<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-19368
-----------
COMMUNITY FIRST BANKSHARES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 46-0391436
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 MAIN AVENUE
FARGO, ND 58124
- ---------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
(701) 298-5600
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: YES X NO
---- ----
At August 8,1996, 11,453,212 shares of Common Stock were outstanding, net of
treasury shares.
-----------------------------------
1
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
FORM 10-Q
QUARTER ENDED JUNE 30, 1996
INDEX
PART I - FINANCIAL INFORMATION: PAGE
------
Item 1. Condensed Consolidated Financial Statements and Notes. . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 15
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . 16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements and Notes
COMMUNITY FIRST BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JUNE 30, DECEMBER 31,
(DOLLARS IN THOUSANDS) 1996 1995
- --------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
Cash and due from banks. . . . . . . . . . . . . . . $81,676 $106,882
Federal funds sold and securities purchased under
agreements to resell . . . . . . . . . . . . . . . 860 10,220
Interest-bearing deposits. . . . . . . . . . . . . . 1,461 3,065
Available-for-sale securities. . . . . . . . . . . . 409,076 405,127
Held-to-maturity securities (fair values: $212,856
and $222,227, respectively). . . . . . . . . . . . 215,446 221,417
Loans . . . . . . . . . . . . . . . . . . . . . . . 1,541,374 1,495,450
Less: Allowance for loan losses. . . . . . . . . (20,621) (19,549)
- --------------------------------------------------------------------------------
Net loans . . . . . . . . . . . . . . . . . . 1,520,753 1,475,901
Bank premises and equipment. . . . . . . . . . . . . 42,891 35,737
Accrued interest receivable. . . . . . . . . . . . . 26,086 25,525
Other assets . . . . . . . . . . . . . . . . . . . 20,689 20,089
Intangible assets. . . . . . . . . . . . . . . . . . 22,290 22,824
- --------------------------------------------------------------------------------
Total assets. . . . . . . . . . . . . . . . . $2,341,228 $2,326,787
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing . . . . . . . . . . . . . . $253,886 $280,292
Interest-bearing . . . . . . . . . . . . . . . . 1,698,229 1,709,649
- --------------------------------------------------------------------------------
Total deposits. . . . . . . . . . . . . . . . 1,952,115 1,989,941
Federal funds purchased and securities sold under
agreements to repurchase . . . . . . . . . . . . . 68,512 42,932
Other short-term borrowings. . . . . . . . . . . . . 105,593 40,779
Long-term debt . . . . . . . . . . . . . . . . . . . 27,586 69,788
Capital lease obligations. . . . . . . . . . . . . . 3,209 1,364
Accrued interest payable . . . . . . . . . . . . . . 13,691 14,864
Other liabilities. . . . . . . . . . . . . . . . . . 6,672 10,104
- --------------------------------------------------------------------------------
Total liabilities . . . . . . . . . . . . . . 2,177,378 2,169,772
Minority interest. . . . . . . . . . . . . . . . . . 1,236 956
Shareholders' equity:
Preferred stock. . . . . . . . . . . . . . . . . 23,000 23,000
Common stock . . . . . . . . . . . . . . . . . . 115 115
Capital surplus. . . . . . . . . . . . . . . . . 42,349 42,177
Retained earnings. . . . . . . . . . . . . . . . 98,149 91,831
Common stock in treasury, at cost --
June 30, 1996 - 50,053 shares, December 31,
1995 - 78,624 shares . . . . . . . . . . . . . (999) (1,064)
- --------------------------------------------------------------------------------
Total equity. . . . . . . . . . . . . . . . . 162,614 156,059
- --------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . $2,341,228 $2,326,787
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ------------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (RESTATED) (RESTATED)
(UNAUDITED) 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans . . . . . . . . . . . . . . . . . . . . . $35,479 $30,741 $69,988 $56,490
Investment securities . . . . . . . . . . . . . 9,372 8,581 18,601 16,646
Interest-bearing deposits . . . . . . . . . . . 48 84 82 176
Federal funds sold and resale agreements. . . . 63 224 346 396
- -------------------------------------------------------------------------------------------------------
Total interest income. . . . . . . . . . . . 44,962 39,630 89,017 73,708
Interest expense:
Deposits. . . . . . . . . . . . . . . . . . . . 17,399 16,023 35,183 29,202
Short-term and other borrowings . . . . . . . . 1,584 1,457 2,469 2,855
Long-term debt. . . . . . . . . . . . . . . . . 872 772 1,949 1,308
- -------------------------------------------------------------------------------------------------------
Total interest expense . . . . . . . . . . . 19,855 18,252 39,601 33,365
- -------------------------------------------------------------------------------------------------------
Net interest income. . . . . . . . . . . . . . . . . 25,107 21,378 49,416 40,343
Provision for loan losses. . . . . . . . . . . . . . 1,268 516 2,115 1,035
- -------------------------------------------------------------------------------------------------------
Net interest income after provision for loan
losses . . . . . . . . . . . . . . . . . . . . . 23,839 20,862 47,301 39,308
- -------------------------------------------------------------------------------------------------------
Noninterest income:
Service charges on deposit accounts . . . . . . 2,324 1,907 4,462 3,527
Fees from fiduciary activities. . . . . . . . . 683 562 1,292 1,098
Insurance commissions . . . . . . . . . . . . . 1,232 945 2,169 1,623
Net loss on sales of available-for-sale
securities. . . . . . . . . . . . . . . . . 1 51 - 13
Other . . . . . . . . . . . . . . . . . . . . . 920 1,211 1,740 2,167
- -------------------------------------------------------------------------------------------------------
Total noninterest income . . . . . . . . . . 5,160 4,676 9,663 8,428
- -------------------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits. . . . . . . . . 10,073 8,678 19,878 16,130
Net occupancy . . . . . . . . . . . . . . . . . 2,668 2,234 5,323 4,282
FDIC insurance. . . . . . . . . . . . . . . . . 57 988 119 1,860
Legal and accounting. . . . . . . . . . . . . . 350 204 735 577
Other professional service. . . . . . . . . . . 441 602 809 1,123
Data processing . . . . . . . . . . . . . . . . 304 230 468 434
Acquisitions. . . . . . . . . . . . . . . . . . 14 433 19 599
Minority interest . . . . . . . . . . . . . . . 55 43 94 80
Amortization of intangibles . . . . . . . . . . 610 462 1,184 785
Other . . . . . . . . . . . . . . . . . . . . . 3,851 3,551 7,470 6,155
- -------------------------------------------------------------------------------------------------------
Total noninterest expense . . . . . . . . . 18,423 17,425 36,099 32,025
Income before income taxes . . . . . . . . . . . . . 10,576 8,113 20,865 15,711
Income taxes . . . . . . . . . . . . . . . . . . . . 3,554 3,202 7,057 6,001
- -------------------------------------------------------------------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . $ 7,022 $ 4,911 $13,808 $9,710
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Dividends on preferred stock . . . . . . . . . . . . 403 402 805 804
- -------------------------------------------------------------------------------------------------------
Net income applicable to common equity . . . . . . . $ 6,619 $ 4,509 $13,003 $8,906
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Earnings per common and common equivalent
share:
Primary . . . . . . . . . . . . . . . . . . . . $0.57 $0.39 $1.12 $0.78
Fully diluted . . . . . . . . . . . . . . . . . $0.54 $0.38 $1.06 $0.75
Average number of common and common
equivalent shares:
Primary. . . . . . . . . . . . . . . . . . . . . 11,635,245 11,441,619 11,622,445 11,425,688
Fully diluted. . . . . . . . . . . . . . . . . . 13,083,449 12,928,660 13,084,108 12,921,187
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Common dividends declared. . . . . . . . . . . . . . $0.14 $0.12 $0.28 $0.24
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
-----------------------
(DOLLARS IN THOUSANDS) (RESTATED)
(UNAUDITED) 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $13,808 $ 9,710
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses . . . . . . . . . . . . . . . 2,115 1,035
Depreciation. . . . . . . . . . . . . . . . . . . . . . 2,655 1,939
Amortization of intangibles . . . . . . . . . . . . . . 1,184 785
Amortization of premium . . . . . . . . . . . . . . . . 1,067 918
Increase in interest receivable . . . . . . . . . . . . (561) (1,531)
(Decrease) increase in interest payable . . . . . . . . (1,173) 2,923
Other - net . . . . . . . . . . . . . . . . . . . . . . (2,594) (6,693)
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities. . . . . . . . . . . 16,501 9,086
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of acquisitions, net of cash paid. . . . . . . . . . . - (4,473)
Net decrease in interest-bearing deposits . . . . . . . . . 1,604 1,782
Purchases of available-for-sale securities. . . . . . . . . (125,321) (11,619)
Maturities of available-for-sale securities . . . . . . . . 114,193 26,709
Purchases of held-to-maturity securities. . . . . . . . . . (9,054) (2,453)
Maturities of held-to-maturity securities . . . . . . . . . 14,770 20,798
Sales of available-for-sale securities, net of gains. . . . 998 20,671
Net increase in loans . . . . . . . . . . . . . . . . . . . (46,967) (63,360)
Net increase in bank premises and equipment . . . . . . . . (9,809) (1,961)
Net increase (decrease) in minority interest. . . . . . . . 280 (4,538)
- --------------------------------------------------------------------------------------------
Net cash used in investing activities. . . . . . . . . . . . . (59,306) (18,444)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand deposits, NOW accounts and
savings accounts . . . . . . . . . . . . . . . . . . . . (49,374) (87,022)
Net increase in time accounts . . . . . . . . . . . . . . . 11,548 63,975
Net increase (decrease) in short-term and other borrowings. 90,394 (10,043)
Net (decrease) increase in long-term debt . . . . . . . . . (40,357) 41,525
Purchase of common stock held in treasury . . . . . . . . . (790) (56)
Sale of common stock held in treasury . . . . . . . . . . . 822 450
Preferred stock dividends paid. . . . . . . . . . . . . . . (805) (804)
Common stock dividends paid . . . . . . . . . . . . . . . . (3,199) (2,543)
- --------------------------------------------------------------------------------------------
Net cash provided by financing activities. . . . . . . . . . . 8,239 5,482
- --------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents. . . . . . . . . . . (34,566) (3,876)
Cash and cash equivalents at beginning of period . . . . . . . 117,102 85,005
Cash and cash equivalents at end of period . . . . . . . . . . $ 82,536 $81,129
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements, which include the accounts of Community First Bankshares, Inc.
(the "Company"), its wholly-owned data processing, credit origination and
insurance agency subsidiaries, and its twelve majority-owned subsidiary
banks, have been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting solely of normal recurring accruals)
considered necessary for fair presentation have been included.
The Company acquired Minowa Bancshares, Inc. ("Minowa"), on February
22, 1995, and First Community Bankshares, Inc. ("First Community"), on July
3, 1995, in transactions accounted for as poolings of interests. Accordingly,
the consolidated financial information has been restated for all periods
prior to the acquisitions to include the accounts and operations of these
institutions. The acquisitions of Minowa and First Community resulted in the
addition of approximately $224 million and $153 million in assets,
respectively.
EARNINGS PER COMMON SHARE
Primary earnings per common share is calculated by dividing net
income, after reduction for preferred stock dividends declared, by the
weighted average number of common shares and equivalents outstanding. Common
share equivalents included in the computation represent the number of shares
of common stock issuable upon assumed exercise of stock options and warrants
during each period.
On a fully diluted basis, both net income and common shares
outstanding are adjusted to assume the conversion of convertible preferred
stock outstanding from the beginning of the period or date of issuance, if
later. Such adjustments to the weighted average number of shares of common
stock outstanding are made only when such adjustments dilute earnings per
share.
NOTE B - BUSINESS COMBINATIONS
On June 25, 1996, the Company signed a definitive merger agreement
with Mountain Parks Financial Corp. ("Mountain Parks"), a multi-bank holding
company headquartered in Denver, Colorado, with banking offices in 17
Colorado communities. Mountain Parks also has two subsidiaries, including
Equity Lending, Inc., an originator of nonconforming residential mortgages,
and Mountain Parks Financial Services, Inc., which purchases sub-prime auto
contracts and other installment loans. Upon completion of the merger, the
Company will issue 1.275 shares of the Company's common stock for each share
of common stock outstanding of Mountain Parks, which would result in the
issuance of approximately 5.2 million shares of the Company's common stock in
the merger. Mountain Parks has total assets of approximately $500 million.
The completion of the transaction is subject to the approval of the
shareholders of the Company, the shareholders of Mountain Parks, regulatory
authorities and other conditions. This transaction is expected to be
completed in either the fourth quarter of 1996 or first quarter of 1997 and
is expected to be accounted for using the pooling of interests method of
accounting.
On March 8, 1996, the Company signed a definitive merger agreement
with Financial Bancorp, Inc. ("Financial Bancorp"), which owns 100% of the
outstanding capital stock of the Trinidad National Bank, Trinidad, Colorado.
Upon completion of the merger, the Company will issue approximately 545,000
shares of common stock to holders of Financial Bancorp common stock.
Financial Bancorp has total assets of approximately $68 million. The
completion of this transaction is subject to approval by the shareholders of
Financial Bancorp and other conditions. This transaction is expected to be
completed in the third quarter of 1996 and is expected to be accounted for
using the pooling of interests method of accounting.
6
<PAGE>
NOTE C - INVESTMENTS
The following is a summary of available-for-sale and held-to-
maturity securities at June 30, 1996 (in thousands):
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
- -------------------------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Treasury . . . . . . . . . $114,215 $ 188 $(1,028) $113,375
United States Government agencies. . . . 42,218 88 (575) 41,731
Mortgage-backed securities . . . . . . . 203,899 902 (2,577) 202,224
Collateralized mortgage obligations. . . 46,747 214 (405) 46,556
Other securities . . . . . . . . . . . . 5,225 38 (73) 5,190
- -------------------------------------------------------------------------------------
$412,304 $1,430 $(4,658) $409,076
<CAPTION>
HELD-TO-MATURITY SECURITIES
- -------------------------------------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed securities . . . . . . . $96,324 $ 444 $(3,095) $93,673
State and political securities . . . . . 54,110 443 (384) 54,169
Other securities . . . . . . . . . . . . 65,012 2 - 65,014
- -------------------------------------------------------------------------------------
$215,446 $ 889 $(3,479) $212,856
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
Proceeds from the sale of available-for-sale securities during the
three months ended June 30, 1996 and 1995, were $998,000 and $19,725,000,
respectively. Gains of $0 and $61,000 were realized on sales during 1996 and
1995. Gross losses of $0 and $11,000 were realized on these sales during
1996 and 1995, respectively. Gains and losses at disposition of these
securities were computed using the specific identification method.
NOTE D - LOANS
The composition of the loan portfolio at June 30, 1996, was as
follows (in thousands):
Real estate. . . . . . . . . . . $ 592,700
Commercial . . . . . . . . . . . 443,421
Agricultural . . . . . . . . . . 224,182
Consumer and other . . . . . . . 281,071
--------
1,541,374
Less allowance for loan losses . (20,621)
--------
Net loans . . . . . . . . . . $1,520,753
--------
--------
NOTE E - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET
In the normal course of business, the Company is party to financial
instruments with off-balance sheet risk to meet the financing needs of its
customers and to manage its interest rate risk. These financial instruments
include commitments to extend credit and letters of credit. The contract or
notional amounts of these financial instruments at June 30, 1996, were as
follows (in thousands):
Commitments to extend credit. . $259,990
Letters of credit . . . . . 6,792
7
<PAGE>
NOTE F - SUBORDINATED NOTES
Long-term debt at June 30, 1996, included $23 million in subordinated
notes issued in April 1993. These notes are due April 15, 2000, and bear an
interest rate of 7.75%, with interest payable monthly. At June 30, 1996,
$13.8 million of the notes qualified as Tier 2 capital.
NOTE G - INCOME TAXES
The Company's effective tax rate has declined due to expansion
into additional states and implementation of certain tax strategies.
The reconciliation between the provision for income taxes and the
amount computed by applying the statutory federal income tax rate was as
follows (in thousands):
JUNE 30, 1996
-------------
35% of pretax income. . . . . . . . . . . . . . . . $3,702
State income tax, net of federal tax benefit. . . . 357
Minority interest . . . . . . . . . . . . . . . . . 19
Tax-exempt interest . . . . . . . . . . . . . . . . (640)
Amortization of goodwill. . . . . . . . . . . . . . 118
Other . . . . . . . . . . . . . . . . . . . . . . . (4)
-------------
Provision for income taxes. . . . . . . . . . . . . $3,554
NOTE H - SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30 (IN THOUSANDS) 1996 1995
- -------------------------------------------------------------------------
Unrealized loss on available-for-sale securities $5,369 $(6,489)
NOTE I - CONTINGENT LIABILITIES
As a result of certain legal proceedings related to the May 1995
purchase of Alliance, the Company retained a portion of the purchase price in
the form of a contingency reserve. Upon resolution of various proceedings,
associated balances may be remitted to the former Abbott Bank Group
shareholders. At June 30, 1996, the reserve balance was $1.1 million. All
remaining issues subject to the reserve are expected to be resolved within a
two-year period. It is management's expectation that resolution of the
remaining issues will not exceed the current reserve balance.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION
The following is a discussion of the Company's financial condition as
of June 30, 1996, and December 31, 1995, and its results of operations for
the six month periods ended June 30, 1996 and 1995. The Company completed
seven acquisitions during 1995, and, as of June 30, 1996, the Company had two
pending bank acquisitions. Each of these acquisitions has had, or will have,
an effect upon the Company's results of operations and financial condition.
During 1995, the Company made the following acquisitions of banks or
associated holding companies:
TOTAL ASSETS
AT DATE OF
MONTH AND HOLDING COMPANY OR ACQUISITION
YEAR LOCATION OF BANK (IN MILLIONS)
------------------------------------------------------------
October 1995 Craig, Colorado $31
October 1995 Beach, North Dakota 44
July 1995 First Community (Colorado) 153
May 1995 Alliance, Nebraska 293
May 1995 Hankinson, North Dakota 8
February 1995 Minowa 224
January 1995 Vail, Colorado *
- -------------
* The Company's acquisition consists of a 24.75% interest in the
holding company that owns 100% of the Vail Bank, which had total assets of
$82 million.
The Minowa and First Community acquisitions were accounted for using the
pooling of interests method. Accordingly, the consolidated financial
information has been restated to reflect the results of operations of the
three companies on a combined basis for all periods presented. Each of the
other acquisitions described in the above table is reflected in the Company's
results of operations for all periods following the acquisition and is
reflected in the Company's statement of financial condition at all dates
subsequent to the acquisition.
OVERVIEW
For the three months ended June 30, 1996, net income was $7.0 million,
an increase of $2.1 million, or 42.9%, from the $4.9 million earned during
the 1995 period. The Company's primary earnings per common share for the
second quarter of 1996 were $0.57, compared to $0.39 in 1995. Fully diluted
earnings per common share for the second quarter of 1996 were $0.54. Net
income applicable to common equity for second quarter 1996 was reduced by
$403,000, due to dividends paid on preferred stock.
Return on average assets was 1.22% for the second quarter of 1996,
compared with .98% for the 1995 period. Return on average common
shareholders' equity for the 1996 and 1995 periods was 19.20% and 15.39%,
respectively. Factors contributing to these changes included incremental net
income provided by entities acquired in 1995, an increase in net interest
margin and an increase in noninterest income.
For the six months ended June 30, 1996, net income was $13.8 million,
an increase of $4.1 million, or 42.3%, from the $9.7 million earned during
the 1995 period. The increase was primarily due to earnings contributed by
banks acquired during 1995. Primary earnings per common share for the six
months ended June 30, 1996, were $1.12, compared to $0.78 in 1995. Fully
diluted earnings per common share for the six months ended June 30, 1996,
were $1.06. Net income applicable to common equity for the six month period
was reduced by $805,000, due to dividends paid on preferred stock.
Return on average assets and return on common equity for the six
months ended June 30, 1996, were 1.20% and 19.15%, respectively, as compared to
the 1995 ratios of 1.02% and 15.57%, respectively.
9
<PAGE>
Total assets were $2,341 million and $2,327 million at June 30, 1996
and December 31, 1995, respectively. The $46 million increase in loans was
funded through the combination of a $35 million reduction in cash and cash
equivalents, a $38 million seasonal decrease in deposits and a $48 million
increase in net borrowings, primarily short-term borrowings. Bank premises
and equipment increased $7.2 million, due principally to the Company's
purchase, through a subsidiary, of its Fargo office facility and equipment
purchases at the data processing subsidiary.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income for the three months ended June 30, 1996, was
$25.1 million, an increase of $3.7 million, or 17.3%, from the net interest
income of $21.4 million earned during the 1995 period. The increase was
principally due to the increased asset base associated with the acquisitions
completed during 1995. In addition, net interest margin increased to 4.90%
during the second quarter of 1996, from 4.69% during the 1995 period.
Net interest income for the six months ended June 30, 1996, was $49.4
million, an increase of $9.1 million, or 22.6%, from the net interest income
of $40.3 million earned during the 1995 period.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended June 30,
1996, was $1,268,000, an increase of $752,000, or 145.7%, from the $516,000
provision during the 1995 period. The provision for loan losses for the six
months ended June 30, 1996, was $2,115,000, an increase of $1,080,000, or
104.4%, from the $1,035,000 provision during the 1995 period. This increase
reflects the Company's objective of maintaining adequate reserve levels in
recognition of significant loan growth, including acquisitions completed
during 1995.
NONINTEREST INCOME
Noninterest income for the three months ended June 30, 1996, was $5.2
million, an increase of $484,000, or 10.4%, from the 1995 level of $4.7
million. The increase was due primarily to the combination of an increase of
$265,000 as a result of the banks acquired in 1995, an increase of $305,000
in the existing bank deposit service charges and a $287,000 increase in
insurance commissions, offset by a decrease in miscellaneous bank fees of
$407,000.
