the Purchase Price, defined as an
aggregate amount equal to the net assets of the Company (i.e. assets
less all liabilities), with Company's investment in Bank being valued
as the sum of:
(i) One hundred percent (100%) of the Book Value of Bank as of the
close of business on the Valuation Date, plus
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(ii) Two million two hundred thirty five thousand dollars
($2,235,000).
(b) "Valuation Date" shall mean the last day of the calendar month
immediately preceding the Closing Date (as defined in Section 1.5
below), with said calendar month being the month in which all
conditions precedent to the obligations of the parties, as set forth
in Articles IV and V, below shall have been satisfied or waived (other
than the actual delivery of items to be provided on the Closing Date).
"Book Value" shall mean the sum of common stock capital, surplus, and
undivided profits, including year-to-date net income after income
taxes and franchise taxes but excluding the allowance for loan and
lease losses (except that portion of said allowance, on an after-tax
basis, which is in excess of the amount which is equal to two percent
(2%) of the Bank's total loans, exclusive of charged-off loans), all
of which shall be computed on the accrual basis method using generally
accepted accounting principles applicable to commercial banks,
consistently applied, as of the close of business on the Valuation
Date; provided, however, that, without the prior approval of Buyer,
which approval shall not be unreasonably withheld, there shall be no
sales of any securities after October 1, 1996, and Book Value shall be
determined exclusive of any unrealized gains and losses on securities
pursuant to FASB 115 (determined on an after-tax basis). The total
assets of Bank as of the close of business on the Valuation Date shall
exclude any unrealized gains and losses on securities pursuant to FASB
115. Notwithstanding anything contained herein to the contrary, the
determination of Book Value of Bank (including all accruals and the
current and deferred income tax liability accounts of Bank) shall have
been reviewed and approved by representatives of both Buyer and
Sellers. Accrued expenses as of the Valuation Date shall include
pro-rated vacation pay, bonuses, and profit sharing and pension plan
contributions for 1996 and 1997.
Section 1.3 Payment of Purchase Price. On the Closing Date, upon compliance
with the requirements of Section 1.4, Buyer shall pay the Purchase Price in full
by delivery of cashier checks (or other immediately available funds) and
unsecured promissory notes (in the form attached hereto as Appendix A and by
this reference incorporated herein) ("Promissory Note") payable to the Sellers
in the percentages and, with respect to the Promissory Notes, over the terms as
set forth on Appendix B (which Appendix is incorporated herein by this
reference).
The purchase price payable to each Seller shall be the Purchase Price (as
determined in accordance with Section 1.2 above) divided by the number of shares
of Company Common Stock issued and outstanding on the Closing Date, multiplied
by the number of shares owned on the Closing Date by such Seller.
Section 1.4 Surrender of Company Common Stock. On the Closing Date, Sellers
shall deliver to Buyer, against receipt of payment of the Purchase Price as
provided for in Sections 1.2 and 1.3 above, certificates representing all of the
shares of Company Common Stock owned by Sellers, duly endorsed in blank or
accompanied by duly executed assignments for transfer and free and clear of all
liens, encumbrances, rights of first refusal, options, or other restrictions
whatsoever, together with such evidence of satisfaction and release of Buyer as
Buyer may request.
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Section 1.5 The Closing. The Closing for the purchase of shares of Company
Common Stock by Buyer (the "Closing") shall take place at the main office of
Bank at 10:00 o'clock a.m., Central Time, on the Closing Date, which shall be
such date as Buyer and Sellers shall agree and which date (unless the parties
agree otherwise in writing) shall be not less than five (5) or more than fifteen
(15) days after the Valuation Date. In no event shall the Closing Date be prior
to January 1, 1997.
Section 1.6 Officers and Directors of Company and Bank.
(a) At the Closing, all officers and directors of Company shall tender
their resignations effective as of the Closing Date.
(b) The present Board of Directors and officers of Bank shall continue
subsequent to the Closing Date to serve as the Board of Directors and
officers of Bank until the next annual meeting of shareholders of Bank, or
until such time as their successors have been elected and qualified, except
that Sellers agree to:
(i) Cause those Sellers who are officers or directors of Bank to
resign from such positions effective as of the Closing Date; and
(ii) From and after the Closing, Buyer shall cause (1) the Bank
to continue to employ Laurie Dauber until the earlier of Bank's data
processing conversion (to Buyer's specified format) or July 31, 1997;
and (2) Karen Suchomel and Chris Kofoed to continue to be employed by
Bank or elsewhere in Buyer's organization; and
(iii) Employment by Buyer of each Seller identified in paragraph
(ii) above shall be (1) at such salary level as shall be mutually
agreeable to Buyer and such Seller; (2) upon terms and conditions
consistent with Buyer's existing employment policies, practices, and
procedures; and (3) subject to Buyer's normal employee review
standards.
Section 1.7 Representation of Sellers Regarding Company Common Stock and
Bank Common Stock. Each Seller represents and warrants that all shares of
Company Common Stock owned by such Seller and all shares of Bank Common Stock
owned by Company shall be, as of the Closing Date, free and clear of all liens,
charges, and encumbrances of any nature whatsoever, and that such Seller has
full legal capacity and authority to execute this Agreement, to transfer the
Company Common Stock on the Closing Date, and to otherwise perform its
obligations hereunder. The representations and warranties of each Seller herein
shall survive for a period of twenty-four (24) months following the Closing
Date, and each Seller agrees to indemnify and hold harmless Buyer from and
against any and all damages, losses, obligations, liabilities, claims,
encumbrances, deficiencies, and costs and expenses of whatever nature which may
be incurred as a result of the breach of such warranties and representations
with respect to Company Common Stock owned by such Seller and the Bank Common
Stock owned by Company.
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ARTICLE II
Section 2.1 Covenants of Sellers Concerning Conduct of Business of Company
and Bank. During the period from the date of this Agreement through the Closing
Date, Sellers shall cause Company and Bank to conduct their respective business
and operations in the usual and ordinary course, in a safe and prudent manner.