Noninterest income for the six months ended June 30, 1996, was $9.7
million, an increase of $1.3 million, or 15.5%, from the level of $8.4
million earned in the 1995 period. The increase was primarily due to the
combination of an increase of $860,000 as a result of banks acquired in 1995,
an increase of $570,000 in bank deposit service charges, an increase of
$546,000 in insurance commissions and a reduction in miscellaneous fee income
of $805,000.
NONINTEREST EXPENSE
Noninterest expense for the three months ended June 30, 1996, was
$18.4 million, an increase of $1.0 million, or 5.8%, from the level of $17.4
million during the 1995 period. The increase was principally due to an
increase of $1.4 million, or 16.1%, in salaries and employee benefits, a
significant portion resulting from banks acquired in 1995. Net occupancy
increased $434,000, or 19.4%, from $2.2 million in the period ended June 30,
1995, to $2.7 million at the end of the current period, principally from
banks acquired during 1995. FDIC expense of $57,000 for the period ended
June 30, 1996, decreased $931,000 from the $988,000 for the same period in
1995, reflecting a significant decrease in deposit premiums. Amortization of
intangibles increased $148,000, or 32.0%, from $462,000 in the period ended
June 30,1995, to $610,000 in the current period, due to 1995 acquisitions.
10
<PAGE>
Noninterest expense for the six months ended June 30, 1996, was $36.1
million, an increase of $4.1 million, or 12.8%, from the level of $32.0
million during the 1995 period. The increase was principally from banks
acquired in 1995. Salaries and benefits increased $3.8 million from $16.1
million in the 1995 period to $19.9 million for the 1996 period, $2.0 million
of which is attributed to annual incremental increases and banks acquired in
1995. Net occupancy was $5.3 million, a $1.0 million, or 23.3%, increase from
$4.3 million in the 1995 period. FDIC expense decreased $1.8 million, or
94.7%, from the 1995 level of $1.9 million to $100,000 during the 1996 period
as a result of a significant decrease in deposit premium rates.
PROVISION FOR INCOME TAXES
The provision for income taxes for the three months ended June
30,1996, was $3.6 million, an increase of $352,000, or 11.0%, from the 1995
level of $3.2 million, due primarily to the increase in pre-tax income.
The provision for income taxes for the six months ended June 30,
1996, was $7.1 million, an increase of $1.1 million, or 18.3%, from the 1995
level of $6.0 million, due to increase in the level of pretax income.
FINANCIAL CONDITION
LOANS
At June 30, 1996, total loans were $1,541 million, an increase of $46
million, or 3.1%, from the December 31, 1995, level of $1,495 million.
The following table presents the Company's balance of each major
category of loans:
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
----------------------------------------------------
PERCENT OF PERCENT OF
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
----------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Loan category:
Real estate. . . . . . . . . . $592,700 38.45% $ 573,700 38.36%
Commercial . . . . . . . . . . 443,421 28.77% 443,878 29.68%
Agricultural . . . . . . . . . 224,182 14.54% 223,796 14.97%
Consumer and other . . . . . . 281,071 18.24% 254,076 16.99%
- ------------------------------------------------------------------------------------
Total loans . . . . . . . . $1,541,374 100.00% 1,495,450 100.00%
------ ------
------ ------
Less allowance for loan losses . . 20,621 19,549
---------- ---------
Total . . . . . . . . . . . . $1,520,753 $1,475,901
---------- ---------
---------- ---------
</TABLE>
11
<PAGE>
NONPERFORMING ASSETS
At June 30, 1996, nonperforming loans were $4.7 million, an increase
of $1.5 million, or 46.9%, from the $3.2 million level at December 31, 1995.
The increase was principally due to transferring selected commercial and
agricultural loans to nonaccrual status as a result of regularly scheduled
loan reviews, principally at banks acquired during 1995. At June 30, 1996,
nonperforming loans as a percent of total loans was .31%, up from the
December 31, 1995 level of .22%. Other real estate owned ("OREO") was $1.7
million at June 30, 1996, and December 31, 1995.
Nonperforming assets of the Company are summarized in the following
table:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------------------------
<S> <C> <C>
Loans:
Nonaccrual loans . . . . . . . . . . . . . . . . . . . $4,081 $2,740
Restructured loans . . . . . . . . . . . . . . . . . . 642 481
- --------------------------------------------------------------------------------------
Nonperforming loans. . . . . . . . . . . . . . . . . . 4,723 3,221
Other real estate owned . . . . . . . . . . . . . . . . . 1,662 1,701
- --------------------------------------------------------------------------------------
Nonperforming assets. . . . . . . . . . . . . . . . . . . $6,385 $4,922
- --------------------------------------------------------------------------------------
Loans 90 days or more past due but still accruing . . . . $2,393 $779
- --------------------------------------------------------------------------------------
Nonperforming loans as a percentage of total loans. . . . .31% .22%
Nonperforming assets as a percentage of total assets. . . .27% .21%
Nonperforming assets as a percentage of loans and OREO. . .41% .33%
</TABLE>
12
<PAGE>
ALLOWANCE FOR LOAN LOSSES
At June 30, 1996, the allowance for loan losses was $20.6 million, an
increase of $1.1 million from the December 31, 1995 level of $19.5 million.
Net charge-offs during the 1996 period were $313,000 more than those incurred
during the three months ended June 30, 1995.
At June 30, 1996, the allowance for loan losses as a percentage of
total loans was 1.34%, a decrease from the June 30, 1995, level of 1.38%.
During the six months ended June 30, 1996, charge-offs were $1,458,000, an
increase of $376,000, or 34.8%, from the $1,082,000 charged off during the
1995 period. These charge-offs related to the Company conforming the credit
practices of the acquired institutions to those of its own and the continued
periodic review of the existing loan portfolios.
The following table sets forth the Company's allowance for loans
losses:
JUNE 30,
1996 1995
---------------------
(RESTATED)
(DOLLARS IN THOUSANDS)
Balance at beginning of period . . . . . . . . . . . . . . $19,549 $15,482
Acquired bank allowance. . . . . . . . . . . . . . . . . . - 3,627
Charge-offs:
Commercial . . . . . . . . . . . . . . . . . . . . . . 366 166
Real estate. . . . . . . . . . . . . . . . . . . . . . 90 78
Agricultural . . . . . . . . . . . . . . . . . . . . . 144 286
Consumer and other . . . . . . . . . . . . . . . . . . 858 552
- --------------------------------------------------------------------------------
Total charge-offs. . . . . . . . . . . . . . . . . 1,458 1,082
- --------------------------------------------------------------------------------
Recoveries:
Commercial . . . . . . . . . . . . . . . . . . . . . . 74 131
Real estate. . . . . . . . . . . . . . . . . . . . . . 181 7
Agricultural . . . . . . . . . . . . . . . . . . . . . 44 22
Consumer and other . . . . . . . . . . . . . . . . . . 116 204
- --------------------------------------------------------------------------------
Total recoveries . . . . . . . . . . . . . . . . . 415 364
- --------------------------------------------------------------------------------
Net charge-offs. . . . . . . . . . . . . . . . . . . . . . 1,043 718
Provision charged to operations. . . . . . . . . . . . . . 2,115 1,035
- --------------------------------------------------------------------------------
Balance at end of period . . . . . . . . . . . . . . . . . $20,621 $19,426
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Allowance as a percentage of total loans . . . . . . . . . 1.34% 1.38%
Annualized net charge-offs to average loans outstanding. . 0.14% 0.12%
INVESTMENTS
The investment portfolio, including available-for-sale securities and
held-to-maturity securities, decreased $2 million, or .3%, to $625 million at
June 30, 1996, from $627 million at December 31, 1995. At June 30, 1996, the
investment portfolio represented 26.7% of total assets, compared with 26.9%
at December 31, 1995. In addition to investment securities, the Company had
investments in interest-bearing deposits of $1 million at June 30, 1996, a $2
million decrease from the $3 million at December 31, 1995.
13
<PAGE>
DEPOSITS
Total deposits at June 30, 1996, were $1,952 million, a decrease of
$38 million, or 1.9%, from $1,990 million at December 31, 1995.
Noninterest-bearing deposits at June 30, 1996, were $254 million, a decrease
of $26 million, or 9.3%, from $280 million at December 31, 1995. The
Company's core deposits as a percent of total deposits were 90.8% and 91.4%
as of June 30, 1996, and December 31, 1995, respectively. Interest-bearing
deposits at June 30, 1996, and December 31, 1995, were $1,698 million and
$1,710 million, respectively. The shift in the Company's deposit mix from
noninterest-bearing deposits to interest-bearing deposits was due to
seasonality of noninterest-bearing deposits, which were at relatively high
year-end levels, and an increase in time deposits in response to a rising
interest rate environment.
BORROWINGS
Short-term borrowings of the Company were $106 million as of June 30,
1996, as compared to $41 million at December 31, 1995, an increase of $65
million, or 158.5%. The increase is a result of management's strategy to use
short-term borrowings to fund loan growth and replace selected long-term debt.
Long-term debt of the Company was $28 million as of June 30, 1996, a
decrease of $42 million, or 60.0%, from the $70 million as of December 31,
1995.
CAPITAL MANAGEMENT
Shareholders' equity increased $7 million, or 4.5%, to $163 million at
June 30, 1996, from $156 million at December 31, 1995. At June 30, 1996, the
Company's Tier 1 capital, total risk-based capital and leverage ratios were
8.27%, 10.26% and 6.14%, respectively, compared to minimum required levels of
4%, 8% and 3%, respectively (subject to change and the discretion of
regulatory authorities to impose higher standards in individual cases). At
June 30, 1996, the Company had risk-weighted assets of $1,735 million.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
None.
ITEM 2. CHANGES IN SECURITIES:
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
The Company held its Annual Meeting of Shareholders on May 14, 1996.
The shareholders took the following actions:
(i) The shareholders elected ten (10) directors to hold office until
the next Annual Meeting of Shareholders or until their successors are
elected. The shareholders present in person or by proxy cast the following
numbers of votes in connection with the election of directors, resulting in
the election of all of the nominees:
VOTES FOR VOTES WITHHELD
---------- --------------
Patricia A. Adam 10,265,204 55,759
James T. Anderson 10,264,442 56,522
Patrick E. Benedict 10,264,968 55,996
Patrick Delaney 10,264,120 56,844
John H. Flittie 10,264,424 56,539
Cargill MacMillan, Jr. 10,264,240 56,724
Donald R. Mengedoth 10,264,810 56,154
Dean E. Smith 10,265,707 55,257
Thomas C. Wold 10,262,847 58,117
Harvey L. Wollman 10,265,715 55,249
(ii) The shareholders ratified and approved the Company's 1996 Stock
Option Plan. 6,202,997 votes were cast for the resolution; 2,403,823 votes
were cast against the resolution; 381,167 votes abstained; and there were
1,332,976 broker non-votes.
(iii) The shareholders ratified and approved the Company's 1996
Supplemental Executive Retirement Plan. 9,449,999 votes were cast for the
resolution; 355,907 votes were cast against the resolution; 400,299 votes
abstained; and there were 114,759 broker non-votes.
(iv) The shareholders ratified and approved the election of Ernst &
Young LLP as the independent public accountants for the Company for the
current fiscal year. 10,290,050 votes were cast for the resolution; 5,203
votes were cast against the resolution; and 25,710 votes abstained.
ITEM 5. OTHER INFORMATION:
None.
15
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) EXHIBITS:
2.1 Agreement and Plan of Reorganization dated as of June 25,
1996, between Mountain Parks Financial Corp. and the
Company.
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K:
None.
16
<PAGE>
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.
COMMUNITY FIRST BANKSHARES, INC.
Date: August 13, 1996 /s/ MARK A. ANDERSON
---------------------------------------------
Mark A. Anderson
Executive Vice President, Chief
Financial Officer, Treasurer, Secretary
(Principal Financial and Accounting Officer)
17
<PAGE>
6/24/96
_______________________________________________________________________________
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
COMMUNITY FIRST BANKSHARES, INC.
AND
MOUNTAIN PARKS FINANCIAL CORP.
_______________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.01. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.02. EFFECTIVE TIME OF THE MERGER . . . . . . . . . . . . . . . . . . . -1-
1.03. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK OF MPF . . . . . . . . . . . . . . . . -2-
2.01. EFFECT ON MPF COMMON STOCK . . . . . . . . . . . . . . . . . . . . -2-
2.02. ADJUSTMENTS TO EXCHANGE RATIO. . . . . . . . . . . . . . . . . . . -2-
2.03. EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . -2-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MPF. . . . . . . . . . . . . . . . . . . . -5-
3.01. ORGANIZATION, STANDING AND POWER . . . . . . . . . . . . . . . . . -5-
3.02. SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
3.03. CAPITAL STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . -6-
3.04. AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
3.05. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . -7-
3.06. REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.07. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS. . . . . . . . . . -9-
3.08. LITIGATION AND CLAIMS. . . . . . . . . . . . . . . . . . . . . . -10-
3.09. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
3.10. CERTAIN AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . -11-
3.11. BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . -12-
3.12. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
3.13. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . -14-
3.14. PROPERTIES, LEASES AND OTHER AGREEMENTS. . . . . . . . . . . . . -15-
3.15. OPINION OF FINANCIAL ADVISOR . . . . . . . . . . . . . . . . . . -16-
3.16. VOTES REQUIRED . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.17. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.18. VOTING AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . -16-
3.19. AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
3.20. AFFILIATE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . -16-
3.21. INTEREST RATE RISK MANAGEMENT INSTRUMENTS. . . . . . . . . . . . -17-
3.22. REGULATORY IMPEDIMENTS . . . . . . . . . . . . . . . . . . . . . -17-
3.23. FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . -17-
(i)
<PAGE>
3.24. NO DISCUSSIONS . . . . . . . . . . . . . . . . . . . . . . . . . -17-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CFB. . . . . . . . . . . . . . . . . . . -18-
4.01. ORGANIZATION, STANDING AND POWER . . . . . . . . . . . . . . . . -18-
4.02. CFB SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . -18-
4.03. CAPITAL STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . -19-
4.04. AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
4.05. CFB FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . -19-
4.06. REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
4.07. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS. . . . . . . . . -21-
4.08. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
4.09. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
4.10. CERTAIN AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . -23-
4.11. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
4.12. ABSENCE OF CERTAIN CHANGES OR EVENTS . . . . . . . . . . . . . . -24-
4.13. PROPERTIES, LEASES AND OTHER AGREEMENTS. . . . . . . . . . . . . -24-
4.14. VOTES REQUIRED . . . . . . . . . . . . . . . . . . . . . . . . . -25-
4.15. TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
4.16. AFFILIATE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . -25-
4.17. REGULATORY IMPEDIMENTS . . . . . . . . . . . . . . . . . . . . . -25-
4.18. FULL DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . -25-
ARTICLE V
COVENANTS OF MPF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
5.01. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . -26-
5.02. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . -27-
5.03. LETTERS OF ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . -30-
5.04. ACCESS AND INFORMATION . . . . . . . . . . . . . . . . . . . . . -30-
5.05. UPDATE DISCLOSURE: BREACHES. . . . . . . . . . . . . . . . . . . -31-
5.06. AFFILIATES; TAX TREATMENT. . . . . . . . . . . . . . . . . . . . -31-
5.07. DISSENT PROCESS. . . . . . . . . . . . . . . . . . . . . . . . . -31-
5.08. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
5.09. DELIVERY OF SHAREHOLDER LISTS. . . . . . . . . . . . . . . . . . -32-
5.10. SHAREHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . -32-
5.11. ACQUISITIONS OF REAL ESTATE. . . . . . . . . . . . . . . . . . . -32-
5.12. PROCESSING CONTRACTS . . . . . . . . . . . . . . . . . . . . . . -33-
5.13. BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . -33-
ARTICLE VI
COVENANTS OF CFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
6.01. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . -33-
6.02. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . -34-
(ii)
<PAGE>
6.03. CFB RIGHTS PLAN. . . . . . . . . . . . . . . . . . . . . . . . . -34-
6.04. ACCESS AND INFORMATION . . . . . . . . . . . . . . . . . . . . . -35-
6.05. BREACHES . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
6.06. LISTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
6.07. CFB BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . . . . -36-
6.08. TAX TREATMENT. . . . . . . . . . . . . . . . . . . . . . . . . . -36-
6.09. LETTERS OF ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . -36-
ARTICLE VII
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
7.01. FILINGS AND APPROVALS. . . . . . . . . . . . . . . . . . . . . . -37-
7.02. REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . -37-
7.03. ENVIRONMENTAL AUDITS . . . . . . . . . . . . . . . . . . . . . . -39-
7.04. REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -39-
7.05. BROKERS OR FINDERS . . . . . . . . . . . . . . . . . . . . . . . -40-
7.06. INDEMNIFICATION AND INSURANCE. . . . . . . . . . . . . . . . . . -40-
7.07. ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. . . . . . . . . . . . -41-
ARTICLE VIII
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . -42-
8.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER . . . -42-
8.02. CONDITIONS TO OBLIGATIONS OF CFB . . . . . . . . . . . . . . . . -43-
8.03. CONDITIONS TO OBLIGATIONS OF MPF . . . . . . . . . . . . . . . . -46-
ARTICLE IX
TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . -48-
9.01. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . -48-
9.02. INVESTIGATION AND REVIEW . . . . . . . . . . . . . . . . . . . . -49-
9.03. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . -49-
9.04. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . -49-
9.05. EXTENSION; WAIVER. . . . . . . . . . . . . . . . . . . . . . . . -50-
9.06. TERMINATION FEE. . . . . . . . . . . . . . . . . . . . . . . . . -50-
9.07. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
ARTICLE X
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
10.01. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. . . . -51-
10.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -51-
10.03. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . -52-
10.04. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . -52-
10.05. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF
OWNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . . . . . -52-
10.06. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . -52-
10.07. PUBLICITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . -52-
(iii)
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10.08. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
10.09. KNOWLEDGE OF THE PARTIES . . . . . . . . . . . . . . . . . . . . -53-
10.10. JURY WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . -53-
(iv)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 25, 1996
("Agreement"), between COMMUNITY FIRST BANKSHARES, INC., a Delaware
corporation ("CFB"), and MOUNTAIN PARKS FINANCIAL CORP., a Delaware
corporation ("MPF").
WHEREAS, subject to full due diligence and final approval by the
respective Boards of Directors of CFB and MPF, the respective Boards of
Directors of CFB and MPF have approved the terms of merger of MPF with and
into CFB (the "Merger") in accordance with the terms and conditions hereof
and of the Plan of Merger in the form attached hereto (the "Plan of Merger",
and, collectively with this Agreement, the "Merger Agreements");
WHEREAS, the respective Boards of Directors of CFB and MPF believe that
the Merger, and the exchange of shares of CFB Common Stock, $.01 par value,
(the "CFB Common Stock") for all the outstanding shares of MPF Common Stock
(as defined SECTION 2.01 (a)), pursuant and subject to the terms of this
Agreement and the Plan of Merger is desirable and in the best interests of
their respective corporations and stockholders;
WHEREAS, CFB and MPF desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe various
conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
1.01. THE MERGER. Subject to the terms and conditions of this Agreement,
CFB and MPF agree to effect the Merger in accordance with the Delaware
General Corporation Law ("DGCL").
1.02. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of the
Merger Agreements, a certificate of merger (the "Certificate of Merger")
shall be duly prepared and executed by CFB and MPF and thereafter delivered
to the Secretary of State of the State of Delaware for filing, as provided in
the DGCL, on or as soon as practicable after the Closing Date (as defined in
SECTION 1.03). The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware or
at such later time as is provided in the Certificate of Merger (the
"Effective Time").
1.03. CLOSING. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. on a date (the "Closing Date") to be specified by the parties,
which, unless both parties agree, shall be no later than the thirtieth
business day after the latest to occur of (i) receipt of all necessary
approvals of the Merger, from the Board of Governors of the Federal Reserve
System (the "Federal Reserve
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Board"), and any other applicable bank regulatory authority and the
expiration of any waiting periods imposed by law, (ii) the date on which the
stockholders of CFB approve the Merger, (iii) the date on which the
stockholders of MPF approve the Merger and (iv) unless waived by CFB,
satisfaction of the condition set forth in SECTION 8.02(l). The Closing will
take place at the offices of CFB, unless another place is agreed to in
writing by the parties hereto. Notwithstanding the foregoing, if the Closing
does not take place on the date referred to in the first sentence of this
Section because any condition to the obligations of CFB or MPF under this
Agreement is not met on that date, the other party may postpone the Closing
from time to time to any designated subsequent business day not more than
thirty (30) days after the original or postponed date on which the Closing
was to occur by delivering notice of such postponement on the date the
Closing was to occur.
ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK OF MPF
2.01. EFFECT ON MPF COMMON STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares
of MPF's common stock, $.001 par value ("MPF Common Stock"), but subject to
the provisions of Section 262 of the DGCL with respect to the rights of
dissenting stockholders and subject to adjustment pursuant to SECTION 2.02,
each then issued and outstanding share of MPF Common Stock shall be converted
into the right to receive 1.275 shares (the "Exchange Ratio") of fully paid
and nonassessable CFB Common Stock. All such shares of MPF Common Stock
shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist. Each MPF shareholder's certificate or
certificates previously representing shares of MPF Common Stock (each a "MPF
Certificate") shall be aggregated (if a single stockholder holds more than
one MPF Certificate) and exchanged for a certificate representing whole
shares of CFB Common Stock and cash in lieu of any fractional share issued in
consideration therefor upon the surrender of such MPF Certificates in
accordance with SECTION 2.03, without any interest thereon. In accordance
with the terms and conditions of the CFB Shareholder Rights Agreement dated
January 19, 1995 (the "Rights Plan") there shall be included with each share
of CFB Common Stock exchanged in the Merger one CFB Right. Prior to the
Distribution Date all references in this Agreement to the CFB Common Stock to
be received pursuant to the Merger shall be deemed to include the CFB Rights.