To the extent consistent with such business, Sellers shall cause Bank to use all
reasonable efforts to preserve, intact, its banking and business organization,
to keep available the services of its officers and employees, and to preserve
its relationships with customers, suppliers, and others having business dealings
with it, to the end that its goodwill and continuing business shall not be
materially and adversely affected on the Closing Date. During said period,
Sellers agree that Company and Bank shall do or refrain from doing (as
applicable) the following, or any thereof, unless they shall have received the
prior written consent of Buyer (unless the context would clearly otherwise
require, references in the following covenants to "Bank" relate collectively and
individually to Company and Bank):
(a) Bank shall not borrow money, except in the ordinary course of
Bank's banking business, or incur any debt, obligations, or liabilities,
absolute or contingent, other than current liabilities incurred in the
ordinary and usual course of business;
(b) Bank shall not sell, transfer, assign, lease, or dispose of any of
its properties or assets, including personal property, except in the
ordinary course of business, or subject any of such property or assets to a
mortgage, pledge, security interest, or lien, except encumbrances of the
character heretofore incurred in the ordinary and usual course of business;
(c) Bank shall not declare or pay any dividends (except that prior to
the Valuation Date, Company may cause Bank to pay a dividend to Company in
an amount not in excess of the amount necessary for Company to repay all
indebtedness of Company existing as of the date hereof, together with
accrued interest thereon; provided that Bank's shareholders' equity-
to-total assets ratio would not be reduced below eight percent (8%)), stock
splits (reverse or otherwise), stock dividends, or any other distributions
with respect to its capital stock, and Bank shall not issue, sell, or
contract to sell any equity or debt securities, options, warrants, rights,
or commitments with respect thereto;
(d) Bank shall not make any expenditures of a capital nature in excess
of $7,500, other than those for which it is committed on the date of this
Agreement;
(e) Bank shall not enter into any long-term contracts or long-term
commitments, other than in the ordinary and usual course of business;
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(f) Bank shall not use any of its assets or properties, except for
proper banking purposes;
(g) Bank shall not modify, amend, cancel, or terminate any existing
agreement, except in the ordinary and usual course of business;
(h) Bank shall not acquire control over any other corporation, firm,
or organization, or create any new subsidiaries, except in connection with
foreclosures in the ordinary and usual course of business, or participate
in any partnership, joint venture, or other business arrangement;
(i) Bank shall not make any promotions or pay bonuses or increase in
any manner the salary, benefits, or other compensation of any of its
personnel except in a manner consistent with Bank's prior practices, nor
shall it enter into any employment contract with any person with whom it
does not have the unconditional right to terminate without liability, other
than liability for services already rendered;
(j) Bank shall maintain all of its existing insurance policies and
bonds in full force and effect;
(k) Bank shall not purchase or enter into any agreement or option to
purchase any investment security the purchase of which is not within the
parameters established by Bank's asset/liability committee and approved by
the Board of Directors of Bank. Sellers shall provide Buyer with a true and
correct copy of the minutes of each monthly meeting of said committee prior
to Bank's Board of Directors action thereon;
(l) Bank shall refrain from applying for any bank office;
(m) Bank shall timely file all tax returns and shall appropriately
accrue and pay, when due, all applicable federal, state, and local taxes
and assessments which have been assessed or are payable as of or prior to
the Closing Date, including, but not limited to, ad valorem, sales, use,
excise, franchise, income, real property, and personal property taxes;
(n) Bank shall continue to pay all interest on deposits, as such
interest becomes due and payable in the ordinary course of business,
through the Closing Date;
(o) Bank shall continue to set aside unearned income and, as earned,
transfer the same to earned income, in the ordinary and usual course of
business, through the Closing Date;
(p) All debts of Bank, with respect to the business conducted at its
banking premises, shall be paid in full as they fall due;
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(q) Bank shall not loan funds, issue letters of credit, accept any
deposits, or enter into any commitments for such loans, letters of credit,
or deposits, except in the ordinary and usual course of business;
(r) Bank shall not merge or consolidate with any other entity, or
enter into any agreement therefor or for the sale of its assets, or acquire
or agree to acquire any stock, business, properties, or assets of any other
person, firm, association, corporation, bank, or other business
organization;
(s) Bank shall not cancel, without payment in full, any notes, loans,
or other obligations receivable from any stockholder, officer, or director
of Bank or Company, or any member of their families, or from any
corporation, partnership, or other entity in which any stockholder,
officer, or director of Bank or Company, or any member of their families,
has any direct or indirect interest;
(t) Bank shall not (i) settle any dispute or (ii) compromise any loan,
either of which is in excess of $10,000, which settlement or compromise
involves the payment of money by Bank, acceptance of liabilities by Bank,
renewal of a loan by Bank, restructure of a loan by Bank, or other
reduction in the amount owed to Bank (pursuant to any lending arrangement)
by any amount greater than the amount of payment actually received by Bank
with respect thereto;
(u) Sellers shall not permit any material adverse change in the
quality, composition, or maturity of Bank's assets, its deposits or other
liabilities, or in the business of Bank; provided, however, that the
following factors shall not be considered in determining what shall
constitute a materially adverse change in the quality or composition of
assets, deposits or other liabilities, or in the business of Bank: (i)
changes in rates of return or yield received on various Bank assets, which
changes are caused by general money market fluctuations; (ii) changes in
interest rates paid by Bank with respect to its source of borrowed funds,
including deposits, repurchase agreements, and federal funds purchased,
which changes are caused by general money market fluctuations; and (iii)
changes in asset quality caused by general economic conditions beyond
Sellers' control;
(v) Bank shall not amend its Articles of Incorporation or Bylaws,
liquidate, or dissolve;
(w) To the extent permitted by appropriate regulatory authority, Bank
shall authorize the president, or other designated officer, of Buyer to
attend (as a non-voting observer) all meetings of the Board of Directors
and committees thereof conducted prior to the Closing Date, and give Buyer
reasonable advance notice of the date, time, and place of any such
regularly scheduled meetings and any special meetings of the entire Board
of Directors. Notwithstanding the foregoing, Buyer's representatives shall
be excluded from any discussions directly related to Buyer and, subject to
Sellers' obligations to confer with Buyer and obtain its consent regarding
Bank's compliance with the covenants set forth herein, discussions with
counsel to Bank where such exclusion is necessary to preserve an
attorney-client privilege. All information gained by representatives of
Buyer by attendance at such meetings shall be held in strict confidence;
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(x) Neither Sellers nor Bank shall take any action or refrain from
taking any action that would cause or have the effect of causing any of the
representations and warranties concerning Sellers or Bank contained herein
to not be true and correct on and as of the Closing Date; and
(y) Bank shall, prior to the Closing Date, terminate any business
relationship in which it is currently engaged in the status of general
partner or any similar capacity.
Section 2.2. Further Covenants of Sellers. Sellers covenant with regard to
Company and Bank (and will cause Company and Bank to be in compliance with such
covenants during the period from the date of this Agreement through the Closing
Date) as follows:
(a) The assets of Company and Bank include, without limitations, all
assets on the respective books of Company and Bank, as well as the books
themselves, and all documents, papers, and records of any kind, including
any and all records disclosing the names of Bank customers or other persons
or entities with whom Company or Bank has dealt. Nonledger assets shall
also be deemed assets of Bank for purposes hereof. Records pertaining to
Company or Bank not physically located on the premises of Bank are
nevertheless the property of Company or Bank, respectively, to the extent
that they reflect information relating to Company or Bank. "Records" shall
include, without limitation, computer or other electronic or mechanical
records and programs;
(b) Company and Bank will reasonably cooperate with Buyer in
connection with Buyer's preparation of all documentation to effect all
filings and to obtain, as soon as possible, all permits, consents,
approvals, and authorizations of all third parties, regulatory authorities,
and other governmental bodies necessary for the consummation of the
transactions contemplated by this Agreement; and
(c) Sellers shall promptly give written notice to Buyer and cause to
be amended any appendix or exhibit attached hereto, if necessary, upon
becoming aware of any event or the impending or threatened occurrence of
any event which would cause or constitute a breach of any of the
representations and warranties or failure of performance of any covenant
concerning Sellers, Company, or Bank contained or referred to in this
Agreement, and shall use their best efforts to prevent the same or remedy
the same promptly.
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Section 2.3 Representations and Warranties of Sellers. Sellers makes the
following representations and warranties:
(a) Each Seller has full and complete authority and capacity to
execute and deliver this Agreement and to consummate the transaction
contemplated herein, in accordance with the terms hereof. Subject to
receipt of regulatory approval, this Agreement is the valid and binding
obligation of Sellers, enforceable in accordance with its terms;
(b) No representation or warranty made herein by Sellers, and no
schedule, exhibit, certificate, or other instrument delivered by or on
behalf of Sellers pursuant to this Agreement or in connection with the sale
of Company Common Stock contemplated hereby, contains or will omit any
statement of any material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading;
(c) Each of the representations, warranties, covenants, and agreements
of Sellers contained in this Agreement shall be true, correct, and complete
on and as of the Closing Date, except those changes occurring in the normal
course of business or consented to by Buyer in writing;
(d) Company is a corporation and Bank is a state bank, each of which
is duly organized, validly existing, and in good standing under the laws of
the State of Iowa, and each of Company and Bank has the corporate power and
is duly licensed and authorized to carry on its business, as now being
conducted, and to own and operate all of its properties and assets. All
charters, licenses, permits, authorizations, and approvals necessary for
Bank's business, as currently being conducted, are in full force and
effect. Accurate and complete copies of the Articles of Incorporation of
Company and Bank, and all amendments thereto, certified by the Secretary of
State of Iowa as of a date within ten (10) days of the date hereof, and a
complete and correct copy of the Bylaws of each of Company and Bank, if
any, and all amendments thereto, certified by the Secretary of Company and
Cashier of Bank, respectively, as of the date hereof, will be delivered to
counsel for Buyer within ten (10) days of the date hereof. Bank is the only
subsidiary of Company, and Bank has no operating subsidiaries. All deposits
of Bank are insured by the Bank Insurance Fund administered by the Federal
Deposit Insurance Corporation, subject to the limitations of the Federal
Deposit Insurance Act, and such insurance will remain in full force and
effect through the Closing Date;
(e) (i) Company has total authorized capital stock of $5,500,000,
consisting of 500,000 shares of common stock of a par value of $1.00 per
share, 43,150 of which, as of the date hereof, are issued and outstanding
and all of which are owned by Sellers, and 500,000 shares of preferred
stock of a par value of $10.00, none of which, as of the date hereof, are
issued and outstanding.