2.02. ADJUSTMENTS TO EXCHANGE RATIO. If prior to the Effective Time CFB
shall declare a stock dividend or distribution upon or subdivide, split up,
reclassify or combine its shares of CFB Common Stock or declare a dividend or
make a distribution on CFB Common Stock of any security convertible into CFB
Common Stock or exercisable to purchase CFB Common Stock (including without
limitation, distribution of any Rights after a Distribution Date),
appropriate adjustment or adjustments will be made in the Exchange Ratio.
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2.03. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. At the Closing, CFB shall deposit with Norwest
Bank Minnesota, N.A. or such other bank or trust company acceptable to the
parties (the "Exchange Agent"), for the benefit of the holders of shares of
MPF Common Stock, certificates dated the Closing Date representing the shares
of CFB Common Stock and the cash to be paid in lieu of fractional shares
(such cash and certificates for shares of CFB Common Stock together with any
dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund") to be issued and paid pursuant to SECTION 2.01 in
exchange for the outstanding shares of MPF Common Stock.
(b) EXCHANGE PROCEDURES. Within five (5) business days after the
Closing Date, CFB shall cause the Exchange Agent to mail to each holder of
record of a MPF Certificate or MPF Certificates (i) a letter of transmittal
which shall specify that delivery shall be effective, and risk of loss and
title to the MPF Certificate(s) shall pass, only upon delivery of the MPF
Certificate(s) to the Exchange Agent and which shall be in such form and have
such other provisions as CFB and MPF may reasonably specify not later than
five business days before the Closing Date and (ii) instructions for use in
effecting the surrender of the MPF Certificate(s) in exchange for a
certificate representing shares of CFB Common Stock and the cash to be paid
in lieu of any fractional share. Upon surrender of a shareholder's MPF
Certificate or MPF Certificates for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the holder of such
MPF Certificate(s) shall be entitled to receive in exchange therefor (1) a
certificate representing the number of whole shares of CFB Common Stock and
(2) a check representing the amount of the cash to be paid in lieu of a
fractional share, if any, as provided in Section 2.03(e) below, and the MPF
Certificate(s) so surrendered shall forthwith be canceled. No interest will
be paid on the cash in lieu of fractional shares, if any, payable to holders
of MPF Certificates. In the event of a transfer of ownership of MPF Common
Stock which is not registered in the transfer records of MPF, a CFB
Certificate representing the proper number of shares of CFB Common Stock,
together with a check for the cash to be paid in lieu of a fractional share,
may be issued to such a transferee if the MPF Certificate representing such
MPF Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer. Any applicable
stock transfer taxes shall be paid by CFB.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES; VOTING. The
Exchange Agent shall receive and hold, for distribution without interest to
the first record holder of the certificate or certificates representing
shares of MPF Common Stock, all dividends and other distributions paid on
shares of CFB Common Stock held in the Exchange Agent's name as agent.
Holders of unsurrendered MPF Certificates shall not be entitled to vote after
the Closing Date at any meeting of CFB shareholders until they have exchanged
their MPF Certificates.
(d) TRANSFERS. After the Effective Time, there shall be no transfers
on the stock transfer books of MPF of the shares of MPF Common Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, MPF Certificates are presented to CFB, they shall be canceled
and exchanged for the shares of CFB Common Stock and cash, in an amount as
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determined in accordance with the provisions of SECTION 2.01, 2.02 and this
SECTION 2.03, deliverable in respect thereof pursuant to this Agreement. MPF
Certificates surrendered for exchange by any person constituting an
"affiliate" of MPF for purposes of Rule 145(c) under the Securities Act of
1933, as amended (the "Securities Act"), shall not be exchanged until CFB has
received a written agreement from such person as provided in SECTION 5.06.
(e) FRACTIONAL SHARES. No fractional shares of CFB Common Stock shall
be issued pursuant hereto. In lieu of the issuance of any fractional share,
cash adjustments will be paid to holders in respect of any fractional share
of CFB Common Stock that would otherwise be issuable, and the amount of such
cash adjustment shall be equal to such fractional proportion of the Trading
Value of a share of CFB Common Stock. For purposes of calculating fractional
shares, a holder of MPF Common Stock with more than one MPF Certificate shall
receive cash only for the fractional share remaining after aggregating all of
its, his or her MPF Common Stock to be exchanged.
As used herein, the "Trading Value" of the CFB Common Stock shall be the
average of the per share closing price for the CFB Common Stock as reported
by the NASDAQ National Market System for the 20 trading days ending at the
end of the fourth trading day immediately preceding the Closing Date (as
appropriately and proportionately adjusted in the event that, between the
date hereof and the termination of such twenty trading day period, shares of
CFB Common Stock shall be changed into a different number of shares or a
different class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment
or stock dividend).
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any CFB Common Stock)
that remains unclaimed by the shareholders of MPF for twelve months after the
Closing Date shall be paid to CFB. Any shareholders of MPF who have not
theretofore complied with this Article 2 shall thereafter look only to CFB
for payment of their shares of CFB Common Stock, and cash in an amount as
determined in accordance with the provisions of SECTIONS 2.01, 2.02 and this
SECTION 2.03, without any interest thereon. Notwithstanding the foregoing,
none of CFB, the Exchange Agent nor any other person shall be liable to any
former holder of shares of MPF Common Stock for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(g) LOST OR DESTROYED SHARES. In the event any MPF Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such MPF Certificate to be lost, stolen or
destroyed and, if required by the Exchange Agent, the posting by such person
of a bond in such amount as CFB may direct as indemnity against any claim
that may be made against it with respect to such MPF Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed MPF
Certificate the shares of CFB Common Stock, and cash in an amount as
determined in accordance with the provisions of SECTIONS 2.01, 2.02 and this
SECTION 2.03, deliverable in respect thereof pursuant to this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MPF
MPF represents and warrants to CFB as follows:
3.01. ORGANIZATION, STANDING AND POWER. MPF is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, except where the failure to have such power or authority would not
have a material adverse effect on the business, operations, prospects or
financial condition of MPF or any of the MPF Subsidiaries ("Material Adverse
Effect"). MPF is qualified to do business and is in good standing in each
other state or foreign jurisdiction where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and
where the failure to be so qualified would have an MPF Material Adverse
Effect. MPF is registered as a bank holding company with the Federal Reserve
Board under the BHC Act. MPF has delivered to CFB true, accurate and
complete copies of the currently effective certificate of incorporation (the
"MPF Certificate") and bylaws of MPF, including all amendments thereto. As
used in this Agreement, the word "Subsidiary" means any corporation or other
organization, whether incorporated or unincorporated (i) of which such party
or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interest of which held by such party or
any Subsidiary of such party does not have a majority of the voting interest
in such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by
such party and one or more of its Subsidiaries.
3.02. SUBSIDIARIES. Except as set forth in the Disclosure Letter (which
is a letter delivered by MPF to CFB within fifteen (15) days after the date
hereof, the receipt thereof to be acknowledged by CFB executing a copy
thereof, that identifies, as to each matter disclosed therein, the section of
this Agreement to which the matter relates), MPF beneficially owns, directly
or indirectly, all of the shares of the outstanding capital stock of each of
its Subsidiaries listed on such letter (herein called collectively the
"Subsidiaries" or individually a "Subsidiary"). No equity securities of any
of the Subsidiaries are or may become required to be issued by reason of any
option, warrants, calls, rights or agreements of any character whatsoever;
there are outstanding no securities or rights convertible into or
exchangeable for shares of any capital stock of any Subsidiary; and there are
no other contracts, commitments, understandings or arrangements by which any
Subsidiary is bound to issue additional shares of its capital stock or
options, warrants, calls, rights or agreements to purchase or acquire any
additional shares of its capital stock. Except as set forth in the Disclosure
Letter, all of the shares of capital stock of each of the Subsidiaries owned
by MPF are fully paid and nonassessable and are owned by MPF free and clear
of any claim, lien, encumbrance or agreement with respect thereto. Each
Subsidiary is a bank or a corporation, in each case duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has the corporate power and authority to own or lease its
properties and assets and to carry on its business
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as it is now being conducted, except, in the case of MPF's nonbank
subsidiaries, where the failure to have such power or authority would not
have a Material Adverse Effect. Except as set forth in the Disclosure Letter,
there are no obligations, contingent or otherwise, of MPF to repurchase,
redeem or otherwise acquire any shares of capital stock of any Subsidiary or
to provide funds (in the form of a loan, capital contribution or otherwise)
to any Subsidiary or to make an investment in any Subsidiary or any other
entity, other than pursuant to commercial loan arrangements and similar
obligations arising in the ordinary course of the business of the
Subsidiaries.
3.03. CAPITAL STRUCTURE.
(a) As of the date hereof, the authorized capital stock of MPF consists
of 6,000,000 shares, divided into 5,000,000 shares of Common Stock and
1,000,000 shares of Authorized Preferred.
(b) As of the date hereof, (i) 3,727,315 shares of Common Stock are
issued and outstanding (assuming no exercise of any stock options since March
31, 1996), (ii) no shares of MPF Authorized Preferred are issued or
outstanding; and (iii) except as set forth in the Disclosure Letter, no
shares of Common Stock are held in treasury.
(c) As of the date hereof, except as set forth in the Disclosure
Letter, (i) neither MPF nor any Subsidiary has issued any outstanding bonds,
debentures, notes or other indebtedness having the right to vote (or
convertible into securities having the right to vote) on any matters on which
stockholders may vote ("Voting Debt"). All outstanding shares of MPF capital
stock are validly issued, fully paid and nonassessable and not subject to or
issued in violation of any preemptive rights; and (ii) there are no options,
warrants, calls, rights, or agreements of any character whatsoever to which
MPF or a Subsidiary is a party or by which it is bound obligating MPF or any
such Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of its capital stock or Voting Debt or obligating
MPF or any MPF Subsidiary to grant, extend or enter into any such option,
warrant, call, right or agreement. Immediately after the Effective Time,
except as set forth in the Disclosure Letter, there will be no option,
warrant, call, right or agreement obligating MPF or any MPF Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, any shares
of its capital stock or Voting Debt or obligating MPF or any MPF Subsidiary
to grant, extend or enter into any such option, warrant, call, right or
agreement.
(d) Except as set forth in the Disclosure Letter, (i) MPF has not
purchased, redeemed, canceled or otherwise acquired any of its capital stock
or Voting Debt during the two years preceding the date hereof; and (ii) there
are no obligations, contingent or otherwise, of MPF or any MPF Subsidiary to
repurchase, redeem or otherwise acquire any shares of its respective capital
stock or Voting Debt.
3.04. AUTHORITY.
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(a) MPF has all requisite corporate power and authority to enter into
this Agreement, the Plan of Merger and to consummate the transactions
contemplated hereby, subject only to approval of this Agreement and the Plan
of Merger by the Board of Directors and stockholders of MPF. The execution
and delivery of this Agreement, and the Plan of Merger and the consummation
of the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of MPF (including unanimous
approval by the Board of Directors of MPF), subject to the final approval of
this Agreement and the Plan of Merger by the stockholders of MPF. This
Agreement and the Plan of Merger have been duly executed and delivered by
MPF, and each constitutes a valid and binding obligation of MPF enforceable
in accordance with its terms other than in connection with or in compliance
with the provisions of the DGCL, the Securities Act, the Exchange Act, the
securities or "blue sky" laws of the various states, and consents,
authorizations, approvals, notices or exemptions required under the BHC Act
and the banking laws of the State of Colorado, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
governmental entity, is required on the part of MPF or any of the
Subsidiaries in connection with the execution and delivery of this Agreement,
the Plan of Merger and the Investment Agreement by or the consummation by MPF
of the transactions contemplated hereby and thereby.
(b) Except as set forth in the Disclosure Letter, the execution and
delivery of this Agreement and the Plan of Merger do not, and the
consummation of the transactions contemplated therein will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a benefit
under, or the creation of a lien, pledge, security interest or other
encumbrance on assets (any such conflict, violation, default, right of
termination, cancellation or acceleration loss or creation, a "Violation"),
pursuant to any provision of (i) the certificate, the bylaws of MPF or the
charter, certificate or articles of incorporation or bylaws of any MPF
Subsidiary or (ii) any loan or credit agreement, note, mortgage, indenture,
lease, MPF Benefit Plan (as defined in SECTION 3.11) or other agreement,
obligation, instrument, permit, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to MPF or any MPF
Subsidiary or their respective properties or assets, which Violation pursuant
to this CLAUSE (b) would have an MPF Material Adverse Effect.
3.05. FINANCIAL STATEMENTS.
(a) The consolidated statements of financial condition of MPF, as of
December 31, 1995 and 1994 and the related consolidated statements of income,
cash flow and stockholders' equity for the three years in the period ended
December 31, 1995 (the "Latest Statement Date"), accompanied by the
unqualified reports of Arthur Andersen LLP, copies of which have been
furnished by MPF to CFB; the unaudited consolidated statement of financial
condition of MPF, as of March 31, 1996 and the related consolidated
statements of income, cash flow and stockholders' equity for the three months
then ended, in the form prepared for MPF's internal use, copies of which have
been furnished by MPF to CFB; (collectively, the "Financial Statements"),
have been prepared in accordance with generally accepted accounting
principles as utilized in the Financial Statements applied on a consistent
basis (except as may be indicated therein or in the notes thereto), and
present fairly the
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consolidated financial position of MPF, at the dates, and the consolidated
results of operations, changes in stockholders' equity and cash flows for the
periods, stated therein. In the case of interim fiscal periods, all
adjustments, consisting only of normal recurring items, which management of
MPF believes necessary for a fair presentation of such financial information,
have been made, subject to year-end audit adjustments, none of which could
reasonably be expected to have a Material Adverse Effect.
(b) Except as and to the extent set forth on the consolidated statement
of financial condition of MPF, as of March 31, 1996, or in the notes thereto,
neither MPF nor any Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a statement of financial condition, or in the
notes thereto, prepared in accordance with generally accepted accounting
principles, except (i) for liabilities or obligations incurred in the
ordinary course of business since the Latest Statement Date that would not,
individually or in the aggregate, have a Material Adverse Effect or (ii) as
otherwise reflected in the Reports (as defined below) filed prior to the date
of this Agreement. Except as disclosed in the Disclosure Letter, neither MPF
nor any Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that are not required to be
reflected on a balance sheet, or in the notes thereto, except for liabilities
or obligations that do not, individually or in the aggregate, have a Material
Adverse Effect.
(c) Without limitation to the foregoing, MPF's consolidated allowance
for on loan losses included in the Financial Statements as of March 31, 1996
was $3,242,000, representing 1.15% of its total consolidated loans held in
the portfolio. The amount of such allowance for loan losses was adequate to
absorb reasonably expectable losses in the loan portfolios of the bank
Subsidiaries of MPF (the "Banks"). To the knowledge of MPF, there are no
facts which would cause it to increase the level of such allowance for loan
losses. The documentation relating to loans made by the Banks and relating
to all security interests, mortgages and other liens with respect to all
collateral for such loans, taken as a whole is adequate for the enforcement
of the material terms of such loans and of the related security interests,
mortgages and other liens, except as enforcement may be limited by bankruptcy
or similar laws or principles of equity. The terms of such loans and of the
related security interests, mortgages and other liens comply in all material
respects with all applicable laws, rules and regulations (including laws,
rules and regulations relating to the extension of credit). Except as set
forth in the Disclosure Letter, (A) as of March 31, 1996, there are no loans,
leases, other extensions of credit or commitments to extend credit of the
Banks that have been or should in accordance with generally acceptable
accounting principles, have been classified by the Banks as nonaccrual, as
restructured, as 90 days past due, as still accruing and doubtful of
collection or any comparable classification and (B) MPF has provided to CFB
true, correct and complete in all material respects such written information
concerning the loan portfolios of the Banks as CFB has requested.
Notwithstanding any provision in Section 3.05(c) to the contrary, MPF makes
no representation or warranty with respect to the collectability of any loan.
3.06. REPORTS. Since January 1, 1994, MPF and the Subsidiaries have
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto,
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that were and are required to be filed with (i) the Comptroller, (ii) the
FDIC, (iii) the Federal Reserve Board, and (iv) any other applicable federal
or state securities or bank authorities (all such reports and statements are
collectively referred to herein as the "Reports"). As of their respective
dates, the Reports filed prior to the date hereof complied in all material
respects with all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed
(including, to the extent applicable, Rule 10b-5 promulgated under the
Exchange Act) 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.
3.07. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS.
(a) MPF and the Subsidiaries hold all authorizations, permits,
licenses, variances, exemptions, orders and approvals of all governmental
entities which are material to the operations of their respective businesses
(the "Permits "). All such Permits are in full force and effect as of the
Closing Date, and MPF and the Subsidiaries are in compliance with the terms
of the Permits, except where the failure so to comply could not reasonably be
expected to have a Material Adverse Effect. Except as disclosed in the
Reports filed prior to the date of this Agreement or in the Disclosure
Letter, the businesses of MPF and the Subsidiaries are not being, and have
not been, conducted in violation of any domestic (federal, state or local) or
foreign law, statute, ordinance or regulation of any governmental entity
(collectively "Laws"), except for possible violations which individually or
in the aggregate do not and, insofar as reasonably can be foreseen, in the
future will not, have a Material Adverse Effect. Except as set forth in the
Disclosure Letter, as of the date hereof, no investigation or review by any
governmental entity with respect to MPF, any of the Subsidiaries or any
Property (as defined below) is pending or, to the knowledge of MPF,
threatened, nor has any governmental entity indicated an intention to conduct
the same.
(b) The Disclosure Letter identifies each parcel of real estate
currently owned, leased or otherwise possessed or controlled by MPF or any
Subsidiary on the date of this Agreement, including real estate owned as a
result of foreclosure ("OREO") and properties managed or controlled by the
Banks in connection with their lending or fiduciary operations, but excluding
residential property managed or controlled in a fiduciary capacity
(collectively, the "Property"). Except as set forth in the Disclosure
Letter, neither MPF nor any Subsidiary nor any of the MPF Property owned or
leased by them for use in the operation of their respective businesses is in
violation of any applicable zoning ordinance or other law, regulation or
requirement relating to the operation of any properties used, including,
without limitation, applicable federal, state and local laws, rules and
regulations relating to the environment or to human health and safety
associated with the environment (collectively, "Environmental Laws"), other
than violations that, in the aggregate with any other conditions described in
this SECTION 3.07(b), would not have a Material Adverse Effect; and neither
MPF nor any Subsidiary has received any notice of any such violation, or the
existence of any condemnation proceeding with respect to any Property.
Except as set forth in the Disclosure Letter, no Toxic Substances (as defined
below) have been deposited or disposed of in, on or under any Property during
the period in which MPF or any of the MPF Subsidiaries has
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owned, occupied, managed, controlled or operated such properties, except to
the extent the same, in the aggregate with any other conditions described in
this SECTION 3.07(b) would not have a Material Adverse Effect. Except as set
forth in the Disclosure Letter, to the best of MPF's knowledge (A) no portion
of the Property has ever been used as a dump, gasoline service station, or
dry cleaning establishment, (B) by any person, including past owners,
occupants and operators of such properties. No Toxic Substances have ever
been deposited or disposed of or allowed to be deposited or disposed of in,
on or under such properties or (C) no past, present or known future event,
condition, circumstances, plans, errors or omissions have existed or
occurred, are existing or occurring or are reasonably expected to exist or
occur on or with respect to any Property, or any other property as to which
MPF or any Subsidiary has held or currently holds ownership or indicia of
ownership ("Interested Property"), except as to the matters in CLAUSES (B)
AND (C) to the extent the same, in the aggregate with any other conditions
described in this SECTION 3.07(b), would not result in costs that would be
material to MPF and the Subsidiaries taken as a whole. There are no
underground or above ground storage tanks (whether or not currently in use)
located on or under the Property, and no underground tank previously located
on the Property has been removed therefrom. To the knowledge of MPF or the
Subsidiaries, there are no conditions or circumstances in connection with the
Property that could reasonably be anticipated to (i) cause any Property to be
subject to any restrictions on ownership, occupancy, use or transferability
under any applicable Environmental Laws or (ii) materially reduce the value
of any Property. To the knowledge of MPF or the Subsidiaries, neither MPF
nor any Subsidiary has been identified as a potentially responsible party in
a matter arising under any Environmental Laws. For purposes of this
Agreement, (1) "Toxic Substances" shall mean petroleum or petroleum-based
substance or waste, solid waste, PCBs, pesticides, herbicides, lead,
radioactive materials, asbestos or asbestos containing materials, urea
formaldehyde foam insulation, or substances defined as "hazardous substances"
or "toxic substances" in any Environmental Laws; (2) materials will be
considered to be deposited or disposed of in, on or under any real property
if such materials have been stored, treated, recycled, used or accidentally
or intentionally spilled, released, dumped, emitted or otherwise placed,
deposited or disposed of, or used in any construction, in, on or under such
property; and (3) costs of violations or conditions shall take into account,
without limitation, liabilities, damages, penalties, injunctive relief or
removal, remediation or other costs under any applicable Environmental Law.
3.08. LITIGATION AND CLAIMS. Except as disclosed in the Reports filed
prior to the date of this Agreement or in the Disclosure Letter: (a) none of
MPF, any of the Subsidiaries or any Property is subject to any continuing
order of, or written agreement or memorandum of understanding with any
federal or state banking or insurance authority or other Governmental Entity,
or any judgment, order, writ, injunction, decree or award of any Governmental
Entity or arbitrator, including, without limitation, cease-and-desist or
other orders of any banking authority, (b) there is no action, suit,
litigation, proceeding or arbitration ("Proceeding") against or affecting MPF
or any Subsidiary, to the knowledge of MPF, any directors, officers,
employees or agents of MPF or any Subsidiary (in their respective capacities
as directors, officers, employees or agents) pending or, to the knowledge of
MPF, threatened, which would, if adversely determined, have a Material
Adverse Effect or, to the knowledge of MPF, any basis therefor, and (c) there
are no uncured material violations, or violations
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with respect to which material refunds or restitutions may be required, cited
in any compliance report to MPF or any Subsidiary as a result of the
examination by any bank regulatory authority.