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(ii) Bank has total authorized capital stock of $500,000,
consisting of 100 shares of common stock of a single class of a par
value of $5,000 per share, 40 of which, as of the date hereof, are
issued and outstanding, all of which are owned by Company.
(iii) All of Company's and Bank's issued and outstanding shares
are validly issued, fully paid, and nonassessable. As of the date of
this Agreement, neither Company nor Bank has outstanding any security,
option, warrant, right, agreement, understanding, or commitment of any
kind entitling any person or persons to purchase, subscribe for, or
otherwise acquire (or relating to the voting of) any shares of capital
stock of Company or Bank;
(f) The call report of Bank, as of September 30, 1996, and Federal
Reserve System Report form FR Y-9SP, as of June 30, 1996, of Company
attached hereto as Appendix C fairly represent the conditions of Bank and
Company, respectively, as of such dates. To the best knowledge of Sellers,
all financial statements referred to in this section have been prepared in
accordance with generally accepted accounting principles, as applied to
banks, applied on a basis consistent with prior periods, do present fairly
the financial position of and the results of operations of Bank at such
date and for such period to which they relate, and include no changes from
past periods in the manner of computation of its income, expenses, or tax
liabilities, or any changes in the method or manner in which it determines
depreciation of its depreciable assets. Sellers shall cause Bank to furnish
to Buyer a quarterly report for each quarter subsequent to September 30,
1996, within thirty (30) days after the close of each quarter. Hereinafter,
all such financial information regarding Company and Bank delivered or to
be delivered to Buyer shall be referred to as "Financial Statements";
(g) Except for (i) endorsements made in connection with the deposit of
items for collection; (ii) unfunded loan commitments and letters of credit
made in the ordinary course of the banking business of Bank, consistent
with the past practices of Bank; and (iii) other obligations of Bank
previously disclosed in writing to Buyer and accepted by Buyer, and to the
best knowledge of Sellers, Bank does not have any indebtedness, liability,
or commitment, contingent or otherwise, of the type and nature
appropriately reflected on a bank's statement of condition, including,
without limitation, any unfunded or unaccrued obligation under employee
benefit plans or arrangements, or any obligations in the capacity as
general partner or similar arrangement, which have not been fairly and
adequately reflected in the Financial Statements as of September 30, 1996
(and for periods subsequent thereto), except for indebtedness, liabilities,
and commitments incurred subsequent to September 30, 1996, in the ordinary
and usual course of business;
(h) All federal, state, and local tax returns required to be filed by
Company and/or Bank have been timely filed. Neither Company nor Bank is a
party to any pending actions or proceedings by any taxing authority for
assessment or collection of taxes, and no such actions or proceedings have
been threatened, nor has Company or Bank received any notice of deficiency
or other adjustments with respect to its income and franchise tax returns.
There are no agreements, waivers, or other arrangements providing for an
extension of time with respect to the assessment of any tax or deficiency
against Company or Bank, nor are any actions, suits, or claims now pending
or threatened against either of them in respect of any tax or assessment;
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(i) Bank and Company have each timely filed all of the required
information returns or statements with the appropriate governmental
authorities (federal, state, and local), including, without limitation, the
information returns or statements required under the Internal Revenue Code
of 1986, as amended. The information returns or statements filed by Bank
and Company are complete and correct in all material respects, and there
are no material penalties or other liabilities due from Bank or Company or
assessable against either of them with respect to such returns or
statements. Bank and Company have complied with all applicable federal and
state laws, rules, and regulations, including, without limitation, the
requirements of Section 3406 of the Internal Revenue Code of 1986, as
amended, regarding the withholding of tax on payments made by them. Neither
Bank nor Company has any material outstanding liability or unassessed
potential liability to any governmental agency for amounts which either was
required to withhold under applicable federal and state laws, rules, and
regulations;
(j) As of the date of the most recent regulatory compliance
examination, Bank has no violations of state or federal law or regulation
requiring reimbursement of money to customers or borrowers of Bank or, if
any such reimbursements were required, all such reimbursements have been
made to the satisfaction of the Bank's primary regulator;
(k) Bank has good and marketable title, free and clear of any
mortgage, pledge, lien, charge, or other encumbrance, to all its real and
personal property and other assets reflected in the Financial Statements or
acquired by it subsequent to the date thereof, except for:
(i) The liens or encumbrances on such property or assets
described or referred to in such Financial Statements;
(ii) Liens for current taxes not yet due and payable, or for
taxes being contested in good faith;
(iii) Dispositions of such property or assets in the ordinary
course of business and for fair value; and
(iv) Certain liens, unpaid taxes, and other impediments to good
and marketable title with respect to repossessed or voluntarily
surrendered personal property and other real estate owned, to the
extent described in title opinions or otherwise reflected in the loan
files relating to such properties.
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(l) All leases, subleases, or arrangements pursuant to which Bank
leases real or personal property are valid and enforceable in accordance
with their respective terms, subject to laws affecting creditors' rights
generally, and grant the leasehold estate they purport to grant, free and
clear of any mortgage, pledge, lien charge, or other encumbrance, and there
is not under any of such instruments any material existing default or any
event which, with the lapse of time or notice by a third party, or both,
could result in such a default, nor has Bank waived any of its rights or
options nor exercised any of its options thereunder;
(m) Bank has obtained all licenses, permits, and governmental
approvals and orders required by applicable law or governmental regulations
necessary or appropriate in the conduct of its banking business at the
banking premises. All real and personal properties used by Bank for banking
purposes are in good operating condition and repair, except for normal wear
and tear, and are suitable for the purposes for which they are presently
utilized. Bank's ownership and operation of its real and personal property,
including other real estate owned, substantially complies with all laws,
ordinances, regulations, orders, and other governmental requirements
relating thereto now in effect or scheduled to come into effect, including,
to the best knowledge of Sellers, Environmental Laws, and such properties
are not affected or threatened by any condemnation or eminent domain
proceeding. "Environmental Laws," as used herein, shall mean all federal,
state, and local laws, including statutes, regulations, ordinances, codes,
rules, and other governmental restrictions and requirements relating to the
environmental or hazardous substances, including, but not limited to, the
Toxic Substance Act, the Clean Air Act, the Clean Water Act, the Resources
Conservation and Recovery Act of 1976, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, regulations of the
Environmental Protection Agency, regulations of the Nuclear Regulatory
Agency, and regulations of the State Department of Natural Resources or
State Environmental Protection Agency in effect now or at any time prior to
the Closing Date. Bank has been and will prior to the Closing Date (i) to
the best knowledge of Sellers be in compliance with all applicable
Environmental Laws; (ii) provide to Buyer, immediately upon receipt, copies
of any correspondence, notice, pleading, citation, indictment, complaint,
order, decree, or other document from any source asserting or alleging a
circumstance or condition which requires or may require a clean up,
removal, remedial action, or other response by or on the part of Bank under
Environmental Laws, or which seek criminal or punitive penalties from Bank
for an alleged violation of Environmental Laws; and (iii) advise Buyer, in
writing, as soon as Bank or Sellers become aware of any condition or
circumstance which makes the foregoing representation incomplete or
inaccurate. Sellers agree that Buyer, at Buyer's expense, may cause a Phase
I environmental audit of all Bank premises and other real estate owned,
solely for the benefit of Buyer. Such audit shall be conducted by an
independent agent selected by Buyer. Buyer shall be responsible for all
Phase I audit expenses and may, in its sole discretion waive the Phase I
audits as to any parcel of such real estate. This provision shall not
relieve Bank and Sellers from taking any other steps necessary to comply
with Environmental Laws. If, in the opinion of Buyer, there exists any
provision of any Environmental Laws or any condition discovered as a result
of such environmental audit which requires or may require an additional and
more extensive audit (Phase II) by Bank, a clean up, removal, or other
remedial action by Bank under any Environmental Laws, and such Phase II
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audit, clean up, removal, or other remedial action is not substantially
completed at Bank's expense and within a reasonable time, provided a good
faith effort is made to comply, the same shall, at the option of Buyer,
constitute a default hereunder and Buyer may terminate this Agreement. In
the event any such remediation procedures are not completed as of the
Closing Date and Buyer determines not to terminate this Agreement, Sellers
agree to remain liable for and to pay all remaining costs and expenses of
such procedures. Buyer may, in its sole discretion, escrow a portion of the
Purchase Price in an amount reasonably estimated to be required to pay any
such remaining costs and expenses;
(n) Except for litigation in which Bank is engaged in the normal
course of its business and except for litigation which has previously been
disclosed to Buyer in writing and accepted by Buyer, the outcome of which
is not expected to have a material adverse impact upon the financial
condition of Bank:
(i) There is no litigation, proceeding, or governmental
investigation pending or, to the knowledge of Sellers, threatened
against or that could directly involve Company or Bank or their
properties or businesses;
(ii) Neither Company nor Bank is in default with respect to any
order, writ, injunction, or decree of any court or federal, state,
municipal, or governmental department, commission, board, bureau,
agency, or instrumentality; and
(iii) Neither Bank nor Company nor any Seller has received any
notice of or claim that Bank has committed any unfair or
discriminatory employment or labor practice, civil rights violation,
or violations of Environmental Laws under applicable federal or Iowa
law; nor, to the best knowledge of Sellers, has Bank committed any of
the foregoing.