3.09. TAXES. MPF and each Subsidiary have filed all tax returns
required to be filed by them and have paid or has set up an adequate reserve
for the payment of, all taxes required to be paid as shown on such returns,
except to the extent such nonpayment did not result in a Material Adverse
Effect and the most recent MPF financial statements contained in the Reports
reflect an adequate reserve for all taxes payable by MPF and the Subsidiaries
accrued through the date of such financial statements. The Disclosure Letter
sets forth, as of the date hereof, the following information with respect to
MPF and each Subsidiary: (a) the most recent tax year for which the United
States Internal Revenue Service ("IRS") has completed its examination of such
corporation, (b) whether there is an examination pending by the IRS with
respect to such corporation and, if so, the tax years involved, (c) whether
such corporation has executed or filed with the IRS any agreement which is
still in effect extending the period for assessment and collection of any
federal tax and, if so, the tax years covered by such agreement and the
expiration date of such extension, and (d) whether there are any existing
material disputes as to foreign, state, or local taxes. There are no liens
for taxes upon the assets of MPF or any Subsidiary, except for statutory
liens for taxes not yet delinquent or the validity of which is being
contested in good faith by appropriate proceedings and, in either case, only
if adequate reserves therefor have been established on MPF's books in
accordance with generally accepted accounting principles. Except as
disclosed in the Disclosure Letter, neither MPF nor any Subsidiary is a party
to any action or proceeding by any governmental authority for assessment and
collection of taxes, and no claim for assessment and collection of taxes has
been asserted against any of them. For the purpose of this Agreement, the
term "tax" (including, with correlative meaning, the terms "taxes" and
"taxable") shall include all federal, state, local and foreign income,
profits, franchise, gross receipts, payroll, sales, employment, use, personal
and real property, withholding, excise and other taxes, duties or assessments
of any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts. MPF and each Subsidiary respectively,
has withheld from its employees (and timely paid to the appropriate
governmental agency) amounts which are proper and accurate in all material
respects for all periods through the date hereof in material compliance with
all tax withholding provisions of applicable federal, state, foreign and
local laws (including without limitation income, social security and
employment tax withholding for all types of compensation). Except as
disclosed in the Disclosure Letter, neither MPF nor any Subsidiary has ever
been a member of an affiliated group of corporations (within the meaning of
Section 1504(a) of the Code) filing consolidated federal income tax returns,
other than the affiliated group of which MPF is the common parent. To the
knowledge of MPF, neither MPF nor any Subsidiary has made any payments, or
been a party to an agreement that under any circumstances could obligate it
to make payments based upon the consummation of the transactions contemplated
hereby constituting a change of the nature described in Section
280G(b)(2)(A)(i) of the Code, that are or will not be deductible because of
Section 280G of the Code.
3.10. CERTAIN AGREEMENTS. Except as discussed in the Reports filed
prior to the date of this Agreement or as disclosed in the Disclosure Letter,
and except for this Agreement and the agreements expressly contemplated
hereby, neither MPF nor any Subsidiary is a party to any oral
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or written (i) consulting agreement not terminable on 60 days' or less notice
or employment agreement or other agreement providing any term of employment,
compensation guarantee, or severance benefit, (ii) union, guild or collective
bargaining agreement, (iii) agreement or plan, including any stock option
plan, stock appreciation right plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of the transactions
contemplated by this Agreement, (iv) contract, agreement or understanding to
repurchase assets previously sold (or to indemnify or otherwise compensate
the purchaser in respect of such assets), (v) contract containing covenants
which limit the liability of MPF or any 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, MPF or any Subsidiary, as
applicable may carry on its business (other than as may be required by law or
applicable regulatory authorities), (vi) any contract, agreement or other
instrument or undertaking which is not terminable by MPF or any Subsidiary
without additional payment or penalty within 60 days and obligates MPF or any
Subsidiary for payments or other consideration with a value in excess of
$100,000, other than loan agreements entered into in the ordinary course of
business, or (vii) other executory material agreement as defined by the
instructions to Exhibit 10 under Item 601 of SEC Regulation S-K. Except as
set forth in the Disclosure Letter, neither MPF nor any of the Subsidiaries
is in Violation of any loan or credit agreement, note, mortgage, indenture or
other agreement, obligation or instrument applicable to MPF or any Subsidiary
or their respective properties or assets, except for any such Violations that
would not, individually or in the aggregate, have a Material Adverse Effect.
3.11. BENEFIT PLANS.
(a) The Disclosure Letter lists (i) each employee bonus, incentive,
deferred compensation, stock purchase, stock appreciation right, stock
option, fringe benefit and severance pay plan, (ii) each pension, profit
sharing, stock bonus, thrift, savings and employee stock ownership plan,
(iii) each health, welfare, disability, vacation, leave, perquisite or
executive plan, program, policy or practice, and (iv) every other employee
benefit plan (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (collectively "Benefit
Plans"), which MPF or any Subsidiary maintains or to which MPF or any
Subsidiary contributes on behalf of current or former employees. Except as
disclosed in the Disclosure Letter, all of the plans and programs listed in
the Disclosure Letter (collectively, "Benefit Plans") comply with all
applicable requirements of Internal Revenue Code, ERISA and all other
applicable federal and state laws and regulations, including without
limitation the reporting and disclosure requirements of Part 1 of Title I of
ERISA. Each of the Benefit Plans that is intended to be a pension, profit
sharing, stock bonus, thrift, savings or employee stock ownership plan that
is qualified under Section 401 (a) of the Code has been determined by the IRS
to so qualify under Section 401(a) of the Code, and, except as disclosed in
Disclosure Letter, there exist no circumstances that would adversely affect
the qualified status of any such Benefit Plan under that section. No Benefit
Plan is a "multi-employer plan" within the meaning of Section 3(37) of ERISA
or subject to the requirements of Section 412 of the Code. Except as set
forth in the Disclosure
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Letter, there is no pending or, to the knowledge of MPF, threatened
litigation, governmental proceeding or investigation against or relating to
any Benefit Plan, and to the knowledge of MPF there is no reasonable basis
for any material proceedings, claims, actions or proceedings against MPF, any
Subsidiary, any Benefit Plan or any fiduciary of any such Benefit Plan.
Except as set forth in the Disclosure Letter, neither MPF, nor any
Subsidiary, nor any party in interest (as defined in Section 3(14) of ERISA
and Section 4975(e) of the Code) nor any Benefit Plan has engaged in a
"prohibited transaction" (as defined in Section 406 of ERISA and Section
4975(c) of the Code) since the date on which said sections became applicable
to such Plan, and no Benefit Plan has engaged in a transaction involving the
purchase or sale of employer securities by such Plan from or to a
"disqualified person" (within the meaning of Section 4975 of the Code). All
Benefit Plans that are group health plans, within the meaning of Section
4980B of the Code or Section 601 of ERISA, have been operated in material
compliance with the group health plan continuation coverage requirements of
Section 4980B of the Code and Section 601 of ERISA to the extent such
requirements are applicable.
(b) There has been no amendment to, written interpretation of, or
announcement (whether or not written) relating to, or any change in employee
participation or coverage under, any Benefit Plan that is not reflected in
the text of such Benefit Plan which would materially increase the expense
(whether or not such expense is recognized under generally accepted
accounting principles) to the employer whose employees are covered by such
Benefit Plan. Except as expressly provided by applicable law or the terms of
any Benefit Plan, no condition exists that would prevent the amendment or
termination of any Benefit Plan with respect to any employee. All employee
and employer contributions with respect to employees which are due and owing
as of the Closing Date pursuant to the Benefit Plans have been made or will
be accrued on the Closing Date Financial Statements and, except for such
accrued liabilities, there are as of the Closing Date no other liabilities of
MPF or any of its Subsidiaries with respect to the Benefit Plans. Neither
MPF nor any Subsidiary has any liability with respect to any employee benefit
plan sponsored by any entity which, together with MPF or any Subsidiary, is a
member of a group of corporations or entities which would be considered a
single employer within the meaning of Section 414(b), (c), (m) or (o) of the
Code.
(c) MPF has delivered to CFB copies of (i) each Benefit Plan or if no
plan document exists, a written summary of the material terms thereof, (ii)
current summary plan descriptions of each Benefit Plan for which they are
required, (iii) each trust agreement, insurance policy or other instrument
relating to the funding of any Benefit Plan, (iv) the most recent Annual
Reports (Form 5500 series) and accompanying schedules filed with the IRS or
United States Department of Labor with respect to each Benefit Plan for which
they are required, (v) the most recent determination letter issued by the IRS
with respect to each MPF Benefit Plan that is intended to qualify under
Section 401 of the Code, (vi) the most recent available financial statements
for each MPF Benefit Plan that has assets, and (vii) the most recent audited
financial statements for each Benefit Plan for which audited financial
statements are required by ERISA.
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(d) The Disclosure Letter describes any obligation that MPF and/or any
Subsidiaries has to provide health and welfare benefits to retirees and other
former employees or their dependents (other than rights arising solely under
Section 601 of ERISA or Section 4980B of the Code) including information as
to the number of retirees, other former employees and dependents entitled to
such coverage and their ages.
3.12. INSURANCE. MPF and each Subsidiary is presently insured, and
during each of the past five calendar years has been insured, for reasonable
amounts with financially sound and reputable insurance companies against such
risks as, to the best knowledge of MPF, companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured. MPF has delivered to CFB correct and complete copies of all
material policies of insurance of MPF and the Subsidiaries currently in
effect. Neither MPF nor any Subsidiary has any liability for material unpaid
premiums or premium adjustments not properly reflected on the Financial
Statements and no notice of cancellation or termination has been received by
MPF or any Subsidiary with respect to any material insurance policy currently
in effect. Within the last five years, neither MPF nor any Subsidiary has
been refused any insurance with respect to any assets or operations, nor has
any coverage been limited in any material respect as to any assets or
operations, by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last five years.
3.13. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Reports filed prior to the date of this Agreement or in the Disclosure
Letter, and except as contemplated by this Agreement and the Plan of Merger,
from and after January 1, 1996 through the date of this Agreement: (a) MPF
and the Subsidiaries have carried on their respective businesses in the
ordinary and usual course consistent with past practices; (b) MPF has not
amended the MPF Articles; (c) MPF has not issued or sold any of its capital
stock or made grants of its capital stock, or issued or sold any corporate
debt securities or otherwise incurred debt which would be classified as
long-term debt on its balance sheet; (d) MPF has not granted any option for
the purchase of its capital stock, effected any stock split, or otherwise
changed its capitalization; (e) MPF has not declared, set aside, or paid any
dividend or other distribution in respect of its capital stock or, directly
or indirectly, redeemed or otherwise acquired any of its capital stock; (f)
neither MPF nor any Subsidiary has (1) incurred any material obligation or
liability (absolute or contingent), except obligations or liabilities
incurred in the ordinary course of business, or (2) mortgaged, pledged, or
subjected to lien, claim, security interest, charge, encumbrance or
restriction any of its assets or properties; (g) neither MPF nor any
Subsidiary has discharged or satisfied any material lien, mortgage, pledge,
claim, security interest, charge, encumbrance, or restriction or paid any
material obligation or liability (absolute or contingent), other than in the
ordinary course of business; (h) neither MPF nor any Subsidiary has sold,
assigned, transferred, leased, exchanged, or otherwise disposed of, other
than in the ordinary course of business, any of its properties or assets; (i)
neither MPF nor any Subsidiary has increased the rate of compensation of, or
paid any bonus to, any of its directors or officers, except merit or
promotion increases in accordance with existing policy; entered into any new,
or amended or supplemented any existing, employment, management, consulting,
deferred compensation, severance, or other similar contract not heretofore
provided to CFB; adopted, entered into,
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terminated, amended or modified any Benefit Plan in respect of any of present
or former directors, officers or other employees; or agreed to do any of the
foregoing; (j) neither MPF nor any Subsidiary has suffered any material
damage, destruction or loss as the result of fire, explosion, earthquake,
accident, casualty, labor trouble, requisition or taking of property by any
government or any agency of any government, flood, windstorm, embargo, riot,
act of God or the enemy, or other similar or dissimilar casualty or event or
otherwise, and whether or not covered by insurance; (k) neither MPF nor any
Subsidiary has canceled or compromised any debt to an extent exceeding
$500,000 owed to MPF or any Subsidiary or claim to an extent exceeding
$500,000 asserted by MPF or any Subsidiary; (l) neither MPF nor any
Subsidiary has entered, or agreed to enter, into any agreement or arrangement
granting any right of refusal or other preferential right to purchase any of
its material assets, properties or rights or requiring the consent of any
party to the transfer and assignment of any such material assets, properties
or rights; (m) there has not been any other transaction, commitment, dispute
or other event or condition of any character (whether or not in the ordinary
course of business) individually or in the aggregate having or which, insofar
as reasonably can be foreseen, in the future is reasonably likely to have, a
Material Adverse Effect; and (n) there has not been any change in the method
of accounting or accounting practices of MPF or any of the Subsidiaries,
except as may be required by law or generally accepted accounting principles.
Except as set forth in the Disclosure, MPF has no knowledge of the announced
or anticipated resignation of any executive officer or key employee of MPF or
any of the Subsidiaries. From and after January 1, 1996 through the date of
this Agreement, no customers of MPF or any Subsidiary have indicated that
they will stop or decrease the rate of business done with MPF or any
Subsidiary (except for changes in the ordinary course of business) such as
to, individually or in the aggregate, have a Material Adverse Effect.
3.14. PROPERTIES, LEASES AND OTHER AGREEMENTS. Except as may be
reflected in the Financial Statements, for any lien for current taxes not yet
delinquent, for pledges to secure deposits and for such other liens, security
interests, claims, charges, options or other encumbrances and imperfections
of title which do not materially affect the value of personal or real
property reflected in the MPF Financial Statements or acquired since the date
of such Statements and which do not materially interfere with or impair the
present and continued use of such property, MPF and its Subsidiaries have
good title, free and clear of any liens, security interests, claims, charges,
options or other encumbrances, to all of the personal and real property
reflected in the Financial Statements, and all personal and real property
acquired since the date of such Statements, except such personal and real
property as has been disposed of in the ordinary course of business. The
Disclosure Letter lists all acquisitions or dispositions of capital assets
planned as of the date of this Agreement by MPF or any Subsidiary, other than
individual transactions with a value not in excess of $25,000 each.
Substantially all MPF's and each Subsidiary's buildings and equipment in
regular use (including such buildings and equipment as are leased) have been
well maintained and are in good and serviceable condition, reasonable wear
and tear excepted. The Disclosure Letter contains a brief description,
including terms, of each lease for real or personal property to which MPF or
any Subsidiary is a party. MPF or the applicable Subsidiary, as lessee, has
a valid and existing leasehold interest under each of such leases, true and
correct copies of which MPF has delivered to CFB. There is not, under any of
such leases relating to real property or any other material leases, any
material existing default
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by MPF, the Subsidiaries or, to the knowledge of MPF, any other party
thereto, or any event with notice or lapse of time or both would constitute
such a material default.
3.15. VOTES REQUIRED. The affirmative vote of holders of a majority
of the outstanding shares of MPF Common Stock is the only vote of the holders
of any class or series of MPF capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
3.16. TAX MATTERS. Neither MPF nor, to its knowledge, any of its
affiliates has taken or agreed to take any action that would prevent the
Merger from qualifying as one or more reorganizations under Section 368(a)(1)
of the Code.
3.17. VOTING AGREEMENTS. Dennis M. Mathisen, Daniel T. Lindsay and
John A. Fischer have each duly executed and delivered to CFB a written
agreement ("Shareholder Agreement") in the form to be attached hereto as
EXHIBIT 3.17. Each such agreement constitutes a valid and binding obligation
of the party thereto other than CFB, enforceable in accordance with its
terms.
3.18. AFFILIATES. The Disclosure Letter identifies persons who are
now "Affiliates" of MPF for purposes of Rule 145 under the Securities Act
("Affiliates"). MPF has advised such persons of the restrictions imposed by
applicable securities laws upon the resale of CFB Common Stock delivered in
connection with the Merger. Each person identified in such letter has
executed a written agreement substantially in the form attached as EXHIBIT
3.18 hereto.
3.19. AFFILIATE TRANSACTIONS. Except as set forth in the Disclosure
Letter, neither MPF nor any of the Subsidiaries, nor any executive officer or
director of MPF, nor any member of the immediate family of any such officer
or director (which for the purposes hereof shall mean a spouse, minor child
or adult child living at the home of any such officer or director), nor any
entity which any of such person "controls" (within the meaning of Regulation
O of the Federal Reserve Board), has any loan agreement, note or borrowing
arrangement or any other agreement with MPF or any of its Subsidiaries (other
than normal employment arrangements) or any interest in any property, real,
personal or mixed, tangible or intangible, used in or pertaining to the
business of MPF or any of the Subsidiaries.
3.20. INTEREST RATE RISK MANAGEMENT INSTRUMENTS.
(a) The Disclosure Letter sets forth a true, correct and complete list
of all interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements to which MPF or any of the
Subsidiaries is a party or by which any of their properties or assets may be
bound. MPF has delivered or made available to CFB true, correct and complete
copies of all such interest rate risk management agreements and arrangements.
(b) All interest rate swaps, caps, floors and option agreements to
which MPF is subject and other interest rate risk management arrangements to
which MPF or any Subsidiary is a party or by which any of their respective
properties or assets may be bound were entered into in the ordinary
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course of business and, to MPF's knowledge, in accordance with prudent
banking practice and applicable rules, regulations and policies of the
regulators to which MPF is subject and with counterparties believed to be
financially responsible at the time, are legal, valid and binding obligations
enforceable in accordance with their terms, and are in full force and effect.
MPF and each of the Subsidiaries has duly performed in all material respects
all of its obligations thereunder to the extent that such obligations to
perform have accrued; and to MPF's knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
3.21. REGULATORY IMPEDIMENTS. As of the date hereof, MPF is unaware
of the existence of any factor that would materially delay or materially
hinder the issuance of any of the required regulatory approvals necessary to
consummate the Merger or the other transactions contemplated hereby, other
than any protests by any nongovernmental parties.
3.22. FULL DISCLOSURE. The representations and warranties of MPF
contained in this Agreement do not omit any material fact necessary to make
the statements contained therein, in light of the circumstances under which
they were made, not misleading. There is no fact known to MPF which has not
been disclosed to CFB pursuant to this Agreement, the Disclosure Letter and
the Reports, all taken together as a whole, which would reasonably be
expected to have a Material Adverse Effect on the ability of CFB or MPF to
consummate the transactions contemplated hereby.
3.23. NO DISCUSSIONS. As of the date of this Agreement, neither MPF
nor any Subsidiary, nor any of its or their Representatives (as defined in
SECTION 5.02(f)), are, directly or indirectly, soliciting, initiating or engaged
in any discussions or other negotiations with, or providing any information to,
any third party concerning any possible proposal regarding a Competing
Transaction (as defined in SECTION 5.02(f)).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CFB
CFB represents and warrants to MPF as follows:
4.01. ORGANIZATION, STANDING AND POWER. CFB is a corporation duly
organized, validly existing and in active status under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, except where the failure to have such power or authority would not
have a material adverse effect on the business, operations, prospects or
financial condition of CFB and its Subsidiaries taken as a whole (a "CFB
Material Adverse Effect"). CFB is qualified to do business and is in good
standing in each other state or foreign jurisdiction where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and where the failure to be so qualified would have a CFB Material
Adverse Effect. CFB is registered as a bank holding company with the Federal
Reserve Board under the BHC Act. CFB has delivered to MPF true, accurate and
complete copies of the currently effective restated articles of incorporation
and bylaws of CFB, including all amendments thereto.
4.02. CFB SUBSIDIARIES. Except as set forth in the CFB Disclosure Letter
(which is a letter delivered by CFB to MPF within fifteen (15) days after the
date hereof, the receipt thereof to be acknowledged by MPF executing a copy
thereof), CFB beneficially owns, directly or indirectly, all of the shares of
the outstanding capital stock of each of the Subsidiaries listed in the CFB
Disclosure Letter (herein, called collectively the "CFB Subsidiaries" or
individually a "CFB Subsidiary"), which constitute CFB's principal operating
subsidiaries as of the date of this Agreement. No equity securities of any
of the CFB Subsidiaries are or may become required to be issued by reason of
any option, warrants, calls, rights or agreements of any character
whatsoever; there are outstanding no securities or rights convertible into or
exchangeable for shares of any capital stock of any CFB Subsidiary; and there
are no other contracts, commitments, understandings or arrangements by which
any CFB Subsidiary is bound to issue additional shares of its capital stock
or options, warrants, calls, rights or agreements to purchase or acquire any
additional shares of its capital stock. Except as provided for under any
applicable banking statute and except as set forth in the CFB Disclosure
Letter, all of the shares of capital stock of each of the CFB Subsidiaries
owned by CFB are fully paid and nonassessable (except as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law) and are owned by it
free and clear of any claim, lien, encumbrance or agreement with respect
thereto. Each CFB Subsidiary is a banking association or a corporation, in
each case duly organized, validly existing and in good standing or in active
status under the laws of its jurisdiction of incorporation, and has the
corporate power and authority to own or lease its properties and assets and
to carry on its business as it is now being conducted, except where the
failure to have such power or authority would not have a CFB Material Adverse
Effect. The deposits of each CFB Subsidiary that is a banking institution
and accepts deposits are insured by the FDIC to the extent provided by law.
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4.03. CAPITAL STRUCTURE. As of the date hereof, CFB has 20,000,000
shares of authorized common stock, $.01 par value, of which there were
11,438,557 shares outstanding on May 31, 1996. CFB has 2,000,000 shares of
authorized preferred stock, of which 230,000 shares of 7% cumulative
convertible preferred stock, no par value, were outstanding on May 31, 1996.
The preferred stock is issued in the form of 920,000 depository shares.
Except as contemplated in the Merger Agreements, as set forth in the CFB
Disclosure Letter or as set forth in the most recent report of CFB filed with
the SEC on Form 10-K or Form 10-Q, there are, as of the date of the Merger
Agreements, no outstanding options, warrants, calls, rights, commitments or
agreements of any character whatsoever to which CFB or any CFB Subsidiary is
a party or by which it is bound obligating CFB or any CFB Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any Voting Debt securities of CFB or of any CFB
Subsidiary or obligating CFB or any CFB Subsidiary to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement. All
outstanding shares of CFB capital stock are, and the shares of CFB Common
Stock to be issued pursuant to or as specifically contemplated by the Merger
Agreements will be, validly issued, fully paid and nonassessable and not
subject to preemptive rights.
4.04. AUTHORITY. CFB has all requisite corporate power and authority to
enter into this Agreement and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement, the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of CFB. This Agreement and the Plan of Merger
have been duly executed and delivered by CFB, and each constitutes a valid
and binding obligation of CFB enforceable in accordance with its terms. The
execution and delivery of this Agreement and the Plan of Merger do not, and
the consummation of the transactions contemplated hereby will not, result in
any Violation pursuant to any provision of (a) the restated articles of
incorporation or bylaws of CFB or any CFB Subsidiary or (b) any loan or
credit agreement, note, mortgage, indenture, lease, Benefit Plan maintained
by CFB or other agreement, obligation, instrument, permit, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to CFB or any CFB Subsidiary or their respective properties or
assets, which Violation pursuant to this CLAUSE (b) would have a CFB Material
Adverse Effect. Other than in connection or in compliance with the
provisions of the DGCL, the banking laws of the State of Colorado, the
Securities Act, the Exchange Act, the securities or blue sky laws of the
various states, and consents, authorizations, approvals, notices or
exemptions required under the BHC Act, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required on the part of CFB or any CFB Subsidiary in
connection with the execution and delivery of this Agreement, the Plan of
Merger by CFB or the consummation by CFB or its Subsidiaries of the
transactions contemplated hereby and thereby, the failure to obtain which
would have a CFB Material Adverse Effect.
4.05. CFB FINANCIAL STATEMENTS.
(a) The consolidated balance sheets of CFB as of December 31, 1995 and
1994 and the related consolidated statements of income, consolidated
statements of cash flows and consolidated statements of stockholders' equity
for the three years in the period ended December 31, 1995,
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accompanied by the unqualified opinion of Ernst & Young, LLP, copies of which
have been furnished by CFB to MPF; the unaudited consolidated balance sheet
of CFB as of March 31, 1996 and the related consolidated statement of income,
consolidated statement of cash flows and consolidated statement of
stockholders' equity for the three months then ended, in the form prepared
for CFB's internal use, copies of which have been furnished by CFB to MPF;
and like financial information included in Forms 10-Q filed with the SEC
subsequent to the Latest Statement Date (collectively, the "CFB Financial
Statements"), have been prepared in accordance with generally accepted
accounting principles as utilized in the CFB Financial Statements applied on
a consistent basis (except as may be indicated therein or in the notes
thereto), and present fairly the consolidated financial condition of CFB at
the dates, and the consolidated results of operations, changes in
stockholders' equity and cash flows for the periods, stated therein. In the
case of interim fiscal periods, all adjustments, consisting only of normal
recurring items, which management of CFB believes necessary for a fair
presentation of such financial information, have been made, subject to
year-end audit adjustments, none of which could reasonably be expected to
have a CFB Material Adverse Effect.
(b) Except as and to the extent set forth on the consolidated balance
sheets of CFB, as of March 31, 1996, or in the notes thereto, neither CFB nor
any CFB Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except (i) for liabilities or
obligations incurred in the ordinary course of business since the Latest
Statement Date that would not, individually or in the aggregate, have a CFB
Material Adverse Effect; or (ii) as otherwise reflected in the CFB Reports
(as defined below) filed prior to the date of this Agreement. Except as
disclosed in the Disclosure Letter, neither CFB nor any Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that are not required to be reflected on a balance
sheet, or in the notes thereto, except for liabilities or obligations that do
not, individually or in the aggregate, have a CFB Material Adverse Effect.
(c) Without limitation to the foregoing, CFB's consolidated allowance
for losses on loans included in the Financial Statements as of March 31, 1996
was $20,072,000, representing 1.35% of its total consolidated loans held in
the portfolio. The amount of such allowance for losses on loans was adequate
to absorb reasonably expectable losses in the loan portfolios of the bank
Subsidiaries of CFB (the "CFB Banks"). To the knowledge of CFB, there are no
facts which would cause it to increase the level of such allowance for losses
on loans. The documentation relating to loans made by the CFB Banks and
relating to all security interests, mortgages and other liens with respect to
all collateral for such loans, taken as a whole, is adequate for the
enforcement of the material terms of such loans and of the related security
interests, mortgages and other liens., except as enforcement may be limited
by bankruptcy or similar laws or principles of equity. The terms of such
loans and of the related security interests, mortgages and other liens comply
in all material respects with all applicable laws, rules and regulations
(including laws, rules and regulations relating to the extension of credit).
Except as set forth in the Disclosure Letters, (A) as of March 31, 1996,
there are no loans, leases, other extensions of credit or commitments to
extend credit of the CFB Banks that have been
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or should in accordance with generally acceptable accounting principles, have
been classified by the CFB Banks as nonaccrual, as restructured, as ninety
(90) days past due, as still accruing and doubtful of collection or any
comparable classification; and (B) CFB has provided to MPF true, correct and
complete in all material respects such written information concerning the
loan portfolios of the CFB Banks as MPF has requested.
4.06. REPORTS. Since January 1, 1994, CFB and the CFB Subsidiaries have
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that were and are required to be
filed with (i) the SEC, including but not limited to Forms 10-K, Forms 10-Q,
Forms 8-K and proxy statements, (ii) the Federal Reserve Board, (iii) the
Comptroller of the Currency, (iv) the FDIC and (v) any other applicable
federal or state securities or banking authorities (all such reports and
statements are collectively referred to herein as the "CFB Reports"). As of
their respective dates, the CFB Reports filed prior to the date hereof
complied and will comply in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the regulatory authority
with which they were filed (including, to the extent applicable, Rule 10b-5
promulgated under the Exchange Act) 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.
4.07. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS.
(a) CFB and the CFB Subsidiaries hold all authorizations, permits,
licenses, variances, exemptions, orders and approvals of all governmental
entities which are material to the operation of the businesses of CFB and the
CFB Subsidiaries taken as a whole (the "CFB Permits"). CFB and the CFB
Subsidiaries are in compliance with the terms of the CFB Permits, except
where the failure so to comply could not reasonably be expected to have a CFB
Material Adverse Effect. Except as disclosed in the CFB Reports filed prior
to the date of this Agreement or the CFB Disclosure Letter, the businesses of
CFB and the CFB Subsidiaries are not being conducted in violation of any
laws, except for possible violations which individually or in the aggregate
do not, and, insofar as reasonably can be foreseen, in the future will not,
have a CFB Material Adverse Effect. Except as set forth in the CFB
Disclosure Letter, as of the date hereof, no investigation or review by a
governmental entity with respect to CFB or to any of the CFB Subsidiaries
that would cause a CFB Material Adverse Effect is pending or, to the
knowledge of CFB, threatened, nor has any governmental entity indicated an
intention to conduct the same.
(b) Except as set forth in the CFB Disclosure Letter, neither CFB nor any
CFB Subsidiary nor any of the CFB Property owned or leased by them for use in
the operation of their respective businesses is in violation of any applicable
zoning ordinance or other law, regulation or requirements relating ro the
operation of any properties used, including, without limitation, applicable
federal, state, and local laws, rules and regulations relating to the
environment or to human health and safety associated with the environment
(collectively, "Environmental Laws"), other than violations that, in the
aggregate with any other conditions described in this SECTION 4.07(b), would not
have a CFB Material Adverse Effect; and neither CFB nor any CFB Subsidiary
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has received any notice of any such violation, or the existence of any
condemnation proceeding with respect to any real estate currently owned,
leased or otherwise possessed or controlled by CFB or any CFB Subsidiary,
including real estate owned as a result of foreclosure ("OREO") and
properties managed or controlled by CFB Banks in connection with their
lending or fiduciary operations, but excluding residential property managed
or controlled in a fiduciary capacity (collectively the "CFB Property").
Except as set forth in the CFB Disclosure Letter, no Toxic Substances have
been deposited or disposed of in, on or under any CFB Property during the
period in which CFB or any of the CFB Subsidiaries has owned, occupied,
managed, controlled or operated such properties, except to the extend the
same, in the aggregate with any other conditions described in this SECTION
4.07(b) would not have a CFB Material Adverse Effect. Except as set forth in
the CFB Disclosure Letter, to the best of CFB's knowledge (A) no portion of
the CFB Property has ever been used as a dump, gasoline service station, or
dry cleaning establishment,; (B) by any person, including past owners,
occupants and operators of such properties. No Toxic Substances have ever
been deposited or disposed of or allowed to be deposited or disposed of in,
on or under such properties; or (C) no past, present or known future event,
condition, circumstances, plans, errors or omissions have existed or
occurred, are existing or occurring or are reasonably expected to exist or
occur on or with respect to any CFB Property, or any other property as to
which CFB or any CFB Subsidiary has held or currently holds ownership or
indicia of ownership ("CFB Interested Property"), except as to the matters in
CLAUSES (B) AND (C) to the extent the same, in the aggregate with any other
conditions described in this SECTION 4.07(b), would not result in costs that
would be material to CFB and the CFB Subsidiaries taken as a whole. There
are no underground or above ground storage tanks (whether or not currently in
use) located on or under the CFB Property that could reasonably be
anticipated to (i) cause any CFB Property to be subject to any restrictions
on ownership, occupancy, use or transferability under any applicable
Environmental Laws; or (ii) materially reduce the value of any CFB Property.
To the knowledge of CFB or the CFB Subsidiaries, neither CFB nor any CFB
Subsidiary has been identified as a potentially responsible party in a matter
arising under any Environmental Laws.
4.08. LITIGATION AND CLAIMS. Except as disclosed in the CFB Reports
filed prior to the date of this Agreement or in the CFB Disclosure Letter,
(a) none of CFB, any of the CFB Subsidiaries or any CFB Property is subject
to any continuing order of, or written agreement or memorandum of
understanding with any federal or state banking or insurance authority or
other governmental entity, or any judgment, order, writ, injunction, decree
or award of any governmental entity or arbitrator, including, without
limitation, cease-and-desist or other orders of any banking authority; (b)
there is no proceeding against or affecting CFB or any CFB Subsidiary, to the
knowledge of CFB, any directors, officers, employees or agents of CFB or any
CFB Subsidiary (in their respective capacities as directors, officers,
employees or agents) pending or, to the knowledge of CFB, threatened, which
would, if adversely determined, have a CFB Material Adverse Effect or, to the
knowledge of CFB, any basis therefor; and (c) there are no uncured material
violations, or violations with respect to which material refunds or
restitutions may be required, cited in any compliance report to CFB or any
CFB Subsidiary as a result of the examination of any bank regulatory
authority.
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4.9. TAXES. CFB and each CFB Subsidiary have filed all tax returns
required to be filed by them and have paid or has set up an adequate reserve
for the payment of all taxes required to be paid as shown on such returns,
except to the extent such nonpayment did not result in a CFB Material Adverse
Effect and the most recent CFB financial statements contained in the CFB
Reports reflect an adequate reserve for all taxes payable by CFB and the CFB
Subsidiaries accrued through the date of such financial statements. The CFB
Disclosure Letter sets forth, as of the date hereof, the following
information with respect to CFB and each CFB Subsidiary: (a) the most recent
tax year for which the United States Internal Revenue Service("IRS") has
completed its examination of such corporation; (b) whether there is an
examination pending by the IRS with respect to such corporation and, if so,
the tax years involved; (c) whether such corporation has executed or filed
with the IRS any agreement which is still in effect extending the period for
assessment and collection of any federal tax and, if so, the tax years
covered by such agreement and the expiration date of such extension; and (D)
whether there are any existing material disputes as to foreign, state, or
local taxes. There are no liens for taxes upon the assets of CFB or any CFB
Subsidiary, except for statutory liens for taxes not yet delinquent or the
validity of which is being contested in good faith by appropriate proceedings
and, in either case, only if adequate reserves therefor have been established
on CFB's books in accordance with generally accepted accounting principles.
Except as disclosed in the CFB Disclosure Letter, neither CFB nor any CFB
Subsidiary is a party to any action or proceeding by any governmental
authority for assessment and collection of taxes, and no claim for assessment
and collection of taxes has been asserted against any of them. For the
purpose of this Agreement, the term "tax" (including, with correlative
meaning, the terms "taxes" and "taxable") shall include all federal, state,
local and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, personal and real property, withholding, excise and other
taxes, duties or assessments of any nature whatsoever together with all
interest, penalties and additions imposed with respect to such amounts. CFB
and each CFB Subsidiary respectively, has withheld from its employees (and
timely paid to the appropriate governmental agency) amounts which are proper
and accurate in all material respects for all periods through the date hereof
in material compliance with all tax withholding provisions of applicable
federal, state, foreign and local laws (including without limitation income,
social security and employment tax withholding for all types of
compensation). Except as disclosed in the CFB Disclosure Letter, neither CFB
nor any CFB Subsidiary has ever been a member of an affiliated group of
corporations (within the meaning of Section 1504(a) of the Code) filing
consolidated federal income tax returns, other than the affiliated group of
which CFB is the common parent. To the knowledge of CFB, neither CFB nor any
CFB Subsidiary has made any payments, or been a party to an agreement that
under any circumstances could obligate it to make payments based upon the
consummation of the transactions contemplated hereby constituting a change of
the nature described in Section 280G(b)(2)(A)(i) of the Code, that are or
will not be deductible because of Section 280G of the Code.
4.10. CERTAIN AGREEMENTS. Except as discussed in the CFB Reports
filed prior to the date of this Agreement or as disclosed in the CFB
Disclosure Letter, and except for this Agreement and the agreements expressly
contemplated hereby, neither CFB nor any CFB Subsidiary is a party to any
oral or written (i) contract, agreement or understanding to repurchase assets
previously sold (or to indemnify or otherwise compensate the purchaser in
respect of such assets); (ii) contract
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containing covenants which limit the liability of CFB or any CFB 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, CFB or any
CFB Subsidiary, as applicable may carry on its business (other than as may be
required by law or applicable regulatory authorities); or (iii) other
executory material agreement as defined by the instructions to Exhibit 10
under Item 601 of SEC Regulation S-K. Except as set forth in the CFB
Disclosure Letter, neither CFB nor any of the CFB Subsidiaries in Violation
of any loan or credit agreement, note, mortgage, indenture or other
agreement, obligation or instrument applicable to CFB or any CFB Subsidiary
or their respective properties or assets, except for any such Violations that
would not, individually or in the aggregate, have a CFB Material Adverse
Effect.
4.11. INSURANCE. CFB and each CFB Subsidiary is presently insured, and
during each of the past five (5) calendar years has been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as, to the best knowledge of CFB, companies engaged in a
similar business would, in accordance with good business practice,
customarily be insured. CFB will deliver to MPF as requested correct and
complete copies of all material policies of insurance of CFB and the CFB
Subsidiaries currently in effect. Neither CFB nor any CFB Subsidiary has any
liability for material unpaid premiums or premium adjustments not properly
reflected on the CFB Financial Statements and no notice of cancellation or
termination has been received by CFB or any CFB Subsidiary with respect to
any material insurance policy currently in effect. Except as disclosed in
the CFB Disclosure Letter within the last five (5), neither CFB nor any CFB
Subsidiary has been refused any insurance with respect to any assets or
operations, nor has any coverage been limited in any material respect as to
any assets or operations, by any insurance carrier to which it has applied
for any such insurance or with which it has carried insurance during the last
five years.
4.12. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the CFB Reports filed prior to the date of this Agreement or in the CFB
Disclosure Letter, and except as contemplated by this Agreement and the Plan
of Merger, from and after January 1, 1996 through the date of this Agreement:
(a) CFB and the CFB Subsidiaries have conducted their respective businesses
only in the ordinary and usual course consistent with past practice, (b) CFB
has not declared, set aside or paid any dividend or other distribution in
respect to any of CFB's capital stock, except for regular quarterly cash
dividends not exceeding $.14 per share on CFB Common Stock and regular
quarterly cash dividends not exceeding $.4375 per share on CFB preferred
stock depository shares with usual record and payment dates for such
dividends, (c) there has not been any transaction, commitment, dispute or
other event or condition of any character (whether or not in the ordinary
course of business) individually or in the aggregate having or which, insofar
as reasonably can be foreseen, in the future is reasonably likely to have, a
CFB Material Adverse Effect and (d) there has not been any material change in
the method of accounting or accounting practices of CFB and the CFB
Subsidiaries, except as requested by law or generally accepted accounting
principles.
4.13. PROPERTIES, LEASES AND OTHER AGREEMENTS. Except as may be
reflected in the CFB Financial Statements, for any lien for current taxes not
yet delinquent, for pledges to secure deposits
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and for such other liens, security interests, claims, charges, options or
other encumbrances and imperfections of title which do not materially affect
the value of personal or real property reflected in the CFB Financial
Statements or acquired since the date of such Statements and which do not
materially interfere with or impair the present and continued use of such
property, CFB and its CFB Subsidiaries have good title, free and clear of any
liens, security interests, claims, charges, options or other encumbrances, to
all of the personal and real property reflected in the CFB Financial
Statements, and all personal and real property acquired since the date of
such Statements, except such personal and real property as has been disposed
of in the ordinary course of business. The CFB Disclosure Letter lists all
acquisitions or dispositions of capital assets planned as of the date of this
Agreement by CFB or any CFB Subsidiary, other than individual transactions
with a value not in excess of $25,000 each. Substantially all CFB's and each
CFB Subsidiary's buildings and equipment in regular use (including such
buildings and equipment as are leased) have been well maintained and are in
good and serviceable condition, reasonable wear and tear excepted. The CFB
Disclosure Letter contains a brief description including terms, of each lease
for real or personal property to which CFB or any CFB Subsidiary is a party.
CFB or the applicable CFB Subsidiary, as lessee, has a valid and existing
leasehold interest under each of such leases, true and correct copies of
which CFB has delivered to MPF. There is not, under any of such leases
relating to real property or any other material leases, any material existing
default by CFB, the CFB Subsidiaries or, to the knowledge of CFB, any other
party thereto, or any event with notice of lapse of time or both would
constitute such a material default.
4.14. VOTES REQUIRED. The affirmative vote of holders of a majority
of the outstanding shares of CFB Common Stock is the only vote of the holders
of any class or series of CFB capital stock necessary to approve this
Agreement and the transactions contemplated hereby, including an amendment to
the articles of incorporation increasing the authorized capital stock..
4.15. TAX MATTERS. To the knowledge of CFB, neither CFB nor any of
its affiliates has through the date hereof taken or agreed to take any action
that would prevent the Merger from qualifying as one or more reorganizations
under Section 368(a)(1)(A) of the Code.
4.16. AFFILIATE TRANSACTIONS. Except as set forth in the CFB
Disclosure Letter, neither CFB nor any of the CFB Subsidiaries, nor any
executive officer or director of CFB, nor any member of the immediate family
of any such officer or director (which for the purposes hereof shall mean a
spouse, minor child or adult child living t the home of any such officer or
director), nor any entity which any of such person "controls" (within the
meaning of Regulation O of the Federal Reserve Board) has any loan agreement,
note or borrowing arrangement or any other agreement with CFB or any of its
Subsidiaries (other than normal employment arrangements) or any interest in
any property, real, personal or mixed, tangible or intangible, used in or
pertaining to the business of CFB or any of the Subsidiaries.
4.17. REGULATORY IMPEDIMENTS. As of the date hereof, CFB is unaware of
the existence of any factor that would materially delay or materially hinder the
issuance of any of the required
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regulatory approvals necessary to consummate the Merger or the other
transactions contemplated hereby, other than any protests by any
nongovernmental parties.
4.18. FULL DISCLOSURE. The representations and warranties of CFB
contained in this Agreement do not omit any material fact necessary to make
the statements contained therein, in light of the circumstances under which
they were made, not misleading. There is no fact known to CFB which has not
been disclosed to MPF pursuant to this Agreement, the CFB Disclosure Letter
and the CFB Reports, all taken together as a whole, which would reasonably be
expected to have a CFB Material Adverse Effect or a material adverse effect
on the ability of CFB or MPF to consummate the transactions contemplated
hereby.
ARTICLE V
COVENANTS OF MPF
5.1. AFFIRMATIVE COVENANTS. MPF hereby covenants and agrees with CFB
that prior to the Effective Time or until the earlier termination or
abandonment of this Agreement in accordance with its terms, unless the prior
written consent of CFB shall have been obtained (which consent shall not be
unreasonably withheld) and except as otherwise contemplated herein, it will
and will cause its Subsidiaries to:
(a) except for the anticipated acquisition of Charter Bancorporation
and High Plains Bank Corp. ("Scheduled Acquisitions") operate its business
only in the usual, regular and ordinary course consistent with past practices;
(b) preserve substantially intact its business organization and assets
(except for acquisitions and dispositions of assets in the ordinary course of
business consistent with past practices, unless otherwise required by the
terms of this Agreement), and maintain its rights and franchises, and use its
reasonable best efforts to retain the services of its officers and key
employees (except that it shall have the right to terminate the employment of
any officer or key employee in accordance with established employment
procedures) and maintain its relationships with customers;
(c) maintain and keep its properties in as good repair and condition as
at present, except for depreciation due to ordinary wear and tear;
(d) keep in full force and effect, insurance and bonds comparable in
amount and scope of coverage to that now maintained by it;
(e) perform in all material respects all obligations required to be
performed by it under all material contracts, leases, and documents relating
to or affecting its assets, properties, and business;
(f) comply with and perform in all material respects all material
obligations and duties imposed upon it by all Laws; and
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(g) notify CFB immediately by telephone, and thereafter promptly
confirm in writing, if any of the matters described in SECTION 5.02(f)
occurs, whether as a result of action by MPF, any Subsidiary or any
Representatives (as defined therein) of MPF, or if any person makes any offer
or other proposal concerning a Competing Transaction (as defined in SECTION
5.02(f)); such notice shall include the name of any person other than MPF, a
Subsidiary and their Representatives involved in such matter and, after
receipt of any written offer or proposal from such person, a copy of any
written offers, proposals, agreements or other documents with respect to such
offer or proposal.