(o) All notes, other evidences of indebtedness, and agreements for the
payment of money, and all collateral, documents, instruments, papers, and
other security applicable thereto which are assets of Bank are valid and
correct in all material aspects, to the best knowledge of Sellers, genuine
as to signatures of makers and endorsers, were given for valid
consideration, comply in all material respects with all applicable consumer
and other laws, rules, and regulations, and are binding and enforceable
against the respective debtors in accordance with their terms, except as
such enforcement may be affected by bankruptcy, insolvency, moratorium, or
other similar laws affecting the rights of creditors generally and general
principles of equity;
(p) There are no loans which are included on any watch list maintained
by Bank, except as set forth in a list provided to Buyer concurrently with
the execution of this Agreement.;
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(q) Except for pledges to secure its Treasury tax and loan demand
accounts, public funds and trust accounts, none of the investment
securities of Bank reflected in the Financial Statements, and none of the
investments made since such date of the Financial Statements, are subject
to any restriction, whether contractual or statutory, which materially
impairs the ability of Bank to dispose of such investments at any time;
(r) Bank has no unfunded (or has otherwise appropriately accrued for)
deferred compensation, pension or profit sharing plans, incentive program
obligations, or other employment related liabilities with respect to
current and former employees or directors or members of their families;
(s) Each of Company and Bank has timely filed all reports,
registrations, statements, and other regulatory compliance matters and
documents, together with any amendments required to be made with respect
thereto, required by law, regulation, or formal or informal arrangement
with any regulating authority, and will file all such reports as may be
required from the date of this Agreement to the Closing Date. As of their
respective dates, such reports complied or will comply in all material
respects with all the reporting and disclosure rules and regulations of
such regulatory authorities. None of such reports contained or will contain
any untrue statement of a material fact, or will 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;
(t) Bank has in force and effect or is covered under policies of
insurance and bonds, including a banker's blanket bond, with reputable
carriers in respect of its properties and business, substantially of the
character and amount carried by banks similarly situated, identified in
Appendix D. Also set forth on Appendix D is a listing which identifies all
Proofs of Loss or notifications of potential claims filed with any of such
carriers or their agents. Bank is in compliance in all respects with the
terms of such policies and bonds, all premiums due on such bonds and
policies have been paid, and all such policies are in full force and effect
at the date hereof;
(u) The execution, delivery, and performance of this Agreement and
consummation of the transactions contemplated by this Agreement will not
constitute a breach, violation or default, create a lien or give rise to
any right of termination, cancellation, prepayment, or acceleration under
the Articles of Incorporation or Bylaws of Bank or the Articles of
Incorporation or Bylaws of Company, or under any law, rule, or regulation,
or any judgment, decree, order, governmental permit, or license, or any
note, bank, mortgage, indenture, deed of trust, license, lease, agreement,
or other instrument or obligation to which either of them is a party or by
which either of them or any of their properties or assets may be bound or
affected. No consents, approvals, or authorizations of, or declarations,
filings, or registrations with any other person, including any government
authority, are required to be obtained or made by Company or Bank in
connection with the transaction contemplated hereby, except for the
required regulatory approvals referred to in this Agreement;
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(v) Since the date of the September 30, 1996, call report, there has
not been any change in the nature and mix of the assets and liabilities of
Bank, materially and adversely affecting the present financial condition,
business, or operations of it; or any damage, destruction, or loss, whether
or not covered by insurance, materially and adversely affecting Bank's
properties or businesses, and Bank has no unrealized or anticipated losses
from any unfavorable commitments arising out of transactions entered into
by Bank as of the date hereof; provided, however, that the following
factors shall not be considered in determining what shall constitute a
materially adverse change in the quality or composition of assets,
liabilities, or business of Bank:
(i) Changes in rates of return or yield received on various Bank
assets, which changes are caused by general money market fluctuations;
and
(ii) Changes in interest rates paid by Bank with respect to its
source of borrowed funds, including deposits, repurchase agreements,
and federal funds purchased, which changes are caused by general money
market fluctuations;
(w) A true, correct, and complete list of all persons employed by Bank
shall be delivered to Buyer not later than thirty (30) days after the date
of this Agreement, which list shall contain true and correct information as
to the positions, years of service, and salaries of all such employees, and
the labor union affiliation, if any, of such employees. Except as set forth
in Appendix E, or as otherwise agreed to in writing by Buyer, Bank is not
and will not, without the written consent of Buyer, be or become a party to
or bound by any written or oral:
(i) Employment contract or compensation arrangement, including,
without limitation, any collective bargaining contract or union
agreement, which is not terminable by it on thirty (30) days' or less
notice, without any liability on the part of it;
(ii) Bonus, deferred compensation, incentive compensation, excess
benefits, profit sharing, pension, thrift, savings, retirement, major
medical, long-term disability, hospitalization, insurance, or other
plan, arrangement, commitment, or practice of Bank providing employee
or executive benefits or benefits to any employee which is not fully
funded (or appropriately accrued) and terminable at will, without any
liability on the part of Bank;
(iii) Loan or commitment to lend in excess of an aggregate amount
of $20,000 (other than loans secured by first mortgages on real
property) to any one individual, and the affiliates thereof, where
such individual is an employee, officer, or director of Bank; or
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(iv) Contract with an employee, officer, or director of Bank,
other than the foregoing, involving more than $10,000.
Accurate and complete copies of all such agreements, plans, policies, and
arrangements (or, where they are oral, true and complete written summaries
thereof) identified in Appendix E will be delivered to Buyer within thirty
(30) days of the date of this Agreement;
(x) Each of Company and Bank has in all respects performed all
material obligations required to be performed by it to date and is not in
default under, and no event has occurred which, with the lapse of time or
notice by a third party, or both, could result in a default by it under any
outstanding indenture, mortgage, contract, lease, or other agreement to
which either Company or Bank is a party or by which either of them is
bound, except for any default or event which would not result in, and would
not have consequences which would result in, a material adverse change in
the present or prospective financial condition, business, or operations of
Company or Bank. Performance by Bank or Company of the presently
unperformed contracts, agreements, understandings, or leases by which
Company or Bank is currently bound will not result in a loss thereunder
that will materially and adversely affect their present or prospective
financial condition, operations, or business. Bank is not subject to any
charter or other corporate restrictions, or any judgment, order, writ,
injunction, or decree that materially and adversely affects, or might
possibly be expected materially and adversely to affect, the present or
prospective financial condition, business, or operations of Bank and which
has not been disclosed to Buyer in writing;
(y) The banking business of Bank has been conducted in the ordinary
course of business, and all of the records and books of account of Bank are
in all material respects complete and correct, have been maintained in
accordance with practices generally used by banks located in Iowa, and are
accurately reflected in the Financial Statements;
(z) Bank has no liability to pay deposits, other than as shown on its
books;
(aa) As of the Closing Date, there will be no unpaid charges, debts,
liabilities, claims, or obligations arising from the construction,
ownership, and/or operation of the banking premises of Bank or other real
estate owned by it which could give rise to any mechanic's or materialmen's
or other statutory lien against any such real estate or any part thereof;
(bb) Bank has no contingent liability, known or unknown, not covered
by insurance, with respect to rights of indemnification from Bank for the
benefit of any director, officer, or employee, or the heirs, executors,
administrators, successors, or assigns thereof;
(cc) Bank has not granted any power of attorney to any person, firm,
corporation, or entity which is presently in effect;
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(dd) There are no properties, real or personal, tangible or
intangible, owned by any Seller, or any person or entity related to any
such Seller, which are or will be used in the day-to-day operations of
Bank, as conducted through the Closing Date;
(ee) No representation or warranty made herein, and no schedule,
exhibit, certificate, or other instrument delivered pursuant to this
Agreement or in connection with the change of control contemplated hereby,
contains or will omit any statement of any material fact necessary to make
the statements contained therein, in light of the circumstances under which
they were made, not misleading;
(ff) Bank has no commitments to make loans or make available letters
of credit in excess of $25,000, as of the date of this Agreement, except as
set forth on Appendix F;
(gg) Bank has not issued or sold any loan participations which might
expose it to direct or indirect recourse liability to the participant,
pursuant to any written or verbal agreements or understandings with such
participant;
(hh) Bank has properly and prudently performed all of its duties and
responsibilities under the Code of Iowa, as well as under all other laws,
rules, or regulations, state and federal, in connection with Bank's acting
in a fiduciary capacity;
(ii) Each Seller receiving a Promissory Note of Buyer in payment of
that portion of the Purchase Price due to such Seller has had access to all
information necessary to enable such Seller to evaluate the merits and
risks of receipt by such Seller of Buyer's Promissory Note and has had the
opportunity to ask questions of and receive answers from officers of Buyer
concerning the terms and conditions thereof and to obtain any additional
information (financial or otherwise) necessary for such Seller to verify
the accuracy of the information received or with respect to which such
Seller has been provided access, and all questions raised by such Seller
regarding the Promissory Note have been answered to the full satisfaction
thereof. Each such Seller is receiving the Promissory Note for such
Seller's own account and not with a view to the distribution, sale, pledge,
or other transfer thereof, except in accordance with all applicable
statutes, regulations, and rules regarding any such transfer; and
(jj) Each of the representations, warranties, covenants, and
agreements contained in this Agreement shall be true, correct, and complete
on and as of the Closing Date, except those changes occurring in the normal
course of business or consented to by Buyer in writing.
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ARTICLE III
Section 3.1 Covenants of Buyer. Buyer covenants as follows:
(a) Buyer will, at its sole cost and expense, as soon as
practicable after the date of this Agreement, file all applications
for approval by bank regulatory agencies having jurisdiction over the
transaction contemplated by this Agreement required to be filed in
order to consummate such transactions. Thereafter, Buyer will use its
best efforts to obtain such approvals;
(b) Buyer will take all steps which are necessary to cause each
of the conditions precedent to the change of control contemplated by
this Agreement to be fulfilled; and
(c) Buyer will provide Sellers with a copy of any application
filed with a regulatory agency in connection with this transaction
(except any confidential portions thereof) at the time of filing with
any such agency. Buyer will also provide to Sellers any notice of
acceptance of an application by any such agency as soon as practicable
after the receipt thereof by Buyer.
Section 3.2 Representations and Warranties of Buyer. Buyer represents and
warrants as follows:
(a) Buyer is a general business corporation and registered bank
holding company under the Bank Holding Company Act of 1956, as
amended, duly organized and validly existing under the laws of the
State of Iowa, and has the corporate power and is duly licensed and
authorized to carry on its business, as now being conducted, and to
own and operate all of its properties and assets;
(b) The execution of this Agreement has been duly authorized and
approved by the Board of Directors of Buyer, and Buyer has full and
complete authority to consummate the transaction contemplated by this
Agreement, in accordance with the provisions of this Agreement,
subject only to regulatory approval, as provided herein. This
Agreement is the valid and binding obligation of Buyer, enforceable in
accordance with its terms;
(c) The execution, delivery, and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby do
not constitute a breach, violation or default, create a lien or give
rise to any right of termination, cancellation, prepayment, or
acceleration under the Articles of Incorporation or Bylaws of Buyer or
under any law, rule, or regulation, or any judgment, decree, order,
governmental permit, or license, or any material lease agreement or
other instrument or obligation to which Buyer is a party or by which
any of its properties or assets may be bound or affected;
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(d) No representation or warranty made herein by Buyer, and no
schedule, exhibit, certificate, or other instrument delivered by or on
behalf of it pursuant to this Agreement, contains or will omit any
statement of any material fact necessary to make the statements
contained therein, in light of the circumstances under which they were
made, not misleading; and
(e) Each of the representations, warranties, covenants, and
agreements of Buyer contained in this Agreement shall be true,
correct, and complete on and as of the Closing Date, except those
changes occurring in the normal course of business or consented to by
Sellers in writing.
ARTICLE IV
Section 4.1 Conditions Precedent to Obligations of Buyer. All obligations
of Buyer under this Agreement are subject to the fulfillment, on or prior to the
Closing Date, of each of the following conditions precedent, unless waived in
writing by Buyer:
(a) All statutory and corporate requirements for the consummation
of the transaction contemplated herein shall have been fulfilled;
(b) All authorizations, orders, consents, and approvals of all
federal, state, and local governmental agencies and authorities
required to be obtained in order to permit the consummation of the
transaction contemplated by this Agreement shall have been obtained,
and all applicable waiting periods imposed by law or by rule,
regulation, or order shall have expired;
(c) No temporary restraining order, preliminary injunction, or
permanent injunction, or order by any governmental agency or court
having similar effect, restraining, prohibiting, or restricting in any
material way the consummation by any of the parties hereto of the
transaction contemplated by this Agreement shall have been entered and
be outstanding. There shall be no threatened, instituted, or pending
action or proceeding before any court or governmental agency, by any
governmental agency, or other person or entity, challenging the
legality or completion of the transaction contemplated by this
Agreement;
(d) Each of the obligations and covenants of Sellers, Company,
and Bank to be performed or complied with, pursuant to this Agreement
on or prior to the Closing Date, shall have been duly performed or
complied with, and the business of Company and Bank shall have been
conducted in accordance with the requirements of Section 2.1 above;
(e) All representations and warranties of Sellers contained in
this Agreement shall be true and correct in all material respects, as
of the date of this Agreement and on the Closing Date;
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(f) Bank's allowance for loan losses shall not be less than two
percent (2%) of total outstanding loans, exclusive of charged-off
loans; there shall have been no reduction between the Valuation Date
and the Closing Date in the net assets of Company or shareholders'
equity of Bank; and the shareholders' equity-to-total assets ratio of
Bank shall not be less than eight percent (8%);
(g) No condition shall exist due to the execution, delivery, and
performance of this Agreement which constitutes or which would
constitute a default under any contract, commitment, or agreement of
Company or Bank, or which gives a party, other than Company or Bank,
the right to terminate any contract, commitment, or agreement;
(h) Each Seller shall have delivered, against receipt of the
consideration therefor as provided in Article I of this Agreement,
certificates representing all of the Company Common Stock owned by
such Seller to Buyer, duly endorsed for transfer to Buyer, free and
clear of all liens, encumbrances, rights of first refusal, options, or
other restrictions of any nature whatsoever;
(i) Sellers shall have obtained and delivered to Buyer each of
the resignations contemplated by Section 1.6 above; and
(j) Buyer shall have completed an examination of Company and Bank
for the purpose of confirming the matters set forth in Sections 4.1(d)
and (e) above; provided, however, that notwithstanding any such
investigation, Buyer shall be entitled to rely on all representations,
warranties, and covenants of Sellers as set forth herein.