5.2. NEGATIVE COVENANTS. Except as specifically contemplated by this
Agreement, from the date hereof until the Effective Time, MPF shall not do,
or permit any of the Subsidiaries to do, without the prior written consent of
CFB (which shall not be unreasonably withheld), any of the following:
(a) incur any material liabilities or material obligations, whether
directly or by way of guaranty, including any obligation for borrowed money
whether or not evidenced by a note, bond, debenture or similar instrument,
except in the ordinary course of business consistent with past practice;
(b) (i) grant any general increase in compensation to its employees as
a class, or to its officers or directors, except in accordance with past
practice or as required by law, or increases which are not material, (ii)
effect any change in retirement benefits to any class of employees or
officers (unless any such change shall be required by applicable law) which
would increase its retirement benefit liabilities, (iii) adopt, enter into,
amend or modify any Benefit Plan, or (iv) enter into or amend any employment,
severance or similar agreements or arrangements with any directors or
officers or former directors or officers;
(c) declare or pay any dividend on, or make any other distribution in
respect of its outstanding shares of capital stock, except cash dividends by
a wholly-owned Subsidiary of MPF;
(d) (i) except for the Scheduled Acquisitions, redeem, purchase or
otherwise acquire any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock, or any options, warrants, conversion or other rights to acquire any
shares of its capital stock or any such securities or obligations; (ii) merge
with or into any other corporation or bank, permit any other corporation or
bank to merge into it or consolidate with, any other corporation or bank, or
effect any reorganization or recapitalization; (iii) purchase or otherwise
acquire any substantial portion of the assets, or more than 5% of any class
of stock, of any corporation, bank, or other business; (iv) liquidate, sell,
dispose of, or encumber any assets or acquire any assets, except in the
ordinary course of its business consistent with past practice; or (v) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(e) except in connection with the Scheduled Acquisitions, issue,
deliver, award, grant or sell, or authorize or propose the issuance,
delivery, award, grant or sale of, any shares of its capital
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stock of any class (including shares held in treasury), any Voting Debt or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, Voting Debt or convertible securities, other than
issuances by a wholly-owned Subsidiary of its capital stock to its parent;
(f) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as such term is defined
below), or negotiate with any person in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor (including Piper
Jaffray Inc.), attorney, accountant or other representative retained by it or
any of the Subsidiaries ("Representatives") to take any such action and MPF
shall promptly notify CFB orally and in writing of all of the relevant
details relating to all inquiries and proposals which it may receive relating
to any of such matters. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following involving MPF or any of the
Subsidiaries: any actual or proposed merger, consolidation, share exchange
or other business combination; a sale, lease, exchange, mortgage, pledge,
transfer or other disposition of a substantial portion of the consolidated
assets of MPF and the Subsidiaries; a sale of shares of voting capital stock
constituting more than 10% of the voting capital stock of MPF (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire such voting capital stock); a
tender offer or exchange offer for at least 10% of the outstanding shares of
Common Stock or MPF Common Stock; a solicitation of proxies in opposition to
approval of the Merger by MPF's stockholders; or a public announcement of a
BONA FIDE proposal, plan or intention to do any of the foregoing;
(g) other than (i) acquisitions described in SECTION 5.02(g) of the
Disclosure Schedule, as the case may be, or (ii) acquisitions which may be
mutually agreed to by the parties, MPF shall not, nor shall permit any of the
Subsidiaries to, acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or division thereof or otherwise
acquire or agree to acquire any substantial amount of assets in each case;
PROVIDED, however, that the foregoing shall not prohibit (i) internal
reorganizations, consolidations or dissolutions involving only the
Subsidiaries as permitted or directed by this Agreement, (ii) foreclosures
and other acquisitions related to previously contracted debt, in each case in
the ordinary course of business, or (iii) acquisitions of MPF assets in each
case in the ordinary course of business;
(h) propose or adopt any amendments to its corporate charter or bylaws
in any way adverse to CFB;
(i) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle with
respect to any acquisition of a material amount of assets or securities or
any release or relinquishment of any material contract rights not in the
ordinary course of business;
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(j) with respect to properties leased by MPF or any of the
Subsidiaries, renew, exercise an option to extend, cancel or surrender any
lease of real property or allow any such lease to lapse, without prior
consultation with CFB;
(k) change any of its methods of accounting in effect at December 31,
1995, or change any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ending July 31, 1995, except
as may be required by law or generally accepted accounting principles;
(l) take action which would or is reasonably likely to (i) adversely
affect the ability of CFB or MPF to obtain any necessary approvals of
governmental authorities required for the transactions contemplated hereby;
(ii) adversely affect MPF's respective ability to perform its covenants and
agreements under this Agreement; or (iii) result in any of the conditions to
the Mergers set forth in ARTICLE VIII not being satisfied or in a violation
of any provision of the Voting Agreements;
(m) change the lending, investment, liability management and other
material policies concerning the banking business of MPF and the
Subsidiaries, unless required by Law or order or unless such change does not
cause a Material Adverse Effect;
(n) purchase, renew or otherwise acquire any investment security for its
own account, except debt obligations issued by the United States Treasury
Department having a maturity at issuance of not more than three years;
(o) (A) make, or agree to make, any fully secured loan or increase any
existing fully secured loan for an amount in excess of $500,000, to any one
borrower, unless said loan is made pursuant to a properly documented and legally
enforceable commitment of the Bank to the borrower made prior to the date of
this Agreement; (B) make, or agree to make, any unsecured loan or increase any
unsecured loan by $100,000 or more, unless said loan is made pursuant to a
properly documented and legally enforceable commitment of the Bank to the
borrower made prior to the date of this Agreement; (C) make, or agree to make,
any new loan or advance on any existing loan, except in conformity with the
Bank's current loan policies; (D) make any change with respect to the terms of
any existing loan, except in the ordinary course of business; (E) make or commit
to make any further advances on any loan which is either in default or
classified, whether such classification is a result of a federal or state bank
regulatory examination or internal classification of substandard or lower by
Bank's officers or directors, unless the Bank is under a legal obligation to do
so. With respect to any CFB consent required by this SECTION 5.02(o), CFB shall
provide advice of its consent within three business days after CFB has received
the request for consent and accompanying information necessary for CFB. to
consider the request (the provisions of parts A and B of this section shall not
apply to renewals of existing loans, advances under existing loans or increases
to existing loans for an amount below the applicable limit set forth in parts A
and B);
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(p) pay any fees of any legal counsel, tax adviser or certified public
accountants retained in connection with the Merger, including Sherman &
Howard and Arthur Andersen LLP, calculated on a basis other than an hourly
basis at the maximum rates per hour set forth in the Disclosure Letter, with
bills detailing such hours and hourly charges to be submitted to MPF (and a
copy provided to CFB) prior to the Effective Time or pay any fees of an
agent, broker, investment banker, or financial advisor, including Piper
Jaffray Inc., otherwise than in accordance with SECTION 7.05;
(q) except for the Scheduled Acquisitions and the minority shares of
Equity Lending, Inc. purchase any equity securities; or
(r) agree in writing or otherwise to do any of the foregoing.
5.03. LETTERS OF ACCOUNTANTS. At the request of CFB, MPF shall use its
best efforts to cause to be delivered to CFB "cold comfort" letters of Arthur
Andersen LLP, dated the date on which the S-4 (as defined below) shall become
effective and the Closing Date, respectively, and addressed to CFB, in form
and substance reasonably satisfactory to CFB and reasonably customary in
scope and substance for letters delivered by independent public accountants
in connection with registration statements similar to the S-4 and
transactions such as those contemplated by the Merger Agreements. From and
after the date of this Agreement, neither MPF nor any of the Subsidiaries
shall take any action which, with respect to MPF, would disqualify the Merger
as a "pooling of interests" for accounting purposes.
5.04. ACCESS AND INFORMATION. Except where prohibited by law, upon
reasonable prior notice, MPF shall (and shall cause the Subsidiaries to)
afford to CFB's officers, employees, accountants, counsel and other
representatives, access, from time to time during normal business hours
during the period prior to the Effective Time, to all books, papers and
records relating to the assets, stock, properties, operations, obligations
and liabilities of MPF and the Subsidiaries, including without limitation all
books of account, tax records, minute books of directors' and stockholders'
meetings, contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files (other than attorney work product
or materials protected by any attorney-client privilege), documents relating
to assets and title thereto, plans affecting employees, securities transfer
records and stockholder lists, and any books, papers and records relating to
other assets, business activities or prospects in which CFB may have a
reasonable interest. including without limitation, its interest in planning
for integration and transition with respect to the business of MPF and the
Subsidiaries. During such period, MPF will cause one or more of its
representatives to confer on a regular and frequent basis with
representatives of CFB, to report on the general status of its ongoing
operations and to consult as to the making of any decisions or the taking of
any actions in matters other than in the ordinary course of business. During
such period, MPF shall (and shall cause each of the Subsidiaries to), except
where prohibited by law, furnish promptly to CFB (i) a copy of each Report
filed or received by it during such period pursuant to the requirements of
federal securities laws, the BHC Act and any other federal or state banking
laws promptly after such documents are available, (ii) the monthly financial
statements of MPF and the Subsidiaries (as prepared by MPF in accordance with
its normal accounting procedures) promptly after such financial
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statements are available, (iii) a summary of any action taken by the Board of
Directors, or any committee thereof, of MPF, (iv) minutes of the MPF Board of
Directors meetings and the reports of management of MPF and each of the
Subsidiaries customarily provided to their respective Boards of Directors,
and (v) all other information concerning its business, properties and
personnel as CFB may reasonably request. During such period, MPF shall, and
shall cause the Subsidiaries to, instruct its officers, employees, counsel
and accountants to be available for, and respond to any questions of, CFB's
officers, employees, accountants, counsel and other representatives at
reasonable hours and with reasonable notice by CFB to such individuals, and
to cooperate fully with CFB in planning for the integration of the business
of MPF and the Subsidiaries with the business of CFB and its Subsidiaries.
5.05. UPDATE DISCLOSURE: BREACHES.
(a) From and after the date hereof until the Effective Time, MPF shall
promptly, but not less frequently than monthly, update the Disclosure Letter
by notice to CFB to reflect any matters which have occurred from and after
the date hereof which, if existing on the date hereof, would have been
required to be described therein; provided, however, that no such update
shall affect the conditions to the obligation of CFB to consummate the
transactions contemplated hereby, and any and all changes reflected in any
such update shall be considered in determining whether such conditions have
been satisfied.
(b) MPF shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or
constitute a material breach (or would have caused or constituted a breach
had such event occurred or been known prior to the date hereof) of any of its
representations or agreements contained or referred to herein or which would
cause any of the conditions to the obligations of any party set forth in
ARTICLE VIII not to be satisfied, give prompt written notice thereof to CFB
and use its best efforts to prevent or promptly remedy the same.
5.6. AFFILIATES; TAX TREATMENT.
(a) MPF shall cause any person who becomes an Affiliate of MPF after
the date hereof, by virtue of becoming a director or officer of MPF or any
Subsidiary, and shall use its best efforts to cause any other person who
becomes an Affiliate of MPF after the date hereof, and on or prior to the
Closing Date, to deliver to CFB a written agreement substantially in the form
attached as EXHIBIT 3.18 hereto as soon as practicable after attaining such
status and advise such person of the restrictions imposed by applicable
securities laws upon the resale of CFB Common Stock delivered in connection
with the Merger.
(b) MPF will use its best efforts to cause the Mergers to qualify as
one or more reorganizations under Section 368(a)(1) of the Code.
5.07. DISSENT PROCESS. MPF will give to CFB prompt notice of its receipt
of any written notice relating to the exercise of dissenters' rights granted
under Section 262 of the DGCL, including
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the name of the dissenting stockholder and the number of shares of stock to
which the dissent relates. CFB will have the right to participate in all
negotiations and proceedings with the MPF stockholders relating to any such
notice or the exercise of such rights, and except as required by law, MPF
will not make any payment with respect to, or settle or offer to settle, any
dissent demands without the prior written consent of CFB.
5.08. EXPENSES.
(a) "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to the party and its
affiliates) incurred by a party or on its behalf in connection with the
consummation of the transactions contemplated by this Agreement.
(b) Except as otherwise provided herein, all Expenses incurred by CFB
and MPF in connection with or related to the authorization, preparation and
execution of this Agreement and the Plan of Merger, the solicitation of
stockholder approvals and all other matters related to the closing of the
transactions contemplated hereby, including all fees and expenses of agents,
representatives, counsel and accountants employed by either such party or its
affiliates, shall be borne solely and entirely by the party which has
incurred the same, except that the parties shall share equally in the expense
of printing the S-4 and the Proxy Statement (as defined below) and the
expense of all SEC and other regulatory filing incurred in connection
herewith.
5.09. DELIVERY OF SHAREHOLDER LISTS. MPF shall arrange to have its
transfer agent deliver to CFB or its designee, from time to time prior to the
Closing Date, a true and complete list setting forth the names and addresses
of all its stockholders of record, their holdings of such stock as of the
latest practicable date, and such other stockholder information as is
reasonably available that CFB may reasonably request.
5.10. SHAREHOLDER MEETINGS. MPF shall call a meeting of its stockholders
for the purpose of voting upon the Merger Agreements and related matters, and
deliver notice of such meeting, as part of the Proxy Statement (as defined
below) to MPF stockholders in accordance with applicable law and the
certificate. MPF shall coordinate and cooperate with CFB with respect to the
timing of such meeting and shall use its best efforts to hold such meeting as
soon as practicable after the date hereof. Unless otherwise required by law,
MPF shall not, at such stockholders' meeting, submit any other matter for
approval of its stockholders (except with the prior written consent of CFB).
MPF will, through its Board of Directors, (i) unanimously recommend to its
stockholders approval of such matters, (ii) not withdraw, modify or amend
such recommendations, and (iii) use its best efforts to obtain such
stockholder approval.
5.11. ACQUISITIONS OF REAL ESTATE. During the period prior to the
Effective Time, MPF shall cause each Subsidiary that proposes to acquire
ownership or possession of any real property (other than single family
residential real property), through foreclosure or repossession or otherwise,
to conduct an environmental assessment of such property meeting the
requirements described in
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SECTION 7.03 and any further environmental investigation, sampling or
analysis reasonably required to ensure that such Subsidiary shall not acquire
ownership or possession of any real property that is reasonably likely to
cause the Subsidiary to be subject to or incur any liabilities, damages,
penalties or removal, remediation or other costs as a result of its ownership
or control of the property that will exceed the value of the property.
5.12. PROCESSING CONTRACTS. As soon as reasonably practicable after the
date hereof, MPF will give notice to the other parties under such of MPF's
agreements for credit card and merchant processing services, trust processing
services and data processing services as CFB may designate as to the intended
termination of such parties' respective agreements as soon as reasonably
practicable after, and contingent on, the Merger. MPF will cooperate with
CFB in using its best efforts to minimize any termination penalties under
such agreements.
5.13. BENEFIT PLANS. MPF and its Subsidiaries will, to the extent
legally permissible, take all action necessary or required (i) to terminate
or amend, if requested by CFB, all qualified pension and welfare benefit
plans and all non-qualified benefit plans and compensation arrangements as of
the Effective Time; (ii) to amend the Plans to comply with the provisions of
the Tax Reform Act of 1986, as amended, and regulations thereunder and other
applicable law as of the Effective Time; and (iii) to submit application to
the Internal Revenue Service for a favorable determination letter for each of
the Plans which is subject to the qualification requirements of Section
401(a) of the Code prior to the Effective Time.
ARTICLE VI
COVENANTS OF CFB
6.01. AFFIRMATIVE COVENANTS. CFB hereby covenants and agrees with MPF
that prior to the Effective Time, unless the prior written consent of MPF
shall have been obtained (which consent shall not be unreasonably withheld)
and except as otherwise contemplated herein, it will cause the CFB
Subsidiaries to:
(a) operate its business only in the usual, regular and ordinary course
consistent with past practices, including acquisition of additional
institutions;
(b) preserve substantially intact its business organization and assets
(except for acquisitions and dispositions of assets in the ordinary course of
business consistent with past practices), and maintain its rights and
franchises, and use its reasonable best efforts to retain the services of its
officers and key employees (except that it shall have the right to terminate
the employment of any officer or key employee in accordance with established
employment procedures) and maintain its relationships with customers;
(c) maintain its corporate existence in good standing and maintain all
books and records in accordance with accounting principles and practices as
utilized in the CFB Financial Statements
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applied on a consistent basis, except as may be required to implement changes
in generally accepted accounting principles;
(d) keep in full force and effect, insurance and bonds comparable in
amount and scope of coverage to that now maintained by it;
(e) perform in all material respects all obligations required to be
performed by it under all material contracts, leases, and documents relating to
or affecting its assets, properties, and business; and
(f) conduct its business in a manner that does not violate any Laws,
except for possible violations which individually or in the aggregate do not,
and, insofar as reasonably can be foreseen, in the future will not, have a CFB
Material Adverse Effect.
6.02. NEGATIVE COVENANTS. Except as specifically contemplated by this
Agreement, from the date hereof until the Effective Time, CFB shall not do,
or agree or commit to do, or permit any of its Subsidiaries to do, without
the prior written consent of MPF (which shall not be unreasonably withheld)
any of the following:
(a) propose or adopt any amendments to its corporate charter or bylaws in
any way adverse to MPF; provided, however, that any amendment to the bylaws of
CFB to increase the size of its Board of Directors shall not be deemed adverse
to MPF and any amendment to the Restated articles of incorporation of CFB
effected solely by action of the Board of Directors of CFB shall not be deemed
adverse to MPF;
(b) take action which would or is reasonably likely to (i) adversely
affect the ability of CFB or MPF to obtain any necessary approvals of
governmental authorities required for the transactions contemplated hereby;
(ii) adversely affect CFB's ability to perform its covenants and agreements
under this Agreement; or (iii) result in any of the conditions to the Merger set
forth in ARTICLE VIII not being satisfied;
(c) change any of its methods of accounting in effect at December 31,
1995, or change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal income
tax returns for the taxable year ending December 31, 1995, except as may be
required by law or generally accepted accounting principles.
(d) change the lending, investment, liability management and other
material policies concerning the banking business of CFB and the CFB
Subsidiaries, unless required by Laws or order or unless such change does not
cause CFB Material Adverse Effect; or
(e) agree in writing or otherwise to do any of the foregoing.
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6.03. CFB RIGHTS PLAN. Nothing herein shall be deemed to prohibit CFB
from (a) redeeming the CFB Rights or (b) if the CFB Rights are so redeemed,
entering into a new rights agreement similar to the CFB Rights Agreement;
provided that, as to this CLAUSE (b), the holders of MPF Common Stock, become
entitled to any benefits thereof by virtue of the Mergers or the Exchange
Ratios are appropriately adjusted.
6.04. ACCESS AND INFORMATION. Except where prohibited by law, upon
reasonable prior notice, CFB shall (and shall cause the CFB Subsidiaries to)
afford to MPF's officers, employees, accountants, counsel and other
representatives, access, from time to time during normal business hours
during the period prior to the Effective Time, to all books, papers and
records relating to the assets, stock, properties, operations, obligations
and liabilities of CFB and the CFB Subsidiaries, including without limitation
all books of account, tax records, minute books of directors' and
stockholders' meetings, contracts and agreements, filings with any regulatory
authority, accountants' work papers, litigation files (other than attorney
work product or materials protected by any attorney-client privilege),
documents relating to assets and title thereto, plans affecting employees,
securities transfer records and stockholder lists, and any books, papers and
records relating to other assets, business activities or prospects in which
MPF may have a reasonable interest. During such period, CFB will cause one
or more of its representatives to confer on a regular and frequent basis with
representatives of MPF, to report on the general status of its ongoing
operations and to consult as to the making of any decisions or the taking of
any actions in matters other than in the ordinary course of business. During
such period, CFB shall (and shall cause each of the CFB Subsidiaries to),
except where prohibited by law, furnish promptly to MPF (i) a copy of each
CFB Report filed or received by it during such period pursuant to the
requirements of federal securities laws, the BHC Act and any other federal or
state banking laws promptly after such documents are available; (ii) the
monthly financial statements of CFB and the CFB Subsidiaries (as prepared by
CFB in accordance with its normal accounting procedures) promptly after such
financial statements are available; (iii) a summary of any action taken by
the Board of Directors, or any committee thereof, of CFB; (iv) minutes of the
CFB Board of Directors meetings and the reports of management of CFB and each
of the CFB Subsidiaries customarily provided to their respective Boards of
Directors; and (v) all other information concerning its business, properties
and personnel as MPF may reasonably request. During such period, CFB shall,
and shall cause the Subsidiaries to, instruct its officers, employees,
counsel and accountants to be available for, and respond to any questions of,
MPF's officers, employees, accountants, counsel and other representatives at
reasonable hours and with reasonable notice by MPF to such individuals.
6.05. BREACHES.
(a) From and after the date hereof until the Effective Time, CFB shall
promptly, but not less frequently than monthly, update the CFB Disclosure Letter
by notice to MPF to reflect any matters which have occurred from and after the
date hereof which, if existing on the date hereof, would have been required to
be described therein; provided, however, that no such update shall affect the
conditions to the obligation of MPF to consummate the transactions contemplated
hereby,
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and any and all changes reflected in any such update shall be considered in
determining whether such conditions have been satisfied.
(b) CFB shall, in the event it becomes aware of the impending or
threatened occurrence of any event or condition which would cause or constitute
a material breach (or would have caused or constituted a breach had such event
occurred or been known prior to the date hereof) of any of its representations
or agreements contained or referred to herein or which would cause any of the
conditions to the obligations of any party set forth in ARTICLE VIII not to be
satisfied, give prompt written notice thereof to MPF and use its best efforts to
prevent or promptly remedy the same.
6.06. LISTING. CFB shall use its best efforts to cause the shares of CFB
Common Stock to be issued in the Mergers to be approved for listing on the
NASDAQ National Market System, subject to official notice of issuance, prior to
the Closing Date.
6.07. CFB BENEFIT PLANS. On or before the first January 1 that is at least
180 days after the Effective Time, CFB shall provide to retained employees of
MPF or of any Subsidiary all corporate-wide employee retirement, health, dental,
life and long-term disability benefits that CFB and its subsidiaries provide to
their similarly situated employees, subject to the age and eligibility
requirements for such benefits. Each such employee's last continuous period of
service prior to the Effective Time with MPF or any Subsidiary shall count for
purposes of determining eligibility and vesting for all such benefits. If such
coverage under the CFB benefits is not provided immediately after the Effective
Time, CFB shall continue the MPF plans until coverage is effective under CFB's
plans so that no lapse in benefits occurs. Without limiting the generality of
the foregoing, no preexisting condition limits shall be applied to participants
in Benefit Plans upon their eligibility for such CFB benefits (except for
continuation of any such limits that were in effect under the applicable Benefit
Plans). For the purpose of determining each employee's benefit for the year in
which the Merger occurs under the CFB vacation program, vacation taken by an
employee in the year in which the Merger occurs will be deducted from the total
CFB benefit.
6.08. TAX TREATMENT. CFB will use its best efforts to cause the Merger to
qualify as one or more reorganizations under Section 368(a)(1) of the Code.
6.09. LETTERS OF ACCOUNTANTS. At the request of MPF, CFB shall use its
best efforts to cause to be delivered to MPF "cold comfort" letters of Ernst
& Young LLP, dated the date on which the S-4 shall become effective and the
Closing Date, respectively, and addressed to MPF, in form and substance
reasonably satisfactory to CFB and reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with registration statements similar to the S-4 and transactions
such as those contemplated by the Merger Agreements. From and after the date
of this Agreement, neither CFB nor any of the CFB Subsidiaries shall take any
action which, with respect to CFB, would disqualify the Merger as a "pooling
of interests" for accounting purposes.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.01. FILINGS AND APPROVALS.
(a) Each party will use all reasonable efforts and will cooperate with
the other in the preparation and filing, as soon as practicable, of all
applications or other documents required to obtain the requisite approvals of
and consents to the Merger and the other transactions contemplated by this
Agreement, from the Federal Reserve Board, the Colorado Commissioner, the
FDIC and the Comptroller, as applicable, and from any other applicable bank
regulatory authorities and provide copies of nonconfidential portions of such
applications, filings and related correspondence to the other parties. Prior
to filing each application, notice or other documents with the applicable
regulatory authority, each party will provide the other party with an
opportunity to review and comment on the nonconfidential portions of each
such application, notice or other document. Each party shall ensure that none
of the information supplied or to be supplied by it for inclusion or
incorporation by reference in any documents to be filed with the Federal
Reserve Board, the Colorado Commissioner, the FDIC, the Comptroller or any
other regulatory agency in connection with the transactions contemplated
hereby will, at the time of filing, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein.
Subject to the terms and conditions herein provided, each party will use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to cause the
conditions set forth in ARTICLE VIII to be satisfied, including participating
in any required hearings or proceedings, and to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement.
Each party shall keep the other advised of all material regulatory
developments in a timely manner;
(b) In the event of a restraining order or injunction which prevents
the Closing by reason of the operation of SECTION 8.01(d), MPF and CFB shall
use their respective best efforts to cause such order or injunction to be
lifted and the Closing to be consummated as soon as reasonably practicable.
7.02. REGISTRATION STATEMENT.
(a) For the purposes of (i) holding a meeting of the stockholders of
MPF to approve the Merger Agreements and the Merger (the "Meeting") and (ii)
registering the CFB Common Stock to be issued to holders of MPF Common Stock
in connection with the Merger with the SEC and with applicable state
securities authorities, the parties hereto shall cooperate in the preparation
of an appropriate registration statement (such registration statement,
together with all and any amendments and supplements thereto, being herein
referred to as the "S-4"), which shall include a joint prospectus of CFB and
proxy statement of MPF (the "Proxy Statement") that shall satisfy all
applicable requirements of the Securities Act, the Exchange Act, applicable
state securities laws and the rules and regulations thereunder.
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(b) CFB shall furnish such information concerning CFB as is necessary in
order to cause the Proxy Statement, insofar as it relates to CFB, to be prepared
in accordance with SECTION 7.02(a). CFB agrees promptly to advise MPF if any
time prior to the Meeting any information provided by CFB in the Proxy Statement
becomes incorrect or incomplete in any material respect, and to provide the
information needed to correct such inaccuracy or omission. At the time the S-4
becomes effective and at the time the Proxy Statement is mailed to the
stockholders of MPF and at all times subsequent to such mailing up to and
including the time of the Meeting, the S-4 and such Proxy Statement (including
any amendments or supplements thereto), with respect to all information set
forth therein relating to CFB (including the CFB Subsidiaries) and the CFB
Common Stock, this Agreement, the Merger and all other transactions contemplated
hereby, will (a) comply in all material respects with applicable provisions of
the Securities Act and the Exchange Act, and (b) not contain any untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they are made, not misleading.
(c) MPF shall furnish CFB with such information concerning MPF and the
Subsidiaries as is necessary in order to cause the Proxy Statement, insofar as
it relates to MPF and the Subsidiaries, to be prepared in accordance with
SECTION 7.02(a). MPF agrees promptly to advise CFB if at any time prior to the
Meeting any information provided by MPF in the Proxy Statement becomes incorrect
or incomplete in any material respect, and to provide CFB with the information
needed to correct such inaccuracy or omission. At the time the S-4 becomes
effective and at the time the Proxy Statement is mailed to the stockholders of
MPF and at all times subsequent to such mailings up to and including the time of
the Meetings, the S-4 and the Proxy Statement (including any supplements
thereto), with respect to all information set forth therein relating to MPF
(including the Subsidiaries) and their stockholders, MPF Common Stock, this
Agreement, the Merger and all other transactions contemplated hereby will
(a) comply in all material respects with applicable provisions of the Securities
Act and the Exchange Act, and (b) not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they are made, not misleading.
(d) CFB shall promptly file the S-4 with the SEC and applicable state
securities agencies. CFB shall use reasonable efforts to cause the S-4 to
become effective under the Securities Act and applicable state securities
laws at the earliest practicable date. MPF authorizes CFB to utilize in the
S-4 the information concerning MPF and its Subsidiaries provided to CFB for
the purpose of inclusion in the Proxy Statement. MPF shall have the right to
review and comment on the forms of proxy statement included in the S-4. CFB
shall advise MPF promptly when the S-4 has become effective and of any
supplements or amendments thereto, and CFB shall furnish MPF with copies of
all such documents. Prior to the Effective Time or the termination of this
Agreement, each party shall consult with the other with respect to any
material (other than the Proxy Statement) that might constitute a
"prospectus" relating to the Mergers within the meaning of the Securities Act.
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7.03. ENVIRONMENTAL AUDITS. CFB shall engage, at MPF's expense, an
environmental consulting engineering firm, reasonably acceptable to MPF, to
perform environmental site assessments of all MPF Property (other than single
family residential real property) (collectively, the "Audited Properties")
which shall satisfy the American Society of Testing and Materials "Standard
Practice for Environmental Site Assessments: Phase I Environmental Site
Assessment Process" (ASTM Designation: E-1527-93) and include a visual
inspection for potential asbestos-containing material (the "Environmental
Audits") and render reports of the Environmental Audits (the "Environmental
Reports") to determine, to CFB's satisfaction, whether there are any
indications or evidence that (i) any Toxic Substance has been stored,
deposited, treated, recycled, used or accidentally or intentionally disposed
of, discharged, spilled, released, dumped, emitted or otherwise placed on,
under or at, or used in any construction on, any such Audited Property, (ii)
any such Audited Property is contaminated by or contains any Toxic Substance
or (iii) any violations of Environmental Laws have occurred or are likely to
occur on any Audited Property. The scope of the Environmental Audits shall
include any testing or sampling of materials to determine, to CFB's
satisfaction, whether any cleanup, removal, remedial action or other response
("Remediation Action") is required to bring the Audited Properties into
material compliance with Environmental Laws or to eliminate any condition
that could result in a material liability as a result of the ownership,
lease, operation or use of any Audited Property, and the estimated cost of
such Remediation Action. Notwithstanding the foregoing, to the extent MPF
has in its possession environmental reports with respect to any of its
properties, CFB shall accept updated and amended reports as the Environmental
Audits for such properties, so long as the environmental consulting
engineering firms preparing such reports are reasonably acceptable to CFB and
the updated and amended reports otherwise qualify as Environmental Audits.
Where satisfactory existing environmental reports are not available. CFB
will use reasonable efforts to engage an environmental consulting engineering
firm within 30 days of the date hereof and CFB and MPF will use reasonable
efforts to cause the Environmental Audits to be completed within 120 days of
the date hereof. MPF shall use reasonable efforts to cause the Remediation
Actions to be completed within six months of the date hereof. The actual
costs of such Remediation Action, whether paid, billed or to be billed, are
the "Remediation Costs." Nothing contained in the Environmental Reports
shall diminish or expand MPF's obligations with respect to the
representations and warranties in SECTION 3.07 or affect the consequences of
any such representation or warranty proving to have been untrue, incomplete
or misleading in any respect.
7.04. REPORTS.
(a) Prior to the Effective Time, (i) MPF shall prepare and file as and
when required all Reports and (ii) CFB shall prepare and file as and when
required all CFB Reports.
(b) MPF and CFB shall prepare such Reports and CFB Reports,
respectively, such that (i) they comply in all material respects with all of
the statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they are filed and do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made,
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not misleading, and (ii) with respect to any Reports or CFB Reports
containing financial information of the type included in the Financial
Statements or the CFB Financial Statements, respectively, the financial
information (A) is prepared in accordance with generally accepted accounting
principles as utilized in the Financial Statements or the CFB Financial
Statements, as the case may be, applied on a consistent basis (except as
stated therein or in the notes thereto), (B) presents fairly the consolidated
financial condition of MPF or CFB, as the case may be, at the dates, and the
consolidated results of operations and cash flows for the periods, stated
therein and (C) in the case of interim fiscal periods, reflects all
adjustments, consisting only of normal recurring items, subject to year-end
audit adjustments.
7.05. BROKERS OR FINDERS. Except as set forth in the Disclosure Letter
or the CFB Disclosure Letter, each of CFB and MPF represents, as to itself,
its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to
any broker's or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement, and
each of CFB and MPF respectively agree to indemnify and hold the other
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on
the basis of any act or statement alleged to have been made by such party or
its affiliate. MPF represents that neither it nor the Subsidiaries has paid
or agreed to pay any fee to its legal counsel, Sherman & Howard, or its
certified public accountants, Arthur Andersen LLP other than on the basis set
forth in SECTION 5.02(p) in connection with the transactions contemplated by
this Agreement.
7.06. INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, CFB shall indemnify, defend and
hold harmless each person who is now, or has been at any time prior to the
date hereof or who becomes prior to the Effective Time, an officer or
director of MPF or any of the Subsidiaries and John Fischer (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees), liabilities or judgments or amounts that are
paid in settlement (which settlement shall require the prior written consent
of CFB, which consent shall not be unreasonably withheld) of or in connection
with any claim, action, suit, proceeding or investigation (a "Claim") in
which an Indemnified Party is, or is threatened to be made, a party or a
witness based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director or officer of MPF or any of
the Subsidiaries if such Claim pertains to any matter or fact arising,
existing or occurring prior to the Effective Time (including, without
limitation, the Merger and other transactions contemplated by this
Agreement), regardless of whether such Claim is asserted or claimed prior to,
at or after the Effective Time (the "Indemnified Liabilities") to the fullest
extent permitted under applicable Delaware or federal law as of the date
hereof or as amended prior to the Effective Time and under the MPF
Certificate and bylaws as in effect on the date hereof (and CFB shall pay
expenses in advance of the final disposition of any such action or proceeding
to each Indemnified Party to the full extent permitted by law, upon receipt
of any undertaking contemplated by the Bylaws of CFB). Any Indemnified Party
wishing to claim indemnification under this SECTION 7.06(a) upon learning of
any Claim, shall notify CFB and shall deliver to CFB any
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undertaking contemplated by the bylaws of CFB. Notwithstanding the
foregoing, the Indemnified Parties as a group may retain only one law firm to
represent them with respect to each matter under this SECTION 7.06(a) unless
there is, under applicable standards of professional conduct, a conflict on
any one significant issue between the positions of any two or more
Indemnified Parties. CFB shall use its best efforts to assure, to the extent
permitted under applicable law, that all limitations of liability existing in
favor of the Indemnified Parties as provided in either the MPF Certificate,
or MPF's bylaws, as the case may be, as in effect as of the date hereof, with
respect to claims or liabilities arising from facts or events existing or
occurring prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), shall survive the Merger. The
obligations of CFB described in this SECTION 7.06(a) shall continue in full
force and effect, without any amendment thereto, for a period of three years
from the Effective Time; provided, however, that all rights to
indemnification in respect of any Claim asserted or made within such period
shall continue until the final disposition of such Claim.
(b) From and after the Effective Time, the directors, officers, and
employees of MPF and the Subsidiaries who become directors, officers or
employees of CFB or any of its Subsidiaries, except for the indemnification
rights set forth in SECTION 7.06(a), shall have indemnification rights with
prospective application only. The prospective indemnification rights shall
consist of such rights to which directors, officers and employees for CFB are
entitled under the provisions of the Restated Certificate of Incorporation of
CFB or similar governing documents of CFB and its Subsidiaries, as in effect
from time to time after the Effective Time, as applicable, and provisions of
applicable law as in effect from time to time after the Effective Date.
(c) The obligations of CFB provided under SECTION 7.06(a) are intended to
benefit, and be enforceable against CFB directly by, the Indemnified Parties,
and shall be binding on all respective successors to CFB.
(d) For three years from and after the Effective Time, CFB will maintain
or cause to maintain MPF's current insurance policy for directors' and officers'
liabilities or an equivalent policy having terms and conditions no less
favorable to all present and former directors and officers of MPF and the
Subsidiaries who are covered by such current insurance policy than those in
effect for such persons on the date of this Agreement; provided, however, that
(i) CFB's obligation under this SUBSECTION (d) shall be satisfied as to any year
at such time as CFB shall have incurred annual costs to maintain insurance in
accordance with this subsection equal to 150% of the annual premium charge
heretofore paid by MPF and (ii) such directors and officers may be required to
make application and provide customary representations and warranties to CFB's
insurance carrier for the purpose of obtaining such coverage.
7.07. ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable 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, subject to the appropriate vote of the stockholders of MPF
described in
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SECTION 8.01(a)(ii), including cooperating fully with the other party. In
case at any time after the Effective Time any further action is reasonably
necessary or desirable to carry out the purposes of this Agreement or to vest
CFB with full title to all properties, assets, rights, approvals, immunities
and franchises of MPF, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
ARTICLE VIII
CONDITIONS PRECEDENT
8.01. 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 satisfaction prior to the Closing Date of the following conditions:
(a) CORPORATE APPROVAL.
(i) The Merger Agreements shall have been approved and adopted by the
requisite vote of the Board of Directors of MPF and the Board of Directors of
CFB.
(ii) The Merger Agreements shall have been approved and adopted by the
requisite vote of the holders of the outstanding shares of MPF Common Stock
and CFB Common Stock.
(b) REGULATORY APPROVALS. The Merger Agreement and the Merger shall
have been approved by the Federal Reserve Board, the Comptroller, the FDIC
and the Colorado Commissioner, as applicable, and any other applicable bank
regulatory authorities without any condition not reasonably satisfactory to
CFB, all conditions required to be satisfied prior to the Effective Time
imposed by the terms of such approvals shall have been satisfied and all
waiting periods relating to such approvals shall have expired.
(c) S-4: SECURITIES LAWS. The S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order. CFB shall have received all state securities or "blue
sky" permits, exemptions or permits under applicable takeover laws and other
authorizations necessary to issue the CFB Common Stock in exchange for the MPF
Common Stock and to consummate the Merger.
(d) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect.
(e) LISTING OF CFB COMMON STOCK. The CFB Common Stock issuable in the
Mergers shall have been authorized for listing on the NASDAQ National Market
System, upon official notice of issuance.
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(f) TAX OPINION. An opinion of Sherman & Howard to the effect that the
Mergers will be treated for federal income tax purposes as one or more
reorganizations within the meaning of Section 368(a) of the Code, and that
CFB and MPF will each be a party to that reorganization within the meaning of
Section 368(b) of the Code, dated on or about the dates that are each two
business days prior to the date the Proxy Statement is first mailed to
stockholders of MPF, shall have been delivered to MPF and to CFB and shall
not have been withdrawn or modified in any material respect.
(g) FAIRNESS OPINION.
(i) CFB shall have received, in form reasonably satisfactory to
CFB, an opinion of the Chicago Corporation, dated as of the date of the Proxy
Statement, substantially to the effect that the consideration to be received
in the Merger by MPF's stockholders is fair to the CFB stockholders from a
financial point of view, which opinion may be included in the Proxy
Statement. Notwithstanding the foregoing, this condition shall be deemed
waived if the Proxy Statement is mailed to CFB's stockholders without such
opinion.
(ii) MPF shall have received, in form reasonably satisfactory to
MPF, an opinion of Piper Jaffray Inc. dated as of the date of the Proxy
Statement, substantially to the effect that the consideration to be received
in the Merger by MPF's stockholders is fair to such stockholders from a
financial point of view, which opinion may be included in the Proxy
Statement. Notwithstanding the foregoing, this condition shall be deemed
waived if the MPF Proxy Statement is mailed to MPF's stockholders without
such opinion.
8.02. CONDITIONS TO OBLIGATIONS OF CFB. The obligation of CFB to effect
the Merger are subject to the satisfaction of the following conditions,
unless waived in writing by CFB:
(a) REPRESENTATIONS AND WARRANTIES. (i) Each of the representations
and warranties of MPF set forth in this Agreement, without giving effect to
any update to the Disclosure Letter or notice to CFB under SECTION 5.05,
shall be true and correct in all material respects (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects) as of
the date of this Agreement, and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date , except for changes expressly
contemplated by this Agreement, and (ii) CFB shall have received certificates
to such effect signed on behalf of MPF by its chief executive officer and its
chief operating officer.
(b) PERFORMANCE OF OBLIGATIONS OF MPF. MPF shall have performed in all
material respects each of the obligations required to be performed by it under
this Agreement and the Plan of Merger at or prior to the Closing Date, and CFB
shall have received certificates to such signed on behalf of MPF by its chief
executive officer and its chief operating officer.
(c) CONSENTS UNDER AGREEMENTS. MPF shall have obtained the consent or
approval of each person whose consent or approval shall be required in order to
permit the succession by CFB
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pursuant to the Merger to any obligation, right or interest of MPF or any
Subsidiary under any loan or credit agreement, note, mortgage, indenture,
lease or other agreement or instrument, except those for which failure to
obtain such consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect, whether prior to or following the
consummation of the transactions contemplated hereby.
(d) NO AMENDMENTS TO RESOLUTIONS. Neither the Board of Directors of MPF
nor any committee thereof shall have (i) amended, modified, rescinded or
repealed the resolutions adopted by the Board of Directors of MPF at a meeting
duly called and held on June 24, 1996 (accurate and complete copies of which
have been provided to CFB) in any manner that adversely affects CFB or
(ii) adopted any other resolutions in connection with this Agreement and the
transactions contemplated hereby inconsistent with such resolutions in any
manner that adversely affects CFB.
(e) NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change since the date of this Agreement in the business, operations, prospects
or financial condition of MPF or any Subsidiary other than any such change
attributable to or resulting from any change in law, regulation or generally
accepted accounting principles which impairs both MPF and CFB in a substantially
similar manner, and CFB shall have received certificates to such effect signed
on behalf of MPF by its chief executive officer and its chief operating officer.
(f) NO PROCEEDING OR LITIGATION. No material action, suit or proceeding
before any court or any governmental or regulatory authority shall be pending
against CFB, MPF or any affiliate, associate, officer or director of either of
them (other than litigation commenced by CFB or any of its affiliates so long as
no order or injunction of a court of competent jurisdiction is in effect in such
litigation on the Closing Date that does restrain, enjoin or prevent the
Closing), seeking to restrain, enjoin, prevent, change or rescind the
transactions contemplated hereby or questioning the validity or legality of any
such transactions.
(g) ACCOUNTANT'S REVIEW LETTERS. CFB shall have received the letters
described in SECTION 5.03 regarding the Financial Statements.
(h) POOLING LETTER. CFB shall have received a letter from Ernst & Young,
in form and substance reasonably satisfactory to CFB, approving the accounting
treatment of the Merger as a "pooling of interests" in accordance with generally
accepted accounting principles, as of a date no more than five business days
prior to the Closing Date; in support of the Ernst & Young pooling letter,
Ernst & Young and CFB shall have received a letter from Arthur Andersen LLP, in
form and substance reasonably satisfying to Ernst & Young, confirming certain
facts on behalf of MPF.