Section 4.2 Opinion of Counsel for Sellers. As a further condition
precedent to the obligations of Buyer under this Agreement, Sellers shall have
delivered to Buyer an opinion of counsel, dated the Closing Date, in form and
substance satisfactory to counsel for Buyer to the effect that:
(a) Company is a corporation and Bank is a state bank, each of
which is duly organized and validly existing, and, as to Bank, in good
standing under the laws of the State of Iowa and each of which has the
corporate power to conduct its business, as presently conducted, and
to own and hold the properties used in connection therewith;
(b) This Agreement is the legal, valid, and binding obligation of
Sellers, and each of them, and is enforceable against each Seller in
accordance with its terms, except that (i) the legality, validity, and
binding effect and enforceability of the obligations contained in this
Agreement may be limited or affected by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of
creditors generally; and (ii) the enforceability of any obligations
contained in this Agreement are subject to principles of equity which
may limit the availability of certain equitable remedies, such as
specific performance, regardless of whether such enforceability is
considered in a proceeding in equity or at law;
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(c) The authorized, issued, and outstanding capital stock of
Company and Bank is as set forth in Section 2.3(e) of this Agreement,
is validly issued, fully paid, and nonassessable;
(d) The execution, delivery, and performance of this Agreement by
Sellers, and the consummation of the transaction contemplated hereby,
do not constitute a breach, violation or default, create a lien or
give rise to any right of termination, cancellation, prepayment, or
acceleration under the Articles of Incorporation or the Bylaws of
Bank, the Articles of Incorporation or Bylaws of Company, or under any
law, rule, or regulation, or any judgment, decree, order, governmental
permit or license, or, to the best knowledge of such counsel, any
material lease, agreement, or other instrument or obligation to which
either Company or Bank is a party or bound by or by which any of their
respective properties or assets may be bound or affected;
(e) All consents, approvals, authorizations, and orders of, or
registrations or qualifications with, any court, regulatory authority,
or other governmental body required of Sellers for the execution,
delivery, and performance of this Agreement by Sellers have been
obtained or accomplished;
(f) On the Closing Date, neither Company nor Bank has any
outstanding option, warrant, or other right to purchase or convert any
obligation into shares of their respective capital stock, nor are
there outstanding, as of the date of this Agreement or as of the
Closing Date, an agreement to issue or, to the knowledge of such
counsel, sell any shares of capital stock of Company or Bank; and
(g) Except as previously disclosed to Buyer in writing, there are
no suits, actions, arbitrations, proceedings, or governmental
investigations pending or threatened against or directly involving
Company or Bank which, if adversely determined, may materially and
adversely affect the business, properties, assets, liabilities,
operations, or condition, financial or otherwise, of Company or Bank.
In rendering the opinions set forth above, counsel for Sellers may rely
upon opinions of other counsel satisfactory to Buyer. In which case, the opinion
shall state that counsel has no reason to believe that Buyer and such counsel
are not entitled to so rely.
ARTICLE V
Section 5.1 Conditions Precedent to Obligations of Sellers. All obligations
of Sellers under this Agreement are subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions, unless waived in writing
by all Sellers:
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(a) All statutory and corporate requirements for the consummation
of the transaction contemplated by this Agreement shall have been
fulfilled;
(b) All authorizations, orders, consents, and approvals of all
federal, state, and local governmental agencies and authorities
required to be obtained in order to permit the consummation of the
transaction contemplated by this Agreement shall have been obtained,
and all applicable waiting periods imposed by law or by rule,
regulation, or order shall have expired;
(c) No temporary restraining order, preliminary injunction, or
permanent injunction, or order by any governmental agency or court
having similar effect, restraining, prohibiting, or restricting in any
material way the consummation by any of the parties hereto of the
transaction contemplated by this Agreement shall have been entered and
be outstanding. There shall be no threatened, instituted, or pending
action or proceeding before any court or governmental agency, by any
governmental agency, or other person or entity challenging the
legality or completion of the transaction contemplated by this
Agreement;
(d) Each of the obligations and covenants of Buyer to be
performed or complied with, pursuant to this Agreement on or prior to
the Closing Date, shall have been duly performed or complied with; and
(e) All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects, as of
the date of this Agreement and on the Closing Date.
Section 5.2 Opinion of Counsel for Buyer. As a further condition precedent
to the obligations of Sellers under this Agreement, Buyer shall have delivered
to Sellers an opinion of counsel, dated the Closing Date, in form and substance
satisfactory to counsel for Sellers to the effect that:
(a) Buyer is a general business corporation duly organized and
validly existing under the laws of the State of Iowa and has the
corporate power to conduct its business, as presently conducted, and
to own and hold the properties used in connection therewith;
(b) Buyer has the corporate power and authority to enter into and
perform this Agreement. The execution, delivery, and performance of
this Agreement have been authorized by all requisite corporate action
of Buyer, and this Agreement has been duly executed and delivered by
Buyer;
(c) This Agreement is the legal, valid, and binding obligation of
Buyer, and is enforceable against it in accordance with its terms,
except that (i) the legality, validity, and binding effect and
enforceability of the obligations contained in this Agreement may be
limited or affected by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors
generally; and (ii) the enforceability of any obligations contained in
this Agreement is subject to principles of equity which may limit the
availability of certain equitable remedies, such as specific
performance, regardless of whether such enforceability is considered
in a proceeding in equity or at law;
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(d) All consents, approvals, authorizations, and orders of, or
registrations or qualifications with, any court, regulatory authority,
or other governmental body required for the execution, delivery, and
performance of this Agreement by Buyer, and the consummation by Buyer
of the acquisition of Company Common Stock contemplated hereby have
been obtained or accomplished;
(e) The execution, delivery, and performance of this Agreement by
Buyer, and the consummation of the transaction contemplated hereby, do
not constitute a breach, violation or default, create a lien or give
rise to any right of termination, cancellation, prepayment, or
acceleration under the Articles of Incorporation or Bylaws of Buyer,
or under any law, rule, or regulation, or any judgment, decree, order,
governmental permit or license, or, to the best knowledge of such
counsel, any material lease, agreement, or other instrument or
obligation to which Buyer is a party or bound by or by which any of
its properties or assets may be bound or affected; and
(f) Except as previously disclosed to Sellers in writing, there
are no suits, actions, arbitrations, proceedings, or governmental
investigations pending or threatened against or directly involving
Buyer which, if adversely determined, may materially and adversely
affect the business, properties, assets, liabilities, or condition,
financial or otherwise, of Buyer.