(i) OPINION OF COUNSEL. MPF shall have delivered to CFB an opinion of its
counsel, Sherman & Howard, dated as of the Closing Date and in form and
substance satisfactory to the counsel of CFB, to the effect that: (i) MPF is a
corporation validly existing and in good standing under the laws of Delaware
with full corporate power and authority to enter into this Agreement and the
Plan of Merger and to consummate the transactions contemplated thereby; (ii) MPF
is registered
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as a bank holding company under the BHC Act; (iii) MPF has the corporate
power to consummate the transactions on its part contemplated by this
Agreement and the Plan of Merger; (iv) this Agreement and the Plan of Merger
have been duly and validly authorized, executed and delivered on behalf of
MPF, and constitute (subject to standard exceptions to enforceability arising
from the bankruptcy laws and rules of equity and to claims relating to
conformance with fiduciary obligations) valid and binding agreements of MPF;
(v) the execution of the MPF Articles of Merger and the Certificate of Merger
by MPF has been duly and validly authorized; (vi) neither the execution and
delivery of this Agreement and the Plan of Merger by MPF and the consummation
of the transactions contemplated hereby result in or will result in a
violation pursuant to any provision of the MPF Certificate, the bylaws of
MPF, the charter, certificate or articles of incorporation or bylaws of any
Subsidiary, the DGCL, or to the knowledge of such counsel, any agreement
included in a certificate delivered to such counsel and CFB by the chief
executive officer and the chief operating officer of MPF, respectively,
setting forth all agreements to which MPF or any Subsidiary is a party that
are material to MPF or any of Subsidiaries; and (vii) in the course of the
preparation of the S-4 and Proxy Statement such counsel has considered the
information set forth therein relating to MPF in light of the matters
required to be set forth therein, and has participated in conferences with
officers and representatives of MPF and CFB, including their respective
counsel and independent public accountants, during the course of which the
contents of the S-4 and the Proxy Statement and related matters relating to
MPF were discussed. Such counsel has not independently checked the accuracy
or completeness of, or otherwise verified, and accordingly is not passing
upon, and does not assume responsibility for, the accuracy, completeness or
fairness of the statements contained in the S-4 or the Proxy Statement; and
such counsel has relied as to materiality, to a large extent, upon the
judgment of officers and representatives of MPF and CFB. However, as a
result of such consideration and participation, nothing has come to such
counsel's attention which causes such counsel to believe that the S-4 (other
than the financial statements, financial data, statistical data and
supporting schedules included therein, and information relating to or
supplied by CFB as to which such counsel expresses no belief), at the time it
became effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Proxy Statement
(other than the financial statements, financial data, statistical data and
supporting schedules included therein, and information relating to or
supplied by CFB, as to which such counsel expresses no belief), at the time
the S-4 became effective, included any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(j) ALLOWANCE FOR LOSSES ON LOANS. If CFB believes that MPF's
consolidated allowance for loan losses is inadequate, it will within ten (10)
days prior to the Closing recommend to the Board of Directors of the Banks an
adjustment in the amount of such allowance which, if reasonable and
consistent with prudent banking practices, shall be approved by such Boards.
(k) OUTSTANDING COMMON STOCK. As of the Closing Date, the number of
outstanding shares of MPF Common Stock shall not be greater than 4,055,551.
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(l) FEES. All fees referred to in SECTION 5.02(p) shall have been paid by
MPF or accrued on the consolidated balance sheet of MPF.
(m) ENVIRONMENTAL MATTERS. The Remediation Actions shall have been
completed.
8.03. CONDITIONS TO OBLIGATIONS OF MPF. The obligation of MPF to effect
the Merger is subject to the satisfaction of the following conditions, unless
waived by MPF:
(a) REPRESENTATIONS AND WARRANTIES. (i) Each of the representations and
warranties of CFB set forth in this Agreement, without giving effect to any
update to the CFB Disclosure Letter or notice to MPF pursuant to SECTION 6.04,
shall be true and correct in all material respects (except that where any
statement in a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects) as of the
date of this Agreement and (except to the extent such representations speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date (except for changes expressly contemplated by this Agreement, and
(ii) MPF shall have received a certificate to such effect signed on behalf of
CFB by the chief executive officer and by the chief financial officer of CFB.
(b) PERFORMANCE OF OBLIGATIONS OF CFB. CFB shall have performed in all
material respects each of the obligations required to be performed by them under
this Agreement and the Plan of Merger at or prior to the Closing Date, and MPF
shall have received a certificate to such effect signed on behalf of CFB by the
chief executive officer and by the chief financial officer of CFB.
(c) CONSENTS UNDER AGREEMENTS. CFB shall have obtained the consent or
approval of each person whose consent or approval shall be required in
connection with the transactions contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease or other agreement or instrument,
except those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a CFB Material Adverse Effect whether
prior to or following the consummation of the transactions contemplated hereby.
(d) NO AMENDMENTS TO RESOLUTIONS. Neither the Board of Directors of CFB
nor any committee thereof shall have amended, modified, rescinded or repealed
the resolutions adopted by the Board of Directors of CFB at a meeting duly
called and held on June 17, 1996 (accurate and complete copies of which have
been provided to MPF) in any manner that adversely affects MPF or adopted any
other resolutions in connection with this Agreement and the transactions
contemplated hereby inconsistent with such resolutions.
(e) NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change since the date of this Agreement in the business, operations, prospects
or financial condition of CFB or any CFB Subsidiary other than any such change
attributable to or resulting from any change in law, regulation or generally
accepted accounting principles which impairs both MPF and CFB in a substantially
similar manner, and MPF shall have received certificates to such effect signed
on behalf of CFB by its chief executive officer and its chief financial officer.
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(f) OPINION OF COUNSEL. CFB shall have delivered to MPF an opinion of
Lindquist & Vennum P.L.L.P., General Counsel of CFB, dated as of the Closing
Date and in form and substance reasonably satisfactory to the counsel of MPF,
to the effect that: (i) CFB is a corporation validly existing under the laws
of its jurisdiction of incorporation with full corporate power and authority
to enter into this Agreement and the Plans of Merger and to consummate the
transactions contemplated thereby; (ii) CFB is registered as a bank holding
company under the BHC Act; (iii) CFB has the corporate power to consummate
the transactions on its part contemplated by this Agreement and the Plan of
Merger; (iv) all corporate proceedings on the part of CFB necessary to be
taken in connection with the Merger and (except for the filing of the
Certificate of Merger) necessary to make same effective have been duly and
validly taken; (v) this Agreement has been duly and validly authorized,
executed and delivered on behalf of CFB and constitutes (subject to standard
exceptions to enforceability arising from the bankruptcy laws and rules of
equity) a valid and binding agreement of CFB; (vi) the execution of the
Certificate of Merger by CFB has been duly and validly authorized; (vii) the
shares of CFB Common Stock to be issued in the Mergers will, when issued, be
duly authorized, validly issued, fully paid and non-assessable; and (viii)
neither the execution or delivery of this Agreement and the Plan of Merger by
CFB and the consummation of the transactions contemplated herein result in or
will result in a violation pursuant to the CFB certificate, the bylaws of
CFB, the charter, certificate of incorporation or bylaws of any CFB
Subsidiary, or the DGCL; and (ix) in the course of the preparation of the S-4
and the Proxy Statement such counsel has considered the information set forth
therein relating to CFB in light of the matters required to be set forth
therein, and has participated in conferences with officers and
representatives of MPF and CFB, including their respective counsel and
independent public accountants, during the course of which the contents of
the S-4 and the Proxy Statement and related matters relating to CFB were
discussed. Such counsel has not independently checked the accuracy or
completeness of, or otherwise verified, and accordingly is not passing upon,
and does not assume responsibility for, the accuracy, completeness or
fairness of the statements contained in the S-4 or the Proxy Statement; and
such counsel has relied as to materiality, to a large extent, upon the
judgment of officers and representatives of MPF and CFB. However, as a
result of such consideration and participation, nothing has come to such
counsel's attention which causes such counsel to believe that the S-4 (other
than the financial statements, financial data, statistical data and
supporting schedules included therein, and information relating to or
supplied by MPF, as to which such counsel expresses no belief), at the time
it became effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Proxy Statement
(other than the financial statements, financial data, statistical data and
supporting schedules included therein, and information relating to or
supplied by MPF, as to which such counsel expresses no belief), at the time
the S-4 became effective, included any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(g) NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change since the date of this Agreement in the business, operations, prospects
or financial condition of CFB and the CFB Subsidiaries taken as a whole, other
than any such change attributable to or resulting
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from any change in law, regulation or generally accepted accounting
principles which impairs both MPF, on the one hand, and CFB, on the other
hand, in a substantially similar manner, and MPF shall have received a
certificate to such effect signed on behalf of CFB by the chief executive
officer and by the chief financial officer of CFB.
(h) NO PROCEEDING OR LITIGATION. No material action, suit or
proceeding before any court or any governmental or regulatory authority shall
be pending against any officer or director of MPF (other than litigation
commenced by MPF or any of its affiliates so long as no order or injunction
of a court of competent jurisdiction is in effect in such litigation on the
Closing Date that does restrain, enjoin or prevent the Closing), seeking to
restrain, enjoin, prevent, change or rescind the transactions contemplated
hereby or questioning the validity or legality of any such transactions,
where such action, suit or proceeding is reasonably likely to result in
material personal liability to such officer(s) or director(s) (other than
liability reasonably likely to be covered by indemnification and/or
insurance).
ARTICLE IX
TERMINATION AND AMENDMENT
9.01. TERMINATION.
(a) This Agreement and the Plan of Merger may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of MPF:
(i) by mutual consent of the Board of Directors or Finance Committee (the
"Committee") of CFB, and the Board of Directors of MPF;
(ii) by CFB or MPF (A) if there has been a breach in any material respect
of any representation, warranty, covenant or agreement on the part of MPF, on
the one hand, or CFB, on the other hand, set forth in this Agreement, or (B) if
the representations and warranties of MPF, on the one hand, or CFB, on the other
hand, shall be discovered to have become materially untrue in the aggregate, in
either case which breach or other condition has not been cured within third
(30) business days following receipt by the nonterminating party of notice of
such breach or other condition;
(iii) by CFB, on the one hand, or MPF, on the other hand, if any
permanent injunction preventing the consummation of the Merger shall have become
final and nonappealable;
(iv) subject to Section 1.03, by the Board of Directors or Committee of CFB
or the Board of Directors of MPF if the Mergers shall not have been consummated
before April 1, 1997, for a reason other than the failure of the terminating
party to comply with its obligations under this Agreement;
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(v) by the Board of Directors or Committee of CFB or the Board of
Directors of MPF if (A) the Federal Reserve Board, the Colorado Commissioner, or
other applicable bank regulatory authority has denied approval of the Merger and
neither CFB nor MPF has, within thirty (30) days after the entry of the order
denying such approval, filed a petition seeking review of such order as provided
by applicable law or (B) any such petition for review has been denied;
(vi) by MPF or CFB, if (A) this Agreement and the Merger are not duly
approved by the stockholders of MPF or CFB after a vote thereon at a meeting of
MPF's or CFB's stockholders (or any adjournment thereof) duly called and held
for such purpose;
(vii) by MPF if CFB merges, or announces it intention to merge, with
and into any bank or bank holding company, and is not the surviving corporation.
9.02. INVESTIGATION AND REVIEW.
(a) Subject to the next following sentence, at any time on or prior to the
20th day following the receipt of the Disclosure Letter, CFB may, by action of
its Board of Directors, elect to terminate this Agreement on behalf of CFB.
Nothing in this SECTION 9.02(a) shall be construed (i) to limit the period of
time during which CFB may conduct its investigation and review of MPF, (ii) to
limit any duty of MPF otherwise to cooperate with the investigation and review
by CFB subsequent to the period established pursuant to the first sentence of
this subsection (a), or (iii) to limit or qualify in any respect the
representations and warranties of MPF to CFB set forth in this Agreement as a
result of any such investigation and review.
(b) Subject to the next following sentence, at anytime on or prior to the
20th day following receipt of the CFB Disclosure Letter, MPF may, by action of
its Board of Directors, elect to terminate this Agreement on behalf of MPF.
Nothing in this Section 9.02(b) shall be construed (i) to limit the period of
time during which MPF may conduct its investigation and review of CFB; (ii) to
limit any duty of CFB otherwise to cooperate with the investigation and review
by MPF subsequent to the period established pursuant to the first sentence of
this subsection (b); or (iii) to limit or qualify in any respect the
representations and warranties of CFB to MPF set forth in this Agreement as a
result of such investigation and review.
9.03. EFFECT OF TERMINATION. In the event of termination of this Agreement
by MPF or CFB as provided in SECTION 9.0l or 9.02, this Agreement and the Plan
of Merger shall forthwith become void and there shall be no liability or
obligation on the part of CFB or MPF or their respective officers or directors
except (a) with respect to SECTIONS 5.08, 7.05 AND 9.06, (b) with respect to the
representations and warranties contained in Article III insofar as they relate
to the Voting Agreement and (c) to the extent that such termination results from
the willful breach by a party hereto of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
9.04. AMENDMENT. Subject to the last sentence of this SECTION 9.04, this
Agreement and the Plan of Merger may be amended by the parties hereto by action
taken or authorized by their
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<PAGE>
respective Boards of Directors (or, in the case of CFB, the Committee) at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of MPF, but after any such approval by the
stockholders of MPF, no amendment shall be made which changes in any manner
adverse to such stockholders the consideration to be provided to such
stockholders pursuant to the Merger Agreements. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.05. EXTENSION; WAIVER. At any time prior to the Effective Time, CFB and
MPF, by action taken or authorized by their respective Boards of Directors (or,
in the case of CFB, the Committee), may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other acts
of the other party hereto, (ii) waive any inaccuracies in the representations
and warranties of the other contained herein or in any document delivered by the
other pursuant hereto, and (iii) waive compliance by the other with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
9.06. TERMINATION FEE. MPF shall pay to CFB a fee of $1,000,000 (the
"Termination Fee") within two days of a "Trigger Event." A Trigger Event means
the occurrence of one or more of the following events: (i) a Transaction
Proposal (as defined below); (ii) termination of the Agreement following a
wilful and material breach thereof by MPF; or (iii) any withdrawal, modification
or amendment in any respect by MPF's Board of Directors of its approval or
recommendation regarding the Agreement and stockholder vote relating to MPF's
Board of Directors adopting a resolution relating to any such withdrawal,
modification or amendment. The rights of CFB hereunder shall terminate upon
the earliest to occur of (i) the Effective Time, (ii) termination of this
Agreement by MPF pursuant to Section 9.01(a)(ii), (iii) the termination of this
Agreement by mutual agreement of the parties or (iv) the expiration of one year
after the termination of the Agreement (other than terminations described in
clause (ii) or (iii)).
A "Transaction Proposal" means any of the following: (a) a bona fide tender
offer or exchange offer for at least 25% of the then outstanding shares of any
class of capital stock of MPF made by any entity or person other than CFB or its
subsidiaries or affiliates, (b) any entity or person filing an application under
the BHC Act or the Change in Bank Control Act with respect to the acquisition by
such entity or person of any shares of capital stock of MPF, (c) a merger,
consolidation or other business combination with MPF or any of its subsidiaries
is effected by any entity or person, (d) any sale, lease, transfer, mortgage or
other disposition involving a substantial part of MPF's or any of its
subsidiaries' consolidated assets, or any agreement to effect such a
transaction, (e) the acquisition by any entity or person of 10% or more of the
outstanding shares of any class of capital stock of MPF or acquisition of
additional shares by any entity or person currently holding 10% or more of such
shares, except for certain acquisitions made pursuant to certain MPF benefit
plans, (f) any reclassification of the securities of, or recapitalization of,
MPF that has the effect, directly or indirectly, of increasing the proportionate
share of any class of equity security of MPF that is owned by an entity or
person other than CFB or its subsidiaries or affiliates, or any agreement to
effect such a reclassification or recapitalization, (g) any transaction having
an effect
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<PAGE>
similar to those described in (a) through (f) above, or (h) a public
announcement regarding a proposal, plan or intention by MPF or another entity
or person to effect any of the foregoing transactions; provided, however,
that events described in clauses (a), (b) and (h) of this definition do not
constitute a "Transaction Proposal" unless either (x) the Board of Directors
of MPF takes or fails to take certain actions in connection therewith or (y)
MPF's stockholders fail to approve the Merger Agreements.
9.07. EXPENSES. In the event the Agreement or the transactions
contemplated thereby are terminated by CFB as a result of MPF's breach of the
Merger Agreements, MPF will pay CFB its out-of-pocket expenses incurred in
connection with the consummation of the transactions contemplated by the
Merger Agreements, but not to exceed $1,000,000. If the Merger Agreements or
the transactions contemplated thereby are terminated by MPF as a result of
CFB's breach of the Merger Agreements, CFB will pay MPF its out-of-pocket
expenses incurred in connection with the consummation of the transactions
contemplated by the Merger Agreements, but not to exceed $1,000,000.
ARTICLE X
GENERAL PROVISIONS
10.01. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in SECTIONS 2.01, 2.02, 6.05, 6.06,
7.06, and 7.07, the last sentence of SECTION 9.04 and ARTICLE X, and the
agreements delivered pursuant to SECTIONS 3.19 and 5.06.
10.02. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by nationally
recognized overnight courier service, telecopied (with receipt confirmed) or
mailed by registered or certified mail (return receipt requested) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to CFB and/or Sub, to: Community First Bankshares, Inc.
Attn.: Donald R. Mengedoth, President
520 Main Avenue
Fargo, ND 58124
Telecopy: (701) 237-4517
with a copy to: Lindquist & Vennum P.L.L.P.
Attn.: Steven J. Johnson, Esq.
4200 IDS Center
80 South 8th Street
Minneapolis, MN 55402-2205
Telecopy: (612) 371-3207
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<PAGE>
(b) if to MPF, to: Mountain Parks Financial Corp.
Attn.: Dennis M. Mathisen, President
6565 East Evans Avenue
Suite 202
Denver, CO 80225
Telecopy: (303) 758-5695
with a copy to: Sherman & Howard L.L.C.
Attn.: John W. Low, Esq.
633 Seventeenth Street, Suite 3000
Denver, CO 80202
Telecopy: (303) 298-0940
10.03. INTERPRETATION. When a reference is made in this Agreement to a
Section or Sections, such reference shall be to a Section or Sections of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to be
made available.
10.04. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.05. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; RIGHTS OF
OWNERSHIP. This Agreement (including the documents and the instruments
referred to herein, including the Plans of Merger, the Voting Agreement) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder. The parties hereby
acknowledge that, except as otherwise specifically provided in the Voting
Agreement or as hereinafter agreed to by all parties in writing, no party
shall have the right to acquire or shall be deemed to have acquired shares of
common stock of the other party pursuant to the Merger until consummation
thereof.
10.06. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Colorado except as the DGCL are
expressly applicable to the Merger.
10.07. PUBLICITY. The parties hereto agree that they will consult with
each other concerning any proposed press release or public announcement
pertaining to the Merger and use their best efforts to agree upon the text of
such press release or public announcement prior to the publication of such
press release or the making of such public announcement.
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<PAGE>
10.08. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
10.09. KNOWLEDGE OF THE PARTIES. Wherever in this Agreement any
representation or warranty is made upon the knowledge of a party hereto that
is not an individual, such knowledge shall include the knowledge, after due
inquiry, of any executive officer of such party or an executive officer of
any Subsidiary thereof.
10.10. JURY WAIVER. Each of the parties hereby waives any right to a
trial by jury with respect to any dispute arising out of or relating to this
Agreement.
10.11. CONFIDENTIALITY. Except for information that is available to the
public, all information concerning MPF, its Subsidiaries and their customers
made available to or in the possession of CFB shall be kept as confidential.
Except for information that is available to the public, all information
concerning CFB, the CFB Subsidiaries and their customers made available to or
in the possession of MPF shall be kept as confidential.
IN WITNESS WHEREOF, CFB and MPF have caused this Agreement to be signed by
their respective officers thereunto duly authorized, all as of the date first
written above.
COMMUNITY FIRST BANKSHARES, INC.
By: /s/ Donald R. Mengedoth
-------------------------------
Its: President
------------------------
Attest:
/s/ Mark A. Anderson
- -----------------------------------
Its: Executive Vice President & CFO
-------------------------------
MOUNTAIN PARKS FINANCIAL CORP.
By: /s/ Dennis M. Mathisen
-------------------------------
Its: President
------------------------
Attest: /s/ James R. Krumm
---------------------------
Its:
------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S QUARTERLY REPORT IN FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 81,676
<INT-BEARING-DEPOSITS> 1,461
<FED-FUNDS-SOLD> 860
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 409,076
<INVESTMENTS-CARRYING> 215,446
<INVESTMENTS-MARKET> 212,856
<LOANS> 1,541,374
<ALLOWANCE> 20,621
<TOTAL-ASSETS> 2,341,228
<DEPOSITS> 1,952,115
<SHORT-TERM> 105,593
<LIABILITIES-OTHER> 92,084
<LONG-TERM> 27,586
0
23,000
<COMMON> 115
<OTHER-SE> 162,499
<TOTAL-LIABILITIES-AND-EQUITY> 2,341,228
<INTEREST-LOAN> 35,479
<INTEREST-INVEST> 9,372
<INTEREST-OTHER> 111
<INTEREST-TOTAL> 44,962
<INTEREST-DEPOSIT> 17,399
<INTEREST-EXPENSE> 19,855
<INTEREST-INCOME-NET> 25,107
<LOAN-LOSSES> 1,268
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 18,423
<INCOME-PRETAX> 10,576
<INCOME-PRE-EXTRAORDINARY> 7,022
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,022
<EPS-PRIMARY> .57
<EPS-DILUTED> .54
<YIELD-ACTUAL> 0
<LOANS-NON> 4,081
<LOANS-PAST> 2,393
<LOANS-TROUBLED> 642
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 19,549
<CHARGE-OFFS> 1,458
<RECOVERIES> 415
<ALLOWANCE-CLOSE> 20,621
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