ARTICLE VI
Section 6.1 Indemnification. Subject to the limitation on liability as set
forth in Section 6.2 below and in addition to and not in limitation of the
indemnification obligations of Sellers set forth in Section 1.7 of this
Agreement, Sellers agree to indemnify and hold Buyer, Company, and Bank harmless
from, against, for, and with respect to any and all damages, losses,
obligations, liabilities, claims, encumbrances, deficiencies, costs, and
expenses, including, without limitation, reasonable attorney fees, and other
costs and expenses incident to any suit, action, investigation, claim, or
proceeding suffered, sustained, incurred, or required to be paid by Buyer,
Company, or Bank by reason of any misrepresentation, or of any breach or failure
of observance or performance of any representation, warranty, covenant,
agreement, or commitment made by Sellers hereunder or relating to or as a result
of any such representation, warranty, covenant, agreement, or commitment being
untrue in any respect. In addition to the foregoing, and not in limitation
thereof, Sellers and their respective successors and assigns shall indemnify
Buyer, Company, and Bank and hold them harmless from and against the following:
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(a) Any and all claims whatsoever based upon the rights as such
of any shareholder or former shareholder of Company or Bank, which
claim or right arose as of or prior to the Closing Date;
(b) Any and all claims whatsoever based upon the rights as such
of any creditor of (i) Company or Bank or (ii) any of the directors,
officers, or agents of Company or Bank as of or prior to the Closing
Date, except for those liabilities of Company or Bank which are in
existence on the Closing Date and have been disclosed to and accepted
by Buyer pursuant to this Agreement;
(c) Any and all claims whatsoever based upon the rights as such
of any employee or former employee of Company or Bank, which claim or
right arose as of or prior to the Closing Date;
(d) Any and all claims whatsoever brought by a person or entity
not a party hereto and which claim is based upon any action or
inaction on or before the Closing Date by Company or Bank or
directors, officers, employees, or agents of Company or Bank;
(e) Any and all claims whatsoever not covered by clauses (a),
(b), (c), and (d) above, and based upon execution and delivery of this
Agreement or the consummation of the transaction contemplated hereby;
(f) Any and all claims whatsoever based upon any failure by
Buyer, Company, or Bank, not in violation of law or contract, to
continue to perform any service or activity heretofore performed by
Bank; and
(g) Any and all costs, counsel fees, expenses, and liabilities
incurred in connection with such claims.
Sellers and their respective successors and assigns (sometimes collectively
referred to in this Article VI as "Indemnitors") shall be afforded timely notice
(by the provision of written notice to Chris Kofoed, as provided in Section 8.1
below) within five (5) business days of the day Buyer, Company, or Bank receives
actual notice of any such claim or assessment. Upon receipt of such notice of
claim or assessment, the Indemnitors shall have not more than fifteen (15) days
in which to elect, by notice in writing to Buyer, as provided in Section 8.1, to
assume, direct, and control the defense of any such claim or assessment,
including the exclusive right to select the attorneys who will conduct the
defense; provided, however, that Buyer, Company, or Bank shall take such action
as shall be necessary to prevent any such claim or assessment from becoming a
final judgment, lien, or charge prior to any such election by the Indemnitors,
and any such action taken by Buyer, Company, or Bank shall be at the sole
expense of Indemnitors. In the event the Indemnitors shall elect to assume such
defense, then (i) all decisions relating to such defense shall be made by the
Indemnitors and (ii) any costs incurred by Buyer in joining in the defense of
any such claim or pursuing any counterclaim shall be the responsibility of
Buyer; provided, however, that the Indemnitors shall not settle any such claim
or assessment without the consent thereto of Buyer, which consent shall not be
unreasonably withheld. Any such election by Indemnitors to assume the defense of
any such claim or assessment may be made under a reservation of its rights to
contest the presumption that such claim or assessment is subject to indemnity
hereunder, and the burden of establishing that such claim or assessment is not
subject to the indemnity provided for herein shall, at all times, remain with
Indemnitors. Buyer shall cooperate in contesting matters, which might result in
claims for which the Indemnitors might become liable under this Agreement, by
promptly providing or making available, at the sole expense of the Indemnitors,
all documents and personnel that may be reasonably necessary in contesting such
matters.
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Section 6.2 Limitation on Indemnification. The obligations of each of the
Indemnitors for indemnification, pursuant to Section 6.1 above, shall be limited
to (i) pro rata liability based upon such Indemnitor's percentage ownership of
Company (either as direct Seller or a successor or assign of a Seller); (ii)
claims for indemnification made in accordance herewith during a twelve (12)
month period commencing on the Closing Date; (iii) a total aggregate liability
of not more than Two Million Two Hundred Thirty-Five Thousand Dollars
($2,235,000); and (iv) shall be subject to a Ten Thousand Dollar ($10,000)
aggregate claim retention by Buyer and Bank.
Section 6.3 Insurance Proceeds. In the event Buyer, Company, or Bank shall
be entitled to receive any insurance proceeds with respect to any matter for
which the Indemnitors are required to provide indemnification pursuant to this
Article VI, the amount of indemnification due from the Indemnitors shall be
reduced by the amount of such proceeds, and any party paying such proceeds to
Buyer or Bank shall be subrogated to their rights against the Indemnitors.
Section 6.4 Exclusive Remedy. Except as set forth in Section 1.7, the
liability of Sellers to Buyer (or Company or Bank) under this Agreement shall be
specifically limited to the indemnification provisions provided in this Article
VI. Such indemnification shall be the sole and exclusive remedy available to
Buyer (or Company or Bank) for any claims, damages, or causes of action which
Buyer (or Company or Bank) may now or hereafter have against Sellers under this
Agreement (except claims made pursuant to Section 1.7), and shall be in lieu of
any right, claim, or cause of action which they may now or hereafter have at
law, in equity, or by statute.
ARTICLE VII
Section 7.1 Termination. In addition to and not in limitation of any
termination provisions set forth above, this Agreement may be terminated:
(a) At any time prior to or on the Closing Date by the mutual consent,
in writing, of Buyer (pursuant to authority granted by its Board of
Directors) and all Sellers;
(b) Upon written notice by Buyer if the conditions set forth in
Article IV shall not have been met on or before the Closing Date;
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(c) Upon written notice by Sellers if the conditions set forth in
Article V shall not have been met on or before the Closing Date;
(d) At any time prior to or on the Closing Date by Buyer by giving
written notice to Sellers if the conduct of business of Company or Bank
shall have been in material breach of any representation, warranty,
covenant, undertaking, or restriction herein and such breach has not been
cured within twenty (20) days after the giving by Buyer of notice to
Sellers of such breach;
(e) At any time prior to or on the Closing Date by Sellers by giving
written notice to Buyer if Buyer shall have been in material breach of any
representation, warranty, covenant, undertaking, or restriction herein and
such breach has not been cured within twenty (20) days after the giving by
Sellers of notice to Buyer of such breach; and
(f) By either Buyer or Sellers upon written notice to the other party
if the Closing Date shall not have occurred by the close of business on
August 15, 1997.
Section 7.2 Remedies and Damages.
(a) If Sellers fail or refuse to fulfill this Agreement, other than as
a result of (i) default hereunder by Buyer or (ii) pursuant to Section 7.1,
subsections (a), (c), (e), or (f) hereof, then, in addition to the rights
specified in Section 7.1, Buyer shall have the right to proceed by any
action, at law or in equity, to specifically enforce this Agreement and/or
to seek damages resulting therefrom, and Sellers agree to pay the costs and
reasonable attorney and accountant fees paid or incurred by Buyer in
connection with such action if Buyer is successful in such action.
(b) If Buyer fails or refuses to fulfill this Agreement or is
otherwise in default hereunder, other than as a result of (i) a failure to
secure the approval of the Board of Governors of the Federal Reserve System
or the Division of Banking of the State of Iowa to acquire the Company
Common Stock and effect a change of control of Bank, (ii) default hereunder
by Sellers, or (iii) pursuant to Section 7.1, subsections (a), (b), (d), or
(f) hereof, then, in addition to the rights specified in Section 7.1,
Sellers shall have the right to proceed by any action, at law or in equity,
to specifically enforce this Agreement and/or to seek damages resulting
therefrom, and Buyer agrees to pay the costs and reasonable attorney and
accountant fees paid or incurred by Sellers in connection with such action
if such parties are successful in such action.
ARTICLE VIII
Section 8.1 Notices. Any notice, report, or demand required or permitted by
any provision of this Agreement shall be deemed to have been sufficiently given
and delivered when placed in the
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U.S. mail, if it is sent by certified mail, return receipt requested, postage
and certified charges prepaid, addressed as follows:
If to Sellers: Chris Kofoed,
President
West Branch Bancorp, Inc.
19 Greenview Drive
West Branch, IA 52358
With copies to: Robert A. Mullen, Esq.
Belin Harris Lamson McCormick, P.C.
Financial Center, Ste. 2000
Des Moines, IA 50309
If to Buyer: Robert M. Sierk,
President and Chief Executive Officer
First Financial Bancorporation
204 East Washington Street
P.O. Box 1880
Iowa City, IA 52244
With copies to: Gregory P. Page, Esq.
Nyemaster, Goode, McLaughlin,
Voigts, West, Hansell & O'Brien, P.C.
1900 Hub Tower
699 Walnut Street
Des Moines, IA 50309
Section 8.2 Brokerage. Sellers as one party and Buyer as the other party
each represents to the other that it has not employed a broker, investment
banker, or acquisition consultant, or entered into any agreement for the payment
of any fees, compensation, or expense to any person, firm, or corporation in
connection with the within transaction (except Sellers' arrangement with Holder
and Associates), and each agrees to hold and save the other harmless from any
such fees, compensation, or expense which may be suffered by reason of any
claims of any broker, investment banker, or acquisition consultant alleging
employment or retention by such party. Each party hereto shall bear its own
legal and other fees, costs, and expenses, except as specifically stated herein.
Section 8.3 Publicity. Each party agrees to hold the fact of this Agreement
and its terms in strictest confidence and not to make any public announcement
concerning the Agreement without the written consent of the other. The filing of
public documents, which may disclose the existence of this Agreement or the
effect of the terms hereof, with any federal or state regulatory authorities in
connection with the transaction contemplated herein shall not constitute a
breach of the terms of this Section 8.3.
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Section 8.4 Negotiation with Other Parties. Sellers agree between the date
of this Agreement and the Closing Date, or the earlier termination of this
Agreement, that none of Sellers or any director or officer of Company or Bank,
or any third party acting on behalf of them, shall contact or negotiate with any
third party concerning the sale of Company's Common Stock or Bank's stock or
assets through actual sale, merger, consolidation, or otherwise.
Section 8.5 Completion of Closing Documents. Buyer shall cause its own
personnel to complete and prepare all documents relating to the closing of the
acquisition of Company by Buyer, other than the opinion of Sellers' counsel.
Sellers shall not be responsible for any mistakes, errors, or omissions relating
to such documents, except with respect to any information specifically supplied
by them for inclusion therein. Sellers shall cause Company and Bank to provide
Buyer, and its representatives, reasonable access to all of their books,
records, files, reports, properties, and other relevant information to enable
Buyer to prepare such documents.
Section 8.6 Miscellaneous.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Iowa;
(b) Any provision of this Agreement prohibited, either by law or court
decrees, shall be ineffective to the extent of such prohibition, without in
any way invalidating or affecting the remaining provisions of this
Agreement;
(c) This Agreement and the respective rights and obligations of the
parties hereunder shall not be assignable by either party hereto, without
the prior written consent of the other party hereto. Subject to the
foregoing, all of the terms and provisions hereof shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto;
(d) Each party shall from time to time after the Closing Date, as and
when requested by one of the other parties hereto, without further
consideration, execute and deliver all such deeds and instruments as may be
necessary or desirable in order to vest in and confirm to Buyer all of the
shares of Company Common Stock acquired pursuant to this Agreement and
otherwise to effectuate the consummation of the transactions described
herein;
(e) This Agreement constitutes the complete and exclusive statement of
the agreement among the parties hereto with respect to the transactions
contemplated hereby, and shall supersede all previous communications,
representations, or agreements, whether oral or written, among the parties
with respect to such transactions;
(f) Any modification or amendments to this Agreement, or any waiver of
any provisions hereof, shall not be valid unless set forth in writing and
signed by the parties hereto;
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(g) This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original but all of which together shall
constitute one and the same instrument;
(h) The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect
the right to enforce the same, and a waiver by any party of any breach of
any provision of this Agreement shall not be construed to be a waiver by
such party of any breach of any other provision; and
(i) The descriptive headings contained in this Agreement are for
convenient reference only and shall in no way affect the meaning or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
day and year first written above.
"BUYER"
FIRST FINANCIAL BANCORPORATION
By: /s/ Robert M. Sierk
-----------------------------
Robert M. Sierk, President and Chief
Executive Officer ATTEST: /s/ A. Russell Schmeiser
-----------------------------
A. Russell Schmeiser, Secretary
(No Seal)
"SELLERS"
/s/ John Kofoed /s/ Audrey Kofoed
- ----------------------------- -----------------------------
John Kofoed Audrey Kofoed
(12,426 Shares of Company Common Stock) (9,100 Shares of Company Common Stock)
/s/ Chris Kofoed /s/ Laurie Dauber
- ----------------------------- -----------------------------
Chris Kofoed Laurie Dauber
(7,208 Shares of Company Common Stock) (7,208 Shares of Company Common Stock)
/s/ Karen Suchomel
- -----------------------------
Karen Suchomel
(7,208 Shares of Company Common Stock)
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NEWS RELEASE - FOR IMMEDIATE USE
Date: Wednesday, November 20, 1996 Contacts: Robert M. Sierk, President & CEO
First Financial Bancorporation
(319) 356-9000
To: Media Name
Contact Name Chris Kofoed, President
Address West Branch State Bank
City, State, Zip (319) 643-5344
West Branch State Bank to Join First National Family
- ----------------------------------------------------
(Iowa City & West Branch, IA) First Financial Bancorporation of Iowa City, Iowa,
and West Branch State Bank of West Branch, Iowa, have jointly announced the
signing of an agreement which provides for the acquisition of the West Branch
bank by First Financial Bancorporation.
The purchase, subject to regulatory approval, is scheduled to be completed
during the first half of 1997. It will result in West Branch State Bank joining
the First National family of banks which are located in Cedar Rapids, Iowa City,
Coralville and North Liberty.
Robert M. Sierk, President and CEO of First Financial Bancorporation, said that
the transaction makes good sense for both organizations. "West Branch is an
exciting, vital town, and we were attracted to the steady growth of the
community and the West Branch State Bank. When one considers every aspect of the
situation, it is a natural fit. The West Branch bank will benefit from a broader
depth of support in back office and behind-the-scenes administrative functions,
and the West Branch community will benefit from a wider range of products and
services including trust, investments and asset management, as well as from a
much greater pool of funds available for loans. From First National's
perspective, it will eventually enable us to provide a greater degree of
convenience to customer households which we currently serve in West Branch and
the surrounding area. Geographic location, facilities, people, and philosophy:
all of these important elements complement our existing organization very well."
According to Sierk and to Chris Kofoed, President of West Branch State Bank,
addressing the needs of customers, the community, and employees were paramount
considerations in structuring the acquisition, and will continue to be extremely
important issues in the future.
"From the outset, we wanted to ensure a smooth, uninterrupted continuity in the
traditions which have been the hallmark of this organization since 1875," Kofoed
said. "Responsiveness to the needs of our customers, a commitment to meaningful
involvement in our community, and a concern for the professional growth of our
employees, as well as solid management and capital strength, were key factors in
this decision. Fortunately, we found all of this and more with our friends at
First National."
(continued on next page)
<PAGE>
NEWS RELEASE Page 2
"To ensure that these objectives are met in an effective, orderly manner, our
organizations have jointly developed a two-phase plan to guide us through the
transition period," Kofoed added. "During the first phase, which begins
immediately after the sale is completed, we will continue to operate as we have
in the past under the name of West Branch State Bank."
"The second phase will involve the eventual consolidation of support operations
into those of First National. By handling these support functions in one
centralized location, we will be able to free up more of our resources for
direct customer service activities, which are the heart of community banking.
Eventually, this will result in providing our customers with the ability to
access their accounts at any of what will then be at least ten First National
locations in West Branch, Iowa City, Cedar Rapids, Coralville and North Liberty.
It is something we're certainly looking forward to, and we are excited by the
prospect of joining forces to become an integral part of the area's leading
independent community banking organization."
<PAGE>
